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Here's Why Selective Insurance (SIGI) Stock is a Solid Bet
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Selective Insurance Group, Inc. (SIGI - Free Report) has been in investors' good books on the back of higher renewal pure pricing, strong segment performance and sufficient liquidity.
The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
The company beat earnings estimates in two of the last four quarters and missed in the other two, with the average surprise being 13.18%.
Considering higher retention in the insurer’s Standard Commercial Lines, overall renewal pure price increases and new business growth, premium income is expected to improve in the future. Renewal pure pricing has trended up through 2020. Standard Commercial Lines represents 74% of consolidated revenues and 80% of total insurance operations’ net premium written in 2020.
Selective Insurance estimates after-tax net investment income of $182 million for 2021, which includes $16 million after-tax gains from the alternative investments. The metric witnessed four-year CAGR (2016-2020) of 14.8%. Higher pre-tax income from other investments portfolio and private equity strategy investment income are likely to fuel net investment income in the long term.
Moreover, its combined ratio continues to benefit from favorable prior year casualty reserve development and lower current year accident year -- accident losses.
It entered 2021 at its strongest financial position in the company’s long history, including a record level of GAAP equity, statutory capital and surplus and holding company cash and invested assets. The insurer believes to be in a strong position to deliver strong growth and superior operating performance.
The debt to capital ratio stands at 16.7% which compares favorably with the industry average of 20.6%. This provides it flexibility to raise additional debt. Its strong balance sheet and holding company cash and liquidity provides it with the financial resources and flexibility to continue to invest in business and grow insurance operations.
It raised dividend at a six-year (2014-2020) CAGR of 9.9% and the current dividend yield is 1.5%, which is better than the industry average of 0.5%. Further, on Dec 2, 2020, its board authorized a $100 million share repurchase program. Thus, the stock is an attractive pick for yield-seeking investors.
Moreover, return on equity (ROE) — reflecting the company’s efficient utilization of shareholders’ funds to generate earnings — has been increasing over the past several years. Its trailing 12 months’ ROE of 10.6% is better than the industry average of 5.6%.
It has an impressive Value Score of B. Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the value investing space.
The stock has seen its estimates for 2021 and 2022 move up nearly 7.1% and 4.3%, respectively, in the past 30 days that reflects investors’ optimism.
Moreover, this Zacks Rank #2 property and casualty insurer has gained 3.2% in the past year, outperforming the industry’s increase of 0.3%.
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $4.5 and $4.85, indicating year-over-year increase of nearly 8.4% and 7.7%, respectively.
Alleghany’s bottom line surpassed estimates in two of the last four quarters (missed in the other two), the average beat being 34.08%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
Arch Capital surpassed estimates in three of the last four quarters, with the average earnings surprise being 32.14%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Here's Why Selective Insurance (SIGI) Stock is a Solid Bet
Selective Insurance Group, Inc. (SIGI - Free Report) has been in investors' good books on the back of higher renewal pure pricing, strong segment performance and sufficient liquidity.
The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
The company beat earnings estimates in two of the last four quarters and missed in the other two, with the average surprise being 13.18%.
Considering higher retention in the insurer’s Standard Commercial Lines, overall renewal pure price increases and new business growth, premium income is expected to improve in the future. Renewal pure pricing has trended up through 2020. Standard Commercial Lines represents 74% of consolidated revenues and 80% of total insurance operations’ net premium written in 2020.
Selective Insurance estimates after-tax net investment income of $182 million for 2021, which includes $16 million after-tax gains from the alternative investments. The metric witnessed four-year CAGR (2016-2020) of 14.8%. Higher pre-tax income from other investments portfolio and private equity strategy investment income are likely to fuel net investment income in the long term.
Moreover, its combined ratio continues to benefit from favorable prior year casualty reserve development and lower current year accident year -- accident losses.
It entered 2021 at its strongest financial position in the company’s long history, including a record level of GAAP equity, statutory capital and surplus and holding company cash and invested assets. The insurer believes to be in a strong position to deliver strong growth and superior operating performance.
The debt to capital ratio stands at 16.7% which compares favorably with the industry average of 20.6%. This provides it flexibility to raise additional debt. Its strong balance sheet and holding company cash and liquidity provides it with the financial resources and flexibility to continue to invest in business and grow insurance operations.
It raised dividend at a six-year (2014-2020) CAGR of 9.9% and the current dividend yield is 1.5%, which is better than the industry average of 0.5%. Further, on Dec 2, 2020, its board authorized a $100 million share repurchase program. Thus, the stock is an attractive pick for yield-seeking investors.
Moreover, return on equity (ROE) — reflecting the company’s efficient utilization of shareholders’ funds to generate earnings — has been increasing over the past several years. Its trailing 12 months’ ROE of 10.6% is better than the industry average of 5.6%.
It has an impressive Value Score of B. Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the value investing space.
The stock has seen its estimates for 2021 and 2022 move up nearly 7.1% and 4.3%, respectively, in the past 30 days that reflects investors’ optimism.
Moreover, this Zacks Rank #2 property and casualty insurer has gained 3.2% in the past year, outperforming the industry’s increase of 0.3%.
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $4.5 and $4.85, indicating year-over-year increase of nearly 8.4% and 7.7%, respectively.
Other Stocks to Consider
Some other top-ranked stocks in the insurance space include Alleghany , Cincinnati Financial Corporation (CINF - Free Report) and Arch Capital Group (ACGL - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany’s bottom line surpassed estimates in two of the last four quarters (missed in the other two), the average beat being 34.08%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
Arch Capital surpassed estimates in three of the last four quarters, with the average earnings surprise being 32.14%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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