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Why Should You Stay Invested in Selective Insurance (SIGI)
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Selective Insurance Group, Inc.’s (SIGI - Free Report) solid renewal pricing, increase in exposure, higher income earned on fixed income securities and prudent capital deployment, along with favorable growth estimates, make it worth retaining in one’s portfolio.
SIGI has a decent track record of beating earnings estimates in three of the last four quarters, the average being 1.05%.
The insurer remains on track to hit the 11% return on equity target for 2022 and record the ninth consecutive year of double-digit ROE.
Zacks Rank & Price Performance
Selective Insurance currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 1%, compared with the industry’s decrease of 8.6%.
Growth Drivers
Premiums are likely to benefit from solid renewal pricing in standard Commercial Lines and excess and surplus lines, solid retention rates in standard commercial and personal lines and an increase in exposure.
Improved renewal pure price, higher direct new business and favorable Excess and Surplus Lines (E&S) Lines marketplace conditions should drive the performance of the E&S segment.
For 2022, Selective Insurance estimates a net investment income of $215 million, banking on improved alternative investment performance.
Selective Insurance remains focused on lowering the expense ratio and expects the same to be 32.5% in 2022.
Selective Insurance has a sound capital structure. It remains focused on enhancing shareholders’ value as well as improving financial strength and underwriting capabilities. Thus, SIGI scores strongly with credit rating agencies. The insurer boasts 16 straight years of net favorable casualty reserve development as well as a record level of statutory capital and surplus.
The Zacks Consensus Estimate for 2023 implies a 19.4% year-over-year improvement of 19.4% and has moved 1 cent up in the past 60 days.
Effective Capital Deployment
Selective Insurance raised dividends at an eight-year (2015-2022) CAGR of 9.1%. The current dividend yield is 1.3%, better than the industry average of 0.4%. SIGI has $90.1 million remaining under its repurchase authorization.
The Zacks Consensus Estimate for Berkshire Hathaway’s 2022 and 2023 earnings implies 14.4% and 5.9% year-over-year growth, respectively. The average four-quarter surprise is 17.55%.
The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings has moved 7.6% and 8.8% north, respectively, in the past 60 days. Year to date, shares of BRK.B have lost 6.7%.
American Financial’s earnings surpassed estimates in the last four quarters, the average earnings surprise being 37.09%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 1% north each in the past 30 days. Year to date, shares of AFG have lost 5.2%.
The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings implies 29.6% and 18.1% year-over-year growth, respectively. The average four-quarter surprise is 33.64%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 9.2% and 7.2% north in the past 60 days, respectively. Year to date, shares of ACGL have increased 6.8%.
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Why Should You Stay Invested in Selective Insurance (SIGI)
Selective Insurance Group, Inc.’s (SIGI - Free Report) solid renewal pricing, increase in exposure, higher income earned on fixed income securities and prudent capital deployment, along with favorable growth estimates, make it worth retaining in one’s portfolio.
SIGI has a decent track record of beating earnings estimates in three of the last four quarters, the average being 1.05%.
The insurer remains on track to hit the 11% return on equity target for 2022 and record the ninth consecutive year of double-digit ROE.
Zacks Rank & Price Performance
Selective Insurance currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 1%, compared with the industry’s decrease of 8.6%.
Growth Drivers
Premiums are likely to benefit from solid renewal pricing in standard Commercial Lines and excess and surplus lines, solid retention rates in standard commercial and personal lines and an increase in exposure.
Improved renewal pure price, higher direct new business and favorable Excess and Surplus Lines (E&S) Lines marketplace conditions should drive the performance of the E&S segment.
For 2022, Selective Insurance estimates a net investment income of $215 million, banking on improved alternative investment performance.
Selective Insurance remains focused on lowering the expense ratio and expects the same to be 32.5% in 2022.
Selective Insurance has a sound capital structure. It remains focused on enhancing shareholders’ value as well as improving financial strength and underwriting capabilities. Thus, SIGI scores strongly with credit rating agencies. The insurer boasts 16 straight years of net favorable casualty reserve development as well as a record level of statutory capital and surplus.
The Zacks Consensus Estimate for 2023 implies a 19.4% year-over-year improvement of 19.4% and has moved 1 cent up in the past 60 days.
Effective Capital Deployment
Selective Insurance raised dividends at an eight-year (2015-2022) CAGR of 9.1%. The current dividend yield is 1.3%, better than the industry average of 0.4%. SIGI has $90.1 million remaining under its repurchase authorization.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Berkshire Hathaway (BRK.B - Free Report) , American Financial Group (AFG - Free Report) and Arch Capital Group (ACGL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Berkshire Hathaway’s 2022 and 2023 earnings implies 14.4% and 5.9% year-over-year growth, respectively. The average four-quarter surprise is 17.55%.
The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings has moved 7.6% and 8.8% north, respectively, in the past 60 days. Year to date, shares of BRK.B have lost 6.7%.
American Financial’s earnings surpassed estimates in the last four quarters, the average earnings surprise being 37.09%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 1% north each in the past 30 days. Year to date, shares of AFG have lost 5.2%.
The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings implies 29.6% and 18.1% year-over-year growth, respectively. The average four-quarter surprise is 33.64%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 9.2% and 7.2% north in the past 60 days, respectively. Year to date, shares of ACGL have increased 6.8%.