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Selective Insurance Group, Inc. (SIGI - Free Report) reported third-quarter 2024 operating income of $1.40 per share, which missed the Zacks Consensus Estimate by 17.1%. The bottom line decreased 7% from the year-ago quarter.
The quarterly results reflected average renewal pure price increases and stable retention across Standard Commercial Lines and Excess & Surplus Lines. Soft performance at Standard Personal Lines, higher catastrophe losses and poor underwriting income were offsets.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Total revenues of $1.2 billion increased 13.9% from the year-ago quarter’s figure, primarily due to higher premiums earned, net investment income and net premiums written (NPW). However, the top line missed the Zacks Consensus Estimate by 0.4%.
On a year-over-year basis, NPW increased 9% to $1.15 billion, driven by accelerating renewal pure price increases and stable Standard Commercial Lines retention. The figure was higher than our estimate of $1.2 billion.
Net investment income earned, before-tax, increased 17% year over year to $117.8 million. The figure was higher than our estimate of $117.3 million. The Zacks Consensus Estimate was pegged at $114 million.
After-tax net underwriting income was $4.1 million, which plunged 83% year over year. Pre-tax catastrophe losses more than doubled year over year to $148.8 million. Non-catastrophe property loss and loss expenses of $146.7 million decreased 15.1% year over year.
The combined ratio of 99.5 deteriorated 270 basis points (bps) year over year due to elevated catastrophe losses. Losses resulted from 19 named storms in the quarter, with Hurricane Helene estimated at $85 million of pre-tax losses.
Total expenses increased 16.4% year over year to $1.1 billion, primarily due to higher loss and loss expense incurred, amortization of deferred policy acquisition costs, other insurance expenses and interest expense. The figure matched our estimate.
Segmental Results
Standard Commercial Lines’ NPW was up 8% year over year to $903.9 million. The premium growth reflected average renewal pure price increases of 9.1% and stable retention of 86%. The figure was lower than our estimate of $963 million.
The combined ratio deteriorated 450 bps to 99.2. The Zacks Consensus Estimate and our estimate were both pegged at 93.3.
Standard Personal Lines’ NPW decreased 2% year over year to $111 million, with a renewal pure price of 22.8% and higher average policy sizes. Retention was 75%, down 13 points from a year ago, and new business decreased 49% due to deliberate profit improvement actions. The figure was lower than our estimate of $130.9 million.
The combined ratio improved 530 bps on a year-over-year basis to 122.1. The Zacks Consensus Estimate was pegged at 102.8, while our estimate was 120.6.
Excess & Surplus Lines’ NPW was up 28% year over year to $142.7 million, driven by new business growth of 43% and average renewal pure price increases of 8%. The figure was higher than our estimate of $ $130.5 million.
The combined ratio improved 70 bps to 83.2. The Zacks Consensus Estimate was pegged at 88, while our estimate was 84.3.
Financial Update
Selective Insurance exited third-quarter 2024 with total assets of $13.4 billion, which was 14% below the level at the end of December 2023. Long-term debt of $ 508.2 million increased 1% from the 2023 level.
Debt-to-total capitalization improved 80 bps to 13.8% from the 2023-end level. As of Sept. 30, 2024, book value per share was $48.82, up 9% year over year. Annualized non-GAAP operating return on equity was 15% in the third quarter of 2024, which contracted 290 bps year over year.
Share Repurchase and Dividend Update
In the third quarter of 2024, Selective Insurance repurchased shares for $8.7 million. It had $75.5 million remaining under authorization as of Sept. 30, 2024.
The board of directors authorized a 9% increase in the quarterly cash dividend to 38 cents per share. The dividend will be paid out on Dec. 2 to shareholders of record at the close of business as of Nov. 15, 2024.
2024 Guidance
SIGI estimates a GAAP combined ratio of 102.5%, up 1 point from the earlier guidance of 101.5%. The combined ratio estimate includes net catastrophe losses of 7.5 points, up from the prior guidance of 5.5 points. The company expects losses from Hurricane Milton, which made landfall on Oct. 9, 2024, to be immaterial.
Selective Insurance estimates after-tax net investment income of $360 million, which includes $32 million from alternative investment.
The company has an overall effective tax rate of approximately 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 Progressive Corporation’s (PGR - Free Report) third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.
Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.
The Travelers Companies (TRV - Free Report) reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Travelers’ total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.
Net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Net investment income increased 18% year over year to $904 million. The figure was higher than our estimate of $868.7 million. The Zacks Consensus Estimate was pegged at $883 million. Catastrophe loss was $939 million, pre-tax, wider than a loss of $850 million, pre-tax, incurred in the year-ago quarter.
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2024 operating income of 93 cents per share beat the Zacks Consensus Estimate by 1.1%. The bottom line improved 3.3% year over year. W.R. Berkley’s net premiums written were a record $3.1 billion, up 7.3% year over year. The figure was $3.1 billion. Operating revenues came in at $3.4 billion, up 10.9% year over year. The top line missed the consensus estimate by 0.8%.
Net investment income surged 19.5% to a record $323.8 million. The figure was lower than our estimate of $382.1 million. The Zacks Consensus Estimate was $343 million. Total expenses increased 12.1% to $2.9 billion. The figure matched our estimate. The loss ratio deteriorated 50 bps to 62.4, while the expense ratio deteriorated 20 bps year over year to 28.5.
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Selective Insurance Misses Q3 Earnings Estimates, Raises Dividend
Selective Insurance Group, Inc. (SIGI - Free Report) reported third-quarter 2024 operating income of $1.40 per share, which missed the Zacks Consensus Estimate by 17.1%. The bottom line decreased 7% from the year-ago quarter.
The quarterly results reflected average renewal pure price increases and stable retention across Standard Commercial Lines and Excess & Surplus Lines. Soft performance at Standard Personal Lines, higher catastrophe losses and poor underwriting income were offsets.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Selective Insurance Group, Inc. price-consensus-eps-surprise-chart | Selective Insurance Group, Inc. Quote
Behind the Headlines
Total revenues of $1.2 billion increased 13.9% from the year-ago quarter’s figure, primarily due to higher premiums earned, net investment income and net premiums written (NPW). However, the top line missed the Zacks Consensus Estimate by 0.4%.
On a year-over-year basis, NPW increased 9% to $1.15 billion, driven by accelerating renewal pure price increases and stable Standard Commercial Lines retention. The figure was higher than our estimate of $1.2 billion.
Net investment income earned, before-tax, increased 17% year over year to $117.8 million. The figure was higher than our estimate of $117.3 million. The Zacks Consensus Estimate was pegged at $114 million.
After-tax net underwriting income was $4.1 million, which plunged 83% year over year. Pre-tax catastrophe losses more than doubled year over year to $148.8 million. Non-catastrophe property loss and loss expenses of $146.7 million decreased 15.1% year over year.
The combined ratio of 99.5 deteriorated 270 basis points (bps) year over year due to elevated catastrophe losses. Losses resulted from 19 named storms in the quarter, with Hurricane Helene estimated at $85 million of pre-tax losses.
Total expenses increased 16.4% year over year to $1.1 billion, primarily due to higher loss and loss expense incurred, amortization of deferred policy acquisition costs, other insurance expenses and interest expense. The figure matched our estimate.
Segmental Results
Standard Commercial Lines’ NPW was up 8% year over year to $903.9 million. The premium growth reflected average renewal pure price increases of 9.1% and stable retention of 86%. The figure was lower than our estimate of $963 million.
The combined ratio deteriorated 450 bps to 99.2. The Zacks Consensus Estimate and our estimate were both pegged at 93.3.
Standard Personal Lines’ NPW decreased 2% year over year to $111 million, with a renewal pure price of 22.8% and higher average policy sizes. Retention was 75%, down 13 points from a year ago, and new business decreased 49% due to deliberate profit improvement actions. The figure was lower than our estimate of $130.9 million.
The combined ratio improved 530 bps on a year-over-year basis to 122.1. The Zacks Consensus Estimate was pegged at 102.8, while our estimate was 120.6.
Excess & Surplus Lines’ NPW was up 28% year over year to $142.7 million, driven by new business growth of 43% and average renewal pure price increases of 8%. The figure was higher than our estimate of $ $130.5 million.
The combined ratio improved 70 bps to 83.2. The Zacks Consensus Estimate was pegged at 88, while our estimate was 84.3.
Financial Update
Selective Insurance exited third-quarter 2024 with total assets of $13.4 billion, which was 14% below the level at the end of December 2023. Long-term debt of $ 508.2 million increased 1% from the 2023 level.
Debt-to-total capitalization improved 80 bps to 13.8% from the 2023-end level.
As of Sept. 30, 2024, book value per share was $48.82, up 9% year over year.
Annualized non-GAAP operating return on equity was 15% in the third quarter of 2024, which contracted 290 bps year over year.
Share Repurchase and Dividend Update
In the third quarter of 2024, Selective Insurance repurchased shares for $8.7 million. It had $75.5 million remaining under authorization as of Sept. 30, 2024.
The board of directors authorized a 9% increase in the quarterly cash dividend to 38 cents per share. The dividend will be paid out on Dec. 2 to shareholders of record at the close of business as of Nov. 15, 2024.
2024 Guidance
SIGI estimates a GAAP combined ratio of 102.5%, up 1 point from the earlier guidance of 101.5%. The combined ratio estimate includes net catastrophe losses of 7.5 points, up from the prior guidance of 5.5 points. The company expects losses from Hurricane Milton, which made landfall on Oct. 9, 2024, to be immaterial.
Selective Insurance estimates after-tax net investment income of $360 million, which includes $32 million from alternative investment.
The company has an overall effective tax rate of approximately 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 Progressive Corporation’s (PGR - Free Report) third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.
Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.
The Travelers Companies (TRV - Free Report) reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Travelers’ total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.
Net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Net investment income increased 18% year over year to $904 million. The figure was higher than our estimate of $868.7 million. The Zacks Consensus Estimate was pegged at $883 million. Catastrophe loss was $939 million, pre-tax, wider than a loss of $850 million, pre-tax, incurred in the year-ago quarter.
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2024 operating income of 93 cents per share beat the Zacks Consensus Estimate by 1.1%. The bottom line improved 3.3% year over year. W.R. Berkley’s net premiums written were a record $3.1 billion, up 7.3% year over year. The figure was $3.1 billion. Operating revenues came in at $3.4 billion, up 10.9% year over year. The top line missed the consensus estimate by 0.8%.
Net investment income surged 19.5% to a record $323.8 million. The figure was lower than our estimate of $382.1 million. The Zacks Consensus Estimate was $343 million. Total expenses increased 12.1% to $2.9 billion. The figure matched our estimate. The loss ratio deteriorated 50 bps to 62.4, while the expense ratio deteriorated 20 bps year over year to 28.5.