Why Is Property Casualty Insurance Provider Travelers Companies Stock Trading Higher Today?

Friday, The Travelers Companies TRV reported record fourth-quarter earnings surpassing the analysts’ expectations, sending its shares more than 6% higher in the trading session.

The New York-based company offers property casualty insurance for auto, home and business.

The company attributed the strong performance to a higher underlying underwriting gain, lower catastrophe losses, and higher net investment income.

For the fourth quarter of 2023, net written premiums increased by 13% to $9.99 billion, beating the consensus of $9.987 billion, while total revenues also increased 13% Y/Y to $10.9 billion, according to data from Benzinga Pro. Net income per share rose to $6.99 from $3.44 a year earlier.

The company’s underlying combined ratio fell from 91.4% to 85.9% in the fourth quarter of 2023. The lower the ratio, the more profitable the insurance company, and vice versa.

Core income per share also more than doubled to $7.01 from $3.40 above the $5.09 consensus forecast.

“Core income, earnings per share, and return on equity were all record highs for the quarter, driven by both underwriting and investment results,” chairman and CEO Alan Schnitzer commented.

“Record underlying underwriting income resulted from net earned premiums of $10 billion, up more than 13% over the prior-year quarter, and an underlying combined ratio which improved 5.5 points to a record 85.9%. Each of our business segments contributed to the improvement,” Schnitzer added.

The fourth quarter net investment income increased 24% to $778 million pre-tax ($645 million after-tax). Income from the fixed-income investment portfolio increased over the prior year’s quarter due to a higher average yield and growth in fixed-maturity investments.

“With another year of very strong results in the books, continued strategic investment in pursuit of our focused innovation agenda and the best talent in the industry, we could not feel more confident about how we are positioned for 2024 and beyond,” Schnitzer said.

Price Action: TRV shares are up 4.79% at $207.85 on the last check Friday.