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Selective Insurance (SIGI) Rises 18.9% YTD: More Room to Run?
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Shares of Selective Insurance Group, Inc. (SIGI - Free Report) have gained 18.9% year to date (YTD), outperforming the industry's rise of 12.1%. The Zacks S&P 500 composite has increased 14.1% in the said time frame. With a market capitalization of $6.38 billion, average volume of shares traded in the last three months was 0.2 million.
Image Source: Zacks Investment Research
The rally was largely driven by strong renewal, exposure growth, favorable excess and surplus (E&S) lines marketplace conditions, higher income earned on fixed-income securities portfolio and prudent capital deployment.
This Zacks Rank #3 (Hold) insurer’s return on common equity was 12.8% in the second quarter of 2023, which expanded 20 basis points year over year. Based on the guidance for 2023, SIGI remains on track to deliver solid results for 2023 with operating return on equity (ROE) with above the 12% target. ROE is a profitability measure that reflects how effectively the company is utilizing its shareholder’s fund.
Selective Insurance has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.11 per share, indicating a 21.4% increase from the year-ago reported figure on 14.6% higher revenues of $4.21 billion. The consensus estimate for 2024 earnings is pegged at $7.62 per share, indicating a 24.6% increase from the year-ago reported figure on 10.4% higher revenues of $4.65 billion.
The expected long-term earnings growth rate is pegged at 21.4%, outperforming the industry average of 12.1%.
Strong renewal, fuel price increases, exposure growth, solid retention rates and higher new business growth in standard commercial and E&S lines should drive premium growth.
The steady betterment of premiums has resulted in top-line improvement. Over the past six years (2017-2022), total revenues witnessed a CAGR of 6.3% and another 19% in the first half of 2023.
The E&S Lines 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.
Given impressive investment results, SIGI projects an after-tax net investment income of $300 million, which includes $30 million of after-tax net investment income from alternative investments. Higher income earned on fixed-income securities portfolio due to improved book yields is likely to drive the metric.
Riding on a solid capital position, the company has been hiking dividends, which registered a nine-year (2015-2023) CAGR of nearly 8.8%. The insurer also has an $84.2 million share buyback authorization under its kitty. Riding on strong financial and operating performance, the board has approved a 7% hike in the quarterly cash dividend in November 2022. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Being a property and casualty insurer, SIGI is exposed to catastrophe losses stemming from natural disasters and weather-related events. For 2023, Selective Insurance estimates GAAP combined ratio of 96.5%, including net catastrophe losses of 6 points, up from the prior guidance of 4.5 points.
Estimates for both 2023 and 2024 earnings have moved up nearly 0.1%, in the past 30 days, reflecting investors’ optimism.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Chubb Limited (CB - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) . While Axis Capital sports a Zacks Rank #1 (Strong Buy), Chubb and Cincinnati Financial carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. YTD, AXS has gained 6.1%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Chubb has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 3.36%. CB has lost 3.9% YTD.
The Zacks Consensus Estimate for CB’s 2023 and 2024 earnings per share is pegged at $18.18 and $19.86, indicating a year-over-year increase of 19.2% and 9.2%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. Year to date, CINF has gained 2.7%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
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Selective Insurance (SIGI) Rises 18.9% YTD: More Room to Run?
Shares of Selective Insurance Group, Inc. (SIGI - Free Report) have gained 18.9% year to date (YTD), outperforming the industry's rise of 12.1%. The Zacks S&P 500 composite has increased 14.1% in the said time frame. With a market capitalization of $6.38 billion, average volume of shares traded in the last three months was 0.2 million.
Image Source: Zacks Investment Research
The rally was largely driven by strong renewal, exposure growth, favorable excess and surplus (E&S) lines marketplace conditions, higher income earned on fixed-income securities portfolio and prudent capital deployment.
This Zacks Rank #3 (Hold) insurer’s return on common equity was 12.8% in the second quarter of 2023, which expanded 20 basis points year over year. Based on the guidance for 2023, SIGI remains on track to deliver solid results for 2023 with operating return on equity (ROE) with above the 12% target. ROE is a profitability measure that reflects how effectively the company is utilizing its shareholder’s fund.
Selective Insurance has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.11 per share, indicating a 21.4% increase from the year-ago reported figure on 14.6% higher revenues of $4.21 billion. The consensus estimate for 2024 earnings is pegged at $7.62 per share, indicating a 24.6% increase from the year-ago reported figure on 10.4% higher revenues of $4.65 billion.
The expected long-term earnings growth rate is pegged at 21.4%, outperforming the industry average of 12.1%.
Strong renewal, fuel price increases, exposure growth, solid retention rates and higher new business growth in standard commercial and E&S lines should drive premium growth.
The steady betterment of premiums has resulted in top-line improvement. Over the past six years (2017-2022), total revenues witnessed a CAGR of 6.3% and another 19% in the first half of 2023.
The E&S Lines 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.
Given impressive investment results, SIGI projects an after-tax net investment income of $300 million, which includes $30 million of after-tax net investment income from alternative investments. Higher income earned on fixed-income securities portfolio due to improved book yields is likely to drive the metric.
Riding on a solid capital position, the company has been hiking dividends, which registered a nine-year (2015-2023) CAGR of nearly 8.8%. The insurer also has an $84.2 million share buyback authorization under its kitty. Riding on strong financial and operating performance, the board has approved a 7% hike in the quarterly cash dividend in November 2022. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Being a property and casualty insurer, SIGI is exposed to catastrophe losses stemming from natural disasters and weather-related events. For 2023, Selective Insurance estimates GAAP combined ratio of 96.5%, including net catastrophe losses of 6 points, up from the prior guidance of 4.5 points.
Estimates for both 2023 and 2024 earnings have moved up nearly 0.1%, in the past 30 days, reflecting investors’ optimism.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Chubb Limited (CB - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) . While Axis Capital sports a Zacks Rank #1 (Strong Buy), Chubb and Cincinnati Financial carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. YTD, AXS has gained 6.1%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Chubb has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 3.36%. CB has lost 3.9% YTD.
The Zacks Consensus Estimate for CB’s 2023 and 2024 earnings per share is pegged at $18.18 and $19.86, indicating a year-over-year increase of 19.2% and 9.2%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. Year to date, CINF has gained 2.7%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.