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Selective Insurance Group, Inc. (SIGI - Free Report) reported first-quarter 2022 operating income of $1.41 per share, which beat the Zacks Consensus Estimate by 2.2%. The bottom line however declined 17.1% from the year-ago quarter.
The quarter witnessed higher net premiums written (NPW) and increased net investment income. However, higher non-catastrophe losses and lower favorable prior year casualty reserve development and escalating costs were offsets.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Total revenues of $886 million increased 11% from the year-ago quarter’s figure, primarily due to higher premiums earned and improved net investment income. The top line outpaced the Zacks Consensus Estimate by 7.6%.
On a year-over-year basis, NPW increased 11% to $889.8 million, driven by renewal pure price increases, solid retention rates, exposure growth and strong new business growth.
Net investment income improved 4% year over year to $59 million, driven by strong gains on alternative investments.
Underwriting income dropped 28% to $44.1 million. Net catastrophe loss of $20.9 million was narrower than a loss of $29.9 million incurred in the year-ago quarter. Non catastrophe loss of $150.4 million was wider than a loss of $115.6 million incurred in the year-ago quarter
The combined ratio deteriorated 380 basis points (bps) on a year-over-year basis to 93.1, attributable to higher non-catastrophe property losses and less favorable prior year casualty reserve development, partially offset by lower catastrophe losses.
Total expenses increased 16.1% year over year to $776.2 million, primarily due to higher loss and loss expense incurred, other insurance expense, corporate expense and amortization of deferred policy acquisition costs.
Segmental Results
Standard Commercial Lines’ NPW was up 11% year over year to $737.6 million. Average renewal pure price increases of 4.8%, solid retention of 87%, and new business growth of 12% drove the improvement in NPW.
The combined ratio deteriorated 540 bps to 93.6.
Standard Personal Lines’ NPW remained flat year over year at $65.1 million, Renewal pure price increases averaged 0.6%, retention was 84%, and new business was down 2% year over year.
The combined ratio deteriorated 140 bps on a year-over-year basis to 91.
Excess & Surplus Lines’ NPW was up 29% year over year to $873.1 million, driven by average renewal pure price increases of 7.7% and new business growth of 25%.
The combined ratio also improved 810 bps to 91.1.
Financial Update
Selective Insurance exited first-quarter 2022 with total assets of $10.3 billion, which was 1% below the level at December 2021 end. Long-term debt of $505.6 million was flat with the 2021 level.
Debt to total capitalization deteriorated 90 bps to 15.4% at first-quarter 2022 end.
As of Mar 31, 2022, book value per share was $43.80, up 1% from the level as of 2021 end.
Annualized non-GAAP operating return on equity was 12.8% in the first quarter of 2022, down 340 bps year over year.
Selective Insurance bought back shares worth $0.1 million and had $96.5 million remaining under authorization as of Mar 31, 2022.
2022 Guidance
Selective Insurance estimates GAAP combined ratio, excluding catastrophe losses of 91 and includes net catastrophe losses of 400 basis points on the combined ratio.
Investment income was $205 million (upped from $200 million guided earlier) including $15 million (down from $20 million guided earlier) in net investment income from alternative investments.
The overall effective tax rate is expected to be around 20.5%, which comprises an effective tax rate of 19.5% for net investment income and 21% for all other items.
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI’s first-quarter 2022 operating earnings of $1.43 per share beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. RLI’s gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 bps year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.
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Selective Insurance (SIGI) Q1 Earnings Beat, Revenues Rise Y/Y
Selective Insurance Group, Inc. (SIGI - Free Report) reported first-quarter 2022 operating income of $1.41 per share, which beat the Zacks Consensus Estimate by 2.2%. The bottom line however declined 17.1% from the year-ago quarter.
The quarter witnessed higher net premiums written (NPW) and increased net investment income. However, higher non-catastrophe losses and lower favorable prior year casualty reserve development and escalating costs were offsets.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Selective Insurance Group, Inc. price-consensus-eps-surprise-chart | Selective Insurance Group, Inc. Quote
Behind the Headlines
Total revenues of $886 million increased 11% from the year-ago quarter’s figure, primarily due to higher premiums earned and improved net investment income. The top line outpaced the Zacks Consensus Estimate by 7.6%.
On a year-over-year basis, NPW increased 11% to $889.8 million, driven by renewal pure price increases, solid retention rates, exposure growth and strong new business growth.
Net investment income improved 4% year over year to $59 million, driven by strong gains on alternative investments.
Underwriting income dropped 28% to $44.1 million. Net catastrophe loss of $20.9 million was narrower than a loss of $29.9 million incurred in the year-ago quarter. Non catastrophe loss of $150.4 million was wider than a loss of $115.6 million incurred in the year-ago quarter
The combined ratio deteriorated 380 basis points (bps) on a year-over-year basis to 93.1, attributable to higher non-catastrophe property losses and less favorable prior year casualty reserve development, partially offset by lower catastrophe losses.
Total expenses increased 16.1% year over year to $776.2 million, primarily due to higher loss and loss expense incurred, other insurance expense, corporate expense and amortization of deferred policy acquisition costs.
Segmental Results
Standard Commercial Lines’ NPW was up 11% year over year to $737.6 million. Average renewal pure price increases of 4.8%, solid retention of 87%, and new business growth of 12% drove the improvement in NPW.
The combined ratio deteriorated 540 bps to 93.6.
Standard Personal Lines’ NPW remained flat year over year at $65.1 million, Renewal pure price increases averaged 0.6%, retention was 84%, and new business was down 2% year over year.
The combined ratio deteriorated 140 bps on a year-over-year basis to 91.
Excess & Surplus Lines’ NPW was up 29% year over year to $873.1 million, driven by average renewal pure price increases of 7.7% and new business growth of 25%.
The combined ratio also improved 810 bps to 91.1.
Financial Update
Selective Insurance exited first-quarter 2022 with total assets of $10.3 billion, which was 1% below the level at December 2021 end. Long-term debt of $505.6 million was flat with the 2021 level.
Debt to total capitalization deteriorated 90 bps to 15.4% at first-quarter 2022 end.
As of Mar 31, 2022, book value per share was $43.80, up 1% from the level as of 2021 end.
Annualized non-GAAP operating return on equity was 12.8% in the first quarter of 2022, down 340 bps year over year.
Selective Insurance bought back shares worth $0.1 million and had $96.5 million remaining under authorization as of Mar 31, 2022.
2022 Guidance
Selective Insurance estimates GAAP combined ratio, excluding catastrophe losses of 91 and includes net catastrophe losses of 400 basis points on the combined ratio.
Investment income was $205 million (upped from $200 million guided earlier) including $15 million (down from $20 million guided earlier) in net investment income from alternative investments.
The overall effective tax rate is expected to be around 20.5%, which comprises an effective tax rate of 19.5% for net investment income and 21% for all other items.
Shares outstanding totaled 61 million.
Zacks Rank
Selective Insurance carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property & Casualty Insurers
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI’s first-quarter 2022 operating earnings of $1.43 per share beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. RLI’s gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 bps year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.