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Selective Insurance Group Inc. Message Board

  • customstyleguy customstyleguy Dec 11, 2009 6:11 PM Flag

    end of the soft market?

    I know you've heard it before; but is this soft pricing market starting to bottom out?
    I got on indication of that while speaking with a West Coast senior Underwriting Manager, for what that is worth with $2.00 gets you a cup of coffe! I don't know if commercial will turn before personal lines. If a turn up in pricing is coming on the brokerage houses like Marsh(MMC) will benfit first, Sigi would follow along. Does appear we've seen worst of price decline on the SIGI shares, looks like base building at $15-$16 level. THere are alot more exciting companies to invest in if you are planning on quick returns...comments? PS: I own SIGI shares, not an employee, associate or agent of SIGI (or MMC), do not work for SIGI competitors but work in Financial services and P&C insurance outside of the SIGI operating territory...

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    • SIGI is definitely pushing pricing more than any of our other P&C commercial carriers in the Mid-atlantic region.

      They have lost some renewal business -- they claim that it is their 4 & 5 diamond accounts (lower-performing), but the loss of premium volume puts greater pressure on their expense ratio.

      • 2 Replies to insgal_2005
      • I caught your post on the CINF Board. I enjoy what you post because they are brief and insightful.

        Your posts seems to indicate that your are a SIGI Agent. If so, do you think they have sustained and nurtured their Agency force to increase production?

        My position is well known. They were once an incredibly efficient, profitable company. I just don't have any confidence in the company now and would prefer that they be sold.

        We don't even hear from the wordy one anymore to beef up our spirits. Has he given up on SIGI?

        Would like to hear your thoughts.

      • You raise an issue which has always been at the root of my disatisfaction with Murphy.

        I believe you may very well be right. Murphy has suddenly realized that the loss of revenue will affect bottom line.
        Is that surprising???

        Anyone with some sense of management expertise knows the principle of break-even. It goes something like this.

        If you have a product or products, i.e. multiple lines of insurance. You know that you must take in a certain amount of revenue, based upon fixed costs in order to break even, regardless of price. If you consciously avoid writing business in a soft market because you have to lower your rates, you run the danger of not reaching break-even revenue. That's a mistake.

        Now you do have the problem of loss expense, which is a variable, but if you don't first take in a certain amount of break-even revenue, there is no chance that you will be profitable.

        I believe Murphy makes snap judgements. If he thinks rates are below what he views as "profitable" rates, he won't write the business. In effect, he discards the principle of break even revenue.

        Then, when he realizes his revenue is indequate to even break even, he makes the judgement to go after that business he lost or is losing.

        Problem: You don't always get that business back. You weaken agency morale and, many times, you have to lower rates more to get the business back than was needed to retain the business before you lost it!!

        I'm praying SIGI moves up. I don't know at what point, but I certainly intend to leave this once fine company.

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