Core Insights - Travelers Companies reported impressive third-quarter results, with shares rallying by 7.6% following the announcement [1] Group 1: Financial Performance - In Q3, Travelers' net written premiums increased by 10% to $10.7 billion, leading to earnings rising by 102% to $5.24 per share, significantly surpassing the consensus estimate of $3.59 per share [2] - The company's combined ratio improved to 93.2%, which is 7.8 percentage points better than Q3 2022, indicating a substantial enhancement in underwriting results [2] - Net investment income rose by 17.6% due to higher bond yields, and the core return on equity was a solid 15.9% over the past 12 months [2] Group 2: Industry Context - The insurance industry has improved profitability due to a hard market, with rising catastrophes and inflation prompting some insurers to reduce underwriting capacity, allowing remaining players to raise prices [3] - Travelers is benefiting from increased bond yields as older bonds mature and are replaced with higher-yielding instruments, contributing positively to its financial results [3] - Year-to-date, Travelers' stock has increased by 56.4% following these excellent results [3] Group 3: Valuation - Travelers currently trades at 16.6 times trailing earnings and about 2 times its adjusted book value per share, which is not considered overly expensive for an insurance stock [4] - Given Travelers' strong business insurance brand and favorable industry conditions, the stock may still present a worthwhile investment opportunity [4]

Financial Data and Key Metrics Changes - Core income for Q3 2024 was over $1.2 billion, or $5.24 per diluted share, with a core return on equity of 16.6% [8][15] - Underlying underwriting income increased by 73% year-over-year to $1.5 billion, driven by record net earned premiums of $10.7 billion, up 10% [9][10] - The consolidated combined ratio improved nearly 8 points to 93.2% [9][15] - Adjusted book value per share rose by 4% during the quarter, reaching $131.30, up 7% from year-end and 13% year-over-year [19] Business Line Data and Key Metrics Changes - Business Insurance segment income was $698 million, up about 50% from the prior year, with a combined ratio of 95.8% [22] - Bond & Specialty Insurance generated segment income of $222 million with an excellent combined ratio of 82.5% [27] - Personal Insurance segment income improved to $384 million, with an underlying combined ratio of 82.7%, reflecting an 11.5-point improvement year-over-year [31] Market Data and Key Metrics Changes - Net written premiums grew by 8% to $11.3 billion, with Business Insurance premiums increasing by 9% to over $5.5 billion [10][11] - Bond & Specialty Insurance net written premiums reached a record $1.1 billion, up 7% [12][28] - Personal Insurance net written premiums grew by 7%, driven by strong renewal price changes in both auto and home [12][31] Company Strategy and Development Direction - The company aims for profitable growth by investing in franchise value and maintaining a granular approach to risk selection, underwriting, and pricing [13][14] - The focus remains on achieving industry-leading returns over time while managing exposure in high-risk areas [12][35] - The company is committed to returning excess capital to shareholders while also investing in organic and inorganic growth opportunities [19][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of recent hurricanes on operations and emphasized the importance of their catastrophe response model [7][8] - The outlook for pricing remains positive, with expectations for continued strong renewal price changes across all segments [44] - Management expressed confidence in the company's ability to navigate the current economic and regulatory uncertainties while maintaining strong underwriting results [40][82] Other Important Information - The company reported $939 million in pre-tax catastrophe losses, primarily from Hurricane Helene [16] - The investment portfolio performed well, with after-tax net investment income up 16% to $742 million [10][18] - The company returned $496 million of excess capital to shareholders, including share repurchases and dividends [19] Q&A Session Summary Question: Renewal premium change sustainability in domestic business insurance - Management indicated uncertainty due to inflation and geopolitical factors but did not provide specific forecasts [39] Question: Capital management approach with strong cash flow - The company prioritizes reinvesting capital back into the business to create shareholder value before considering share repurchases [41] Question: Sustainability of the current rate environment - Management expects continued positive renewal price changes but acknowledged the unpredictability of future trends [44] Question: Changes in personal lines deductibles - The company is actively making meaningful changes to terms and conditions, particularly in catastrophe-exposed geographies [52] Question: Workers' compensation pricing outlook - Management anticipates continued strong pricing driven by favorable experience in the line [70]

Economic Indicators - U.S. Retail Sales for September increased by +0.4%, the strongest level since summer, indicating strengthening economic growth [2] - Excluding volatile auto sales, Retail Sales rose to +0.5%, while ex-autos and gasoline sales increased to +0.7%, the highest since June [2] - Initial Jobless Claims reported at 241K, below the expected 260K, indicating a slight improvement in the labor market [4] - Continuing Claims reached 1.867 million, the highest since late July, raising concerns about the labor market as it approaches 2 million [4] - Philly Fed Manufacturing index for October jumped to 10.3, significantly above the expected 3.0, indicating strong manufacturing growth [5] Company Earnings - Taiwan Semiconductor (TSM) reported Q3 earnings of $1.94 per ADR, exceeding the Zacks consensus by 20 cents, and up from $1.29 in the previous year [6] - TSM's revenues for Q3 were $23.50 billion, surpassing the expected $22.72 billion, reflecting a +36% year-over-year growth [6] - TSM's gross margins reached 57.8%, with guidance for future margins set between 57-59% [6] - The Travelers (TRV) reported Q3 earnings of $5.24 per share, significantly above the expected $3.29, and up from $1.95 in the previous year [8] - Travelers' revenues for Q3 were $11.85 billion, beating the Zacks consensus by +1.42% [8]

Core Insights - Travelers Companies (TRV) reported a third-quarter 2024 core income of $5.24 per share, exceeding the Zacks Consensus Estimate by 38.2% [1] - The company's total revenues rose 10.7% year over year to $11.84 billion, driven by increased premiums and net investment income, surpassing the Zacks Consensus Estimate by 1.4% [2] - The underwriting gain significantly improved to $685 million from a loss of $136 million in the prior year, with a consolidated underlying combined ratio of 85.6, an improvement of 500 basis points year over year [3] Revenue and Premiums - Net written premiums reached a record $11.31 billion, an 8% increase year over year, exceeding the estimate of $10.5 billion [2] - Business Insurance segment net written premiums increased 9% to approximately $5.51 billion, matching estimates [4] - Personal Insurance segment net written premiums rose 7% to $4.72 billion, reflecting strong renewal premium changes [6] Investment Income and Catastrophe Losses - Net investment income increased 18% year over year to $904 million, driven by higher average yields and growth in fixed maturity investments [2] - Catastrophe losses were reported at $939 million, pre-tax, compared to $850 million in the prior year [2] Segment Performance - Business Insurance segment income increased 49% year over year to $698 million, benefiting from lower net unfavorable prior-year reserve development [4] - Bond & Specialty Insurance segment net written premiums rose 7% to $1 billion, but segment income decreased 16.2% year over year to $222 million [5] - Personal Insurance segment income was $384 million after-tax, a significant recovery from a loss of $193 million in the prior year [6] Shareholder Returns - Travelers returned $496 million to shareholders in Q3 2024, including $253 million used for share repurchases [7] - A quarterly dividend of $1.05 per share was announced, payable on December 31, 2024 [7]

Core Insights - Travelers reported revenue of $11.85 billion for the quarter ended September 2024, reflecting a year-over-year increase of 10.7% [1] - The company's EPS was $5.24, significantly higher than $1.95 in the same quarter last year, indicating a strong performance [1] - Revenue exceeded the Zacks Consensus Estimate of $11.68 billion by 1.42%, while EPS surpassed the consensus estimate of $3.79 by 38.26% [1] Financial Metrics - Combined Ratio - Consolidated: 93.2% compared to the estimated 97.4% [3] - Loss and Loss Adjustment Expense Ratio - Consolidated: 64.8% versus the estimated 68.3% [3] - Underwriting Expense Ratio - Consolidated: 28.4% against the estimated 28.5% [3] - Total Revenues - Net Investment Income: $904 million, exceeding the estimate of $882.60 million, with a year-over-year increase of 17.6% [3] - Total Revenues - Fee Income: $121 million, above the estimated $113.60 million, representing an 8% year-over-year change [3] - Total Revenues - Premiums: $10.70 billion, surpassing the estimate of $10.58 billion, with a year-over-year increase of 10.2% [3] - Total Revenues - Other Revenues: $120 million, exceeding the estimate of $99.60 million, with an 18.8% year-over-year increase [3] - Revenues - Premiums - Business Insurance: $5.47 billion, above the estimated $5.42 billion, reflecting a 10.5% year-over-year increase [3] - Revenues - Premiums - Personal Insurance: $4.42 billion, exceeding the estimate of $4.22 billion, with a 15.4% year-over-year increase [3] - Revenues - Premiums - Bond & Specialty Insurance: $1.01 billion, slightly above the estimated $998.03 million, indicating a 7.9% year-over-year increase [3] - Revenues - Other Revenues - Personal Insurance: $24 million, slightly above the estimate of $23.78 million, with no year-over-year change [3] Stock Performance - Shares of Travelers have returned +1.3% over the past month, compared to the S&P 500 composite's +3.8% change [2] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [2]

TRAVELERS J THIRD QUARTER 2024 RESULTS October 17, 2024 LONG-TERM FINANCIAL STRATEGY CREATE SHAREHOLDER VALUE Objective: Mid–Teens Core ROE Over Time Meaningful and sustainable competitive advantages Generation of top-tier earnings and capital substantially in excess of growth needs Balanced approach to rightsizing capital and growing book value per share over time 2 THIRD QUARTER 2024 OVERVIEW Travelers Reports Excellent Third Quarter and Year-to-Date Results Third Quarter 2024 Net Income per Diluted Share ...

Company Performance - Travelers reported quarterly earnings of $5.24 per share, exceeding the Zacks Consensus Estimate of $3.79 per share, and up from $1.95 per share a year ago, representing an earnings surprise of 38.26% [1] - The company posted revenues of $11.85 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.42%, and an increase from $10.7 billion year-over-year [1] - Over the last four quarters, Travelers has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [1] Stock Performance - Travelers shares have increased approximately 27.5% since the beginning of the year, outperforming the S&P 500's gain of 22.5% [2] - The current Zacks Rank for Travelers is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $6.15 on revenues of $11.89 billion, and for the current fiscal year, it is $17.09 on revenues of $46.11 billion [4] - The trend of estimate revisions for Travelers is mixed, and changes in estimates for the coming quarters and current fiscal year are anticipated following the recent earnings report [4] Industry Context - The Insurance - Property and Casualty industry is currently in the top 23% of over 250 Zacks industries, indicating a favorable outlook for stocks within this sector [5] - Another company in the same industry, Selective Insurance, is expected to report quarterly earnings of $1.69 per share, reflecting a year-over-year change of +11.9%, with revenues projected at $1.24 billion, up 14.3% from the previous year [5][6]

Financial Performance - Net income for Q3 2024 was $1.26 billion, a 212% increase from $404 million in Q3 2023, resulting in diluted earnings per share of $5.42, up 211% from $1.74 [162]. - Net earned premiums reached $10.70 billion in Q3 2024, a 10% increase from $9.72 billion in Q3 2023, and $31.07 billion for the first nine months, a 12% increase from $27.79 billion [166]. - Net investment income for Q3 2024 was $904 million, an 18% increase from $769 million in Q3 2023, and $2.64 billion for the first nine months, a 23% increase from $2.14 billion [169]. - Total capital returned to shareholders was $496 million, including $253 million in share repurchases and $243 million in dividends [158]. - Segment income for the first nine months of 2024 was $2.12 billion, a 30% increase from $1.63 billion in the same period of 2023 [199]. Claims and Expenses - Claims and claim adjustment expenses in Q3 2024 were $7.00 billion, a decrease of $153 million or 2% compared to Q3 2023 [173]. - Claims and claim adjustment expenses for the first nine months of 2024 totaled $21.03 billion, an increase of $690 million or 3% compared to the same period in 2023 [175]. - General and administrative expenses in Q3 2024 were $1.46 billion, an increase of $148 million or 11% compared to Q3 2023 [183]. - The combined ratio improved to 93.2% in Q3 2024 from 101.0% in Q3 2023, reflecting better underwriting performance [161]. - The combined ratio for the first nine months of 2024 was 95.1%, down 2.6 points from 97.7% in the same period of 2023 [210]. Investment and Capital Management - The company reported a total debt of $8.03 billion, resulting in a debt-to-total capital ratio of 22.5% [158]. - The company's invested assets totaled $95.45 billion as of September 30, 2024, with 94% allocated to fixed maturity and short-term investments [286]. - The carrying value of the fixed maturity portfolio was $83.99 billion, maintaining a weighted average credit quality of "Aa2" [287]. - The company held $12.00 billion in residential mortgage-backed securities as of September 30, 2024, up from $7.82 billion in December 2023 [289]. - The company plans to continue returning capital to shareholders, with dividends and share repurchases likely not exceeding net income over time [315]. Premiums and Underwriting - Gross written premiums for Business Insurance increased to $18.73 billion in the first nine months of 2024, up 9% from $17.18 billion in 2023 [192]. - Total gross written premiums for the first nine months of 2024 were $35.32 billion, a 9% increase compared to $32.52 billion in the same period of 2023 [193]. - Domestic automobile net written premiums were $2.14 billion in Q3 2024, a 6% increase from Q3 2023, and $6.00 billion in the first nine months of 2024, a 9% increase from the same period in 2023 [262]. - The underwriting expense ratio for the first nine months of 2024 was 39.7%, an increase of 2.7 points from 37.0% in the same period of 2023 [232]. - The combined ratio for Q3 2024 was 92.5%, a decrease of 17.5 points from 110.0% in Q3 2023 [255]. Catastrophe and Environmental Claims - Catastrophe losses in Q3 2024 were $939 million, compared to $850 million in Q3 2023, while total catastrophe losses for the first nine months were $3.16 billion, up from $2.87 billion [162]. - The company holds gross claims and claim adjustment expense reserves totaling $2.22 billion for asbestos and environmental claims as of September 30, 2024 [337]. - The company increased its net environmental reserves by $21 million in Q3 2024 and $58 million in the first nine months of 2024, compared to $26 million and $74 million in the same periods of 2023 [280]. - Net asbestos paid loss and loss expenses were $201 million in the first nine months of 2024, up from $156 million in the same period of 2023 [274]. - The preliminary estimate for Hurricane Milton's incurred losses is between $75 million and $175 million for Q4 2024, after reinsurance and before taxes [302]. Market and Competitive Environment - The property and casualty insurance market is expected to remain competitive for new business through 2025, affecting underwriting profitability [299]. - The Company anticipates strong retention levels for expiring premiums during the remainder of 2024 and into 2025 [298]. - The company is focused on strategic initiatives to improve growth, profitability, and competitiveness, including advancements in artificial intelligence [343]. - The company is exposed to risks from high levels of catastrophe losses and changing climate conditions, which could adversely affect its financial position [344]. - The company is subject to regulatory risks that could affect profitability and growth, including changes in tax regulations [348].

Financial Performance - Net income for Q3 2024 was $1,260 million, compared to $404 million in Q3 2023, representing a significant increase of 212% year-over-year[4] - Core income for Q3 2024 reached $1,218 million, up from $454 million in Q3 2023, indicating a growth of 168%[4] - The diluted earnings per share for Q3 2024 was $5.42, compared to $1.74 in Q3 2023, reflecting a year-over-year increase of 212%[4] - Net income for Q3 2023 was $404 million, a decrease from $975 million in Q1 2023, while YTD net income for 3Q2023 reached $1,365 million[10] - Core income for Q3 2023 was $454 million, with a core income per share of $1.97, while YTD core income reached $1,439 million[10] - The company reported a diluted earnings per share of $1.74 for Q3 2023, compared to $4.13 in Q2 2023, with YTD diluted earnings per share of $5.83[10] - Net income for 3Q2024 is $1,365 million, up from $1,260 million in 3Q2023, reflecting an increase of approximately 8.3%[100] Assets and Equity - Total assets at the end of Q3 2024 were $134,588 million, an increase from $121,384 million at the end of Q3 2023, marking a growth of 10.8%[4] - The total equity at the end of Q3 2024 was $27,696 million, up from $19,978 million at the end of Q3 2023, representing a growth of 38.5%[4] - Book value per share at the end of Q3 2024 was $122.00, compared to $87.47 in Q3 2023, indicating a year-over-year increase of 39.4%[4] - The company's total shareholders' equity increased to $27,696 million, up from $24,921 million, reflecting a growth of 11.1%[71] - Common equity increased to $29,807 million from $28,050 million, reflecting a growth of approximately 6.3%[95] Revenue and Premiums - Total revenues for Q3 2024 are projected to be $11,849 million, compared to $10,700 million in Q3 2023, indicating a 10.7% growth[16] - Premiums for Q3 2024 are projected at $10,704 million, compared to $9,718 million in Q3 2023, marking a 10.2% rise[16] - Total revenues for Q3 2023 were $10,635 million, up from $10,098 million in Q2 2023, with YTD revenues of $30,437 million compared to $34,415 million in YTD 3Q2024[10] - Gross written premiums for Q3 2023 were $11,263 million, an increase of 8.8% compared to Q3 2022[19] - Net written premiums for YTD Q3 2024 reached $32,616 million, up 7.9% from $30,207 million in YTD Q3 2023[19] Investment Performance - The company reported net unrealized investment gains of $(9.30) million in Q3 2024, compared to $(28.31) million in Q3 2023, showing an improvement in investment performance[4] - Net investment income for Q3 2024 is expected to reach $742 million, up from $640 million in Q3 2023, a 15.9% increase[16] - Net investment income increased to $458 million in 3Q2023, up from $426 million in 2Q2023, contributing to a year-to-date total of $1,551 million[28] - The average yield pre-tax on investments improved to 3.7% for YTD 3Q2024, compared to 3.2% for the same period in 2023[79] - The company experienced a net realized investment loss of $25 million for YTD 3Q2024, contrasting with a net gain of $94 million in the same period last year[100] Underwriting Performance - The combined ratio improved to 93.2% in Q3 2024 from 101.0% in Q3 2023, reflecting better underwriting performance[13] - The loss and loss adjustment expense ratio decreased to 64.8% in Q3 2024 from 73.0% in Q3 2023, indicating improved claims management[13] - The combined ratio improved to 99.1% in 3Q2023, down from 100.1% in 2Q2023, indicating better underwriting performance[28] - The underwriting gain for 3Q2023 was $190 million, a decrease from $265 million in 3Q2022, with YTD 3Q2023 underwriting gain at $493 million compared to $341 million for YTD 3Q2024[39] - The combined ratio for 1Q2024 improved to 94.6%, down from 104.7% in 1Q2023, showing enhanced underwriting performance[60] Claims and Expenses - Claims and claim adjustment expenses for Q3 2023 were $7,149 million, a decrease from $7,227 million in Q2 2023, with YTD claims totaling $20,335 million[10] - The claims and claim adjustment expenses for Personal Insurance decreased from $9,516 million in YTD 3Q2023 to $9,183 million in YTD 3Q2024, a reduction of 3.5%[47] - The total incurred losses and loss expenses for Q3 2023 amounted to $7,091 million, with a year-to-date total of $20,176 million[90] - Business insurance incurred losses for Q3 2023 were $3,467 million, with a year-to-date total of $9,576 million[90] - The ending reserves for asbestos in Q3 2023 were $1,848 million, reflecting a gross increase from $1,620 million at the beginning of the period[92] Tax and Dividends - The effective tax rate on net investment income for Q3 2024 is projected at 17.9%, compared to 16.8% in Q3 2023[16] - The company declared dividends of $243 million in Q3 2024, slightly down from $232 million in Q3 2023[4] - The effective tax rate on net investment income for Q3 2023 was 16.8%, up from 16.5% in Q2 2023[10] - The company paid dividends totaling $238 million in Q3 2023, which is consistent with the previous quarter's payment of $232 million[102] Strategic Outlook - The company anticipates continued growth in premiums and revenues, projecting Q4 2023 revenues to exceed $11 billion[10] - The company expects continued market expansion and product development, aiming for improved underwriting performance in the upcoming quarters[36] - The company plans to expand its market presence through strategic acquisitions and new product developments in the upcoming quarters[104] - The company has a 20% quota-share reinsurance agreement with subsidiaries of Fidelis Insurance Holdings Limited, enhancing its international operations[108]

Core Insights - Travelers (TRV) is expected to report quarterly earnings of $3.76 per share, reflecting a year-over-year increase of 92.8% and revenues of $11.68 billion, which is a 9.1% increase compared to the previous year [1] - Analysts have revised the consensus EPS estimate upward by 0.2% over the last 30 days, indicating a collective reassessment of forecasts [1] - The relationship between earnings estimate revisions and short-term stock price performance is highlighted as a significant factor for investor behavior [1] Revenue Estimates - The consensus estimate for 'Total Revenues- Net investment income' is $882.72 million, representing a 14.8% increase from the prior-year quarter [2] - 'Total Revenues- Fee income' is projected to reach $113.55 million, indicating a 1.4% increase year-over-year [2] - 'Total Revenues- Premiums' is expected to be $10.58 billion, suggesting an 8.9% year-over-year change [2] Other Revenue Metrics - Analysts estimate 'Total Revenues- Other Revenues' at $99.60 million, which is a decrease of 1.4% from the previous year [3] - The 'Combined Ratio - Consolidated' is projected to be 97.6%, down from 101% in the same quarter last year [3] - The 'Loss and loss adjustment expense ratio - Consolidated' is expected to be 68.3%, compared to 73% a year ago [3] - The 'Underwriting Expense Ratio - Consolidated' is forecasted at 28.5%, slightly up from 28% in the previous year [3] Business Insurance Metrics - The 'Combined Ratio - Business Insurance' is expected to be 96.7%, down from 99.1% in the same quarter last year [4] - 'Combined Ratio - Bond & Specialty Insurance' is projected at 82.4%, an increase from 73.6% a year ago [4] - The 'Underwriting Expense Ratio - Personal Insurance' is estimated at 25.0%, compared to 24.3% in the previous year [4] - 'Underwriting Expense Ratio - Business Insurance' is forecasted to remain at 29.1%, unchanged from the year-ago value [4] Stock Performance - Shares of Travelers have decreased by 0.5% over the past month, contrasting with a 4.9% increase in the Zacks S&P 500 composite [4] - Travelers holds a Zacks Rank 3 (Hold), indicating expectations to mirror overall market performance in the near future [5]