AXS or SIGI: Which P&C Insurer Should You Stay Invested In?

Industry Performance - The Zacks Property and Casualty Insurance industry has gained 15.1% year to date, outperforming the Zacks S&P 500 composite's rise of 12.6% and the Finance sector's increase of 4.4% [1] - Improved performance in personal auto insurance, better investment results, and lower claims are expected to fuel insurers' performance this year [1] - Catastrophe losses are projected to contribute 680 basis points to the expected combined ratio of 100.7 in 2024, with Swiss Re estimating an improvement to 98.5% in 2024 [1] Pricing and Premiums - Global commercial insurance prices have risen for 26 consecutive quarters, increasing by 1% in Q1 2024 [2] - Premiums are expected to grow by 7% in 2024 and 4.5% in 2025, with personal auto performing better than other lines of business [2] - The industry benefits from an improved rate environment, particularly long-tail insurers [2] Company Analysis: Selective Insurance Group (SIGI) and Axis Capital Holdings Limited (AXS) - AXS has a market capitalization of $6.1 billion, while SIGI has a market capitalization of $5.7 billion [3] - AXS has gained 31% year to date, while SIGI has declined by 5.3% [4] Key Financial Metrics - AXS has a return on equity (ROE) of 19.1%, higher than SIGI's 13.7% and the industry average of 7.8% [5] - AXS's return on invested capital (ROIC) is 11.1%, surpassing SIGI's 8% and the industry average of 5.9% [6] - AXS's dividend yield of 2.4% exceeds the industry average of 0.3% and SIGI's 1.5% [7] - AXS's combined ratio was 91.1 in Q1 2024, lower than SIGI's 98.2% [10] - AXS's proforma net margin for the trailing 12 months was 10.3%, higher than SIGI's 8.1% [11] Growth Projections - The Zacks Consensus Estimate for AXS's 2024 earnings indicates a 2.5% increase, while SIGI's estimate implies a 16.6% increase [9] - For 2025, AXS's earnings are projected to increase by 8.9%, while SIGI's is expected to rise by 19.5% [9] Conclusion - AXS shows superior performance in price, ROE, ROIC, dividend yield, combined ratio, and net margin compared to SIGI, while SIGI has an advantage in leverage and growth projections [12]