Travelers Companies Inc. (NYSE:TRV) is a New York-based insurance company and one of the leaders in U.S. commercial property casualty insurance and personal insurance. The stock was up 0.43% in the mid-afternoon hours on October 20. Travelers saw its stock drop significantly after Hurricane Harvey and Irma devastated the southeastern U.S. and Florida coast. Shares reacted positively after the company released its third quarter results on October 19.
Earnings dropped to $253 million or $0.91 per share compared to $701 million or $2.40 per share in the third quarter of 2016. Revenue increased 7.3% to $7.33 billion – up from $6.96 billion in Q3 2016.
Estimates of the costs from the catastrophic damage of Hurricane Harvey range from $65 billion to $190 billion while Irma totals range from $50 billion to $100 billion. The sheer magnitude of the financial toll has the potential to drop total U.S. GDP by as much as 0.8%. This reality allowed Travelers to actually beat expectations heading into the third quarter in spite of the large drop in core income. In September Travelers estimated a loss between $350 million and $750 million due to Hurricane Harvey.
Travelers reported an underwriting loss of $246 million compared to a gain of $408 million in the previous year.
The stock also offers a dividend of $0.72 per share representing a dividend yield of 2.1%. Although its earnings beat expectations this is an expensive buy in an aging bull market.
