Travelers' stock jumps toward a record as lower catastrophe losses boost profit

By Tomi Kilgore

Insurer's stock heads for longest weekly win streak in nearly 5 years

Shares of Travelers Companies Inc. surged into record territory Friday, after the property casualty insurer said lower catastrophe losses and higher underlying underwriting gains helped produce record profits.

Catastrophes costs, net of insurance, improved to $125 million from $459 million in the same period a year ago, while underwriting gains improved to $1.38 billion from $449 million.

That helped improve the combined ratio, a measure of profitability for insurers that expresses expenses and incurred losses relative to premiums earned - the lower the ratio the better - to 85.8% from 94.5%, well below the FactSet consensus of 94.1%.

The stock (TRV) ran up 4.6% toward a seventh straight gain in midday trading, and a sixth straight record close. It was also headed for a sixth straight weekly gain, the longest such streak since the seven-week stretch that ended May 24, 2019.

The $9.19 price gain for the stock was adding about 61 points to the Dow Jones Industrial Average's DJIA price, which was up 144 points, or 0.4%.

Regarding underlying underwriting income, the company said on the post-earnings conference call with analysts that 2023 marked the first time it exceeded $3 billion, just three years after crossing above $2 billion for the first time. That marks a sharp acceleration from the $1.3 billion the company averaged from 2012 to 2019.

Net income nearly doubled to a record $1.63 billion, or $6.99 a share, from $819 million, or $3.44 a share, in the year-ago period. Excluding nonrecurring items, core earnings per share more than doubled to $7.01 from $3.40, well above the FactSet consensus of $5.10.

"Core income, earnings per share and return on equity were all record highs for the quarter, driven by both underwriting and investment results," said Chief Executive Alan Schnitzer.

Meanwhile, total revenue grew 13.4% to $10.93 billion, below the FactSet consensus of $11.17 billion, as net premiums written increased 13.2% to $9.99 billion to miss expectations of $10.40 billion.

Travelers' stock has rallied 26.6% over the past three months, while the SPDR S&P Insurance ETF (KIE) has gained 8.5% and the S&P 500 has advanced 12.3%.

-Tomi Kilgore

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01-19-24 1222ET

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