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Selective Insurance Group, Inc. (SIGI - Free Report) reported first-quarter 2024 operating income of $1.33 per share, which missed the Zacks Consensus Estimate by 29.3%. The bottom line decreased 7.6% from the year-ago quarter.
The company’s performance in the quarter suffered due to higher non-catastrophe property loss and loss expenses. However, it witnessed average renewal pure price increases, new business growth, solid net investment income as well as lower catastrophe losses in the quarter, which limited the downside.
Behind the Headlines
Total revenues of $1.2 billion increased 17.2% 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 0.1%.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
On a year-over-year basis, net premiums written (NPW) increased 16% to $991 million, reflecting new business growth and effective management of the renewal portfolio. Average renewal pure price increased 8.1%, with stable retention and increased exposure. The figure was lower than our estimate of $1.1 billion.
Net investment income increased 17% year over year to $86 million.
After-tax net underwriting income was $15 million, which decreased 51% year over year. Net catastrophe losses of $55.2 million were lower than the year-ago loss of $55.3 million. Non-catastrophe property loss and loss expenses were $171.2 million, higher than the year-ago loss of $148.2 million.
The combined ratio of 98.2 deteriorated 250 basis points year over year due to prior year casualty reserve development, partially offset by an improved expense ratio and lower catastrophe losses. The Zacks Consensus Estimate was 94 and our estimate was 93.8.
Total expenses increased 20% year over year to $1.1 billion, primarily due to higher loss and loss expenses incurred, other insurance expenses, amortization of deferred policy acquisition costs and corporate expenses. The figure was higher than our estimate of $1 billion.
Segmental Results
Standard Commercial Lines’ NPW was up 15% year over year to $931.7 million. The premium growth reflected average renewal pure price increases of 7.6%, new business growth of 17%, strong exposure growth and stable retention of 86%. The figure was higher than our estimate of $923.5 million.
The combined ratio deteriorated 410 basis points (bps) to 98.8. The Zacks Consensus Estimate was 93 and our estimate was 93.4.
Standard Personal Lines’ NPW increased 17% year over year to $99.9 million, driven by renewal pure price increases of 14.3% and higher average policy sizes. However, retention was down to 83%. New business decreased 19%. The figure was higher than our estimate of $98.6 million.
The combined ratio improved 1090 bps on a year-over-year basis to 105.1. The Zacks Consensus Estimate was pegged at 108, while our estimate was 103.5.
Excess & Surplus Lines’ NPW was up 24% year over year to $125 million, driven by new business growth of 57% and average renewal pure price increases of 5.2%. The figure was higher than our estimate of $124 million.
The combined ratio deteriorated 260 bps to 87.6. The Zacks Consensus Estimate was pegged at 87, while our estimate was 87.6.
Financial Update
Selective Insurance exited the first quarter of 2024 with total assets of $12.1 billion, 2% above the level at December 2023 end. Long-term debt of $503.3 million was flat with the 2023 end level.
Debt-to-total capitalization improved 30 bps to 14.3% from the first-quarter 2023 level.
As of Mar 31, 2024, adjusted book value per share was $50.97, up 9% year over year.
SIGI achieved the 10th consecutive year of double-digit operating ROE of 11.7%, which contracted 290 basis points year over year.
Share Repurchase and Dividend Update
No shares were bought back in the first quarter of 2024. SIGI had $84.2 million remaining under authorization as of Mar 31, 2024.
The board of directors authorized a quarterly cash dividend of 35 cents per share. The dividend will be paid out on Jun 3 to shareholders of record at the close of business on May 15, 2024.
2024 Guidance
SIGI estimates a GAAP combined ratio of 96.5%, up from the prior guidance of 95.5. This includes net catastrophe losses of 500 basis points and 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.
The Travelers Companies (TRV - Free Report) reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s (PGR - Free Report) first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
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Selective Insurance (SIGI) Q1 Earnings Miss, Premiums Rise Y/Y
Selective Insurance Group, Inc. (SIGI - Free Report) reported first-quarter 2024 operating income of $1.33 per share, which missed the Zacks Consensus Estimate by 29.3%. The bottom line decreased 7.6% from the year-ago quarter.
The company’s performance in the quarter suffered due to higher non-catastrophe property loss and loss expenses. However, it witnessed average renewal pure price increases, new business growth, solid net investment income as well as lower catastrophe losses in the quarter, which limited the downside.
Behind the Headlines
Total revenues of $1.2 billion increased 17.2% 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 0.1%.
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 16% to $991 million, reflecting new business growth and effective management of the renewal portfolio. Average renewal pure price increased 8.1%, with stable retention and increased exposure. The figure was lower than our estimate of $1.1 billion.
Net investment income increased 17% year over year to $86 million.
After-tax net underwriting income was $15 million, which decreased 51% year over year. Net catastrophe losses of $55.2 million were lower than the year-ago loss of $55.3 million. Non-catastrophe property loss and loss expenses were $171.2 million, higher than the year-ago loss of $148.2 million.
The combined ratio of 98.2 deteriorated 250 basis points year over year due to prior year casualty reserve development, partially offset by an improved expense ratio and lower catastrophe losses. The Zacks Consensus Estimate was 94 and our estimate was 93.8.
Total expenses increased 20% year over year to $1.1 billion, primarily due to higher loss and loss expenses incurred, other insurance expenses, amortization of deferred policy acquisition costs and corporate expenses. The figure was higher than our estimate of $1 billion.
Segmental Results
Standard Commercial Lines’ NPW was up 15% year over year to $931.7 million. The premium growth reflected average renewal pure price increases of 7.6%, new business growth of 17%, strong exposure growth and stable retention of 86%. The figure was higher than our estimate of $923.5 million.
The combined ratio deteriorated 410 basis points (bps) to 98.8. The Zacks Consensus Estimate was 93 and our estimate was 93.4.
Standard Personal Lines’ NPW increased 17% year over year to $99.9 million, driven by renewal pure price increases of 14.3% and higher average policy sizes. However, retention was down to 83%. New business decreased 19%. The figure was higher than our estimate of $98.6 million.
The combined ratio improved 1090 bps on a year-over-year basis to 105.1. The Zacks Consensus Estimate was pegged at 108, while our estimate was 103.5.
Excess & Surplus Lines’ NPW was up 24% year over year to $125 million, driven by new business growth of 57% and average renewal pure price increases of 5.2%. The figure was higher than our estimate of $124 million.
The combined ratio deteriorated 260 bps to 87.6. The Zacks Consensus Estimate was pegged at 87, while our estimate was 87.6.
Financial Update
Selective Insurance exited the first quarter of 2024 with total assets of $12.1 billion, 2% above the level at December 2023 end. Long-term debt of $503.3 million was flat with the 2023 end level.
Debt-to-total capitalization improved 30 bps to 14.3% from the first-quarter 2023 level.
As of Mar 31, 2024, adjusted book value per share was $50.97, up 9% year over year.
SIGI achieved the 10th consecutive year of double-digit operating ROE of 11.7%, which contracted 290 basis points year over year.
Share Repurchase and Dividend Update
No shares were bought back in the first quarter of 2024. SIGI had $84.2 million remaining under authorization as of Mar 31, 2024.
The board of directors authorized a quarterly cash dividend of 35 cents per share. The dividend will be paid out on Jun 3 to shareholders of record at the close of business on May 15, 2024.
2024 Guidance
SIGI estimates a GAAP combined ratio of 96.5%, up from the prior guidance of 95.5. This includes net catastrophe losses of 500 basis points and 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 #3 (Hold). 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 first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s (PGR - Free Report) first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. (RLI - Free Report) reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.