Contrasting Selective Insurance Group (SIGI) & Arch Capital Group (ACGL)

Selective Insurance Group (NASDAQ: SIGI) and Arch Capital Group (NASDAQ:ACGL) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitability, dividends, analyst recommendations, risk, valuation and institutional ownership.

Insider & Institutional Ownership

76.8% of Selective Insurance Group shares are owned by institutional investors. Comparatively, 73.2% of Arch Capital Group shares are owned by institutional investors. 3.0% of Selective Insurance Group shares are owned by company insiders. Comparatively, 6.6% of Arch Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Selective Insurance Group and Arch Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Selective Insurance Group 7.36% 11.00% 2.37%
Arch Capital Group -3.12% -2.77% -0.57%

Valuation & Earnings

This table compares Selective Insurance Group and Arch Capital Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Selective Insurance Group $2.28 billion 1.49 $158.49 million $3.01 19.37
Arch Capital Group $4.39 billion 2.84 $692.73 million $3.10 30.76

Arch Capital Group has higher revenue and earnings than Selective Insurance Group. Selective Insurance Group is trading at a lower price-to-earnings ratio than Arch Capital Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Selective Insurance Group and Arch Capital Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Selective Insurance Group 0 4 0 0 2.00
Arch Capital Group 0 6 4 0 2.40

Selective Insurance Group currently has a consensus target price of $49.91, indicating a potential downside of 14.39%. Arch Capital Group has a consensus target price of $99.67, indicating a potential upside of 4.53%. Given Arch Capital Group’s stronger consensus rating and higher possible upside, analysts clearly believe Arch Capital Group is more favorable than Selective Insurance Group.

Risk and Volatility

Selective Insurance Group has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Dividends

Selective Insurance Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.1%. Arch Capital Group does not pay a dividend. Selective Insurance Group pays out 21.3% of its earnings in the form of a dividend.

Summary

Arch Capital Group beats Selective Insurance Group on 10 of the 16 factors compared between the two stocks.

Selective Insurance Group Company Profile

Selective Insurance Group, Inc. is a holding company. As of December 31, 2016, the Company had 10 insurance subsidiaries, nine of which were licensed by various state departments of insurance to write specific lines of property and casualty insurance business. The remaining subsidiary is authorized by various state insurance departments to write property and casualty insurance in the excess and surplus lines (E&S) market. Its segments include Standard Commercial Lines, which consists of insurance products and services provided in the standard marketplace; Standard Personal Lines, which consists of insurance products and services, including flood insurance coverage that it writes through the National Flood Insurance Program (NFIP); E&S Lines, which consists of insurance products and services provided to customers not obtaining coverage in the standard marketplace, and investment segment invests insurance premiums, as well as amounts generated through its capital management strategies.

Arch Capital Group Company Profile

Arch Capital Group Ltd. provides insurance, reinsurance and mortgage insurance. The Company provides a range of property, casualty and mortgage insurance and reinsurance lines. The Company operates in five segments: insurance, reinsurance, mortgage, other and corporate. The insurance segment’s product lines include construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health, and other. The reinsurance segment’s product lines include casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe, and other. The mortgage segment includes the results of Arch Mortgage Insurance Company and Arch Mortgage Insurance Designated Activity Company, which are providers of mortgage insurance products and services to the United States and European markets. The other segment includes the results of Watford Holdings Ltd.

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