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Reasons Why Investors Should Hold Selective Insurance (SIGI)
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Selective Insurance Group, Inc. (SIGI - Free Report) has been gaining momentum, given its solid underwriting profitability, higher direct new business, renewal pure price, and exposure growth.
Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 1.7% and 1.1% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Earnings Surprise History
Selective Insurance has a decent earnings surprise history. Its bottom line beat estimates in each of the last four quarters, the average being 29.9%.
Zacks Rank & Price Performance
Selective Insurance currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 24.2%, outperforming the industry’s increase of 20.4%.
Image Source: Zacks Investment Research
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.
Return on Equity (ROE)
Selective Insurance’s ROE for the trailing 12 months is 14.5%, better than the industry average of 5.9%. ROE expanded 380 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
Solid underwriting profitability, manageable catastrophe losses and strong investment contribution should continue to drive solid operating return on equity. SIGI witnessed eight consecutive years of double-digit operating ROE averaging 11.9% between 2014 and 2021.
Business Tailwinds
Strong new business growth, stable retention, solid renewal pure price increases, and exposure growth are expected to drive solid results in the Commercial Lines segment.
Selective’s renewal pure price increases exceeded the industry average from 2009 to 2018 and steadily increased from 2019 to 2021. An attractively priced book along with solid profitability as well as industry pricing trends should provide an additional tailwind for further increases.
Selective Insurance is shifting the focus of Personal Lines toward the mass-affluent market that is less price-sensitive and places greater value on products and services.
The Excess and Surplus Lines (E&S) segment of Selective Insurance is likely to improve due to higher direct new business, renewal pure price, and exposure growth, driven by favorable market conditions in E&S lines.
SIGI has a property catastrophe reinsurance program where its 2022 property catastrophe treaty structure provides coverage of $835 million in excess of $40 million retention, and $259 million in collateralized limit. It also provides additional earnings volatility protection from non-footprint $30 million in excess of the $10 million layer.
Selective Insurance expects an improvement in expense ratio in 2022 and over the next few years.
Sturdy Balance Sheet
The capital position of Selective Insurance remains strong. Book value per share increased in 2021, with robust earnings. Cash flow was solid in 2021, with $771 million of operating cash flow. Its financial position provides sufficient financial flexibility as it executes the strategic objectives. The cash and investment position at the holding company remains above the longer-term target.
Impressive Dividend History
Selective Insurance raised dividends at an eight-year (2015-2022) CAGR of 9.1%. The current dividend yield is 1.2%, which is better than the industry average of 0.3%. SIGI had $96.6 million remaining under repurchase authorization.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $6.40, indicating year-over-year increases of 9.4%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance sector are Kinsale Capital Group (KNSL - Free Report) , United Fire Group (UFCS - Free Report) and American Financial Group (AFG - Free Report) . While Kinsale Capital and United Fire currently sport a Zacks Rank #1 (Strong Buy), American Financial Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 36.1%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, the UFCS stock has declined 7.7%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
The bottom line of American Financial surpassed earnings estimates in each of the last four quarters, the average being 39.58%. In the past year, the insurer has rallied 28.8%.
The Zacks Consensus Estimate for American Financial’s 2022 and 2023 earnings has moved 3.3% and 8.2% north, respectively, in the past 60 days.
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Reasons Why Investors Should Hold Selective Insurance (SIGI)
Selective Insurance Group, Inc. (SIGI - Free Report) has been gaining momentum, given its solid underwriting profitability, higher direct new business, renewal pure price, and exposure growth.
Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 1.7% and 1.1% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Earnings Surprise History
Selective Insurance has a decent earnings surprise history. Its bottom line beat estimates in each of the last four quarters, the average being 29.9%.
Zacks Rank & Price Performance
Selective Insurance currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 24.2%, outperforming the industry’s increase of 20.4%.
Image Source: Zacks Investment Research
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.
Return on Equity (ROE)
Selective Insurance’s ROE for the trailing 12 months is 14.5%, better than the industry average of 5.9%. ROE expanded 380 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
Solid underwriting profitability, manageable catastrophe losses and strong investment contribution should continue to drive solid operating return on equity. SIGI witnessed eight consecutive years of double-digit operating ROE averaging 11.9% between 2014 and 2021.
Business Tailwinds
Strong new business growth, stable retention, solid renewal pure price increases, and exposure growth are expected to drive solid results in the Commercial Lines segment.
Selective’s renewal pure price increases exceeded the industry average from 2009 to 2018 and steadily increased from 2019 to 2021. An attractively priced book along with solid profitability as well as industry pricing trends should provide an additional tailwind for further increases.
Selective Insurance is shifting the focus of Personal Lines toward the mass-affluent market that is less price-sensitive and places greater value on products and services.
The Excess and Surplus Lines (E&S) segment of Selective Insurance is likely to improve due to higher direct new business, renewal pure price, and exposure growth, driven by favorable market conditions in E&S lines.
SIGI has a property catastrophe reinsurance program where its 2022 property catastrophe treaty structure provides coverage of $835 million in excess of $40 million retention, and $259 million in collateralized limit. It also provides additional earnings volatility protection from non-footprint $30 million in excess of the $10 million layer.
Selective Insurance expects an improvement in expense ratio in 2022 and over the next few years.
Sturdy Balance Sheet
The capital position of Selective Insurance remains strong. Book value per share increased in 2021, with robust earnings. Cash flow was solid in 2021, with $771 million of operating cash flow. Its financial position provides sufficient financial flexibility as it executes the strategic objectives. The cash and investment position at the holding company remains above the longer-term target.
Impressive Dividend History
Selective Insurance raised dividends at an eight-year (2015-2022) CAGR of 9.1%. The current dividend yield is 1.2%, which is better than the industry average of 0.3%. SIGI had $96.6 million remaining under repurchase authorization.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $6.40, indicating year-over-year increases of 9.4%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance sector are Kinsale Capital Group (KNSL - Free Report) , United Fire Group (UFCS - Free Report) and American Financial Group (AFG - Free Report) . While Kinsale Capital and United Fire currently sport a Zacks Rank #1 (Strong Buy), American Financial Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 36.1%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, the UFCS stock has declined 7.7%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
The bottom line of American Financial surpassed earnings estimates in each of the last four quarters, the average being 39.58%. In the past year, the insurer has rallied 28.8%.
The Zacks Consensus Estimate for American Financial’s 2022 and 2023 earnings has moved 3.3% and 8.2% north, respectively, in the past 60 days.