Travelers stock advances strongly on Q4 underwriting margins, investment gains

Travelers hits earnings expectation out of the park in Q4.
Revenue rises 20% above same quarter in 2023.
Underwriting margins expand, and investment income soars.
Market surges as Netflix earnings pull NASDAQ higher.

Clay Webster FXStreet

The Travelers Companies (TRV) stock shot up more than 6% in the morning session on Wednesday. The insurer’s share price has been hurt as one of the top three home insurers to bear the brunt of the Los Angeles fires in recent weeks, so the fourth-quarter results released on Wednesday were a welcome respite.

The Dow Jones Industrial Average (DJIA) rose more than 0.3% in the session that saw the NASDAQ surge 1.3% and the S&P 500 reach a new all-time high. Johnson & Johnson (JNJ), another Dow member like Travelers, slipped 2.5% following sullen 2025 guidance. The market rally largely stemmed from excitement over Netflix (NFLX) earnings with shares of the streamer exploding more than 12%.

Travelers stock news

Earnings exploded in Q4, which did not have any of the losses attributed to the LA fires that began in early January. Management said that better underwriting margins and investment portfolio gains contributed to the outperformance.

Net written premiums of $10.74 billion rose 7% from a year prior.

Adjusted earnings per share (EPS) of $9.15 came in $2.54 above the Wall Street consensus. This amounted to a nearly 31% gain compared to the same period a year ago.

Likewise, $12.01 billion in revenue in Q4 was $1.21 billion above consensus. The topline figure advanced more than 20% from a year earlier.

"Earned premiums and underwriting margins were strong in all three segments," said Travelers CEO and Chair Alan Schnitzer.

Pre-tax net investment income increased 23% YoY, and Schnitzer boasted that the post-tax figure hit $785 million in the quarter.

The consolidated combined ratio improved by 2.6 percentage points YoY to 83.2%, and book value per share gained 13% from a year earlier.

Catastrophic losses, particularly stemming from Hurricane Milton in the fourth quarter, came in surprisingly low at $175 million gross. This compares with $939 million one quarter earlier.

Travelers stock forecast

Travelers stock has recently faced pushback after fulfilling a double-top pattern in October and November of last year. Both instances of that rally petered out at $269. So the downtrend that insued for much of December and into January made sense.

After slumping below the 100-day Simple Moving Average (SMA), TRV stock found support near the $232 historical resistance-turned-support level. Now encircling the $250 area, TRV needs to overcome $269 again. Otherwise, it is in for a long-term consolidation.

TRV daily stock chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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