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Jun 30, 2020
Selective Insurance Q2 2020 Earnings Report
Selective Insurance reported net income and non-GAAP operating income for Q2 2020.
Key Takeaways
Selective Insurance Group reported a decrease in net income per diluted share to $0.57 and non-GAAP operating income per diluted share to $0.40 for the second quarter ended June 30, 2020. The results were impacted by elevated catastrophe losses and a decline in alternative investment income, but the underlying profitability remained excellent with a combined ratio of 98.4%.
Net premiums written increased by 3% compared to the second quarter of 2019.
GAAP combined ratio was 98.4%.
Annualized return on equity was 6.2%, and non-GAAP operating ROE was 4.4%.
Overall renewal pure price increased by 3.9%.
Selective Insurance
Selective Insurance
Selective Insurance Revenue by Segment
Revenue by Segment
Standard Commercial Lines Revenue
CapyFin.comStandard Personal Lines Revenue
CapyFin.comExcess and Surplus Lines Revenue
CapyFin.com Forward Guidance
Selective provided revised full-year guidance for 2020, reflecting the current estimated full-year impact of COVID-19.
Positive Outlook
- A GAAP combined ratio, excluding catastrophe losses, of between 90% and 91%, an improvement from the first quarter guidance.
- After-tax net investment income of approximately $170 million, a $10 million improvement from the first quarter guidance.
- Up to $5 million in after-tax net investment income from alternative investments is expected.
- An overall effective tax rate of approximately 18.5% is anticipated.
- Weighted average shares of 60.5 million on a diluted basis.
Challenges Ahead
- Guidance has a higher degree of uncertainty than prior years due to the dynamic and fluid nature of the impact of the COVID-19 pandemic.
- Potential reduction in premium and adverse impact on underwriting results due to voluntary premium credits and regulatory directives.
- Possible increase in loss and loss expenses due to litigation or changes in statutory or common law related to COVID-19.
- Potential impact on net investment income due to financial market volatility.
- Catastrophe losses of 6.0 points on the combined ratio, reflecting higher than expected losses through the first half of the year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income