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Travelers (TRV.US) Gains 4% in Premarket After Q1 Earnings

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The Travelers Companies (TRV.US), US insurance company and a Dow Jones index member, reported Q1 2023 earnings today ahead of the Wall Street session open. When it comes to headline results, the earnings report turned out to be mixed. Nevertheless, shares of the company trade around 4% higher in premarket today. Let’s take a quick look at the release.

Q1 earnings highlights

  • Core EPS: $4.11 vs $3.58 expected (-3% YoY)
  • Revenue: $9.70 billion vs $9.81 billion expected (+10% YoY)
  • Net written premiums: $9.40 billion (+12% YoY)
  • Net Investment Income: $663 million vs $686.4 million expected (+4% YoY)
  • Net Income: $975 million (-4% YoY)
  • Combined ratio: 95.4% vs 91.3% in Q1 2022
  • Underlying combined ratio: 90.6% vs 91.2% in Q1 2022
  • 8% increase in quarterly dividend, to $1.00 per share
  • Additional $5 billion added to buyback programme

Travelers reported a 10% YoY jump in revenue, to $9.70 billion, driven by 12% Yoy increase in net written premiums. However, analysts expected even more as the median forecast pointed to a $9.81 billion in revenue. Situation looked completely opposite when it comes to earnings – while profit dropped year-over-year, it was significantly higher than expected by the market. Company said in a statement that the drop in earnings was driven by higher catastrophe losses. 

A jump in net written premiums was driven primarily by 15% YoY increase in business insurance premiums as well as 12% YoY jump in personal insurance premiums. Net written premiums from Bond & Specialty Insurance were more or less flat year-over-year ($886 million vs $882 million in Q1 2022). However, a rather big jump in combined ratio – from 91.3 to 95.4% – shows that the company’s insurance business performed worse than a year ago. However, readings below 100% indicate that the company made profit on its insurance business and it is a positive given that insurance is Travelers’ main business.

While Q1 earnings from Travelers’ were rather mixed, stock is trading higher in premarket. This comes after the company’s Board made an announcement that usually lifts share prices – buyback programme was expanded! Board authorized additional $5 billion buybacks as well as announced an 8% YoY increase in quarterly dividend, to $1.00 per share. This is 19 consecutive years of Travelers increasing its dividend.

Travelers (TRV.US) trades almost 4% higher in premarket following release of Q1 2023 earnings, or more precisely – an announcement of buyback programme expansion. Stock is set to open above the $174 resistance zone that limit recent upward impulse. The next resistance zone to watch can be found ranging above the $180 mark. Source: xStation5

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