Why Is Travelers (TRV) Down 0.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Travelers (TRV). Shares have lost about 0.1% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Travelers due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Travelers Q4 Earnings Surpass Estimates on Higher Underwriting GainThe Travelers Companies  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. Behind Q4 HeadlinesTravelers’ 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.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 UpdateBusiness 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 HighlightsTravelers 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 UpdateThis 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 Mar. 10, 2025.How Have Estimates Been Moving Since Then?It turns out, estimates review have trended downward during the past month.The consensus estimate has shifted -90.35% due to these changes.VGM ScoresAt this time, Travelers has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Travelers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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. 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