Travelers: Buy as Rates Rise, Says Sandler Analyst

Sandler O’Neill analyst Paul Newsome upgraded Travelers Companies (TRV) to Buy today as the company raises rates for its commercial customers.

“We are upgrading Travelers to Buy from Hold for three primary reasons: 1) further evidence of higher commercial insurance prices continues to mount, 2) TRV�s position as perhaps the best public play on the improving insurance environment, and 3) TRV’s valuation remains attractive at 92% of book value, versus its peer group (excluding Progressive) at average of 87% and the company�s five-year average of 114%, given its position as one of the leading beneficiaries of rising commercial lines pricing as well as our expectation for the company to generate a return-on-equity of 10.5% in 2012 compared to our large cap property-casualty coverage universe average of 8.9%.”