Travelers Earnings: Strong Quarter Despite Catastrophes and Ongoing Issues in Personal Auto

Travelers' result remained somewhat mixed in the first quarter, as the company continued to see tailwinds on the commercial side of its business partially offset by headwinds on the personal side. Additionally, the insurer experienced a relatively high level of catastrophe losses in the quarter, due to severe wind and hail storms across multiple states. Still, we see the annualized core return on equity of 15% as a good result for the narrow-moat firm, and this level suggests that, on balance, the operating environment is favorable for Travelers. We will maintain our $194 per share fair value estimate.