Should You Add Selective Insurance To Your Portfolio?

On Nov 25, Zacks Investment Research upgraded Selective Insurance Group Inc. AEL to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?    

Selective Insurance witnessed rising earnings estimates on the back of solid third-quarter results. Moreover, this property and casualty insurer delivered four straight quarters of positive surprise with an average beat of 42.8%.

Selective Insurance delivered earnings of 76 cents per share in the third quarter that outperformed the Zacks Consensus Estimate by 49.02% and improved 81% year over year on higher revenues.

Revenues improved 5.9% year over year on the strength of higher premiums (driven by renewal pure price increase of 5.4% and strong retention of 82%) and net investment income. It also surpassed the Zacks Consensus Estimate.

Statutory combined ratio improved 480 basis points to 91.5%. The company expects to achieve a combined ratio of 92% in 2014, which seems attainable given the year-to-date performance.

In addition, the board of directors approved an 8% increase in quarterly dividend. These not only testify to Selective Insurance's commitment to enhance shareholders' value but also its solid operational performance.

These positives prompted a rise in the Zacks Consensus Estimate for 2014 (8.6% to $2.01) as most analysts moved their estimates north over the last 30 days.

The above factors clearly indicate that Selective Insurance is a good investment choice at present and is likely to outperform the broader market in the near team.

Other Stocks to Consider

Investors interested in property and casualty insurers may also look at AmTrust Financial Services, Inc. AFSI, Arch Capital Group Ltd. ACGL and Navigators Group Inc. NAVG. All the three stocks sport a Zacks Rank #1 (Strong Buy).