Homeowner’s Insurance Rates Skyrocketing: 10 Best Stocks To Buy

6. The Travelers Companies, Inc. (NYSE:TRV)

Number of Hedge Fund Investors  in Q1 2024: 40

The Travelers Companies, Inc. (NYSE:TRV) is one of the biggest insurance companies in America. It operates in the homeowner’s insurance industry through its Personals business division which offers automobile and homeowner insurance. Its diversified business model and scale means that the The Travelers Companies, Inc. (NYSE:TRV) has to ensure that it has adequate reserves to manage liabilities in a variety of different sectors. Apart from the homeowners’ insurance industry which has seen rising claims and costs due to climate change and inflation, the historic Crowdstrike outage in July and other similar events could impact The Travelers Companies, Inc. (NYSE:TRV) harder than other homeowner insurers due to its presence in the market. Additionally, the firm also has to ensure that its premiums are growing with or above the market, especially since any slowdown could make it struggle with reserves and increase investor worries of insolvency in case of a major calamity. These trends were also in play during July 2024, when The Travelers Companies, Inc. (NYSE:TRV)’s stock dipped by 7% after its Q2 results saw it earn $11.12 billion in premiums. While these marked a 7.7% annual growth, they missed analyst estimates of $11.24 billion.

During the earnings call, The Travelers Companies, Inc. (NYSE:TRV)’s management commented on its homeowners business division and shared:

“Production results in homeowners and other reflect our focus to manage growth, while improving profitability. Renewal premium change increased sequentially to 15.1%, reflecting higher rate change, while retention remains strong at 85%. We expect renewal premium change to remain at this level through year end. As we intended, new business and policies enforced declined, reflecting our efforts to thoughtfully deploy capacity. To sum up for the Personal Insurance segment overall, we’re pleased with our progress as we continue to deliver improved profitability. We’re confident that the actions we’ve taken and continue to take will result in a profitable growing portfolio of personalized business over time.”