Yahoo Finance Reasons Why Investors Should Retain Selective Insurance (SIGI)
Selective Insurance Group, Inc.’s SIGI strong renewal, fuel price increases, favorable excess and surplus (E&S) lines marketplace conditions and higher income earned on fixed-income securities portfolio make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Selective Insurance’s 2024 earnings per share indicates a year-over-year increase of 18.8%. The consensus estimate for revenues is pegged at $4.89 billion, implying a year-over-year improvement of 15.3%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 18.2% and 9.9%, respectively, from the corresponding 2024 estimates.
The expected long-term earnings growth rate is 16.2%, outperforming the industry average of 10.5%.
Zacks Rank & Price Performance
SIGI currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has lost 5.8% against the industry’s growth of 24.7%.
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Business Tailwinds
Strong renewal, fuel price increases, exposure growth, solid retention rates and higher new business gains in standard commercial and E&S lines should drive premium growth.
Steady betterment of premiums, improved net investment income and higher other income have resulted in top-line improvement. Over the past seven years (2017-2023), total revenues witnessed a CAGR of 8%.
The E&S Lines 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 estimates an after-tax net investment income of $360 million for 2024 and includes $32 million of after-tax net investment income from alternative investments. Higher income earned on fixed-income securities portfolio due to improved book yields received from the investment of operating and investing cash flows over the past year in the higher interest rate environment is likely to drive the metric.
Riding on a solid capital position, the company has been hiking dividends, which registered a nine-year (2015-2023) CAGR of nearly 8.8%. It had $84.2 million remaining under authorization as of Mar 31, 2024. Riding on strong financial and operating performance, the board has approved a 17% hike in the quarterly cash dividend in November 2023. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, RLI Corp. RLI and NMI Holdings Inc NMIH. While Arch Capital and RLI Corp. sport a Zacks Rank #1 (Strong Buy) each, NMI Holdings carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 28.41%. In the past year, shares of ACGL have climbed 34%.
The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings has moved 5.1% and 3.3% north, respectively, in the past 30 days.
RLI Corp. has a solid track record of beating earnings estimates in three of the trailing four quarters and missing in one, the average being 132.39%. In the past year, shares of RLI have gained 12.3%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 16.1% and 3.2%, respectively.
NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, shares of NMIH have jumped 35.4%.
The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 8.3%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
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NMI Holdings Inc (NMIH) : Free Stock Analysis Report
