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Selective Insurance (SIGI) Q4 Earnings In Line, Revenues Miss
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Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2022 operating income of $1.46 per share, which met the Zacks Consensus Estimate. The bottom line declined 6.4% from the year-ago quarter.
The quarter witnessed average renewal pure price increases, solid retention, higher new business and exposure growth. Lower alternative investment income and escalating costs were offsets.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Total revenues of $958 million increased 10.4% from the year-ago quarter’s figure, primarily due to higher premiums earned. The top line missed the Zacks Consensus Estimate by 0.7%.
On a year-over-year basis, NPW increased 14% to $849.7 million, driven by renewal pure price increases, solid retention, new business and exposure growth.
Net investment income increased 1% year over year to $65.5 million due to decreased after-tax alternative investment income, partially offset by higher income from the fixed-income securities portfolio due to higher book yields.
Net underwriting income, after-tax, dropped 15% to $36.4 million. The combined ratio deteriorated 160 basis points (bps) on a year-over-year basis to 94.7, driven by higher catastrophe losses.
Total expenses increased 13.2% year over year to $844.4 million, primarily due to higher loss and loss expenses incurred, amortization of deferred policy acquisition costs, other insurance expenses and corporate expenses.
Segmental Results
Standard Commercial Lines’ NPW was up 13% year over year to $676.6 million. Average renewal pure price increases of 5.6%, new business growth of 22% and consistently solid retention of 86% drove the improvement in NPW. The combined ratio deteriorated 240 bps to 95.5.
Standard Personal Lines’ NPW increased 20% year over year to $84.6 million.
Average renewal pure price increases of 1%, higher retention of 87% and 126% higher new business drove the improvement in NPW. The combined ratio deteriorated 230 bps on a year-over-year basis to 99.9.
Excess & Surplus Lines’ NPW was up 14% year over year to $88.5 million, driven by average renewal pure price increases of 7.9% and new business growth of 5%. The combined ratio improved 450 bps to 84.3.
Full-Year Highlights
Operating income of $5.03 per share missed the Zacks Consensus Estimate of $5.04. The bottom line declined 19.8% from the year-ago quarter.
Total revenues of $3.7 million increased 9.3%. The top line was almost in line with the Zacks Consensus Estimate.
Net premium written of $3.6 billion increased 12%.
Underwriting income dropped 23.7% to $166.8 million. Combined ratio deteriorated 230 basis points to 95.1.
Financial Update
Selective Insurance exited 2022 with total assets of $10.8 billion, up 3% from the level at December 2021 end.
Long-term debt of $504.7 million decreased 0.2% from the 2021 level. Debt-to-total capitalization deteriorated 210 bps to 16.6% at 2022 end.
As of Dec 31, 2022, the book value per share was $45.49, up 2% from the level as of 2021 end.
Annualized non-GAAP operating return on equity was 12.4% in 2022, down 190 bps year over year.
Capital Deployment
The board approved a quarterly cash dividend of 30 cents per share, to be paid out on Mar 1, 2022, to holders of record as of Feb 15, 2022
In 2022, Selective Insurance repurchased shares for $12.4 million. It had $84.2 million remaining under authorization as of Dec 31, 2022.
2023 Guidance
Selective Insurance estimates GAAP combined ratio, excluding net catastrophe losses, of 96.5%, including net catastrophe losses of 4.5 points.
Net investment income was $300 million, including after-tax net investment income from its alternative investments of $30 million.
The overall effective tax rate is expected to be around 21%, which assumes an effective tax rate of 20% for net investment income and 21% for all other items. Weighted average shares were 61 million on a fully diluted basis.
Zacks Rank
Selective Insurance currently carries a Zacks Rank #4 (Sell).
The Travelers Companies, Inc. (TRV - Free Report) reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 10% year over year to $8.8 billion. The figure was higher than our estimate of $8.6 billion. Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year. The combined ratio deteriorated 650 bps year over year to 94.5.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year
Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 bps from the prior-year quarter’s level to 93.9.
RLI Corp. (RLI - Free Report) reported fourth-quarter 2022 operating earnings of $1.53 per share, beating the Zacks Consensus Estimate by 41.7%. The bottom line improved 26.4% from the prior-year quarter. Operating revenues for the reported quarter were $329.5 million, up 19.4% year over year. The top line beat the Zacks Consensus Estimate by 0.4%.
Gross premiums written increased 14% year over year to $383.8 million. Underwriting income of $54 million increased 8.7%, primarily due to higher profitability at its Property segment. The combined ratio deteriorated 140 bps year over year to 82.1.
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Selective Insurance (SIGI) Q4 Earnings In Line, Revenues Miss
Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2022 operating income of $1.46 per share, which met the Zacks Consensus Estimate. The bottom line declined 6.4% from the year-ago quarter.
The quarter witnessed average renewal pure price increases, solid retention, higher new business and exposure growth. Lower alternative investment income and escalating costs were offsets.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Selective Insurance Group, Inc. price-consensus-eps-surprise-chart | Selective Insurance Group, Inc. Quote
Behind the Headlines
Total revenues of $958 million increased 10.4% from the year-ago quarter’s figure, primarily due to higher premiums earned. The top line missed the Zacks Consensus Estimate by 0.7%.
On a year-over-year basis, NPW increased 14% to $849.7 million, driven by renewal pure price increases, solid retention, new business and exposure growth.
Net investment income increased 1% year over year to $65.5 million due to decreased after-tax alternative investment income, partially offset by higher income from the fixed-income securities portfolio due to higher book yields.
Net underwriting income, after-tax, dropped 15% to $36.4 million. The combined ratio deteriorated 160 basis points (bps) on a year-over-year basis to 94.7, driven by higher catastrophe losses.
Total expenses increased 13.2% year over year to $844.4 million, primarily due to higher loss and loss expenses incurred, amortization of deferred policy acquisition costs, other insurance expenses and corporate expenses.
Segmental Results
Standard Commercial Lines’ NPW was up 13% year over year to $676.6 million. Average renewal pure price increases of 5.6%, new business growth of 22% and consistently solid retention of 86% drove the improvement in NPW. The combined ratio deteriorated 240 bps to 95.5.
Standard Personal Lines’ NPW increased 20% year over year to $84.6 million.
Average renewal pure price increases of 1%, higher retention of 87% and 126% higher new business drove the improvement in NPW. The combined ratio deteriorated 230 bps on a year-over-year basis to 99.9.
Excess & Surplus Lines’ NPW was up 14% year over year to $88.5 million, driven by average renewal pure price increases of 7.9% and new business growth of 5%. The combined ratio improved 450 bps to 84.3.
Full-Year Highlights
Operating income of $5.03 per share missed the Zacks Consensus Estimate of $5.04. The bottom line declined 19.8% from the year-ago quarter.
Total revenues of $3.7 million increased 9.3%. The top line was almost in line with the Zacks Consensus Estimate.
Net premium written of $3.6 billion increased 12%.
Underwriting income dropped 23.7% to $166.8 million. Combined ratio deteriorated 230 basis points to 95.1.
Financial Update
Selective Insurance exited 2022 with total assets of $10.8 billion, up 3% from the level at December 2021 end.
Long-term debt of $504.7 million decreased 0.2% from the 2021 level. Debt-to-total capitalization deteriorated 210 bps to 16.6% at 2022 end.
As of Dec 31, 2022, the book value per share was $45.49, up 2% from the level as of 2021 end.
Annualized non-GAAP operating return on equity was 12.4% in 2022, down 190 bps year over year.
Capital Deployment
The board approved a quarterly cash dividend of 30 cents per share, to be paid out on Mar 1, 2022, to holders of record as of Feb 15, 2022
In 2022, Selective Insurance repurchased shares for $12.4 million. It had $84.2 million remaining under authorization as of Dec 31, 2022.
2023 Guidance
Selective Insurance estimates GAAP combined ratio, excluding net catastrophe losses, of 96.5%, including net catastrophe losses of 4.5 points.
Net investment income was $300 million, including after-tax net investment income from its alternative investments of $30 million.
The overall effective tax rate is expected to be around 21%, which assumes an effective tax rate of 20% for net investment income and 21% for all other items. Weighted average shares were 61 million on a fully diluted basis.
Zacks Rank
Selective Insurance currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies, Inc. (TRV - Free Report) reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 10% year over year to $8.8 billion. The figure was higher than our estimate of $8.6 billion. Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year. The combined ratio deteriorated 650 bps year over year to 94.5.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year
Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 bps from the prior-year quarter’s level to 93.9.
RLI Corp. (RLI - Free Report) reported fourth-quarter 2022 operating earnings of $1.53 per share, beating the Zacks Consensus Estimate by 41.7%. The bottom line improved 26.4% from the prior-year quarter. Operating revenues for the reported quarter were $329.5 million, up 19.4% year over year. The top line beat the Zacks Consensus Estimate by 0.4%.
Gross premiums written increased 14% year over year to $383.8 million. Underwriting income of $54 million increased 8.7%, primarily due to higher profitability at its Property segment. The combined ratio deteriorated 140 bps year over year to 82.1.