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Sep 30, 2020
Selective Insurance Q3 2020 Earnings Report
Selective Insurance reported strong results in Q3 2020, with a profitable combined ratio despite catastrophe losses, driven by growth in net premiums written and investment income.
Key Takeaways
Selective Insurance Group reported strong third-quarter results with net income per diluted share of $1.16 and non-GAAP operating income per diluted share of $1.06. The company achieved a 97.0% combined ratio despite significant catastrophe losses. Net premiums written grew by 6%, and investment income increased by 22%.
Net premiums written grew by 6% compared to Q3 2019.
GAAP combined ratio was a profitable 97.0%, despite 11.4 percentage points of catastrophe losses.
Annualized return on equity was 11.9%, and non-GAAP operating ROE was 10.9%.
After-tax net investment income increased by 22% to $55 million compared to Q3 2019.
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 Insurance revised its full-year guidance for 2020 to reflect the current estimated full-year impact of COVID-19.
Positive Outlook
- A GAAP combined ratio, excluding catastrophe losses, between 88% and 89%.
- Combined ratio estimate assumes no additional prior-year casualty reserve development in the fourth quarter.
- After-tax net investment income of $175 million, including $10 million to $15 million from alternative investments.
- Overall effective tax rate of approximately 18.5%.
- Weighted average shares of 60.5 million on a diluted basis.
Challenges Ahead
- Catastrophe losses of 8.0 points on the combined ratio.
- COVID-19 losses are not included as catastrophes.
- Potential reduction in premium due to voluntary credits and regulatory directives.
- Possible increase in loss and loss expenses due to litigation or changes in statutory or common law.
- Net investment income may be impacted by financial market volatility.
Revenue & Expenses
Visualization of income flow from segment revenue to net income