SIGI shareholders, pray that some company comes along and makes a decent offer for this once beautiful company. The Board of this company has no clue of what's going on and a year or two more of Murphy at the helm, there may not be anything attractive to an acquiror to buy.
This last report was a disaster, topped off by a huge loss on the sale of a subsidiary, rather casually reported, I might add. This CEO is and has been a disaster!
I see a number of major problems with this company. First and foremost is Executive and lower lever management turnover. For whatever reason, the company can't seem to maintain stability among the leadership ranks. This, obviously, has a trickle down effect to the ranks and has to effect overall company performance and productivity. Secondly, the mix of the book of business is out of sync with current market conditions. Murphy admitted that the biggest issue is the personal lines book in New Jersey. No wonder given the fact that Geico and other major players are vying for market share and are running on lower margins. Additionally, I believe about 80% of the commercial lines book is contractors. And, we all know what is happening with contractors today and, most likely, into the indefinite future. Lastly, the competition is heating up as other carriers are targeting this company's best insureds with what I understand to be more attractive rates. I'd also feel remiss if I didn't address the idea of a purchase of the company. I really don't see any major carrier wanting to buy Selective. A major carrier would rather take the book of business away from Selective than pay for it. So, that leaves an offshore player. And, right now, I don't believe anyone out there wants to get into the U.S. insurance market at this time other than the new start ups in the E&S lines market.
Yours was a beautiful post, right on target! I couldn't agree more with the sentiments expressed.
But don't you think we should be expecting more from the CEO? After all, he's the one who has the responsibility and the duty to address the problems you have cogently set forth in your post. There are things he should and can do to meet competition, be more product innovative and do he other things to maintain or increase revenue. He simply accepts the status quo which we all agree is unacceptable. He simply hasn't done any of those things and I question whether he has the breadth of knowledge or wisdom to comprehend the market place in which SIGI functions.
You bet there are problems with selling SIGI. In the meantime why doesn't their discredited Board of Directors bring in a new CEO?????
Shares are selling at 80% of book value per share, and I do believe the book value number is good. So the question is; is management so bad (and their business activities) that it overrules (offsets)the tremendous asset value available (discount) at the current share price? And of course how long it will take for the marketplace to recognize this discount in share price to book value and pop up the share price to equal the book value, which is where SIGI share price usually trades at (that is share price usually trades at the book value or slightly above for this company). Or is the market discounting book value because it anticipates deteriorating asset values and operating losses that will destroy the current book value ? Ponder that over an irish coffee...
There is little in your post about which to disagree. And seeing SIGI sold would be a personal painful experience for me.
But at a given point in time one simply has to conclude that the CEO running this company has a myopic understanding of corporate management. He was and is a CPA. I think SIGI might have been his first job. He simply does not have the necessary broad view of the market place and how to attack and cope with the changes the insurance industry undergoes, on a very predictable basis. He simply refuses to adjust and adapt and he is left in the wake of those companies who can cope.
I, too, hope that there is some company out in the market place that recognizes the intrinsic value of the company, i.e. its book value etc. The problem is simply that Murphy doesn't know how to make a decent profit and that fact reduces value in the market place.