Travelers stock ended Wednesday slightly higher after drawing a double-upgrade from Goldman Sachs, to buy from sell. Meanwhile, JPMorgan released a note on Wednesday estimating that insurance industry losses from the ongoing Los Angeles fires will be "high but manageable."
Travelers stock, which jumped 42% in 2024 through the end of November, briefly led the Dow Jones Industrial Average on Wednesday before paring its gains.
The Goldman Sachs upgrade cited a combination of profitable commercial insurance lines and net interest income, positioning the company ahead of peers to beat 2025 expectations. An improving personal lines segment also carried upside. The analyst, Robert Cox, hoisted the stock's price target to 278, according to The Fly. That target was 15% above where shares traded on Wednesday.
Piper Sandler, Barclays and Jefferies had all lowered their price targets on Travelers over the past month. Barclays maintained an overweight rating. Piper and Jefferies kept neutral and hold ratings, respectively.
California Wildfires
Investors are keeping a close eye on insurance stocks Wednesday as losses mount in the wildfires scorching the Los Angeles-area mountains. Wildfire risk has been a key driver in the state's challenge to maintain affordable homeowner's insurance coverage.
JPMorgan saw losses related to the current fires as being confined mostly to the homeowners' insurance businesses at Allstate, Travelers and Chubb, The Fly reported Wednesday. Commercial property businesses at Travelers, AIG, Chubb and Kinsale Capital were also expected to take hits, but to a lesser extent.
Based on a preliminary assessment of the affected area and historical events, insured losses from this fire could approach $10 billion, with primary carriers being more exposed than reinsurers, the note said. Arch Capital and RenaissanceRe are the most exposed reinsurers, but their losses should be less than for similar events prior to 2023, the JPMorgan note said.
Total losses could be much higher. Weather forecaster AccuWeather released a preliminary estimate Wednesday afternoon that put total losses from the current fires at between $52 billion and $57 billion.
Travelers increased its rates in California by an average 15% in May. The company was the seventh largest property and casualty insurer in the state in 2023, according to the National Association of Insurance Commissioners.
Policy Renewals Declined In Hardest Hit Areas
State Farm declined to renew thousands of policies in the state over the past year, including a reported 1,600 policies in the Pacific Palisades — one of the areas hardest hit in Wednesday's fires. State Farm was the state's largest insurer in 2023, followed by Farmers.
The Los Angeles Times reported that, in April, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. notified the insurance department that they will not renew 12,556 homeowners policies with a premium value of $11.3 million, starting July 1.
In December, KTLA 5 News in Los Angeles reported that Safeco, a subsidiary of Liberty Mutual, announced it would stop offering policies for new rental and condo customers on Jan. 1. Liberty Mutual is California's fourth-largest home insurer.
Travelers Stock
MarketSurge stock charts show Dow Jones component Travelers has sketched out a series of closely spaced bases and breakouts. The pattern left it with a 42% gain through the end of November in 2024. Shares then dipped back into another consolidation.
Travelers stock has now notched three weeks of tight closes. This can signal a stock forming a bottom to its consolidation. Shares are down modestly so far in the current week, and trading midway between their 10-week and 40-week moving averages.
Travelers stock closed with a 0.5% gain on Wednesday.
Travelers carries an IBD Composite Rating of 91. Its Relative Strength Rating is a lukewarm 78, according to IBD's Stock Checkup.
