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The Travelers Companies Inc (TRV)
NYSE:TRV
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Travelers Companies
(NYSE:TRV)75Outperform
Positive Factors
Earnings Potential
Significant reserve releases in workers’ compensation, personal lines, and fidelity and surety are expected, boosting future earnings.
Financial Performance
The analyst upgrades TRV’s shares to Outperform and raises the target price to $286 following a year-end GAAP reserve analysis.
Negative Factors
Liability Concerns
General liability deficiencies, especially within Bond & Specialty, that partly offset the positive reserve developments.
Travelers Companies (TRV) vs. S&P 500 (SPY)
Market Cap
$58.61B
Dividend Yield1.59%
Average Volume (3M)1.34M
Price to Earnings (P/E)12.0
Beta (1Y)0.49
Revenue Growth12.23%
EPS Growth68.50%
CountryUS
Employees33,300
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)21.47
Shares Outstanding226,726,580
10 Day Avg. Volume1,304,336
30 Day Avg. Volume1,342,617
Financial Highlights & Ratios
PEG Ratio0.18
Price to Book (P/B)N/A
Price to Sales (P/S)1.26
Price to Cash Flow (P/CF)7.10
P/FCF Ratio6.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$276.73Price Target Upside8.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
Travelers Companies Business Overview & Revenue Model
Company DescriptionTravelers Companies, Inc. (TRV) is a leading provider of property and casualty insurance for auto, home, and business sectors. Headquartered in New York City, Travelers operates primarily in the United States, Canada, and the United Kingdom, offering a wide range of insurance products and services designed to meet the needs of both individual and commercial clients. The company's offerings include auto insurance, homeowners insurance, renters insurance, and a variety of business insurance solutions such as liability, workers' compensation, and cyber insurance. Travelers is known for its strong financial performance, innovative risk management services, and comprehensive insurance products.
How the Company Makes MoneyTravelers Companies generates revenue primarily through the sale of insurance policies and the investment of the premiums collected. The company's key revenue streams include personal insurance, which covers auto and home insurance for individuals, and business insurance, which encompasses a broad range of products for businesses of all sizes, including property, general liability, and workers' compensation coverage. Additionally, Travelers engages in bond and specialty insurance, providing surety bonds and management liability coverage. The company earns money by collecting premiums from policyholders, which are then invested in various financial instruments to generate investment income. Travelers' earnings are influenced by factors such as underwriting performance, claims experience, and investment returns. Strategic partnerships and collaborations with independent agents and brokers also play a significant role in expanding the company's market reach and customer base.
Travelers Companies Financial Statement Overview
Summary
Travelers Companies shows strong financial performance with robust revenue growth, improved profitability margins, and the elimination of debt enhancing financial security. However, the absence of cash reserves poses a liquidity risk.Income Statement
Travelers Companies demonstrated robust revenue growth of 12.22% from 2023 to 2024, coupled with an impressive gross profit margin consistently at 100% due to the nature of the insurance industry. The net profit margin improved significantly to 10.77% in 2024 from 7.23% in 2023, highlighting enhanced profitability. The EBIT margin also increased from 87.50% to 87.48%, indicating effective cost control and operational efficiency. However, the EBITDA margin could not be calculated for 2024 due to missing data, which slightly tempers the overall assessment.85
Very Positive
Balance Sheet
The balance sheet reflects a solid equity base with the equity ratio improving to 20.91% in 2024 from 19.78% in 2023, suggesting a growing buffer against liabilities. The debt-to-equity ratio improved significantly from 0.32 to 0.00, as total debt was eliminated in 2024, enhancing financial stability. Return on equity (ROE) also saw a rise to 17.94% from 12.00%, indicating better utilization of equity. However, the complete absence of cash and short-term investments as of 2024 may pose liquidity concerns.75
Positive
Cash Flow
The cash flow statement shows strong free cash flow growth of 17.70%, highlighting improved cash generation capacity. The operating cash flow to net income ratio stands at 1.82 for 2024, indicating robust cash earnings. The free cash flow to net income ratio also increased to 1.82, demonstrating a high conversion of net income to cash. Nevertheless, the absence of capital expenditures may limit long-term growth potential.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 46.42B | 41.36B | 36.88B | 34.82B | 31.98B | Gross Profit |
| 46.42B | 41.36B | 36.88B | 34.82B | 31.98B | EBIT |
| -5.00M | 36.19B | 3.71B | 4.10B | 2.96B | EBITDA |
| 0.00 | 4.47B | 4.53B | 5.67B | 4.37B | Net Income Common Stockholders |
| 5.00B | 2.99B | 2.84B | 3.66B | 2.70B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 89.13B | 650.00M | 75.43B | 82.41B | 80.23B | Total Assets |
| 133.19B | 125.98B | 115.72B | 120.47B | 116.76B | Total Debt |
| 8.03B | 8.03B | 7.29B | 7.29B | 6.55B | Net Debt |
| 7.33B | 7.38B | 6.49B | 6.53B | 5.83B | Total Liabilities |
| 105.33B | 101.06B | 94.16B | 91.58B | 87.56B | Stockholders Equity |
| 27.86B | 24.92B | 21.56B | 28.89B | 29.20B |
| Cash Flow | Free Cash Flow | |||
| 9.07B | 7.71B | 7.27B | 7.28B | 6.52B | Operating Cash Flow |
| 9.07B | 7.71B | 7.27B | 7.27B | 6.52B | Investing Cash Flow |
| -7.26B | -6.82B | -5.20B | -5.20B | -4.89B | Financing Cash Flow |
| -1.75B | -1.05B | -2.04B | -2.04B | -1.42B |
Travelers Companies Technical Analysis
Positive
255.70
Price Trends
243.74
Positive
247.89
Positive
232.13
Positive
Market Momentum
3.33
Negative
59.69
Neutral
86.84
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TRV, the sentiment is Positive. The current price of 255.7 is above the 20-day moving average (MA) of 246.57, above the 50-day MA of 243.74, and above the 200-day MA of 232.13, indicating a bullish trend. The MACD of 3.33 indicates Negative momentum. The RSI at 59.69 is Neutral, neither overbought nor oversold. The STOCH value of 86.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TRV.
Travelers Companies Risk Analysis
Travelers Companies disclosed 23 risk factors in its most recent earnings report. Travelers Companies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Travelers Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $114.31B | 12.58 | 14.48% | 1.24% | 11.78% | 4.39% | |
78 Outperform | $23.14B | 10.18 | 16.45% | 2.19% | 13.22% | 24.83% | |
75 Outperform | $58.61B | 12.04 | 17.94% | 1.59% | 12.23% | 68.50% | |
74 Outperform | $165.20B | 19.58 | 33.14% | 1.72% | 21.36% | 118.77% | |
72 Outperform | $52.78B | 11.72 | 21.77% | 1.85% | 12.28% | ― | |
71 Outperform | $47.38B | 15.77 | -3.30% | 1.89% | -28.56% | 1.14% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
TRV
Travelers Companies
255.70
40.48
18.81%
CB
Chubb
284.15
38.07
15.47%
ALL
Allstate
199.03
44.58
28.86%
AIG
American International Group
79.85
7.48
10.34%
CINF
Cincinnati Financial
143.26
34.12
31.26%
PGR
Progressive
283.19
97.21
52.27%
Travelers Companies Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: 6.92% | Next Earnings Date: Apr 22, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong financial performance in 2024, with record core income, improved combined ratios, and significant premium growth across all segments. However, the anticipated impact of the California wildfires introduces uncertainty for the upcoming quarter.Highlights
Record Core Income and Return on Equity
Core income for the full year increased 64% to more than $5 billion, with a core return on equity of 17.2%.
Improved Combined Ratios Across Segments
The combined ratio improved by 2.6 points to 83.2%, driven by strong underlying profitability and favorable prior-year reserve development.
Significant Premium Growth
Net earned premiums increased by 9% to $10.9 billion in Q4, with net written premiums growing by 8% for the year to over $43 billion.
Strong Investment Income
After-tax net investment income for the full year was up 21%, totaling $3 billion.
Growth in Business Insurance
Net written premiums in Business Insurance grew by 8% in the quarter to $5.4 billion, with a renewal premium change of 9.6%.
Bond & Specialty Insurance Success
Net written premiums grew by 7%, and the segment delivered a combined ratio of 82.7%.
Record Personal Insurance Performance
Personal Insurance delivered segment income of $798 million with a combined ratio of 80.7%.
Lowlights
Impact of California Wildfires
The California wildfires are expected to have a material impact on Q1 2025 earnings, though an estimate is not yet available.
Challenges in Select Business Insurance Retention
Retention in Select Business Insurance dropped due to non-renewals in certain geographies driven by severe convective storms.
Company Guidance
During the Travelers earnings call for Q4 2024, the company reported a significant increase in core income for the full year, reaching over $5 billion, or $21.58 per diluted share, which represents a 64% year-over-year growth, and generating a core return on equity of 17.2%. The quarter's core income was $2.1 billion, marking a record for the company. Net earned premiums increased by 9% to $10.9 billion, and the combined ratio improved by 2.6 points to 83.2%, driven by strong underwriting profitability and favorable prior year reserve development. The Business Insurance segment's combined ratio improved by over 1 point to 85.2%, while the Bond & Specialty business and Personal Insurance reported combined ratios of 82.7% and 80.7%, respectively. Net investment income for the full year rose 21% to $3 billion, contributing to a 13% increase in adjusted book value per share, which reached $139.4. The company also highlighted robust growth in net written premiums, which rose 8% to more than $43 billion for the year, with notable performance in Business Insurance and Bond & Specialty segments.Travelers Companies Corporate Events
Business Operations and StrategyFinancial Disclosures
Travelers Companies Reports $1.7 Billion Catastrophe Losses
Negative
Feb 11, 2025
On February 11, 2025, Travelers Companies, Inc. announced a preliminary estimate of $1.7 billion in pre-tax catastrophe losses stemming from the January 2025 California wildfires. This estimate includes losses from personal and commercial segments and considers the involvement of the Fidelis quota share, California FAIR Plan assessments, and reinsurance recoveries. The company is actively providing resources and support to help affected communities recover, expressing gratitude to first responders, relief organizations, and their claim professionals for their efforts.
Business Operations and StrategyFinancial Disclosures
Travelers Companies Focuses on Shareholder Value Enhancement
Neutral
Jan 27, 2025
Travelers Companies, Inc. recently revealed its strategic focus on enhancing shareholder value through sustainable competitive advantages and improved financial performance metrics. The company highlighted its increased investment in technology to bolster productivity and efficiency, leading to significant reductions in expense ratios over the past seven years. Additionally, the company reported a 64% year-over-year increase in core income and core EPS for the full year 2024 compared to 2023. However, the company is anticipating substantial financial impacts from the California wildfires starting in January 2025, particularly affecting its personal property exposures, signaling potential challenges ahead for its earnings.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.