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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Selective Insurance Group Inc | NASDAQ:SIGI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.18 | 2.22% | 100.25 | 100.13 | 102.78 | 100.78 | 98.87 | 98.87 | 364,510 | 01:00:00 |
Fourth Quarter 2022 Return on Common Equity ("ROE") of 14.8% and Non-GAAP Operating ROE1 of 15.6%
Full Year 2022 ROE of 8.8% and Non-GAAP Operating ROE1 of 12.4%
In the fourth quarter of 2022, we reported:
BRANCHVILLE, N.J., Feb. 2, 2023 /PRNewswire/ -- Selective Insurance Group, Inc. (NASDAQ: SIGI) reported financial results for the fourth quarter ended December 31, 2022, with net income per diluted common share of $1.38 and non-GAAP operating income1 per diluted common share of $1.46. The fourth quarter combined ratio was a profitable 94.7%, with 5.2 points of catastrophe losses. Non-catastrophe property losses were 2.5 points above a year ago.
Catastrophe losses in the quarter were driven by Winter Storm Elliott. This storm impacted 37 states, 26 of which are in our standard lines footprint. We have recorded $135 million in ultimate gross losses, or $46.1 million net of reinsurance. In addition, we incurred $11.7 million in ceded earned reinstatement premium related to Winter Storm Elliott for a total negative impact to fourth quarter 2022 underwriting results of $57.8 million, pre-tax, or $0.75 per diluted share. Winter Storm Elliott increased our fourth quarter and full year 2022 combined ratio by 6.5 points and 1.7 points, respectively, and reduced our fourth quarter and full year 2022 ROE by 8.0 points and 1.9 points, respectively.
Despite Winter Storm Elliott, non-GAAP operating ROE in the quarter was 15.6%. NPW increased 14% from a year ago and growth was strong across all our underwriting segments, driven by renewal pure price increases, solid retention, new business, and exposure growth. For the quarter, the Investments segment contributed 11.5 points of annualized ROE.
"2022 marks our ninth consecutive year of double-digit non-GAAP operating ROEs. Against a backdrop of elevated catastrophe losses, higher loss cost trends, and capital market volatility, these results reflect the success of our underwriting discipline and profitable growth strategies," said John J. Marchioni, Chairman, President and Chief Executive Officer.
"In 2023, we expect to build on our strong market position. Our superior distribution partnerships, sophisticated underwriting tools, and strong capital and liquidity position support our profitable growth opportunities," Mr. Marchioni concluded.
Operating Highlights | ||||||||||
Consolidated Financial Results | Quarter ended December 31, | Change | Year-to-Date December 31, | Change | ||||||
$ and shares in millions, except per share data | 2022 | 2021 | 2022 | 2021 | ||||||
Net premiums written | $ 849.7 | 745.4 | 14 | % | $ 3,573.6 | 3,189.7 | 12 | % | ||
Net premiums earned | 872.8 | 784.5 | 11 | 3,373.4 | 3,017.3 | 12 | ||||
Net investment income earned | 81.4 | 80.1 | 2 | 288.2 | 326.6 | (12) | ||||
Net realized and unrealized (losses) gains, pre-tax | (5.9) | 2.2 | (362) | (114.8) | 17.6 | (752) | ||||
Total revenues | 952.2 | 869.7 | 9 | 3,558.1 | 3,379.2 | 5 | ||||
Net underwriting income, after-tax | 36.4 | 42.7 | (15) | 131.8 | 172.7 | (24) | ||||
Net investment income, after-tax | 65.5 | 64.5 | 1 | 232.2 | 263.0 | (12) | ||||
Net income available to common stockholders | 84.2 | 96.7 | (13) | 215.7 | 394.5 | (45) | ||||
Non-GAAP operating income1 | 88.9 | 94.9 | (6) | 306.4 | 380.6 | (19) | ||||
Combined ratio | 94.7 | % | 93.1 | 1.6 | pts | 95.1 | % | 92.8 | 2.3 | pts |
Loss and loss expense ratio | 62.4 | 60.4 | 2.0 | 62.7 | 60.1 | 2.6 | ||||
Underwriting expense ratio | 32.1 | 32.5 | (0.4) | 32.3 | 32.5 | (0.2) | ||||
Dividends to policyholders ratio | 0.2 | 0.2 | — | 0.1 | 0.2 | (0.1) | ||||
Net catastrophe losses | 5.2 | pts | 4.5 | 0.7 | 4.3 | pts | 5.4 | (1.1) | ||
Non-catastrophe property losses and loss expenses | 18.5 | 16.0 | 2.5 | 18.3 | 15.6 | 2.7 | ||||
(Favorable) prior-year reserve development on casualty lines | (4.4) | (1.9) | (2.5) | (2.5) | (2.7) | 0.2 | ||||
Net income available to common stockholders per diluted common share | $ 1.38 | 1.59 | (13) | % | $ 3.54 | 6.50 | (46) | % | ||
Non-GAAP operating income per diluted common share1 | 1.46 | 1.56 | (6) | 5.03 | 6.27 | (20) | ||||
Weighted average diluted common shares | 60.9 | 60.8 | — | 60.9 | 60.7 | — | ||||
Book value per common share | $ 38.57 | 46.24 | (17) | 38.57 | 46.24 | (17) | ||||
Adjusted book value per common share1 | 45.49 | 43.23 | 5 | 45.49 | 43.23 | 5 |
Overall Insurance Operations
For the fourth quarter, overall NPW increased 14% from a year ago, reflecting average renewal pure price increases of 5.3%, solid retention, new business, and exposure growth. Our 94.7% combined ratio in the quarter was up from 93.1% a year ago, driven principally by higher catastrophe and non-catastrophe property losses. The quarter's catastrophe losses were driven by $46.1 million of net losses related to Winter Storm Elliott. We also incurred $11.7 million in reinstatement premium for a total negative impact to our underwriting results of $57.8 million, pre-tax. The non-catastrophe property loss increase was primarily a result of higher severities from inflationary pressures on items such as new and used car prices, auto repair costs, building materials, and labor costs. These items were partially offset by prior-year favorable casualty reserve development of $38.0 million, including $30.0 million on our workers compensation line of business. Our Insurance Operations generated 6.4 points of annualized ROE in the quarter.
Standard Commercial Lines Segment
For the fourth quarter, Standard Commercial Lines premiums (representing 80% of total NPW) increased 13% compared to a year ago. The premium growth reflected average renewal pure price increases of 5.6%, new business growth of 22%, and consistently solid retention of 86%. The fourth quarter combined ratio was 95.5%. The following table shows the variances relative to the 93.1% combined ratio a year ago:
Standard Commercial Lines Segment | Quarter ended December 31, | Change | Year-to-Date December 31, | Change | ||||||
$ in millions | 2022 | 2021 | 2022 | 2021 | ||||||
Net premiums written | $ 676.6 | 597.7 | 13 | % | $ 2,902.0 | 2,593.0 | 12 | % | ||
Net premiums earned | 705.7 | 635.4 | 11 | 2,739.8 | 2,443.9 | 12 | ||||
Combined ratio | 95.5 | % | 93.1 | 2.4 | pts | 94.8 | % | 91.9 | 2.9 | pts |
Loss and loss expense ratio | 62.3 | 59.5 | 2.8 | 61.5 | 58.4 | 3.1 | ||||
Underwriting expense ratio | 33.0 | 33.3 | (0.3) | 33.1 | 33.3 | (0.2) | ||||
Dividends to policyholders ratio | 0.2 | 0.3 | (0.1) | 0.2 | 0.2 | — | ||||
Net catastrophe losses | 5.7 | pts | 4.2 | 1.5 | 3.5 | pts | 4.3 | (0.8) | ||
Non-catastrophe property losses and loss expenses | 16.5 | 14.5 | 2.0 | 16.8 | 13.9 | 2.9 | ||||
(Favorable) prior-year reserve development on casualty lines | (4.7) | (2.4) | (2.3) | (3.0) | (3.0) | — |
Standard Personal Lines Segment
For the fourth quarter, Standard Personal Lines premiums (representing 10% of total NPW) increased 20% compared to a year ago. Renewal pure price increases averaged 1.0%, retention was 87%, and new business was up $12.5 million, or 126%, compared to last year. The fourth quarter combined ratio was 99.9%. The following table shows the variances relative to the 97.6% combined ratio a year ago:
Standard Personal Lines Segment | Quarter ended December 31, | Change | Year-to-Date December 31, | Change | ||||||
$ in millions | 2022 | 2021 | 2022 | 2021 | ||||||
Net premiums written | $ 84.6 | 70.4 | 20 | % | $ 319.1 | 292.3 | 9 | % | ||
Net premiums earned | 77.8 | 73.1 | 6 | 299.4 | 293.6 | 2 | ||||
Combined ratio | 99.9 | % | 97.6 | 2.3 | pts | 102.4 | % | 98.6 | 3.8 | pts |
Loss and loss expense ratio | 75.4 | 71.0 | 4.4 | 77.2 | 72.2 | 5.0 | ||||
Underwriting expense ratio | 24.5 | 26.6 | (2.1) | 25.2 | 26.4 | (1.2) | ||||
Net catastrophe losses | 5.3 | pts | 9.9 | (4.6) | 13.6 | pts | 12.7 | 0.9 | ||
Non-catastrophe property losses and loss expenses | 45.7 | 35.7 | 10.0 | 39.1 | 35.0 | 4.1 | ||||
(Favorable) prior-year reserve development on casualty lines | — | — | — | — | — | — |
Excess and Surplus Lines Segment
For the fourth quarter, Excess and Surplus Lines premiums (representing 10% of total NPW) increased 14% compared to the prior-year period, driven by average renewal pure price increases of 7.9% and new business growth of 5%. The fourth quarter combined ratio was 84.3%. The following table shows the variances relative to the 88.8% combined ratio a year ago:
Excess and Surplus Lines Segment | Quarter ended December 31, | Change | Year-to-Date December 31, | Change | ||||||
$ in millions | 2022 | 2021 | 2022 | 2021 | ||||||
Net premiums written | $ 88.5 | 77.3 | 14 | % | $ 352.5 | 304.4 | 16 | % | ||
Net premiums earned | 89.3 | 76.0 | 17 | 334.2 | 279.8 | 19 | ||||
Combined ratio | 84.3 | % | 88.8 | (4.5) | pts | 90.9 | % | 94.3 | (3.4) | pts |
Loss and loss expense ratio | 52.3 | 56.9 | (4.6) | 58.8 | 62.6 | (3.8) | ||||
Underwriting expense ratio | 32.0 | 31.9 | 0.1 | 32.1 | 31.7 | 0.4 | ||||
Net catastrophe losses | 1.6 | pts | 1.6 | — | 2.9 | pts | 8.1 | (5.2) | ||
Non-catastrophe property losses and loss expenses | 10.5 | 8.9 | 1.6 | 11.9 | 10.1 | 1.8 | ||||
(Favorable) prior-year reserve development on casualty lines | (5.6) | — | (5.6) | (1.5) | (2.5) | 1.0 |
Investments Segment
For the fourth quarter, after-tax net investment income of $65 million was up 1%, compared to last year. After-tax alternative investment income of $0.1 million was $19 million lower in fourth quarter 2022 than the prior-year period. Higher income from our fixed income securities portfolio due to higher book yields and the investment of operating cash flow during the year were an offset. For the quarter, the after-tax earned income yield averaged 3.4% for the overall portfolio, and 3.7% for the fixed income securities portfolio. Invested assets per dollar of common stockholders' equity was $3.37 at December 31, 2022, and the investment portfolio generated 11.5 points of non-GAAP operating ROE for the quarter.
Investments Segment | Quarter ended December 31, | Change | Year-to-Date December 31, | Change | ||||||
$ in millions, except per share data | 2022 | 2021 | 2022 | 2021 | ||||||
Net investment income earned, after-tax | $ 65.5 | 64.5 | 1 | % | $ 232.2 | 263.0 | (12) | % | ||
Net investment income per common share | 1.08 | 1.06 | 2 | 3.81 | 4.34 | (12) | ||||
Effective tax rate | 19.6 | % | 19.5 | 0.1 | pts | 19.4 | % | 19.5 | (0.1) | pts |
Average yields: | ||||||||||
Portfolio: | ||||||||||
Pre-tax | 4.2 | 4.0 | 0.2 | 3.6 | 4.2 | (0.6) | ||||
After-tax | 3.4 | 3.2 | 0.2 | 2.9 | 3.4 | (0.5) | ||||
Fixed income securities: | ||||||||||
Pre-tax | 4.6 | % | 3.1 | 1.5 | pts | 3.9 | % | 3.2 | 0.7 | pts |
After-tax | 3.7 | 2.5 | 1.2 | 3.1 | 2.6 | 0.5 | ||||
Annualized ROE contribution | 11.5 | 9.4 | 2.1 | 9.4 | 9.9 | (0.5) |
Balance Sheet | ||||||||
$ in millions, except per share data | December 31, 2022 | December 31, 2021 | Change | |||||
Total assets | $ 10,802.3 | 10,461.4 | 3 % | |||||
Total investments | 7,837.5 | 8,027.0 | (2) | |||||
Long-term debt | 504.7 | 506.1 | — | |||||
Stockholders' equity | 2,527.6 | 2,982.9 | (15) | |||||
Common stockholders' equity | 2,327.6 | 2,782.9 | (16) | |||||
Invested assets per dollar of common stockholders' equity | 3.37 | 2.88 | 17 | |||||
Net premiums written to policyholders' surplus | 1.44 | 1.33 | 0.11 | |||||
Book value per common share | $ 38.57 | 46.24 | (17) | |||||
Adjusted book value per common share1 | 45.49 | 43.23 | 5 | |||||
Debt to total capitalization | 16.6 | % | 14.5 | % | 2.1 | pts |
Book value per common share declined by $7.67, or 17%, during 2022. The decline was principally driven by (i) a $9.91 change in after-tax net unrealized losses on our fixed income securities portfolio from higher interest rates, and (ii) $1.14 of dividends on our common stock paid to shareholders, partially offset by $3.54 of net income per diluted common share. During 2022, the Company repurchased 165,159 shares for $12.4 million, or an average price of $75.20 per share. Capacity under our existing repurchase authorization was $84.2 million as of December 31, 2022.
Selective's Board of Directors declared:
Guidance
For 2023, our full-year expectations are as follows:
The supplemental investor package, including financial information not included in this press release, is available on the Investors page of Selective's website at www.Selective.com. Selective's quarterly analyst conference call will be simulcast at 10:00 A.M. ET, on Friday, February 3, 2023, at www.Selective.com. The webcast will be available for rebroadcast until the close of business on March 5, 2023.
About Selective Insurance Group, Inc.
Selective Insurance Group, Inc. (Nasdaq: SIGI) is a holding company for 10 property and casualty insurance companies rated "A+" (Superior) by AM Best. Through independent agents, the insurance companies offer standard and specialty insurance for commercial and personal risks and flood insurance through the National Flood Insurance Program's Write Your Own Program. Selective has been honored and awarded for its unique position as a leading insurance group and employer of choice, including listing in the Fortune 1000 and three consecutive years as a certified Great Place to Work®. For more information about Selective, visit www.Selective.com.
1Reconciliation of Net Income Available to Common Stockholders to Non-GAAP Operating Income and Certain Other Non-GAAP Measures
Non-GAAP operating income, non-GAAP operating income per diluted common share, and non-GAAP operating return on common equity differ from net income available to common stockholders, net income available to common stockholders per diluted common share, and return on common equity, respectively, by the exclusion of after-tax net realized and unrealized gains and losses on investments included in net income. Adjusted book value per common share differs from book value per common share by the exclusion of total after-tax unrealized gains and losses on investments included in accumulated other comprehensive (loss) income. These non-GAAP measures are used as important financial measures by management, analysts, and investors, because the timing of realized and unrealized investment gains and losses on securities in any given period is largely discretionary. In addition, net realized and unrealized gains and losses on investments could distort the analysis of trends. These operating measurements are not intended as a substitute for net income available to common stockholders, net income available to common stockholders per diluted common share, return on common equity, and book value per common share prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of net income available to common stockholders, net income available to common stockholders per diluted common share, return on common equity, and book value per common share to non-GAAP operating income, non-GAAP operating income per diluted common share, non-GAAP operating return on common equity, and adjusted book value per common share, respectively, are provided in the tables below.
Note: All amounts included in this release exclude intercompany transactions.
Reconciliation of Net Income Available to Common Stockholders to Non-GAAP Operating Income | ||||||||
$ in millions | Quarter ended December 31, | Year-to-Date December 31, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income available to common stockholders | $ 84.2 | 96.7 | 215.7 | 394.5 | ||||
Net realized and unrealized investment losses (gains) included in net income, before tax | 5.9 | (2.2) | 114.8 | (17.6) | ||||
Tax on reconciling items | (1.2) | 0.5 | (24.1) | 3.7 | ||||
Non-GAAP operating income | $ 88.9 | 94.9 | 306.4 | 380.6 | ||||
Reconciliation of Net Income Available to Common Stockholders per Diluted Common Share to Non-GAAP Operating Income | ||||||||
Quarter ended December 31, | Year-to-Date December 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income available to common stockholders per diluted common share | $ 1.38 | 1.59 | 3.54 | 6.50 | ||||
Net realized and unrealized investment losses (gains) included in net income, before tax | 0.10 | (0.04) | 1.89 | (0.29) | ||||
Tax on reconciling items | (0.02) | 0.01 | (0.40) | 0.06 | ||||
Non-GAAP operating income per diluted common share | $ 1.46 | 1.56 | 5.03 | 6.27 | ||||
Reconciliation of Return on Common Equity to Non-GAAP Operating Return on Common Equity | ||||||||
Quarter ended December 31, | Year-to-Date December 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Return on Common Equity | 14.8 % | 14.0 | 8.8 | 14.8 | ||||
Net realized and unrealized investment losses (gains) included in net income, before tax | 1.0 | (0.3) | 4.7 | (0.7) | ||||
Tax on reconciling items | (0.2) | 0.1 | (1.1) | 0.2 | ||||
Non-GAAP Operating Return on Common Equity | 15.6 % | 13.8 | 12.4 | 14.3 | ||||
Reconciliation of Book Value per Common Share to Adjusted Book Value per Common Share | ||||||||
Quarter ended December 31, | Year-to-Date December 31, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Book value per common share | $ 38.57 | 46.24 | 38.57 | 46.24 | ||||
Total unrealized investment losses (gains) included in accumulated other comprehensive (loss) income, before tax | 8.75 | (3.80) | 8.75 | (3.80) | ||||
Tax on reconciling items | (1.83) | 0.79 | (1.83) | 0.79 | ||||
Adjusted book value per common share | 45.49 | 43.23 | 45.49 | 43.23 |
Note: Amounts in the tables above may not foot due to rounding.
Forward-Looking Statements
Certain statements in this report, including information incorporated by reference, are "forward-looking statements" as defined by 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 and financial performance. They involve known and unknown risks, uncertainties, and other factors that may cause our or industry actual results, activity levels, or performance to materially differ from those expressed or implied by the forward-looking statements. In some cases, forward-looking statements include the words "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro forma," "seek," "likely," "continue," or comparable terms. Our forward-looking statements are only predictions, and we can give no assurance that such expectations will prove correct. We undertake no obligation, other than as federal securities laws may require, to publicly update or revise any forward-looking statements for any reason.
Factors that could cause our actual results to differ materially from what we project, forecast, or estimate in forward-looking statements include, without limitation:
These risk factors may not be exhaustive. We operate in a constantly changing business environment, and new risk factors may emerge any time.
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).
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SOURCE Selective Insurance Group, Inc.
Copyright 2023 PR Newswire
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