SIGI

Selective Insurance ($SIGI) CEO Buys $250K Despite 17% Plunge: Management Confidence vs Earnings Concerns

07/29/2025 18:42

Selective Insurance ($SIGI) has once again faced a stock plunge following disappointing earnings, yet management's aggressive buying continues to capture investor attention. This mid-cap property and casualty insurer, with a market cap of $5.27 billion, provides commercial, personal, and specialty insurance products across the United States. Q2 2025 results showed revenue of $1.33 billion, up 10.9% year-over-year, but earnings per share of $1.31 fell short of analyst expectations of $1.51 by 13.6%. The combined ratio of 100.2% indicated that claims and expenses exceeded premium income, disappointing investors. Consequently, shares plummeted 17% from $90.4 to $75 on July 24th. Remarkably, management responded to this decline with substantial purchases. On July 25th, Director Terrence Cavanaugh bought 2,000 shares for $151,000, while EVP Joseph Eppers purchased 1,402 shares for $108,000. More significantly, on July 28th, CEO John Marchioni acquired 3,200 shares for $249,000, and Director Thomas McCarthy bought 2,500 shares for $194,000. These represent meaningful investments rather than token purchases. This pattern has repeated throughout the company's recent challenges. When social inflation issues caused a 19% drop from $99.5 to $80.7 in July 2024, CEO Marchioni and Director Cavanaugh made purchases totaling $200,000 and $172,000 respectively. Following Q4 2024 disappointments that triggered another January 2025 decline, multiple executives made additional purchases through February and March. Insurance industry analysts point to both challenges and opportunities facing Selective. While social inflation and rising claim costs persist, the company maintains solid customer retention rates and continues efforts to improve margins through premium increases. Management's repeated buying at depressed levels suggests they view current pricing as significantly undervalued. Investors should focus on whether the combined ratio improves in upcoming quarters. A drop below 100% would signal restored underwriting profitability, requiring either premium increases to take effect or claim cost inflation to moderate. Whether management's buying translates into actual performance improvements will be crucial. With shares trading around $75-78, analyst price targets of $94 suggest approximately 20% upside potential. However, without earnings improvement, stock recovery may remain limited, warranting cautious positioning ahead of next quarter's results. Positive signals would include combined ratios improving to below 98% or additional large-scale insider buying. Conversely, ratios exceeding 102% or any insider selling would necessitate investment thesis reconsideration.