Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Investor Presentation (November 2008)
21 slides from Selective Insurance's investor presentation, Nov 10, 2008
Slide 1: Selective Insurance Group, Inc. Investor Presentation November 2008
Selective Insurance Group, Inc. Investor Presentation November 2008
Slide 2: Selective Profile
MN IA MO WI IL IN MI MI NC PA NY CT MA TN Selective Profile • Strong market position – 22-state super-regional – $1.6B NPW • 87% commercial lines • 13% personal lines • Distribution partner with 940 independent agents • High-Tech, High-Touch Business Model • History of financial strength – “A+” A.M.
Slide 3: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation Book Value at 9/30/08 - $18.53 Indicated Annual Dividend - $0.52
Slide 4: High Tech - High Touch Business Model Significant Competitive Advantage
High Tech - - High Touch Business Model Significant Competitive Advantage
Slide 5: High Tech - High Touch Business Model Significant Competitive Advantage
High Tech - - High Touch Business Model Significant Competitive Advantage *Agents with Selective for 5 years or more.
Slide 6: Disciplined Reserving Practices
Disciplined Reserving Practices • Strong actuarial department – 8 fellows, 7 associates – Responsible for budgeting and planning • Detailed actuarial reviews quarterly • Carried reserves at 57 th percentile of range
Slide 7: Strong Natural Catastrophe Program
CAT cover: $310M in excess of $40M Strong Natural Catastrophe Program Percentages are net of tax, reinsurance and reinstatement premium. RMS data as of 6/30/08; Equity data as of 9/30/08. RMS Model
Slide 8: High Quality Capital
13% 5-year CAGR in statutory surplus High Quality Capital
Slide 9: Conservative Investment Portfolio
12% ROE generated by investment portfolio Conservative Investment Portfolio $3.6B Invested Assets as of September 30, 2008
Slide 10: Proactive Capital Management
YTD 2008 1.8M shares repurchased for $40.5M Proactive Capital Management 18.9% 26.0% 82.8% Annual Earnings ($ in Millions) Dividends paid Share Repurchase Capital Returned to Shareholders 116.0% 25.2%
Slide 11: Cycle Management
Cycle Management
Slide 12: Industry Conditions Challenging
Environment conducive to a cycle turn Industry Conditions Challenging • Combined ratio pressure – Pricing continues to decline but at lesser pace than past cycles – Catastrophe losses up significantly from 2007 – Reserve releases continue • Challenging growth environment – Expense ratio pressure • A
Slide 13: Responding to Current Industry Conditions
Positioned for long-term out-performance Responding to Current Industry Conditions • Expense management • Underwriting tools through Knowledge Management • Improving personal lines • Generating profitable growth opportunities • Leveraging agency relationships
Slide 14: Managing Expenses through Cycle
Managing Expenses through Cycle • Workforce reduced – Restructuring announced in January 2008 with $7 million annualized pre-tax savings • Commission structure changes effective July 1 – $7 million annualized pre-tax savings • Re-domestication of two insurance subsidiaries to Indiana – $2 million an
Slide 15: Knowledge Management
Knowledge Management • Information and analytics delivered through Knowledge Management • Pricing precision through predictive modeling – Commercial lines models: workers compensation, BOP, CPP and commercial auto – MATRIX ® for personal lines: auto and homeowners
Slide 16: The Power of Predictive Modeling
Operating Return on Equity % C/L Book New (%) Renewal (%) Total (%) Worst 5% (1 Diamond) (18.6) (43.3) (38.7) Best 95% 11.5 16.9 15.6 Total Commercial 10.6 14.5 13.6 The Power of Predictive Modeling • Commercial lines business performance
Slide 17: Quality of New Business
Quality of New Business Percent of Total Premium Diamond Distribution* WC, BOP, CPP, CA
Slide 18: Workers Compensation Success
Workers Compensation Success Year, 7 point combined ratio improvement goal achieved Note: Booked accident year combined ratios 7.8 points
Slide 19: Multi-Faceted Personal Lines Improvement Plan
Multi-Faceted Personal Lines Improvement Plan
Slide 20: Profitable Growth Opportunities
Profitable Growth Opportunities • Entered MA and TN: $8.5 billion commercial lines premium potential • One & Done ® small business opportunities – 400+ classes and growing – New business up 11% for 2008 YTD • 289 new agents appointed since 2005
Slide 21: Leveraging Excellent Agent Relationships
Leveraging Excellent Agent Relationships • Field model with front-line decision-making authority • Superior claims service • Access to management team • Competitive products and programs through Strategic Business Units • Technology designed in partnership with agents • Granular pricing capability t
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