Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL SUPPLEMENT

SECOND QUARTER 2017

 

 

 

 

 

 

 

 

Forward-Looking Statements

Certain statements in this report, including information incorporated by reference, are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. These statements relate to our intentions, beliefs, projections, estimations, or forecasts of future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, or performance to be materially different from those expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by use of words such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” or “continue” or other comparable terminology. These statements are only predictions, and we can give no assurance that such expectations will prove to be correct. We undertake no obligation, other than as may be required under the federal securities laws, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Factors that could cause our actual results to differ materially from those projected, forecasted, or estimated by us in forward-looking statements, include, but are not limited to:

☐ difficult conditions in global capital markets and the economy;

☐  deterioration in the public debt and equity markets and private investment marketplace that could lead to investment losses and fluctuations in interest rates;

☐ ratings downgrades could affect investment values and, therefore, statutory surplus;

☐ the adequacy of our loss reserves and loss expense reserves;

☐ the frequency and severity of natural and man-made catastrophic events, including, but not limited to, hurricanes, tornadoes, windstorms, earthquakes, hail, terrorism, explosions, severe winter weather, floods, and fires;

☐ adverse market, governmental, regulatory, legal, or judicial conditions or actions;

☐ the concentration of our business in the Eastern Region;

☐ the cost and availability of reinsurance;

☐ our ability to collect on reinsurance and the solvency of our reinsurers;

☐ uncertainties related to insurance premium rate increases and business retention;

☐ changes in insurance regulations that impact our ability to write and/or cease writing insurance policies in one or more states;

☐ recent federal financial regulatory reform provisions that could pose certain risks to our operations;

☐ our ability to maintain favorable ratings from rating agencies, including A.M. Best, Standard & Poor’s, Moody’s and Fitch;

☐ our entry into new markets and businesses; and

☐ other risks and uncertainties we identify in filings with the United States Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and other periodic reports.

These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time-to-time. We can neither predict such new risk factors nor can we assess the impact, if any, of such new risk factors on our businesses or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied in any forward-looking statements in this report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

Selective’s SEC filings can be accessed through the Investors page of Selective’s website, www.Selective.com, or through the SEC’s EDGAR Database at www.sec.gov (Selective EDGAR CIK No. 0000230557).

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries
TABLE OF CONTENTS
	Page
Consolidated Financial Highlights	1
Consolidated Statements of Operations	2
Consolidated Balance Sheets	3
Financial Metrics	4
Consolidated Insurance Operations	5
Standard Commercial Lines Statement of Operations and Supplemental Data	6
Standard Personal Lines Statement of Operations and Supplemental Data	7
Excess and Surplus Lines Statement of Operations and Supplemental Data	8
Consolidated Investment Income	9
Consolidated Composition of Invested Assets	10
Statutory Results by Line of Business - Quarter Ended June 30, 2017	11
Statutory Results by Line of Business - Year-to-Date Ended June 30, 2017	12
Reconciliation of Net Income to Operating Income and Certain Other Non-GAAP Measures	13
Ratings and Contact Information	14

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ and shares in millions, except per share data)		2017				2017				2016				2016				2016				2017				2016
For Period Ended
Net premiums written		$	613.8				598.7				515.0				578.8				578.1				1,212.5				1,143.5
Change in net premiums written, from comparable prior year period			6	%			6				9				6				9				6				9
Underwriting income, before-tax		$	30.3				49.2				35.2				32.0				43.8				79.5				84.7
Net investment income earned, before-tax			41.4				37.4				35.4				33.4				31.2				78.8				62.0
Net realized investment gains (losses), before-tax			1.7				(1.0	)			(7.7	)			3.7				1.8				0.7				(0.9	)
Net income		$	41.4				50.4				39.4				38.5				43.6				91.9				80.6
Operating income*			40.3				51.1				44.4				36.1				42.5				91.4				81.2
At Period End
Total assets			7,528.2				7,404.1				7,355.8				7,363.2				7,189.6				7,528.2				7,189.6
Total invested assets			5,503.0				5,460.8				5,364.9				5,368.4				5,266.5				5,503.0				5,266.5
Stockholders' equity			1,652.6				1,592.6				1,531.4				1,574.9				1,552.7				1,652.6				1,552.7
Shares outstanding			58.4				58.2				58.0				57.9				57.8				58.4				57.8
Per Share and Share Data
Net income per diluted share		$	0.70				0.85				0.67				0.66				0.74				1.55				1.38
Operating income per diluted share*			0.68				0.86				0.75				0.62				0.72				1.54				1.39
Weighted average diluted shares outstanding			59.2				59.1				58.9				58.7				58.6				59.2				58.6
Book value per share		$	28.32				27.34				26.42				27.22				26.86				28.32				26.86
Dividends paid per share			0.16				0.16				0.16				0.15				0.15				0.32				0.30
Financial Ratios
Loss and loss expense ratio			60.2	%			56.6				58.4				58.3				56.1				58.4				56.5
Underwriting expense ratio			34.2				34.6				35.2				35.7				35.4				34.4				35.2
Dividends to policyholders ratio			0.3				-				-				0.1				0.3				0.2				0.3
GAAP combined ratio			94.7	%			91.2				93.6				94.1				91.8				93.0				92.0
Annualized ROE			10.2				12.9				10.1				9.8				11.5				11.5				10.9
Annualized operating ROE*			9.9				13.1				11.4				9.2				11.2				11.5				11.0
Debt to total capitalization			21.0				21.6				22.3				21.2				20.0				21.0				20.0
Net premiums written to policyholders' surplus			1.4	x			1.4	x			1.4	x			1.4	x			1.4	x			1.4	x			1.4	x
Invested assets per dollar of stockholders' equity		$	3.33				3.43				3.50				3.41				3.39				3.33				3.39

 

* Non-GAAP measure. Refer to Page 13 for definition.

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ and shares in millions)		2017				2017				2016				2016				2016				2017				2016
Revenues
Net premiums earned		$	568.0				560.9				552.8				542.4				531.9				1,128.9				1,054.4
Net investment income earned			41.4				37.4				35.4				33.4				31.2				78.8				62.0
Net realized investment gains (losses)			3.0				2.4				(3.7	)			4.0				2.3				5.4				3.2
Other-than-temporary impairments			(1.2	)			(3.5	)			(4.0	)			(0.3	)			(0.5	)			(4.7	)			(4.1	)
Other income			3.3				3.2				1.9				2.2				3.9				6.5				4.8
Total revenues			614.5				600.5				582.4				581.7				568.7				1,215.0				1,120.2
Expenses
Losses and loss expenses incurred			341.6				317.5				322.9				316.3				298.5				659.0				595.6
Policy acquisition costs			196.8				196.2				196.0				193.8				190.7				393.1				374.0
Interest expense			6.1				6.1				5.8				5.7				5.6				12.2				11.2
Other expenses			11.1				13.1				7.3				10.4				11.6				24.2				25.2
Total expenses			555.6				532.9				532.0				526.2				506.4				1,088.5				1,006.0
Income before federal income tax			58.9				67.6				50.3				55.4				62.3				126.5				114.2
Federal income tax expense			17.5				17.1				11.0				16.9				18.7				34.6				33.6
Net income		$	41.4				50.4				39.4				38.5				43.6				91.9				80.6
Exclude:  Net realized investment (gains) losses, after tax			(1.1	)			0.7				5.0				(2.4	)			(1.1	)			(0.4	)			0.6
Operating income *		$	40.3				51.1				44.4				36.1				42.5				91.4				81.2
Weighted average shares outstanding (diluted)			59.2				59.1				58.9				58.7				58.6				59.2				58.6
Net income per share (diluted)		$	0.70				0.85				0.67				0.66				0.74				1.55				1.38
Operating income per share (diluted) *		$	0.68				0.86				0.75				0.62				0.72				1.54				1.39

 

* Non-GAAP measure. Refer to Page 13 for definition.

 

   Note: Amounts may not foot due to rounding.                          

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,
($ in millions, except per share data)		2017				2017				2016				2016				2016
ASSETS
Investments
Fixed income securities, held-to-maturity, at carrying value		$	72.5				84.8				101.6				130.5				160.3
Fixed income securities, available-for-sale, at fair value			5,018.7				4,867.0				4,792.5				4,832.5				4,671.8
Equity securities, available-for-sale, at fair value			161.7				154.9				146.8				147.3				152.9
Short-term investments			133.7				247.2				221.7				169.6				205.5
Other investments			116.4				106.8				102.4				88.5				76.1
Total investments			5,503.0				5,460.8				5,364.9				5,368.4				5,266.5
Cash			8.6				0.5				0.5				1.5				1.5
Interest and dividends due or accrued			40.2				40.2				40.2				39.9				39.9
Premiums receivable, net of allowance			764.3				707.7				681.6				711.6				706.6
Reinsurance recoverable, net of allowance			601.9				580.4				621.5				640.0				592.4
Prepaid reinsurance premiums			151.9				145.4				146.3				152.0				145.5
Current federal income tax			-				-				2.5				-				-
Deferred federal income tax			60.4				72.2				84.8				41.7				47.7
Property and equipment, net of accumulated depreciation and amortization			66.3				68.5				69.6				69.8				68.6
Deferred policy acquisition costs			234.9				227.6				222.6				235.9				228.6
Goodwill			7.8				7.8				7.8				7.8				7.8
Other assets			88.8				92.9				113.5				94.6				84.5
Total assets		$	7,528.2				7,404.1				7,355.8				7,363.2				7,189.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Reserve for losses and loss expenses		$	3,731.2				3,679.5				3,691.7				3,686.6				3,590.2
Unearned premiums			1,352.1				1,299.8				1,262.8				1,306.3				1,263.5
Short-term debt			-				-				-				45.0				60.0
Long-term debt			438.9				438.8				438.7				378.6				328.4
Current federal income tax			2.1				11.6				-				6.5				8.7
Accrued salaries and benefits			103.2				96.3				132.9				103.6				118.7
Other liabilities			248.2				285.6				298.4				261.8				267.4
Total liabilities		$	5,875.6				5,811.5				5,824.5				5,788.3				5,636.9
Stockholder's Equity
Preferred stock of $0 par value per share		$	-				-				-				-				-
Common stock of $2 par value per share			204.3				204.1				203.2				203.0				202.9
Additional paid-in capital			360.0				354.2				347.3				342.8				340.1
Retained earnings			1,641.8				1,609.9				1,568.9				1,538.9				1,509.2
Accumulated other comprehensive income (loss)			24.5				2.1				(16.0	)			62.2				72.0
Treasury stock, at cost			(578.0	)			(577.7	)			(572.1	)			(572.1	)			(571.5	)
Total stockholders' equity		$	1,652.6				1,592.6				1,531.4				1,574.9				1,552.7
Commitments and contingencies
Total liabilities and stockholders' equity		$	7,528.2				7,404.1				7,355.8				7,363.2				7,189.6

 

Note: Amounts may not foot due to rounding

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

FINANCIAL METRICS

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ and shares in millions, except per share data)		2017				2017				2016				2016				2016				2017				2016
Book value per share
Stockholders' equity		$	1,652.6				1,592.6				1,531.4				1,574.9				1,552.7				1,652.6				1,552.7
Common shares issued and outstanding, at period end			58.4				58.2				58.0				57.9				57.8				58.4				57.8
Book value per share		$	28.32				27.34				26.42				27.22				26.86				28.32				26.86
Book value per share excluding unrealized gain (loss) on fixed income securities			27.25				26.65				25.98				25.53				25.00				27.25				25.00
Financial results (after-tax)
Underwriting income			19.7				32.0				22.9				20.8				28.5				51.7				55.1
Net investment income			30.3				27.5				26.4				24.9				23.5				57.8				47.1
Interest expense			(4.0	)			(4.0	)			(3.8	)			(3.7	)			(3.7	)			(7.9	)			(7.3	)
Other expense			(5.8	)			(4.4	)			(1.1	)			(5.9	)			(5.9	)			(10.1	)			(13.6	)
Net realized gains (losses)			1.1				(0.7	)			(5.0	)			2.4				1.1				0.4				(0.6	)
Total after-tax net income			41.4				50.4				39.4				38.5				43.6				91.9				80.6
Return on average equity
Insurance segments			4.9	%			8.2				5.9				5.3				7.5				6.5				7.5
Net investment income			7.5				7.0				6.8				6.4				6.2				7.3				6.4
Interest expense			(1.0	)			(1.0	)			(1.0	)			(0.9	)			(1.0	)			(1.0	)			(1.0	)
Other expense			(1.5	)			(1.1	)			(0.3	)			(1.6	)			(1.5	)			(1.3	)			(1.9	)
Net realized gains (losses), net of tax at 35%			0.3				(0.2	)			(1.3	)			0.6				0.3				-				(0.1	)
Annualized ROE			10.2				12.9				10.1				9.8				11.5				11.5				10.9
Exclude: Net realized (gains) losses, net of tax at 35%			(0.3	)			0.2				1.3				(0.6	)			(0.3	)			-				0.1
Annualized Operating ROE*			9.9	%			13.1				11.4				9.2				11.2				11.5				11.0
Debt and total capitalization
Notes payable:
1.61% Borrowings from FHLBNY		$	25.0				25.0				25.0				25.0				-				25.0				-
1.56% Borrowings from FHLBNY			25.0				25.0				25.0				25.0				-				25.0				-
3.03% Borrowings from FHLBI			60.0				60.0				60.0				-				-				60.0				-
0.63% Borrowings from FHLBI			-				-				-				-				15.0				-				15.0
1.25% Borrowings from FHLBI			-				-				-				45.0				45.0				-				45.0
7.25% Senior notes			49.7				49.7				49.6				49.6				49.6				49.7				49.6
6.70% Senior notes			99.0				99.0				99.0				98.9				98.9				99.0				98.9
5.875% Senior notes			180.2				180.2				180.1				180.0				179.9				180.2				179.9
Total debt			438.9				438.8				438.7				423.6				388.4				438.9				388.4
Stockholders' equity			1,652.6				1,592.6				1,531.4				1,574.9				1,552.7				1,652.6				1,552.7
Total capitalization		$	2,091.5				2,031.4				1,970.1				1,998.5				1,941.1				2,091.5				1,941.1
Ratio of debt to total capitalization			21.0	%			21.6				22.3				21.2				20.0				21.0				20.0
Policyholders' surplus		$	1,653.2				1,622.3				1,583.8				1,551.2				1,506.5				1,653.2				1,506.5

 

* Non-GAAP measure. Refer to Page 13 for definition.

 

   Note: Amounts may not foot due to rounding

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

CONSOLIDATED INSURANCE OPERATIONS

STATEMENT OF OPERATIONS

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ in millions)		2017				2017				2016				2016				2016				2017				2016
Underwriting results
Net premiums written		$	613.8				598.7				515.0				578.8				578.1				1,212.5				1,143.5
Change in net premiums written, from comparable prior year period			6	%			6				9				6				9				6				9
Net premiums earned		$	568.0				560.9				552.8				542.4				531.9				1,128.9				1,054.4
Losses and loss expenses incurred			341.6				317.5				322.9				316.3				298.5				659.0				595.6
Net underwriting expenses incurred			194.2				194.3				194.8				193.6				188.1				388.5				370.8
Dividends to policyholders			1.9				(0.1	)			(0.2	)			0.5				1.6				1.8				3.3
GAAP underwriting gain		$	30.3				49.2				35.2				32.0				43.8				79.5				84.7
Catastrophe losses		$	29.3				12.2				26.6				10.4				8.4				41.5				22.8
(Favorable) prior years' casualty reserve development			(14.3	)			(14.4	)			(23.0	)			(19.0	)			(10.0	)			(28.7	)			(27.0	)
Underwriting ratios
Loss and loss expenses ratio			60.2	%			56.6				58.4				58.3				56.1				58.4				56.5
Underwriting Expense ratio			34.2				34.6				35.2				35.7				35.4				34.4				35.2
Dividends to policyholders ratio			0.3				-				-				0.1				0.3				0.2				0.3
Combined ratio			94.7	%			91.2				93.6				94.1				91.8				93.0				92.0
Catastrophe losses			5.2	pts			2.2				4.8				1.9				1.6				3.7				2.2
(Favorable) prior years' casualty reserve development			(2.5	) pts			(2.6	)			(4.2	)			(3.5	)			(1.9	)			(2.5	)			(2.6	)
Combined ratio before catastrophes			89.5	%			89.0				88.8				92.2				90.2				89.3				89.8
Combined ratio before catastrophes and prior years' development			92.0				91.6				93.0				95.7				92.1				91.8				92.4
Other Statistics
Non-catastrophe property losses		$	73.3				71.4				70.0				78.5				64.3				144.7				130.8
Non-catastrophe property losses			12.9	pts			12.7				12.7				14.5				12.1				12.8				12.4
Direct new business		$	136.1				124.7				123.8				125.4				130.5				260.8				248.1

 

Note: Amounts may not foot due to rounding.                            

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

STANDARD COMMERCIAL LINES

STATEMENT OF OPERATIONS AND SUPPLEMENTAL DATA

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ in millions)		2017				2017				2016				2016				2016				2017				2016
Underwriting results
Net premiums written		$	478.9				483.5				392.2				449.5				449.0				962.5				904.1
Change in net premiums written, from comparable prior year period			7	%			6				10				9				9				6				9
Net premiums earned		$	443.6				438.4				429.7				421.6				411.3				882.0				814.2
Losses and loss expenses incurred			252.9				241.6				230.3				238.2				221.6				494.4				445.0
Net underwriting expenses incurred			154.0				154.4				154.4				152.7				147.9				308.4				294.8
Dividends to policyholders			1.9				(0.1	)			(0.2	)			0.5				1.6				1.8				3.3
GAAP underwriting gain		$	34.8				42.5				45.2				30.1				40.2				77.3				71.1
Catastrophe losses		$	17.0				6.9				13.6				6.2				3.6				23.9				15.3
(Favorable) prior years' casualty reserve development			(17.3	)			(16.4	)			(28.5	)			(19.0	)			(12.0	)			(33.7	)			(30.0	)
Underwriting ratios
Loss and loss expenses ratio			57.1	%			55.1				53.6				56.5				53.9				56.0				54.7
Underwriting expense ratio			34.7				35.2				35.9				36.3				35.9				35.0				36.2
Dividends to policyholders ratio			0.4				-				-				0.1				0.4				0.2				0.4
Combined ratio			92.2	%			90.3				89.5				92.9				90.2				91.2				91.3
Catastrophe losses			3.8	pts			1.6				3.2				1.5				0.9				2.7				1.9
(Favorable) prior years' casualty reserve development			(3.9	) pts			(3.7	)			(6.6	)			(4.5	)			(2.9	)			(3.8	)			(3.7	)
Combined ratio before catastrophes			88.4	%			88.7				86.3				91.4				89.3				88.5				89.4
Combined ratio before catastrophes and prior years' development			92.3				92.4				92.9				95.9				92.2				92.3				93.1
Other statistics
Non-catastrophe property losses		$	48.2				49.8				45.6				51.6				41.6				98.0				85.2
Non-catastrophe property losses			10.9	pts			11.4				10.6				12.2				10.1				11.1				10.5
Direct new business		$	98.0				89.5				85.2				89.2				95.5				187.5				183.2
Renewal pure price increases			3.1	%			3.0				2.7				2.5				2.6				3.1				2.7
Retention			83	%			85				84				84				83				83				83

 

Note: Amounts may not foot due to rounding.                            

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

STANDARD PERSONAL LINES

STATEMENT OF OPERATIONS AND SUPPLEMENTAL DATA

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ in millions)		2017				2017				2016				2016				2016				2017				2016
Underwriting results
Net premiums written		$	78.1				64.7				68.1				76.2				75.6				142.8				137.5
Change in net premiums written, from comparable prior year period			3	%			4				3				(1	)			(1	)			4				(2	)
Net premiums earned		$	71.7				71.2				70.9				68.7				70.8				142.9				141.0
Losses and loss expenses incurred			54.7				44.3				54.3				41.6				42.2				99.0				81.9
Net underwriting expenses incurred			22.7				21.8				23.2				22.8				22.5				44.5				44.4
GAAP underwriting (loss) gain		$	(5.8	)			5.1				(6.6	)			4.3				6.1				(0.7	)			14.7
Catastrophe losses		$	9.4				3.9				11.4				2.5				2.1				13.3				4.3
Unfavorable prior years' casualty reserve development			3.0				2.0				2.5				-				-				5.0				-
Underwriting ratios
Loss and loss expenses ratio			76.3	%			62.2				76.5				60.5				59.6				69.3				58.1
Underwriting expense ratio			31.7				30.6				32.8				33.3				31.8				31.2				31.5
Combined ratio			108.0	%			92.8				109.3				93.8				91.4				100.5				89.6
Catastrophe losses			13.0	pts			5.5				16.0				3.6				3.0				9.3				3.1
Unfavorable prior years' casualty reserve development			4.2	pts			2.8				3.5				—				—				3.5				—
Combined ratio before catastrophes			95.0	%			87.3				93.3				90.2				88.4				91.2				86.5
Combined ratio before catastrophes and prior years' development			90.8				84.5				89.8				90.2				88.4				87.7				86.5
Other Statistics
Non-catastrophe property losses		$	20.0				16.3				17.6				18.9				18.4				36.4				34.7
Non-catastrophe property losses			27.9	pts			22.9				24.8				27.6				25.9				25.4				24.6
Direct new business		$	13.2				11.4				10.7				12.0				9.6				24.6				17.0
Renewal pure price increases			2.6	%			2.7				4.1				4.7				5.2				2.7				5.1
Retention			84	%			84				84				83				83				84				82

 

Note: Amounts may not foot due to rounding.                            

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

EXCESS AND SURPLUS LINES

STATEMENT OF OPERATIONS AND SUPPLEMENTAL DATA

(Unaudited)

 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ in millions)		2017				2017				2016				2016				2016				2017				2016
Underwriting results
Net premiums written		$	56.8				50.5				54.8				53.0				53.6				107.2				101.9
Change in net premiums written, from comparable prior year period			6	%			4				6				(2	)			18				5				23
Net premiums earned		$	52.8				51.2				52.1				52.2				49.8				104.0				99.2
Losses and loss expenses incurred			34.0				31.6				38.3				36.5				34.6				65.6				68.7
Net underwriting expenses incurred			17.5				18.1				17.3				18.1				17.7				35.5				31.6
GAAP underwriting gain (loss)		$	1.3				1.6				(3.5	)			(2.4	)			(2.5	)			2.9				(1.1	)
Catastrophe losses		$	3.0				1.4				1.6				1.7				2.7				4.4				3.2
Unfavorable prior years' casualty reserve development			-				-				3.0				-				2.0				-				3.0
Underwriting ratios
Loss and loss expenses ratio			64.4	%			61.7				73.5				69.9				69.5				63.0				69.3
Underwriting expense ratio			33.1				35.2				33.1				34.6				35.6				34.2				31.8
Combined ratio			97.5	%			96.9				106.6				104.5				105.1				97.2				101.1
Catastrophe losses			5.7	pts			2.7				3.1				3.3				5.4				4.2				3.2
Unfavorable prior years' casualty reserve development			-	pts			-				5.8				-				4.0				-				3.0
Combined ratio before catastrophes			91.8	%			94.2				103.5				101.2				99.7				93.0				97.9
Combined ratio before catastrophes and prior years' development			91.8				94.2				97.7				101.2				95.7				93.0				94.9
Other Statistics
Non-catastrophe property losses		$	5.1				5.3				6.8				7.9				4.4				10.4				10.8
Non-catastrophe property losses			9.7	pts			10.3				13.0				15.2				8.7				10.0				10.9
Direct new business		$	24.9				23.8				27.9				24.2				25.4				48.7				47.9
Price increases			3.7	%			7.1				4.6				5.8				4.3				5.6				4.1

 

Note: Amounts may not foot due to rounding.                            

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

CONSOLIDATED INVESTMENT INCOME

(Unaudited)

                             

		Quarter Ended																					Year-to-date
		June 30,					Mar. 31,				Dec. 31				Sept. 30,				June 30,				June 30,				June 30,
($ in millions)		2017					2017				2016				2016				2016				2017				2016
Net Investment Income
Fixed income securities
Taxable		$	28.4				27.5				23.9				22.5				21.2				55.8				42.2
Tax-exempt			9.3				9.4				9.6				10.0				10.6				18.7				21.2
Total fixed income securities			37.7				36.9				33.5				32.5				31.8				74.6				63.4
Equity securities			1.4				1.5				1.4				1.5				2.2				2.9				4.4
Other investments			5.2				1.6				3.0				1.6				(0.6	)			6.8				(1.7	)
Short-term investments			0.4				0.3				0.2				0.2				0.1				0.6				0.3
Investment income			44.7				40.2				38.1				35.8				33.5				84.9				66.5
Investment expenses			(3.3	)			(2.8	)			(2.6	)			(2.4	)			(2.3	)			(6.1	)			(4.5	)
Investment tax expense			(11.1	)			(10.0	)			(9.0	)			(8.5	)			(7.7	)			(21.1	)			(14.9	)
Total net investment income, after-tax		$	30.3				27.5				26.4				24.9				23.5				57.8				47.1
Net realized capital gains (losses)
Fixed income securities		$	2.6				2.0				(6.8	)			2.2				0.4				4.6				0.9
Equity securities			0.3				-				3.1				1.9				2.0				0.4				2.3
Short term			-				-				-				-				-				-				-
Other investments			-				0.5				-				-				-				0.5				-
Gross gains (losses)			3.0				2.4				(3.7	)			4.0				2.3				5.4				3.2
Other-than-temporary impairment losses			(1.2	)			(3.5	)			(4.0	)			(0.3	)			(0.5	)			(4.7	)			(4.1	)
Total net realized capital gains (losses)		$	1.7				(1.0	)			(7.7	)			3.7				1.8				0.7				(0.9	)
Change in unrealized gains (losses)		$	34.0				27.2				(110.0	)			(16.7	)			53.9				61.2				122.2
Average investment yields
Fixed income securities, before-tax			3.0	%			3.0				2.7				2.6				2.6				3.0				2.7
Fixed income securities, after-tax			2.2				2.2				2.0				2.0				2.0				2.2				2.0
Total portfolio, before-tax			3.0	%			2.8				2.6				2.5				2.4				2.9				2.4
Total portfolio, after-tax			2.2				2.0				2.0				1.9				1.8				2.1				1.8
Effective tax rate on net investment income			26.9	%			26.6				25.5				25.4				24.6				26.8				24.0
New money purchase rates for fixed income securities, before-tax			3.0				3.1				3.0				2.9				3.5				3.1				3.0
New money purchase rates for fixed income securities, after-tax			2.2				2.1				2.1				2.0				2.4				2.1				2.1
Effective duration of fixed income portfolio including short term (in years)			3.7				3.6				3.8				3.7				3.7				3.7				3.7

 

 

Note: Amounts may not foot due to rounding.                            

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

CONSOLIDATED COMPOSITION OF INVESTED ASSETS

(Unaudited)

 

		June 30,								March 31,								December 31,								September 30,								June 30,
		2017								2017								2016								2016								2016
($ in millions)		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
Fixed income securities, at fair value		$	5,094.3				92.5	%			4,955.4				90.7				4,897.8				91.2				4,968.6				92.5				4,838.8				91.8
Equity securities, at fair value			161.7				2.9				154.9				2.8				146.8				2.7				147.3				2.7				152.9				2.9
Other investments			116.4				2.1				106.8				2.0				102.4				1.9				88.5				1.6				76.1				1.4
Short-term investments			133.7				2.4				247.2				4.5				221.7				4.1				169.6				3.2				205.5				3.9
Total investments		$	5,506.1				100.0	%			5,464.3				100.0				5,368.6				100.0				5,374.0				100.0				5,273.3				100.0
Fixed income portfolio, at carry value
U.S. government obligations		$	68.0				1.3	%			88.3				1.8				77.3				1.6				89.9				1.8				96.2				2.0
Foreign government obligations			18.7				0.4				32.6				0.7				26.9				0.5				9.5				0.2				9.0				0.2
State and municipal			1,458.7				28.7				1,349.9				27.3				1,457.4				29.8				1,551.5				31.3				1,594.2				33.0
Corporate			1,840.1				36.1				1,850.2				37.4				2,020.3				41.3				2,219.7				44.7				2,061.9				42.7
Collateralized loan obligations ("CLOs") and other asset-backed securities ("ABS")			702.5				13.8				678.4				13.7				529.0				10.8				284.5				5.7				258.8				5.4
Residential mortgage-backed securities ("RMBS")			724.0				14.2				688.6				13.9				525.2				10.7				538.9				10.9				551.6				11.4
Commercial mortgage-backed securities ("CMBS")			279.2				5.5				263.8				5.3				258.0				5.3				269.1				5.4				260.4				5.4
Total fixed income securities		$	5,091.2				100.0	%			4,951.8				100.0				4,894.1				100.0				4,963.0				100.0				4,832.1				100.0
Weighted average credit quality
Investment grade credit quality		$	4,944.2				97.1	%			4,807.3				97.0				4,747.7				96.9				4,805.6				96.7				4,755.6				98.3
Non-investment grade credit quality			150.1				2.9				148.1				3.0				150.0				3.1				163.1				3.3				83.3				1.7
Total fixed income securities, at fair value		$	5,094.3				100.0	%			4,955.4				100.0				4,897.9				100.0				4,968.6				100.0				4,838.9				100.0
Weighted average credit quality of fixed income portfolio			AA-								AA-								AA-								AA-								AA-
Expected maturities of fixed income securities at carry value
Due in one year or less		$	341.0				6.7	%			371.4				7.5				429.6				8.8				550.3				11.1				567.3				11.7
Due after one year through five years			2,124.7				41.7				2,026.9				40.9				2,179.1				44.5				2,466.0				49.7				2,491.1				51.6
Due after five years through 10 years			2,388.0				46.9				2,302.5				46.5				2,099.2				42.9				1,831.6				36.9				1,657.9				34.3
Due after 10 years			237.6				4.7				251.0				5.1				186.2				3.8				115.1				2.3				115.8				2.4
Total fixed income securities		$	5,091.2				100.0	%			4,951.8				100.0				4,894.1				100.0				4,963.0				100.0				4,832.1				100.0
Alternative investments		June 30, 2017
		Number				Original				Remaining				Current
Strategy		of Funds				Commitment				Commitment				Market Value
Private equity			22			$	182.8				76.0				46.9
Private credit			12				126.0				57.4				29.9
Real assets			8				99.0				31.2				20.8
Total			42			$	407.8				164.7				97.7

 

Note: Amounts may not foot due to rounding.                                

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

Combined Insurance Company Subsidiaries

Statutory Results by Line of Business

Quarter Ended June 30, 2017

(Unaudited)

                                                 

		Net								Net																Underwriting				Dividends to				Combined				Combined
		Premiums				Percent				Premiums				Percent				Loss				LAE				Expense				Policyholders				Ratio				Ratio				Underwriting
($ in thousands)		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2017				2016				Gain/(Loss)
Standard Personal Lines:
Homeowners		$	35,095				(2.5	)  %		$	32,467				(2.8	)  %			65.8				9.2				34.0				-				109.0				84.4			$	(3,829	)
Auto			41,071				8.2				37,663				5.0				67.7				10.8				33.0				-				111.5				104.3				(5,439	)
Other (including flood)			1,941				19.2				1,542				0.7				87.9				(32.6	)			(127.7	)			-				(72.2	)			(129.2	)			3,162
Total		$	78,107				3.3			$	71,672				1.2				67.2				9.2				29.5				-				105.9				89.9			$	(6,106	)
Standard Commercial Lines:
Commercial property			81,971				3.3				78,052				6.1				58.2				5.6				37.5				0.1				101.4				78.2				(2,572	)
Workers compensation			81,354				2.9				79,460				5.6				33.0				16.2				26.9				2.2				78.3				87.7				16,744
General liability			158,721				9.1				141,503				9.5				30.0				14.7				33.7				-				78.4				83.5				24,763
Auto			119,063				9.3				108,316				9.5				71.6				11.3				31.1				0.1				114.1				107.0				(18,643	)
Businessowners' policies			25,121				(0.6	)			24,989				1.4				32.5				11.3				38.0				-				81.8				82.4				4,490
Bonds			8,363				22.2				6,986				23.3				(17.6	)			6.3				53.2				-				41.9				74.6				3,323
Other			4,324				5.9				4,288				8.8				(0.2	)			(0.1	)			56.6				-				56.3				56.4				1,852
Total		$	478,917				6.7			$	443,594				7.9				44.8				12.1				33.3				0.4				90.6				88.6			$	29,957
E&S		$	56,790				6.0			$	52,764				5.9				51.5				12.8				32.7				-				97.0				102.7			$	251
Total Insurance Operations		$	613,814				6.2			$	568,030				6.8				48.2				11.8				32.8				0.3				93.1				90.1			$	24,102
Note: Amounts may not foot due to rounding.
							2017				2016
		Losses Paid				$	253,507			$	241,720
		LAE Paid					53,969				51,045
		Total Paid				$	307,476			$	292,765

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

Combined Insurance Company Subsidiaries

Statutory Results by Line of Business

Year-to-Date Ended June 30, 2017

(Unaudited)

                                           

		Net								Net																Underwriting				Dividends to				Combined				Combined
		Premiums				Percent				Premiums				Percent				Loss				LAE				Expense				Policyholders				Ratio				Ratio				Underwriting
($ in thousands)		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2017				2016				Gain/(Loss)
Standard Personal Lines:
Homeowners		$	61,630				(1.5	)  %		$	65,167				(1.7	)  %			52.3				8.8				36.3				-				97.4				85.0			$	3,001
Auto			77,791				8.1				74,613				4.1				66.8				10.8				33.2				-				110.8				104.5				(9,114	)
Other (including flood)			3,382				12.8				3,093				1.2				71.4				(28.5	)			(137.7	)			-				(94.9	)			(136.1	)			6,426
Total		$	142,803				3.8			$	142,873				1.3				60.2				9.1				30.5				-				99.8				90.1			$	313
Standard Commercial Lines:
Commercial property			162,474				4.8				154,443				7.4				50.8				5.4				37.6				(0.2	)			93.7				84.8				6,747
Workers compensation			173,194				1.6				158,786				5.0				44.0				14.9				26.4				1.6				86.9				84.3				16,989
General liability			313,858				8.2				281,487				9.4				31.0				11.0				33.9				(0.1	)			75.8				83.4				57,058
Auto			236,449				8.9				215,445				10.9				67.7				10.9				31.4				(0.1	)			109.9				106.0				(28,027	)
Businessowners' policies			51,321				2.5				49,834				2.6				39.4				11.3				37.6				-				88.3				88.6				5,283
Bonds			16,154				26.5				13,484				21.2				(3.8	)			6.4				52.6				-				55.2				77.8				4,638
Other			9,015				5.4				8,529				9.7				(0.2	)			0.1				55.7				-				55.6				55.1				3,513
Total		$	962,465				6.5			$	882,008				8.3				45.4				10.6				33.3				0.2				89.5				89.1			$	66,201
E&S		$	107,250				5.3			$	104,003				4.8				48.6				14.6				33.3				-				96.5				100.6			$	2,598
Total Insurance Operations		$	1,212,518				6.0			$	1,128,884				7.1				47.6				10.6				33.0				0.2				91.4				90.4			$	69,111
Note: Amounts may not foot due to rounding.
						2017				2016
		Losses Paid				$	495,486			$	452,393
		LAE Paid					102,482				97,169
		Total Paid				$	597,968			$	549,562

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 

RECONCILIATION OF NET INCOME TO OPERATING INCOME AND CERTAIN OTHER NON-GAAP MEASURES

(Unaudited)

                                 

		Quarter ended																				Year-to-date
		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,				June 30,				June 30,
($ in millions, except per share data)		2017				2017				2016				2016				2016				2017				2016
Reconciliation of net income to operating income
Net income		$	41.4				50.4				39.4				38.5				43.6				91.9				80.6
Exclude: Net realized (gains) losses			(1.7	)			1.0				7.7				(3.7	)			(1.8	)			(0.7	)			0.9
Exclude: Tax on net realized (gains) losses			0.6				(0.4	)			(2.7	)			1.3				0.7				0.2				(0.3	)
Operating income		$	40.3				51.1				44.4				36.1				42.5				91.4				81.2
Reconciliation of net income per diluted share to operating income per diluted share
Net income per diluted share		$	0.70				0.85				0.67				0.66				0.74				1.55				1.38
Exclude: Net realized (gains) losses			(0.03	)			0.02				0.13				(0.06	)			(0.03	)			(0.01	)			0.02
Exclude: Tax on net realized (gains) losses			0.01				(0.01	)			(0.05	)			0.02				0.01				-				(0.01	)
Operating income per diluted share		$	0.68				0.86				0.75				0.62				0.72				1.54				1.39
Reconciliation of annualized ROE to annualized operating ROE
Annualized ROE			10.2	%			12.9				10.1				9.8				11.5				11.5				10.9
Exclude: Net realized (gains) losses			(0.4	)			0.3				2.0				(0.9	)			(0.5	)			(0.1	)			0.1
Exclude: Tax on net realized (gains) losses			0.1				(0.1	)			(0.7	)			0.3				0.2				0.1				-
Annualized operating ROE			9.9	%			13.1				11.4				9.2				11.2				11.5				11.0

 

Operating income, operating income per diluted share, and operating return on equity differ from net income, net income per diluted share, and return on equity, respectively, by the exclusion of after-tax net realized gains and losses on investments and the results of discontinued operations, if any. They are used as important financial measures by management, analysts, and investors, because the realization of net investment gains and losses in any given period is largely discretionary as to timing. In addition, these net realized investment gains and losses, as well as other-than-temporary investment impairments that are charged to earnings and the results of discontinued operations, could distort the analysis of trends. These operating measurements are not intended as a substitute for net income, earnings per share, or return on equity prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of net income, net income per diluted share, and return on equity to operating income, operating income per diluted share, and operating return on equity, respectively, are provided in the tables above. Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners Accounting Practices and Procedures Manual and, therefore, is not reconciled to GAAP.

 

Note: Amounts may not foot due to rounding.                            

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

RATINGS AND CONTACT INFORMATION

Address:

As of June 30, 2017

40 Wantage Avenue

A.M. Best

Standard & Poor’s

Moody's

Fitch

Branchville, NJ 07890

Financial Strength Ratings:

A

A

A2

A+

Corporate Website:

Long-Term Debt Credit Rating

bbb+

BBB

Baa2

BBB+

www.Selective.com

Investor Contact:

Rohan Pai

REGISTRAR AND TRANSFER AGENT

Senior Vice President

Wells Fargo Shareowner Services

Investor Relations & Treasurer

P.O. Box 64854

Phone:  973-948-1364

St. Paul, MN 55164

Rohan.Pai@Selective.com

866-877-6351

Media Contact:

Jamie M. Beal

Assistant Vice President

Director of Communications

Phone:  973-948-1234

Jamie.Beal@Selective.com

 

 

 

14

---