Selective Insurance Q4 2020 Earnings Report
Key Takeaways
Selective Insurance Group reported excellent financial results for Q4 2020, including an 18.0% non-GAAP operating ROE and an 88.1% combined ratio. Strong commercial lines NPW growth of 10% was driven by renewal pure price increases, solid retention, and new business growth.
Net premiums written growth of 8% compared to the fourth quarter of 2019.
GAAP combined ratio of 88.1%.
Annualized return on common equity of 20.6% and non-GAAP operating ROE of 18.0%.
After-tax net investment income of $55 million, up 18% compared to the fourth quarter of 2019.
Selective Insurance
Selective Insurance
Selective Insurance Revenue by Segment
Forward Guidance
For 2021, Selective Insurance Group expects a GAAP combined ratio, excluding catastrophe losses, of 91.0% and after-tax net investment income of $182.0 million.
Positive Outlook
- A GAAP combined ratio, excluding catastrophe losses, of 91.0%.
- Our combined ratio estimate assumes no prior-year casualty reserve development.
- Catastrophe losses of 4.0 points on the combined ratio.
- After-tax net investment income of $182.0 million that includes $16.0 million in after-tax net investment income from our alternative investments.
- An overall effective tax rate of approximately 20.5%, which includes an effective tax rate of 19.0% for net investment income and 21.0% for all other items.
Challenges Ahead
- Governmental directives to contain or delay the spread of the COVID-19 pandemic have disrupted ordinary business commerce and impacted financial markets.
- Difficult conditions in global capital markets and the economy.
- 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.
- The adequacy of our loss reserves and loss expense reserves.
Revenue & Expenses
Visualization of income flow from segment revenue to net income