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Here's Why You Should Hold Selective Insurance (SIGI) Stock
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Selective Insurance Group, Inc. (SIGI - Free Report) is well-poised to gain from 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 16.6%. The consensus estimate for revenues is pegged at $4.89 billion, implying a year-over-year improvement of 15.4%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 19.5% and 9.9%, respectively, from the corresponding 2024 estimates.
The expected long-term earnings growth rate is 16.2%, outperforming the industry average of 10.2%.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has lost 6.8% against the industry’s growth of 21.2%.
Image Source: Zacks Investment Research
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, improved net investment income and higher other income have 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, Selective Insurance estimates an after-tax net investment income of $360 million for 2024 and includes $32 million of after-tax net investment income from alternative investments. 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 remaining under authorization as of Mar 31, 2024. 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.
However, Selective Insurance remains exposed to catastrophe loss stemming from natural disasters and weather-related events. Such a massive loss poses an inherent risk to the P&C insurance business inducing volatility to its results. In the first quarter of 2024, the combined ratio deteriorated year over year due to the prior year’s casualty reserve development.
HCI Group’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 139.15%. In the past year, shares of HCI have surged 63.1%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 57.6% and 4.2%, respectively.
RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 132.39%. In the past year, RLI has gained 9.2%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 18.2% and 2.6%, respectively.
NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, NMIH has climbed 26.8%.
The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 10.6% and 7.6%, respectively.
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Here's Why You Should Hold Selective Insurance (SIGI) Stock
Selective Insurance Group, Inc. (SIGI - Free Report) is well-poised to gain from 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 16.6%. The consensus estimate for revenues is pegged at $4.89 billion, implying a year-over-year improvement of 15.4%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 19.5% and 9.9%, respectively, from the corresponding 2024 estimates.
The expected long-term earnings growth rate is 16.2%, outperforming the industry average of 10.2%.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has lost 6.8% against the industry’s growth of 21.2%.
Image Source: Zacks Investment Research
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, improved net investment income and higher other income have 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, Selective Insurance estimates an after-tax net investment income of $360 million for 2024 and includes $32 million of after-tax net investment income from alternative investments. 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 remaining under authorization as of Mar 31, 2024. 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.
However, Selective Insurance remains exposed to catastrophe loss stemming from natural disasters and weather-related events. Such a massive loss poses an inherent risk to the P&C insurance business inducing volatility to its results. In the first quarter of 2024, the combined ratio deteriorated year over year due to the prior year’s casualty reserve development.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are HCI Group, Inc. (HCI - Free Report) , RLI Corp. (RLI - Free Report) and NMI Holdings Inc (NMIH - Free Report) . While HCI Group sports a Zacks Rank #1 (Strong Buy), RLI and NMI Holdings carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 139.15%. In the past year, shares of HCI have surged 63.1%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 57.6% and 4.2%, respectively.
RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 132.39%. In the past year, RLI has gained 9.2%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 18.2% and 2.6%, respectively.
NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, NMIH has climbed 26.8%.
The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 10.6% and 7.6%, respectively.