Not surprisingly in the current environment, only two financial companies made it to our final screen. They are property-casualty company Traveler s (TRV), with an earnings yield of 15% and mean long-term earnings-per-share growth estimated at 8.5%, and Warren Buffett's financial conglomerate Berkshire Hathaway (BRKA), with interests in insurance as well as manufacturing, media, consumer-discretionary and retail sectors and an earnings yield of 7.5%. Travelers' conservative management of its investment portfolio, stable personal-lines business, manageable debt load, and strong balance sheet has helped it weather the current downturn well, and should give it an edge in a recovery.

The largest U.S. insurer was among the most active names on the NYSE Tuesday.

Property-and-casualty insurance stocks got a lift recently amid expectations of an end to the slide in commercial premiums. Yet, Allstate (ALL) and The Travelers Companies (TRV) still trade at or under book value, while two of the strongest insurers, Ace (ACE) and Chubb (CB), trade at modest premiums to book and at less than 10 times projected 2009 profits. Depressed asset managers like Franklin Resources (BEN) and AllianceBernstein (AB) trade for 10 to 15 times projected 2009 profits.

PE of 6, a PEG of 0.73, and it pays a yield of 2.8%.

Cramer wasn’t recommending any particular stock, but he did say names like Allstate [ALL], MetLife [MET], Prudential [PRU] Chubb [CB] and The Travelers [TRV], which dealt mainly in the safer property, casualty and life insurances, stand to gain the most by any AIG fallout.

9/8/2008

Buy - Price 44.66 on July 23
by Sandler O'Neill

Travelers is a holding company principally engaged in providing, through subsidiaries, commercial and personal property and casualty insurance. TRV reported 2Q08 operating earnings of $1.50 a share, versus our $1.17 estimate and consensus $1.45. The quarter benefited from...56 cents a share (after tax) of favorable reserve development. ...TRV maintained '08 earnings guidance in a range of $5.55 to $5.85 a share, [which] doesn't assume any additional prior-year reserve development. We expect '08 operating EPS of $5.77; consensus is $5.97. Target: 59. Market cap: $26.5 billion.

"This is a once-in-a-generation opportunity in the financials," says Mark Boyar, head of the New York investment firm bearing his name. Boyar is partial to such stocks as JPMorgan Chase (JPM), Lehman Brothers (LEH), Travelers (TRV) and Bank of New York Mellon (BK). The last time financial stocks were hit so badly was in 1990, when the group fell 24%. That was followed by a 43% gain in 1991.

Q: What do you like about Travelers, whose shares have been under pressure?

Cohen: Travelers trades at about 1.1 times book value. They have what we consider to be the best management in the property-and-casualty insurance business. They have a pristine balance sheet and, unlike many other financial firms, they have not been dinged by any exposure to subprime mortgages. And their chief executive, Jay Fishman, understands how to price risk. First of all, he won't take outsize risks, relative to what kind of premiums they are getting. And, No. 2, they won't cut prices dramatically just to capture more market share. In a better market environment the stock trades at 1.5 times book. And Travelers is increasing its book value every year.

He said buy names like Chubb (CB), Travelers (TRV), Metlife (MET) and Prudential (PRU)