It has been about a month since the last earnings report for Travelers (TRV). Shares have added about 7.7% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Travelers due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Travelers Q4 Earnings Beat on Strong Net Investment Income
The Travelers Companies reported fourth-quarter 2025 core income of $11.13 per share, which beat the Zacks Consensus Estimate by 32% and improved 22% year over year. The improvement was primarily due to a higher underlying underwriting gain, improved net investment income, lower catastrophe losses, and higher net favorable prior year reserve development.
Behind Q4 Headlines
Travelers’ total revenues increased 3.2% from the year-ago quarter to $12.4 billion, primarily driven by higher premiums, net investment income, and other revenues. The top line beat the Zacks Consensus Estimate by 0.08%.
Net written premiums increased 1% year over year to a record $10.8 billion, driven by strong growth across Business Insurance and Bond & Specialty Insurance segments.
Net investment income increased 10.3% year over year to $1 billion, primarily due to growth in average invested assets and a higher average yield in the long-term fixed income investment portfolio. The figure matched the Zacks Consensus Estimate.
Catastrophe loss was $95 million, pre-tax, narrower than a loss of $175 million, pre-tax, incurred in the year-ago quarter.
Travelers witnessed an underwriting gain of $1.7 billion, up 21.7% year over year. The consolidated underlying combined ratio of 82.2 improved 180 basis points (bps) year over year. The combined ratio improved 300 bps year over year to 80.2, driven by an improvement in the underlying combined ratio, lower catastrophe losses, and higher net favorable prior year reserve development. The Zacks Consensus Estimate was pegged at 87.
Segment Update
Business Insurance: Net written premiums increased 2% year over year to about $5.5 billion, reflecting growth of 4% in Select Accounts small commercial business and 3% in core Middle Market business. It was partially offset by a decline in net written premiums in National Property, reflecting disciplined underwriting.
The combined ratio improved 80 bps year over year to 84.4 due to higher net favorable prior year reserve development and lower catastrophe losses. It was partially offset by a higher underlying combined ratio. The Zacks Consensus Estimate was pegged at 90.
Segment income of $1.3 billion increased 8.7% year over year, primarily due to higher net investment income, higher net favorable prior year reserve development, and lower catastrophe losses, partially offset by a lower underlying underwriting gain.
Bond & Specialty Insurance: Net written premiums increased 4% year over year to $1 billion, reflecting production growth in both surety and management liability.
The combined ratio deteriorated 30 bps year over year to 83 due to lower net favorable prior year reserve development. It was partially offset by a lower underlying combined ratio and lower catastrophe losses. The Zacks Consensus Estimate was pegged at 84.
Segment income of $236 million increased 3.5% year over year due to higher net investment income and a higher underlying underwriting gain. It was partially offset by lower net favorable prior year reserve development. The underlying underwriting gain benefited from higher business volumes.
Personal Insurance: Net written premiums of $4.2 billion remained flat year over year.
The combined ratio improved 670 bps year over year to 74% due to an improvement in the underlying combined ratio, lower catastrophe losses, and higher net favorable prior year reserve development. The Zacks Consensus Estimate was pegged at 85.
Segment income was $1 billion, up 36% year over year, driven by a higher underlying underwriting gain, lower catastrophe losses, higher net investment income and higher net favorable prior year reserve development.
Full-Year Highlights
Travelers reported 2025 core income of $27.59 per share, up 28% from 2024. The figure beat the Zacks Consensus Estimate of $24.89 per share.
Net written premiums increased 2% year over year to a record $44.4 billion.
Travelers witnessed an underwriting gain of $3.4 billion, which grew 42.6% year over year. The combined ratio of 89.9 improved 260 bps year over year.
Core return on equity expanded 220 basis points to 19.4%.
Adjusted book value per share of $158.01 was up 14% from 2024.
At 2025-end, statutory capital and surplus were $31.06 billion, and the debt-to-capital ratio was 22%, which improved 40 bps year over year.
Dividend and Share Repurchase Update
This property and casualty insurer returned $1.89 billion. Travelers repurchased 5.8 million shares in the fourth quarter for $1.65 billion. As of Dec. 31, 2025, TRV had $2.01 billion remaining under its share repurchase authorizations.
The board also authorized an additional $5 billion of share repurchases. This amount is in addition to the $2.01 billion. The board also announced a quarterly dividend of $1.10 per share. The dividend will be paid out on Mar 31, 2026, to shareholders of record at the close of business on Mar 10, 2026.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
VGM Scores
At this time, Travelers has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Travelers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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The Travelers Companies, Inc. (TRV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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