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Here's Why Hold Strategy is Apt for Selective Insurance (SIGI)
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Selective Insurance Group, Inc. (SIGI - Free Report) has been favored by investors on the back of strong renewal, fuel price increases, favorable excess and surplus (E&S) lines marketplace conditions and higher income earned on fixed-income securities portfolio.
Growth Projections
The Zacks Consensus Estimate for Selective Insurance’s 2024 earnings per share indicates a year-over-year increase of 30.3% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $4.86 billion, implying a year-over-year improvement of 14.7% from the consensus mark of 2023.
The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 10.1% from the consensus estimate of 2024. The estimate for 2025 revenues is pinned at $5.31 billion, implying a year-over-year improvement of 9.3% from the consensus mark of 2024.
The expected long-term earnings growth rate is 18.1%, outperforming the industry average of 12.2%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.1% and 0.9% north, respectively, in the past 60 days, reflecting analyst optimism.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 13.6% compared with the industry’s growth of 33.7%.
Image Source: Zacks Investment Research
Style Score
Selective Insurance has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Strong renewal, fuel price increases, exposure growth, solid retention rates and higher new business gains in standard commercial and E&S lines should drive premium growth.
Steady betterment of premiums has resulted in top-line improvement. Over the past seven years (2017-2023), total revenues witnessed a CAGR of 8%.
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, for 2024, Selective Insurance projects an after-tax net investment income of $360 million, which includes after-tax net investment income from alternative investments of $32 million. Higher income earned on fixed-income securities portfolio due to improved book yields received from the investment of operating and investing cash flows over the past year in the higher interest rate environment 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%. It had $84.2 million of shares remaining under its authorization as of Dec 31, 2023. Riding on strong financial and operating performance, the board has approved a 17% hike in the quarterly cash dividend in November 2023. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings, Inc. (PLMR - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) . While HCI Group and Palomar Holdings sport a Zacks Rank #1 (Strong Buy) each, Axis Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, HCI has surged 118.8%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.
Palomar Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, PLMR has rallied 55.6%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.
Axis Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. In the past year, AXS has gained 19.2%.
The Zacks Consensus Estimate for AXS’ 2024 and 2025 earnings implies year-over-year growth of 3% and 10%, respectively, from the consensus estimate of the corresponding years.
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Here's Why Hold Strategy is Apt for Selective Insurance (SIGI)
Selective Insurance Group, Inc. (SIGI - Free Report) has been favored by investors on the back of strong renewal, fuel price increases, favorable excess and surplus (E&S) lines marketplace conditions and higher income earned on fixed-income securities portfolio.
Growth Projections
The Zacks Consensus Estimate for Selective Insurance’s 2024 earnings per share indicates a year-over-year increase of 30.3% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $4.86 billion, implying a year-over-year improvement of 14.7% from the consensus mark of 2023.
The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 10.1% from the consensus estimate of 2024. The estimate for 2025 revenues is pinned at $5.31 billion, implying a year-over-year improvement of 9.3% from the consensus mark of 2024.
The expected long-term earnings growth rate is 18.1%, outperforming the industry average of 12.2%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.1% and 0.9% north, respectively, in the past 60 days, reflecting analyst optimism.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 13.6% compared with the industry’s growth of 33.7%.
Image Source: Zacks Investment Research
Style Score
Selective Insurance has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Strong renewal, fuel price increases, exposure growth, solid retention rates and higher new business gains in standard commercial and E&S lines should drive premium growth.
Steady betterment of premiums has resulted in top-line improvement. Over the past seven years (2017-2023), total revenues witnessed a CAGR of 8%.
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, for 2024, Selective Insurance projects an after-tax net investment income of $360 million, which includes after-tax net investment income from alternative investments of $32 million. Higher income earned on fixed-income securities portfolio due to improved book yields received from the investment of operating and investing cash flows over the past year in the higher interest rate environment 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%. It had $84.2 million of shares remaining under its authorization as of Dec 31, 2023. Riding on strong financial and operating performance, the board has approved a 17% hike in the quarterly cash dividend in November 2023. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings, Inc. (PLMR - Free Report) and Axis Capital Holdings Limited (AXS - Free Report) . While HCI Group and Palomar Holdings sport a Zacks Rank #1 (Strong Buy) each, Axis Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, HCI has surged 118.8%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.
Palomar Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, PLMR has rallied 55.6%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.
Axis Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. In the past year, AXS has gained 19.2%.
The Zacks Consensus Estimate for AXS’ 2024 and 2025 earnings implies year-over-year growth of 3% and 10%, respectively, from the consensus estimate of the corresponding years.