Selective Insurance Q2 2024 Earnings Report
Key Takeaways
Selective Insurance Group reported a challenging second quarter with a net loss of $1.08 per diluted common share and a non-GAAP operating loss of $1.10 per diluted common share. The combined ratio was 116.1%, significantly impacted by unfavorable prior year casualty reserve development and catastrophe losses. Despite these challenges, net premiums written increased by 13%, and after-tax net investment income rose by 11%.
Net loss per diluted common share was $1.08, and non-GAAP operating loss per diluted common share was $1.10.
The combined ratio was 116.1%, increased by prior year casualty reserve development and catastrophe losses.
Net premiums written increased 13% compared to the second quarter of 2023.
After-tax net investment income increased 11% from the second quarter of 2023.
Selective Insurance
Selective Insurance
Selective Insurance Revenue by Segment
Forward Guidance
Selective Insurance increased its expected GAAP combined ratio to 101.5% for 2024, reflecting unfavorable prior year casualty reserve development, elevated catastrophe losses in the first half of the year, and increased current year loss costs.
Positive Outlook
- 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
- Renewal pure price increase across all insurance segments was 9.1% in the quarter, including 7.9% for Standard Commercial Lines
- General liability renewal pure pricing increased to 7.6%, up over a point from the first quarter
- Capacity under the existing repurchase authorization was $84.2 million as of June 30, 2024
Challenges Ahead
- A GAAP combined ratio of 101.5%, up five points from our prior guidance of 96.5%
- Our combined ratio estimate includes net catastrophe losses of 5.5 points, up from prior guidance of 5.0 points
- The unfavorable prior year casualty reserve development was driven by elevated loss emergence in the quarter reflecting higher severity that we attribute to social inflation
- Retention was 78% in Standard Personal Lines segment, down 10 points from a year ago
- New business decreased 32% in Standard Personal Lines segment due to deliberate profit improvement actions
Revenue & Expenses
Visualization of income flow from segment revenue to net income