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Jun 30, 2023
Selective Insurance Q2 2023 Earnings Report
Selective Insurance reported strong growth and profitability despite elevated catastrophe losses.
Key Takeaways
Selective Insurance Group, Inc. reported a net income of $0.92 per diluted common share and a non-GAAP operating income of $0.99 per diluted common share for the second quarter ended June 30, 2023. The company experienced exceptional growth in net premiums written, which increased by 17% compared to the second quarter of 2022. However, the GAAP combined ratio was 100.2%, impacted by significant catastrophe losses.
Net premiums written increased 17% compared to the second quarter of 2022.
GAAP combined ratio was 100.2%, inclusive of $100 million in pre-tax net catastrophe losses.
Commercial Lines renewal pure price increases averaged 6.7%, compared to 5.3% in the second quarter of 2022.
After-tax net investment income of $78 million, up 37% compared to the second quarter of 2022.
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
For 2023, Selective increased its expectation for net catastrophe losses while maintaining other full-year expectations.
Positive Outlook
- A GAAP combined ratio of 96.5%, including net catastrophe losses of 6.0 points.
- After-tax net investment income of $300 million that includes $30 million of after-tax net investment income from our alternative investments.
- An overall effective tax rate of approximately 21%, which assumes an effective tax rate of 20% for net investment income and 21% for all other items.
- Weighted average shares of 61 million on a fully diluted basis.
Challenges Ahead
- 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 and equity markets and private investment marketplace 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.
- 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, or judicial conditions or actions.
Revenue & Expenses
Visualization of income flow from segment revenue to net income