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Selective Insurance Group (SIGI)
NASDAQ:SIGI
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Selective Insurance Group
(NASDAQ:SIGI)65Neutral
Positive Factors
Investment Income
The company had $122.7 million of pre-tax net investment income, which was above consensus expectations.
Pricing Power
SIGI's relative pricing power gives it an advantage in a competitive environment, allowing it to charge higher prices for lawsuit inflationary lines of insurance.
Negative Factors
General Casualty Reserves
There is likely to remain elevated investor uncertainty surrounding the general casualty reserves following four reserve charges totaling $371 million over the past five quarters.
Reserving Charges
SIGI's 4Q’24 combined ratio included another material $100m reserving charge, which implies a worse profit margin starting point going into CY’25 EPS.
Selective Insurance Group (SIGI) vs. S&P 500 (SPY)
Market Cap
$5.21B
Dividend Yield1.67%
Average Volume (3M)507.89K
Price to Earnings (P/E)26.6
Beta (1Y)0.45
Revenue Growth15.35%
EPS Growth-44.64%
CountryUS
Employees2,800
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)3.22
Shares Outstanding60,805,020
10 Day Avg. Volume483,541
30 Day Avg. Volume507,891
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.09
Price to Cash Flow (P/CF)4.00
P/FCF Ratio3.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$94.17Price Target Upside10.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Selective Insurance Group Business Overview & Revenue Model
Company DescriptionSelective Insurance Group, Inc. (SIGI) is a prominent provider of property and casualty insurance products and services in the United States. The company primarily operates through its subsidiaries, offering a wide range of insurance products tailored for commercial and personal lines. Selective Insurance focuses on providing coverage solutions that include property, general liability, automobile, workers' compensation, and flood insurance, catering to both individual and business clients. The company is known for its strong regional presence, personalized service, and a robust network of independent agents that help deliver its comprehensive insurance offerings.
How the Company Makes MoneySelective Insurance Group generates revenue primarily through the underwriting of insurance policies and the subsequent collection of premiums from policyholders. The company's key revenue streams include commercial lines, which consist of business insurance products such as property, auto, and liability coverage, and personal lines, which focus on individual insurance products like homeowner's and auto insurance. Additionally, Selective Insurance earns investment income from its portfolio of invested assets, which includes fixed-income securities and equities. The company also benefits from strategic partnerships with independent insurance agents who distribute their products, enhancing its market reach and premium collection. Effective risk management and claims processing further contribute to maintaining profitability and operational efficiency.
Selective Insurance Group Financial Statement Overview
Summary
Selective Insurance Group presents a strong financial profile with robust cash flow and a stable balance sheet. However, recent declines in revenue and operating earnings, alongside a decrease in total assets, require attention.Income Statement
Selective Insurance Group shows strong gross profit margins consistently over the years, indicative of effective cost management. The company has experienced substantial revenue growth from 2019 to 2023, although the revenue for 2024 is significantly lower than previous years, impacting overall growth trajectory. The net profit margin and EBIT margin are substantial, especially in 2023, demonstrating profitability. However, the drop in EBIT and EBITDA in 2024 is a concern, suggesting recent operational challenges.75
Positive
Balance Sheet
The company maintains a solid balance sheet with a high equity ratio, reflecting financial stability and a conservative leverage strategy. Debt-to-equity ratio has been reasonable, indicating a balanced approach to financing. The return on equity has been positive, showcasing effective utilization of shareholder funds. Despite a stable equity position, the decrease in total assets in 2024 is a point of concern.82
Very Positive
Cash Flow
The cash flow performance of Selective Insurance Group is robust, with strong free cash flow and operating cash flow figures. The consistent growth in free cash flow, particularly in recent years, highlights strong cash generation capability. The operating cash flow to net income ratio has been favorable, indicating strong cash earnings alignment. However, the investing cash flow remains negative, possibly due to strategic investments.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 65.42M | 101.17M | 3.56B | 3.38B | 2.92B | Gross Profit |
| 65.42M | 91.55M | 3.55B | 3.38B | 2.92B | EBIT |
| 0.00 | 474.49M | 309.04M | 534.53M | 334.15M | EBITDA |
| 0.00 | 517.25M | 351.37M | 589.58M | 393.18M | Net Income Common Stockholders |
| 207.01M | 365.24M | 224.89M | 403.84M | 246.35M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 268.58M | 180.00K | 26.00K | 455.00K | 394.00K | Total Assets |
| 3.62B | 11.80B | 10.80B | 10.46B | 9.69B | Total Debt |
| 441.66M | 503.95M | 500.96M | 500.60M | 525.24M | Net Debt |
| 441.56M | 503.77M | 500.93M | 500.14M | 524.84M | Total Liabilities |
| 10.39B | 8.85B | 8.27B | 7.48B | 6.95B | Stockholders Equity |
| 3.12B | 2.95B | 2.53B | 2.98B | 2.74B |
| Cash Flow | Free Cash Flow | |||
| 1.07B | 736.28M | 776.39M | 749.26M | 531.98M | Operating Cash Flow |
| 1.10B | 758.91M | 802.41M | 771.42M | 554.04M | Investing Cash Flow |
| -947.38M | -686.36M | -734.45M | -618.78M | -688.17M | Financing Cash Flow |
| -102.75M | -84.49M | -87.82M | -122.81M | 141.38M |
Selective Insurance Group Technical Analysis
Neutral
85.04
Price Trends
88.28
Negative
92.08
Negative
91.35
Negative
Market Momentum
-1.01
Negative
51.70
Neutral
92.06
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SIGI, the sentiment is Neutral. The current price of 85.04 is above the 20-day moving average (MA) of 83.12, below the 50-day MA of 88.28, and below the 200-day MA of 91.35, indicating a neutral trend. The MACD of -1.01 indicates Negative momentum. The RSI at 51.70 is Neutral, neither overbought nor oversold. The STOCH value of 92.06 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SIGI.
Selective Insurance Group Risk Analysis
Selective Insurance Group disclosed 20 risk factors in its most recent earnings report. Selective Insurance Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Selective Insurance Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $6.09B | 14.50 | 16.03% | 2.03% | 4.07% | 1110.92% | |
78 Outperform | $22.42B | 9.86 | 16.45% | 2.26% | 13.22% | 24.83% | |
77 Outperform | $23.60B | 14.29 | 20.92% | 0.49% | 12.32% | 29.21% | |
73 Outperform | $23.81B | 9.37 | 15.55% | ― | 5.17% | 35.36% | |
71 Outperform | $6.92B | 20.17 | 22.72% | 0.76% | 18.31% | 13.13% | |
65 Neutral | $5.21B | 26.56 | 6.63% | 1.67% | 15.35% | -44.64% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
SIGI
Selective Insurance Group
85.04
-17.96
-17.44%
CINF
Cincinnati Financial
143.18
28.36
24.70%
MKL
Markel
1,906.47
400.21
26.57%
RLI
RLI
75.91
3.83
5.31%
THG
Hanover Insurance
169.42
40.98
31.91%
WRB
W. R. Berkley Corporation
62.53
7.40
13.42%
Selective Insurance Group Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -9.14% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call indicates a mixed performance for Selective Insurance Group in 2024. While the company achieved strong growth in net premiums and investment income, along with strategic expansions, it faced challenges with an elevated combined ratio and significant reserve strengthening due to social inflation pressures. The operating ROE fell short of targets, reflecting the need for continued adjustments to meet profitability goals.Highlights
Strong Net Premiums Growth
Selective Insurance Group reported a 12% growth in net premiums written for the year, demonstrating solid progress in expanding their business.
Improvement in Underlying Combined Ratio
The company's underlying combined ratio improved by 90 basis points from 2023, reaching 89.4% for 2024, excluding catastrophe losses and prior year casualty development.
Excess and Surplus Lines Growth
The Excess and Surplus lines segment delivered a 29% growth, exceeding $500 million of net premiums written for the first time, with a combined ratio of 89.7%.
Investment Income Increase
After-tax net investment income rose 17% from 2023, reaching $363 million for the year, contributing significantly to the return on equity.
Strategic Initiatives and Market Expansion
Selective expanded its Standard Commercial Lines operating footprint by adding five states and repositioned Personal Lines while enhancing technology for Excess and Surplus lines.
Lowlights
Operating ROE Below Target
The operating ROE for 2024 was 7.1%, below the company's target of 12%, highlighting challenges in achieving desired return levels.
Elevated Combined Ratio
The company's combined ratio for the year was 103%, up 6.5 points from 2023, largely due to strengthened casualty reserves addressing elevated severities.
Significant Reserve Strengthening
In 2024, Selective took casualty reserving actions totaling $411 million, with $311 million related to prior accident years and an additional $100 million in the current year.
Challenging Environment and Social Inflation
Social inflation remained a significant headwind, impacting loss trends and prompting the company to increase current year loss expectations.
Company Guidance
During the fourth quarter earnings call for Selective Insurance Group, Inc., the company provided guidance for 2025 and discussed key metrics from 2024. The operating return on equity (ROE) for 2024 was 7.1%, falling short of the 12% target, largely due to challenges in general liability lines influenced by social inflation. Net premiums written grew by 12%, and the company reported an underlying combined ratio of 89.4%. The full-year combined ratio was 103%, impacted by reserve strengthening actions amounting to $411 million, primarily for accident years 2020 and later. For 2025, Selective expects a GAAP combined ratio between 96% and 97%, including six points for catastrophe losses, and an after-tax net investment income of $405 million. The guidance reflects an assumption of approximately 7% overall loss trend, with 8.5% for casualty lines. The company aims for an operating ROE of approximately 15% in 2025.Selective Insurance Group Corporate Events
Business Operations and StrategyFinancial Disclosures
Selective Insurance Group Reports Mixed 2024 Financial Results
Neutral
Jan 29, 2025
For the fourth quarter and year-end 2024, Selective Insurance Group reported a net income per diluted common share of $1.52 and $3.23, respectively, with substantial growth in net premiums written and after-tax net investment income. Despite strong investment results, the company’s financial performance did not meet expectations due to increased casualty reserves in response to social inflation, although strategic initiatives aimed at long-term growth were advanced, positioning the company for future profitability.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.