It Seems Challenging To Reconcile Selective Insurance's Performance And Valuation

Good companies deserve, and often get, a premium valuation. Although I believe Selective Insurance (SIGI) is an above-average small P&C insurer, and one with opportunities to generate better results in the coming years, I have a hard time reconciling that performance with a book value multiple well over 2x and a P/E ratio that seems to assume quite a bit more growth than I think is likely.

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It Seems Challenging To Reconcile Selective Insurance's Performance And Valuation

United Fire Looks A Little Overheated In A Still-Challenging Sector

These are challenging times for the insurance industry, and small-cap player United Fire (UFCS) has not been immune. Healthy reserve releases have helped boost underwriting results, but the top line remains pressured, and management has decided to reinvest in the business by boosting its technology platform - a decision that should pay off long term, but that will pressure expense ratios in the near term. While United Fire has a decent enough business focusing on smaller businesses and offering coverage for commercial auto, fire (and allied lines), workers' comp, and product liability, the valuation more or less already captures the positives of the story.

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United Fire Looks A Little Overheated In A Still-Challenging Sector