Value: The Travelers Companies, Inc.

| About: The Travelers (TRV)

Earnings momentum has soared for The Travelers Companies, Inc. (NYSE:TRV) in just the past 7 days, following strong third-quarter results from this property and casualty insurer. Moreover, with a price-to-book (P/B) ratio of just 1.09, this Zacks #1 Rank (Strong Buy) is a true value pick.

Strong Third-Quarter Performance

On October 18, Travelers reported third-quarter earnings of $2.22 per share, beating the Zacks Consensus Estimate by 38.7% and soaring 181% from a year ago. Lower catastrophe losses and sturdy underwriting results fueled the outperformance.

Total revenue was up 2% from last year to $6.5 billion, driven by the augmentation in premiums earned and net investment income. Revenue edged past the Zacks Consensus Estimate by 1.6%.

Net investment income increased 4.6% year over year to $722 million during the quarter, largely due to a better performance for the non-fixed income portfolio.

Travelers posted an underwriting gain of $327 million, rebounding from a loss of $185 million in the year-ago quarter. The combined ratio improved to 90.3% in the reported quarter. The improvement stemmed from lower catastrophe losses and higher underwriting margins.

Travelers spent $350 million to buy back 5.4 million shares in the quarter. The company also paid $179 million in dividends.

Positive Earnings Estimate Revisions

Following the solid quarter, the Zacks Consensus Estimate for 2012 increased 9.8% to $7.16 in the past 7 days, as 20 of 23 estimates were revised higher. This represents a year-over-year increase of approximately 118.1%.

For 2013, the Zacks Consensus Estimate increased 6.6% to $6.81 in the same time frame, as 16 of 23 estimates moved higher.

Attractive Valuation

Along with a very attractive P/B multiple, Travelers has a price-to-earnings (P/E) ratio as low as 10.23 (a P/B ratio under 3.0 and P/E ratio below 15.0 indicate value).

Moreover, the company has a 1-year return on equity (ROE) of 11.1%, higher than its peer group average of 10.2%.

Based in New York and founded in 1853, The Travelers Companies Inc. is a holding company that’s principally engaged, through its subsidiaries, in providing a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and in selected international markets. The company meets insurance needs in more than 90 countries through its network of insurers.

With a market capitalization of $27.91 billion and 30,600 employees, it competes with American International Group, Inc. (NYSE:AIG) and W.R. Berkley Corporation (NYSE:WRB), among others.