Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — New York Society of Security Analysts 13th Annual Insurance Conference (February 2009)
25 slides from Selective Insurance's conference presentation, Feb 9, 2009
Slide 1: Selective Insurance Group, Inc. NYSSA 13th Annual Insurance Conference
Selective Insurance Group, Inc. New York Society of Security Analysts 13th Annual Insurance Conference February 9, 2009
Slide 2: 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 3: Selective Profile
Only 10% of P&C carriers rated A+ or better MN IA MO WI MI MI NC NY CT MA TN Selective Profile NJ DE
Slide 4: A Foundation of Financial Strength
A Foundation of Financial Strength • Conservative investment portfolio • Disciplined reserving practices • Strong reinsurance program • High-quality capital
Slide 5: Conservative Investment Portfolio
Most asset classes became correlated in 2008 Conservative Investment Portfolio $3.5B Invested Assets as of December 31, 2008
Slide 6: Asset Allocation to Equities and Other Investments
Economic benefit of alternative investments: $30M over 10 years Asset Allocation to Equities and Other Investments Source: A.M. Best, Barclays Capital Peers include: CB, CINF, CNA, THG, HIG, Liberty Mutual, PHLY, SAF, STFC, TRV, WRB
Slide 7: Disciplined Reserving Practices
Calendar Year Reserve Development (p/t) ($10M) ($5M) $7M $16M $18M Carried $2,415M Disciplined Reserving Practices 52.6% 54.8% 56.9% 57.5% 53.9%
Slide 8: Strong Natural Catastrophe Program
CAT cover: $310M in excess of $40M Strong Natural Catastrophe Program Percentages are net of tax, reinsurance and reinstatement premium. RMS data as of 6/30/08; Equity data as of 12/31/08. RMS Model
Slide 9: High Quality Capital Strong Liquidity Position
Sustainable growth rate of 5% High Quality Capital Strong Liquidity Position • Premium to surplus: 1.7x • Debt to total capitalization: – Total: 23.5% – Adjusted: 17.0% • Weighted average life of debt: 36 years • Ended 2008 with $200 million cash – $60 million at holding company – $140 million at in
Slide 10: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation
Slide 11: 2008 Market Valuation Impact on Book Value
OTTI $0.65 Fixed Income $1.39 Equity $1.21 Pension charge $0.72 Total $3.97 2008 Market Valuation Impact on Book Value • Through Jan 31, 2009 total investment portfolio recovered approximately $30M after-tax or $0.57/share • Equity exposure reduced to $132M at 12/31/2008
Slide 12: Selective: Response is everything
& seective’ Response is everything.”
Slide 13: Commercial Lines Pricing Continues to Decline
Commercial Lines Pricing Continues to Decline Sources: Advisen and Tillinghast CLIPs Selective gave up less price than competitors in 2008: (3.1)% versus (5.8)%
Slide 14: Estimated Commercial Lines Statutory Combined Ratios Pricing Impact
Estimated Commercial Lines Statutory Combined Ratios Based on Various Rating Surveys Pricing Impact 118.2% 103.7% 120.4% 104.6% 100.4% Reported 98.5%
Slide 15: Agent's Profitability 2003, 2007, and 2008
Agent’s Profitability 2003, 2007, and 2008 Cumulative Direct Premiums ($M) 2003 2007 1,000 1,500 2008 Note: Active agents only, calendar-year basis
Slide 16: Profitable Growth through Segmentation
Segment 61 101.2% Segment 80 120.2% Segment 21 86.3% Segment 40 95.3% Segment 1 68.7% Segment 20 85.8% Segment 41 95.6% Segment 60 101.0% Profitable Growth through Segmentation FY 2008 DPW Growth Business Segments 12/31/08 year Combined Ratio Growth Market Penetration New & Renewal +4% New & Renewal
Slide 17: The Power of Predictive Modeling
Commercial Lines Operating Return on Equity % C/L Book New (%) Renewal (%) Total (%) Worst 5% (1 Diamond) (43.3) (59.3) (57.4) Best 95% 0.7 13.4 10.6 Total Commercial (0.5) 11.0 8.5 The power of predictive modeling Knowledge Management Predictive Modeling • Pricing precision through predictive model
Slide 18: Profitability Drivers
Profitability Drivers • Predictive modeling – 1 & 2 diamond: minimum 8% rate increase, reduce number of accounts – 5 diamond: increase number of accounts • Unprofitable agent strategy – Tactical underwriting of renewal books • Overall rate level of book • Quality distribution by diamond score – Focu
Slide 19: Commercial Lines Pure Price vs. Retention
Commercial Lines Pure Price vs. Retention 2006 2007 2008
Slide 20: Growth Opportunities
Growth Opportunities • State expansion MA and TN: $85B commercial lines premium potential • Agency appointments: 300 since 2005 • One & Done ® small business: new business up 7% in 2008 • Leads Program: – Leverages power of predictive models and information assets – Infuses quality prospects into th
Slide 21: Quality of New Business
Quality of New Business Percent of Total Premium Diamond Distribution* WC, BOP, CPP, CA *For lines < $50,000
Slide 22: Pure Price % Change
Pure Price % Change 2005 2006 2007 2008 2009E 4y SELECTIVE” Response is everything.”
Slide 23: 2008 Agency Survey Results
2008 Agency Survey Results 8.5 on a 10 pt. scale Agency Penetration Source: SNL Financial and Company Reports Peer Average
Slide 24: "There will be a flight to quality…"
“There will be a flight to quality…” Robert Rusboldt President and CEO Independent Insurance Agents and Brokers of America “…super-regionals like Selective are attracting the top independent agents in the country, there’s going to be a flight to good companies like Selective [who have] taken on the
Slide 25: Selective Insurance Group, Inc.
Selective Insurance Group, Inc. New York Society of Security Analysts 13th Annual Insurance Conference February 9, 2009