Travelers (TRV) Set to Report Q2 Earnings: What to Expect
The Travelers Companies, Inc. TRV is set to report second-quarter 2023 earnings on Jul 20. The company delivered an earnings surprise in each of the last four reported quarters.
Factors to Consider
TRV’s second-quarter results are likely to benefit from solid performance across its three segments.
Better pricing, solid renewal rate change, robust retention and exposure growth are likely to have favored premiums in the to-be-reported quarter. The Zacks Consensus Estimate for premiums is pegged at $9.3 billion, indicating an 11.3% increase from the year-ago reported number. We estimate premiums to increase 9.3% to $9.1 billion.
Travelers expects after-tax net investment income from the non-fixed income portfolio in the second quarter, including earnings from short-term securities of about $555 million. A better interest rate environment, higher average levels of invested assets, reliable results from the fixed-income portfolio and strong returns from the non-fixed income portfolio are likely to aid investment results in the to-be-reported quarter. The Zacks Consensus Estimate for NII is $669 million, indicating a decline of 5.4% from the year-ago reported number. We estimate the metric to increase 8% to $650.1 million.
Continued growth at the profitable agency auto and homeowners business is likely to aid results of the Personal Insurance segment in the quarter to be reported. We estimate earned premiums at Personal Insurance to be $3.7 billion, indicating an improvement of 13.4% from the year-ago reported figure.
Higher net written premiums coupled with an increase in net investment income and other revenues are likely to have boosted the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $10.1 billion, indicating a 9.5% increase from the year-ago reported figure.
TRV is expected to have benefited from better pricing and increased exposure, which are likely to have aided underwriting profitability. The Zacks Consensus Estimate for combined ratio is pegged at 98, deteriorating 600 basis points. We estimate the combined ratio to be 94.7.
Continued share buybacks are anticipated to have provided an additional boost to the bottom line.
However, expenses are expected to have risen on higher claims and claim adjustment expenses, amortization of deferred acquisition costs, general and administrative expenses as well as interest expense.
The Zacks Consensus Estimate for second-quarter 2023 earnings per share is pegged at $2.27, suggesting a decline of 11.7% from the year-ago reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Travelers this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case here.
Earnings ESP: Travelers has an Earnings ESP of +3.74%. This is because the Most Accurate Estimate is pegged at $2.36, higher than the Zacks Consensus Estimate of $2.27. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The Travelers Companies, Inc. Price and EPS Surprise
The Travelers Companies, Inc. price-eps-surprise | The Travelers Companies, Inc. Quote
Zacks Rank: Travelers currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some insurance stocks with the right combination of elements to deliver an earnings beat this time around are:
Kinsale Capital Group KNSL has an Earnings ESP of +2.70% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for KNSL’s second-quarter 2023 earnings is pegged at $2.55, indicating an increase of 32.8% from the year-ago reported figure.
KNSL’s earnings beat estimates in each of the last four reported quarters.
Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.57% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $1.65, indicating a year-over-year increase of 23.1%.
ACGL’s earnings beat estimates in each of the last four reported quarters.
RLI Corporation RLI has an Earnings ESP of +8.33% and currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $1.20, implying a decline of 19.5% from the year-ago reported figure.
RLI’s earnings beat estimates in each of the last four reported quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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