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Travelers Hikes Dividend & Buyback After Mixed Q1

The Travelers Companies Inc. (TRV) provides a wide range of commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals.

The company generated 89% of its revenue from premium income during the first quarter of 2021 with the remainder coming from net investment income (8%), fee income (1%), net realized investment gains (<1%) and other revenue (<1%). Premium income was divided between business insurance (46%), personal insurance (34%) and specialty and bond insurance (9%).

Mixed First Quarter Results

Travelers reported first quarter earned premiums that rose 2.2% to $7.4 billion, missing consensus estimates by $110 million, with earnings of $2.73 per share, beating consensus estimates by 33 cents per share. In addition to hiking its dividend, the company added $5 billion to its existing $805 million share repurchase plan.

Despite being hit with record first quarter catastrophe losses, RBC Capital’s Mark Dwelle said that core margin improvements and strong reserve releases more than offset the impact in a research note on April 21, 2021, following the earnings release. The analyst added that interest rate increases could also continue to outpace loss cost inflation.

The company raised its quarterly dividend by 3.5% to $0.88 per share, which represents a 2.19% forward yield. The dividend is payable on June 30, 2021, to shareholders on record as of June 10, 2021.

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