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Travelers Drops, And Is Starting To Look Very Interesting
TRVTravelers(TRV) Seeking Alpha·2024-07-19 20:28

Core Viewpoint - The Travelers Companies, Inc. is positioned for significant premium growth and earnings due to inflation in insurance premiums, despite experiencing a recent selloff following Q2 earnings that exceeded analyst expectations [1][2] Financial Performance - Q2 net income was reported at 534millionandcoreincomeat534 million and core income at 585 million, significantly impacted by catastrophe losses of 1.509billionpretax[2]Theconsolidatedcombinedratioimprovedto100.21.509 billion pre-tax [2] - The consolidated combined ratio improved to 100.2%, a 6-point improvement from the previous year, while the underlying combined ratio was 87.7%, a 3.4-point improvement [2] - Net written premiums rose by 8% to a record 11.12 billion, driven by pricing power, new business, and strong renewal rates across segments [2] Segment Analysis - Business Insurance saw net written premiums grow by 7% to over 5.5 billion, with significant new business growth [2] - Bond & Specialty Insurance experienced an 8% increase in net written premiums to 1.04 billion, with a combined ratio of 87.7%, up 10.6 points from the previous year [2] - Personal Insurance faced a loss of 153millionduetocatastrophelossesbutstillachieved9153 million due to catastrophe losses but still achieved 9% premium growth, primarily from higher pricing [2] Shareholder Value - The company has a strong buyback policy, repurchasing 1.2 million shares at an average price of 211.24 per share, costing 253million,with253 million, with 5.54 billion remaining under share repurchase authorizations [3] - The quarterly dividend is 1.05,withexpectationsforannualincreasesasnetpremiumgrowthcontinues,appealingtodividendgrowthinvestors[3]FutureOutlookPremiumsareexpectedtocontinuegrowing,supportedbypricingpowerandastrongmarketposition,despitetheinherentvolatilityfromcatastrophelosses[4]Thecurrentpullbackinstockpricepresentsabuyingopportunity,particularlyifsharesfallbelow1.05, with expectations for annual increases as net premium growth continues, appealing to dividend growth investors [3] Future Outlook - Premiums are expected to continue growing, supported by pricing power and a strong market position, despite the inherent volatility from catastrophe losses [4] - The current pullback in stock price presents a buying opportunity, particularly if shares fall below 200 [4]