Selective Insurance (SIGI) Q2 Earnings Miss, Revenues Beat

The opinion of the company Selective Insurance Group, Inc. SIGI reported second-quarter 2022 earnings of $1.17 per share, which missed the Zacks Consensus Estimate by 6.4%. Results are down 37% from the previous quarter.

This quarter witnessed an increase in renewal rates, strong bookings, high new business and growth in visibility. Lower after-tax income, higher risk-free losses and higher investment costs weighed it down.

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

chart of Selective Insurance Group, Inc | | The opinion of the company Selective Insurance Group, Inc

Behind the Heads

Net income of $908 million was up 9.4% from the prior quarter, primarily due to higher revenue and write-downs. The top line beat the Zacks Consensus Estimate by 3.3%.

On a year-over-year basis, NPW increased 12% to $930.7 million, driven by net price revisions of 5%, strong retention and visible growth.

Net income after tax fell 16% year-over-year to $57 million due to lower net income after tax, partially offset by higher income from fixed book yields.

Net underwriting revenue, after tax, fell 50% to $29.8 million. A catastrophic loss of $ 45.6 million doubled in the year. Impairment and impairment losses of $138.6 million increased 29.2% year-over-year due to the severe drought, driven by lower prices for new and used vehicles, vehicle repair costs, and construction equipment and operating costs.

The combined ratio fell below 570 basis points (bps) year-on-year to 95.5, due to high losses from disasters and low development of casualties.

Net income increased 18.6% year-over-year to $814.9 million, primarily due to higher losses and impairment losses, other insurance premiums and write-downs of pending acquisitions.

Group Results

Standard Commercial Lines’ NPW rose 12% year over year to $760.3 million. The average cost of repairs increased by 5.3% and a high maintenance rate of 86% drove the change in NPW.

The combined ratio fell by 440 bps to 93.1.

Standard Personal Lines’ NPW increased 5% year over year to $82.6 million. Average net price renewals increased by 0.6%, high retention of 85%, and new business of 23% drove NPW.

The combined ratio fell by 2460 bps year-on-year to 116.9.
Excess & Surplus Lines’ NPW increased by 13% year over year to $87.9 million, driven by a 6.9% increase in fixed costs and 17% new business growth.

The combined ratio changed 80 bps to 95.8.

Financial reforms

Selected insurance came out in the second quarter of 2022 with total assets of $ 10.3 billion, which was 1% below the level of December 2021 at the end. Long-term debt of $505.1 million was lower than the 2021 level.

Loan to total capitalization decreased 180 bps to 16.3% at the end of the second quarter of 2022.

As of June 30, 2022, book value per share was $39.68, down 14% from the level reached at the end of 2021.

Annual non-adjusted GAAP return was 11.4% in the second quarter of 2022, down 570 bps year over year.

In the first half of 2022, Selective Insurance also bought shares for $ 6.5 million. It had $90.1 million outstanding as of Jun 30, 2022.

2022 Instructions

The selected insurer estimates a combined GAAP ratio, excluding catastrophe losses, of 90.5% (prior to guidance 91.0%). A comparison of the combined ratio shows that there is no more development than the previous year in the number of injured people.

Selective Insurance estimates a global catastrophe loss of 4 points for the combined ratio.

After tax net income was $215 million (previous guidance $205 million), including after tax net income 4 from its other income of $15 million (previous guidance $15 million);

The total effective tax rate is expected to be approximately 20.5%, which is based on a total tax rate of 19.5% on gross income and 21% on all other income.
Weighted average shares were 61 million on a diluted basis.

Zacks Profile

Selective Insurance currently has a Zacks Rank #3 (Hold). You can see a complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among the insurance industry players that have reported second quarter results so far, Hartford Financial Services Group, Inc. EXTREMELY, Opinions of the company NMI Holdings NMIH is Opinions of the company Chubb Limited CB beat the Zacks Consensus Estimate for earnings.

Hartford Financial Services Group reported second-quarter 2022 adjusted earnings of $2.15 per share, beating the Zacks Consensus Estimate by 41.5%. The result, however, was down 8% year-on-year.

Hartford Financial’s operating income reached $3,765 million, which changed from $3,568 million in the second quarter of 2022. Also, the top line beat the consensus by 1.5%. Total revenue of $4,810 million exceeded $4,776.3 million and was up from $4,460 million a year ago. Net investment income of $541 million was down from $581 million a year ago due to a year-over-year decrease in other expenses. The reported figure was below the Zacks Consensus Estimate of $564.5 million.

NMI Holdings reported second-quarter 2022 earnings per share of 86 cents, beating the Zacks Consensus Estimate by 11.7%. The results increased by 28.4% year-on-year.

NMI Holdings’ net operating income of $132.2 million rose 9.5% year-over-year on higher earnings (up 9%) and net sales (up 16.4%). Earnings beat the Zacks Consensus Estimate by 1.3%. General insurance increased 23% to $168.6 billion. Annual performance was 71.5%, up 1760 basis points year on year. New insurance written was $16.6 billion, down 27% year over year, reflecting a decrease in reinsurance volume year over year.

Chubb reported second-quarter 2022 earnings of $2.40 per share, which exceeded the Zacks Consensus Estimate by about 17%. The bottom line was also up 16% from the previous quarter. Total revenue recorded rose 7.9% year over year to $10.3 billion in the quarter. Total revenue rose 8.4% to $9.6 billion. Adjusted revenue was $950 million, up 0.5%.

Expenses recorded by property and casualty increased $1.4 billion, up 21.1% from the previous quarter. Chubb posted an after-tax loss of $241 million, a 6.6% year-over-year increase. The combined ratio improved 150 bps year-on-year to a record 84% in the quarter under review.

5 Shares Are Doubled

Each was selected by Zacks analyst as the #1 favorite to earn +100% or more in 2021. Previous estimates were +143.0%, +175.9%, +498.3% and +673.0%.

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