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Selective Insurance (SIGI) Up 16% YTD: More Upside Left?
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Shares of Selective Insurance Group, Inc. (SIGI - Free Report) have gained 16.3% year to date, outperforming the industry’s increase of 4.1%. While the Finance sector has declined 0.6%, the Zacks S&P 500 composite has gained 10.3% in the same time frame. With a market capitalization of $6.2 billion, the average volume of shares traded in the last three months was about 0.3 million.
A compelling portfolio, high retention ratio, pure renewal price increase, new business growth, rise in investment income and solid capital position continue to drive SIGI.
This Zacks Rank #3 (Hold) insurer has been delivering double-digit returns on equity for the last nine years. Banking on operational strength, the insurer is set to generate 12% ROE in 2023.
Image Source: Zacks Investment Research
It has a VGM Score of B. The Style Score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Can SIGI Retain the Momentum?
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.45, indicating an increase of 28.2% on 13.7% higher revenues of $4.2 billion. The consensus estimate for 2024 earnings is pegged at $7.54, indicating an increase of 16.9% on 10.5% higher revenues of $4.6 billion.
While earnings grew 9.6% over the last five years, the long-term earnings growth rate is currently pegged at 19.3%, better than the industry average of 13.8%. It has a Growth Score of B. The Style Score analyzes the growth prospects of a company.
Solid renewal pricing in standard commercial lines and excess and surplus lines, solid retention rates in standard commercial and personal lines, and an increase in exposure should help SIGI grow premium.
The Excess and Surplus Lines (E&S) 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, Selective Insurance projects an after-tax net investment income of $300 million for 2023, up from the prior guidance of $215 million. The guidance includes after-tax net investment income from alternative investments of $30 million, up from $7 million guided earlier.
Banking on its sturdy operational performance, SIGI increased dividends at a nine-year CAGR (2015-2023) of 8.8%, with dividends currently yielding 1.2%, better than the industry average of 0.3%. The insurer also has an $84.2 million share buyback authorization under its kitty.
Being a property and casualty insurer, SIGI is exposed to catastrophe losses stemming from natural disasters and weather-related events. For 2023, Selective Insurance estimates a GAAP combined ratio of 96.5%, including net catastrophe losses of 4.5 points.
Stocks to Consider
Some top-ranked stocks from the insurance industry are RLI Corporation (RLI - Free Report) , Kinsale Capital Group (KNSL - Free Report) and Berkshire Hathaway (BRK.B - Free Report) .
RLI delivered a four-quarter average earnings surprise of 43.50%. Year to date, the insurer has lost 1.8%.
Kinsale delivered a four-quarter average earnings surprise of 14.77%. Year to date, the insurer has gained 23.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings indicates a respective year-over-year increase of 32.9% and 19.7%. It sports a Zacks Rank #1.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 20.29%. Year to date, the insurer has gained 3%.
The Zacks Consensus Estimate for BRK.B’s 2023 and 2024 earnings indicates a respective year-over-year increase of 35.8% and 1.3%. It carries a Zacks Rank #2 (Buy).
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Selective Insurance (SIGI) Up 16% YTD: More Upside Left?
Shares of Selective Insurance Group, Inc. (SIGI - Free Report) have gained 16.3% year to date, outperforming the industry’s increase of 4.1%. While the Finance sector has declined 0.6%, the Zacks S&P 500 composite has gained 10.3% in the same time frame. With a market capitalization of $6.2 billion, the average volume of shares traded in the last three months was about 0.3 million.
A compelling portfolio, high retention ratio, pure renewal price increase, new business growth, rise in investment income and solid capital position continue to drive SIGI.
This Zacks Rank #3 (Hold) insurer has been delivering double-digit returns on equity for the last nine years. Banking on operational strength, the insurer is set to generate 12% ROE in 2023.
Image Source: Zacks Investment Research
It has a VGM Score of B. The Style Score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum.
Can SIGI Retain the Momentum?
The Zacks Consensus Estimate for Selective Insurance’s 2023 earnings is pegged at $6.45, indicating an increase of 28.2% on 13.7% higher revenues of $4.2 billion. The consensus estimate for 2024 earnings is pegged at $7.54, indicating an increase of 16.9% on 10.5% higher revenues of $4.6 billion.
While earnings grew 9.6% over the last five years, the long-term earnings growth rate is currently pegged at 19.3%, better than the industry average of 13.8%. It has a Growth Score of B. The Style Score analyzes the growth prospects of a company.
Solid renewal pricing in standard commercial lines and excess and surplus lines, solid retention rates in standard commercial and personal lines, and an increase in exposure should help SIGI grow premium.
The Excess and Surplus Lines (E&S) 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, Selective Insurance projects an after-tax net investment income of $300 million for 2023, up from the prior guidance of $215 million. The guidance includes after-tax net investment income from alternative investments of $30 million, up from $7 million guided earlier.
Banking on its sturdy operational performance, SIGI increased dividends at a nine-year CAGR (2015-2023) of 8.8%, with dividends currently yielding 1.2%, better than the industry average of 0.3%. The insurer also has an $84.2 million share buyback authorization under its kitty.
Being a property and casualty insurer, SIGI is exposed to catastrophe losses stemming from natural disasters and weather-related events. For 2023, Selective Insurance estimates a GAAP combined ratio of 96.5%, including net catastrophe losses of 4.5 points.
Stocks to Consider
Some top-ranked stocks from the insurance industry are RLI Corporation (RLI - Free Report) , Kinsale Capital Group (KNSL - Free Report) and Berkshire Hathaway (BRK.B - Free Report) .
RLI delivered a four-quarter average earnings surprise of 43.50%. Year to date, the insurer has lost 1.8%.
The Zacks Consensus Estimate for RLI’s 2023 earnings indicates a year-over-year increase of 4.1%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale delivered a four-quarter average earnings surprise of 14.77%. Year to date, the insurer has gained 23.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings indicates a respective year-over-year increase of 32.9% and 19.7%. It sports a Zacks Rank #1.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 20.29%. Year to date, the insurer has gained 3%.
The Zacks Consensus Estimate for BRK.B’s 2023 and 2024 earnings indicates a respective year-over-year increase of 35.8% and 1.3%. It carries a Zacks Rank #2 (Buy).