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Selective Insurance (SIGI) Up 6% YTD: More Room to Run?
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Shares of Selective Insurance Group, Inc. (SIGI - Free Report) have gained 5.5% year to date against the industry’s decline of 5.1%. While the Finance sector declined 4.2%, the Zacks S&P 500 composite has gained 1.6% in the same time frame. With a market capitalization of $5.6 billion, the average volume of shares traded in the last three months was about 0.3 million.
A compelling portfolio, high retention ratio, pure renewal price increase, new business growth, rise in investment income and solid capital position continue to drive SIGI.
This Zacks Rank #1 (Strong Buy) insurer has been delivering double-digit returns on equity for the last nine years. Banking on operational strength, the insurer is set to generate 12% ROE in 2023.
Image Source: Zacks Investment Research
It has a VGM Score of B. The Style Score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Can SIGI Retain the Momentum?
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.57, indicating an increase of 30.6% on 13.7% higher revenues of $4.2 billion. The consensus estimate for 2024 earnings is pegged at $7.55, indicating an increase of 15% on 10.2% higher revenues of $4.6 billion.
The long-term earnings growth rate is currently pegged at 18.9%, better than the industry average of 14.6%. It has a Growth Score of B. The Style Score analyzes the growth prospects of a company.
SIGI’s premium has risen at a six-year CAGR of 7.1%. 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 should help retain the momentum.
The Excess and Surplus Lines (E&S) segment of Selective Insurance is likely to improve because of renewal pure price increases, higher direct new business and favorable E&S Lines marketplace conditions.
The insurer has been delivering impressive investment results. For 2023, Selective Insurance projects an after-tax net investment income of $300 million, up from the prior guidance of $215 million that includes after-tax net investment income from alternative investments of $30 million, up from $7 million guided earlier.
Banking on its sturdy operational performance, SIGI increased dividends at a nine-year CAGR (2015-2023) of 8.8%, with dividends currently yielding 1.2%. The insurer also has an $84.2 million share buyback authorization under its kitty.
Being a property and casualty (P&C) insurer, Selective Insurance remains exposed to catastrophe losses stemming from natural disasters and weather-related events, inducing volatility in results. Nonetheless, for 2023, Selective Insurance estimates a GAAP combined ratio of 96.5%, including net catastrophe losses of 4.5 points.
SIGI has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Style Score of A or B combined with a Zacks Rank #1 or #2 (Buy) offer better returns.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 has moved 5.4% north in the past 60 days.
The Zacks Consensus Estimate for AXS 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating year-over-year increases of 29.6% and 11.7%, respectively. In the past year, AXS has gained 1.4%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $46.03 and $53.25, indicating a year-over-year increase of 69.9% and 15.7%, respectively. In the past year, RE has gained 26.6%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 35.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.
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Selective Insurance (SIGI) Up 6% YTD: More Room to Run?
Shares of Selective Insurance Group, Inc. (SIGI - Free Report) have gained 5.5% year to date against the industry’s decline of 5.1%. While the Finance sector declined 4.2%, the Zacks S&P 500 composite has gained 1.6% in the same time frame. With a market capitalization of $5.6 billion, the average volume of shares traded in the last three months was about 0.3 million.
A compelling portfolio, high retention ratio, pure renewal price increase, new business growth, rise in investment income and solid capital position continue to drive SIGI.
This Zacks Rank #1 (Strong Buy) insurer has been delivering double-digit returns on equity for the last nine years. Banking on operational strength, the insurer is set to generate 12% ROE in 2023.
Image Source: Zacks Investment Research
It has a VGM Score of B. The Style Score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Can SIGI Retain the Momentum?
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.57, indicating an increase of 30.6% on 13.7% higher revenues of $4.2 billion. The consensus estimate for 2024 earnings is pegged at $7.55, indicating an increase of 15% on 10.2% higher revenues of $4.6 billion.
The long-term earnings growth rate is currently pegged at 18.9%, better than the industry average of 14.6%. It has a Growth Score of B. The Style Score analyzes the growth prospects of a company.
SIGI’s premium has risen at a six-year CAGR of 7.1%. 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 should help retain the momentum.
The Excess and Surplus Lines (E&S) segment of Selective Insurance is likely to improve because of renewal pure price increases, higher direct new business and favorable E&S Lines marketplace conditions.
The insurer has been delivering impressive investment results. For 2023, Selective Insurance projects an after-tax net investment income of $300 million, up from the prior guidance of $215 million that includes after-tax net investment income from alternative investments of $30 million, up from $7 million guided earlier.
Banking on its sturdy operational performance, SIGI increased dividends at a nine-year CAGR (2015-2023) of 8.8%, with dividends currently yielding 1.2%. The insurer also has an $84.2 million share buyback authorization under its kitty.
Being a property and casualty (P&C) insurer, Selective Insurance remains exposed to catastrophe losses stemming from natural disasters and weather-related events, inducing volatility in results. Nonetheless, for 2023, Selective Insurance estimates a GAAP combined ratio of 96.5%, including net catastrophe losses of 4.5 points.
SIGI has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Style Score of A or B combined with a Zacks Rank #1 or #2 (Buy) offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Everest Re Group, Ltd. and Kinsale Capital Group, Inc. (KNSL - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 has moved 5.4% north in the past 60 days.
The Zacks Consensus Estimate for AXS 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating year-over-year increases of 29.6% and 11.7%, respectively. In the past year, AXS has gained 1.4%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $46.03 and $53.25, indicating a year-over-year increase of 69.9% and 15.7%, respectively. In the past year, RE has gained 26.6%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 35.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.