The Travelers Companies TRV reported fourth-quarter 2024 core income of $9.15 per share, which beat the Zacks Consensus Estimate by 39.3% and improved 30.5% year over year. The improvement was primarily due to a higher underlying underwriting gain, an increase in net investment income and higher net favorable prior-year reserve development, partially offset by higher catastrophe losses. 

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Behind Q4 Headlines

Travelers’ total revenues increased 10.4% from the year-ago quarter to $11.9 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1%.

Net written premiums increased 7% year over year to a record $10.7 billion, driven by strong growth across all three segments. Our estimate was $10.8 billion.

The Travelers Companies, Inc. Price, Consensus and EPS Surprise

The Travelers Companies, Inc. price-consensus-eps-surprise-chart | The Travelers Companies, Inc. Quote

Net investment income increased 26% year over year to $955 million, primarily due to a higher average yield and growth in fixed maturity investments and higher private equity partnership returns. The figure was higher than our estimate of $884.9 million. The Zacks Consensus Estimate was pegged at $926 million.

Catastrophe loss was $175 million, pre-tax, wider than a loss of $125 million, pre-tax, incurred in the year-ago quarter.

Travelers witnessed an underwriting gain of $1.4 billion, up 30.5% year over year. The consolidated underlying combined ratio of 84 improved 190 basis points (bps) year over year. The combined ratio improved 260 bps year over year to 83.2, driven by strong underlying profitability and higher net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 90.

Segment Update

Business Insurance: Net written premiums increased 9% year over year to about $5.4 billion, up 8%, reflecting strong renewal premium change and retention. Our estimate was $5.6 billion.

The combined ratio improved 130 bps year over year to 85.2 due to higher net favorable prior-year reserve development and an improvement in the underlying combined ratio, partially offset by higher catastrophe losses. Our estimate was 87.8. The Zacks Consensus Estimate was pegged at 90.

Segment income of $1.2 billion increased 24.1% year over year, primarily due to higher net investment income, a higher underlying underwriting gain and higher net favorable prior-year reserve development, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. Our estimate was $1.1 billion.

Bond & Specialty Insurance: Net written premiums increased 7% year over year to $1 billion, reflecting production growth in both surety and management liability. Our estimate was $1 billion.

The combined ratio deteriorated 540 bps year over year to 82.7 due to a higher underlying combined ratio, partially offset by higher net favorable prior-year reserve development and lower catastrophe losses. Our estimate was 76.6. The Zacks Consensus Estimate was pegged at 83.

Segment income of $228 million decreased 5% year over year due to a lower underlying underwriting gain, partially offset by higher net investment income and higher net favorable prior-year reserve development. The underlying underwriting gain benefited from higher business volumes. The figure was lower than our estimate of $236.1 million.

Personal Insurance: Net written premiums of $4.3 billion increased 7% year over year, reflecting a strong renewal premium change. Our estimate was $4.2 billion.

The combined ratio improved 610 bps year over year to 80.7 due to an improvement in the underlying combined ratio, higher net favorable prior year reserve development and lower catastrophe losses. Our estimate was 95.5. The Zacks Consensus Estimate was pegged at 92.

Segment income was $798 million, up 53% year over year, driven by higher underlying underwriting gain, increased net investment income and higher net favorable prior-year reserve development. The underlying underwriting gain was due to higher business volumes. Our estimate was a loss of $131.2 million.

Full-Year Highlights

Travelers reported 2024 core income of $21.58 per share, up 64.3% from 2023. The figure beat the Zacks Consensus Estimate of $19 per share. 

Net written premiums increased 8% year over year to a record $43.3 billion. Our estimate was $41.9 billion.

Travelers witnessed an underwriting gain of $2.4 billion, which more than doubled year over year. The combined ratio of 92.5 improved 450 basis points (bps) year over year. 

Core return on equity expanded 570 basis points to 17.2%.
 
Adjusted book value per share of $139.04 was up 13% from 2023. 

At 2024-end, statutory capital and surplus were $27.7 billion, and the debt-to-capital ratio was 22.4%.

Dividend and Share Repurchase Update

This property and casualty insurer returned more than $2.1 billion of excess capital to shareholders through dividends and share repurchases in 2024. 

It bought back 1 million shares for $252 million in the fourth quarter. At the end of 2024, TRV had $5.04 billion remaining under its authorization.

The board also announced a quarterly dividend of $1.05 per share. The dividend will be paid out on March 31, 2025, to shareholders of record at the close of business on March 10, 2025.

Zacks Rank

TRV currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

The Progressive Corporation PGR will report fourth-quarter 2024 results on Jan. 29, before market open. The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $3.43, suggesting an increase of 15.9% from the year-ago quarter’s reported figure.

PGR’s earnings beat estimates in the last four quarters.

Chubb Limited CB will report fourth-quarter 2024 results on Jan. 28, after market close. The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $5.50 per share, indicating a decrease of 33.7% from the year-ago quarter’s reported figure.

CB’s earnings beat estimates in the last four quarters.

W.R. Berkley Corporation WRB will report fourth-quarter 2024 results on Jan.27, after market close. The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 94 cents, suggesting a decrease of 3.1% from the year-ago quarter’s reported figure.

WRB’s earnings beat estimates in the last four reported quarters.

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