Shares of Selective Insurance Group, Inc. SIGIs have gained 5.5% year to date versus the industry’s decline of 5.1%. While the financials sector fell 4.2%, the Zacks S&P 500 composite rose 1.6% over the same time period. With a market capitalization of $5.6 billion, the average volume of shares traded over the past three months is about 0.3 million.
A compelling portfolio, high retention rate, net renewal rate increases, new business growth, investment income growth and a strong capital position continue to drive SIGI.
This Zacks #1 Rank (Strong Buy) insurer has delivered double-digit returns on capital over the past nine years. Relying on operating strength, the insurer is set to generate 12% ROE in 2023.
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It has a VGM score of B. The style rating evaluates stocks by their combined weighted styles, helping to identify those with the most attractive value, best growth and most promising momentum.
Can SIGI keep the momentum going?
The Zacks Consensus Estimate for Selective Insurance’s 2023 revenue is pegged at $6.57, indicating an increase of 30.6% on 13.7% higher revenue of $4.2 billion. The consensus estimate for 2024 revenue is pegged at $7.55, indicating an increase of 15% on 10.2% higher revenue of $4.6 billion.
The long-term earnings growth rate is currently pegged at 18.9%, which is better than the industry average of 14.6%. It has a growth rating of B. The style rating analyzes a company’s growth prospects.
SIGI’s premium has risen at a six-year CAGR of 7.1%. Steady renewal rates in standard commercial lines and surplus and excess lines, solid retention rates in standard commercial and personal lines and increased exposure should help maintain momentum.
The Excess and Surplus Lines (E&S) segment of Selective Insurance is likely to improve due to net renewal price increases, greater direct new business and favorable E&S Lines market conditions.
The insurer achieves impressive investment results. For 2023, Selective Insurance forecasts after-tax net investment income of $300 million versus previous guidance of $215 million, which includes after-tax net investment income from alternative investments of $30 million versus $7 million. provided earlier.
Building on its solid operating performance, SIGI has grown dividends at a nine-year CAGR (2015-2023) of 8.8%, with dividends currently at 1.2%. The insurer also has an $84.2 million share buyback authorization under its kitty.
As a property and casualty (P&C) insurer, Selective Insurance remains exposed to catastrophe losses arising from natural disasters and weather-related events, causing volatility in results. Nevertheless, for 2023, Selective Insurance estimates a combined GAAP ratio of 96.5%, including net catastrophe losses of 4.5 points.
SIGI has a value rating of B. This style rating helps find the most attractive value stocks. Backtest results showed that stocks with a Style Rating of A or B combined with a Zacks Rank #1 or #2 (Buy) offered better returns.
Other stocks to consider
Some other top-rated stocks in the property and casualty insurance industry are Axis Capital Holdings Limited wasps, Everest Re Group, Ltd. RE and Kinsale Capital Group, Inc. KNSL, each of which currently has a Zacks Rank #1. You can see the full list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, averaging 5.70%. The Zacks Consensus Estimate for 2023 has moved 5.4% north over the past 60 days.
The Zacks Consensus Estimate for AXS’s 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating year-over-year increases of 29.6% and 11.7%, respectively. Over the past year, AXS has gained 1.4%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $46.03 and $53.25, indicating a year-over-year increase of 69.9% and 15.7%, respectively. Over the past year, RE has grown by 26.6%.
RE has beaten estimates in each of the last four quarters, averaging 18.41%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the past four quarters, averaging 13.83%. Last year, KNSL earned 35.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating year-over-year increases of 26.4% and 20.2%, respectively.
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
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