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Selective Insurance's (SIGI) Q2 Earnings Beat, Rise Y/Y

Zacks Equity Research

Selective Insurance Group, Inc. SIGI reported second-quarter 2019 operating income of $1.16 per share, beating the Zacks Consensus Estimate by 11.5% on the back of better net investment income and net premiums written. Moreover, the bottom line improved 14.9% from the year-ago period’s number.

Behind the Headlines

Total revenues of $701 million were up 7.8% from the year-ago quarter’s figure. However, the same missed the Zacks Consensus Estimate by 1.5%.

Net investment income rose 27% year over year to $48 million, driven by stellar alternative investment returns, better book yield on core fixed income securities portfolio, solid cash flow from operations and net proceeds from senior notes issuance in the last reported quarter.

Net premiums written increased 7% year over year to $557.4 million on the back of new business generation and renewal pure price increases.

Combined ratio contracted 60 basis points (bps) on a year-over-year basis to 93.1 in the quarter under review.

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

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

Selective Insurance Group, Inc. price-consensus-eps-surprise-chart | Selective Insurance Group, Inc. Quote

Segmental Results

Standard Commercial Lines net premiums written were up 8% year over year to $557.4 million, attributable to retention, increase in new business generation and solid renewal pure price rise.

Combined ratio expanded 130 bps to 92.7% from the prior-year quarter’s level.

Standard Personal Lines net premiums written dipped 1% year over year to $82.7 million due to reduction in new business. Combined ratio was flat at 94.1% with the year-ago period’s count.

Excess & Surplus Lines net premiums written grew 9% year over year to $61.3 million, primarily attributable to a significant relationship that the company established in the comparable quarter last year. Combined ratio also improved 1970 bps to 95%.

Financial Update

Selective Insurance exited the second quarter with total assets of $8.6 billion, which climbed 8% above the level at December 2018 end.

As of Jun 30, 2019, book value per share was $34.71, having improved 14% from the level as of 2018 end.

Annualized operating return on equity was 14.5% in the quarter under review, expanding 50 basis points year over year.

2019 Guidance

The company’s estimates a catastrophe loss of 3.5 points.

The company projects an after-tax investment income of $180 million, consisting of $13 million of after-tax net investment income from other investments.

Zacks Rank
Selective Insurance carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players that have already reported second-quarter results, the bottom-line figures of The Progressive Corporation PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate. However, The Travelers Companies, Inc.’s TRV earnings missed the same.

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