Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Investor Presentation (February 2024)
30 slides from Selective Insurance's investor presentation, Feb 9, 2024
Slide 1: Investor Presentation 1st Quarter 2024
1 INVESTOR PRESENTATION 1ST QUARTER 2024 Copyright © 2024 by Selective Insurance. All rights reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement We make certain statements and reference other information in this presentation that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a forward-looking statement safe harbor under the Securities Ac
Slide 3: Introduction
INTRODUCTION 3
Slide 4: Our role in rebuilding lives and businesses
4 Every day, our interactions with our customers and distribution partners reinforce the importance of our role in rebuilding lives and businesses, making communities safer, and supporting economic expansion.
Slide 5: A Leader in U.S. Property & Casualty Insurance
A Leader in U.S. Property & Casualty Insurance 5*Based on 2022 net premiums written in AM Best’s annual list of “Top 200 U.S. Property/Casualty Writers” NASDAQ: SIGI (common stock) NASDAQ: SIGIP (preferred) Investor.Relations@Selective.com Superior track record driven by disciplined execution 10 con
Slide 6: Sustainable Competitive Advantages
Sustainable Competitive Advantages 6 Our success is based on a unique combination of competitive advantages. Taken together, they create a winning formula for Selective. Our unique field model, placing empowered underwriting staff in proximity to our distribution partners and customers Our ability t
Slide 7: Differentiated Operating Model
Differentiated Operating Model 7 2023 Net Premiums Written $4 Billion • Approximately 1,550 distribution partners selling our standard lines products and services through approximately 2,650 office locations • ~850 of these distribution partners sell our personal lines products • ~90 wholesale agent
Slide 8: Ten Consecutive Years of Double-Digit Non-GAAP Operating ROEs
Ten Consecutive Years of Double-Digit Non-GAAP Operating ROEs* 8 Consistently generating ROEs exceeding our cost of capital and peer group average 100 basis points of combined ratio translates to ~120 basis points of ROE** 100 basis points of pre-tax investment yield translates to ~260 basis points
Slide 9: Excellent Operating Results with Low Historical Volatility
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 92%94%96%98%100%102%104% 10 -Y ea r N PW C AG R 10-Year Average Combined Ratio Excellent Operating Results with Low Historical Volatility 9 NPW CAGR vs. Average Combined Ratio Note: White dots represent P&C peers: CINF, CNA, HIG, THG, TRV, and UFCS; 10-year avg based on
Slide 10: Track Record of Disciplined, Profitable Growth
Track Record of Disciplined, Profitable Growth 10 $4.1 $- $1 $2 $3 $4 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 N PW ($ in b ill io ns ) $5.89 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 *Compound annual growth rate Net Premiums Written Oper
Slide 11: Path for Profitable Growth
Path for Profitable Growth 11 *Subject to regulatory approval • Targeting 3% market share in existing footprint over the long-term • 12% share of wallet target with existing distribution partners • 25% agent market share target in existing markets • Additional long-term premium opportunity of ~$3 bi
Slide 12: 2024 Guidance
2024 Guidance 12 *As of February 1, 2024 95.5% GAAP combined ratio • 5.0 points of catastrophe losses • No prior accident year reserve development After-tax net investment income of $360 million • Including $32 million of after-tax income from alternative investments Overall effective tax rate of ap
Slide 13: Segment Performance
SEGMENT PERFORMANCE 13
Slide 14: Standard Commercial Lines
Standard Commercial Lines 14 • Account-based approach with granular data and sophisticated tools to support underwriting decisions • Focus on maintaining underwriting discipline and price adequacy • Targeting renewal pure price increases in line with expected loss trend • Underwriting actions focuse
Slide 15: Portfolio Approach Drives Business Mix Improvements
Portfolio Approach Drives Business Mix Improvements 15 • Portfolio management approach yields higher retention and rate • Account-specific pricing, including: • Predictive modeling • Relative loss frequency and severity • Pricing deviation • Hazard and segment considerations Strong focus on providin
Slide 16: Excess & Surplus Lines
16 Excess & Surplus Lines • Profitable and growing portfolio of commercial risks • Small and middle market focus with $4,600 average premium per policyholder • Modernized technology platform • Approximately 2/3 casualty and 1/3 property • ~90 wholesale general agents with limited binding authority w
Slide 17: Standard Personal Lines
17 • Strategic shift to mass affluent target market underway • Strong existing product set and servicing capabilities • Aggressive profit improvement plan driven by accelerated pricing and tighter terms and conditions • Expect pressure on policy counts in 2024 due to rate and underwriting actions St
Slide 18: Conservative Investment Portfolio
Conservative Investment Portfolio 18 • Maximize risk-adjusted after-tax income and generate long-term growth in book value • Objectives balanced against prevailing market conditions and enterprise risk-taking capacity • Consistent strategy and risk appetite focused on increasing book yield as intere
Slide 19: Financial Overview
FINANCIAL OVERVIEW SELECTIVE INSURANCE®
Slide 20: Enterprise Risk Management
Enterprise Risk Management 20 7% 4% 0% 10% 2023 2024 1-in-250 Probable Maximum Loss* as a % of GAAP Equity • Predominantly write low to medium hazard risks • Strong balance sheet and underwriting controls with prudent reserving practices • Catastrophe loss mitigation initiatives include: • Exposure
Slide 21: Prudent Reinsurance Structure
Prudent Reinsurance Structure 21 • 2024 property catastrophe treaty highlights: • $1.1B in excess of $100M retention • $417.5M in collateralized limit, all in the top layer of the program • 1-in-250 PML = 4% of GAAP equity • Property excess of loss treaty covers losses up to $65M in excess of $5M re
Slide 22: Quarterly Reserve Review
Quarterly Reserve Review Strong reserve discipline facilitated by in- depth quarterly reserve reviews, semi-annual independent reviews, and independent year- end opinion 22 Disciplined Financial Planning and Reserving Practices Detailed Planning Process Detailed ground up premium, expense, and loss
Slide 23: Favorable Casualty Reserve Development
Favorable Casualty Reserve Development Consistent Process and Strong Reserving Track Record 23 • In 2023, reported modest net favorable prior year casualty reserve development • Favorable prior year casualty development in Workers Compensation, largely offset by unfavorable prior year casualty reser
Slide 24: Strong Capital Position
Strong Capital Position 24 • Instituted $100 million share repurchase authorization in 2020 ̶ $84 million remained as of Dec 31, 2023 S&P: A Moody’s: A2Fitch: A+AM Best: A+ Financial Strength Ratings • Generated $759 million of operating cash flow in 2023 • Investing in organic growth is currently t
Slide 25: Balancing Expense Discipline with Strategic Investments
Balancing Expense Discipline with Strategic Investments • Expect our 2024 expense ratio to be relatively stable compared to 2023 • Recent and current strategic investments include: • New platforms for Small Business and E&S • Claim system modernization • Geographic expansion • Customer experience •
Slide 26: Strong Track Record of Book Value per Share Growth
$22.54 $45.42 $0 $10 $20 $30 $40 $50 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2023 Strong Track Record of Book Value per Share Growth Focus on ROE and Growth in Book Value Per Share* 26*Book value per share decreased 17% for 2022 compared to 2021 primarily due to increased net unrealized losses
Slide 27: Long-Term Total Shareholder Return
-3.2% 13.7% 11.8% 15.6% 11.8% 10.8% 15.7% 13.5% 11.7% 26.3% 15.7% 12.0% -5% 0% 5% 10% 15% 20% 25% 30% SIGI S&P Prop/Cas S&P 500 Long-Term Total Shareholder Return 27Note: Total shareholder return calculations are as of December 31, 2023 1 Year 5 Years 10 Years4Q 2023
Slide 28: Progress Through Impact
PROGRESS THROUGH IMPACT SELECTIVE INSURANCE®
Slide 29: Our Approach to Sustainability
Our Approach to Sustainability 29 Our primary objectives are to: • Help our customers put their lives and businesses back together after experiencing a covered loss • Help make our customers and communities safer • Support economic growth by providing capital that protects against covered losses and
Slide 30: 1st Quarter 2024
30 INVESTOR PRESENTATION 1ST QUARTER 2024 Copyright © 2024 by Selective Insurance. All rights reserved.
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