• Recent analysis of Selective Insurance Group shows that over the past five years its costs have risen faster than revenue, leading to a 2.3 percentage point deterioration in its combined ratio and less profitable incremental sales in the last two years.
• This weaker profitability has been accompanied by annual book value per share growth of 6.4% over five years, which trails typical insurance sector standards and raises questions about the company’s efficiency in converting growth into shareholder value.
• We’ll now examine how rising costs outpacing revenue growth shapes Selective Insurance Group’s investment narrative and what it may mean for investors.

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What Is Selective Insurance Group's Investment Narrative?

To own Selective Insurance Group, you really have to believe that its underwriting discipline and pricing power can catch up with the cost pressures now showing through in the combined ratio and only moderate book value growth. Near term, the key catalyst is whether upcoming results, starting with Q4 2025, show any stabilization in profitability after several years of costs rising faster than revenue. The recent analysis highlighting less profitable incremental sales and below-sector book value growth directly raises the bar for those results, but the share price move over the last quarter suggests the market has not radically reset expectations yet. The biggest current risks center on sustained margin pressure and the company’s ability to justify ongoing buybacks and dividends if efficiency does not improve.

However, investors should be aware of how persistent cost pressure could eventually constrain capital returns. Selective Insurance Group's shares have been on the rise but are still potentially undervalued. Find out how large the opportunity might be.

Exploring Other Perspectives

Three Simply Wall St Community fair value views for Selective range from about US$78.81 to nearly US$179.93, underscoring how far apart individual expectations can be. Set those against the current concern that rising costs are eroding underwriting margins, and you can see why it pays to compare several viewpoints before deciding how resilient the business might be.

Explore 3 other fair value estimates on Selective Insurance Group - why the stock might be worth over 2x more than the current price!

Build Your Own Selective Insurance Group Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Selective Insurance Group research is our analysis highlighting 5 key rewards that could impact your investment decision.
• Our free Selective Insurance Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Selective Insurance Group's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.