Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Investor Presentation (June 2022)
31 slides from Selective Insurance's investor presentation, Jun 13, 2022
Slide 1: Investor Presentation Quarter Ended March 31, 2022
INVESTOR PRESENTATION Quarter Ended March 31, 2022
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT In this presentation, we make certain statements and reference other information that are “forward - looking statements” as define d in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 193 3, as amended
Slide 3: Overview
OVERVIEW SELECTIVE INSURANCES®
Slide 4: A Track Record of Superior Execution
4 2021 Non - GAAP Operating ROE of 14.3%* State Footprint ** 28 Market Cap (as of 6 /2 /2022 ) $4.9B Years of Financial Strength and Superior Execution 95+ 2021 NPW ( up 15% Y/Y ) $3.2B 2021 GAAP Combined Ratio 92.8% A TRACK RECORD OF SUPERIOR EXECUTION An Eight - Year Track Record of Double - Digit
Slide 5: Our Sustainable Competitive Advantages
OUR SUSTAINABLE COMPETITIVE ADVANTAGES Competitive Position Enhanced by Working Towards the Benefit of all our Stakeholders • Appointment of high - quality independent agent distribution partners with whom we have close relationships • Enables effective management of pricing and retention • Presents
Slide 6: Summary of Our Operations
SUMMARY OF OUR OPERATIONS • Focus on disciplined growth • Strong calendar year profitability; Commercial Auto remains an area of focus • Strong new business growth, higher retention, solid renewal pure price increases, and exposure growth • Greater prospective loss trend uncertainty • Competitive dy
Slide 7: Super Regional Company with National Capabilities
SUPER REGIONAL COMPANY WITH NATIONAL CAPABILITIES Standard Commercial (81% of NPW) Standard Personal (9% of NPW) E&S (10% of NPW) 28 States & D.C. 15 States 50 States & D.C. Note: NPW as of year - end 2021 7
Slide 8: Strong ROE Outperformance Relative to Peers
STRONG ROE OUTPERFORMANCE RELATIVE TO PEERS • Solid 12.8% non - GAAP operating ROE* in 1Q 2022 driven by: ̶ Solid underwriting profitability ̶ Manageable CAT losses ̶ Strong investment contribution • Track record of generating ROEs well in excess of our cost of capital and peer group averages 10.3%
Slide 9: Excellent Historical Operating Results
EXCELLENT HISTORICAL OPERATING RESULTS • Consolidated combined ratio of 92.8% • NPW growth of 15% (11% excluding specific 2020 COVID - 19 - related impacts) • After - tax net investment income up 42% over prior year 95.2% 90.1% 91.0% 85% 90% 95% 100% 2014 2015 2016 2017 2018 2019 2020 2021 2022F Und
Slide 10: Our Strategic Initiatives
OUR STRATEGIC INITIATIVES 10
Slide 11: Our Major Strategic Initiatives
OUR MAJOR STRATEGIC INITIATIVES Deploy sophisticated underwriting and pricing tools to achieve price increases ≥ loss trends Expanding “share of wallet” and new agent appointments; geo - expansion Continue to deliver superior omni - channel customer experience CONTINUED PROFITABLE GROWTH LEVERAGE SO
Slide 12: Consistently Achieving Price Increases in Alignment with Loss Trend
CONSISTENTLY ACHIEVING PRICE INCREASES IN ALIGNMENT WITH LOSS TREND • Selective’s renewal pure price increases exceeded industry average from 2009 - 2018 • An attractively priced book with strong embedded profitability • Ability to obtain appropriate price enabled by: ̶ Strong distribution partner r
Slide 13: Portfolio Approach to Pricing and Underwriting Helps Drive Business Mix Improvements
PORTFOLIO APPROACH TO PRICING AND UNDERWRITING HELPS DRIVE BUSINESS MIX IMPROVEMENTS Commercial Lines Pricing by Retention Group % of Premium As of March 31, 2022 May not foot due to rounding. Strong focus on developing tools and technologies that enable more effective decision making • Portfolio ma
Slide 14: Targeting Profitable Growth Over Time
TARGETING PROFITABLE GROWTH OVER TIME Historical Net Premiums Written • Target of growing “share of wallet” to 12% with existing distribution partners • Target of appointments to represent 25% share in existing markets • Geo - expansion • New products and M&A Additional NPW opportunity of about $3B
Slide 15: Initiatives Focused on Profitable Growth
INITIATIVES FOCUSED ON PROFITABLE GROWTH Shifting Personal Lines focus towards “mass affluent” market, where we believe we can be more competitive with our strong coverage and servicing capabilities MarketMax ® provides our distribution partners with insights into their portfolio and positions them
Slide 16: Greenfield Geo-Expansion Enhances Growth Opportunities
Diversification and spread of risk, with a target of having national capabilities GREENFIELD GEO - EXPANSION ENHANCES GROWTH OPPORTUNITIES A disciplined approach to geo - expansion Footprint States Targeted Expansion States for 2022 2017 – 2018 • Established new Southwest regional hub by entering AZ
Slide 17: Deliver a Superior Omni-Channel Experience
Customer - centricity is core to who we are as a company DELIVER A SUPERIOR OMNI - CHANNEL EXPERIENCE “360 - DEGREE” VIEW OF CUSTOMER PROACTIVE MESSAGING VALUE - ADDED SERVICES SUCH AS SELECTIVE ® DRIVE FULL DIGITAL - ENABLED CAPABILITIES OMNI - CHANNEL CX IN 24/7 ENVIRONMENT • Changing expectations
Slide 18: Developing Leadership in Environmental, Social, and Governance Disclosures
DEVELOPING LEADERSHIP IN ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURES A Culture of Strong Governance and Transparency Understanding and Attempting to Mitigate Climate Change Risk Providing Customers with Empathetic Claims Services and Risk Mitigation Solutions Building a Highly Engaged Team of
Slide 19: DE&I Initiatives to Drive Employee Engagement
DE&I INITIATIVES TO DRIVE EMPLOYEE ENGAGEMENT Increased Board diversity Building a leadership culture centered around inclusivity, including appointing a dedicated DE&I leader Employee hiring, retention, evaluation, and promotion practices targeted towards increasing diversity across all levels with
Slide 20: Financial Overview
FINANCIAL OVERVIEW SELECTIVE 20 INSURANCE®
Slide 21: Lower Risk Profile and Strong Financial Strength
LOWER RISK PROFILE AND STRONG FINANCIAL STRENGTH A LOWER RISK PROFILE • Strong balance sheet underpinned by a conservative approach to: ̶ Managing the investment portfolio ̶ Purchasing reinsurance protection ̶ Loss reserving • Conservative business and balance sheet profile allows for higher operati
Slide 22: A Writer of Predominantly Low- to Medium-Hazard Risks
A WRITER OF PREDOMINANTLY LOW - TO MEDIUM - HAZARD RISKS A lower volatility portfolio of risks Percent of Policies with TIV* or Limits of $1M or Less Property Casualty Standard Commercial Lines 77% 86%** Standard Personal Lines 81% 98% E&S Lines 96% 98% Notes: Figures as of December 31, 2021 * TIV r
Slide 23: Conservative Investment Portfolio
Fixed Income 86% Short-Term 3% Equities 5% Alternatives & Other 6% CONSERVATIVE INVESTMENT PORTFOLIO Investment Portfolio at 3/31/22 $7.8B of Investments • Core fixed income and short - term investments comprise 89% of the investment portfolio in 1Q22: ̶ “A+” average credit quality ̶ Effective durat
Slide 24: Active Portfolio Management Drives Investment Results
ACTIVE PORTFOLIO MANAGEMENT DRIVES INVESTMENT RESULTS • Updated guidance¹ of after - tax net investment income of $205M in 2022: ̶ $15M of after - tax net investment income from our alternative investments ̶ Rising interest rates helping new money reinvestment rates 2.2% 1.9% 1.9% 2.1% 2.8% 2.9% 2.6
Slide 25: Historical Catastrophe Loss Impact Below Industry Average
Relatively low historical combined ratio volatility from catastrophe losses HISTORICAL CATASTROPHE LOSS IMPACT BELOW INDUSTRY AVERAGE Impact of Catastrophe Losses on Combined Ratio Note: Catastrophe impact for P&C industry based on AM Best estimates • Catastrophe loss impact over the past 20 years h
Slide 26: Conservative Reinsurance Program
Balance sheet protection through conservative program and strong panel of reinsurance partners CONSERVATIVE REINSURANCE PROGRAM 1% 1% 1% 2% 2% 4% 15% 0% 6% 12% 18% 25 50 100 150 200 250 500 (Return Period in Years) Net Single - Event Hurricane Loss* as a % of Equity * Single event hurricane losses a
Slide 27: Strong Reserving Track Record
Sixteen consecutive years of net favorable casualty reserve development STRONG RESERVING TRACK RECORD • Disciplined reserving practices: ̶ Quarterly actuarial reserve reviews ̶ Semi - annual independent review ̶ Independent year - end opinion • Favorable reserve development in Workers Compensation a
Slide 28: Strong Capital and Liquidity Position, Greater Focus on Expenses
28 • Expecting expense ratio improvement over the next few years Areas for operational enhancements include: • Workflow and process improvements • Robotics and artificial intelligence • Talent development • Product innovation STRONG CAPITAL AND LIQUIDITY POSITION, GREATER FOCUS ON EXPENSES EXPENSE M
Slide 29: A Focus on ROE and Growth in Book Value per Share
A FOCUS ON ROE AND GROWTH IN BOOK VALUE PER SHARE Strong Track Record of Book Value per Share Growth and Shareholder Value Creation Over Time Generating non - GAAP operating ROE* in line with our long - term target Superior growth in book value per share Expected higher total shareholder returns ove
Slide 30: Total Shareholder Returns Have Outperformed Benchmarks Over Longer Term
30 TOTAL SHAREHOLDER RETURNS HAVE OUTPERFORMED BENCHMARKS OVER LONGER TERM Total Shareholder Return • Solid long - term outperformance in TSR relative to S&P P&C insurance and S&P 500 indices • Share price performance has reflected our ability to generate strong and consistent financial results Our
Slide 31: Our Value Proposition
OUR VALUE PROPOSITION A distribution model that emphasizes franchise value, meaning we focus on appointing high - quality independent distribution partners with whom we have meaningful and close business relationships Unique field model enabled by sophisticated technology Strong customer experience
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