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Selective Insurance Set to Grow on Rising Premium Amid Challenges
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Key Takeaways
SIGI's premiums grow on renewal price gains, high retention and Commercial Lines expansion.
Commercial Lines now has a presence in 27 states, with stronger distribution and new market entries planned.
After-tax net investment income guidance for 2025 was raised to $415M from $405M.
Selective Insurance Group (SIGI - Free Report) is set to grow on rising premiums aided by solid renewal pure pricing, high retention and new business growth in Commercial Lines and Excess and Supply Lines.
Selective Insurance operates as a leading property and casualty insurer with a strong emphasis on both Standard Commercial Lines and Excess & Surplus (E&S) segments.
SIGI has underperformed its industry in the first six months, losing 7.4% versus the industry’s gain of 7.2%. Shares are trading below the 50-day moving average, indicating a bearish trend.
Earnings History
SIGI’s earning history is disappointing. It lagged estimates in each of the last four quarters, the average negative earnings surprise being 14.43%.
Earnings declined 4.3% over the past five years, while the industry average growth was 20.9%.
Factors Favoring SIGI
Selective Insurance Group (SIGI - Free Report) achieved an 8.7% CAGR in net premiums written from 2017 to 2024, fueled by renewal pure price increases and solid direct new business growth. The company remains committed to driving organic expansion, with its Commercial Lines segment increasing its share of distribution partners’ total premiums to 12%. Key initiatives include adding new distribution partners to target a 25% agent market share and entering additional states.
Even during an extended low interest rate period, SIGI delivered strong investment performance, supported by stable returns from its expanding fixed-income portfolio and higher yields from non-fixed-income assets. The insurer follows a conservative allocation strategy, with 82% of investments in fixed maturities and short-term instruments, and the remaining 18% in equities and other holdings. For 2025, it has raised its after-tax net investment income guidance to $415 million from the earlier $405 million.
Geographic diversification continues to be a major growth lever. The company has expanded its presence in New Hampshire and across the Southwest—covering Arizona, Colorado, Utah and Mexico—bringing Commercial Lines operations to 27 states, with further expansion in the pipeline.
Backed by a strong capital base, Selective Insurance enjoys favorable credit ratings. It has consistently increased dividends at a 10-year CAGR of approximately 10% (2015–2024) and, as of June 30, 2025, had $56.1 million remaining under its share repurchase authorization.
Concerns for SIGI
Being a property and casualty (P&C) insurer, Selective Insurance remains exposed to catastrophe loss stemming from natural disasters and weather-related events. This, in turn, induces underwriting volatility and weighs on the combined ratio. SIGI estimates a GAAP combined ratio of 97% to 98% in 2025, including net catastrophe losses of 6 points. This is a 100-basis point deterioration from the level guided earlier. SIGI’s debt levels have remained relatively stable in the past few years. Its leverage and times interest earned compare unfavorably with the industry.
Increasing competition in the E&S market is emerging as a challenge for Selective Insurance Group. With the segment’s profitability and flexibility attracting more insurers and new market participants, pricing pressure is increasing. The combination of rising capital inflows and enhanced risk analytics is reducing entry barriers, which puts pressure on margins and makes it more difficult for established players to maintain their competitive positioning.
Some Key Industry Players
Other players from the property and casualty insurance industry include NMI Holdings Inc. (NMIH - Free Report) , Axis Capital Holdings Limited (AXS - Free Report) , and Arch Capital Group Ltd. (ACGL - Free Report) .
NMI Holdings’ earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 5.62%.
NMI Holdings is well-poised for growth on new primary insurance written, direct primary insurance in force, and a better risk-based capital ratio. Its mortgage insurance portfolio is expected to create a strong foundation for future earnings. The mortgage insurer should continue to gain from a strong mortgage origination market and increased private mortgage insurance penetration rates.
Axis Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 13.39%.
Axis Capital continues to build on its Specialty Insurance and Reinsurance business to pave the way for long-term growth. Its focus on deploying resources prudently while enhancing efficiencies, improving its portfolio mix, and underwriting profitability bodes well. Its collaborations with distribution partners enable AXIS to widen its reach. AXS effectively deploys capital to boost shareholder value.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.21%.
Arch Capital boasts a strong product portfolio and has a solid track record of premium growth. Premiums should benefit from new business opportunities, rate increases, growth in existing accounts, and growth in Australian single-premium mortgage insurance. A solid capital position shields it from market volatility.
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Selective Insurance Set to Grow on Rising Premium Amid Challenges
Key Takeaways
Selective Insurance Group (SIGI - Free Report) is set to grow on rising premiums aided by solid renewal pure pricing, high retention and new business growth in Commercial Lines and Excess and Supply Lines.
Selective Insurance operates as a leading property and casualty insurer with a strong emphasis on both Standard Commercial Lines and Excess & Surplus (E&S) segments.
SIGI has underperformed its industry in the first six months, losing 7.4% versus the industry’s gain of 7.2%. Shares are trading below the 50-day moving average, indicating a bearish trend.
Earnings History
SIGI’s earning history is disappointing. It lagged estimates in each of the last four quarters, the average negative earnings surprise being 14.43%.
Earnings declined 4.3% over the past five years, while the industry average growth was 20.9%.
Factors Favoring SIGI
Selective Insurance Group (SIGI - Free Report) achieved an 8.7% CAGR in net premiums written from 2017 to 2024, fueled by renewal pure price increases and solid direct new business growth. The company remains committed to driving organic expansion, with its Commercial Lines segment increasing its share of distribution partners’ total premiums to 12%. Key initiatives include adding new distribution partners to target a 25% agent market share and entering additional states.
Even during an extended low interest rate period, SIGI delivered strong investment performance, supported by stable returns from its expanding fixed-income portfolio and higher yields from non-fixed-income assets. The insurer follows a conservative allocation strategy, with 82% of investments in fixed maturities and short-term instruments, and the remaining 18% in equities and other holdings. For 2025, it has raised its after-tax net investment income guidance to $415 million from the earlier $405 million.
Geographic diversification continues to be a major growth lever. The company has expanded its presence in New Hampshire and across the Southwest—covering Arizona, Colorado, Utah and Mexico—bringing Commercial Lines operations to 27 states, with further expansion in the pipeline.
Backed by a strong capital base, Selective Insurance enjoys favorable credit ratings. It has consistently increased dividends at a 10-year CAGR of approximately 10% (2015–2024) and, as of June 30, 2025, had $56.1 million remaining under its share repurchase authorization.
Concerns for SIGI
Being a property and casualty (P&C) insurer, Selective Insurance remains exposed to catastrophe loss stemming from natural disasters and weather-related events. This, in turn, induces underwriting volatility and weighs on the combined ratio. SIGI estimates a GAAP combined ratio of 97% to 98% in 2025, including net catastrophe losses of 6 points. This is a 100-basis point deterioration from the level guided earlier.
SIGI’s debt levels have remained relatively stable in the past few years. Its leverage and times interest earned compare unfavorably with the industry.
Increasing competition in the E&S market is emerging as a challenge for Selective Insurance Group. With the segment’s profitability and flexibility attracting more insurers and new market participants, pricing pressure is increasing. The combination of rising capital inflows and enhanced risk analytics is reducing entry barriers, which puts pressure on margins and makes it more difficult for established players to maintain their competitive positioning.
Some Key Industry Players
Other players from the property and casualty insurance industry include NMI Holdings Inc. (NMIH - Free Report) , Axis Capital Holdings Limited (AXS - Free Report) , and Arch Capital Group Ltd. (ACGL - Free Report) .
NMI Holdings’ earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 5.62%.
NMI Holdings is well-poised for growth on new primary insurance written, direct primary insurance in force, and a better risk-based capital ratio. Its mortgage insurance portfolio is expected to create a strong foundation for future earnings. The mortgage insurer should continue to gain from a strong mortgage origination market and increased private mortgage insurance penetration rates.
Axis Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 13.39%.
Axis Capital continues to build on its Specialty Insurance and Reinsurance business to pave the way for long-term growth. Its focus on deploying resources prudently while enhancing efficiencies, improving its portfolio mix, and underwriting profitability bodes well. Its collaborations with distribution partners enable AXIS to widen its reach. AXS effectively deploys capital to boost shareholder value.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.21%.
Arch Capital boasts a strong product portfolio and has a solid track record of premium growth. Premiums should benefit from new business opportunities, rate increases, growth in existing accounts, and growth in Australian single-premium mortgage insurance. A solid capital position shields it from market volatility.