News

The Travelers Companies, Inc. TRV is set to report second-quarter 2024 earnings on Jul 19. The company delivered an earnings surprise in one of the last reported quarters while missing in the other three.

Factors to Consider

Better performances across all three segments are likely to aid Travelers’ second-quarter results.

Better pricing, solid renewal rate change, strong retention and exposure growth are likely to have aided premiums in the to-be-reported quarter. The Zacks Consensus Estimate is currently pegged at $10.4 billion, indicating an increase of 13% from the year-ago reported number. We estimate premiums to increase 9.1% to $10.6 billion.

Investment results are likely to benefit from a favorable interest rate environment, higher average levels of invested assets, better results from the fixed-income portfolio and strong returns from the non-fixed-income portfolio. The Zacks Consensus Estimate is currently pegged at $842.8 million, implying an increase of 18.4% from the year-ago reported number. We estimate net investment income to increase 13% to $868.7 million.

The Personal Insurance segment is likely to have benefited from growth at the profitable agency auto and homeowners business. The Zacks Consensus Estimate is currently pegged at $4.1 billion, indicating an increase of 13.4% from the year-ago reported number. We estimate earned premiums at Personal Insurance to be $4.1 billion, suggesting an improvement of 11.2% from the year-ago reported figure.

An increase in net written premiums coupled with higher net investment income and other revenues is likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $11.5 billion, indicating a 13.2% increase from the year-ago reported figure.

Better pricing and increased exposure coupled with prudent underwriting are expected to have aided underwriting profitability, which, in turn, is expected to have led to an improvement in the combined ratio. We estimate combined ratio to be 100, an improvement of 380 basis points from the year-ago reported number. The Zacks Consensus Estimate is currently pegged at 100, indicating an improvement of 645 basis points from year ago reported number.

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 expenses. We estimate expenses to increase 4.4% in the to-be-reported quarter to $10.6 billion.

Continued share buybacks are anticipated to have provided an additional boost to the bottom line.

The Zacks Consensus Estimate for second-quarter 2024 earnings per share is pegged at $2.49, suggesting an increase of 4,050% 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, as you can see below:

Earnings ESP: Travelers has an Earnings ESP of -16.60%. This is because the Most Accurate Estimate of $2.07 is pegged lower than the Zacks Consensus Estimate of $2.49. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are three P&C insurance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Arch Capital Group ACGL has an Earnings ESP of +2.84% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at $2.16, indicating a year-over-year increase of 12.5%

ACGL’s earnings beat estimates in each of the last four reported quarters.

First American Financial FAF has an Earnings ESP of +8.46% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at $1.13, indicating a year-over-year decrease of 16.3%.

FAF earnings beat estimates in two of the last four reported quarters while missed in other two.

W.R. Berkley Corporation WRB has an Earnings ESP of +0.21% and currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 93 cents, implying an increase of 22.4% from the year-ago reported figure.

WRB’s earnings beat estimates in each of the last four reported quarters.

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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report

W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

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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.