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The Travelers Companies (TRV - Free Report) reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%.
The bottom line more than doubled from the year-ago quarter, driven by a higher underlying underwriting gain, improved net favorable prior-year reserve development and higher net investment income. It was partially offset by higher catastrophe losses.
The Travelers Companies, Inc. Price, Consensus and EPS Surprise
Travelers’ total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.
Net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion.
Net investment income increased 18% year over year to $904 million, primarily due to a higher average yield and growth in fixed maturity investments and higher private equity partnership returns. The figure was higher than our estimate of $868.7 million. The Zacks Consensus Estimate was pegged at $883 million.
Catastrophe loss was $939 million, pre-tax, wider than a loss of $850 million, pre-tax, incurred in the year-ago quarter.
Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 basis points (bps) year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 97.
Core return on equity expanded 970 basis points to 16.6%. Adjusted book value per share (excludes net unrealized investment gains/losses) of $131.30 increased 13% year over year. At quarter-end, statutory capital and surplus were $26.191 billion and the debt-to-capital ratio was 22.5%.
Segment Update
Business Insurance: Net written premiums increased 9% year over year to about $5.51 billion, reflecting strong renewal premium change and retention. Business Insurance net written premiums matched our estimate.
The combined ratio improved 330 bps year over year to 95.8 on lower net unfavorable prior-year reserve development and an improvement in the underlying combined ratio, partially offset by higher catastrophe losses. Our estimate was 97.8. The Zacks Consensus Estimate was pegged at 97.
Segment income of $698 million increased 49% year over year on lower net unfavorable prior-year reserve development, a higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. The figure was lower than our estimate of $795.7 million.
Bond & Specialty Insurance: Net written premiums increased 7% year over year to $1 billion, reflecting strong production in both surety and management liability. Our estimate was $970.6 million.
The combined ratio deteriorated 890 bps year over year to 82.5 due to higher underlying combined ratio and lower net favorable prior-year reserve development, partially offset by lower catastrophe losses. Our estimate was 74.9. The Zacks Consensus Estimate was pegged at 82.
Segment income of $222 million decreased 16.2% year over year due to lower net favorable prior-year reserve development and a lower underlying underwriting gain, partially offset by higher net investment income. The underlying underwriting gain benefited from higher business volumes. The figure was lower than our estimate of $259.5 million.
Personal Insurance: Net written premiums of $4.72 billion increased 7% year over year, reflecting a strong renewal premium change in both Domestic Homeowners and Other and Automobile. Our estimate was $4 billion.
The combined ratio improved 1,750 bps year over year to 92.5, driven by an improvement in the underlying combined ratio, higher net favorable prior-year reserve development and lower catastrophe losses. Our estimate was 109.6. The Zacks Consensus Estimate was pegged at 102.
Segment income was $384 million after-tax against the segment loss of $193 million in the prior-year quarter, attributable to a higher underlying underwriting gain, higher net favorable prior-year reserve development, lower catastrophe losses and higher net investment income. The underlying underwriting gain benefited from higher business volumes. Our estimate was a loss of $108.5 million.
Dividend and Share Repurchase Update
This property and casualty insurer returned $496 million to shareholders in the third quarter of 2024. It bought back 1.1 million shares for $253 million in the third quarter. At the end of September 2024, TRV had $5.29 billion remaining under its authorization.
The board also announced a quarterly dividend of $1.05 per share. The dividend will be paid out on Dec. 31, 2024, to shareholders of record at the close of business on Dec. 10, 2024.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.
Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 basis points (bps) from the prior-year quarter’s level to 89.
Upcoming Releases
RLI Corporation (RLI - Free Report) is slated to report third-quarter 2024 results on Oct. 21, after market close. The Zacks Consensus Estimate for third-quarter earnings per share is pegged at 94 cents, indicating an increase of 54.1% from the year-ago quarter’s reported figure.
RLI’s earnings beat estimates in each of the last four reported quarters.
W.R. Berkley Corporation (WRB - Free Report) will report third-quarter 2024 results on Oct. 21, before market open. The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $3.99, suggesting an increase of 21.6% from the year-ago quarter’s reported figure.
WRB’s earnings beat estimates in each of the last four reported quarters.
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Travelers Q3 Earnings & Revenues Surpass Estimates, Premiums Rise Y/Y
The Travelers Companies (TRV - Free Report) reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%.
The bottom line more than doubled from the year-ago quarter, driven by a higher underlying underwriting gain, improved net favorable prior-year reserve development and higher net investment income. It was 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 Q3 Headlines
Travelers’ total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.
Net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion.
Net investment income increased 18% year over year to $904 million, primarily due to a higher average yield and growth in fixed maturity investments and higher private equity partnership returns. The figure was higher than our estimate of $868.7 million. The Zacks Consensus Estimate was pegged at $883 million.
Catastrophe loss was $939 million, pre-tax, wider than a loss of $850 million, pre-tax, incurred in the year-ago quarter.
Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 basis points (bps) year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 97.
Core return on equity expanded 970 basis points to 16.6%. Adjusted book value per share (excludes net unrealized investment gains/losses) of $131.30 increased 13% year over year. At quarter-end, statutory capital and surplus were $26.191 billion and the debt-to-capital ratio was 22.5%.
Segment Update
Business Insurance: Net written premiums increased 9% year over year to about $5.51 billion, reflecting strong renewal premium change and retention. Business Insurance net written premiums matched our estimate.
The combined ratio improved 330 bps year over year to 95.8 on lower net unfavorable prior-year reserve development and an improvement in the underlying combined ratio, partially offset by higher catastrophe losses. Our estimate was 97.8. The Zacks Consensus Estimate was pegged at 97.
Segment income of $698 million increased 49% year over year on lower net unfavorable prior-year reserve development, a higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. The figure was lower than our estimate of $795.7 million.
Bond & Specialty Insurance: Net written premiums increased 7% year over year to $1 billion, reflecting strong production in both surety and management liability. Our estimate was $970.6 million.
The combined ratio deteriorated 890 bps year over year to 82.5 due to higher underlying combined ratio and lower net favorable prior-year reserve development, partially offset by lower catastrophe losses. Our estimate was 74.9. The Zacks Consensus Estimate was pegged at 82.
Segment income of $222 million decreased 16.2% year over year due to lower net favorable prior-year reserve development and a lower underlying underwriting gain, partially offset by higher net investment income. The underlying underwriting gain benefited from higher business volumes. The figure was lower than our estimate of $259.5 million.
Personal Insurance: Net written premiums of $4.72 billion increased 7% year over year, reflecting a strong renewal premium change in both Domestic Homeowners and Other and Automobile. Our estimate was $4 billion.
The combined ratio improved 1,750 bps year over year to 92.5, driven by an improvement in the underlying combined ratio, higher net favorable prior-year reserve development and lower catastrophe losses. Our estimate was 109.6. The Zacks Consensus Estimate was pegged at 102.
Segment income was $384 million after-tax against the segment loss of $193 million in the prior-year quarter, attributable to a higher underlying underwriting gain, higher net favorable prior-year reserve development, lower catastrophe losses and higher net investment income. The underlying underwriting gain benefited from higher business volumes. Our estimate was a loss of $108.5 million.
Dividend and Share Repurchase Update
This property and casualty insurer returned $496 million to shareholders in the third quarter of 2024. It bought back 1.1 million shares for $253 million in the third quarter. At the end of September 2024, TRV had $5.29 billion remaining under its authorization.
The board also announced a quarterly dividend of $1.05 per share. The dividend will be paid out on Dec. 31, 2024, to shareholders of record at the close of business on Dec. 10, 2024.
Zacks Rank
Travelers currently carries a Zacks Rank #3 (Hold). 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 - Free Report) third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.
Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 basis points (bps) from the prior-year quarter’s level to 89.
Upcoming Releases
RLI Corporation (RLI - Free Report) is slated to report third-quarter 2024 results on Oct. 21, after market close. The Zacks Consensus Estimate for third-quarter earnings per share is pegged at 94 cents, indicating an increase of 54.1% from the year-ago quarter’s reported figure.
RLI’s earnings beat estimates in each of the last four reported quarters.
W.R. Berkley Corporation (WRB - Free Report) will report third-quarter 2024 results on Oct. 21, before market open. The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $3.99, suggesting an increase of 21.6% from the year-ago quarter’s reported figure.
WRB’s earnings beat estimates in each of the last four reported quarters.