Selective(US:SIGI) ZACKS·2025-01-15 15:10Core Viewpoint - Selective Insurance Group, Inc. (SIGI) is currently trading at a premium compared to the Zacks Property and Casualty Insurance industry, with a price-to-book value of 1.90X versus the industry average of 1.49X [1] Company Performance - Selective Insurance has a market capitalization of $5.64 billion, with an average trading volume of 0.3 million shares over the last three months [2] - Over the past six months, SIGI shares have declined by 7.3%, underperforming the industry, sector, and the Zacks S&P 500 composite, which grew by 1.7%, 4.2%, and 3.4% respectively [3] - The stock closed at $92.89, which is 15.2% below its 52-week high of $109.58, and is trading below both the 50-day and 200-day simple moving averages of $95.97 and $94.67, indicating downward momentum [5] Growth Projections - The Zacks Consensus Estimate for SIGI's 2025 earnings per share indicates a significant increase of 117%, while revenues are projected to grow by 9.8% from 2024 estimates [6] - One of the five analysts covering SIGI has raised estimates for 2025 in the past 60 days, resulting in a 1% upward adjustment in the Zacks Consensus Estimate for 2025 [9] Factors Supporting Growth - Factors such as exposure growth, solid retention rates, and higher new business gains in standard commercial and excess and surplus (E&S) lines are expected to drive premium growth [10] - The E&S Lines segment is anticipated to improve due to renewal pure price increases and favorable marketplace conditions [11] - Selective Insurance estimates an after-tax net investment income of $360 million for 2024, benefiting from higher income on fixed-income securities due to improved book yields in a higher interest rate environment [12] Dividend and Return Metrics - Selective Insurance has a strong dividend history, with a nine-year CAGR of nearly 8.8% from 2015 to 2023, and a recent 9% hike in the quarterly cash dividend approved in Q3 2024 [13] - The company's return on equity in the trailing 12 months was 8.1%, surpassing the industry average of 7.5%, indicating efficient use of shareholders' funds [14] Conclusion - Despite facing challenges such as exposure to catastrophe loss and rising expenses, SIGI is well-positioned for growth due to strong renewal rates and favorable market conditions [15] - The company is considered a hold at present, benefiting from favorable growth estimates and prudent capital deployment, despite its expensive valuation [16]