Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — NYSSA 14th Annual Insurance Conference 2010
17 slides from Selective Insurance's conference presentation, Feb 8, 2010
Slide 1: NYSSA 14th Annual Insurance Conference / Forward Looking Statement
Selective Insurance Group, Inc. NYSSA 14th Annual Insurance Conference February 8, 2010 Forward Looking Statement Certain statements in this report, including information incorporated by reference, are “forward- looking statements” as that term is defined in the Private Securities Litigation Reform
Slide 2: Financial Strength: Who we are
Financial Strength Dale Thatcher Executive Vice President Chief Financial Officer & Treasurer Who we are • 22-state super-regional • High tech, high touch business model MN MI WI NY CTMA • Partner of choice – 960 independent MI CT RI agents IA PA NJ OH MD DE IL IN • $1.4B NPW MO VA KY • 84% commerci
Slide 3: A Foundation of Financial Strength
A Foundation of Financial Strength • Economic impact on growth • Re-balanced investment portfolio • Disciplined reserving practices • Strong reinsurance program • Enterprise risk management Selective: A Growth Company $ in millions 1,800 1,600 $22M $73M Net Premium Written 1,400 1,200 1,000 800 600
Slide 4: High Quality Investment Portfolio; Disciplined Reserving Practices
High Quality Investment Portfolio • Average “AA+” bond quality $3.8B Invested Assets • Approximately 3.3 year December 31, 2009 average duration, including short-term & cash Bonds 88% • Rebalanced to address market risks • Market-to-amortized cost on Equities 2% the fixed income portfolio Alternativ
Slide 5: Strong Natural Catastrophe Reinsurance Program; Surplus Position
Strong Natural Catastrophe Reinsurance Program % of Equity at Risk 14% RMS Model 12% 9.0 Historic 9.0 Stochastic 10% 11% 8% 8% 6% 4% 4% 4% 2% 0% 1% Probability 0.4% Probability CAT cover: $310M in excess of $40M Percentages are net of tax, reinsurance and reinstatement premium. RMS data as of 7/09;
Slide 6: Enterprise Risk Management; 2010 Statutory Combined Ratio Guidance
Enterprise Risk Management Corporate Risk Asset Risk Insurance Risk Adverse Underwriting Other Risks Credit Risk Market Risk CAT Risk Development Risk (operational) • Investments •Alternatives • Loss due to • Natural Cat • Change in • Pension • Actuarial premium Losses historical Assets •Equities De
Slide 7: Competitively Positioned for the Market Turn
Competitively Positioned for the Market Turn Greg Murphy Chairman, President & CEO Industry Has a Long History of Few Profitable Years P&C Commercial Combined Ratios, 1988-2009E C/R % 125 120 115 110 105 100 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09E 95 90 Selective Industry
Slide 8: Commercial Lines: Is the Market Ready to Turn?
U.S. Industry vs. Insurance Industry ROE ROE % 18 16 14 12 10 8 6 4 2 0 -2 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 09E U.S. Industry Insurance Industry Source: III & A.M. Best Commercial Lines: Is the Market Ready to Turn? Factor This Signals… Reckless Com
Slide 9: 2009 Industry Reserve Releases; Commercial Lines Industry Pricing Indices
2009 Industry Reserve Releases 2009 Sep YTD Prior Period Development 0.0 -1.0 Points on the C/R -2.0 -3.0 -4.0 -5.0 -4.7 -4.7 -6.0 -5.6 -5.5 -7.0 -6.4 -8.0 -7.0 Primary Regional Large Primary Specialty CL 2008 2009 Source: Dowling & Partners Commercial Lines Industry Pricing Indices 4.0% 2.0% 0.5% 0
Slide 10: Selective's Commercial Lines Pricing Success
Selective’s Commercial Lines Pricing Success 4.0% 3.5% 2.7% 2.0% 1.5% 0.6% 0.0% -0.8% -2.0% -3.0% -4.0% -6.0% -8.0% -10.0% 4Q:08 1Q:09 2Q:09 3Q:09 4Q:09 Jan:10 Selective CLIPS Advisen ADVx CIAB MarketScout 10
Slide 11: Granular Pricing Capabilities
Granular Pricing Capabilities Selective Pricing by Diamond 12.0% 10.3% 4Q:08 1Q:09 2Q:09 3Q:09 4Q:09 10.0% 8.0% 7.6% 6.5% 6.0% 4.0% 2.8% 2.0% 0.0% -0.3% -2.0% -4.0% 1&2 Diamond Granular Pricing Capabilities Selective Pricing by Diamond 12.0% 10.3% 4Q:08 1Q:09 2Q:09 3Q:09 4Q:09 10.0% 8.0% 7.6% 6.5% 6
Slide 12: Granular Pricing Capabilities; Retaining our Best Commercial Business
Granular Pricing Capabilities Selective Pricing by Diamond 12.0% 10.3% 4Q:08 1Q:09 2Q:09 3Q:09 4Q:09 10.0% 8.0% 7.6% 6.5% 6.0% 3.8% 4.0% 2.8% 2.0% 1.6%1.6% 0.9% 0.3% 0.0% -0.3% -0.2% -0.6% -2.0% -1.6% -2.1% -2.9% -4.0% 1&2 3 4&5 Diamond Diamond Diamond Retaining our Best Commercial Business 95% 90%
Slide 13: Commercial Lines Growth Opportunity; Quality Improvement
Commercial Lines Growth Opportunity Most Recent Agency Current Commercial Share of Lines Premium State Wallet Volume ($M) 18% Share of NJ 12.5% 2,209 Wallet Results in MD 8.6 1,054 $3.0 Billion DPW RI 8.0 257 PA 8.8 2,011 NY 7.4 2,014 NC 9.7 448 VA 11.8 800 • Added over 200 agents in 2008-2009 All o
Slide 14: Commercial Lines Diversification; Personal Lines Improvement Plan
Commercial Lines Diversification 50 105% 45 3-Year Accident Combined Ratio 100.2% 40 94.6% 95% SBU DPW % of C/L 35 93.5% 92.6% 30 25 85% 20 15 75% 10 5 0 65% Contractors Merc/Serv Manufacturing Specialty 2008 2009 3-Year Accident C/R Further diversification results in lower combined ratio Personal L
Slide 15: Personal Lines Improvement Plan; Focus on Long-Term Outperformance
Personal Lines Improvement Plan • Statutory Combined Ratio including flood • 2009: 104.4% • 2010E: 100.0% • Average insurance scores improving or stable 770 759 760 752 750 743 742 742 740 737 730 720 Auto Home 2007 2008 2009 Focus on Long-Term Outperformance 15
Slide 16: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation $22 $0.49 $0.44 $0.52 $18 $0.40 $0.52 $0.35 $19.81 $18.83 $16.84 $17.34 $18.81 Per Share $0.31 $14 $0.30 $15.79 $0.30 $0.30 $13.74 $12.26 $11.58 $10 $11.46 $6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Book Value Dividends Long-Term Shareholder Value Creat
Slide 17: Selective Insurance Group, Inc. NYSSA 14th Annual Insurance Conference
Selective Insurance Group, Inc. NYSSA 14th Annual Insurance Conference February 8, 2010 17
Selective Insurance Group — NYSSA 14th Annual Insurance Conference 2010 on 6ix