Selective Insurance Group, Inc. SIGI reported first-quarter 2025 operating income of $1.76 per share, which missed the Zacks Consensus Estimate by 6.8%. The bottom line increased 32.3% from the year-ago quarter.
The company’s performance in the quarter reflects solid underwriting income, lower catastrophe losses, average renewal pure price increase, offset by wider non-catastrophe property loss and loss expenses and higher expenses. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Behind the Headlines
Total revenues of $1.3 billion increased 10% from the year-ago quarter’s figure, primarily due to higher net premiums written, net premiums earned and net investment income earned. The top line missed the Zacks Consensus Estimate by 0.9%.
On a year-over-year basis, net premiums written (NPW) increased 7% to $1.2 billion. Average renewal pure price expanded 220 basis points year over year to 10.3%. The figure matched our estimate.
Net investment income increased 12% year over year to $95.6 million.
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Selective Insurance Group, Inc. Price, Consensus and EPS Surprise
Selective Insurance Group, Inc. price-consensus-eps-surprise-chart | Selective Insurance Group, Inc. Quote
After-tax net underwriting income was $36.1 million, which more than doubled year over year. Net catastrophe losses of $43.4 million were narrower than the year-ago loss of $55.2 million. Non-catastrophe property loss and loss expenses were $178.7 million, wider than the year-ago loss of $171.2 million.
The combined ratio of 96.1 improved 210 basis points year over year due to lower unfavorable prior year casualty reserve development, net catastrophe losses, and non-catastrophe property losses drove the improvement. This was partially offset by higher current-year casualty loss costs and a higher expense ratio. The figure matched the Zacks Consensus Estimate and our estimate.
Total expenses rose 7.8% year over year to $1.1 billion, primarily due to higher loss and loss expense incurred, amortization of deferred policy acquisition costs, other insurance expenses, interest expense and corporate expenses. The figure matched our estimate.
Segmental Results
Standard Commercial Lines’ NPW was up 8% year over year to $1 billion. The premium growth reflected average renewal pure price increases of 9.1% and stable retention of 85%. The figure matched our estimate.
The combined ratio improved 240 basis points (bps) to 96.4. The Zacks Consensus Estimate was 97 and our estimate was 96.7.
Standard Personal Lines’ NPW decreased 12% year over year to $87.5 million, due to deliberate profit improvement actions. New business decreased 58%, while renewal pure price was 24.1% and retention was 75%. The figure was lower than our estimate of $114 million.
The combined ratio improved 710 bps on a year-over-year basis to 98. The Zacks Consensus Estimate was pegged at 102, while our estimate was 105.6.
Excess & Surplus Lines’ NPW was up 20% year over year to $149.7 million, driven by strong policy count growth, average renewal pure price increases of 8.7%, and new business growth of 4%. The figure matched our estimate.
The combined ratio deteriorated 490 bps to 92.5. The Zacks Consensus Estimate was pegged at 87, while our estimate was 86.3.
Financial Update
Selective Insurance exited the first quarter of 2025 with total assets of $14.2 billion, 5% above the level at December 2024 end. Long-term debt of $903.2 million surged 78% from the 2024 end level.
Debt-to-total capitalization deteriorated 770 bps to 21.7% from the 2024 end level.
As of March 31, 2025, adjusted book value per share was $53.39, up 5% year over year.
Operating return on common equity of 14.4% expanded 270 basis points year over year.
Share Repurchase and Dividend Update
In the first quarter of 2025, Selective Insurance repurchased shares for $19.4 million. SIGI had $56.1 million remaining under authorization as of March 31, 2025.
The board of directors authorized a quarterly cash dividend of 38 cents per share. The dividend will be paid out on June 2 to shareholders of record at the close of business on May 15, 2025.
2025 Guidance
SIGI estimates a GAAP combined ratio of 96% to 97%, including net catastrophe losses of 6 points. The combined ratio estimate assumes no additional prior year casualty reserve development.
Selective Insurance estimates an after-tax net investment income of $405 million. A higher asset base due to proceeds from senior notes issuance should benefit net investment income, while the alternative investments portfolio could face increased valuation headwinds given financial market volatility.
The overall effective tax rate is expected to be around 21.5%.
Weighted average shares were 61.5 million on a fully diluted basis, including the shares repurchased in the first quarter of 2025 and assuming no additional repurchases under our existing share repurchase authorization.
Zacks Rank
Selective Insurance currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
W.R. Berkley Corporation’s WRB first-quarter 2025 operating income of $1.01 per share matched the Zacks Consensus Estimate. The bottom line, however, declined 2.9% year over year. W.R. Berkley’s net premiums written were $3.1 billion, up 9.9% year over year. The figure was higher than our estimate of $3 billion.
Operating revenues came in at $3.5 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income, higher insurance service fees and other income. The top line beat the consensus estimate by 2.2%. Net investment income grew 12.6% to $360.3 million. The figure was lower than our estimate of $380.4 million. The Zacks Consensus Estimate was pegged at $346 million. Solid operating cash flow continues to drive growth in net investable assets.
Chubb Limited CB reported first-quarter 2025 core operating income of $5.68 per share, which outpaced the Zacks Consensus Estimate by 12.8%. However, the bottom line decreased 30.1% year over year. Net premiums written improved 3.5% year over year to $12.6 billion in the quarter. Our estimate was $13.2 billion, while the Zacks Consensus Estimate was pegged at $13 billion.
Net investment income was $1.5 billion, up 12.2% year over year. The Zacks Consensus Estimate and our estimate for the same were both pegged at $1.6 billion. Property and casualty (P&C) underwriting income was $441 million, down 68.5% year over year. Global P&C underwriting income, excluding Agriculture, was $387 million, down 71.2%. Chubb Limited incurred pre-tax net catastrophe losses of $1.64 billion, wider than the year-ago quarter’s loss of $435 million. The losses include $1.47 billion from the California wildfires.
The Travelers Companies TRV reported first-quarter 2025 core income of $1.91 per share, which beat the Zacks Consensus Estimate of 69 cents. The bottom line, however, declined 29.3% year over year. Travelers’ total revenues increased 6.1% from the year-ago quarter to $11.9 billion. The top-line figure, however, missed the Zacks Consensus Estimate of $12.1 billion.
Net written premiums increased 3% year over year to a record $10.5 billion, driven by strong growth across all three segments. Our estimate was $10.2 billion. Underlying underwriting income of $1.6 billion improved more than 30% year over year, driven by strong net earned premiums. The consolidated underlying combined ratio of 84.8 improved 290 basis points (bps) year over year. The combined ratio deteriorated 860 bps year over year to 102.5 due to higher catastrophe losses. The Zacks Consensus Estimate was pegged at 105.
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