Selective Insurance Group, Inc. · NASDAQ:SIGI
Selective Insurance — Q3 2024 Earnings Presentation
30 slides from Selective Insurance's earnings presentation, Oct 22, 2024
Slide 1: Investor Presentation Third Quarter 2024
Exhibit 99.3 INVESTOR PRESENTATION Third 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
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. 4
Slide 5: A Leader in U.S. Property & Casualty Insurance
A Leader in U.S. Property & Casualty Insurance Superior track record driven by disciplined execution 10 consecutive years of double-digit Operating Return on Equity A+ (Superior) rating by A.M. Best $4.1 billion of net premiums written in 2023 34th largest P&C carrier in the United Stated States* Cl
Slide 6: Sustainable Competitive Advantages
Sustainable Competitive Advantages Our unique Our ability to Our franchise Our commitment Our highly field model, develop and value to delivering engaged and placing integrate distribution a superior aligned team empowered sophisticated model, defined omni-channel of skilled and underwriting tools f
Slide 7: Differentiated Operating Model
Differentiated Operating Model 2023 Net Premiums Written • Locally based underwriting, claims, and Unique, locally based field model safety management specialists 11% • Proven ability to develop and integrate Excess and actionable tools Surplus Lines • Enables effective portfolio management in an un
Slide 8: Ten Consecutive Years of Double-Digit Non-GAAP Operating ROEs
Ten Consecutive Years of Double-Digit Non-GAAP Operating ROEs Non-GAAP Operating ROE 14.4% SIGI 15% Peer Avg. 10% 5% 4.8% 12.2% average from 2014 0% to 2023 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 9M24 Note: Peer Average includes CINF, CNA, HIG, THG, TRV, and UFCS; Peer 9M24 based off 1H24
Slide 9: Excellent Operating Results with Low Historical Volatility
Excellent Operating Results with Low Historical Volatility NPW CAGR vs. Average Combined Ratio Combined Ratio (Average & Volatility) 10% 105% SIGI 9% 8% 10-Year Average Combined Ratio 7% Industry 10-Year NPW CAGR Industry 100% 6% 5% 4% 95% 3% 2% SIGI 1% 0% 90% 104% 102% 100% 98% 96% 94% 92% 0 2 4 6
Slide 10: Track Record of Disciplined, Profitable Growth
Track Record of Disciplined, Profitable Growth Net Premiums Written Operating Earnings per Share $4.1 $7.00 $5.89 12% CAGR* 9% CAGR* $6.00 $4 $5.00 $3 $4.00 NPW ($ in billions) $3.00 $2 $2.00 $1 $1.00 $- $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 2015 2016 2017 2018 2019 2020 2021 202
Slide 11: Path for Profitable Growth
Path for Profitable Growth Standard Commercial Lines Excess and Surplus Lines • Targeting 3% market share in existing footprint over the long-term • Opportunistic, profitable growth • 12% share of wallet target with existing distribution partners strategy • 25% agent market share target in existing
Slide 12: 2024 Guidance
2024 Guidance • 7.5 points of catastrophe losses 102.5% GAAP • Assumes no additional prior year casualty reserve development combined ratio • Although too early to provide a specific estimate, we expect losses from Hurricane Milton, which made landfall on October 9, 2024, to be immaterial. After-tax
Slide 13: Segment Performance
SEGMENT PERFORMANCE 13
Slide 14: Standard Commercial Lines
Standard Commercial Lines 79% of Net Premiums Written (“NPW”) • 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 tr
Slide 15: Portfolio Approach Drives Business Mix Improvements
Portfolio Approach Drives Business Mix Improvements Standard Commercial Lines Pricing by Retention Group • Portfolio management approach yields Renewal Pure Price Point of Renewal Retention higher retention and rate • Account-specific pricing, including: Point of Renewal Retention 16% 95% • Predicti
Slide 16: Excess & Surplus Lines
Excess & Surplus Lines 11% of Net Premiums Written • 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 li
Slide 17: Standard Personal Lines
Standard Personal Lines 10% of Net Premiums Written • 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 count
Slide 18: Conservative Investment Portfolio
Conservative Investment Portfolio Investment Long-term investment philosophy and focus on managing risk Portfolio at Fixed Income • Maximize risk-adjusted after-tax income and generate long-term growth in book value 9/30/24 87% • Objectives balanced against prevailing market conditions and enterpris
Slide 19: Financial Overview
FINANCIAL OVERVIEW SELECTIVE INSURANCE®
Slide 20: Enterprise Risk Management and Catastrophe Losses
Enterprise Risk Management 1-in-250 Probable Maximum Average premium per Loss* as a % of GAAP Equity policyholder: • Predominantly write low to medium hazard risks • Strong balance sheet and underwriting controls with prudent reserving practices 10% 7% Standard Commercial $17K • Catastrophe loss mit
Slide 21: Prudent Reinsurance Structure
Prudent Reinsurance Structure 2024 Property Catastrophe Program • 2024 property catastrophe treaty highlights: $500M in excess of $700M 100% • $1.1B in excess of $100M retention 65% covered through Catastrophe Bond Placed (3-year risk period) • $417.5M in collateralized limit, all in the top layer o
Slide 22: Disciplined Financial Planning and Reserving Practices
Quarterly Reserve Review Strong reserve discipline facilitated by in- depth quarterly reserve reviews, semi-annual independent reviews, and independent year- end opinion Detailed Planning Process Detailed ground up premium, expense, and loss planning, with monthly forecasts Disciplined Financial Pla
Slide 23: Prior Years Development as % of PY Carried Reserves
1-Year Reserve Development (% of Prior Carried Reserve)* 25% Prior Years Development as % of PY Carried Reserves Selective has exhibited less 20% reserve development volatility than peers and the 15% industry 10% 2024 reserving actions 5% 0% -5% -10% -15% -20% Selective Peer 1 Peer 2 Peer 3 Peer 4 P
Slide 24: Strong Capital Position
Strong Capital Position • Generated $768 • NPW-to-Surplus ratio of • Target 20-25% dividend • Instituted $100 million million of operating 1.63x at September 30, 2024 payout ratio over time share repurchase cash flow in the first authorization in 2020 nine months of 2024, • Investing in organic ̶ Qu
Slide 25: Balancing Expense Discipline with Strategic Investments
Balancing Expense Discipline with Strategic Investments 36% • Expect the expense ratio to finish the year 35% about one point better than full year 2023. 34% • Recent and current strategic investments 33.0% include: 33% • New platforms for Small Business and E&S 32% • Claim system modernization 31%
Slide 26: Focus on ROE and Growth in Book Value Per Share
Focus on ROE and Growth in Book Value Per Share* $48.82 $50 Book Value per Share $40 $30 $22.54 $20 $10 $0 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2023 9M24 Generating non-GAAP Expected higher operating ROE** in line Superior growth in total shareholder with our long-term target book value per
Slide 27: Long-Term Total Shareholder Return
Long-Term Total Shareholder Return SIGI S&P Prop/Cas S&P 500 60% 56.3% 50% 40.0% 40% 36.2% 30% 22.1% 20% 16.7% 17.8% 17.2% 17.2% 16.0% 13.4% 10% 5.9% 5.9% 0% -0.2% -10% -5.2% -8.2% -20% 3Q 2024 YTD 1 Year 5 Years 10 Years Note: Total shareholder return calculations are as of September 30, 2024 27
Slide 28: Progress Through Impact
PROGRESS THROUGH IMPACT SELECTIVE INSURANCE?
Slide 29: Our Approach to Sustainability
Our Approach to Sustainability Our primary objectives are to: Key sustainability accomplishments: • Help our customers put their lives and businesses • Achieved an “AA” rating from MSCI back together after experiencing a covered loss • Completed a solar facility at corporate • Help make our customer
Slide 30: Investor Presentation Third Quarter 2024
INVESTOR PRESENTATION Third Quarter 2024 Copyright © 2024 by Selective Insurance. All rights reserved.
Selective Insurance Group — Q3 2024 Earnings Presentation on 6ix