Travelers Earnings: Catastrophe Losses Ding Quarter; Underlying Results Mixed

Elevated catastrophe losses of $1.5 billion in the second quarter (representing 16.1% of net earned premiums and roughly double last year's level of losses on an absolute basis) pushed narrow-moat Travelers to a loss of $14 million in the second quarter. Excluding catastrophes, Travelers continued to see tailwinds on the commercial side of the business and headwinds on the personal side; both sides roughly maintained their recent trajectories. We will maintain our $194 fair value estimate and see the shares as modestly undervalued.