Selective Insurance Group, Inc. ( SIGI Quick Quote SIGI - Free Report) has been gaining momentum, given its strong new business growth, solid retention rates and lower expense ratio. Earnings Surprise History
Selective Insurance has a solid track record of beating earnings estimates in six of the last seven quarters.
Zacks Rank & Price Performance
Selective Insurance currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 2.8% compared with the
industry’s increase of 1%. Image Source: Zacks Investment Research Style Score
Selective Insurance is well poised for progress, as is evident from its favorable
VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum. Return on Equity (ROE)
Selective Insurance’s ROE for the trailing 12 months is 13.8%, better than the industry average of 5.7%. ROE expanded 130 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
Selective Insurance’s premium income is expected to improve on the back of strong renewal price increases, exposure growth, solid retention rates, and strong new business growth in outstanding commercial lines and Excess and Surplus Lines (E&S) segments.
For 2022, Selective Insurance projects an investment income of $205 million (upped from earlier guidance of $200 million). It includes $15 million in net investment income from alternative investments. Higher income earned on fixed income securities and other investments are likely to drive investment income. These tailwinds are expected to boost the top-line growth of the insurer. The Zacks Consensus Estimate for Selective Insurance’s 2023 revenues is pegged at $4 billion, indicating a year-over-year increase of nearly 24.3%. The expense ratio is likely to improve owing to lower-than-expected travel and entertainment, overhead and general and administrative expenses. The expense ratio was 32.1% for the first quarter, which is below the full-year run-rate expectations of 32.5%. Selective Insurance remains focused on lowering the expense ratio through a range of initiatives going forward. Sturdy Balance Sheet
Selective Insurance boasts an impressive solvency level. Its financial position remains extremely strong with $518 million of cash and investments, which is above the longer-term target. Banking on solid financial flexibility, SIGI is able to grow above its sustainable growth rate, which provides it with better growth opportunities.
Impressive Dividend History
Selective Insurance raised dividends at an eight-year (2015-2022) CAGR of 9.1%. The current
dividend yield is 1.4%, which is better than the industry average of 0.4%. SIGI had $96.5 million remaining under repurchase authorization. Thus, the stock is an attractive pick for yield-seeking investors. The Zacks Consensus Estimate for 2023 earnings per share is pegged at $6.37, indicating year-over-year increases of 12.3%. Stocks to Consider
Some better-ranked stocks from the property and casualty insurance sector are
W.R. Berkley Corporation ( WRB Quick Quote WRB - Free Report) , RLI Corp. ( RLI Quick Quote RLI - Free Report) and HCI Group, Inc. ( HCI Quick Quote HCI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley stock has increased 31.6%. The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 30 days. RLI has a solid track record of beating earnings estimates in each of the last seven quarters. In the past year, RLI stock has increased 12.8%. The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $4.35 and $4.45, indicating year-over-year increases of 12.4% and 2.3%, respectively. The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 13.7%. The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 280.9% and 75%, respectively.