Selective Insurance Beats on Q4 Earnings, Revs - Analyst Blog

Selective Insurance Group, Inc. 's ( SIGI ) fourth-quarter 2013 earnings of 45 cents a share, bounced back from an operating loss of 4 cents a share in the prior-year quarter. The result also surpassed the Zacks Consensus Estimate of 41 cents by 9.8%.

Including the effect of capital losses, Selective Insurance Group reported net income of 44 cents a share that surged from 2 cents per share reported in the prior year quarter.

Bottom-line growth of this property and casualty insurer was primarily driven by strong results across all its operations.

Operational Update

Selective Insurance Group reported total revenue of $488 million, surpassing the Zacks Consensus Estimate of $483 million marginally by 1% in the reported quarter. Also, the results increased 8.7% year over year. Top-line growth was driven by higher net premiums earned and net investment income, which was partially offset by net realized losses as against net realized gains witnessed in the prior-year quarter.

Total net premiums written for the company increased 9.3% to $405.1 million in the fourth quarter. This improvement was driven by written premium increases in Standard Commercial lines (10%), Standard Personal lines (4%) and also in Excess and Surplus lines (20%).

Selective Insurance Group also witnessed improved statutory combined ratio during the quarter. It reduced 1080 basis points (bps) year over year to 99.6% mainly due to decreased property losses and consolidated underwriting actions in Excess and Surplus lines.

Full Year 2013 Highlights

Selective Insurance Group reported operating net earnings of $1.65 per share for full year 2013 that surged significantly from the 2012 operating net income of 58 cents a share.

Including the effect of capital gains and loss on discontinued operations, the company reported net earnings per share of $1.87 a share that also jumped substantially higher than the 2012 comparable number.

Total revenue for 2013 grossed $1.90 billion, up 9.8% from the 2012 figure. The hike was driven by higher net premiums earned, net investment income as well as higher net realized gains.

Statutory combined ratio improved 600 bps from 2012-level to 97.5% during 2013.

Financial Update

Total assets of Selective Insurance Group as of the end of 2013 stood at $6.3 billion, down from $6.8 billion as of 2012-end. Investment portfolio at 2013 end was $4.6 billion, up from $4.3 billion as of Dec 31, 2012.

Statutory surplus of the company moved up 20% from 2012-end to $1.3 billion on Dec 31, 2013.


Selective Insurance Group expects its 2014-full year statutory combined ratio (excluding catastrophe losses) to be 92%.

The company expects its January catastrophe losses to range between $28 million and $32 million. This is expected to result from the extreme cold weather in all 22 locations of Selective Insurance Group which was caused by polar vortex during the month.

Zacks Rank

Selective Insurance Group presently carries a Zacks Rank #3 (Hold). Other better-ranked property and casualty insurers include ACE Limited ( ACE ), Aspen Insurance Holdings Ltd. ( AHL ) and Platinum Underwriters Holdings Ltd. ( PTP ). All these stocks sport a Zacks Rank #1 (Strong Buy).

ACE LIMITED (ACE): Free Stock Analysis Report

ASPEN INS HLDGS (AHL): Free Stock Analysis Report

PLATINUM UNDRWT (PTP): Free Stock Analysis Report

SELECT INS GRP (SIGI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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