Travelers' stock suffers biggest selloff in 4 years after profit miss

By Tomi Kilgore

The stock's price decline cut more than 100 points off the Dow's price, while the Dow closed down only 46 points

Shares of Travelers Companies Inc. were hit hard Wednesday, after the property casualty insurer missed expectations for first-quarter profit, combined ratio, and net premiums written, while total revenue beat views.

The company also announced an increase in its quarterly dividend to $1.05 a share, which effectively boosted the dividend yield above 2%.

The stock (TRV) took a 7.4% to $7.41, which was the lowest closing since Jan. 18.

The stock's percentage selloff was the biggest since it sank 8.6% on June 11, 2020, and marked the worst one-day post-earnings performance since it tumbled 8.3% after quarterly results were reported on Oct. 19, 2019. The $16.54 price decline shaved about 108 points off the Dow Jones Industrial Average's DJIA price, while the Dow fell 45.66 points, or 0.1%.

And despite missing Wall Street's expectations, the company touted its "excellent" profit results and record earned premiums.

"The year is off to a terrific start, with strong profitability and production in all three segments, as well as higher investment income," said Chief Executive Alan Schnitzer. "In short, we're firing on all cylinders."

Net income rose to $1.12 billion, or $4.80 a share, from $975 million, or $4.13 a share, in the same period a year ago. Excluding nonrecurring items, core earnings per share of $4.69 was below the FactSet consensus of $4.92.

That was the third profit miss in the past four quarters, according to FactSet data.

The combined ratio, a measure of profitability for insurers - the lower the better - fell to 93.9% from 95.4% as catastrophe losses grew 33% to $712 million while underwriting gains jumped 57% to $577 million. However, that was above the FactSet consensus of 93.2%.

Total revenue increased 15.7% to $11.23 billion, above the FactSet consensus of $11.18 billion, but net premiums written rose 8.4% to $10.18 billion to miss expectations of $10.4 billion and net earned premiums increased 14% to a record $10.13 billion but came up shy of expectations of $10.16 billion.

Meanwhile, the company raised its quarterly dividend by five cents to $1.05 a share. Based on current stock prices, the new annual dividend rate of $4.20 a share implies a dividend yield of 2.03%. That compares with the implied yield for the S&P 500 of 1.44%.

The stock has gained 8.5% year to date, while the SPDR S&P Insurance ETF (KIE) has tacked on 5.5% and the S&P 500 index SPX has advanced 5.3%.

-Tomi Kilgore

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04-17-24 1624ET

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