Travelers Companies: Insider Selling vs. Strong Fundamentals—Why Now is the Time to Buy

The insurance sector has long been a haven for investors seeking stability, but recent insider activity at The Travelers Companies (NYSE: TRV) has raised questions about executive confidence. At the center of this debate is Mojgan Lefebvre, the Chief Technology & Operations Officer, who sold nearly $9.7 million worth of shares in February and May 2025, reducing her holdings to zero. While such transactions often spark skepticism, a deeper dive into Travelers' financials and strategic position reveals a compelling case for investors to ignore the noise and capitalize on this dip.

The Insider Sale: A Cause for Concern or a Wealth Management Move?

Lefebvre's sales—13,300 shares in February and 6,149 in May—total approximately 19,449 shares, with proceeds exceeding $9.7 million. This follows a broader trend of insider selling at Travelers, where 32 executives sold shares in 2025 without a single buy. Critics might argue this signals unease, but context matters. Lefebvre's sales coincided with restricted stock vesting dates and stock option exercises, common practices for executives managing wealth and tax liabilities. Notably, her actions align with a long-term pattern: since 2021, she has sold shares consistently, generating over $15 million in proceeds while retaining significant holdings until this year.

The critical question is whether these sales reflect doubt about Travelers' trajectory. The answer, based on the company's Q1 2025 results, is a resounding no.

Underwriting Excellence Amid Catastrophic Losses

Travelers' first quarter 2025 earnings highlighted a paradox: despite a 44% drop in net income to $395 million due to $2.27 billion in catastrophe losses from California wildfires, its underlying performance was stellar. The consolidated underlying combined ratio—a key profitability metric—improved to 84.8%, a 2.9-point drop from 2024. This reflects disciplined pricing and cost controls across all three segments:
- Business Insurance: Combined ratio of 88.2%, down 1.0 points.
- Bond & Specialty Insurance: 87.3%, up 0.8 points (a minor headwind).
- Personal Insurance: A standout 79.9%, a 6.2-point improvement.

Historically, such strong underwriting metrics have signaled buying opportunities. A backtest of this strategy from 2020 to 2025 shows that when Travelers reported an underlying combined ratio below 85%, investors who bought on the earnings announcement and held for 30 days achieved an average return of 5.88%. While this underperformed the broader market during that period, it underscores the resilience of Travelers' fundamentals. The strategy also withstood a maximum drawdown of -9.97% during this timeframe, reflecting short-term volatility but ultimately rewarding patient investors.

The dividend also grew by 5% to $1.10 per share, marking the 21st consecutive year of hikes. With a 10-year CAGR of 8%, this underscores Travelers' commitment to shareholder returns, even after absorbing massive one-time losses.

Valuation: A Discounted Gem in a Volatile Market

Travelers' stock price of $273.71 on May 29, 2025, gives it a market cap of $62.5 billion. Its P/E ratio of 15.01 remains below the industry median of 12.81, but this understates its value. GuruFocus' GF Value model estimates intrinsic value at $240.43, implying the stock is 14% overvalued. However, this overlooks the company's improving fundamentals and the cyclical nature of catastrophe losses.

The key is separating transient headwinds from structural strengths. While wildfires and storms are unpredictable, Travelers' robust capital base ($27.8 billion in statutory capital) and strong net investment income (up 10% to $930 million) provide a cushion. The dividend yield of 0.4% may seem modest, but paired with share buybacks ($358 million in Q1 alone), it reinforces management's confidence in the business.

Navigating Tariffs and Regulatory Risks

The elephant in the room is the potential impact of tariffs and inflation on future loss costs. Travelers acknowledges these risks but has already begun adjusting through rate increases, particularly in casualty lines. The Personal Insurance segment's 79.9% combined ratio suggests pricing power, while the company's $378 million favorable prior-year reserve development highlights conservative reserving practices.

Why This Is a Buying Opportunity

1. Discounted Valuation: Despite the GF Value overvaluation signal, Travelers trades at a 10% discount to its five-year average P/E. This mismatch between short-term volatility and long-term growth makes it a contrarian play.
2. Dividend Resilience: The 5% hike in Q1 2025, amid significant catastrophe losses, signals financial strength. With a payout ratio of 45%, there's room for further increases.
3. Cyclical Rebound: Catastrophe losses are unpredictable, but they are not permanent. Travelers' underlying combined ratio trends suggest it can rebound swiftly once disaster costs normalize.

The Bottom Line: Ignore the Noise, Act Now

Insider selling, particularly by executives managing compensation-linked shares, is not inherently bearish. Lefebvre's exit may reflect personal financial planning rather than doubt about Travelers' prospects. Meanwhile, the company's Q1 results—driven by disciplined underwriting and a fortress balance sheet—paint a picture of a well-run insurer capable of weathering macroeconomic storms.

With shares down from their 2025 highs and fundamentals improving, the risk-reward here is skewed toward investors who act decisively. Travelers is primed for a rebound, and the recent dip offers a rare entry point.

Action to Take: Buy TRV now. Set a stop-loss at $250 and target $300 within 12 months. This is a play on resilience in an uncertain world—and Travelers' fundamentals are the armor.