Slide 1: Investor Presentation Quarter Ended September 30, 2022
INVESTOR PRESENTATION Quarter Ended September 30, 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 defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 1933, as amended, an
Slide 3: Overview
OVERVIEW SELECTIVE INSURANCE®
Slide 4: A Track Record of Superior Execution
A TRACK RECORD OF SUPERIOR EXECUTION An Eight-Year Track Record of Double-Digit Non-GAAP Operating ROEs* and Above Average Industry Growth 2021 Non-GAAP Operating ROE of 14.3%* 30 $5.6B 95+ $3.2B 92.8% State Footprint** Market Cap Years of Financial 2021 NPW 2021 GAAP (as of 11/11/2022) Strength and
Slide 5: Our Sustainable Competitive Advantages
OUR SUSTAINABLE COMPETITIVE ADVANTAGES Competitive Position Enhanced by Working Towards the Benefit of all our Stakeholders Distribution model Unique field model enabled Sophisticated tools for risk Superior omni-channel emphasizing franchise by sophisticated tools and selection, pricing, and custom
Slide 6: Summary of Our Operations
SUMMARY OF OUR OPERATIONS Commercial Lines Personal Lines Excess & Surplus (81% of NPW) (9% of NPW) (10% of NPW) • Focus on disciplined growth • Personal auto margins • Focus on achieving target under pressure, but price combined ratio; top-line • Strong calendar year increases to help will depend o
Slide 7: Super Regional Company with National Capabilities
SUPER REGIONAL COMPANY WITH NATIONAL CAPABILITIES Standard Commercial Standard Personal E&S (81% of NPW) (9% of NPW) (10% of NPW) 30 15 50 States & D.C. States 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 Historical Non-GAAP Operating ROEs* • 11.6% non-GAAP operating ROE* in first nine months of 2022 driven by: 15% Elevated CAT losses ̶ Solid underwriting profitability 10.3% 12.0% ̶ Manageable CAT losses 11.6% ̶ Strong investment contribution 10% 9.2% • Tra
Slide 9: Excellent Historical Operating Results
EXCELLENT HISTORICAL OPERATING RESULTS FIRST NINE MONTHS 2022 HIGHLIGHTS • GAAP combined ratio of 95.2% Historical GAAP Combined Ratios • NPW growth of 11% 100% COVID-19 impacts • After-tax net investment income of $167 million, and elevated CAT down 16% over prior year losses 95% 2022 GUIDANCE¹ 95.
Slide 10: Our Strategic Initiatives
OUR STRATEGIC INITIATIVES 10
Slide 11: Our Major Strategic Initiatives
OUR MAJOR STRATEGIC INITIATIVES LEVERAGE SOPHISTICATED CONTINUED EXCELLENT CULTURE FOCUSED ON TOOLS TO ACHIEVE PROFITABLE GROWTH CUSTOMER SERVICE INNOVATION AND ADEQUATE PRICING SUSTAINABILITY Deploy sophisticated underwriting Expanding “share of wallet” and Continue to deliver superior A culture of
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 Commercial Lines Pricing and Retention industry average from 2009-2018 SIGI Pricing CLIPS Pricing SIGI Retention • An attractively priced book with strong embedded 10.0% 88% profit
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 • Portfolio management approach yields higher retention and rate • Account-specific pricing, including: ̶ Predictive modeling ̶ Relative loss frequency and severity ̶ Pric
Slide 14: Targeting Profitable Growth Over Time
TARGETING PROFITABLE GROWTH OVER TIME Commercial Lines Growth Drivers Historical Net Premiums Written • Target of growing “share of wallet” to 12% LOWER $3.5B with existing distribution partners RISK • Target of appointments to represent 25% Managed Premium Volume share in existing markets During So
Slide 15: Initiatives Focused on Profitable Growth
INITIATIVES FOCUSED ON PROFITABLE GROWTH MarketMax® provides New small business our distribution partners agency interface with insights into their enhances opportunities portfolio and positions by significantly them to expand their streamlining quoting relationship with us and issuance process Shif
Slide 16: Greenfield Geo-Expansion Enhances Growth Opportunities
GREENFIELD GEO-EXPANSION ENHANCES GROWTH OPPORTUNITIES Diversification and spread of risk, with a target of having national capabilities 2017 – 2018 • Established West regional hub by entering AZ, CO, NM, and UT for commercial lines • NH for commercial lines • AZ and UT for personal lines • Growth a
Slide 17: Deliver a Superior Omni-Channel Experience
DELIVER A SUPERIOR OMNI-CHANNEL EXPERIENCE • Changing expectations from customers, and potential disruptive threats from traditional and VALUE-ADDED SERVICES non-traditional competitors SUCH AS SELECTIVE® DRIVE • Partnering with agents to provide a seamless customer experience “360-DEGREE” VIEW OF C
Slide 18: Developing Leadership in Environmental, Social, and Governance Disclosures
DEVELOPING LEADERSHIP IN ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURES Risk oversight and mitigation Capital allocation away from specific environmentally hazardous classes Understanding and Publication of our inaugural TCFD report Attempting to Mitigate Climate Change Risk Sustainability Commit
Slide 19: DE&I Initiatives to Drive Employee Engagement
DE&I INITIATIVES TO DRIVE EMPLOYEE ENGAGEMENT Promoting diversity, equity, and inclusion is a key facet of driving employee engagement and enhancing innovation and creativity Senior leadership business Increased Board diversity Building a leadership culture objectives tied to supporting and centered
Slide 20: Financial Overview
FINANCIAL OVERVIEW SELECTIV 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 AM Best conservative approach to: A+ ̶ Managing the investment portfolio ̶ Purchasing reinsurance protection S&P ̶ Loss reserving A Low to • Conservative business and balance sheet Medium pr
Slide 22: A Writer of Predominantly Low- to Medium-Hazard Risks
A WRITER OF PREDOMINANTLY LOW- TO MEDIUM- HAZARD RISKS • Manage volatility of underwriting Percent of Policies with TIV* or Property Casualty Limits of $1M or Less results, in part through maintaining a smaller limit profile Standard Commercial Lines 77% 86%** • Low account sizes (premium per policy
Slide 23: Conservative Investment Portfolio
CONSERVATIVE INVESTMENT PORTFOLIO • Core fixed income and short-term Investment Portfolio at 9/30/22 investments comprise 92% of the investment portfolio in 3Q22: ̶ “AA-” average credit quality ̶ Effective duration of 4.2 years Fixed Income 88% • Risk asset allocation (high yield, public equity, Sho
Slide 24: Active Portfolio Management Drives Investment Results
ACTIVE PORTFOLIO MANAGEMENT DRIVES INVESTMENT RESULTS • Rising interest rates helping new money Historical After-Tax Fixed Income Portfolio Yields reinvestment rates: 3.0% ̶ $2.3B of new money ‘put to work’ in fixed 3.0% 2.8% 2.9% income investments through Sept 30 2.6% 2.6% ̶ Pre-tax book yield on
Slide 25: Historical Catastrophe Loss Impact Below Industry Average
HISTORICAL CATASTROPHE LOSS IMPACT BELOW INDUSTRY AVERAGE Impact of Catastrophe Losses on Combined Ratio • Catastrophe loss impact over the past 20 years has averaged: 12 pts Elevated ̶ 5.2 percentage points for the P&C industry frequency of CAT losses ̶ 3.4 percentage points for Selective P&C Indus
Slide 26: Conservative Reinsurance Program
CONSERVATIVE REINSURANCE PROGRAM • 2022 property catastrophe treaty structure: Net Single-Event Hurricane Loss* as a % of Equity ̶ Coverage of $835M in excess of $40M 40% retention 34% ̶ $259M in collateralized limit, primarily in the 30% top layer of the program ̶ Additional earnings volatility pro
Slide 27: Strong Reserving Track Record
STRONG RESERVING TRACK RECORD • Disciplined reserving practices: Impact of Casualty Reserve Development on our Combined Ratio ̶ Quarterly actuarial reserve reviews ̶ Semi-annual independent review 4.0% ̶ Independent year-end opinion • Favorable reserve development in Workers Compensation, General Li
Slide 28: Strong Capital and Liquidity Position, Greater Focus on Expenses
STRONG CAPITAL AND LIQUIDITY POSITION, GREATER FOCUS ON EXPENSES CAPITAL AND LIQUIDITY PLAN EXPENSE MANAGEMENT • Debt-to-capital ratio of 17.2% • Expecting expense ratio improvement over the next few years • NPW to surplus ratio of ~1.45x is in the middle of our target range of 1.35x – 1.55x Areas f
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 $50 $3,000 with our long-term target $2,500 $40 $2,000 ($ in millions) $30 Superior growth in book value per share
Slide 30: Total Shareholder Returns Have Outperformed Benchmarks Over Longer Term
TOTAL SHAREHOLDER RETURNS HAVE OUTPERFORMED BENCHMARKS OVER LONGER TERM Total Shareholder Return SIGI S&P Prop/Cas S&P 500 • Solid long-term 30% outperformance in TSR relative to S&P 21.0% 20% 17.6% P&C insurance and 14.2% 12.3% S&P 500 indices 11.7% 10.1% 8.3% 9.2% 10% • Share price 0% performance
Slide 31: Our Value Proposition
OUR VALUE PROPOSITION Leveraging our competitive strengths to generate sustained financial outperformance 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