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Jun 30, 2024
Selective Insurance Q2 2024 Earnings Report
Selective Insurance reported a net loss and a non-GAAP operating loss for Q2 2024, with a combined ratio of 116.1% impacted by prior year casualty reserve development and catastrophe losses.
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
Revenue by Segment
Standard Commercial Lines Revenue
CapyFin.comStandard Personal Lines Revenue
CapyFin.com 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