The Norwegians are taking over America.

There's Erling Haaland, the giant Viking king of Norway's streaking World Cup soccer team with its legion of rowing fans. (They play England on Saturday.) And did you see fellow Norwegian Viktor Hovland win the Travelers Championship last month in a sudden-death playoff over Scottie Scheffler, the top-ranked player in the world? The gallery roared as Hovland sank a birdie putt to clinch his eighth PGA Tour title. Congratulations, too, came from Travelers CEO Alan Schnitzer, who handed Hovland the trophy (and a $3.6 million check to boot).

Dig a little bit deeper, though, and you might think Schnitzer deserves a trophy, too. Not for his golf, mind you -- he's just so-so at that -- but for what he's doing at his day job running that iconic property-and-casualty insurer. OK, I admit, this is just a way into a story that's actually about insurance, but bear with me because this old-school company upping its game is pretty amazing stuff.

Travelers (yup, they of the red umbrella) has been through the wars, both in terms of a stressed business model and a convoluted history. Given a rudimentary awareness of the P&C insurance business environment -- which is to say on the one hand catastrophic weather, higher claim costs, and inflation, and on the other hand investors' infatuation with all things AI, hyperscalers, and chips -- you could be forgiven for thinking Travelers stock would be a market laggard, and maybe by a wide margin. If so, you would be quite mistaken.

Not only has Travelers trounced the S&P 500 year to date (18.5% to 9.8%), but it also has done so over the past three years and five years (in the latter case, 126% to 75%). So, what gives? Basically, Travelers has turned those two aforementioned negatives, a tough operating environment and investors only caring about AI, on their respective heads.

Let's take a look at each of these two turnabouts, starting with the business. Travelers was founded 162 years ago in Hartford, Conn., and more than a century later became part of one of Sandy Weill's financial supermarket schemes, wrapped into Citigroup and then spun out in 2002.

Schnitzer, a former Simpson Thacher partner who joined the company in 2007 and became CEO in late 2015, rolled out a game plan prioritizing innovation. That meant greatly ramping up the technology spend -- which today exceeds $1.5 billion annually -- and using it to improve everything from streamlining the claims process to better identifying risk.

Schnitzer's plan was tracking fine, but then changing business conditions punched the insurer in the mouth. Going back to 2017, Travelers, along with its peers, started getting socked by increasingly extreme weather claims. According to the National Oceanic and Atmospheric Administration, there were an unprecedented 88 $1 billion-plus claims from 2020 to 2024.

Insurers also got whacked by inflation, which upped replacement claims of damaged property. And finally, what's known as social inflation, which are societal factors causing claims to climb faster than the consumer price index, reared up. It includes the proliferation of "billboard lawyers" as well as third-party litigation funded by hedge funds and private investors, which drove up legal fees and payouts.

Travelers took its hits, and while some industry players said these were either company-specific or just transitory problems, Schnitzer saw they were neither. Consequently, Travelers recalibrated its risk selection, underwriting, pricing, and claim strategies before its competitors did.

Reflecting those moves has been Travelers' improved combined ratio, the gold standard metric of a P&C insurer's operational ability, which is simply the amount of incurred losses paid out, plus expenses, divided by earned premiums. Like a golf score, lower is better. A combined ratio of less than 100% means the insurer collected more in premiums than it paid out in claims and expenses -- for example, a combined ratio of 93% means the company kept seven cents of profit for every dollar of premium collected. A ratio over 100% indicates an underwriting loss, meaning the insurer paid out more in claims and expenses than it brought in.

Yes, Travelers' combined ratio spiked in the early 2020s, up into the 90s, but over the past decade it has trended down decidedly, even in 2025, when the company incurred a record $1.7 billion loss from the Los Angeles wildfires. Today, Travelers' combined ratio is now a stellar 85.3%.

Still, how does an insurer attract investors and beat the S&P 500, which these days mostly resembles an AI-mania machine? As it turns out, Travelers seems to be Exhibit A of a company demonstrably improving its business performance with the help of AI, something of a mostly-only-talked-about holy grail at this point. That shouldn't come as a surprise, because what is an insurance company other than a massive collection of data sets, tailor made for AI optimization? Still, Travelers seems to be ahead of the curve.

"More than 20,000 of our colleagues use AI tools on a regular basis," Schnitzer wrote in his 2025 shareholder letter. "Agentic AI isn't a future aspiration, it's embedded in our business operations today....[M]ore than half of all claims are now eligible for straight-through digital processing, with customers adopting straight-through processing about two-thirds of the time."

An eye on costs and soaring premium revenue has helped Travelers lower its expense ratio (expenses divided by premium revenue) -- another lower-is-better metric -- from 31.5% in 2016 to 28.5% in 2025, with each percentage point worth about $440 million annually in pretax income.

Even BofA Securities analyst Joshua Shanker, who has an Underperform rating on the stock based on its valuation and a $276 price target (versus a current price of $333), notes that relative to its peers, Travelers has seen the most positive earnings-per-share revisions and higher stock price gains.

Travelers' valuation isn't vexing Raymond James' Gregory Peters, who has a Strong Buy on the stock and recently raised his price target from $375 to $400. Peters says his price target is based on 2.5 times his 2026 year-end book value estimate of $161, which compares with the S&P insurance peer average of 1.9 and Travelers' current valuation of 2.1. "We believe our outlook for elevated shareholder returns and the company's strong earnings power justifies a premium to insurance peers," he writes.

Travelers declined to make any of its executives available to comment, as the company reports earnings next Friday.

And now you can go back to catching up on golf and maybe even that Norway vs. England soccer match, too.

Write to Andy Serwer at andy.serwer@barrons.com. Follow him on X and subscribe to his At Barron's podcast.

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July 10, 2026 01:00 ET (05:00 GMT)

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