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Selective Insurance (SIGI) Q1 Earnings Miss Mark, Surge Y/Y

Zacks Equity Research

Selective Insurance Group, Inc. SIGI reported first-quarter 2019 operating income of 90 cents per share, missing the Zacks Consensus Estimate by 1.1%. However, the bottom line soared 95.7% from the year-ago period’s number.

The reported quarter benefited from strategic initiatives that drive the company’s performance as well as higher revenues, premiums and net investment income.

Behind the Headlines

Total revenues of $686 million were up 7.7% from the year-ago quarter’s figure. Moreover, the top line exceeded the Zacks Consensus Estimate by 1.1%.

Net investment income rose 15% year over year to $41.3 million, driven by an active portfolio management, stellar operating cash flow and high net proceeds from Senior Note issuance.

Net premiums written increased 8% year over year to $672.9 million. Combined ratio contracted 450 basis points (bps) on a year-over-year basis to 94.7%.

Selective Insurance Group, Inc. Price, Consensus and EPS Surprise

Selective Insurance Group, Inc. Price, Consensus and EPS Surprise | Selective Insurance Group, Inc. Quote

Segmental Results

Standard Commercial Lines net premiums written were up 7% year over year to $546.7 million on the back of a solid renewal pure price improvement besides retention and strength in new business. Combined ratio shrank 370 bps to 94.8% from the prior-year quarter’s level.

Standard Personal Lines net premiums written inched up 2% year over year to$69.4 million, reflecting higher renewal pure price and solid retention. Combined ratio contracted 610 bps to 95.9% from the year-ago period’s count.

Excess & Surplus Lines net premiums written grew 19% year over year to $56.9 million, primarily attributable to a substantial uptick in new business. Combined ratio contracted 900 bps to 92.1%.

Financial Update

Selective Insurance exited the first quarter with total assets of $8.3 billion, which climbed 4% above the level at December 2018 end.

As of Mar 31, 2019, book value per share was $32.51, having improved 7% from the level as of 2018 end.

Annualized operating return on equity was 13.2% in the quarter under review, expanding 870 points year over year.

2019 Guidance

Catastrophe loss of 3.5 points has been estimated.

The company projects an after-tax investment income of $180 million, up from the previous outlook of $175 million owing to net proceeds from Senior Notes issuance.

Zacks Rank

Selective Insurance carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the insurance industry having posted first-quarter earnings so far, the bottom-line results of The Travelers Companies, Inc. TRV, Cincinnati Financial Corporation CINF and The Progressive Corporation PGR surpassed the respective Zacks Consensus Estimates.

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