The Travelers Companies (TRV) second quarter was hurt by huge catastrophe losses. The company reported a wider loss in the quarter than the Zacks Consensus Estimate. We expect the rate of premium growth to stay restricted and underwriting margins to remain under pressure.
Also, potential reserve additions for asbestos liabilities present another risk. Further, exposure to significant catastrophic events remains a concern.
Our six-month target price of $52.00 equates to 12.2x our earnings estimate for 2011. Combined with $1.64 per share annual dividend this price target implies an expected total negative return of 8.4% over that period. This is consistent with our Underperform recommendation on the shares.
TRAVELERS COS (TRV): Free Stock Analysis Report
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