Back to Main

Selective Insurance Downgraded to Sell - Analyst Blog

Posted: 12/24/2013 3:17:00 PM
Referenced Stocks: ACGL;AFSI;AWH;SIGI

Zacks Investment Research downgraded Selective Insurance Group, Inc. ( SIGI ) to a Zacks Rank #4 (Sell) on Dec 24, 2013.

Why the Downgrade?

Selective Insurance witnessed downward estimate revisions after reporting mixed third-quarter 2013 results. Additionally, Selective Insurance delivered negative earnings surprise in two out of the last three quarters. Over the last 30 days, estimates moved downwards leading to an approximately 2% decline in the Zacks Consensus Estimate for full year 2013 to $1.61 per share.

On Oct 30, Selective Insurance reported third-quarter earnings per share of 42 cents, which although higher than the year-ago earnings, missed the Zacks Consensus Estimate by 4.6%.

The quarter experienced an increase in total expenses due to higher loss and loss expense and policy acquisition costs. Catastrophe losses and interest expense also increased during the quarter. Further, over the last nine months of 2013, the debt burden of Selective Insurance increased approximately 28% from year end 2012 leading to deterioration in the debt-to-capital ratio.

Additionally, the company expects the weighted average share outstanding to be around 57 million for full year 2013, higher than the earlier guidance of 56 million. Higher share count might affect earnings per share adversely in the upcoming period.

Other Stocks to Consider

However, some better-ranked stocks in the property and casualty insurance space include Allied World Assurance Company Holdings, AG ( AWH ), AmTrust Financial Services, Inc. ( AFSI ) and Arch Capital Group Ltd. ( ACGL ). While Allied World and AmTrust Financial carry a Zacks Rank #1 (Strong Buy), Arch Capital carries a Zacks Rank #2 (Buy).

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ALLIED WORLD AS (AWH): Free Stock Analysis Report

SELECT INS GRP (SIGI): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research