- Higher P&C rates, lower insurance losses, and better portfolio returns helped drive a strong core earnings beat for Travelers in the fourth quarter.
- Bears expect pricing power to fade (historically that has been the right call), but weaker industry reserves, lower surplus capital levels, and weak rates could still support rates in '21.
- Travelers' lack of a meaningful specialty P&C business is negative, and the company is facing increased competition in its core small/middle-market business categories.
- Travelers has a long history of generating attractive returns, and competing profitably in the small/mid-sized market takes more than just deciding to try.
- These shares look priced for a high single-digit total annualized return, which is not bad but also not especially exciting.
For further details see:
Travelers Outperforming On Firmer Markets And Benign Losses