A Big Upgrade for Travelers

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After spending much of the past six months at a mediocre three-star rank, The Travelers Companies (NYSE: TRV  ) has impressed enough top-performing members of our 160,000-strong Motley Fool CAPS community to climb back up to four stars. A total of 370 members have given their opinion on the insurance firm, with many of them offering analysis and commentary explaining the recent optimism.

The world isn't as bleak these days for Travelers and other insurers, as the sector has seen much improved financial results this earnings season. Despite suffering the same sharp increase in catastrophe claims that led to a dramatic jump in first-quarter payouts at peers such as Allstate (NYSE: ALL  ) and Chubb (NYSE: CB  ) , Travelers saw a 6.7% increase in revenue and generated a 39% jump in investment income as the markets have shown signs of improvement. Events such as Chile's earthquake affected several local industries and led to catastrophe claims that Travelers considered unusually significant, dragging down first-quarter earnings. But the company has seen positive signs like positive renewal and retention rates in its business insurance unit, a business line that is still under the thumb of a weakened economy.                          

Earnings reports from others around the sector have also been heading in the right direction. Berkshire Hathaway's (NYSE: BRK-B  ) insurance businesses saw overall increasing underwriting profits and others like Hartford Financial (NYSE: HIG  ) and life insurer MetLife (NYSE: MET  ) posted better-than-expected quarterly results, suggesting that issues from the financial crisis could be easing. Hartford in particular has raised its 2010 earnings outlook as well, as executives from both firms have positive expectations for the rest of the fiscal year.

Travelers' solid financial position has also attracted big fans; Warren Buffett has jumped in and one UBS analyst recently described Travelers as a cash cow. While other financial companies such as AIG struggled to survive during the financial crisis and still face numerous underlying problems, Travelers remained profitable throughout the recession. The company recently announced it was raising its dividend and is continuing to buy back shares, moves that have some investors feeling more confident about the company going forward.                                        

Do you think Travelers deserves its raised status? Add your thoughts in the comments box below on this page, or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.

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Fool contributor Dave Mock recently upgraded his backyard with a long-overdue hammock for those lazy summer days. He owns no shares of companies mentioned here. Berkshire Hathaway is a Inside Value choice. Berkshire Hathaway is a Stock Advisor selection. The Fool owns shares of Berkshire Hathaway. If more people read and abided by the Fool's disclosure policy, the SEC wouldn't be such a busy place these days.

Read/Post Comments (1) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 19, 2010, at 4:27 PM, BadBoysDriveAudi wrote:

    "Travelers' solid financial position has also attracted big fans; Warren Buffett has jumped in..."

    Did Mr. Buffett jump in or jump out?

    According to the date of this article, it makes it seem as if Mr. Buffett is bullish. The supporting article that referred to those purchases is dated Jan 2010.

    However, there is an article that just came out today indicating that Mr. Buffett has relived himself of the entire Traveler's position:

    So which is it? I guess one could quickly go to the SEC website and find out.

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