SIGI

Selective Insurance ($SIGI) CEO, CFO Stage $500K Contrarian Buying Amid Stock Decline

10/27/2025 15:14

Selective Insurance Group ($SIGI), a mid-cap property and casualty insurer founded in 1926 and headquartered in New Jersey, operates across commercial, personal, and specialty excess & surplus insurance lines through a nationwide independent agent network. With a market capitalization of approximately $4.6 billion, the company has carved out a strong niche in specialty insurance markets while maintaining a diversified business model. The stock has experienced significant volatility recently, falling from around $95 in October 2024 to the mid-$70s by late July 2025, representing a decline of over 20% from its recent highs. This downturn was triggered by an unexpected quarterly loss in July 2024 due to adverse reserve development and broader industry concerns about social inflation impacting claim costs. However, what stands out during this price decline is the aggressive insider buying activity. CEO John Marchioni purchased 3,200 shares at $77.89 on July 28, 2025, investing approximately $250,000. This marked his second major purchase, following an earlier acquisition of 1,180 shares in March. CFO Patrick Brennan also demonstrated confidence by purchasing 2,700 shares at $76.17 on October 24, investing about $200,000. Directors Terence Cavanaugh and Robert Doherty joined the buying spree during the July-August price weakness. The timing and scale of these purchases suggest management views the $75-85 price range as an attractive entry point. The consistency of insider buying during market weakness indicates strong conviction about the company's intrinsic value and future prospects. Fundamentally, SIGI's financial position supports management's confidence. Third-quarter 2025 results showed earnings per share of $1.75, slightly below the $1.84 analyst estimate, but revenue of $1.35 billion exceeded expectations with 9.1% year-over-year growth. The standout performer was the Excess & Surplus segment, which delivered 20.6% premium growth and an impressive 76.2% combined ratio, demonstrating strong profitability in this specialty niche. Investment income has also been a bright spot, growing 17.7% year-over-year to $138.7 million in Q3, providing stable earnings to offset underwriting volatility. The company maintains a conservative balance sheet with a debt-to-equity ratio of approximately 26%, supporting financial stability. Challenges remain in the core segments. The Standard Commercial Lines combined ratio of 101.1% indicates underwriting losses, while Personal Lines posted 110.1%. These metrics reflect industry-wide pressures from social inflation, where litigation costs and claim settlements are rising faster than premium increases. Industry analysts view SIGI's situation with cautious optimism. Insurance sector experts note that "the strong growth in specialty lines and increasing investment income are positives, but recovery in core segment profitability remains crucial." Current analyst consensus maintains a "hold" rating with an average price target of $94, suggesting approximately 20% upside potential from current levels. Key catalysts to watch include whether rate increases will show meaningful impact in upcoming quarters and whether the Excess & Surplus segment can maintain its growth trajectory. The company recently announced a new $200 million share repurchase program, signaling management's commitment to shareholder value creation. While the insider buying activity sends a positive signal, investors should closely monitor the company's progress in improving underwriting discipline and the broader industry's ability to address social inflation pressures. At current price levels, the risk-reward profile appears attractive, but execution on operational improvements will determine investment success.