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1. Company Snapshot

1.a. Company Description

Selective Insurance Group, Inc., together with its subsidiaries, provides insurance products and services in the United States.It operates through four segments: Standard Commercial Lines, Standard Personal Lines, E&S Lines, and Investments.The company offers property insurance products, which covers the financial consequences of accidental loss of an insured's real property, personal property, and/or earnings due to the property's loss; and casualty insurance products that covers the financial consequences of employee injuries in the course of employment, and bodily injury and/or property damage to a third party, as well as flood insurance products.


It also invests in fixed income investments and commercial mortgage loans, as well as equity securities and alternative investment portfolio.The company offers its insurance products and services to businesses, non-profit organizations, local government agencies, and individuals through independent retail agents and wholesale general agents.Selective Insurance Group, Inc.


was founded in 1926 and is headquartered in Branchville, New Jersey.

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1.b. Last Insights on SIGI

Selective Insurance Group, Inc.'s recent performance was negatively impacted by its Q3 earnings miss, with quarterly earnings of $1.75 per share, falling short of the Zacks Consensus Estimate of $1.84 per share. Despite solid underwriting gains, the company's earnings lagged behind expectations. However, the company has taken steps to enhance shareholder value, including a dividend increase and a $200M share buyback program. According to Zacks, the stock had been added to the Strong Sell List in August.

1.c. Company Highlights

2. Selective Insurance Group's Q3 2025 Earnings: Strong Investment Income Drives Profitability

Selective Insurance Group reported a robust third-quarter 2025, with an operating return on equity of 13.2%, fueled by an 18% year-over-year increase in investment income. The company's fully diluted EPS came in at $1.85, up 26% from the previous year, while non-GAAP operating EPS was $1.75, a 25% increase. The combined ratio for the quarter was 98.6%, impacted by unfavorable prior year casualty reserve development of $40 million or 3.3 points. Revenue growth is expected to be 5.7% next year, according to analysts' estimates.

Publication Date: Oct -25

📋 Highlights
  • Strong Operating Return on Equity:: 13.2% ROE driven by 18% Y/Y investment income growth.
  • EPS Growth:: Fully diluted EPS rose 26% Y/Y to $1.85; non-GAAP operating EPS up 25% to $1.75.
  • Combined Ratio:: 98.6% with $40M unfavorable prior-year casualty reserve development (3.3 pts impact).
  • Capital Returns:: 13% dividend increase and $200M share repurchase program announced.
  • Commercial Auto Reserves:: 5-point pick increase in New Jersey due to accelerating frequency/severity trends.

Financial Performance and Guidance

The company's financial performance was strong, with a significant increase in investment income. Selective Insurance Group expects a 2025 GAAP combined ratio between 97% and 98%, with 4 points of catastrophe losses, and after-tax net investment income of $420 million. The underlying combined ratio on an accident year basis is expected to be around 91-92%, underlying the full-year guidance.

Business Diversification and Expansion

Selective Insurance Group is prioritizing profit improvement and moderating premium growth, focusing on sharpening fundamental disciplines such as risk selection, individual risk pricing, and claims adjudication. The company is diversifying its portfolio by expanding its Standard Commercial Lines footprint and pursuing opportunities to further diversify its business. The company is expanding into new states, including Montana this quarter and Wyoming next year, with favorable agent receptivity and performance in line with expectations.

Reserve Development and Reinsurance

The company's commercial auto reserve review resulted in a 5-point increase in the pick, largely driven by the state of New Jersey, where frequency and severity trends have accelerated. The external actuarial experts that reviewed Selective's reserves indicated that the elevated trends in recent accident years are evident across the industry. The company has considered reinsurance opportunities, including LPT for casualty reserves, but does not think it makes sense at this point due to immature years and unfavorable economics.

Valuation and Dividend

With a Price-to-Book Ratio of 1.35, the company's valuation appears reasonable. The Dividend Yield is 1.97%, and the company announced a 13% increase in its quarterly dividend and a new $200 million share repurchase program. Book value per share increased 13% in the first 9 months of the year, driven by profitability. The company's ROE is 12.29%, indicating a strong return on equity.

3. NewsRoom

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Connor Clark & Lunn Investment Management Ltd. Acquires Shares of 19,775 Selective Insurance Group, Inc. $SIGI

Nov -17

Source: defenseworld.net

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Selective Insurance Announces Vincent Senia's Retirement as Executive Vice President & Chief Actuary

Nov -11

Source: businesswire.com

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Arkadios Wealth Advisors Acquires Shares of 3,452 Selective Insurance Group, Inc. $SIGI

Nov -06

Source: defenseworld.net

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Selective Appoints Julie Parsons as Independent Director

Nov -03

Source: businesswire.com

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Selective Insurance Group's (SIGI) CFO Bought 2,700 Shares for $205,700

Nov -02

Source: fool.com

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Selective Insurance Group, Inc. (SIGI) Q3 2025 Earnings Call Transcript

Oct -23

Source: seekingalpha.com

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SIGI Misses Q3 Earnings Estimates, Ups Dividend, Okays Share Buyback

Oct -23

Source: zacks.com

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Selective Insurance (SIGI) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Oct -23

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.35%)

6. Segments

Standard Commercial Lines

Expected Growth: 9%

Selective Insurance Group's 9% growth in Standard Commercial Lines is driven by a combination of factors, including a strong underwriting discipline, strategic pricing, and a diversified portfolio of small to medium-sized businesses. Additionally, investments in digital capabilities and data analytics have enhanced customer experience, improved risk selection, and increased operational efficiency.

Excess and Surplus Lines

Expected Growth: 8%

Selective Insurance Group's Excess and Surplus Lines segment growth of 8% is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic partnerships. Additionally, the company's expertise in underwriting and risk management, as well as its ability to adapt to changing market conditions, have contributed to its growth in this segment.

Investments

Expected Growth: 12%

Selective Insurance Group's 12% growth is driven by strategic investments in digital transformation, expansion into new markets, and a focus on niche commercial lines. Additionally, the company's strong underwriting discipline, favorable loss reserve development, and solid capital position have contributed to its growth momentum.

Standard Personal Lines

Expected Growth: 11%

Selective Insurance Group's 11% growth in Standard Personal Lines is driven by increasing demand for auto and homeowners insurance, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, improved underwriting capabilities, and enhanced customer experience have contributed to its growth momentum.

7. Detailed Products

Personal Lines

Insurance products for individuals and families, including auto, homeowners, and umbrella insurance

Commercial Lines

Insurance products for businesses, including commercial auto, general liability, and workers' compensation insurance

Flood Insurance

Insurance products that provide protection against flood damage to homes and businesses

Excess and Surplus Lines

Specialized insurance products for unique or hard-to-place risks

Reinsurance

Insurance products for other insurance companies, providing additional coverage and risk management

8. Selective Insurance Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Selective Insurance Group, Inc. operates in a highly regulated industry, which limits the threat of substitutes. Additionally, the company's diversified product offerings and strong brand recognition reduce the likelihood of customers switching to alternative products or services.

Bargaining Power Of Customers

Selective Insurance Group, Inc. has a large customer base, which gives customers some bargaining power. However, the company's strong brand reputation and diversified product offerings mitigate this power to some extent.

Bargaining Power Of Suppliers

Selective Insurance Group, Inc. has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's strong financial position and long-term relationships with suppliers also limit supplier power.

Threat Of New Entrants

The insurance industry is highly regulated, and new entrants face significant barriers to entry, including high capital requirements and complex regulatory hurdles. Selective Insurance Group, Inc.'s established brand and strong market position also make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The insurance industry is highly competitive, with many established players competing for market share. Selective Insurance Group, Inc. faces intense competition from larger rivals, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 14.83%
Debt Cost 6.68%
Equity Weight 85.17%
Equity Cost 6.68%
WACC 6.68%
Leverage 17.42%

11. Quality Control: Selective Insurance Group, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Hanover Insurance

A-Score: 6.8/10

Value: 7.3

Growth: 4.8

Quality: 6.6

Yield: 4.0

Momentum: 8.5

Volatility: 9.3

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RLI

A-Score: 6.5/10

Value: 6.0

Growth: 6.9

Quality: 8.2

Yield: 7.0

Momentum: 1.5

Volatility: 9.3

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Loews

A-Score: 6.1/10

Value: 6.2

Growth: 6.8

Quality: 5.3

Yield: 0.0

Momentum: 8.0

Volatility: 10.0

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Kemper

A-Score: 5.5/10

Value: 8.5

Growth: 3.7

Quality: 7.5

Yield: 5.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Selective Insurance

A-Score: 5.4/10

Value: 7.7

Growth: 6.0

Quality: 6.9

Yield: 3.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

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Kinsale Capital Group

A-Score: 5.2/10

Value: 4.1

Growth: 9.8

Quality: 8.6

Yield: 0.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

77.54$

Current Price

77.54$

Potential

-0.00%

Expected Cash-Flows