The Travelers Companies, Inc.
) is witnessing solid bottom-line growth fueled by its robust
operational strategies. Moreover, the company is also engaged in
enhancing its shareholders' value through consistent share
repurchase and dividend payments.
Travelers exited 2013 with the bottom line for both the fourth
quarter and the full year 2013 surpassing the respective Zacks
Consensus Estimate. The fourth quarter witnessed improvement in
underlying underwriting gains aided by benign catastrophe
activities. Travelers also witnessed higher net investment income
and higher net favorable prior-year reserve development. Lower
share count, at the same time, boosted the bottom line. Travelers
reported record earnings for 2013.
Travelers is focused on reducing operating expenses and
acquisition costs in order to improve underwriting margins and
enable itself to come up with a more competitively priced
product. The company's expense reduction initiatives
include the announcement of a plan to cut down on certain claim
and other insurance expenses with the majority of the impact in
the Agency Automobile line of business. This, when fully
implemented, should lead to an annualized savings of $140 million
Travelers remains upbeat about its new product Quantum 2.0. It
expects this lower cost, lower-priced Auto insurance product to
help it improve volumes at attractive returns. Also, the company
remains focused on implementing pricing actions that should
continue to result in improved returns. With successful
implementation of pricing actions, the company effectively
revamped its portfolio with better performing classes of
With respect to enhancing shareholders value, Travelers returned
about $27 billion since mid 2006 via share repurchases and
dividends. The company noted the amount is nearly reaching its
market capitalization. While over the last 5 years, the company
increased dividend at a CAGR of 10.8%, its dividend yield of
2.39% betters the industry average of 2.12%. The company also has
a new $5 billion share repurchase authorization.
It is also noted that written rate gains continued to exceed
expected loss cost trends in all segments. High retention rate,
pricing gains, positive renewal rate changes, and a strong
capital position are among the positives.
However, exposure to catastrophe events always remains a headwind
for property and casualty insurers and Travelers is no exception.
Nonetheless, the solid fundamentals are reflected in the
company's Zacks Rank. Travelers currently sports a Zacks Rank #2
With respect to estimate revisions, the company has witnessed a
positive movement. For 2014, the Zacks Consensus Estimate moved
north by 1.7% to $8.21 per share and for 2015, the same moved up
by 6.0% to $8.59 over the last 60 days.
Other Stocks to Consider
Some other stocks worth mentioning in the property and casualty
insurance industry are
AmTrust Financial Services, Inc
Fidelity National Financial, Inc
). All these stocks sport a Zacks Rank #1 (Strong Buy).
AMTRUST FIN SVC (AFSI): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
TRAVELERS COS (TRV): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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