Selective Insurance (SIGI) Beats on Q3 Earnings, Updates View

Selective Insurance Group, Inc . SIGI reported third-quarter 2018 operating income of 99 cents per share, beating the Zacks Consensus Estimate by 12.5%. Also, the bottom line surged 37.5% from the year-ago period's number.

Selective Insurance Group, Inc. Price, Consensus and EPS Surprise

Selective Insurance Group, Inc. Price, Consensus and EPS Surprise | Selective Insurance Group, Inc. Quote

The quarter benefited from disciplined underwriting franchise and a strong underlying insurance operations performance.

Behind the Headlines

Total revenues of $667 million inched up 0.3% from the year-ago quarter's figure.

Net investment income surged 45% year over year to $43 million, driven by higher pre-tax yields on core fixed income securities portfolio, higher levels of alternative investment income and lower taxes.

Net premiums written climbed 8% year over year to $651.7 million. Combined ratio deteriorated 30 basis points (bps) on a year-over-year basis to 94.6%.

Segment Results

Standard Commercial Lines net premiums written were up 6% year over year to $502.3 million on the back of solid renewal pure price improvement as well as retention. Combined ratio deteriorated 240 bps to 94.5% from the prior-year quarter's level.

Standard Personal Lines net premiums written grew 4% year over year to $84.7 million, mainly aided by a strong renewal pure price increase and solid retention. Combined ratio deteriorated 720 bps to 95.9% from the year-ago period's count.

Excess & Surplus Lines net premiums written improved 27% year over year to $64.6 million, primarily attributable to new business. Combined ratio improved 2670 bps to 9.7%. Lower current-year loss costs drove this upside.

Financial Update

Selective Insurance exited the third quarter with total assets of nearly $8 billion, which increased 4% over the level at December 2017 end.

As of Sep 30, 2018, book value per share was $29.52, having slid 1% year over year.

Annualized return on equity was 13.8% in the reported quarter, expanding 370 points year over year.

Dividend Raised

Selective Insurance's board of directors approved an 11% increase in its quarterly dividend to 20 cents per share, payable Dec 3 to stockholders of record as of Nov 15, 2018.

2018 Guidance Revised

Selective Insurance anticipates delivering a combined ratio (excluding catastrophe loss) of about 92%.

The company projects an after-tax investment income of $156 million, up from $150 million, predicted earlier.

The P&C insurer estimates an overall effective tax rate of nearly 18% including the same of 17% for net investment income, which reflects a tax rate of 5.25% for tax-advantaged municipal bonds and a tax rate of approximately 21% for all other investments.

Weighted average shares outstanding of 59.6 million have been anticipated.

Zacks Rank

Selective Insurance carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other P&C Insurers

Among other players from the insurance industry having reported third-quarter earnings so far, the bottom line of The Progressive Corp. PGR and MGIC Investment Corp. MTG beat the respective Zacks Consensus Estimate while that of RLI Corp. RLI missed the same.

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MGIC Investment Corporation (MTG): Free Stock Analysis Report

Selective Insurance Group, Inc. (SIGI): Free Stock Analysis Report

The Progressive Corporation (PGR): Free Stock Analysis Report

RLI Corp. (RLI): 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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