2Q26 EPS beat on favorable U/W margins, valuation testing multiple highs

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2Q26 EPS beat on favorable U/W margins, valuation testing multiple highs

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Travelers Cos

2Q26 EPS beat on favorable U/W margins,

valuation testing multiple highs

Reiterate Rating: UNDERPERFORM | PO: 307.00 USD | Price: 368.98 USD

2Q26 operating EPS of $10.04 20 July 2026

This is a beat vs our estimate of $5.45 and Street consensus of $5.37. The largest Equity

variances vs our forecasts include more favorable reserve development ($578mn vs

$65mn est.; +$1.90/sh.) and lower catastrophe losses ($518mn vs $939mn est.;

Key Changes+$1.56/sh.), but lower underlying loss experience in both Personal lines (52.7% vs 57%

est.; +$0.68/sh.) and Business Insurance (BI, 57.9% vs 60% est.; +$0.44/sh.) also (US$) Previous Current

contributed. Net written premium growth of 2.3% including -4.0% in Personal Lines Price Obj. 283.00 307.00

suggests a flattish revenue outlook. Repurchases of $1.3bn exceeded our $1bn estimate. 2026E EPS 27.50 33.40

2027E EPS 26.90 28.90

2028E EPS 26.00 27.10Margins at all-time peak levels in cyclical business

We expected underwriting margins would have peaked and began to retreat due to the

cyclicality of the insurance market and declines in insurance pricing. Nevertheless, Joshua Shanker

Research Analyst

Travelers BI segment has been achieving ex-cat loss ratios in the 57-58% range since BofAS

4Q23, historical lows. The company is also earning peak margins in Personal Lines as it +1 347 821 9017 joshua.shanker@bofa.com

pushes rate through, though this has arguably resulted in customer count declines in

Cyril Onyango

both home and auto. We were surprised by Travelers’ atypically high paid-to-incurred Research Analyst

ratio of 96% in 2Q26 given the lack of outsized cat losses in 1Q26. It could mean BofAS cyril.onyango@bofa.com