Lowering price target to $145, retain Neutral
Although management retained its positive commentary regarding pricing, evidence seems to be emerging that achieving the necessary rate increases in commercial could take longer than expected. This has negative repurcussions for our future earnings, which are only partially offset by a quicker improvement in Personal Auto than we previously anticipated. Following the higher catastrophes in 1Q18, we have lowered our FY18 EPS by 4% but our FY19 and FY20 EPS forecasts also decline by 1%. Given the lower earnings trajectory we are also reducing our price target to $145 (from $150). We retain our Neutral recommendation.Travelers Companies is a holding company. Through its subsidiaries, the company is engaged in providing commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals. The company's segments include: Business Insurance, which provides property and casualty insurance and insurance-related services; Bond and Specialty Insurance, which provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services, and certain specialty insurance products; and Personal Insurance, which writes property and casualty insurance covering individuals' personal risks.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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