Mixed Signals and Prudent Reserving Actions Lead to Hold Rating for Selective Insurance Group

Bob Huang, an analyst from Morgan Stanley, maintained the Hold rating on Selective Insurance Group (SIGI – Research Report). The associated price target remains the same with $87.00.

Bob Huang has given his Hold rating due to a combination of factors impacting Selective Insurance Group. One of the primary considerations is the company’s recent reserving actions, which appear to be improving, particularly in light of the deceleration of social inflation frequency. This suggests that the management is taking prudent steps to address potential reserve issues, especially those stemming from accident years 2021-2023.
Additionally, the initial loss ratio picks for various lines of business show mixed results. For instance, the General Liability line has seen an increase in its initial loss ratio pick, indicating a conservative approach, while the Commercial Auto line has experienced a decline, attributed to improved underwriting trends. The Workers Compensation reserves are deemed redundant, providing a buffer against future reserve charges. However, there are concerns that E&S Casualty loss picks may need to be adjusted higher. These mixed signals contribute to the Hold rating, as they reflect both strengths and potential challenges for Selective Insurance Group.

According to TipRanks, Huang is a 2-star analyst with an average return of 0.8% and a 61.11% success rate. Huang covers the Financial sector, focusing on stocks such as Progressive, AFLAC, and Selective Insurance Group.

In another report released on February 18, KBW also maintained a Hold rating on the stock with a $93.00 price target.