Sign In
Subscribe

Selective Insurance (SIGI) Banks on Premiums Amid Cost Woes

Selective Insurance Group, Inc. SIGI is well-poised to gain from strong renewal, fuel price increases, favorable excess and surplus (E&S) lines marketplace conditions and higher income earned on fixed-income securities portfolio.

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.

However, Selective Insurance remains exposed to catastrophe loss stemming from natural disasters and weather-related events. Such a massive loss poses an inherent risk to the P&C insurance business inducing volatility to its results. In the first half of 2024, the combined ratio of 107.3 deteriorated 930 basis points year over year.

Other Industry Players

Other players in the property and casualty insurance industry include NMI Holdings Inc. NMIH, American Financial Group, Inc. AFG and Arch Capital Group Ltd. ACGL.

NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%.

NMI Holdings is well-poised for growth on new primary insurance written, direct primary insurance in force and a better risk-based capital ratio. Its mortgage insurance portfolio is expected to create a strong foundation for future earnings. The mortgage insurer should continue to gain from a strong mortgage origination market and increased private mortgage insurance penetration rates.

American Financial’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 0.27%.

American Financial boasts impressive inorganic growth and is prudently investing in businesses. Better industry fundamentals, a high renewal ratio and a favorable combined ratio should drive growth. New business opportunities, increased exposures and a good renewal rate environment in the P&C group bode well.

Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 28.93%.

Arch Capital boasts a strong product portfolio and has a solid track record of premium growth. Premiums should benefit from new business opportunities, rate increases, growth in existing accounts and growth in Australian single-premium mortgage insurance. A solid capital position shields it from market volatility.

Top Stories

Related Articles

Shopping Cart

Media Kit

    Data Protection

    Personal Data (“Data”) submitted for Media Kit (“Media Kit”), and/or collected in the form of first name, last name, email address and other contact details may be used for the purposes of inviting you to future events and for reaching out to you with content which may be of interest to you. For these purposes, Coeus Intelligence will share the Data with our associate companies (including event and content sponsors) to promote their products and services. If you would like to opt-out, email us at [email protected].

    By clicking Submit, you acknowledge that you consent/ have sufficient informed consent to the collection, use and disclosure of Data as set out above.

    Contact Us

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Request Nomination Pack

        Data Protection

        The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

        Registration Form

          Data Protection

          The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

          Registration Form

            Data Protection

            The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

            The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

            COVID-19
            Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

            Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

            The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

            Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

            Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

            Request Nomination Pack

            Error: Contact form not found.