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Travelers (TRV) to Report Q2 Earnings: What's in The Cards?

The Travelers Companies, Inc. TRV is set to report second-quarter 2020 earnings on Jul 23, before market open. The company delivered a negative surprise of 9.03% in the last reported quarter.

Let’s see what’s in store for the company this time around.

The impact of the disruption in global financial markets that occurred in the latter half of the first quarter is likely to have affected the company’s second-quarter performance.

Travelers’ second-quarter results are expected to reflect lower premiums and strong performances of Personal Lines business.

Renewal premium changes, growth across all businesses, strong retention, higher levels of new business, and better domestic results, especially in homeowners, are likely to have fueled premiums increase in the to-be-reported quarter. The company expects downward pressure on both written and earned premiums The Zacks Consensus Estimate for premiums is pegged at $7.2 billion, indicating an increase of 2.8% from second-quarter 2019.

Improvements in both agency automobile and homeowners, due to strong production, are likely to have aided personal lines of business.

Travelers estimates net investment income (NII) to decrease approximately $20 million after-tax per quarter from the second quarter of 2019 due to the recent decline in short-term yields. The Zacks Consensus Estimate for NII is pegged at $192 million, indicating an increase of 70.4% from the year-ago period reported figure.

Higher net written premiums driven by strong production are likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $7.8 billion, indicating 0.1% decrease from the year-ago period reported figure.

Higher levels of earned premium in all three business segments, lower levels of non-catastrophe weather losses along with new catastrophe reinsurance treaty entered into in the first quarter of 2019 and an improved loss ratio in personal insurance auto are likely to have aided underwriting income and combined ratio. The company expects cat loss to be the highest in the second quarter.

The Zacks Consensus Estimate for second-quarter earnings per share stands at 25 cents, implying a decrease of 87.6% from the year-ago quarter reported figure.

What Our Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Travelers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Travelers has an Earnings ESP of -98.02%. This is because the Most Accurate Estimate of 1 cent is pegged lower than the Zacks Consensus Estimate of 25 cents. 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 and EPS Surprise

The Travelers Companies, Inc. price-eps-surprise | The Travelers Companies, Inc. Quote

Zacks Rank: Travelers carries a Zacks Rank of 3.

Stocks to Consider

Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

American Financial Group AFG has an Earnings ESP of +21.45% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation ALL has an Earnings ESP of +3.01% and a Zacks Rank #3.

Kingstone Companies, Inc. KINS has an Earnings ESP of +12.82% and a Zacks Rank of 2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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