Highlights

  • Travelers shows 50.13% basic EPS growth, a P/E of 10.43 and PEG of 0.81.
  • Third quarter net income was $1,917 million, against $1,888 million a year earlier.
  • The third quarter combined ratio was 86.8%, against 87.3% a year earlier.
  • Travelers repurchased 4.0 million shares for $1.50 billion in the third quarter.

One-year earnings growth of 50.13%, paired with a trailing twelve-month P/E of 10.43 and an expected-basis PEG of 0.81, puts Travelers (NYSE:TRV) among undervalued growth stocks, with shares trading at USD 397.58 on October 28, 2026, up 0.14%. On the company's side, the New York-based property and casualty insurer divested its Canadian operations in the first quarter of 2026, issued $750 million of 4.95% senior notes on July 24, and reported third quarter 2026 net income of $1.92 billion on October 16.

The Travelers Companies, Inc. has its principal executive offices at 485 Lexington Avenue in New York and is incorporated in Minnesota. It reports three segments: Business Insurance, which includes Select Accounts, Middle Market and National Accounts; Bond & Specialty Insurance, which includes fidelity and surety and general liability; and Personal Insurance, which includes automobile and homeowners coverage. It also operates in the United Kingdom, the Republic of Ireland and, through Lloyd's, other parts of the world, and in Brazil through a joint venture.

Growth: Third Quarter Net Income, Core Income and Segments

Net income was $1,917 million in the third quarter against $1,888 million, and $5,836 million for the first nine months against $3,792 million. Basic earnings per share were $9.20 against $8.37, and diluted earnings per share were $9.04 against $8.24. For nine months, diluted earnings per share were $27.05 against $16.45. The company said the higher rate of increase in per share earnings reflected share repurchases.

Core income was $1,947 million against $1,867 million for the quarter, and $5,803 million against $3,814 million for nine months. Net investment income was $1,098 million against $1,033 million. The combined ratio was 86.8% against 87.3%, and 86.3% against 93.2% for nine months.

The company said the third quarter pre-tax increase primarily reflected higher net favorable prior year reserve development of $234 million against $22 million and higher net investment income, partially offset by catastrophe losses of $538 million against $402 million. Business Insurance segment income was $1,036 million against $907 million, Bond & Specialty Insurance $309 million against $250 million, and Personal Insurance $706 million against $807 million.

Valuation: P/E of 10.43, PEG of 0.81 and Book Value

The P/E ratio of 10.43 is measured on trailing twelve-month earnings, and the PEG ratio of 0.81 on expected growth. Book value per common share was $141.48, and shareholders' equity was $29.00 billion at September 30, 2026. Operating cash flows were $3.88 billion for the quarter.

Net unrealized investment losses were $8.05 billion ($6.35 billion after-tax), and diluted weighted average shares were 210.6 million against 227.5 million.

Capital Returns, Debt and Holding Company Liquidity

Travelers returned $1.77 billion to shareholders in the quarter, comprising $1.51 billion of share repurchases and $261 million of dividends. It repurchased 4.0 million shares for $1.50 billion at an average cost of $376.01 in the third quarter, and 14.3 million shares for $4.60 billion at $322.60 for nine months. The company expects that, generally over time, dividends and repurchases will likely not exceed net income. On October 16, the Board declared a $1.25 quarterly dividend payable December 31, 2026.

Total debt was $9.81 billion, with a debt-to-total capital ratio of 25.3%, or 21.7% excluding net unrealized investment losses, within a target range of 15% to 25%. The $750 million of notes mature July 24, 2031. Holding company liquidity was $3.17 billion against a target of approximately $1.47 billion, and $100 million of commercial paper was outstanding.

Disclosed Risks and Outlook

Business Insurance recorded an addition to asbestos reserves of $295 million in the third quarter, following its annual asbestos review, and the company said it cannot predict legal outcomes for asbestos claims. Personal Insurance segment income fell 13%, and its earned premiums of $4.14 billion were 6% lower, which the company linked to the divested Canadian operations. The company said the tort environment, including more aggressive attorney involvement in claims, continues to affect the combined ratio.

The company expects property and casualty market conditions to remain competitive for new business through the remainder of 2026 and into 2027. Effective October 1, 2026, it increased its cyber reinsurance quota share cession, reducing net written premiums by approximately $165 million in the fourth quarter of 2026 and approximately $230 million in full-year 2027, with a de minimis expected effect on net and core income.

On the third quarter 2026 call, management said it expects the 2026 expense ratio to come in a little below 29% and about the same in 2027. It expects fixed income net investment income of approximately $875 million after-tax in the fourth quarter, $3.3 billion for 2026 and more than $3 billion for 2027.