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Travelers Companies Inc (TRV), The Allstate Corporation (ALL), The Chubb Corporation (CB): One Property & Casualty Insurance Company To Buy

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Travelers Companies Inc (NYSE:TRV)Property and casualty insurance companies are some of the most profitable and necessary companies around. Unlike their peers in healthcare, there are not mandates that restrict the profit margins of these companies; it is all a balance of raising premiums and keeping customers happy. Today, we will look at three companies in this segment: Travelers Companies Inc (NYSE:TRV)The Allstate Corporation (NYSE:ALL) and The Chubb Corporation (NYSE:CB). All three of these companies have slightly different strengths and weaknesses, and below we’ll take a look at each.

Can the red umbrella provide investors shelter?

Travelers Companies Inc (NYSE:TRV) Insurance is one of the largest P&C companies in the U.S. This company operates in three segments, representing $22.4 billion in premiums in 2012: personal, business, and financial, professional and international. Travlers has an operating margin of 13%, while its peers are closer to 10.5%. At the end of 2012, Travelers Companies Inc (NYSE:TRV) topped the charts in five-year total return for a financial company at 101.8%, compared to The Allstate Corporation (NYSE:ALL)’s 19.2%, and The Chubb Corporation (NYSE:CB)’s 100.6%.

Travelers Companies Inc (NYSE:TRV) has one title the others can’t claim. In 2011, it repurchased the largest percentage of shares outstanding, by repurchasing 9% of shares outstanding. In 2012, the company dealt with the ramifications of super storm Sandy and still reduced share count by 4%. Travelers was able to pass through a double-digit rate increase last year, and still resign over 93% of contracts. Travelers Companies Inc (NYSE:TRV) is utilizing its strong brand recognition to deliver superior shareholder value.

Are you in good hands?

The Allstate Corporation (NYSE:ALL) is the largest publicly traded insurer in the U.S. Last year, The Allstate Corporation (NYSE:ALL) increased its book value per share by 12.7%. Allstate continues to focus on the long term by accelerating its technology purchases and premium models to reduce costs in its standard auto policies, and improve retention rates. Currently, it is struggling to maintain an underwriting profit in this division.

The Allstate Corporation (NYSE:ALL) has the lowest operating margin of the group at 9.6%, and sports a dividend of 2%. This company is operating in the highly competitive auto and home segment, and is up against some pretty large competitors. The Allstate Corporation (NYSE:ALL) will continue to have lower margins as the property insurance industry continues to consolidate, and all of the policy options look the same to consumers.

Insurance for the wealthy

The Chubb Group is an insurance carrier that caters to the wealthy. If a home is valued at over $2 million, a lot of property and casualty companies will shy away, and that’s where The Chubb Corporation (NYSE:CB) makes its bread and butter. Last year, super storm Sandy set the record for the single largest insurance claim in the company’s history, as it has substantial market share in the New England region.

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