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Selective Insurance (SIGI) Q4 Earnings Beat on Solid Underwriting
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Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2023 operating income of $1.94 per share, which beat the Zacks Consensus Estimate by 1%. The bottom line increased 32.9% from the year-ago quarter.
The company witnessed average renewal pure price increases, new business growth, solid net investment income as well as lower catastrophe losses in the quarter.
Behind the Headlines
Total revenues of $1.1 billion increased 15.4% from the year-ago quarter’s figure, primarily due to higher premiums earned, net investment income and other income. The top line missed the Zacks Consensus Estimate by 0.7%.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
On a year-over-year basis, net premiums written (NPW) increased 17% to $991 million, reflecting new business growth and effective management of the renewal portfolio. Average renewal pure price increased 7.4%, with stable retention and increased exposure. The figure was higher than our estimate of $963.9 million.
After-tax net investment income increased 20% year over year to $78 million.
After-tax net underwriting income was $52 million, which increased 38% year over year. Net catastrophe losses of $24.6 million were lower than the year-ago loss of $45.7 million. Non-catastrophe property loss and loss expenses were $172.1 million, higher than the year-ago loss of $161.4 million.
The combined ratio of 93.7 improved 100 basis points year over year, with lower catastrophe and non-catastrophe property losses and an improved expense ratio. The Zacks Consensus Estimate and our estimate was 94.
Total expenses increased 12.9% year over year to $953.7 million, primarily due to higher loss and loss expenses incurred, other insurance expenses, amortization of deferred policy acquisition costs and interest expenses. The figure was higher than our estimate of $937.2 million.
Segmental Results
Standard Commercial Lines’ NPW was up 13% year over year to $764.3 million. The premium growth reflected average renewal pure price increase of 7.3%, new business growth of 14%, strong exposure growth and stable retention of 86%. The figure was higher than our estimate of $763.4 million.
The combined ratio improved 240 basis points (bps) to 93.1. The Zacks Consensus Estimate was 94 and our estimate was 95.2.
Standard Personal Lines’ NPW increased 27% year over year to $107 million. Renewal pure price increases averaged 8.9%, retention was 87% and new business was up $3.7 million, which drove the improvement in NPW. The figure was higher than our estimate of $93.6 million.
The combined ratio deteriorated 1700 bps on a year-over-year basis to 116.9. The Zacks Consensus Estimate was pegged at 100 while our estimate was 95.8.
Excess & Surplus Lines’ NPW was up 36% year over year to $111.6 million, driven by average renewal pure price increases of 6.1% and new business growth of 58%. The figure was higher than our estimate of $106.9 million.
The combined ratio improved 810 bps to 76.2. The Zacks Consensus Estimate was pegged at 86, while our estimate was 83.6.
Full-Year Highlights
Operating earnings of 5.86 increased 17% year over year.
NPW was a record $4.1 billion and marked a 16% year-over-year increase.
Underwriting income dropped 20% to $104.9 million while the combined ratio deteriorated 140 basis points to 96.5% with lower catastrophe and non-catastrophe property losses and an improved expense ratio.
Financial Update
Selective Insurance exited 2023 with total assets of $11.8 billion, which was 9% above the level at December 2022 end. Long-term debt of $504.6 million declined 0.2% from the 2022 level.
Debt-to-total capitalization improved 200 bps to 14.6% from the level as of 2022 end.
As of Dec 31, 2023, book value per share was $445.42, up 18% year over year.
SIGI achieved the 10th consecutive year of double-digit operating ROE of 14.4%, which exceeded the 12% target and expanded 200 basis points year over year.
Share Repurchase and Dividend Update
No shares were bought back in 2023. SIGI had $84.2 million remaining under authorization as of Dec 31, 2023.
The board of directors authorized a quarterly cash dividend of 35 cents per share. The dividend will be paid out on Mar 1 to shareholders of record at the close of business on Feb 15, 2024.
2024 Guidance
SIGI estimates a GAAP combined ratio of 95.5%, including net catastrophe losses of 5 points. The combined ratio estimate assumes no additional prior-year casualty reserve development.
Selective Insurance estimates an after-tax net investment income of $360 million and includes $32 million of after-tax net investment income from alternative investments.
The overall effective tax rate is expected to be around 21%, which assumes an effective tax rate of 20.5% for net investment income and 21% for all other items.
Weighted average shares were 61.5 million on a fully diluted basis.
Zacks Rank
Selective Insurance currently carries a Zacks Rank #4 (Sell).
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. TRV witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. PGR’s premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
Progressive’s combined ratio improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year at 88.4.
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Selective Insurance (SIGI) Q4 Earnings Beat on Solid Underwriting
Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2023 operating income of $1.94 per share, which beat the Zacks Consensus Estimate by 1%. The bottom line increased 32.9% from the year-ago quarter.
The company witnessed average renewal pure price increases, new business growth, solid net investment income as well as lower catastrophe losses in the quarter.
Behind the Headlines
Total revenues of $1.1 billion increased 15.4% from the year-ago quarter’s figure, primarily due to higher premiums earned, net investment income and other income. The top line missed the Zacks Consensus Estimate by 0.7%.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Selective Insurance Group, Inc. price-consensus-eps-surprise-chart | Selective Insurance Group, Inc. Quote
On a year-over-year basis, net premiums written (NPW) increased 17% to $991 million, reflecting new business growth and effective management of the renewal portfolio. Average renewal pure price increased 7.4%, with stable retention and increased exposure. The figure was higher than our estimate of $963.9 million.
After-tax net investment income increased 20% year over year to $78 million.
After-tax net underwriting income was $52 million, which increased 38% year over year. Net catastrophe losses of $24.6 million were lower than the year-ago loss of $45.7 million. Non-catastrophe property loss and loss expenses were $172.1 million, higher than the year-ago loss of $161.4 million.
The combined ratio of 93.7 improved 100 basis points year over year, with lower catastrophe and non-catastrophe property losses and an improved expense ratio. The Zacks Consensus Estimate and our estimate was 94.
Total expenses increased 12.9% year over year to $953.7 million, primarily due to higher loss and loss expenses incurred, other insurance expenses, amortization of deferred policy acquisition costs and interest expenses. The figure was higher than our estimate of $937.2 million.
Segmental Results
Standard Commercial Lines’ NPW was up 13% year over year to $764.3 million. The premium growth reflected average renewal pure price increase of 7.3%, new business growth of 14%, strong exposure growth and stable retention of 86%. The figure was higher than our estimate of $763.4 million.
The combined ratio improved 240 basis points (bps) to 93.1. The Zacks Consensus Estimate was 94 and our estimate was 95.2.
Standard Personal Lines’ NPW increased 27% year over year to $107 million. Renewal pure price increases averaged 8.9%, retention was 87% and new business was up $3.7 million, which drove the improvement in NPW. The figure was higher than our estimate of $93.6 million.
The combined ratio deteriorated 1700 bps on a year-over-year basis to 116.9. The Zacks Consensus Estimate was pegged at 100 while our estimate was 95.8.
Excess & Surplus Lines’ NPW was up 36% year over year to $111.6 million, driven by average renewal pure price increases of 6.1% and new business growth of 58%. The figure was higher than our estimate of $106.9 million.
The combined ratio improved 810 bps to 76.2. The Zacks Consensus Estimate was pegged at 86, while our estimate was 83.6.
Full-Year Highlights
Operating earnings of 5.86 increased 17% year over year.
NPW was a record $4.1 billion and marked a 16% year-over-year increase.
Underwriting income dropped 20% to $104.9 million while the combined ratio deteriorated 140 basis points to 96.5% with lower catastrophe and non-catastrophe property losses and an improved expense ratio.
Financial Update
Selective Insurance exited 2023 with total assets of $11.8 billion, which was 9% above the level at December 2022 end. Long-term debt of $504.6 million declined 0.2% from the 2022 level.
Debt-to-total capitalization improved 200 bps to 14.6% from the level as of 2022 end.
As of Dec 31, 2023, book value per share was $445.42, up 18% year over year.
SIGI achieved the 10th consecutive year of double-digit operating ROE of 14.4%, which exceeded the 12% target and expanded 200 basis points year over year.
Share Repurchase and Dividend Update
No shares were bought back in 2023. SIGI had $84.2 million remaining under authorization as of Dec 31, 2023.
The board of directors authorized a quarterly cash dividend of 35 cents per share. The dividend will be paid out on Mar 1 to shareholders of record at the close of business on Feb 15, 2024.
2024 Guidance
SIGI estimates a GAAP combined ratio of 95.5%, including net catastrophe losses of 5 points. The combined ratio estimate assumes no additional prior-year casualty reserve development.
Selective Insurance estimates an after-tax net investment income of $360 million and includes $32 million of after-tax net investment income from alternative investments.
The overall effective tax rate is expected to be around 21%, which assumes an effective tax rate of 20.5% for net investment income and 21% for all other items.
Weighted average shares were 61.5 million on a fully diluted basis.
Zacks Rank
Selective Insurance currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property & Casualty Insurers
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. TRV witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. PGR’s premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
Progressive’s combined ratio improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year at 88.4.