Yahoo Finance Travelers (TRV) Misses Q1 Earnings Estimates, Raises Dividend
The Travelers Companies TRV reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss.
Shares lost 2.9% in the pre-market trading session to reflect the underperformance.
The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses.
The Travelers Companies, Inc. Price, Consensus and EPS Surprise
The Travelers Companies, Inc. price-consensus-eps-surprise-chart | The Travelers Companies, Inc. Quote
Behind Q1 Headlines
Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion.
Net investment income increased 27.6% year over year to $846 million, primarily due to strong fixed-income returns and growth in fixed-maturity investments. The figure was higher than our estimate of $784 million. The Zacks Consensus Estimate was pegged at $808 million.
Catastrophe loss was $712 million, pre-tax, wider than a loss of $535 million, pre-tax, incurred in the year-ago quarter.
Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes. Consolidated underlying combined ratio of 87.7 improved 290 basis points (bps) year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior year reserve development. The Zacks Consensus Estimate was pegged at 94.
Core return on equity expanded 90 basis points to 15.4%. Adjusted book value per share (excludes net unrealized investment gains/losses) of $125.53 increased 8% year over year. At quarter-end, statutory capital and surplus were $25.3 billion and the debt-to-capital ratio was 24.3%.
Segment Update
Business Insurance: Net written premiums increased 9% year over year to about $5.6 billion, reflecting strong renewal premium change and retention, as well as higher levels of new business. Business Insurance net written premiums beat our estimate of $5 billion.
The combined ratio improved 30 bps year over year to 93.3 due to a lower underlying combined ratio and lower catastrophe losses, partially offset by no net prior year reserve development compared with net favorable prior year reserve development in the prior year quarter. Our estimate was 95.1. The Zacks Consensus Estimate was pegged at 93.
Segment income of $764 million increased 1.1% year over year on higher net investment income. The figure was higher than our estimate of $763.5 million.
Bond & Specialty Insurance: Net written premiums increased 6% year over year to $943 million, reflecting strong retention and new business in high-quality management liability business. Our estimate was $982.9 million.
The combined ratio deteriorated 450 bps year over year to 84.5 due to lower net favorable prior-year reserve development and a higher underlying combined ratio, partially offset by a smaller impact from catastrophe losses. Our estimate was 82.1. The Zacks Consensus Estimate was pegged at 81.
Segment income of $195 million decreased 5.8% year over year due to lower net favorable prior year reserve development. The figure was lower than our estimate of $231.6 million.
Personal Insurance: Net written premiums of $3.6 billion increased 9% year over year, reflecting strong renewal premium change in both Domestic Automobile and Homeowners and Other. Our estimate was $3.9 billion.
The combined ratio improved 460 bps year over year to 96.9 due to an improvement in the underlying combined ratio and higher net favorable prior-year reserve development, partially offset by higher catastrophe losses. Our estimate was 98.6. The Zacks Consensus Estimate was pegged at 97.
Segment income more than doubled year over year to $220 million, driven by higher underlying underwriting gain, higher net favorable prior-year reserve development and higher net investment income.
Dividend and Share Repurchase Update
This property and casualty insurer returned $620 million to shareholders in the first quarter of 2023. It bought back 1.2 million shares for $388 million in the first quarter.
The board also approved an increase of 5% to quarterly dividend to $1.05 per share. The dividend will be paid out on Jun 28, 2024, to shareholders of record at the close of business on Jun 10, 2024. This marked the 20th consecutive year of dividend increase at a compound annual growth rate of 8% over that period.
Travelers had $5.79 billion remaining under authorization as of Mar 31, 2024.
Zacks Rank
Travelers currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Another Insurer
The Progressive Corporation’s PGR first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1290 bps from the prior-year quarter’s level to 86.1.
Upcoming Releases
RLI Corporation RLI will report first-quarter 2024 results on Apr 22, after market close. The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.63, indicating no change from the year-ago quarter’s reported figure.
RLI’s earnings beat estimates in three of the last four quarters while missing in one.
W.R. Berkley Corporation WRB will report first-quarter 2024 results on Apr 23, before market open. The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.47, suggesting an increase of 47% from the year-ago quarter’s reported figure.
WRB’s earnings beat estimates in three of the last four quarters while missing in one.
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