UBS Downgrades Travelers Companies To Neutral, Cites Valuation 'Looks Full'

Brian Meredith of UBS downgraded shares of Travelers Companies (NYSE: TRV) to Neutral from Buy on Thursday with a price target raised to $105 from a previous $101.Shares of Travelers have risen 15.2 percent year-to-date, outperforming both the S&P 500 Financials and the company's peer commercial insurances. As such, Meredith sees “insufficient upside” to support a Buy rating at this time.“Better than expected underwriting margin improvement drove upward EPS revisions and share outperformance this year,” Meredith wrote. “Going forward, we expect underwriting margins to compress modestly in 2015 with commercial insurance pricing staying in-line to modestly below loss cost inflation and prior year loss reserve releases moderating.”The analyst continues to expect the company to deliver “solid” results with operating return on equity in the low-teens. Capital management will remain “strong” despite limited organic growth opportunities. Meredith also expects the company to improve its market share in personal auto insurance.Meredith increased his 2015 operating earnings per share estimates to $9.15 from a previous $8.95 while 2016 estimates were also hiked to $9.40 from $9.10, mostly due to higher loss reserve releases.