Travelers: The Undercover Bond

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About: The Travelers Companies, Inc. (TRV)
by: Gedas Dirkstys
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Gedas Dirkstys
Long only, long-term horizon, value, research analyst
Summary

Travelers earns the largest share of profits from investment income (c70%) among P&C insurance companies in the U.S.

Majority (c88%) of the investment portfolio is allocated to a diversified portfolio of bonds.

Travelers is also very likely to generate positive underwriting profits from its specialty insurance lines.

The current market price of Travelers ignores the low risk profile and growth potential of earnings.

Investment Thesis

Travelers (TRV) earns the largest share of profits from investment income among P&C insurance companies in the U.S. Even with no underwriting profits, investment in Travelers at $132 would yield c7%