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Travelers insurance stock outlook 2013

Travelers insurance stock outlook 2013
Travelers insurance stock forecast 2013 : Shares of The Travelers Companies closed at $74.95 Monday, trading for 10.9 times the consensus 2013 earnings per part guess of $6.85. The consensus 2014 earnings per part guess is $7.06. The shares returned 25 per centum during 2012.
Based on a quarterly payout of 46 cents, the shares induce got a dividend yield of 2.45 percent.

Travelers on Dec. v announced that its preliminary estimate of losses related to Sandy was $1.135 billion, internet of reinsurance. The after-tax loss guess was $650 million. The companionship is scheduled denote its fourth-quarter results on Jan. 22, amongst a consensus earnings estimate of 7 cents a share, compared to earnings per part of $2.22 during the 3rd quarter, together with $1.48 during the 4th quarter of 2011.

The companionship on Dec. v too said it intended to resume repurchasing mutual shares, which it had suspended temporarily subsequently Sandy hit. For the get-go 3 quarters of 2012, Travelers reported an underwriting turn a profit of $845 million. For 2011, the companionship reported an underwriting loss of $745 million.

Loss From Sandy
Catastrophe related losses delineate of piece of job concern human relationship for most 10% of Travelers full claims together with expenses. In 2011, natural disasters similar Hurricane Irene together with Tropical Storm Lee, led to catastrophe related losses of around $1 billion. The operating margin for the delineate of piece of job concern insurance sectionalization cruel from 17% inward 2010 to 12% inward 2011, piece the operating margin for personal insurance cruel from 6% to a 4% loss.

The delineate of piece of job concern insurance sectionalization reported catastrophe losses of $360 meg for the get-go nine months of the calendar year. Given the guess provided past times the company, nosotros aspect an operating margin of around 15% for the financial year.

he catastrophe related losses reported past times the personal insurance sectionalization through the get-go nine months of 2012 totaled $450 million. We aspect an operating margin around 6% for the financial year. For a detailed analysis of the operating margins together with the acquit on of Superstorm Sandy,

Revenue Growth
To mitigate the effects of the losses incurred past times Travelers due to Hurricane Irene together with Tropical Storm Lee, the companionship had to undertake several pricing initiatives. Insurance rates increased past times almost 8% through the get-go nine months of 2012, but the companionship was yet able to hold high retentivity rates, unopen to 80% inward the delineate of piece of job concern insurance division. This allowed a 3% growth inward delineate of piece of job concern insurance premiums. Given the company’s historical performance, nosotros aspect it to hold premium growth. However, at that topographic point are to a greater extent than than 2,500 belongings together with casualty insurers inward the U.S. of America together with the highly competitive nature of the marketplace set volition Pb to a slight turn down inward Travelers’ marketplace set part inward the coming years.

Importance Of Investments
Although Travelers earns simply 12% of its revenues from returns on investments, it is of import for the companionship to invest premiums earned. Looking at the 2011 figures, nosotros tin encounter that Travelers earned most $22 billion inward premiums together with had to pay around $24 billion inward claims. The $3 billion it earned from investment income allowed the companionship to hold a turn a profit for the year.

Most of Travelers investments are inward fixed maturity securities similar authorities bonds, which delineate of piece of job concern human relationship for 85% of the internet investment income amongst a yield of around 4%. However every bit the Fed has stated that involvement rates volition go kept depression for the side past times side few years, nosotros aspect a slight turn down inward yield inward the coming years, amongst a recovery coinciding amongst an improvement inward macro-economic conditions.

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