COMPANY DESCRIPTION

Travelers Companies is a holding company. Through its subsidiaries, Co. provides insurance products and services to businesses, government units, associations and individuals. Co. has three segments: Business Insurance, which provides property and casualty insurance and insurance-related services; Financial, Professional and International Insurance, which includes surety and financial liability coverages, and property and casualty products marketed domestically basis in Canada, the U.K. and the Republic of Ireland, and internationally; and Personal Insurance, which writes property and casualty insurance covering individuals' personal risks, primarily automobile and homeowners insurance.

 

ECONOMIC MOAT

TRV’s moat is built on scale, scope and expertise.  TRV’s property and casualty insurance business is more profitable than other lines of insurance.  TRV’s has expertise in specialty insurance like oil and gas, agribusiness, and inland marine.  TRV’s experience has enabled the company to assemble some proprietary data that helps the company in developing products and assessing risk.

 

OUTLOOK

Travelers ended 2014 in solid fashion.  We look for another solid year in 2015 based on decent conditions in the broader insurance market and a continued economic rebound on the domestic front.  This stock has many positive attributes at the recent price. They are timely for the year ahead, and also offer alluring 3- to 5-year total return potential, especially when factoring in risk.  It also offers a good solid dividend.

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STRENGTHS

  • Broad product portfolio ensuring strong market position

  • Effective claims management building customer loyalty

  • Strong financial ratings ensuring liquidity 

WEAKNESSES

  • Overdependence on the US market increasing business risk

  • Inefficiency in managing investment 

THREATS

  • Intense competition in the property and casualty insurance industry likely to affect market share

  • Changes in the US federal income tax laws could adversely affect an investment in shares 

OPPORTUNITIES

  • Expected recovery in the US commercial real estate could increase Travelers's revenues

  • Positive outlook of property and casualty insurance likely to increase profitability

  • Strategic acquisition deal with JMalucelli likely to enhance market share 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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