The Travelers Companies, Inc. TRV is set to report fourth-quarter 2024 earnings on Jan. 22. The company delivered an earnings beat in three of the last four reported quarters while missing in one.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Factors to Consider

Better performances across all three segments are likely to aid Travelers’ fourth-quarter results.

Premiums are likely to have benefited from better pricing, solid renewal rate change, strong retention and exposure growth. The Zacks Consensus Estimate is currently pegged at $10.8 billion, indicating an increase of 8.3% from the year-ago reported number. We estimate premiums to increase 8.3% to $10.8 billion.

A higher average level of invested assets, better results from the fixed-income portfolio and strong returns from the non-fixed-income portfolio are likely to aid investment results in the to-be-reported quarter. Management estimates fixed income NII, including earnings from short-term securities, to be approximately $700 million for the fourth quarter of 2024. The Zacks Consensus Estimate is currently pegged at $926 million, implying an increase of 18.6% from the year-ago reported number. We estimate net investment income to increase 13% to $884.5 million.

The Personal Insurance segment is likely to have benefited from strong renewal price in both auto and homeowners business. The Zacks Consensus Estimate is currently pegged at $4.3 billion, indicating an increase of 9% from the year-ago reported number. We estimate earned premiums at Personal Insurance to be $4.2 billion, suggesting an improvement of 4.7% from the year-ago reported figure.

The Bond & Specialty Insurance segment is likely to have benefited from solid retention in the high-quality management liability business and strong production in the market-leading surety business. The Zacks Consensus Estimate is currently pegged at $1 billion, indicating an increase of 8.8% from the year-ago reported number. We estimate earned premiums at Personal Insurance to be $1 billion, suggesting an improvement of 7.2% from the year-ago reported figure.

Strong contributions from liability coverages are likely to have aided premiums at Business Insurance. The Zacks Consensus Estimate is currently pegged at $6.3 billion, indicating an increase of 10% from the year-ago reported number. We estimate earned premiums at Personal Insurance to be $5.6 billion, suggesting an improvement of 11.4% from the year-ago reported figure.

An increase in net written premiums coupled with higher net investment income and other revenues is likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $11.9 billion, indicating a 9.1% increase from the year-ago reported figure.

Better pricing and increased exposure coupled with prudent underwriting are expected to have aided underwriting profitability, which, in turn, is expected to have led to an improvement in the combined ratio. However, losses from Hurricane Milton are likely to have weighed on the improvement. We estimate combined ratio to be 89. The Zacks Consensus Estimate is currently pegged at 90, indicating an improvement of 300 basis points from the year-ago reported number.

However, expenses are expected to have risen on higher claims and claim adjustment expenses, amortization of deferred acquisition costs, general and administrative expenses, as well as interest expenses. We estimate expenses to increase 14.4% in the to-be-reported quarter to $10.2 billion. 

Continued share buybacks are anticipated to have provided an additional boost to the bottom line.

The Zacks Consensus Estimate for fourth-quarter 2024 earnings per share is pegged at $6.53, suggesting a decrease of 6.9% from the year-ago reported figure. 

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Travelers this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). 

Earnings ESP: Travelers has an Earnings ESP of +8.12%. This is because the Most Accurate Estimate of $7.06 is pegged higher than the Zacks Consensus Estimate of $6.53. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

The Travelers Companies, Inc. Price and EPS Surprise

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

Zacks Rank: Travelers currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are three P&C insurance stocks you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Selective Insurance SIGI has an Earnings ESP of +5.95% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at $1.98, indicating a year-over-year increase of 2.1%

SIGI’s earnings beat estimates in one of the last four reported quarters while missing in the other three.

RenaissanceRe RNR has an Earnings ESP of +11.31% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at $7.39, indicating a year-over-year decrease of 37.2%.

RNR’s earnings beat estimates in each of the last four reported quarters.

W.R. Berkley Corporation WRB has an Earnings ESP of +0.38% and currently carries a Zacks Rank of 3. The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 95 cents, implying a decrease of 2.1% from the year-ago reported figure.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report

W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report

Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research