Travelers’ Strong Q1 Earnings Bode Well For Other Insurers

April 23rd, 2012 by Trefis Team
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The Travelers Companies
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The Travelers Companies (NYSE:TRV) announced its first quarter earnings for 2012 on Thursday. The company reported strong results, with net income of $806 million for the quarter. [1] Total revenues showed a 2% increase from $6.3 billion in Q1 2011 to $6.4 billion in 2012. Travelers’ performance this quarter provides a positive outlook for the rest of the insurance industry, which is still recovering from significant losses due to natural disasters in 2011. Travelers’ primary competitors, AIG (NYSE: AIG), MetLife (NYSE: MET) and Hartford Financial (NYSE: HIG) are scheduled to report earnings over the next two weeks.

We presently have a price estimate of $63 for Travelers, which is slightly above the market price.

See Full Analysis for Travelers Here

Business and Financial Insurance

Travelers’ U.S. business and financial insurance division accounts for a majority (73%) of the Trefis price estimate for the company. Business insurance net written premiums were $3.1 billion, an increase of 3% from last quarter, primarily due to improvements in business activity as well as strong renewal rates and renewal pricing increases.

The company’s renewal rate increase was about 8% in the quarter as the company continues to improve its pricing. While this did result in a decline in retention rates and new volumes, the company expects it to result in an improvement in returns on new accounts.

Understand How a Company’s Products Impact its Stock Price at Trefis

Travelers Companies (NYSE:TRV) announced its first quarter earnings for 2012, on Thursday, 19th April. The company reported strong results with a net income of $806 million or $2.02 per diluted share, compared with $839 million or $ 1.92 per diluted share last year. Total revenues showed a 2% increase, form $6,278 last year to $6,392. Travelers is a property and casualty insurance company, and is the first major insurance company to report its earnings this year. Travelers performance this year provides a positive outlook for the rest of the industry, which is recovering from significant losses due to unpredictable weather phenomena last year, including natural disasters such as Hurricane Irene. Travelers main competitors AIG (NYSE: NYSE),MetLife (NYSE: MET) and Hartford Financial (NYSE: HIG) are scheduled to report earnings over the next two weeks.

We presently have a price estimate of $63.13 for Travelers, 6% above the market price of $59.47.

See complete analysis of Travelers here

Notes:
  1. Travelers Reports First Quarter Net and Operating Income per Diluted Share of $2.02 and $2.01, an Increase of 5% and 6%, Respectively, From the Prior Year Quarter, Company Press  Release, April 19, 2012 [↩]