Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Investor Day (March 2009)
116 slides from Selective Insurance's investor day presentation, Mar 24, 2009
Slide 1: Welcome
Welcome Jennifer DiBerardino Vice President, Investor Relations
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: Investor Day Agenda - March 24, 2009
12:30-1:00 p.m. Registration 1:00 p.m. Welcome Jennifer DiBerardino, VP Investor Relations 1:10 p.m. Strategic Overview Greg Murphy, Chairman, President and Chief Executive Officer 1:35 p.m. Insurance Operations John Marchioni, Chief U/W & Field Officer Business Intelligence Brenda Hall, SVP Field U
Slide 4: The Journey Continues with Sound Strategy
The Journey Continues with Sound Strategy Greg Murphy Chairman, President & CEO
Slide 5: Commercial Lines P&C Statutory Combined Ratio
Source: A.M. Best Commercial Lines P&C Statutory Combined Ratio %
Slide 6: Commercial Lines P&C Statutory NPW Growth
Commercial Lines P&C Statutory NPW Growth Source: A.M. Best
Slide 7: Strong Cycle Management that Balances Growth and Profitability
Strong Cycle Management that Balances Growth and Profitability Who We Are Selective is a High-Tech, High-Touch company writing commercial and personal lines business in 22 states through 940 relationship focused independent agents. We deploy leading edge technology to provide an ease of doing busine
Slide 8: Our Strategy is About…
Our Strategy is About… …creating and capturing value …managing information to make better decisions creating long term profitable growth …competitive positioning and sustainability
Slide 9: Competitive Advantages
Nationals Estimated Years of Advantage Regionals Ahead Behind On Par Small business straight through processing P/L predictive modeling 1-2 C/L predictive modeling 2-3 3-5 Relationships Field model 3-5 Ability to execute Safety management Competitive Advantages
Slide 10: Competitive Advantages
Nationals Estimated Years of Advantage Regionals Ahead Behind On Par 1-3 1-3 Information Management Cycle Mgmt Tools: DSM Technology: agency integration Technology: CL customer self service Competitive Advantages
Slide 11: Strategy is About Increasing Market Share
* Source: IIABA 2007P-C Insurance Market report (2-09) Regional Carriers Wrote 23% of 2007 PL Premiums or $52B Strategy is About Increasing Market Share
Slide 12: Personal Lines - $115 Billion Opportunity
Personal Lines - $115 Billion Opportunity How Written: • CSRs place business based on price and ease of doing business Keys to Success: • Relationships are critical to being in the game • Operational and technological efficiency • Automated underwriting • Pricing precision
Slide 13: Strategy is About Increasing Market Share
In 10 years regional companies increased C/L market share 20% Source: IIABA 2007 P-C Insurance Market report (2-09) Regional Agency Carriers Wrote 32% of 2007 CL or $83B Strategy is About Increasing Market Share
Slide 14: Greenfield Growth Opportunities
Premium at 5% Market Share Total Statewide DPW ($M) Current Market Share State 6,122 4,026 1.1 122,437 Total 80,512 18,771 9,725 3,729 8,819 1.0 NY 0.7 All other 2.1 PA 2.6 RI 3.0 MD 4.4% NJ Greenfield Growth Opportunities
Slide 15: Greenfield Growth Opportunities
State Current Share of Wallet Most Recent Agency Commercial Lines Premium Volume ($M) NJ 13.6% 2,655 MD 10.0 1,174 RI 18.5 283 PA 11.4 2,215 NY 8.3 2,060 All other 5.9 10,733 Total 8.3 19,120 18% Share of Wallet Results in $3.4 Billion DPW *Includes agents appointed prior to 2006 only Source: Highli
Slide 16: We Look at the Market in Three Distinct Components
Middle Market ($25K to $250K ) Small Business (up to $25K) Large Accounts ($250K to $1M) $54 billion $23 billion $21 billion We Look at the Market in Three Distinct Components
Slide 17: Small Business - $23 Billion Opportunity
About 30% of our book is small business How Written: • The decision makers are the Agency CSR or the Producer • Flows through path of least resistance Keys to our Success: • Must have relationship to get in the game • Systems integrate directly with agents • Underwriting templates with predictive mo
Slide 18: Automated One & Done New Business
Automated One & Done ® New Business
Slide 19: Small Business Profitability
Small Business Profitability Retention • 1.5 points better than policies over $25,000 Profitability • A 3-year loss ratio of 2.2 points better than policies over $25,000 Price Sensitivity • Small business policies have significantly less rate modification than policies > $25,000
Slide 20: Middle Market Business - $54 Billion Opportunity
● Middle Market Business - $54 Billion Opportunity
Slide 21: Middle Market Profitability
AMS compensation guidelines • Measures growth and profitability • No pure growth objectives Strategic Business Units • Product portfolio by market segment • Specialty • Mercantile and Service • Manufacturing • Contractors • Underwriting authority guidelines • Not a market • Not an appetite Middle Ma
Slide 22: Large Account Business - $21 Billion Opportunity
How Written: • Agent-controlled accounts or new prospects that want customized solutions Keys to Success: • Custom safety management solutions • CMS provides service and customer knowledge • Actuarial unit for target pricing • Sophisticated underwriting Large Account Business - $21 Billion Opportuni
Slide 23: Solid Cycle Management Critical to Profitability
In 2008… • Submissions continue to be strong • Hit ratio down 50% • New business down 40% to $20M • Pure price down only 4% • Retention remained strong at 81% • Combined ratio - 101.7% Solid Cycle Management Critical to Profitability
Slide 24: Commercial Lines Pricing Key to Underwriting Improvements
Selective gave up less price than competitors in 2008: (3.1)% versus (5.8)% Sources: Advisen and Tillinghast CLIPs Commercial Lines Pricing Key to Underwriting Improvements
Slide 25: Financial Strength to Support Profitable Growth
• Enterprise risk management • Conservative investment strategy • Strong reinsurance program • Disciplined reserving practices Financial Strength to Support Profitable Growth
Slide 26: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation
Slide 27: Building on a Strong Foundation
Building on a Strong Foundation John Marchioni Executive Vice President Chief Underwriting & Field Operations Officer
Slide 28: High-Tech, High-Touch Model
• Empowered field model • Best-in-class agency relationships • Industry-leading automation • Broad underwriting appetite Enhanced through Knowledge Management High-Tech, High-Touch ® Model
Slide 29: Knowledge Management
The integration of KM and our strong business model will drive growth and profitability Better access to better information to make better decisions Knowledge Management
Slide 30: The Power of Modeling
Historical % of Premium 20% 30% 30% 15% 5% Worst 5% of the book reduces ROE by 200 bps Models are weighted using 2008 premium, new and renewal. Policy size <$50,000 DPW CL Predictive Models - All Lines Diamond Score The Power of Modeling
Slide 31: Empowered Field Model: Agency Management Specialist
For new prospects AMS provided with: • Diamond score • Pricing guidance by line of business Enhanced through Knowledge Management Empowered Field Model Agency Management Specialist (AMS) • Own their geographic territory • Measured on growth and profitability • Authority to write middle market new bu
Slide 32: Improved New Business Decision-Making
Percent of Total Premium Diamond Distribution WC, BOP, CPP, CA For lines < $50,000 Improved New Business Decision-Making
Slide 33: Empowered Field Model: Renewal Accounts
For renewal accounts underwriter provided with: • Diamond score • Pricing guidance by line of business • All necessary information to make renewal underwriting and pricing decision Enhanced through Knowledge Management Empowered Field Model Regional underwriting teams • Manage renewal book by agency
Slide 34: Decision Support Information
Decision Support Information
Slide 35: Improving Renewal Mix
2008: All lines combined (WC, BOP, CPP, Comm Auto) <$50K DPW Average retention of 87% All lines, point of renewal retention. Diamond Score Improving Renewal Mix
Slide 36: Safety Management Specialists
Advanced segmentation drives reallocation of resources to troubled segments Enhanced through Knowledge Management Empowered Field Model Safety Management Specialists (SMS) • Consultative approach with customers • Pre-quote inspections lead to higher hit ratio • Accounts on service plan retain at hig
Slide 37: Strong Agency Relationships
While each of these factors is important, relationships drive the business In the current market, what do agents rank as “most important” when deciding where to place their best business? Strong Agency Relationships
Slide 38: Strong Agency Relationships
91% rated us “excellent” or “very good” for overall satisfaction • 2008 Agency satisfaction survey • Survey highlights: • Quality of AMSs’ underwriting decisions - 87% favorable • Quality of CMSs’ claims decisions - - 84% favorable • Quality of Commercial Lines products - - 93% favorable • Overall e
Slide 39: Agency Penetration
$1.8M Top 3 position in 65% of our agents Source: SNL Financial and Company Reports Peer Average ($ Millions) Agency Penetration
Slide 40: Agency Management & Planning
Note: for illustrative purposes only Agency Management & Planning Enhanced Through Market Knowledge • Advanced agency segmentation • Improved market planning
Slide 41: 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 role that nationals used to play as f
Slide 42: Industry Leading Automation
Predictive Models drive more accurate pricing and risk selection without manual intervention Advanced segmentation drives expanded underwriting templates Enhanced through Knowledge Management Industry Leading Automation Underwriting systems designed in collaboration with agents • CLAS ® , SelectPLUS
Slide 43: Broad Underwriting Appetite
Focused on segment diversification Specialty Mercantile & Service Manufacturers & Wholesalers Contractors Broad Underwriting Appetite
Slide 44: Broad Underwriting Appetite
Segment 41 95.6% Segment 60 101.0% Segment 21 86.3% Segment 40 95.3% Segment 1 68.7% Segment 20 85.8% Segment 61 101.2% Segment 80 120.2% Operational Areas Marketing Safety Management Training Pricing Average Lower Than Average Higher Than Average Growth Marketing Materials Stewardship Service Reten
Slide 45: Using Information to Drive Growth
Qualified Leads Program • Prescreened, high-quality new business prospects • Leverages power of predictive models • AMS’s more proactive in new business development Targeted state expansion • Massachusetts 2007 (CL only) • Tennessee 2008 (all lines) • $8.5B CL premium potential combined Using Inform
Slide 46: The Winning Equation
= Profitable Growth Empowered field model Best-in-class agency relationships Industry-leading automation Broad underwriting appetite The Winning Equation
Slide 47: Business Intelligence Drives Profitability
Business Intelligence Drives Profitability Brenda Hall Senior Vice President Director of Field Underwriting & Information Strategy
Slide 48: Fuels Business Intelligence
Fuels Business Intelligence Data Selective’s Information Engine Business Engine Underwriting - Claims Billing - Safety Management Information Augmentation External Data Business Intelligence Platform Analytics - - Predictive Modeling Fuels Business Intelligence
Slide 49: Portfolio Management
Portfolio Management Traditional analytics: • State • Line of Business • Agency
Slide 50: Managing Our Portfolio Through Analytics
Managing Our Portfolio Through Analytics Dividend Plan FTE Count Voluntary / Involuntary Policy New or Renewal Policy Size Policy Info Integration RMF Stratified Policy LOB Trans Type Declination Reason Account Level Referral President Club Agent BOP Hazard Grade Calendar Year Term Effective Month T
Slide 51: Portfolio Management - Segmentation
Segment 41 95.6% Segment 60 101.0% Segment 21 86.3% Segment 40 95.3% Segment 1 68.7% Segment 20 85.8% Segment 61 101.2% Segment 80 120.2% Portfolio Management - Segmentation Operational Areas Marketing Safety Management Training Pricing Average Lower Than Average Higher Than Average Growth Marketing
Slide 52: Targeted Business Segmentation Growth
Targeted Business Segmentation Growth • Targeted Specialty Segment • 3 year combined ratio of 92% • YTD February new business growth +40% • 15 sales meetings in 9 states • Enhanced specialty program coverage
Slide 53: Segmentation Analysis - Hotels
New underwriting guidelines now in use Segmentation Analysis - Hotels • Detailed loss analysis conducted • Newer business traveler hotel sub- segment driving losses: • Relaxed building codes • Workers Compensation strains • Ineffective management • Market pressure pushed pricing down
Slide 54: Implementation - Hotels
Implementation - - Hotels New Guidelines: • No new ventures or management with < 5 years experience • Larger, resort-style hotels • AAA or equivalent ‘star’ rating • Formal risk management plan
Slide 55: Portfolio Management - Agency Segmentation
Tactical book of business review Portfolio Management - Agency Segmentation • • • Focus on multi-year performance • Focus on multi-year performance • Identify agencies not meeting expectations • Identify agencies not meeting expectations • Perform tactical book of business review • Perform tactical
Slide 56: Agency Profitability Improvement Plan Success Story
Agency Profitability Improvement Plan Success Story The Agent High-caliber agency Not profitable with Selective Not growing as we wanted Strong relationship with AMS and underwriter - commitment to Selective
Slide 57: Agency Profitability Improvement Plan Success Story
Agency Profitability Improvement Plan Success Story The Analysis High concentration of heavier vehicles - deductibles low Poorly performing non- contracting risks Concentration of larger accounts
Slide 58: Agency Profitability Improvement Plan Success Story
Agency Profitability Improvement Plan Success Story The Plan Re-underwrite, price to exposure, engage Safety Management Non-renew where necessary Aggressive, targeted growth Buy-in from the agency
Slide 59: The Results Speak For Themselves
DPW - Total DPW - NEW Combined Ratio (%) 2002 $3,985 $443 115.1 2003 $4,561 $1,701 108.1 2004 $6,149 $1,617 79.6 2005 $6,427 $1,335 69.4 2006 $8,610 $2,825 81.2 2007 $10,338 $3,641 93.6 2008 $11,401 $2,675 73.7 Keys to Success • Relationship with agency • Ability to understand what drove results • C
Slide 60: Decision Support Information
Decision Support Information
Slide 61: Business Intelligence Drives Profitability
Business Intelligence Drives Profitability
Slide 62: Personal Lines
Personal Lines Allen Anderson Senior Vice President Personal Lines
Slide 63: The Road to Profitability
The Road to Profitability Personal Lines • Our opportunity • Underwriting and automation improvements • Profitable by 2010
Slide 64: Opportunity — Personal Lines Footprint
Opportunity — Personal Lines Footprint Bi Recent expansion BB existing states @ scucrve eaponce ia overvtin,
Slide 65: Key Growth Opportunities
Region Targeted Market Share ($M) Heartland (IL, IN, MN, WI, IA) 302 Mid-Atlantic (PA, MD, OH) 267 New Jersey 143 Northeast (RI) 13 Southern (VA, TN, SC) 175 Total premium at 1.5% market share $900 Significant growth potential in our 13-state footprint Key Growth Opportunities
Slide 66: Underwriting and Automation Improvement
Underwriting and Automation Improvement
Slide 67: Underwriting and Automation Improvement
Underwriting and Automation Improvement • Automated underwriting rules at point of sale • Knowledge Management launched • Access to current information • Production • In-force • Renewal • Accident year loss • Granular, real-time information to make decisions
Slide 68: New Business Processed through One & Done
Note: Year-end run rates New Business Processed through One & Done ®
Slide 69: Quote Volume
2006 2007 2008 Quote Volume Underwriting and Automation Improvement
Slide 70: Personal Lines Rate Activity
($ in millions) Weighted Average Price Change In-Force Premium Impact 2008 7.4% $14.9 2009 4.3% $ 9.1 2008 NPW of $213M, up 4% versus 2007 Personal Lines Rate Activity
Slide 71: The Road to Profitability - Quality of Book
x The Road to Profitability - Quality of Book
Slide 72: The Road to Profitability - New Business
The Road to Profitability - New Business x Rate Group
Slide 73: The Road to Profitability
The Road to Profitability • Opportunity - A targeted 1.5% market share equals $900 million • Underwriting and automation improvements - reduced operating costs and increased data quality • Profitable by 2010 through additional rate and improved business mix Personal Lines
Slide 74: Agency Panel
ituit lerends lendricks re A
Slide 75: Claims Strategy
Claims Strategy Mary Porter Executive Vice President Chief Claims Officer
Slide 76: Claims Opportunity
• Year-end 2008 • $2.3 billion total loss reserves • $385 million total LAE reserves • 38,000 open claims • Best integrated outcome • Cycle time management • Cost effective assignment • Expense management Claims Opportunity
Slide 77: Overview of Claims Organization
Corporate Claims Field-based CMS Claims Service Center Overview of Claims Organization
Slide 78: Claims Service Center
Shorter cycle-time, lower expense Claims Service Center • First notice of loss - 24 x 7 • Immediate file set-up and assignment • Total loss / glass / auto • Small dollar claims
Slide 79: Field-Based Claims
Field based litigation and workers compensation adjusters Field-Based Claims • 140 CMSs in 22 states • Ability to service multi-lines • Speed in response and resolution • Immediate investigation better results
Slide 80: Corporate Claims
Corporate Claims • Line of business expertise • High-exposure files and litigation • Specialty claims - Environmental, EPLI, Municipalities • Claims legal - expertise and expense management • Quality assurance, training, compliance
Slide 81: Continual Review and Benchmarking
Continual Review and Benchmarking • Operational reviews • Internal and external reviews • Workers compensation strategy • Overall claims strategy • Ward Group ® • We participated in 2006 and 2007 Benchmarking Program
Slide 82: Goal: Approximately $6 million savings in 2009
Goal: Approximately $6 million savings in 2009 Key Initiatives Completed • Workers compensation strategy • Case management improvements • Right sized staffing and workloads • Streamlined procedures/report handling • Bill review, PPO penetration and additional expense management
Slide 83: Moving Us in the Right Direction
Moving Us in the Right Direction Key Initiatives for 2009 • Litigation management • Continue 2008 improvement: $2.5 million legal expense reduction • Proactive suit management • Early recognition • Expense management
Slide 84: Key Initiatives for 2009
Key Initiatives for 2009 • Vendor panel • Quality • Expense management • Cycle time and best possible integrated outcome
Slide 85: The Journey Ahead - Claims Strategy Initiative
The Journey Ahead - Claims Strategy Initiative
Slide 86: Enterprise Risk Management
Enterprise Risk Management Dale Thatcher Executive Vice President Chief Financial Officer & Treasurer
Slide 87: Selective's Risk Profile - Underwriting
• Super-regional P&C company • 22-state commercial lines footprint (86% NPW) • 13-state personal lines footprint (14% NPW) • Commercial lines consists of low hazard, suburban and rural risks • Small to mid-sized commercial lines with $11,000 avg. account size • High franchise value: $1.6M in NPW per
Slide 88: Selective's Risk Profile - Reserves
• Short liability duration of 3.7 years • Carried reserves at 54 th percentile of actuarial range • Detailed actuarial reviews each quarter • Smaller risks are more homogeneous and less complex which yields more stable results • Experienced actuarial staff: 10 Fellows, 5 Associates, students, 1 stat
Slide 89: Selective's Risk Profile - Reinsurance
• Buy reinsurance to 0.6% probability event (stochastic basis), 0.4% probability event (historic basis) • “A” average credit quality of catastrophe reinsurers • Ceded premium, excluding Flood, 4% of gross premium • Unsecured net reinsurance recoverables 10% of surplus at 12/31/08 • 1% probability ev
Slide 90: Selective Risk Profile - Capital & Liquidity
• Premium to surplus: 1.7x • Debt-to-capital ratio of 23.5%, 17% adjusted • Attractive debt repayment schedule • $250M long-term, average life of 39 years • Near-term expiring debt of $12M in 2009 & 2010 • Interest coverage ratio of 4.6x operating income at YE 2008 • Access to $50M line of credit, e
Slide 91: Selective Risk Profile - Investments
$3.6B Invested Assets as of February 28, 2009 Selective Risk Profile - Investments
Slide 92: Investments
Investments Kerry Guthrie Executive Vice President Chief Investment Officer
Slide 93: High Credit Quality Bond Investment Portfolio
“AA+” average portfolio rating AA+ A AA+ AAA AAA AA $3.1 billion market value, 84% of overall portfolio High Credit Quality Bond Investment Portfolio As of February 28, 2009
Slide 94: Municipal Securities - February 28, 2009
Challenges • Significant revenue shortfalls • State & local budget pressures • Weakening credit profiles • Ratings turbulence • $1.8 billion market value, 49% of overall portfolio • “AA+” rated (“AA” without insurance enhancement) Municipal Securities - February 28, 2009
Slide 95: Municipal Observations
• Comfortable with underlying credit quality, which remains very high • First quarter actions: • $1.3 billion reclassified to held to maturity (HTM) • $500 million AFS highest quality bonds, most liquid names • Sold $39 million of state general obligation bonds • Underweight potential troubled spots
Slide 96: Corporate Bonds - February 28, 2009
Challenges • Capital market access • Declining corporate earnings • Ratings turbulence • $407 million market value, 11% of overall portfolio • Average rating “A” Corporate Bonds - February 28, 2009
Slide 97: Corporate Bonds Observations
• New purchases • Limited financing needs • Recession resistant companies • Strong balance sheets • Avoiding troubled sectors • Focused on short duration paper • No “Big 3” auto exposure • Underweight financials and cyclicals • Portfolio is high quality and has performed well Corporate Bonds Observa
Slide 98: RMBS and RABS Securities - February 28, 2009
Challenges • Unemployment continues to rise • Home values continue to fall • Illiquid non-agency RMBS market • Ratings turbulence • Regulatory/Political risk • $352 million market value, 10% of overall portfolio • High quality ratings profile, “AA+” average rating RMBS and RABS Securities - February
Slide 99: RMBS and RABS Observations
• Total Prime RMBS portfolio - “amortizing effect” • Received $56 million in principal paydowns in 2008 - 15% of portfolio • Averaging $14 million in principal paydowns per quarter • Prime Non-agency RMBS under pressure • Received $23 million in principal paydowns in 2008 - 17% of portfolio • $113 m
Slide 100: Alt-A RMBS Securities - February 28, 2009
Challenges • Refinancing risk • All Alt-A’s viewed negatively • Illiquid market • 2006 vintage issues • Rating downgrades • $41 million market value, 1% of total portfolio • “AA” average rating • Predominantly fixed-rate loans Alt-A RMBS Securities - February 28, 2009
Slide 101: Alt-A Observations
• Total Prime Alt-A portfolio • No Alt-A purchases after 3 rd quarter 2006 • Unrealized loss $38 million • Alt-A 2006 vintage: • $25 million, 60% of total Alt-A, 3% of stockholders equity • Average FICO score • Average loan-to-value (LTV) ratio 73% • Average market evaluation $42 • Unrealized loss $
Slide 102: CMBS Securities - February 28, 2009
Challenges • Corporate bankruptcies rising • Weak operating conditions • Declining property values • Refinancing risk • Subordinated classes • $209 million market value, 6% of overall portfolio • High quality ratings profile, Average rating “AAA” • Diversified portfolio CMBS Securities - February 28
Slide 103: CMBS Observations
• Actions taken in first quarter: • Sold $65 million • Purchased $23 million GNMA-backed project loans • Reduced exposure by 20% • $100 million reclassified to HTM • $11 million principal paydowns received in Q1 2009 • Received $18 million in principal paydowns in 2008 • $12 million in unrealized lo
Slide 104: Alternative Investments - December 31, 2008
Challenges • Global financial asset decline • Accounting = Earnings volatility • FAS 157 adding more volatility • Credit crisis = low M&A • Quarter lag in reporting NAVs • Illiquidity • $165 million market value, less than 5% of portfolio • Alternative investments outperformed S&P 500 by: • 2,700 bp
Slide 105: Alternative Investment Observations
• No new commitments planned • Private equity structure, no hedge fund exposure • $119 million unfunded commitment at 12/31/08 • Expect some reduction in unfunded commitment from a few general partners • Distribution and contributions have slowed significantly • Awaiting 12/31/08 net asset values Al
Slide 106: Equity Securities - February 28, 2009
Challenges • Current bear market • Extreme volatility • Decline corporate profits • Limited earnings visibility • Regulatory/political risk • $114 million market value, 3% of total portfolio • Equities outperformed S&P 500 for last nine years Equity Securities - February 28, 2009
Slide 107: Equity Observations
• Actions taken in the first quarter: • Further sales reduced gross equity exposure to approximately $90 million • Including the hedge, net equity exposure of approximately $50 million or only 1.4% of invested assets, 6% of stockholders equity Equity Observations
Slide 108: Investment Strategy for the Current Environment
Investment Strategy for the Current Environment
Slide 109: Selective's Investment Philosophy
Selective’s Investment Philosophy • Conservative buy & hold strategy • Fundamental analysis driven decision-making • Value-oriented investment style • Investing for the long-term • Confidence in the strength of our investment portfolio
Slide 110: Financial Highlights
Financial Highlights Dale Thatcher Executive Vice President Chief Financial Officer & Treasurer
Slide 111: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation
Slide 112: Market Valuation Impact on Book Value
Non-cash reductions in Book Value per share OTTI $(0.65) Fixed Income $(1.39) Equity $(1.21) Pension charge $(0.72) Total $(3.97) 2008 Market Valuation Impact on Book Value • Moved $1.9B of fixed income securities into HTM to lock-in gains and protect GAAP equity • Equity exposure reduced to $90M gr
Slide 113: First Quarter Update
First Quarter Update • Severe weather losses throughout our footprint generated property losses of approximately $17 million in excess of expected • Alternative investments have not yet reported 4 th quarter results • Commercial lines pure price down only 1.3% through February
Slide 114: Response is everything
Lew Dryfoos, Ill President, Dryfoos Insurance Agency, In ® seuctive Response is everthing
Slide 115: The Journey Continues with Sound Strategy
The Journey Continues with Sound Strategy Greg Murphy Chairman, President & CEO
Slide 116: Long Term Focus
Long Term Focus • Foundation of financial strength • Superior field model • Best in class agency relationships • Information rich to make better decisions
Selective Insurance Group — Investor Day (March 2009) on 6ix