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Selective Insurance to Benefit From Growing Premium Amid Cost Woes
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Key Takeaways
Premium momentum driven by new business volume, rate increases, strong retention, and product expansion.
Investment income benefits from higher yields and an improved rate environment.
Strategic acquisitions expand surety, reinsurance, and Markel Ventures' revenue streams.
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.
Exposure growth, solid retention rates and higher new business gains in standard commercial and E&S lines should drive premium growth. Selective Insurance 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.
Steady betterment of premiums, improved net investment income and higher other income have resulted in top-line improvement. 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 continues to expect after-tax net investment income of $415 million in 2025, up from $405 million guided earlier. 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 10-year CAGR (2015-2024) of about 10%. It had $56.1 million remaining under authorization as of June 30, 2025. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Risk
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.
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.
Other Industry Players
Other players in 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 to Benefit From Growing Premium Amid Cost Woes
Key Takeaways
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.
Exposure growth, solid retention rates and higher new business gains in standard commercial and E&S lines should drive premium growth. Selective Insurance 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.
Steady betterment of premiums, improved net investment income and higher other income have resulted in top-line improvement.
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 continues to expect after-tax net investment income of $415 million in 2025, up from $405 million guided earlier. 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 10-year CAGR (2015-2024) of about 10%. It had $56.1 million remaining under authorization as of June 30, 2025. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Risk
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.
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.
Other Industry Players
Other players in 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.