Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Travelers Too Expensive to Be Defensive, Goldman Says

Dec. 2 (Bloomberg) -- Travelers Cos., the only property insurer in the Dow Jones Industrial Average, is too expensive to be a defensive pick for investors, Goldman Sachs Group Inc. said while outlining a “cautious” outlook for the industry.

The insurer’s rating was downgraded to neutral from buy, Goldman Sachs analysts led by Michael Nannizzi wrote in a note to clients today. New York-based Travelers has rallied about 80 percent since September 2011, when it was added to the bank’s list of stocks to buy in the Americas, compared with the Standard & Poor’s 500 Index’s 50 percent gain, the analysts said.

Earnings at property-casualty insurers were helped this year as underwriting margins widened, claims costs from natural disasters fell and reserves proved redundant. Such benefits may be unsustainable, making the industry less attractive after some companies’ stock valuations rose, Goldman Sachs said.

“Leading commercial insurers are at all-time highs,” the analysts wrote. “On a relative-value basis, the sector is simply less defensive than at past market highs when valuations for the group were depressed relative to other industries, which made it a natural defensive choice.”

Travelers fell 1.9 percent to $89 at 4 p.m. in New York, the biggest decline since July. The insurer ended November trading 33 percent above book value, the highest in about six years relative to the measure of assets minus liabilities.

Patrick Linehan, a spokesman for Travelers, declined to comment on the note. Goldman Sachs also downgraded commercial insurer W.R. Berkley Corp. to sell from neutral, citing valuation.

To contact the reporters on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net; Alexandria Baca in New York at abaca3@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.