The Zacks Analyst Blog Highlights: Travelers, Aspen Insurance Holdings, AmTrust Financial Services, Atlas Financial Holdings and Aetna

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Jun 05, 2014, 09:30 ET

CHICAGO, June 5, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Travelers Companies, Inc. (NYSE:TRV-Free Report), Aspen Insurance Holdings Ltd. (NYSE:AHL-Free Report), AmTrust Financial Services, Inc. (Nasdaq:AFSI-Free Report), Atlas Financial Holdings, Inc. (Nasdaq:AFH-Free Report) and Aetna Inc. (NYSE:AET-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Why Travelers Is a Good Investment Now

On Jun 3, Zacks Investment Research upgraded The Travelers Companies, Inc. (NYSE:TRV-Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Travelers has been witnessing rising earnings estimates on the back of strong first-quarter 2014 results. Moreover, this property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 28.73%.

Travelers reported first-quarter operating net earnings of $2.95 a share, outperforming the Zacks Consensus Estimate by 38.5% and improving 28% from the year-ago earnings. Higher net investment income and net favorable prior-year reserve development led to the upside. Lower share count attributable to continued buybacks also boosted the bottom line. The last quarter also witnessed written rate gains exceeding expected loss cost trends in all segments. The company also experienced a high retention rate, pricing gains and positive renewal rate changes.

With its efforts to reduce operating expenses and acquisition costs, Travelers expects to realize savings of $140 million in 2015. This in turn is expected to drive margins higher.

Travelers also remains committed to enhance its shareholders' value via dividend increase and share buyback. Travelers returned $882 million to its shareholders in the first quarter. In addition, the board of directors of Travelers approved a dividend hike of 10%. The insurer also has $4.109 billion remaining under its share repurchase authorization.

Travelers also scores strongly with the credit rating agencies.

Strong results prompted upward revisions in Zacks Consensus Estimate for 2014 and 2015 as 15 of 17 estimates moved north over the last 60 days. It is currently pegged at $9.11 (up 11.2%) for 2014 and $8.93 (up 4%) for 2015. The expected long-term growth rate for the stock is 7.7%.

Other Stocks to Consider

Investors interested in the property and casualty industry may also consider stocks like Aspen Insurance Holdings Ltd. (NYSE:AHL-Free Report), AmTrust Financial Services, Inc. (Nasdaq:AFSI-Free Report) and Atlas Financial Holdings, Inc. (Nasdaq:AFH-Free Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

Aetna Also a Solid Pick

On June 4, Zacks Investment Research upgraded U.S. health insurer Aetna Inc. (NYSE:AET-Free Report) to Zacks Rank #2 (Buy) from Zacks Rank #3 (Hold).

Why the Upgrade?

Aetna has been enjoying rising estimate revisions in the past 60 days with 10 of 15 estimates revised upward. This positive estimate revisions led to a 1.9% rise in the Zacks Consensus Estimate to $6.52 per share for 2014.The same for 2015 rose 1.1% to $7.20 as 9 out of 16 estimates moved north.

Unfazed by numerous challenges related to the Health Care Reform Act that stifled the health insurance industry, this insurer has been performing strongly. Aetna's stock has in fact rallied 16.4% year to date.

Aetna churned out first-quarter earnings of $1.98 per share, zooming past the Zacks Consensus Estimate of $1.56 per share. Earnings also grew 27% year over year. Better-than-expected earnings came on the back of higher underwriting margins in the Health Care business and accretion from the Coventry acquisition.

Buoyed by solid first-quarter results and expectations of continued momentum, management increased its previously provided outlook for the full year. Aetna now expects to earn in the range of $6.35 to $6.55. The Zacks Consensus Estimate lies near the top end of the guidance. The company had earlier announced a minimum of $6.25 per share in earnings for 2014. Top line is expected to fall in the range of $56 billion to $57 billion, which is higher than the previous expectation of $54 billion.

Aetna is one of the biggest health insurers in the U.S. which has proactively adapted to the changing industry landscape. Extensive investments in products and technology, with an intention to extend its core health business and capitalize on exciting new consumer and provider opportunities emerging in the marketplace will certainly help it to stay it ahead of its ilk.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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