Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2018 operating income of $1.20 per share, beating the Zacks Consensus Estimate by 27.7%. Also, the bottom line surged nearly 40% from the year-ago period’s number.
The reported quarter benefited from disciplined underwriting franchise and a strong underlying insurance operations performance.
Full-Year Highlights
For 2018, Selective Insurance came up with operating income of $3.66 per share, surpassing the Zacks Consensus Estimate by 7.9% and also improving 17.7% from the year-earlier quarter.
Moreover, total revenues of $2.6 billion grew 7.2% year over year.
Behind the Headlines
Total revenues of $680.9 million were up 7.2% from the year-ago quarter’s figure. Also, the top line beat the Zacks Consensus Estimate by 2.9%.
Net investment income rose 41.7% year over year to $44 million, driven by higher interest rates, active portfolio management, stellar operating cash flow (18% of Net premiums written), increase in alternative investment returns and lower tax.
Net premiums written increased 5.2% year over year to $582.8 million. Combined ratio improved 10 basis points (bps) on a year-over-year basis to 92.7%.
Segment Results
Standard Commercial Lines net premiums written were up 5.9% year over year to $449.4 million on the back of solid renewal pure price improvement as well as retention and strength in new business. Combined ratio deteriorated 90 bps to 92.9% from the prior-year quarter’s level.
Standard Personal Lines net premiums written remained flat year over year at $72.7 million, reflecting higher renewal pure price and solid retention. Combined ratio improved 340 bps to 91.8% from the year-ago period’s count.
Excess & Surplus Lines net premiums written grew 6.7% year over year to $60.7 million, primarily attributable to a substantial uptick in new business. Combined ratio improved 360 bps to 92.9%.
Financial Update
Selective Insurance exited the fourth quarter with total assets of $7.9 billion, which climbed 3.5% above the level at December 2017 end.
As of Dec 31, 2018, book value per share was $30.40, having improved 3.8% year over year.
Annualized operating return on equity was 16.3% in the quarter under review, expanding 430 points year over year.
2019 Guidance
Selective Insurance projects a combined ratio (excluding catastrophe loss) of about 92% that assumes no prior-year casualty reserve development.
Catastrophe loss of 3.5 points has been estimated.
The company projects an after-tax investment income of $175 million, which comprises $8 million of after-tax net investment income from alternative investments.
The P&C insurer expects an overall effective tax rate of nearly 19% including the same of 18% for net investment income, which represents a tax rate of 5.25% for tax-advantaged municipal bonds and a tax rate of approximately 21% for all other items.
Weighted average shares outstanding of 60 million have been anticipated.
Zacks Rank
Selective Insurance carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other players from the same space having reported fourth-quarter earnings so far, the bottom line of MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while that of The Progressive Corp. (PGR - Free Report) missed the same.
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Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2018 operating income of $1.20 per share, beating the Zacks Consensus Estimate by 27.7%. Also, the bottom line surged nearly 40% from the year-ago period’s number.
The reported quarter benefited from disciplined underwriting franchise and a strong underlying insurance operations performance.
Full-Year Highlights
For 2018, Selective Insurance came up with operating income of $3.66 per share, surpassing the Zacks Consensus Estimate by 7.9% and also improving 17.7% from the year-earlier quarter.
Moreover, total revenues of $2.6 billion grew 7.2% year over year.
Behind the Headlines
Total revenues of $680.9 million were up 7.2% from the year-ago quarter’s figure. Also, the top line beat the Zacks Consensus Estimate by 2.9%.
Net investment income rose 41.7% year over year to $44 million, driven by higher interest rates, active portfolio management, stellar operating cash flow (18% of Net premiums written), increase in alternative investment returns and lower tax.
Net premiums written increased 5.2% year over year to $582.8 million. Combined ratio improved 10 basis points (bps) on a year-over-year basis to 92.7%.
Segment Results
Standard Commercial Lines net premiums written were up 5.9% year over year to $449.4 million on the back of solid renewal pure price improvement as well as retention and strength in new business. Combined ratio deteriorated 90 bps to 92.9% from the prior-year quarter’s level.
Standard Personal Lines net premiums written remained flat year over year at $72.7 million, reflecting higher renewal pure price and solid retention. Combined ratio improved 340 bps to 91.8% from the year-ago period’s count.
Excess & Surplus Lines net premiums written grew 6.7% year over year to $60.7 million, primarily attributable to a substantial uptick in new business. Combined ratio improved 360 bps to 92.9%.
Financial Update
Selective Insurance exited the fourth quarter with total assets of $7.9 billion, which climbed 3.5% above the level at December 2017 end.
As of Dec 31, 2018, book value per share was $30.40, having improved 3.8% year over year.
Annualized operating return on equity was 16.3% in the quarter under review, expanding 430 points year over year.
2019 Guidance
Selective Insurance projects a combined ratio (excluding catastrophe loss) of about 92% that assumes no prior-year casualty reserve development.
Catastrophe loss of 3.5 points has been estimated.
The company projects an after-tax investment income of $175 million, which comprises $8 million of after-tax net investment income from alternative investments.
The P&C insurer expects an overall effective tax rate of nearly 19% including the same of 18% for net investment income, which represents a tax rate of 5.25% for tax-advantaged municipal bonds and a tax rate of approximately 21% for all other items.
Weighted average shares outstanding of 60 million have been anticipated.
Zacks Rank
Selective Insurance carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other players from the same space having reported fourth-quarter earnings so far, the bottom line of MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while that of The Progressive Corp. (PGR - Free Report) missed the same.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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