Selective Insurance Group Inc (SIGI, Financial) released its 8-K filing on October 21, 2024, reporting third-quarter results that fell short of analyst expectations. The company, a regional property-casualty insurer based in New Jersey, focuses on small businesses and offers a range of commercial and personal insurance products.
Performance Overview
For the third quarter of 2024, Selective Insurance Group Inc (SIGI, Financial) reported net income of $1.47 per diluted common share, missing the analyst estimate of $1.55. The company's non-GAAP operating income was $1.40 per diluted common share. Total revenues reached $1,244.3 million, surpassing the estimated $1,174.76 million. However, the GAAP combined ratio increased to 99.5% from 96.8% in the same quarter last year, primarily due to elevated catastrophe losses.
Financial Achievements and Challenges
Net premiums written (NPW) increased by 9% year-over-year, driven by a 9.1% average renewal pure price increase in Commercial Lines. Despite this growth, the company faced significant challenges from catastrophe losses, which added 13.4 points to the combined ratio, compared to 6.6 points in the previous year. The impact of 19 named storms, including Hurricane Helene, resulted in $149 million in catastrophe losses.
Key Financial Metrics
Selective Insurance Group Inc (SIGI, Financial) reported a return on common equity (ROE) of 12.6% and a non-GAAP operating ROE of 12.1%. The book value per common share increased by 9% from the previous quarter to $48.82, while the adjusted book value per common share rose by 2% to $50.80. After-tax net investment income grew by 16% to $93 million, contributing to a 13.1-point annualized ROE in the investments segment.
Segment Performance
| Segment | Net Premiums Written ($ millions) | Combined Ratio (%) |
|---|---|---|
| Standard Commercial Lines | 903.9 | 99.2 |
| Standard Personal Lines | 111.0 | 122.1 |
| Excess and Surplus Lines | 142.7 | 83.2 |
The Standard Commercial Lines segment, which represents 78% of total NPW, saw an 8% increase in premiums but faced a higher combined ratio due to catastrophe losses. The Standard Personal Lines segment experienced a 2% decrease in premiums, with a significant drop in retention and new business. The Excess and Surplus Lines segment showed strong growth with a 28% increase in premiums and a lower combined ratio.
Analysis and Outlook
Selective Insurance Group Inc (SIGI, Financial) continues to navigate a challenging environment with elevated catastrophe losses impacting its financial performance. The company's disciplined approach to pricing and underwriting, along with its strategic expansion into new states, positions it to manage future uncertainties. However, the increased combined ratio and missed earnings estimates highlight the ongoing challenges in the insurance industry, particularly in managing catastrophe risks.
“The continued frequency and severity of storms in the third quarter, including the devastation from Hurricane Helene, underscore our unwavering commitment to our customers, agency partners, and communities,” said John J. Marchioni, Chairman, President, and CEO.
Despite the setbacks, Selective Insurance Group Inc (SIGI, Financial) remains focused on achieving its long-term combined ratio target and leveraging its strong capital position to support growth and resilience in the face of external challenges.
Explore the complete 8-K earnings release (here) from Selective Insurance Group Inc for further details.
