Selective Insurance shares target raised to $96 by BMO Capital

On Tuesday, BMO Capital Markets adjusted its outlook on Selective Insurance Group, increasing the price target on the company’s stock to $96 from the previous target of $92. The firm maintained its Outperform rating on the shares, traded under (NASDAQ:SIGI), despite revising some of its financial estimates for the company. According to InvestingPro data, the company, currently valued at $5.3 billion, appears slightly undervalued based on its Fair Value analysis.

The revised price target comes after BMO Capital’s analysis of Selective Insurance Group’s financial performance and prospects. Analyst Michael Zaremski noted that while estimates were lowered by 2% through 2026, an increase of 3% is projected for the same year as the company’s margin is expected to revert closer to its historical 95% average. The adjustment reflects a conservative approach to reserving, near double-digit pricing increases, and the impact of higher catastrophe losses, increased interest expenses, and challenges in alternative investment income. InvestingPro analysis reveals the company’s impressive dividend track record, maintaining payments for 51 consecutive years, with revenue growing at 13.3% over the last twelve months.

Selective Insurance Group has maintained its catastrophe loss ratio guidance for 2025 at 6%, despite first-quarter results that surpassed expectations by approximately 120 basis points. BMO Capital’s current underlying combined ratio estimate aligns with the midpoint of Selective Insurance Group’s guidance.

The price target increase to $96 reflects BMO Capital’s confidence in Selective Insurance Group’s ability to navigate through the pressures of higher catastrophe losses and other financial headwinds. The Outperform rating indicates that BMO Capital expects the company’s stock to perform better than the broader market in the foreseeable future.

In other recent news, Selective Insurance Group reported its first-quarter 2025 earnings, revealing a mixed performance. The company posted earnings per share (EPS) of $1.76, which fell short of analysts’ expectations of $1.88. However, revenue exceeded forecasts, coming in at $1.29 billion compared to the expected $1.25 billion. Despite the EPS miss, net income available to common stockholders increased by 34%, reflecting strong company performance in other areas. The firm continues to focus on technology and AI investments to support growth. Analyst commentary from the earnings call highlighted concerns over loss trends in general liability and workers’ compensation pricing. Selective Insurance Group maintains its guidance for a GAAP combined ratio between 96% and 97% for 2025. The company also anticipates after-tax net investment income to reach $405 million, with a projected mid-teens operating return on equity.

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