Will Travelers' Beat Streak Continue in This Earnings Season?

The Travelers' Companies, Inc. TRV is set to report first-quarter 2025 earnings on April 16. The company delivered an earnings beat in three of the last four reported quarters while missing in one. 

See the Zacks Earnings Calendar to stay ahead of market-making news. 

Factors to Consider 

Better performances across all three segments are likely to aid Travelers’ first-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 $10.9 billion, indicating an increase of 8.3% from the year-ago reported number. We estimate premiums to increase 7.9% to $10.9 billion. 

Higher average yield, growth in fixed maturity investments and higher private equity partnership returns 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 $710 million for the first quarter of 2025. The Zacks Consensus Estimate is currently pegged at $952 million, implying an increase of 12.5% from the year-ago reported number. We estimate net investment income to increase 9.6% to $927 million. 

The Personal Insurance segment is likely to have benefited from continued strong renewal premium change, particularly in the Homeowners business. The Zacks Consensus Estimate is currently pegged at $4.3 billion, indicating an increase of 8.3% from the year-ago reported number. We estimate premiums at Personal Insurance to be $4.1 billion, suggesting an improvement of 4.3% from the year-ago reported figure.  

The Bond & Specialty Insurance segment is likely to have benefited from higher business volumes and production growth in both surety and management liability. The Zacks Consensus Estimate is currently pegged at $1 billion, indicating an increase of 8.2% from the year-ago reported number. We estimate earned premiums at Bond & Specialty Insurance to be $1 billion, suggesting an improvement of 8% from the year-ago reported figure. 

Strong renewal premium change and retention are likely to have aided premiums at Business Insurance. The Zacks Consensus Estimate is currently pegged at $5.5 billion, indicating an increase of 7.7% from the year-ago reported number. We estimate earned premiums at Business Insurance to be $5.7 billion, suggesting an improvement of 10.6% 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 $12.1 billion, indicating an 8.5% 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, catastrophe losses relating to the recent California wildfires are likely to have weighed on the improvement. We estimate combined ratio to be 102.7. The Zacks Consensus Estimate is currently pegged at 104, indicating deterioration of 1000 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 21.8% in the to-be-reported quarter to $12 billion.  

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

The Zacks Consensus Estimate for first-quarter 2025 earnings per share is pegged at 62 cents, suggesting a decrease of 86.7% 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 a stock needs to have 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 +78.50%. This is because the Most Accurate Estimate of $1.11 is pegged higher than the Zacks Consensus Estimate of 62 cents. 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 #3. 

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: 

Chubb Limited CB has an Earnings ESP of +0.30% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $3.26, indicating a year-over-year decrease of 39.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Cincinnati Financial Corporation CINF has an Earnings ESP of +2.00% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at a loss of 50 cents, indicating a year-over-year decrease of 129%.

CINF’s earnings beat estimates in three of the last four reported quarters and missed in one.

First American Financial Corporation FAF has an Earnings ESP of +5.85% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at 67 cents, indicating a year-over-year increase of 48.8%. 

FAF’s earnings beat estimates in three of the last four reported quarters and missed in one. 

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research