BMO Capital has reaffirmed its Market Perform rating and $379 price target for Travelers stock, despite the company's current trading price of $383.20. The stock's P/E ratio stands at 10.3, with a notably low PEG ratio of 0.15, suggesting an attractive valuation relative to growth prospects.
The company's core loss ratio exceeded expectations by roughly 90 basis points. While Business Insurance performance deteriorated by about 50 basis points year-over-year, Bond & Specialty improved by 50 basis points and beat consensus by roughly 180 basis points. Personal Insurance also outperformed expectations, with personal auto and homeowners segments beating consensus by 180 and 200 basis points, respectively.
Reserve releases across all segments were higher than expected. Business insurance reserve releases beat consensus by roughly 220 basis points, while Bond & Specialty reserve releases exceeded expectations by 530 basis points. Additionally, Travelers repurchased $1.5 billion in shares, surpassing the expected $900 million, which is likely to raise forward earnings per share estimates.
Travelers reported third-quarter earnings and revenue that surpassed Wall Street expectations, with core earnings of $9.18 per share on revenue of $12.41 billion. The company's underlying combined ratio improved to 84.1%, marking its ninth consecutive quarter below 86%. After-tax net investment income also exceeded $900 million for the first time, further boosting earnings. The company returned $1.8 billion to shareholders through buybacks and dividends during the quarter.