Travelers Earnings: Another Strong Quarter Due to Industry Tailwinds

Travelers delivered strong fourth-quarter results as it continues to benefit from multiple industry tailwinds. The annualized return on equity of 30% is well above our long-term expectations for the narrow-moat company. We will maintain our $214 fair value estimate and see the shares as modestly overvalued. We think the market is overly focused on the positive near-term picture for Travelers and its property-casualty insurance peers and is not fully factoring in the fact that returns will ultimately normalize.