Here's Why Investors Should Hold Selective Insurance (SIGI)
Selective Insurance Group, Inc.’s SIGI strong renewal, fuel price increases, favorable excess and surplus (E&S) lines marketplace conditions and higher income earned on fixed-income securities portfolio make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Selective Insurance’s 2024 earnings is pegged at $7.68 per share, indicating a 30.3% increase from the year-ago reported figure on 14.7% higher revenues of $4.86 billion. The consensus estimate for 2025 earnings is pegged at $8.46 per share, indicating a 10.1% increase from the year-ago reported figure on 9.3% higher revenues of $5.31 billion.
The expected long-term earnings growth rate is pegged at 18.1%, outperforming the industry average of 11.5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.1% and 0.9% north, respectively, in the past 30 days, reflecting analyst optimism.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 3.5% compared with the industry’s growth of 15.8%.
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Style Score
Selective Insurance has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Strong renewal, fuel price increases, exposure growth, solid retention rates and higher new business gains in standard commercial and E&S lines should drive premium growth.
Steady betterment of premiums has resulted in top-line improvement. Over the past seven years (2017-2023), total revenues witnessed a CAGR of 8%.
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, for 2024, Selective Insurance projects an after-tax net investment income of $360 million, which includes after-tax net investment income from alternative investments of $32 million. 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 nine-year (2015-2023) CAGR of nearly 8.8%. It had $84.2 million of shares remaining under its authorization as of Dec 31, 2023. Riding on strong financial and operating performance, the board has approved a 17% hike in the quarterly cash dividend in November 2023. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
SIGI has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, Mercury General Corporation MCY and Arch Capital Group Ltd. ACGL. While Axis Capital and Mercury General sport a Zacks Rank #1 (Strong Buy) each, Arch Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. Year to date, the insurer has gained 11.6%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 earnings per share is pegged at $10.10 and $11.07, indicating a year-over-year increase of 2.5% and 9.6%, respectively.
Mercury General beat estimates in three of the last four quarters and matched in one, the average being 3,417.48%. Year to date, the insurer has rallied 34.2%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 earnings per share is pegged at $2.90 and $3.90, indicating a year-over-year rise of 866.67% and 34.48%, respectively.
Arch Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 27.32%. Year to date, ACGL has jumped 17.5%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 revenues is pegged at $15.52 billion and $16.93 billion, indicating a year-over-year increase of 15% and 9%, respectively.
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Mercury General Corporation (MCY) : Free Stock Analysis Report
