Selective Insurance Group, Inc. (SIGI) reported fourth-quarter 2014 operating income of 72 cents per share outperforming the Zacks Consensus Estimate of 64 cents by 12.5% and improving year over year by 60%.
The property and casualty insurer’s bottom-line growth was primarily driven by strong results across all its operations.
Operational Update
Selective Insurance reported total revenue of $503.6 million, improving 3.2% year over year. Top-line growth was driven by higher net premiums earned which were partially offset by net realized losses and a decline in net investment income.
Total net premiums written for the company increased 7% to $433.6 million in the fourth quarter. This improvement was driven by the increase in premiums written in Standard Commercial lines (6.9%) and Excess and Surplus lines (27.7%) operations.
Selective Insurance also witnessed improved statutory combined ratio during the quarter. It improved 640 basis points (bps) year over year to 93.2% mainly due solid statutory combined ratios across all the three segments of the company.
Full Year Highlights
Selective Insurance reported operating income of $2.17 per share for 2014 that surged 31.5% year over year. However, the results missed the Zacks Consensus Estimate by 13.5%.
Total revenue grossed $2.0 billion, up 5.3% from the 2013 figure. The hike was driven by higher net premiums earned, net investment income as well as higher net realized gains.
Financial Update
Total assets of Selective Insurance as of end-2014 stood at $6.6 billion, up from $6.3 billion as of 2013-end.
Statutory surplus of the company moved up 4% from 2013-end to $1.3 billion on Dec 31, 2014.
Book value per share was $22.54 as of Dec 31, 2014, up from $20.63 at year-end 2013.
Dividend
Selective Insurance’s board of directors declared a quarterly cash dividend of 14 cents per share which will be payable on Mar 2, 2015 to shareholders on record as of Feb 13, 2015.
Guidance
Selective Insurance expects its 2015 statutory combined ratio (excluding catastrophe losses) to be 91%.
The company estimates 4 points of catastrophe losses for 2015. After-tax investment income is expected to be around $105 million and weighted average shares are expected to be 58 million by end-2015.
Zacks Rank
Selective Insurance holds a Zacks Rank #2 (Buy).
Performance of Other Property and Casualty Insurers
RLI Corp. (RLI) reported fourth-quarter 2014 operating earnings of 71 cents per share, outpacing the Zacks Consensus Estimate by 18.3%. However, operating earnings declined marginally by 1.4% from the year-ago quarter.
The Travelers Companies Inc. (TRV) posted operating earnings of $3.07 per share in the fourth quarter of 2014, outperforming the Zacks Consensus Estimate by 21%. Earnings improved 14.6% year over year.
Progressive Corp.’s (PGR) earnings per share for fourth-quarter 2014 came in at 60 cents, 40% above the Zacks Consensus Estimate and up about 43% year over year.
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