Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Keefe, Bruyette & Woods Insurance Conference 2009
30 slides from Selective Insurance's conference presentation, Sep 9, 2009
Slide 1: Selective Insurance Group, Inc.
Selective Insurance Group, Inc. Keefe, Bruyette & Woods Insurance Conference September 10, 2009
Slide 2: Financial Strength
Financial Strength Dale Thatcher Executive Vice President Chief Financial Officer & Treasurer
Slide 3: Forward Looking Statement
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 Act of 1995 (“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 1933
Slide 4: Selective Profile
Selective Profile Only 9% of P&C carriers rated A+ or better CT MN IA MO WI I L I N KY OH MI MI GA SC NC VA PA NY MD CT MA TN 22-state super-regional $ 1.5B NPW 86% commercial lines 14% personal lines Distribution partner with 960 independent agents Best in class field model History of financial str
Slide 5: Net Premium Written
Net Premium Written $ in millions 1,000 1,200 1,400 1,600 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 6: Current Economic Impact on Premium Growth
Current Economic Impact on Premium Growth 2009 2008 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 1Q 2Q 3Q 4Q 1Q 2Q Audit and Endorsement Returned Premium
Slide 7: A Foundation of Financial Strength
A Foundation of Financial Strength Focused expense management Conservative investment portfolio Disciplined reserving practices Strong reinsurance program Proactively managed capital
Slide 8: Focused Expense Management Savings Initiative
Focused Expense Management Savings Initiative Next expense focus area is claims $1 million Vendor consolidation project $1 million Tax credits and incentives $4 million, one time Benefits changes 2009 $2 million Indiana re-domestication $7 million Restructuring $7 million Targeted commission reducti
Slide 9: Conservative Investment Portfolio
Conservative Investment Portfolio Average “AA+” bond quality Approximately 3.5 year average duration, including short-term & cash Equities outperformed S&P 500 for nine consecutive years Alternative investments have outperformed S&P 500 since 1997 $3.6B Invested Assets as of June 30, 2009 Equities 2
Slide 10: Alternative Investment Strategies
Alternative Investment Strategies Alternative strategies generated $7 million in additional equity over S&P 500 since 1997 ($ in millions) Market Values of $143M at June 30, 2009 Venture Capital Mezzanine Financing Real Estate Private Equity Secondary Private Equity Distressed Debt Energy/Power Gene
Slide 11: Disciplined Reserving Practices
Carried $2,415M Disciplined Reserving Practices Actuarial Reserve Ranges 53.9% 57.5% 56.9% 54.8% 52.6% ($10M) $18M $16M $7M ($5M) Calendar Year Reserve Development (p/t) $102 $112 $135 $150 $84 $85 $99 $128 $87 $79 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2004 2005 2006 2007 2008
Slide 12: Strong Natural Catastrophe Program
Strong Natural Catastrophe Program CAT cover: $310M in excess of $40M 4% 12% RMS Model % of Equity at Risk Percentages are net of tax, reinsurance and reinstatement premium. RMS data as of 7/1/07; Equity data as of 6/30/09 . 4% 7% 0% 2% 4% 6% 8% 10% 12% 14% 1% Probability 0.4% Probability 8.0 Histor
Slide 13: Capital Position
Capital Position Premium to surplus: 1.7x Debt to total capitalization: Total: 21.7% Adjusted: 15.4% Weighted average life of debt: 35 years Book value per share $17.85 As of June 30, 2009
Slide 14: Profitability Improvement
Profitability Improvement Greg Murphy Chairman, President & CEO
Slide 15: Strategies for Long-Term Profitable Growth
Strategies for Long-Term Profitable Growth Best in class agency relationships and field model Commercial lines pricing power Quality of new business through predictive modeling Diversification of commercial lines book Personal lines improvement plan Best in class claims practices
Slide 16: Best in Class Field Model
Best in Class Field Model CT MN IA MO WI IL IN KY OH MI MI GA SC NC VA PA NY MD CT MA TN NJ RI DE 100 Agency Management Specialists 140 Claims Management Specialists …one of the great things with the AMS field model is the fact that our AMS is out visiting with us every other week…looking at new opp
Slide 17: Commercial Lines New Business
Commercial Lines New Business Commercial lines new business up 12% YTD 6 mos 2008 6 mos 2009 One & Done Middle Market Large Account
Slide 18: Profitability Monitoring
99.1% Segment 60 94.6% Segment 41 94.0% Segment 40 87.2% Segment 21 87.2% Segment 20 65.4% Segment 1 117.7% Segment 80 99.3% Segment 61 Profitability Monitoring Predictive modeling improves performance on an account basis Operational Areas Marketing Safety Management Training Pricing Average Lower T
Slide 19: Commercial Lines Quality Improvement
Commercial Lines Quality Improvement Percent of Total New Premium Diamond Distribution WC, BOP, CPP, CA For lines < $50,000 53% 59% 29% 12% 25% 9% 17% 30% 66% 0% 10% 20% 30% 40% 50% 60% 70% 5 & 4 Diamond 3 Diamond 2 & 1 Diamond Pre-Modeling 2008 2009 YTD June
Slide 20: Retaining our Best Commercial Business
Retaining our Best Commercial Business 86% 80% 91% Retention at point of renewal as of June 30 , 2009 5 & 4 Diamond 3 Diamond 2 & 1 Diamond 74% 76% 78% 80% 82% 84% 86% 88% 90% 92%
Slide 21: Commercial Lines Diversification
Commercial Lines Diversification Further diversification results in lower combined ratio 99.4% 93.2% 91.7% 94.4% 100 % Contractors Merc/Serv Manufacturing Specialty 2008 YTD 2009 June
Slide 22: Commercial Lines Pricing Power
Commercial Lines Pricing Power Selective Total Pricing Jul/Aug:09 2Q:09 1Q:09 4Q08 -3.0% -0.8% 0.6% 1.2% -4.0% -2.0% 0.0% 2.0%
Slide 23: Commercial Lines Pricing Power
Commercial Lines Pricing Power Selective Pricing by Diamond Total 2&1 Diamond Diamond 5&4 Diamond -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 4Q:08 1Q:09 2Q:09 Jul/Aug:09
Slide 24: Commercial Lines Pricing Power
Commercial Lines Pricing Power Selective Pricing vs. Industry Indices 2Q:09 1Q:09 4Q:08 -3.0% -0.8% 0.6% -2.8% -0.6% 0.5% -3.1% -0.5% -1.1% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% Selective CLIPS Advisen ADVx
Slide 25: Personal Lines
Personal Lines $24M in-force price change on $213M book Underwriting and automation improvements – reduced operating costs and increased data quality 13-state footprint opportunity – $900 million
Slide 26: Key Claims Strategies
Key Claims Strategies Litigation management Vendor management Integrated outcomes Workers compensation Other casualty lines Heightened fraud monitoring
Slide 27: Commercial Lines State Market Opportunity
MA MN IA MO WI IL IN KY OH MI MI GA SC NC VA PA NY MD NJ CT TN Commercial Lines State Market Opportunity SIGI’s current average market share = 1.1%. At 4% market share, premiums would be > $5B RI DE >4% (NJ) 3% to <4% (MD) 2% to <3% (RI & PA) 1% to <2% (NY) 0% to <1% (GA, KY, NC, SC, TN, VA, IA, IL,
Slide 28: Commercial Lines Agency Market Opportunity
Commercial Lines Agency Market Opportunity Most Recent Agency Commercial Lines Premium Volume ($M) Current Share of Wallet State 18% Share of Wallet Results in $3.4 Billion DPW 19,120 10,733 2,060 2,215 1,174 2,655 8.3 Total 5.9 8.3 11.4 18.5 10.0 13.6% NY All other PA RI MD NJ *Includes agents appo
Slide 29: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation *Fiscal-year dividend *
Slide 30: Selective Insurance Group, Inc.
Selective Insurance Group, Inc. Keefe, Bruyette & Woods Insurance Conference September 10, 2009
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