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TRV) is another defensive name worth owning in 2013. Travelers is a major commercial and personal lines insurer, with products that include auto, homeowners, and business insurance. Travelers benefits from the network effect -- its network of 10,000 agents and brokers means that more consumers have a chance to learn about TRV's offerings and ultimately buy its insurance products.
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The insurance business has become increasingly commoditized in recent years, a trend that's meant better prices for consumers but thinner margins for insurers. Scale is Travelers' way around that limitation -- because the firm can spread risk across a bigger pool of clients than smaller peers, it's able to compete better on price too. Like other insurers, TRV has a massive investment portfolio that requires careful management -- the firm can't reach for high returns and risk insolvency if a catastrophic event crashes its investments and triggers claims. As a result, Travelers has kept a defensive bent to its own funds, making it an even better defensive name for investors.
Financially, the firm is in good shape, with a reasonable amount of leverage on its balance sheet and healthy capital reserves. A 2.4% dividend yield is healthy for a financial sector firm in 2013.