Should You Retain Selective Insurance (SIGI) Stock Now?
Selective Insurance Group, Inc. SIGI has been in investors' good books on the back of strong renewal, fuel price increases, exposure growth, favorable excess and surplus (E&S) lines marketplace conditions, higher income earned on fixed-income securities portfolio and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $5.84 per share, indicating a 16.1% increase from the year-ago reported figure on 15.4% higher revenues of $4.24 billion. The consensus estimate for 2024 earnings is pegged at $7.70 per share, indicating a 31.9% increase from the year-ago reported figure on 11.7% higher revenues of $4.74 billion.
The expected long-term earnings growth rate is pegged at 23.8%, outperforming the industry average of 12.3%.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 11.7% compared with the industry’s rise of 10%.
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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 six years (2017-2022), total revenues witnessed a compound annual growth rate (CAGR) of 6.3% and another 19.8% in the first nine months of 2023.
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, SIGI projects an after-tax net investment income of $300 million, which includes $30 million of after-tax net investment income from alternative investments. 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 Sep 30, 2023. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are NMI Holdings Inc. NMIH, Kinsale Capital Group, Inc. KNSL and Cincinnati Financial Corporation CINF, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NMI Holdings beat estimates in three of the last four quarters and matched in one, the average being 4.48%. Over the past year, NMIH has gained 40.8%.
The Zacks Consensus Estimate for NMIH’s 2023 and 2024 earnings has moved 0.2% and 0.2% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Kinsale Capital has a solid record of beating earnings estimates in each of the last trailing four quarters, the average being 14.25%. Over the past year, KNSL has gained 34.4%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $12.06 and $14.72, indicating a year-over-year increase of 54.6% and 22%, respectively.
Cincinnati Financial has a solid record of beating earnings estimates in three of the last four quarters and missing in one, the average being 38.33%. Over the past year, CINF has lost 0.5%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5.58 and $6.05, indicating a year-over-year increase of 31.6% and 8.4%, respectively.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
NMI Holdings Inc (NMIH) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
