Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Bank of America Merrill Lynch 2014 Insurance Conference
33 slides from Selective Insurance's conference presentation, Feb 12, 2014
Slide 1: Bank of America Merrill Lynch 2014 Insurance Conference
Ay SELECTIVE® Selective Insurance Group, Inc. Bank of America Merrill Lynch 2014 Insurance Conference February 13, 2014
Slide 2: Forward Looking Statements
1995 (“PSLRA”). These beliefs, projection: nticipate,” "target, end, ee or “continue” or other ome Brien “ih stent are revise any ee environment, the impact, if any n this report. In light of these risk might not occur. Forward Looking Statements & seusctive®
Slide 3: Dale Thatcher, EVP, Chief Financial Officer
ay SELECTIVE® Dale Thatcher EVP, Chief Financial Officer
Slide 4: History of Success as a Super-Regional Selective
History of Success as a Super-Regional 52 SELECTIVE?
Slide 5: Standard Commercial Lines
Standard Commercial Lines “Main street” account underwriter Average account size $10,000 ~1,100 agents Field underwriters supported by regional and corporate expertise 2013 % Net Premiums Written 2013 Statutory Combined Ratio = 97.1% Standard Commercial Lines dy SELECTIVE®
Slide 6: Personal Lines
2013 % Net Premiums Written Personal Lines a2 SELECTIVE®
Slide 7: Excess & Surplus Lines
s & Surplus Li e: | . Gnees binding authority, no claims authorit | + ~90 whol tes ale general agencies Average policy size of $2,700 + ~70% general liabilit + 98% $1M or lower limits ) 2013 % Net Premiums Written 2013 Statutory Combined Ratio = 102.9% Excess and Surplus Lines & sevective®
Slide 8: Key Takeaways
Key Takeaways SELECTIVE®
Slide 9: Conservative Investment Portfolio
Net Operating Cash Flows as % of NP December 31, 2013 $4.6B in Invested Assets Alternative 2%, 16% Short-Term 4% Equities 4% 2009 ©2010-2011 ae 2013 asiGl —Industry’ - “KA-” average credit quality + 3.6 year duration, excluding short-term « Investment leverage of 4.0x “Source: Conning, Inc. and A.M.
Slide 10: Conservative Catastrophe Reinsurance
% of Equity at Risk - 1 in 250 Event Blended Model Results (RMS & AIR) 2014 Property Catastrophe Treaty 11% 85M in excess of $40M retention yer lat premium despite additional mit SUIS at approximately 1-in- 250 ye Average reinsurer rating “A+” 2012 2013 Conservative Catastrophe Reinsurance ®& seuect
Slide 11: Impact of CATs on Combined Ratio
cops GSIGI Avg = 2. 3 ee 1 Ind. Avg. = 5.0 pts 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Industry Source: A.M. Best Impact of CATs on Combined Ratio ®& seuective®
Slide 12: Lower Volatility of Results
Standard Deviation (2003-2012) R velopment Combined Ratio (Points on Combined Ratio) 8.0 5.9 SIGI Peer Average” SIGI Peer Average* serve review and focus on street” accounts ind-up” quarterly *Source: SNL Financial, Statutory Data i STFC, UFCS, CNA, HIG, TRV, WRB Lower Volatility of Results & stisct
Slide 13: Combined Ratio Improvement Plan
2014 Ex-CAT i io Pl 2.0% | oT (4.5)% 0.2% 92% = Lal 0)% 2013. | LossTrend | EarnedRate | Underwriting/ | Expense | 2014 Actual* Claims Projected* “Excluding CATS and reserve development May not foot due to rounding Combined Ratio Improvement Plan 4 SELECTIVE® Guidance provided as of January 31, 2014
Slide 14: Impact of Leverage
a Investment Levera: Underwriting Leverage es (Invested Assets 2 ROE Gena at a 96% (Premiums-to-Surplus) Stockholders’ Equity) mbined Ratio Oe Ais 10.5% 8.0% 2.3x 0.7x 7 a siGI Industry sic Industry sic Industry Industry Source: A.M. Best 2013E Impact of Leverage & stircrives
Slide 15: John Marchioni, President and Chief Operating Officer
ay SELECTIVE® John Marchioni President and Chief Operating Officer
Slide 16: Competitive Advantages: Field Model
Field Model Superior Agenc: Empower Relationships Decision! Makers Effective Manager of Leverage Capabilities of a National...Relationships of a Regional Competitive Advantages & suctive®
Slide 17: Effective Cycle Management
\ go Managed Growth Through Cycle 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 4p SELECTIVE® Effective Cycle Management
Slide 18: Growth Opportunities
of feo and Storefronts Growth Opportunities &y SELECTIVE®
Slide 19: Standard Commercial Lines Pricing
7% 85% wo 6% 2 oe 80% uo 5% = 2 2 = 4% 75% < : 5 2 3% 4 2 70% 2% 65% 1% 0% + 60% 20:09, 4Q:09 20310 42:10 2Q:11 4:11 2Q:12 4:12 2Q313 4Q:13 + 19 consecutive quarters of renewal pure price increases + In 2014, anticipate renewal pure price increases of 6-7% Standard Commercial Lines Pricing 52 SELECT
Slide 20: Pricing by Retention
me : Pricing by Retention ae ‘anda: rd Commercial Lin g Renewal Pure Price 3 8 Point of Renewal Retention Above Average Average Below Average Very Low ic Portfolio Manager allows underwriters to drive provemel Underwriting 4 SELECTIVE®
Slide 21: Standard Commercial Lines Profitability
2013 Statutory Combined Ratio by Line of Business 130% 120% — 2) 110% — g % 100% — iS & 2 90%) 2 & 80% 70% 7 : General Commercial Workers Come iy Liability Auto NPW____$426M_ $321 $277M_ ‘$238M_ “$82M Standard Commercial Lines Profitability & sciectives
Slide 22: Claims Initiatives
Claims Initiatives Workers Compensation Plan dy SELECTIVE®
Slide 23: Claims Initiatives
2 SELECTIVE® C lai ms I niti atives
Slide 24: Why Invest in Selective?
“s Lower volatility allows for greater operational leverage cycle management | [ Path to a 92% ex-catastrophes combined ratio in 2014 Why Invest in Selective? dy SELECTIVE?
Slide 25: Financial Highlights 2009 – 2013
Financial Highlights 2009 — 2013 Statutory NPW Growth Operating EPS* Net Income per Share® - Excess and Surplus Lines® ®& SELECTIVE®
Slide 26: Net Operating Cash Flow
Net Operating Cash Flow 2009 2010 2011 2012 2013 4 SELECTIVE®
Slide 27: Investment Income – After-tax
Investment Income — After-tax (Sin millions) 120 5 2009 2010 2011 2012 2013 ®& sevective®
Slide 28: Focus on Expense Management
Focus on Expense Management GAAP Expense Ratio 2007 2008 2009 2010 2011 2012 9/30/2013 YTD @ sici i Peer Median ‘Source: SNL Financial Note: Expense Ratio including Dividends THG, TRY, UFCS, and WRB.
Slide 29: Insurance Operations Productivity
Insurance Operations Productivity ($ in 000s; iaNPW per Employee —==Statutory Expense Ratio 900 + 700 - 500 + 2009 2010 2011* 2012 2013 *Excludes Excess & Surplus Lines 4 SELECTIVE®
Slide 30: Standard Commercial Lines Profitability
Standard Commercial Lines Profitability Statutory Combined Ratios 298g gat got 38 aat aot gst” gt® Hl Impact of Catastrophe Losses HH Combined Ratio excluding CATS @& serective®
Slide 31: Premium by Strategic Business Unit
Premium by Strategic Business Unit 2013 Standard Commercial Lines Direct Premium Written Bonds Community and 2% Public Services Contractors 33% Manufacturing & Mercantile 42% @& seuctiver
Slide 32: Premium by Line of Business
Premium by Line of Business 2013 Standard Commercial Lines Net Premium Written Workers al lores General Liability o 31% Commercial Pp Bonds gop Auto 1% 24% 4 SELECTIVE®
Slide 33: Long-Term Shareholder Value Creation
Per Share Long-Term Shareholder Value Creation 2 2 , T T T : : : T T 1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ll Book Value & Dividend ®& sevective®
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