EXHIBIT 99.2

 

 

 

Supplemental Investor Package ________________________________________________   Third Quarter 2016                       Investor Contact: Rohan Pai Tel: 973-948-1364 Rohan.Pai@Selective.com

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Balance Sheet Data

(unaudited)

 

		September 30,												September 30,												December 31,
($ in thousands, except per share data)		2016												2015												2015
										Unrecognized/												Unrecognized/												Unrecognized/
		Balance				Market				Unrealized				Balance				Market				Unrealized				Balance				Market				Unrealized
		Sheet				Value				Gain				Sheet				Value				Gain				Sheet				Value				Gain
Invested Assets:
Corporate bonds 1		$	3,312,160				3,314,526				77,917			$	2,901,352				2,904,449				37,945			$	2,955,001				2,957,427				8,276
Government and Municipal bonds			1,650,844				1,654,100				78,164				1,679,563				1,686,985				50,263				1,654,556				1,660,320				55,901
Total fixed income securities			4,963,004				4,968,626				156,081				4,580,915				4,591,434				88,208				4,609,557				4,617,747				64,177
Equities			147,304				147,304				24,323				221,951				221,951				1,131				207,051				207,051				13,235
Short-term investments			169,604				169,604				-				125,855				125,855				-				194,819				194,819				-
Other investments			88,512				88,512				-				85,146				85,146				-				77,842				77,842				-
Total invested assets		$	5,368,424				5,374,046				180,404			$	5,013,867				5,024,386				89,339			$	5,089,269				5,097,459				77,412
Invested assets per $ of stockholders' equity			3.41												3.69												3.64
Total assets			7,363,233												6,891,877												6,904,433
Liabilities:
Reserve for loss and loss expenses			3,686,586												3,517,751												3,517,728
Unearned premium reserve			1,306,255												1,218,884												1,169,710
Total liabilities			5,788,329												5,532,855												5,506,392
Stockholders' equity			1,574,904												1,359,022												1,398,041
Total debt to capitalization ratio			21.2	%											22.2	%											21.7	%
Book value per share			27.22												23.77												24.37
Book value per share excluding
unrealized gain or loss on fixed income portfolio			25.53												22.88												23.74
NPW per insurance segment employee			1,021												958												979
Statutory premiums to surplus ratio			1.4	x											1.5	x											1.5	x
Statutory surplus			1,551,227												1,367,343												1,426,320

 

¹ Includes mortgage-backed and asset-backed securities.

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Income Statement Data

(unaudited)

 

			Quarter Ended September 30,																Year-to-Date September 30,
($ in thousands, except per share amounts)			2016								2015								2016								2015
							Per diluted share								Per diluted share								Per diluted share								Per diluted share
Consolidated
Revenue			$	581,691							$	540,457							$	1,701,912							$	1,586,322
Operating income				36,104				0.62				46,796				0.81				117,348				2.00				110,221				1.90
Net realized gains, after tax				2,398				0.04				200				-				1,787				0.03				10,251				0.18
Net income				38,502				0.66				46,996				0.81				119,135				2.03				120,472				2.08
Return on equity				9.8	%							14.1	%							10.7	%							12.2	%
Operating return on equity				9.2	%							14.0	%							10.5	%							11.2	%
Total Insurance Operations
Gross premiums written				677,488								637,528								2,003,736								1,868,760
Net premiums written				578,773								545,025								1,722,272								1,595,246
Net premiums earned				542,429								507,390								1,596,819								1,473,822
Underwriting gain	- before tax			32,033								44,831								116,765								99,976
	- after tax			20,821				0.35				29,140				0.50				75,897				1.29				64,984				1.12
GAAP combined ratio				94.1	%							91.2	%							92.7	%							93.2	%
Standard Commercial Lines
Net premiums earned				421,586								389,542								1,235,752								1,132,280
GAAP combined ratio				92.9	%							88.7	%							91.8	%							90.3	%
Standard Personal Lines
Net premiums earned				68,690								72,088								209,719								216,638
GAAP combined ratio				93.8	%							96.1	%							90.9	%							102.0	%
Excess and Surplus Lines
Net premiums earned				52,153								45,760								151,348								124,904
GAAP combined ratio				104.5	%							104.4	%							102.3	%							104.0	%
Investments
Net investment income	- before tax			33,375								32,061								95,326								91,208
	- after tax			24,913				0.42				24,555				0.42				71,998				1.23				70,542				1.22
Effective tax rate				25.4	%							23.4	%							24.5	%							22.7	%
Annualized after-tax yield on investment portfolio																				1.8	%							1.9	%
Annualized after-tax, after-interest expense yield																				1.6	%							1.6	%
Invested assets per $ of stockholders' equity																				3.41								3.69
Other expenses (net of other income)
Interest expense	- before tax			(5,714	)							(5,610	)							(16,940	)							(16,826	)
	- after tax			(3,714	)			(0.06	)			(3,646	)			(0.06	)			(11,011	)			(0.19	)			(10,937	)			(0.18	)
Other expense - after tax			$	(5,916	)			(0.09	)		$	(3,253	)			(0.05	)		$	(19,536	)			(0.33	)		$	(14,368	)			(0.26	)
Diluted weighted avg shares outstanding				58,731								57,984								58,612								57,838

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

 

Third Quarter
($ in thousands)		Quarter Ended September 30, 2016																Quarter Ended September 30, 2015
		Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total				Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total
Net Premiums Written		$	449,544				76,225				53,004				578,773			$	414,031				76,927				54,067				545,025
Net Premiums Earned			421,586				68,690				52,153				542,429				389,542				72,088				45,760				507,390
Loss and Loss Expense Incurred			238,215				41,582				36,461				316,258				203,621				49,588				31,952				285,161
Net Underwriting Expenses Incurred			152,706				22,837				18,054				193,597				139,973				19,674				15,830				175,477
Dividends to Policyholders			541				-				-				541				1,921				-				-				1,921
GAAP Underwriting Gain (Loss)		$	30,124				4,271				(2,362	)			32,033			$	44,027				2,826				(2,022	)			44,831
GAAP Ratios
Loss and Loss Expense Ratio			56.5	%			60.5	%			69.9	%			58.3	%			52.3	%			68.8	%			69.8	%			56.2	%
Underwriting Expense Ratio			36.3	%			33.3	%			34.6	%			35.7	%			35.9	%			27.3	%			34.6	%			34.6	%
Dividends to Policyholders Ratio			0.1	%			0.0	%			0.0	%			0.1	%			0.5	%			0.0	%			0.0	%			0.4	%
Combined Ratio			92.9	%			93.8	%			104.5	%			94.1	%			88.7	%			96.1	%			104.4	%			91.2	%

 

 

Year-to-Date
($ in thousands)		Year-to-Date September 30, 2016																Year-to-Date September 30, 2015
		Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total				Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total
Net Premiums Written		$	1,353,615				213,770				154,887				1,722,272			$	1,240,110				217,937				137,199				1,595,246
Net Premiums Earned			1,235,752				209,719				151,348				1,596,819				1,132,280				216,638				124,904				1,473,822
Loss and Loss Expense Incurred			683,183				123,489				105,209				911,881				619,857				156,490				85,374				861,721
Net Underwriting Expenses Incurred			447,528				67,229				49,604				564,361				397,829				64,443				44,563				506,835
Dividends to Policyholders			3,812				-				-				3,812				5,290				-				-				5,290
GAAP Underwriting Gain (Loss)		$	101,229				19,001				(3,465	)			116,765			$	109,304				(4,295	)			(5,033	)			99,976
GAAP Ratios
Loss and Loss Expense Ratio			55.3	%			58.9	%			69.5	%			57.1	%			54.7	%			72.2	%			68.4	%			58.5	%
Underwriting Expense Ratio			36.2	%			32.0	%			32.8	%			35.4	%			35.1	%			29.8	%			35.6	%			34.3	%
Dividends to Policyholders Ratio			0.3	%			0.0	%			0.0	%			0.2	%			0.5	%			0.0	%			0.0	%			0.4	%
Combined Ratio			91.8	%			90.9	%			102.3	%			92.7	%			90.3	%			102.0	%			104.0	%			93.2	%

 

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

September 2016 (unaudited)

 

		Quarter Ended								%				Year-to-Date								%
		September				September				Increase				September				September				Increase
($ in thousands, except per share data)		2016				2015				(Decrease)				2016				2015				(Decrease)
Investment Income:
Interest:
Fixed Income Securities		$	32,453				30,601				6			$	95,850				92,227				4
Short-term			192				24				700				493				72				585
Other Investments			1,628				1,337				22				(49	)			(781	)			94
Dividends			1,506				2,370				(36	)			5,940				6,546				(9	)
			35,779				34,332				4				102,234				98,064				4
Investment Expense			2,404				2,271				6				6,908				6,856				1
Net Investment Income Before Tax			33,375				32,061				4				95,326				91,208				5
Tax			8,462				7,506				13				23,328				20,666				13
Net Investment Income After Tax		$	24,913				24,555				1			$	71,998				70,542				2
Net Investment Income per Share		$	0.42				0.42				-			$	1.23				1.22				1
Effective Tax Rate			25.4	%			23.4	%							24.5	%			22.7	%
Average Yields :
Fixed Income Securities:
Pre Tax															2.67	%			2.74	%
After Tax															2.00	%			2.08	%
Portfolio:
Pre Tax															2.43	%			2.48	%
After Tax															1.84	%			1.92	%

 

		Quarter Ended								Year-to-Date
		September				September				September				September
Net Realized Gains (Losses)		2016				2015				2016				2015
Fixed Income Securities		$	2,163				(80	)		$	1,944				587
Equity Securities			1,522				388				806				15,838
Other Investments			3				-				(1	)			(654	)
Total			3,688				308				2,749				15,771
Net of Tax			2,398				200				1,787				10,251

 

As of September 30, 2016 year-to-date new money rates for fixed income securities were 2.9% on a pre-tax basis and 2.0% on an after-tax basis.

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Quarter Ended September 2016 (unaudited)

 

		Net								Net																Underwriting				Dividends to
		Premiums				Percent				Premiums				Percent				Loss				LAE				Expense				Policyholders				Combined Ratio				Combined Ratio				Underwriting
($ in thousands)		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2016				2015				Gain (Loss)
Standard Personal Lines:
Homeowners		$	36,131				(3.6	)%		$	32,031				(4.9	)%			41.9	%			8.6	%			35.9	%			0.0	%			86.4	%			96.8	%		$	2,873
Auto			38,114				1.3	%			34,865				(4.8	)%			63.3	%			11.0	%			36.0	%			0.0	%			110.3	%			103.4	%			(4,752	)
Other (including flood)			1,980				8.4	%			1,794				(0.0	)%			62.0	%			(83.5	)%			(143.8	)%			0.0	%			(165.3	)%			(118.3	)%			5,028
Total		$	76,225				(0.9	)%		$	68,690				(4.7	)%			53.3	%			7.4	%			31.3	%			0.0	%			92.0	%			95.0	%		$	3,149
Standard Commercial Lines:
Commercial property		$	82,695				6.5	%		$	74,052				8.0	%			42.0	%			5.1	%			38.0	%			0.1	%			85.2	%			67.8	%		$	7,703
Workers compensation			81,646				9.7	%			78,596				5.4	%			37.0	%			13.4	%			29.5	%			0.2	%			80.2	%			84.0	%			14,689
General liability			141,556				8.3	%			133,981				8.7	%			32.5	%			15.8	%			36.3	%			0.1	%			84.7	%			89.1	%			17,714
Auto			108,655				10.9	%			100,612				10.9	%			70.3	%			10.4	%			33.6	%			0.1	%			114.5	%			104.5	%			(17,257	)
Businessowners' policies			23,985				0.2	%			24,461				3.1	%			55.3	%			11.9	%			39.6	%			0.0	%			106.8	%			100.0	%			(1,482	)
Bonds			6,723				25.1	%			5,795				15.2	%			12.8	%			7.2	%			55.0	%			0.0	%			75.0	%			91.5	%			937
Other			4,282				8.8	%			4,089				12.7	%			0.3	%			0.4	%			60.0	%			0.0	%			60.6	%			60.0	%			1,494
Total		$	449,544				8.6	%		$	421,586				8.2	%			44.8	%			11.7	%			35.4	%			0.1	%			92.0	%			88.4	%		$	23,799
E&S		$	53,004				(2.0	)%		$	52,153				14.0	%			52.1	%			17.9	%			31.4	%			0.0	%			101.4	%			101.1	%		$	(986	)
Total Insurance Operations		$	578,773				6.2	%		$	542,429				6.9	%			46.5	%			11.8	%			34.5	%			0.1	%			92.9	%			90.5	%		$	25,962
Note: Some amounts may not foot due to rounding.
							2016				2015
			Losses Paid			$	226,037			$	237,573
			LAE Paid				48,335				50,084
			Total Paid			$	274,372			$	287,657

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Year-to-Date September 2016 (unaudited)

 

		Net								Net																Underwriting				Dividends to
		Premiums				Percent				Premiums				Percent				Loss				LAE				Expense				Policyholders				Combined Ratio				Combined Ratio				Underwriting
($ in thousands)		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2016				2015				Gain (Loss)
Standard Personal Lines:
Homeowners		$	98,697				(3.1	)%		$	98,342				(2.7	)%			39.7	%			8.5	%			37.2	%			0.0	%			85.4	%			108.0	%		$	14,253
Auto			110,093				(0.9	)%			106,526				(3.5	)%			59.8	%			11.2	%			35.4	%			0.0	%			106.4	%			105.5	%			(8,120	)
Other (including flood)			4,980				0.1	%			4,851				(5.7	)%			63.4	%			(50.9	)%			(158.7	)%			0.0	%			(146.2	)%			(108.5	)%			12,148
Total		$	213,770				(1.9	)%		$	209,719				(3.2	)%			50.4	%			8.5	%			31.8	%			0.0	%			90.7	%			101.7	%		$	18,280
Standard Commercial Lines:
Commercial property		$	237,693				8.4	%		$	217,821				9.1	%			41.6	%			4.9	%			38.5	%			0.3	%			85.0	%			86.9	%		$	25,186
Workers compensation			252,032				7.8	%			229,847				7.4	%			40.2	%			13.8	%			28.0	%			0.8	%			82.8	%			87.7	%			33,220
General liability			431,751				9.1	%			391,349				9.5	%			34.5	%			13.7	%			35.5	%			0.2	%			83.9	%			80.0	%			48,820
Auto			325,751				11.7	%			294,927				11.0	%			66.1	%			9.7	%			32.8	%			0.2	%			108.9	%			101.5	%			(36,277	)
Businessowners' policies			74,055				3.2	%			73,016				4.9	%			43.9	%			11.6	%			39.1	%			0.0	%			94.7	%			108.9	%			3,479
Bonds			19,494				18.8	%			16,924				11.8	%			12.8	%			7.4	%			56.7	%			0.0	%			76.8	%			87.5	%			2,463
Other			12,839				11.5	%			11,868				11.4	%			(0.2	)%			0.3	%			56.9	%			0.0	%			56.9	%			56.0	%			4,558
Total		$	1,353,615				9.2	%		$	1,235,752				9.1	%			44.3	%			10.9	%			34.6	%			0.3	%			90.1	%			89.4	%		$	81,449
E&S		$	154,887				12.9	%		$	151,348				21.2	%			50.2	%			19.3	%			31.4	%			0.0	%			100.9	%			101.8	%		$	(2,461	)
Total Insurance Operations		$	1,722,272				8.0	%		$	1,596,819				8.3	%			45.6	%			11.4	%			34.0	%			0.2	%			91.2	%			92.3	%		$	97,268
Note: Some amounts may not foot due to rounding.
							2016				2015
			Losses Paid			$	678,430			$	656,683
			LAE Paid				145,504				144,145
			Total Paid			$	823,934			$	800,828

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Net Catastrophe Losses and Prior Year Casualty Reserve Development

Statutory Results by Line of Business

(unaudited)

 

		Quarter Ended																Year-to-Date
Net Catastrophe Losses Incurred		September 30, 2016								September 30, 2015								September 30, 2016								September 30, 2015
($ in thousands)		Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio
Standard Personal Lines		$	2,480				3.6	%		$	5,784				8.0	%		$	6,809				3.2	%		$	20,381				9.4	%
Standard Commercial Lines			6,204				1.5	%			757				0.2	%			21,476				1.7	%			33,016				2.9	%
E&S			1,710				3.3	%			308				0.7	%			4,895				3.2	%			2,752				2.2	%
Total Insurance Operations		$	10,394				1.9	%		$	6,850				1.3	%		$	33,180				2.1	%		$	56,149				3.8	%
Prior Year Casualty Reserve Development		Quarter Ended																Year-to-Date
(Favorable) / Unfavorable		September 30, 2016								September 30, 2015								September 30, 2016								September 30, 2015
($ in thousands)		Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio
Standard Personal Lines		$	-				0.0	%		$	-				0.0	%		$	-				0.0	%		$	-				0.0	%
Standard Commercial Lines			(19,000	)			(4.5	)%			(19,000	)			(4.9	)%			(49,000	)			(4.0	)%			(61,000	)			(5.4	)%
E&S			-				0.0	%			4,000				8.7	%			3,000				2.0	%			6,000				4.8	%
Total Insurance Operations		$	(19,000	)			(3.5	)%		$	(15,000	)			(3.0	)%		$	(46,000	)			(2.9	)%		$	(55,000	)			(3.7	)%

 

Note: Some amounts may not foot due to rounding.

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries Consolidated Balance Sheets		Unaudited
($ in thousands, except share amounts)		September 30,  2016				December 31,  2015
ASSETS
Investments:
Fixed income securities, held-to-maturity – at carrying value (fair value:  $136,094 – 2016; $209,544 – 2015)		$	130,472				201,354
Fixed income securities, available-for-sale – at fair value (amortized cost: $4,682,267 – 2016; $4,352,514 – 2015)			4,832,532				4,408,203
Equity securities, available-for-sale – at fair value (cost:  $122,981 – 2016; $193,816 – 2015)			147,304				207,051
Short-term investments (at cost which approximates fair value)			169,604				194,819
Other investments			88,512				77,842
Total investments			5,368,424				5,089,269
Cash			1,493				898
Interest and dividends due or accrued			39,901				38,501
Premiums receivable, net of allowance for uncollectible accounts of:  $5,907 – 2016; $4,422 – 2015			711,589				615,164
Reinsurance recoverables, net of allowance for uncollectible accounts of: $5,500 – 2016; $5,700 – 2015			640,012				561,968
Prepaid reinsurance premiums			151,981				140,889
Deferred federal income tax			41,656				92,696
Property and equipment – at cost, net of accumulated depreciation and amortization of: $198,171 – 2016; $188,548 – 2015			69,812				65,701
Deferred policy acquisition costs			235,934				213,159
Goodwill			7,849				7,849
Other assets			94,582				78,339
Total assets		$	7,363,233				6,904,433
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for loss and loss expenses		$	3,686,586				3,517,728
Unearned premiums			1,306,255				1,169,710
Short-term debt			45,000				60,000
Long-term debt			378,551				328,192
Current federal income tax			6,509				7,442
Accrued salaries and benefits			103,583				167,336
Other liabilities			261,845				255,984
Total liabilities		$	5,788,329				5,506,392
Stockholders’ Equity:
Preferred stock of $0 par value per share:		$	—				—
Authorized shares 5,000,000; no shares issued or outstanding
Common stock of $2 par value per share:
Authorized shares 360,000,000
Issued: 101,505,201 – 2016; 100,861,372 – 2015			203,011				201,723
Additional paid-in capital			342,846				326,656
Retained earnings			1,538,928				1,446,192
Accumulated other comprehensive income (loss)			62,209				(9,425	)
Treasury stock – at cost (shares:  43,653,034 – 2016; 43,500,642 – 2015)			(572,090	)			(567,105	)
Total stockholders’ equity		$	1,574,904				1,398,041
Commitments and contingencies
Total liabilities and stockholders’ equity		$	7,363,233				6,904,433

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Income		Quarter ended September 30,								Nine Months ended September 30,
($ in thousands, except per share amounts)		2016				2015				2016				2015
Revenues:
Net premiums earned		$	542,429				507,390				1,596,819				1,473,822
Net investment income earned			33,375				32,061				95,326				91,208
Net realized gains:
Net realized investment gains			4,030				1,590				7,233				23,598
Other-than-temporary impairments			(342	)			(1,282	)			(4,494	)			(7,827	)
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income			—				—				10				—
Total net realized gains			3,688				308				2,749				15,771
Other income			2,199				698				7,018				5,521
Total revenues			581,691				540,457				1,701,912				1,586,322
Expenses:
Loss and loss expense incurred			316,258				285,161				911,881				861,721
Policy acquisition costs			193,835				174,802				567,793				509,295
Interest expense			5,714				5,610				16,940				16,826
Other expenses			10,441				9,045				35,669				29,586
Total expenses			526,248				474,618				1,532,283				1,417,428
Income before federal income tax			55,443				65,839				169,629				168,894
Federal income tax expense:
Current			5,625				9,141				38,027				29,128
Deferred			11,316				9,702				12,467				19,294
Total federal income tax expense			16,941				18,843				50,494				48,422
Net income		$	38,502				46,996				119,135				120,472
Earnings per share:
Basic net income		$	0.66				0.82				2.06				2.11
Diluted net income		$	0.66				0.81				2.03				2.08
Dividends to stockholders		$	0.15				0.14				0.45				0.42

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Comprehensive Income		Quarter ended September 30,								Nine Months ended September 30,
($ in thousands)		2016				2015				2016				2015
Net income		$	38,502				46,996				119,135				120,472
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on investment securities:
Unrealized holding (losses) gains arising during period			(8,444	)			5,442				70,473				(18,132	)
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income			—				—				(6	)			—
Amounts reclassified into net income:
Held-to-maturity securities			(9	)			(63	)			(68	)			(353	)
Non-credit other-than-temporary impairments			—				—				—				232
Realized gains on available-for-sale securities			(2,395	)			(199	)			(1,786	)			(10,906	)
Total unrealized (losses) gains on investment securities			(10,848	)			5,180				68,613				(29,159	)
Defined benefit pension and post-retirement plans:
Amounts reclassified into net income:
Net actuarial loss			1,050				1,110				3,021				3,332
Total defined benefit pension and post-retirement plans			1,050				1,110				3,021				3,332
Other comprehensive (loss) income			(9,798	)			6,290				71,634				(25,827	)
Comprehensive income		$	28,704				53,286				190,769				94,645

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Stockholders’ Equity		Nine Months ended September 30,
($ in thousands, except per share amounts)		2016				2015
Common stock:
Beginning of year		$	201,723				199,896
Dividend reinvestment plan (shares:  29,865 – 2016; 38,947 – 2015)			60				78
Stock purchase and compensation plans (shares:  613,964 – 2016; 686,984 – 2015)			1,228				1,374
End of period			203,011				201,348
Additional paid-in capital:
Beginning of year			326,656				305,385
Dividend reinvestment plan			1,035				1,014
Stock purchase and compensation plans			15,155				14,588
End of period			342,846				320,987
Retained earnings:
Beginning of year			1,446,192				1,313,440
Net income			119,135				120,472
Dividends to stockholders ($0.45 per share – 2016; $0.42 per share – 2015)			(26,399	)			(24,376	)
End of period			1,538,928				1,409,536
Accumulated other comprehensive income (loss):
Beginning of year			(9,425	)			19,788
Other comprehensive income (loss)			71,634				(25,827	)
End of period			62,209				(6,039	)
Treasury stock:
Beginning of year			(567,105	)			(562,923	)
Acquisition of treasury stock (shares: 152,392 – 2016; 139,031 – 2015)			(4,985	)			(3,887	)
End of period			(572,090	)			(566,810	)
Total stockholders’ equity		$	1,574,904				1,359,022

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Cash Flow		Nine Months ended September 30,
($ in thousands)		2016				2015
Operating Activities
Net income		$	119,135				120,472
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			45,563				43,868
Stock-based compensation expense			8,950				7,626
Undistributed losses of equity method investments			49				781
Net realized gains			(2,749	)			(15,771	)
Changes in assets and liabilities:
Increase in reserve for loss and loss expenses, net of reinsurance recoverables			90,814				60,065
Increase in unearned premiums, net of prepaid reinsurance			125,453				121,424
Decrease in net federal income taxes			11,534				27,980
Increase in premiums receivable			(96,425	)			(95,188	)
Increase in deferred policy acquisition costs			(22,775	)			(28,058	)
(Increase) decrease in interest and dividends due or accrued			(1,356	)			979
Decrease in accrued salaries and benefits			(63,753	)			(338	)
Increase in other assets			(16,280	)			(13,888	)
(Decrease) increase in other liabilities			(20,686	)			29,081
Net adjustments			58,339				138,561
Net cash provided by operating activities			177,474				259,033
Investing Activities
Purchase of fixed income securities, available-for-sale			(842,253	)			(731,154	)
Purchase of fixed income securities, held-to-maturity			(4,235	)			—
Purchase of equity securities, available-for-sale			(24,747	)			(192,717	)
Purchase of other investments			(34,994	)			(6,589	)
Purchase of short-term investments			(1,307,024	)			(1,084,794	)
Sale of fixed income securities, available-for-sale			33,448				22,323
Sale of short-term investments			1,332,239				1,090,911
Redemption and maturities of fixed income securities, held-to-maturity			74,186				79,972
Redemption and maturities of fixed income securities, available-for-sale			483,877				403,510
Sale of equity securities, available-for-sale			99,420				148,228
Distributions from other investments			18,512				22,038
Purchase of property and equipment			(13,421	)			(11,869	)
Net cash used in investing activities			(184,992	)			(260,141	)
Financing Activities
Dividends to stockholders			(24,885	)			(22,848	)
Acquisition of treasury stock			(4,985	)			(3,887	)
Net proceeds from stock purchase and compensation plans			4,906				6,016
Proceeds from borrowings			105,000				15,000
Repayments of borrowings			(70,000	)			—
Excess tax benefits from share-based payment arrangements			1,917				1,498
Repayments of capital lease obligations			(3,840	)			(3,517	)
Net cash provided by (used in) financing activities			8,113				(7,738	)
Net increase (decrease) in cash			595				(8,846	)
Cash, beginning of year			898				23,959
Cash, end of period		$	1,493				15,113

 

 Selective Insurance Group, Inc.

 Combined Insurance Company Subsidiaries

 Statutory Balance Sheets

 (unaudited)

               

 

		September 30,				September 30,				December 31,
($ in thousands)		2016				2015				2015
ASSETS
Bonds		$	4,737,691				4,438,650				4,491,136
Common stocks			135,489				210,197				194,789
Preferred stocks			11,310				11,708				11,856
Affiliated mortgage loan			34,538				35,366				35,163
Other investments			134,972				136,591				128,788
Short-term investments			147,891				109,393				165,678
Total investments			5,201,891				4,941,905				5,027,410
Cash on hand and in banks			5,581				(6,272	)			(34,378	)
Interest and dividends due and accrued			39,843				37,944				38,466
Premiums receivable			705,735				648,264				609,146
Reinsurance recoverable on paid losses and expenses			9,326				11,288				10,949
Deferred tax recoverable			159,475				146,936				142,066
EDP equipment			389				436				390
Equities and deposits in pools and associations			12,533				12,394				10,920
Receivable for sold securities			6				64				17
Other assets			30,343				26,798				28,300
Total assets		$	6,165,122				5,819,757				5,833,286
LIABILITIES
Reserve for losses		$	2,477,012				2,427,024				2,426,583
Reinsurance payable on paid loss and loss expense			3,472				2,677				2,841
Reserve for loss expenses			561,520				526,253				525,322
Unearned premiums			1,154,274				1,070,250				1,028,820
Reserve for commissions payable			83,202				73,293				89,740
Ceded balances payable			46,471				32,626				37,222
Federal income tax payable			18,332				22,996				25,644
Premium and other taxes payable			21,375				24,257				23,998
Borrowed money			95,156				60,029				60,031
Reserve for dividends to policyholders			6,587				5,989				5,805
Reserves for unauthorized reinsurance			2,030				7,661				2,030
Payable for securities			31,326				31,974				6,204
Funds withheld on account of others			10,671				7,695				6,806
Accrued salaries and benefits			69,337				69,837				77,933
Other liabilities			33,130				89,853				87,987
Total liabilities			4,613,895				4,452,414				4,406,966
POLICYHOLDERS' SURPLUS
Capital			42,725				42,725				42,725
Paid in surplus			492,869				492,869				492,869
Unassigned surplus			1,015,633				831,749				890,726
Total policyholders' surplus			1,551,227				1,367,343				1,426,320
Total liabilities and policyholders' surplus		$	6,165,122				5,819,757				5,833,286

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

 

		Quarter Ended September																Nine Months Ended September
($ in thousands)		2016								2015								2016								2015
UNDERWRITING
Net premiums written		$	578,773								545,025								1,722,272								1,595,246
Net premiums earned			542,429								507,390								1,596,819								1,473,822
Net losses paid			226,037								237,573								678,430								656,683
Change in reserve for losses			26,528								(11,051	)							50,463								28,493
Net losses incurred			252,565				46.5	%			226,522				44.6	%			728,893				45.6	%			685,176				46.5	%
Net loss expenses paid			48,335								50,084								145,504								144,145
Change in reserve for loss expenses			15,460								8,083								36,198								32,744
Net loss expenses incurred			63,795				11.8	%			58,167				11.5	%			181,702				11.4	%			176,889				12.0	%
Net underwriting expenses incurred			201,060				34.8	%			185,183				33.9	%			590,178				34.3	%			537,019				33.6	%
Total deductions			517,420								469,872								1,500,773								1,399,084
Statutory underwriting gain			25,009								37,518								96,046								74,738
Net loss from premium balances charged off			(734	)							(833	)							(2,058	)							(2,146	)
Finance charges and other income			2,228								772								7,092								5,688
Total other income			1,494				-0.3	%			(61	)			0.1	%			5,034				-0.3	%			3,542				-0.2	%
Policyholders' dividends incurred			(541	)			0.1	%			(1,921	)			0.4	%			(3,812	)			0.2	%			(5,290	)			0.4	%
Total underwriting gain			25,962				92.9	%			35,536				90.5	%			97,268				91.2	%			72,990				92.3	%
INVESTMENT
Net investment income earned			32,398								31,821								93,920								91,103
Net realized gain			3,689								309								2,747								15,770
Total income before income tax			62,049								67,666								193,935								179,863
Federal income tax expense			8,778								17,938								47,283								37,729
Net income		$	53,271								49,728								146,652								142,134
Policyholders' Surplus
Surplus, beginning of period		$	1,506,535								1,344,630								1,426,320								1,307,842
Net income			53,271								49,728								146,652								142,134
Change in deferred taxes			(10,503	)							752								(9,002	)							(11,401	)
Change in net unrealized capital (losses) / gains			(1,078	)							(6,554	)							7,159								(20,101	)
Dividends to stockholders			(15,254	)							(14,438	)							(45,761	)							(43,314	)
Change in non-admitted assets			16,729								(8,390	)							21,471								(12,661	)
Change in Overfunded Contra Asset			(28,408	)							(281	)							(52,108	)							(842	)
Qual Pen Trans Liab			29,908								1,845								56,425								5,534
Excess Plan Trans Liab			22								44								60								130
PRL Plan Trans Liab			5								7								11								22
Net change in surplus for period			44,692								22,713								124,907								59,501
Surplus, end of period		$	1,551,227								1,367,343								1,551,227								1,367,343
Statutory underwriting gain		$	25,962								35,536								97,268								72,990
Adjustments under GAAP:
Deferred policy acquisition costs			7,380								10,442								22,775								28,058
Other, net			(1,309	)							(1,147	)							(3,278	)							(1,072	)
GAAP underwriting gain		$	32,033								44,831								116,765								99,976

 

Note: Some amounts or ratios may not foot due to rounding      

 

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments
September 30, 2016
(unaudited)
	Number	Original	Remaining	Current
Strategy	of Funds	Commitment	Commitment	Market Value
Private Equity	15	150,456,790	57,793,283	35,443,848
Private Credit	8	92,000,000	30,762,618	27,708,889
Real Assets	7	100,000,000	22,922,421	15,329,396
TOTAL - ALTERNATIVE INVESTMENTS	30	342,456,790	111,478,322	78,482,133
Exhibit may not foot due to rounding