Net Income of $1.47 per Diluted Common Share
and Non-GAAP Operating Income1 of $1.40 per Diluted Common
Share; Return on Common Equity ("ROE") of 12.6% and Non-GAAP
Operating ROE1 of 12.1%
Quarterly Dividend Increased 9% to $0.38 per
Common Share
In the third quarter of 2024:
- Net premiums written ("NPW") increased 9% from the third
quarter of 2023;
- The GAAP combined ratio was 99.5%, compared to 96.8% in the
third quarter of 2023;
- Net catastrophe losses increased the GAAP combined ratio by
13.4 points, compared to 6.6 points in the third quarter of
2023;
- Commercial Lines renewal pure price increases averaged 9.1%, up
2.0 points from 7.1% in the third quarter of 2023;
- After-tax net investment income was $93 million, up 16% from
the third quarter of 2023;
- Book value per common share was $48.82, up 9% from last
quarter; and
- Adjusted book value per common share1 was $50.80, up 2% from
last quarter.
Selective Insurance Group, Inc. (NASDAQ: SIGI) reported
financial results for the third quarter ended September 30, 2024,
with net income per diluted common share of $1.47 and non-GAAP
operating income1 per diluted common share of $1.40. Return on
common equity was 12.6% and non-GAAP operating ROE1 was 12.1%.
NPW increased 9% from a year ago driven by accelerating renewal
pure price increases and stable Standard Commercial Lines
retention. The investments segment generated 13.1 points of
annualized ROE in the quarter, as after-tax net investment income
was $93 million, up 16% from a year ago.
For the quarter, Selective reported a combined ratio of 99.5%
with no net prior year casualty reserve development. Elevated
catastrophe losses of $149 million increased the combined ratio by
13.4 points, up from 6.6 points a year ago. Losses resulted from 19
named storms in the quarter, with Hurricane Helene estimated at $85
million of pre-tax losses.
“The continued frequency and severity of storms in the third
quarter, including the devastation from Hurricane Helene,
underscore our unwavering commitment to our customers, agency
partners, and communities. During these challenging times for those
impacted by the storms, I thank my colleagues for continuing to
deliver superior claims service and supporting customers and
claimants,” said John J. Marchioni, Chairman, President and Chief
Executive Officer.
“We maintain a disciplined approach to pricing and underwriting
our business. Loss trends remain elevated and uncertain, but we
continue to be prudent and vigilant in addressing them. In the
quarter, renewal pure price increased 10.5%. In Standard Commercial
Lines, renewal pure price accelerated to 9.1%. For General
Liability, the line most impacted by loss emergence in previous
quarters, renewal pure price was 10.2%, up from 7.6% in the second
quarter. Importantly, retention was stable in Standard Commercial
Lines at 86%.”
“Our primary goal is to consistently achieve our 95% combined
ratio target. Although catastrophe losses impacted the quarter, our
underlying performance was excellent, reflecting our underwriting
and pricing actions and disciplined expense management. We added
Nevada, Oregon, and Washington to our Standard Commercial Lines
footprint in early October, now covering 35 states. With our strong
capital position, financial flexibility, and strategic execution,
we are well positioned to face the uncertainty in the external
environment,” concluded Mr. Marchioni.
Operating Highlights
Consolidated Financial Results
Quarter ended
September 30,
Change
Year-to-Date
September 30,
Change
$ and shares in millions, except per share
data
2024
2023
2024
2023
Net premiums written
$
1,157.6
1,058.3
9
%
$
3,540.4
3,143.0
13
%
Net premiums earned
1,112.2
981.9
13
3,243.4
2,826.4
15
Net investment income earned
117.8
100.9
17
334.3
290.1
15
Net realized and unrealized gains
(losses), pre-tax
5.4
(6.9
)
(178
)
5.1
(9.0
)
(156
)
Total revenues
1,244.3
1,081.1
15
3,605.3
3,121.4
16
Net underwriting income (loss),
after-tax
4.1
25.0
(83
)
(118.0
)
54.7
(316
)
Net investment income, after-tax
93.4
80.2
16
265.3
231.1
15
Net income (loss) available to common
stockholders
90.0
86.9
4
104.6
233.5
(55
)
Non-GAAP operating income (loss)1
85.7
92.3
(7
)
100.6
240.6
(58
)
Combined ratio
99.5
%
96.8
2.7
pts
104.6
%
97.5
7.1
pts
Loss and loss expense ratio
68.8
65.8
3.0
73.8
65.7
8.1
Underwriting expense ratio
30.6
30.9
(0.3
)
30.6
31.6
(1.0
)
Dividends to policyholders ratio
0.1
0.1
—
0.2
0.2
—
Net catastrophe losses
13.4
pts
6.6
6.8
9.1
pts
7.8
1.3
Non-catastrophe property losses and loss
expenses
13.2
17.6
(4.4
)
15.5
16.9
(1.4
)
(Favorable) unfavorable prior year reserve
development on casualty lines
—
—
—
6.5
(0.6
)
7.1
Net income (loss) available to common
stockholders per diluted common share
$
1.47
1.42
4
%
$
1.71
3.83
(55
)
%
Non-GAAP operating income (loss) per
diluted common share1
1.40
1.51
(7
)
1.64
3.95
(58
)
Weighted average diluted common shares
61.3
61.0
—
61.3
60.9
1
Book value per common share
$
48.82
40.35
21
$
48.82
40.35
21
Adjusted book value per common share1
50.80
48.54
5
50.80
48.54
5
Overall Insurance Operations
For the third quarter, overall NPW increased 9%, or $99 million,
from a year ago. Average renewal pure price increased 10.5%, up 3.5
points from a year ago. Selective's 99.5% combined ratio was 2.7
points higher than a year ago, as elevated catastrophe losses were
partially offset by lower non-catastrophe property losses and a
lower expense ratio. There was no net unfavorable prior year
casualty reserve development in either period. The combined ratio
excluding net catastrophe losses and prior year casualty reserve
development was 86.1%, 4.1 points lower than a year ago.
Overall, our insurance segments increased ROE by 0.6 points in
the third quarter of 2024.
Standard Commercial Lines Segment
For the third quarter, Standard Commercial Lines premiums
(representing 78% of total NPW) grew 8% from a year ago. The
premium growth reflected average renewal pure price increases of
9.1% and stable retention of 86%. The third quarter combined ratio
was 99.2%, up 4.5 points from a year ago, primarily due to
catastrophe losses.
There was no net prior year casualty reserve development in the
quarter, compared to $3.0 million, or 0.4 points, of favorable
development a year ago.
The following table shows the variances in key quarter-to-date
and year-to date measures:
Standard Commercial Lines
Segment
Quarter ended
September 30,
Change
Year-to-Date
September 30,
Change
$ in millions
2024
2023
2024
2023
Net premiums written
$
903.9
833.6
8
%
$
2,798.7
2,517.0
11
%
Net premiums earned
875.4
785.3
11
2,563.0
2,279.7
12
Combined ratio
99.2
%
94.7
4.5
pts
105.6
%
95.5
10.1
pts
Loss and loss expense ratio
67.6
62.8
4.8
74.0
63.0
11.0
Underwriting expense ratio
31.4
31.7
(0.3
)
31.4
32.3
(0.9
)
Dividends to policyholders ratio
0.2
0.2
—
0.2
0.2
—
Net catastrophe losses
11.5
pts
4.7
6.8
7.4
pts
5.9
1.5
Non-catastrophe property losses and loss
expenses
11.0
15.6
(4.6
)
13.1
14.9
(1.8
)
(Favorable) unfavorable prior year reserve
development on casualty lines
—
(0.4
)
0.4
8.2
(0.9
)
9.1
Standard Personal Lines Segment
For the third quarter, Standard Personal Lines premiums
(representing 10% of total NPW) decreased 2% from a year ago with
renewal pure price of 22.8% and higher average policy sizes.
Retention was 75%, down 13 points from a year ago, and new business
decreased 49% due to deliberate profit improvement actions. Despite
elevated catastrophe losses, the third quarter 2024 combined ratio
decreased by 5.3 points from a year ago to 122.1%. There was no
prior year casualty reserve development in the quarter, compared to
$3 million in unfavorable prior year casualty reserve development
in personal auto a year ago. Flood claims handling fees from the
National Flood Insurance Program's Write Your Own program,
primarily related to Hurricane Helene, reduced the loss and loss
expense ratio by 4.3 points in the quarter, up from 1.2 points in
the prior-year period.
The following table shows the variances in key quarter-to-date
and year-to-date measures:
Standard Personal Lines Segment
Quarter ended
September 30,
Change
Year-to-Date
September 30,
Change
$ in millions
2024
2023
2024
2023
Net premiums written
$
111.0
113.2
(2
)
%
$
327.1
307.5
6
%
Net premiums earned
107.5
95.2
13
317.8
264.2
20
Combined ratio
122.1
%
127.4
(5.3
)
pts
115.2
%
123.6
(8.4
)
pts
Loss and loss expense ratio
98.7
104.5
(5.8
)
91.8
98.7
(6.9
)
Underwriting expense ratio
23.4
22.9
0.5
23.4
24.9
(1.5
)
Net catastrophe losses
38.8
pts
25.6
13.2
24.8
pts
22.8
2.0
Non-catastrophe property losses and loss
expenses
35.3
44.7
(9.4
)
39.4
43.2
(3.8
)
Unfavorable prior year reserve development
on casualty lines
—
3.2
(3.2
)
—
3.4
(3.4
)
Excess and Surplus Lines Segment
For the third quarter, Excess and Surplus Lines premiums
(representing 12% of total NPW) increased 28% compared to the
prior-year period, driven by new business growth of 43% and average
renewal pure price increases of 8.0%. The third quarter 2024
combined ratio was 83.2%, down 0.7 points compared to a year
ago.
The following table shows the variances in key quarter-to-date
and year-to-date measures:
Excess and Surplus Lines
Segment
Quarter ended
September 30,
Change
Year-to-Date
September 30,
Change
$ in millions
2024
2023
2024
2023
Net premiums written
$
142.7
111.6
28
%
$
414.5
318.4
30
%
Net premiums earned
129.3
101.4
28
362.6
282.5
28
Combined ratio
83.2
%
83.9
(0.7
)
pts
88.4
%
89.7
(1.3
)
pts
Loss and loss expense ratio
52.5
51.9
0.6
57.5
57.4
0.1
Underwriting expense ratio
30.7
32.0
(1.3
)
30.9
32.3
(1.4
)
Net catastrophe losses
5.2
pts
3.5
1.7
7.1
pts
9.0
(1.9
)
Non-catastrophe property losses and loss
expenses
10.0
7.4
2.6
11.8
8.7
3.1
(Favorable) prior year reserve development
on casualty lines
—
—
—
—
(1.8
)
1.8
Investments Segment
For the third quarter, after-tax net investment income of $93
million was up 16% from a year ago. The after-tax income yield
averaged 4.0% for the overall and fixed income securities
portfolios. With this and invested assets per dollar of common
stockholders' equity of $3.25 as of September 30, 2024, the
Investments segment generated 13.1 points of non-GAAP operating
ROE.
Investments Segment
Quarter ended
September 30,
Change
Year-to-Date
September 30,
Change
$ in millions, except per share data
2024
2023
2024
2023
Net investment income earned,
after-tax
$
93.4
80.2
16
%
$
265.3
231.1
15
%
Net investment income per common share
1.52
1.31
16
4.33
3.79
14
Effective tax rate
20.7
%
20.5
0.2
pts
20.6
%
20.3
0.3
pts
Average yields:
Portfolio:
Pre-tax
5.0
4.9
0.1
4.9
4.8
0.1
After-tax
4.0
3.9
0.1
3.9
3.8
0.1
Fixed income securities:
Pre-tax
5.0
%
5.1
(0.1
)
pts
4.9
%
5.0
(0.1
)
pts
After-tax
4.0
4.1
(0.1
)
3.9
4.0
(0.1
)
Annualized ROE contribution
13.1
13.1
—
12.6
12.7
(0.1
)
Balance Sheet
$ in millions, except per share data
September 30, 2024
December 31, 2023
Change
Total assets
$
13,473.1
11,802.5
14
%
Total investments
9,635.3
8,693.7
11
Long-term debt
508.2
503.9
1
Stockholders’ equity
3,167.8
2,954.4
7
Common stockholders' equity
2,967.8
2,754.4
8
Invested assets per dollar of common
stockholders’ equity
3.25
3.16
3
Net premiums written to policyholders'
surplus
1.63
1.51
8
Book value per common share
48.82
45.42
7
Adjusted book value per common share1
50.80
50.03
2
Debt to total capitalization
13.8
%
14.6
%
(0.8
)
pts
Book value per common share increased by $3.40, or 7%, during
the first nine months of 2024. The increase was primarily
attributable to a $2.61 decrease in after-tax net unrealized losses
on our fixed income securities portfolio and $1.71 of net income
per diluted common share, partially offset by $1.05 in common
stockholder dividends. The decrease in after-tax net unrealized
losses on our fixed income securities portfolio was primarily
related to lower interest rates. During the third quarter of 2024,
the Company repurchased 103,000 shares of common stock at an
average price of $84.34 for $8.7 million. Capacity under the
existing repurchase authorization was $75.5 million as of September
30, 2024.
Selective's Board of Directors declared:
- A 9% increase in the quarterly cash dividend on common stock to
$0.38 per common share that is payable December 2, 2024, to holders
of record on November 15, 2024; and
- A quarterly cash dividend of $287.50 per share on our 4.60%
Non-Cumulative Preferred Stock, Series B (equivalent to $0.28750
per depositary share) payable on December 16, 2024, to holders of
record as of December 2, 2024.
Guidance
For 2024, we increased our expected GAAP combined ratio to
102.5%. The change reflects the third quarter's elevated
catastrophe losses, partially offset by better-than-expected
non-catastrophe property losses. Full-year expectations are as
follows:
- A GAAP combined ratio of 102.5%, up 1 point from our prior
guidance of 101.5%. Our combined ratio estimate includes net
catastrophe losses of 7.5 points, up from prior guidance of 5.5
points. Although too early to provide a specific estimate, we
expect losses from Hurricane Milton, which made landfall on October
9, 2024, to be immaterial. Our combined ratio estimate assumes no
additional prior year casualty reserve development;
- After-tax net investment income of $360 million that includes
$32 million from alternative investments;
- An overall effective tax rate of approximately 21.0%, which
assumes an effective tax rate of 20.5% for net investment income
and 21% for all other items; and
- Weighted average shares of 61.5 million on a fully diluted
basis.
The supplemental investor package, with financial information
not included in this press release, is available on the Investors
page of Selective’s website at www.Selective.com.
Selective’s quarterly analyst conference call will be simulcast
at 8:30 AM ET, on Tuesday, October 22, 2024, on www.Selective.com.
The webcast will be available for rebroadcast until the close of
business on November 21, 2024.
About Selective Insurance Group, Inc. Selective Insurance
Group, Inc. (Nasdaq: SIGI) is a holding company for 10 property and
casualty insurance companies rated "A+" (Superior) by AM Best.
Through independent agents, the insurance companies offer standard
and specialty insurance for commercial and personal risks and flood
insurance through the National Flood Insurance Program's Write Your
Own Program. Selective's unique position as both a leading
insurance group and an employer of choice is recognized in a wide
variety of awards and honors, including listing in Forbes Best
Midsize Employers in 2024 and certification as a Great Place to
Work® in 2024 for the fifth consecutive year. For more information
about Selective, visit www.Selective.com.
1Reconciliation of Net Income (Loss) Available to Common
Stockholders to Non-GAAP Operating Income (Loss) and Certain Other
Non-GAAP Measures Non-GAAP operating income (loss), non-GAAP
operating income (loss) per diluted common share, and non-GAAP
operating return on common equity differ from net income (loss)
available to common stockholders, net income (loss) available to
common stockholders per diluted common share, and return on common
equity, respectively, by the exclusion of after-tax net realized
and unrealized gains and losses on investments included in net
income (loss). Adjusted book value per common share differs from
book value per common share by excluding total after-tax unrealized
gains and losses on investments included in accumulated other
comprehensive income (loss). These non-GAAP measures are used as
important financial measures by management, analysts, and
investors, because the timing of realized and unrealized investment
gains and losses on securities in any given period is largely
discretionary. In addition, net realized and unrealized gains and
losses on investments could distort the analysis of trends. These
operating measurements are not intended to be a substitute for net
income (loss) available to common stockholders, net income (loss)
available to common stockholders per diluted common share, return
on common equity, and book value per common share prepared in
accordance with U.S. generally accepted accounting principles
(GAAP). Reconciliations of net income (loss) available to common
stockholders, net income (loss) available to common stockholders
per diluted common share, return on common equity, and book value
per common share to non-GAAP operating income (loss), non-GAAP
operating income (loss) per diluted common share, non-GAAP
operating return on common equity, and adjusted book value per
common share, respectively, are provided in the tables below.
Note: All amounts included in this release exclude intercompany
transactions.
Reconciliation of Net Income (Loss) Available to Common
Stockholders to Non-GAAP Operating Income (Loss)
$ in millions
Quarter ended September
30,
Year-to-Date September
30,
2024
2023
2024
2023
Net income (loss) available to common
stockholders
$
90.0
86.9
104.6
233.5
Net realized and unrealized investment
(gains) losses included in net income, before tax
(5.4
)
6.9
(5.1
)
9.0
Tax on reconciling items
1.1
(1.4
)
1.1
(1.9
)
Non-GAAP operating income (loss)
$
85.7
92.3
100.6
240.6
Reconciliation of Net Income (Loss) Available to Common
Stockholders per Diluted Common Share to Non-GAAP Operating Income
(Loss) per Diluted Common Share
Quarter ended September
30,
Year-to-Date September
30,
2024
2023
2024
2023
Net income (loss) available to common
stockholders per diluted common share
$
1.47
1.42
1.71
3.83
Net realized and unrealized investment
(gains) losses included in net income, before tax
(0.09
)
0.11
(0.08
)
0.15
Tax on reconciling items
0.02
(0.02
)
0.01
(0.03
)
Non-GAAP operating income (loss) per
diluted common share
$
1.40
1.51
1.64
3.95
Reconciliation of Return on Common Equity to Non-GAAP
Operating Return on Common Equity
Quarter ended September
30,
Year-to-Date September
30,
2024
2023
2024
2023
Return on Common Equity
12.6
%
14.1
5.0
12.8
Net realized and unrealized investment
(gains) losses included in net income, before tax
(0.8
)
1.1
(0.2
)
0.5
Tax on reconciling items
0.3
(0.2
)
—
(0.1
)
Non-GAAP Operating Return on Common
Equity
12.1
%
15.0
4.8
13.2
Reconciliation of Book Value per Common Share to Adjusted
Book Value per Common Share
Quarter ended September
30,
Year-to-Date September
30,
2024
2023
2024
2023
Book value per common share
$
48.82
40.35
48.82
40.35
Total unrealized investment (gains) losses
included in accumulated other comprehensive (loss) income, before
tax
2.50
10.38
2.50
10.38
Tax on reconciling items
(0.52
)
(2.19
)
(0.52
)
(2.19
)
Adjusted book value per common share
$
50.80
48.54
50.80
48.54
Note: Amounts in the tables above may not foot due to
rounding.
Forward-Looking Statements
Certain statements in this report, including information
incorporated by reference, are “forward-looking statements” defined
in the Private Securities Litigation Reform Act of 1995 ("PSLRA").
The PSLRA provides a forward-looking statement safe harbor under
the Securities Act of 1933 and the Securities Exchange Act of 1934.
These statements discuss our intentions, beliefs, projections,
estimations, or forecasts of future events and financial
performance. They involve known and unknown risks, uncertainties,
and other factors that may cause our or our industry’s actual
results, activity levels, or performance to materially differ from
those in or implied by the forward-looking statements. In some
cases, forward-looking statements include the words “may,” “will,”
“could,” “would,” “should,” “expect,” “plan,” “anticipate,”
“attribute,” “confident,” “strong,” “target,” “project,” “intend,”
“believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,”
“likely,” “continue,” or comparable terms. Our forward-looking
statements are only predictions; we cannot guarantee or assure that
such expectations will prove correct. We undertake no obligation to
publicly update or revise any forward-looking statements for any
reason, except as may be required by law.
Factors that could cause our actual results to differ materially
from what we project, forecast, or estimate in forward-looking
statements include, without limitation:
- Challenging conditions in the economy, global capital markets,
the banking sector, and commercial real estate, including prolonged
higher inflation, could increase loss costs and negatively impact
investment portfolios;
- Deterioration in the public debt, public equity, or private
investment markets that could lead to investment losses and
interest rate fluctuations;
- Ratings downgrades on individual securities we own could affect
investment values and, therefore, statutory surplus;
- The adequacy of our loss reserves and loss expense
reserves;
- Frequency and severity of catastrophic events, including
natural events that may be impacted by climate change, such as
hurricanes, severe convective storms, tornadoes, windstorms,
earthquakes, hail, severe winter weather, floods, and fires, and
man-made events such as criminal and terrorist acts, including
cyber-attacks, explosions, and civil unrest;
- Adverse market, governmental, regulatory, legal, political, or
judicial conditions or actions, including social inflation;
- The significant geographic concentration of our business in the
eastern portion of the United States;
- The cost, terms and conditions, and availability of
reinsurance;
- Our ability to collect on reinsurance and the solvency of our
reinsurers;
- The impact of changes in U.S. trade policies and imposition of
tariffs on imports that may lead to higher than anticipated
inflationary trends for our loss and loss expenses;
- Related to COVID-19, we have successfully defended against
payment of COVID-19-related business interruption losses based on
our policies' terms, conditions, and exclusions. However, should
the highest courts determine otherwise, our loss and loss expenses
may increase, our related reserves may not be adequate, and our
financial condition and liquidity may be materially impacted.
- Ongoing wars and conflicts impacting global economic, banking,
commodity, and financial markets, exacerbating ongoing economic
challenges, including inflation and supply chain disruption, which
influences insurance loss costs, premiums, and investment
valuations;
- Uncertainties related to insurance premium rate increases and
business retention;
- Changes in insurance regulations that impact our ability to
write and/or cease writing insurance policies in one or more
states;
- The effects of data privacy or cyber security laws and
regulations on our operations;
- Major defect or failure in our internal controls or information
technology and application systems that result in harm to our brand
in the marketplace, increased senior executive focus on crisis and
reputational management issues, and/or increased expenses,
particularly if we experience a significant privacy breach;
- Potential tax or federal financial regulatory reform provisions
that could pose certain risks to our operations;
- Our ability to maintain favorable financial ratings, which may
include sustainability considerations, from rating agencies,
including AM Best, Standard & Poor’s, Moody’s, and Fitch;
- Our entry into new markets and businesses; and
- Other risks and uncertainties we identify in filings with the
United States Securities and Exchange Commission, including our
Annual Report on Form 10-K and other periodic reports.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241021614542/en/
Investor Contact: Brad B. Wilson 973-948-1283
Brad.Wilson@Selective.com
Media Contact: Jamie M. Beal 973-948-1234
Jamie.Beal@Selective.com
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