Macquarie Discusses Travelers Investor Day Presentation, Reiterates At Sell

In a report published Thursday, Macquarie Research analyst Amit Kumar offered a quick take following

's Investor Day presentation which was hosted by senior executives including incoming Alan Schnitzer who will take over as CEO on December 1. Kumar noted that the Investor Day presentation surrounded the company's expanded use of data and analytics along with the emergence of cyber risks and the corresponding cyber insurance market. The event also featured visits to its Virtual Reality Testing facility (Oculus Rift) and engineering facilities that are focused on fraud detection. Kumar continued that the cyber market is expected to "grow meaningfully" over the next four years as the company suggested the size of the market will grow from $2 billion in premiums to $5 to $10 billion by 2019. The analyst added that the market is not a "topic du jour," but it is actually an "evolving market" with buyers only beginning to understand their exposure. According to Kumar, 29 percent of cyber losses are attributable to hacks while staff mistakes represents 13 percent of losses while rogue employees results in only 11 percent of losses. Meanwhile, Travelers offers three products with middle market policies insuring limits up to $1 million and smaller policies with limits around $25,000, implying the company's goal is to the "go-to" company for middle market cyber risk. However, despite the fast growing segment, Kumar reiterated a Sell rating and $90 price target on the stock as he expects the "higher multiple names to sell off in the current market conditions."