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The Travelers Companies, Inc. (TRV), The Chubb Corporation (CB): Watch These Stocks

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Travelers Companies Inc (NYSE:TRV)When turnaround trends take place in industries that have been considered boring or unappealing for extended periods of time, such events can be rather explosive. A good example of this is the PowerShares KBW Insurance Portfoliio ETF (NYSEARCA:KBWI), an ETF that holds only insurance-company stocks. The inception date is Nov. 1, 2011 and the posted one-year return is approximately 28.9%.

The release of the PowerShares KBW Insurance Portfolio appears to be timely. The underlying index does have a five-year track record of average returns. In fact this index has outperformed the S&P Insurance index, which supports the creator’s ability to design and back-test a portfolio. Below are an allocation chart and a price chart of the PowerShares KBW Insurance Portfolio. I am seeing a trend reversal in an industry that tends to stay on track, after the track is formed.

PowerShares KBW Insurance Portfoliio (KBWI): Exciting Investment Ideas in "Stodgy” Industries
PowerShares KBW Insurance Portfoliio (KBWI): Exciting Investment Ideas in "Stodgy” Industries

The largest position held in the PowerShares KBW Insurance Portfolio is The Travelers Companies, Inc. (NYSE:TRV). Travelers was once part of Citigroup Inc (NYSE:C)‘s family of companies that were the foundation of the mega-financial supermarket concept. The Travelers Companies, Inc. (NYSE:TRV) was one of the early spin-offs from this family.

As of May 2, there is a 7.7% weighting of the fund in The Travelers Companies, Inc. (NYSE:TRV), and the price chart below shows a nice uptrend. The first quarter of 2013 is filled with positive news for this company. Net earnings per share are up by 11% from the same quarter last year, underwriting margins in all lines of insurance are improving, and rate gains continue to exceed claims losses. All in all I think this shows that The Travelers Companies, Inc. (NYSE:TRV)’ management is guiding this once-stodgy property and casualty insurer to new heights.

The second largest position (7.3%) of the PowerShares KBW Insurance Portfolio goes to another property and casualty insurer, The Chubb Corporation (NYSE:CB). Chubb is reporting similar stellar results. First-quarter 2013 earnings per share were up 36% from the same period last year.  The Chubb Corporation (NYSE:CB) has repurchased approximately 3.9 million shares and John D. Finnegan, chairman, president, and CEO, states that The Chubb Corporation (NYSE:CB) is off to great start in 2013. Just look at the price chart below to see that this is another terrific story.

The number three spot goes to Metlife Inc (NYSE:MET). Metlife Inc (NYSE:MET) is an insurer that underwrites a wider range of lines than the two previously mentioned companies. The holdings in the PowerShares KBW Insurance Portfolio are approximately 7.2%, and the company’s developments are good, yet do not show the same bang as the other top holdings do.

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