What happened

Insurance giant The Travelers Companies (TRV -0.38%) trailed the market last month as its stock shed 12% compared to a 2% increase in the S&P 500, according to S&P Global Market Intelligence. The drop pushed investor returns lower, but the stock is still up about 10% so far in 2019 compared to a 22% increase in the S&P.

A woman making a call on her smartphone while standing in front of two cars involved in an accident.

Image source: Getty Images.

So what

October's slump was driven by Wall Street's lukewarm reception of Travelers' third-quarter earnings results. On Oct. 22, the company revealed that premiums rose by a healthy 7% but that this increase was offset by significant underwriting losses related to volatile weather and to a worsening claims environment for automotive accidents. Struggles in these areas helped push underwriting to a $149 million loss compared to a $200 million gain a year ago.

Now what

CEO Alan Schnitzer and his team told investors that they plan to adjust pricing to better reflect these increased loss expectations, and those changes might pressure premium growth. Executives are confident that their broad portfolio will help them maintain industry-leading growth and efficiency over the long term, and success here will ultimately determine whether this value stock produces good returns for investors.