Reasons Why You Should Retain Selective Insurance (SIGI) Stock
Selective Insurance Group, Inc. SIGI has been gaining momentum on the back of solid renewal pricing, increase in exposure, higher income earned on fixed-income securities and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.41 per share, indicating a 27.4% increase from the year-ago reported figure on 13.8% higher revenues of $4.18 billion. The consensus estimate for 2024 earnings is pegged at $7.52 per share, indicating a 17.2% increase from the year-ago reported figure on 10.5% higher revenues of $4.62 billion.
The expected long-term earnings growth rate is pegged at 19.3%, outperforming the industry average of 13.7%.
Zacks Rank & Price Performance
Selective Insurance currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 17.9%, outperforming the industry’s increase of 16.4%.
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Style Score
Selective Insurance is well-poised for progress, as is evident from its favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Solid renewal pricing in standard commercial lines and excess and surplus (E&S) lines, solid retention rates in standard commercial and personal lines, and an increase in exposure should drive premium growth.
The Excess and Surplus 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, SIGI projects an after-tax net investment income of $300 million for 2023, up from the prior guidance of $215 million.
The guidance includes after-tax net investment income from alternative investments of $30 million, up from $7 million guided earlier. Higher returns on the alternative investments in other investments portfolio and higher income earned on fixed income securities are likely to drive the metric.
Banking on its sturdy operational performance, the property and casualty insurer increased dividends at a nine-year CAGR (2015-2023) of 8.8%, with dividends currently yielding 1.2%, better than the industry average of 0.3%. The insurer also has an $84.2 million share buyback authorization under its kitty.
Being a property and casualty insurer, SIGI is exposed to catastrophe losses stemming from natural disasters and weather-related events. For 2023, Selective Insurance estimates a GAAP combined ratio of 96.5%, including net catastrophe losses of 4.5 points.
Selective Insurance 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 Kinsale Capital Group, Inc. KNSL, RLI Corp. RLI and Root, Inc. ROOT. While Kinsale Capital and RLI Corp. sport a Zacks Rank #1 (Strong Buy), Root caries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. In the past year, KNSL has gained 58.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.62 and $12.89, indicating a year-over-year increase of 36.1% and 21.3%, respectively.
RLI Corp. beat estimates in each of the last four quarters, the average being 43.50%. In the past year, RLI has gained 14.5%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings has moved 3.6% and 10.9% north, respectively, in the past seven days.
Root beat estimates in each of the last four quarters, the average being 18.24%. In the past year, the insurer has lost 46.9%.
The Zacks Consensus Estimate for ROOT’s 2023 and 2024 earnings per share indicates a year-over-year increase of 43.8% and 42.5%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
Root, Inc. (ROOT) : Free Stock Analysis Report
