Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — 2018 Bank of America Merrill Lynch Insurance Conference
28 slides from Selective Insurance's conference presentation, Feb 14, 2018
Slide 1: Selective Insurance Group, Inc.
SELECTIVE INSURANCE GROUP, INC. February 14, 2018 2018 Bank of America Merrill Lynch Insurance Conference
Slide 2: Safe Harbor Statement
CLICK TO EDIT MASTER TITLE STYLE PAGE 2 SAFE HARBOR STATEMENT Edit Master text styles In this presentation, we make certain statements and reference other information that are “forward-looking statements” as defined in the o Securities Private SecondLitigation level Reform Act of 1995 (“PSLRA”). T
Slide 3: Strategic Overview
CLICK TO EDIT MASTER TITLE STYLE PAGE 3 Edit Master text styles o Second level Third level Fourth level Fifth level STRATEGIC OVERVIEW Greg Murphy Chairman and Chief Executive Officer
Slide 4: A Super-Regional Company with National Capabilities
A SUPER-REGIONAL CLICK COMPANY TO EDIT MASTER WITH NATIONAL CAPABILITIES TITLE STYLE PAGE 4 Edit Master text styles 25 o Second level state footprint Third level significant expansion plans $3.4B Market Cap (as of 2/12/17) Fourth level Fifth years of financial strength level and 90+ superior
Slide 5: Our Sustainable Competitive Advantages
CLICK OUR SUSTAINABLE TO EDIT MASTER COMPETITIVE TITLE STYLE ADVANTAGES PAGE 5 Enables effective management of pricing and retention True franchise value Edit Master textwith “ivy styles league” o distribution partners Increase share of wallet and new agent appointments Second level Third le
Slide 6: True Franchise Value with Distribution Partners
TRUE FRANCHISE CLICK VALUETITLE TO EDIT MASTER WITHSTYLE DISTRIBUTION PARTNERS PAGE 6 Standard Commercial Standard Personal E&S Edit Master text styles (78% of 2017 NPW) (13% of 2017 NPW) (9% of 2017 NPW) o Second level Third level Fourth level Fifth level 25 States 13 States All 50 States 1
Slide 7: Unique Underwriting Field Model Enabled by Sophisticated Tools and Technology
UNIQUE UNDERWRITING FIELD MODEL ENABLED BY SOPHISTICATED CLICK TO EDIT MASTER TITLE STYLE TOOLS AND TECHNOLOGY PAGE 7 Edit Master text styles Empowered field underwriting model Small o Second level Business Local decision making supported by Team Third level centralized expertise Fourth le
Slide 8: Deliver Superior Omni-Channel Customer Experience
CLICK TOAEDIT DELIVER SUPERIOR MASTER OMNI-CHANNEL TITLE STYLE CUSTOMER EXPERIENCE PAGE 8 Changing expectations from customers, and Edit Master text styles potential disruptive threats from traditional and o Second level non-traditional competitors Third level Fourth level Partnering with
Slide 9: 2017: Excellent Operating Performance
CLICK TO EDIT MASTER 2017: EXCELLENT TITLE STYLE OPERATING PERFORMANCE PAGE 9 2017 pure written price increases by segment: Edit Master text styles o Commercial Lines – 2.9% GAAP Combined Ratios o Second level o Personal Lines – 3.0% 110% Underlying Combined Ratio Third level o E&S – 5.0% 107.
Slide 10: Long History of Disciplined & Profitable Growth
LONG HISTORY CLICK OF DISCIPLINED TO EDIT MASTER & PROFITABLE GROWTH TITLE STYLE PAGE 10 EditHistorical Master textNet Premiums Written styles COMMERCIAL LINES GROWTH Lower o Second level Risk $2.5B Managed Premium DRIVERS: Combined Third level opportunity Volume During Soft Fourth Market leve
Slide 11: Commercial Lines Geo-Expansion Enhances Growth Opportunities
COMMERCIAL LINES GEO-EXPANSION ENHANCES GROWTH CLICK TO EDIT MASTER TITLE STYLE OPPORTUNITIES PAGE 11 Edit Master text styles Diversification and spread of risk o Second level o Targeting 30 fully operational states Third level o Remainder to support multi-state accounts Fourth level Lever
Slide 12: Standard Commercial: A Profit Engine
STANDARD CLICK COMMERCIAL TO EDIT (78%STYLE MASTER TITLE OF BUSINESS): A PROFIT ENGINE PAGE 12 ($ in billions) Edit Master text styles Focused on disciplined and profitable growth NPW GAAP Combined Ratio 110% $2.2B o Second level Third level 7% CAGR of NPW Drivers of profitability are: from
Slide 13: A Portfolio Approach to Underwriting
A PORTFOLIO CLICK TO EDITAPPROACH TO UNDERWRITING MASTER TITLE STYLE PAGE 13 Commercial Lines Pricing By Retention Group Portfolio management approach yields higher Edit Master text styles retention and rate CLAS Pure Rate % Premium Renewed o Second level Point of Renewal Retention 9% Third le
Slide 14: Sophisticated Tools and Actionable Data
SOPHISTICATED CLICK TOOLS AND TO EDIT MASTER TITLEACTIONABLE STYLE DATA PAGE 14 SIGI Pricing CLIPS Pricing SIGI Retention Edit Master text styles o Second level 84% 83% Third level Renewal Pure Price (%) 82% Fourth level 5.9% 7.6% 5.9% 6.0% Fifth level Retention (%) 6.2% 5.6% 80% 3.0% 80% 79
Slide 15: Standard Personal Lines (13% of Business)
STANDARD CLICK PERSONAL TO EDIT MASTERLINES TITLE (13% OF BUSINESS) STYLE PAGE 15 HOMEOWNERS (88.2% combined ratio in 2017) ($ in millions) Edit Master text styles NPW GAAP Combined Ratio Target of 90% combined ratio in normal CAT year (14 o Second level $400M 120% points) Third level Fourth
Slide 16: Excess & Surplus (9% of Business)
CLICK EXCESSTO& EDIT MASTER SURPLUS (9% TITLE STYLE OF BUSINESS) PAGE 16 Focus on target combined ratio – top-line changes will ($ in millions) Edit MasterNPW text stylesGAAP Combined Ratio be based on market conditions $250M 140% o Second level Targeted price increases being implemented to dr
Slide 17: Financial Overview
CLICK TO EDIT MASTER TITLE STYLE PAGE 17 Edit Master text styles o Second level Third level Fourth level Fifth level FINANCIAL OVERVIEW Mark Wilcox EVP, Chief Financial Officer
Slide 18: A Focus on Non-GAAP Operating ROE and Growth in Book Value per Share
A FOCUS ON NON-GAAP OPERATING ROE* AND GROWTH IN BOOK CLICK TO EDIT MASTER TITLE STYLE VALUE PER SHARE PAGE 18 Historical Book Value per Share Growth Edit Master text styles Meeting long-term financial target for a non-GAAP $32 o Second level operating ROE* of 300 basis points above our WACC $29.2
Slide 19: Lower Risk Profile and Strong Financial Strength
LOWERTO CLICK RISK PROFILE EDIT MASTERAND STRONG TITLE STYLEFINANCIAL STRENGTH PAGE 19 A Lower Risk Profile Focused on low- to medium-hazard business Edit Master text styles o Second level Strong balance sheet underpinned by a conservative Third level approach to: Fourth level o Managing t
Slide 20: Conservative Investment Portfolio
CONSERVATIVE CLICK INVESTMENT TO EDIT MASTER TITLEPORTFOLIO STYLE PAGE 20 Investment Edit Master text styles Portfolio Breakdown as of 12/31/17 Fixed income and short-term investments comprise o Second level 95% of the investment portfolio: $5.7B of Investments Third level o “AA-” average cred
Slide 21: Catastrophe Loss Impact Has Been Below Industry Average
CATASTROPHE CLICK LOSS IMPACT TO EDIT MASTER TITLEHAS BEEN BELOW INDUSTRY AVERAGE STYLE PAGE 21 Impact of Catastrophe Losses on Combined Ratio Catastrophe loss impact over the past 15 years Edit Master text styles has averaged: o Second level Catastrophe o 5.0 percentage points for the P&C indus
Slide 22: Prudent Reinsurance Program
PRUDENT CLICK REINSURANCE TO EDIT PROGRAM MASTER TITLE STYLE PAGE 22 2018 property catastrophe treaty structure: Net Single-Event Edit Master textHurricane styles Loss* as a % of Equity o Second level o Coverage of $735M in excess of $40M retention (up to 1-in-250 year event level) 24% Third le
Slide 23: A Strong Reserving Track Record
A STRONG CLICK RESERVING TO EDIT MASTERTRACK RECORD TITLE STYLE PAGE 23 Impact of Reserve Development on our Combined Ratio Disciplined reserving practices: Edit Master text styles 4.0% o Second level o Quarterly actuarial reserve reviews Third level o Semi-annual independent review Fourth l
Slide 24: Strong Non-GAAP Operating ROE in 2017 and Well Positioned for Future
STRONG NON-GAAP OPERATING ROE* IN 2017 AND WELL POSITIONED CLICK TOFUTURE FOR THE EDIT MASTER TITLE STYLE PAGE 24 14% 7.3% Edit Master text styles o Second level 11.4% Third level (2.1)% 8.5% Fourth level 7% 6.2%Fifth level 0% Underwriting Investments Other* Non-GAAP Estimated Operating WACC
Slide 25: 2018 Combined Ratio Plan: Underlying Margin Improvement
2018 COMBINED CLICK TO EDIT MASTER TITLE–STYLE RATIO PLAN UNDERLYING MARGIN IMPROVEMENT PAGE 25 Reconciliation of 2018 GAAP Combined Ratio Guidance Targeting price increases to keep up Edit Master text styles with loss inflation o Second 2.1% level Third level Assumes no prior-year casualty
Slide 26: Strong Capital and Liquidity Position, Focus on Expenses
CLICK TOCAPITAL STRONG EDIT MASTER AND LIQUIDITY TITLE STYLE POSITION, FOCUS ON EXPENSES PAGE 26 Strong capital position with 20.4% debt-to-capital ratio Edit Master text styles o Second level Target NPW/surplus ratio of ~1.4x (lower end of historical range) CAPITAL AND Third level Growing
Slide 27: Our Investment Proposition
OUR INVESTMENT PROPOSITION CLICK TO EDIT MASTER TITLE STYLE PAGE 27 Leveraging our competitive strengths to generate sustained Edit Master text styles financial outperformance o Second level o Strong franchise value with “ivy league” distribution partners Third level o Unique field model enabl
Slide 28: Selective Insurance Group, Inc.
SELECTIVE INSURANCE GROUP, INC. February 14, 2018 2018 Bank of America Merrill Lynch Insurance Conference
Selective Insurance Group — 2018 Bank of America Merrill Lynch Insurance Conference on 6ix