Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Keefe, Bruyette & Woods 2008 Insurance Conference
25 slides from Selective Insurance's conference presentation, Sep 3, 2008
Slide 1: Selective Insurance Group, Inc. – KBW 2008 Insurance Conference
Exhibit 99.1 Selective Insurance Group, Inc. Keefe, Bruyette & Woods 2008 Insurance Conference September 4, 2008
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
MN IA MO WI IL IN KY MI MI NC PA NY CT MA TN Selective Profile • Strong market position – 22-state super-regional – $1.6B NPW • 87% commercial lines • 13% personal lines • Distribution partner with 920 independent agents • High-Tech, High-Touch™ Business Model • History of financial strength – “A+”
Slide 4: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation
Slide 5: High Tech - High Touch Business Model Significant Competitive Advantage
High Tech - - High Touch™ Business Model Significant Competitive Advantage • Industry leading technology – Predictive Modeling - cycle management tool • Fully integrated into underwriting - both new and renewal • “Insurers who don’t master both the art and science of predictive technology are at ris
Slide 6: High Tech - High Touch Business Model Significant Competitive Advantage
High Tech - - High Touch™ Business Model Significant Competitive Advantage *Agents with Selective for 5 years or more. • 350 field personnel – 100 agency management specialists -- strong technical decision makers – 165 claims management specialists with multi-line experience – 75 safety management s
Slide 7: Disciplined Reserving Practices
Disciplined Reserving Practices • Strong actuarial department – 8 fellows, 7 associates – Responsible for budgeting and planning • Detailed actuarial reviews quarterly • Monthly and quarterly controls and monitoring • Minimal environmental & asbestos exposure • Carried reserves at 57 th percentile o
Slide 8: Strong Natural Catastrophe Program
CAT cover: $310M in excess of $40M Strong Natural Catastrophe Program Percentages are net of tax, reinsurance & reinstatement premium RMS data as of 6/30/07; Equity data as of 6/30/08 % of Equity at Risk RMS Model
Slide 9: Conservative Investment Portfolio
11.6% ROE generated by investment portfolio Conservative Investment Portfolio $3.7B Invested Assets as of June 30, 2008
Slide 10: Carefully Monitoring Credit Quality
Carefully Monitoring Credit Quality • RMBS & RABS - -- $421M – 95% rated “AAA” – $56M at less than 85% of amortized cost • CMBS -- $275M – 85% rated “AAA” – 8% rated “AA” – $26M at less than 85% of amortized cost • Municipal Fixed Income Portfolio - $1.7B – Average rating “AA+” including insurance e
Slide 11: High Quality Capital
14% 5-year CAGR in statutory surplus High Quality Capital • Premium to surplus: 1.5x • Debt to total capitalization: – Total: 21.2% – Adjusted: 15.3% • Weighted average life of debt: 36 years • Weighted average cost of capital: 9.8%
Slide 12: Proactive Capital Management
YTD 2008 1.8M shares repurchased for $40.5M Proactive Capital Management 18.9% 26.0% 82.8% Annual Earnings ($ in Millions) Dividends paid Share Repurchase Capital Returned to Shareholders 116.0% 25.2%
Slide 13: Cycle Management
Cycle Management
Slide 14: What will be the catalyst for cycle turn? Industry Conditions Challenging
What will be the catalyst for cycle turn? Industry Conditions Challenging
Slide 15: Responding to Current Industry Conditions
Positioned for long-term out-performance Responding to Current Industry Conditions • Expense management • Underwriting tools through Knowledge Management • Improving personal lines • Generating profitable growth opportunities • Leveraging agency relationships
Slide 16: Managing Expenses through Cycle
Managing Expenses through Cycle • Workforce reduced – Restructuring announced in January 2008 with $7 million annualized pre-tax savings • Commission structure changes effective July 1 – $7 million annualized pre-tax savings • Re-domestication of two insurance subsidiaries to Indiana – $2 million an
Slide 17: Knowledge Management
Knowledge Management • Information and analytics delivered through Knowledge Management • Pricing precision through predictive modeling – Commercial lines models: workers compensation, BOP, CPP and commercial auto – MATRIX ® for personal lines: auto and homeowners
Slide 18: The Power of Predictive Modeling
Operating Return on Equity % C/L Book New (%) Renewal (%) Total (%) Total Commercial 10.6 14.5 13.6 The Power of Predictive Modeling Worst 5% (1 Diamond) (18.6) (43.3) (38.7) Best 95% 11.5 16.9 15.6 • Commercial lines business performance
Slide 19: Quality of New Business
Quality of New Business Percent of Total Premium Diamond Distribution* WC, BOP, CPP, CA *For lines <$50,000
Slide 20: Workers Compensation Success
Workers Compensation Success Year, 7 point combined ratio improvement goal achieved Note: Booked accident year combined ratios 7.8 points
Slide 21: Multi-faceted Personal Lines Improvement Plan
Multi-faceted Personal Lines Improvement Plan • Competitive pricing through MATRIX ® – Auto rolled out Aug 2006 – Homeowners rolled out Jan 2008 • Price increases totaling – NJ Auto +13.7% – Non-NJ Auto +6.1% – NJ Homeowners +5% • Shift in mix of business • Property results – Inspection program in k
Slide 22: Profitable Growth Opportunities
Profitable Growth Opportunities • Entered MA and TN: $8.5 billion commercial lines premium potential • One & Done small business opportunities – 400+ classes and growing – New business up 16% for 2008 YTD • 265 new agents appointed since 2005
Slide 23: Leveraging Excellent Agent Relationships
Leveraging Excellent Agent Relationships • Field model with front-line decision-making authority • Superior claims service • Access to management team • Competitive products and programs through Strategic Business Units • Technology designed in partnership with agents • Granular pricing capability t
Slide 24: Agents Get What They Need from Selective
Agents rate us 8.9 for overall service levels for second consecutive year Jerry Niewiek, Principal Berends, Hendricks, Stuit Insurance Grandville, Michigan Agents Get What They Need from Selective
Slide 25: Selective Insurance Group, Inc. – KBW 2008 Insurance Conference
Selective Insurance Group, Inc. Keefe, Bruyette & Woods 2008 Insurance Conference September 4, 2008
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