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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 |
BRANCHVILLE, N.J., Oct. 27, 2021 /PRNewswire/ -- Selective Insurance Group, Inc. (NASDAQ: SIGI) reported financial results for the third quarter ended September 30, 2021, with net income per diluted common share of $1.18. Non-GAAP operating income1 per diluted common share was also $1.18. The third quarter combined ratio was a profitable 98.6%, despite $76 million of net catastrophe losses, or 10.0 points on the combined ratio. Hurricane Ida accounted for $43 million of net catastrophe losses, with a number of other events accounting for the remainder. Overall NPW increased 13% from a year ago, driven primarily by continued renewal pure price increases, solid retention rates, and strong new business growth. The Investments segment contributed 11.0 points of annualized ROE, principally due to exceptionally strong alternative investment returns.
"We generated profitable underwriting results and delivered a solid ROE in the third quarter despite elevated catastrophe losses for the industry and Selective. Our 14.5% non-GAAP operating ROE for the first nine months builds on our seven-year track record of double-digit operating ROEs. I am proud of our strong and consistent operating performance and the strength of our balance sheet and capital position. We are well-positioned, with high-quality distribution partner relationships and superior underwriting capabilities, as we look ahead to 2022," said John Marchioni, President and CEO.
Operating Highlights | ||||||||||||||
Consolidated Financial Results | Quarter ended September 30, | Change | Year-to-Date September 30, | Change | ||||||||||
$ and shares in millions, except per share data | 2021 | 2020 | 2021 | 2020 | ||||||||||
Net premiums written | $ | 812.9 | 719.5 | 13 | % | $ | 2,444.3 | 2,091.6 | 17 | % | ||||
Net premiums earned | 767.2 | 694.5 | 10 | 2,232.7 | 1,976.9 | 13 | ||||||||
Net investment income earned | 93.0 | 68.2 | 36 | 246.5 | 158.6 | 55 | ||||||||
Net realized and unrealized gains (losses), pre-tax | 0.2 | 7.7 | (98) | 15.4 | (24.3) | (163) | ||||||||
Total revenues | 865.0 | 776.6 | 11 | 2,509.5 | 2,123.8 | 18 | ||||||||
Net underwriting income, after-tax | 8.6 | 16.6 | (48) | 130.0 | 41.3 | 215 | ||||||||
Net investment income, after-tax | 74.7 | 55.1 | 35 | 198.5 | 129.2 | 54 | ||||||||
Net income available to common stockholders | 71.4 | 69.9 | 2 | 297.8 | 119.3 | 150 | ||||||||
Non-GAAP operating income1 | 71.3 | 63.8 | 12 | 285.7 | 138.5 | 106 | ||||||||
Combined ratio | 98.6 | % | 97.0 | 1.6 | pts | 92.6 | % | 97.4 | (4.8) | pts | ||||
Loss and loss expense ratio | 65.9 | 64.5 | 1.4 | 60.0 | 63.4 | (3.4) | ||||||||
Underwriting expense ratio | 32.6 | 32.4 | 0.2 | 32.4 | 33.9 | (1.5) | ||||||||
Dividends to policyholders ratio | 0.1 | 0.1 | — | 0.2 | 0.1 | 0.1 | ||||||||
Net catastrophe losses | 10.0 | pts | 11.4 | (1.4) | 5.8 | pts | 9.9 | (4.1) | ||||||
Non-catastrophe property losses and loss expenses | 16.1 | 15.2 | 0.9 | 15.5 | 14.9 | 0.6 | ||||||||
(Favorable) prior year reserve development on casualty lines | (1.8) | (3.6) | 1.8 | (3.0) | (2.5) | (0.5) | ||||||||
Net income available to common stockholders per diluted common share | $ | 1.18 | 1.16 | 2 | % | $ | 4.92 | 1.98 | 148 | % | ||||
Non-GAAP operating income per diluted common share1 | 1.18 | 1.06 | 11 | 4.72 | 2.30 | 105 | ||||||||
Weighted average diluted common shares | 60.6 | 60.4 | — | 60.5 | 60.3 | — | ||||||||
Book value per common share | $ | 45.27 | 40.00 | 13 | 45.27 | 40.00 | 13 |
Overall Insurance Operations
For the third quarter, overall NPW increased 13% from a year ago. The increase in NPW reflected overall renewal pure price increases averaging 4.9%, solid retention rates, and new business growth of 20%. Our combined ratio was 98.6% in the quarter, compared to 97.0% a year ago. Both periods included elevated levels of net catastrophe losses with 10.0 points in the third quarter of 2021 and 11.4 points in the third quarter of 2020, both well above our longer-term averages. Our Insurance Operations generated 1.3 points of annualized ROE in the quarter.
Standard Commercial Lines Segment
For the third quarter, Standard Commercial Lines premiums, representing 80% of total NPW, increased 13% compared to a year ago. Renewal pure price increases that averaged 5.3%, solid retention rates, and new business growth of 24% drove the NPW growth. The third quarter combined ratio was 97.2%, up 4.9 points from a year ago, driven by the items listed in the table below.
Standard Commercial Lines Segment | Quarter ended September 30, | Change | Year-to-Date September 30, | Change | ||||||||||
$ in millions | 2021 | 2020 | 2021 | 2020 | ||||||||||
Net premiums written | $ | 652.6 | 577.8 | 13 | % | $ | 1,995.3 | 1,679.5 | 19 | % | ||||
Net premiums earned | 619.6 | 558.1 | 11 | 1,808.5 | 1,575.7 | 15 | ||||||||
Combined ratio | 97.2 | % | 92.3 | 4.9 | pts | 91.4 | % | 95.1 | (3.7) | pts | ||||
Loss and loss expense ratio | 63.5 | 59.3 | 4.2 | 57.9 | 60.3 | (2.4) | ||||||||
Underwriting expense ratio | 33.5 | 32.9 | 0.6 | 33.3 | 34.7 | (1.4) | ||||||||
Dividends to policyholders ratio | 0.2 | 0.1 | 0.1 | 0.2 | 0.1 | 0.1 | ||||||||
Net catastrophe losses | 8.1 | pts | 7.0 | 1.1 | 4.3 | pts | 7.0 | (2.7) | ||||||
Non-catastrophe property losses and loss expenses | 14.5 | 13.5 | 1.0 | 13.7 | 13.7 | — | ||||||||
(Favorable) prior-year reserve development on casualty lines | (2.3) | (4.5) | 2.2 | (3.3) | (3.2) | (0.1) |
Standard Personal Lines Segment
For the third quarter, Standard Personal Lines premiums, representing 10% of total NPW, were down 2% compared to the prior-year period. Renewal pure price increases averaged 1.2%, retention was 84%, and new business was down 15% compared to the prior year. The third quarter combined ratio was 115.2%, down 3.8 points from a year ago, driven by the items listed in the table below.
Standard Personal Lines Segment | Quarter ended September 30, | Change | Year-to-Date September 30, | Change | ||||||||||
$ in millions | 2021 | 2020 | 2021 | 2020 | ||||||||||
Net premiums written | $ | 78.2 | 79.7 | (2) | % | $ | 221.9 | 225.5 | (2) | % | ||||
Net premiums earned | 73.4 | 76.0 | (3) | 220.5 | 223.7 | (1) | ||||||||
Combined ratio | 115.2 | % | 119.0 | (3.8) | pts | 99.0 | % | 109.1 | (10.1) | pts | ||||
Loss and loss expense ratio | 88.8 | 91.7 | (2.9) | 72.7 | 81.4 | (8.7) | ||||||||
Underwriting expense ratio | 26.4 | 27.3 | (0.9) | 26.3 | 27.7 | (1.4) | ||||||||
Net catastrophe losses | 26.7 | pts | 37.4 | (10.7) | 13.7 | pts | 29.7 | (16.0) | ||||||
Non-catastrophe property losses and loss expenses | 39.1 | 29.5 | 9.6 | 34.8 | 27.1 | 7.7 | ||||||||
(Favorable) prior-year reserve development on casualty lines | — | — | — | — | — | — |
Excess and Surplus Lines Segment
For the third quarter, Excess and Surplus Lines premiums, representing 10% of total NPW, were up 32% compared to the prior-year period, driven by renewal pure price increases that averaged 5.6%, increased retention rates, and new business growth of 20%. The third quarter combined ratio was 93.7%, down 18.3 points from a year ago, driven by the items listed in the table below.
Excess and Surplus Lines Segment | Quarter ended September 30, | Change | Year-to-Date September 30, | Change | ||||||||||
$ in millions | 2021 | 2020 | 2021 | 2020 | ||||||||||
Net premiums written | $ | 82.1 | 62.1 | 32 | % | $ | 227.1 | 186.6 | 22 | % | ||||
Net premiums earned | 74.3 | 60.5 | 23 | 203.8 | 177.5 | 15 | ||||||||
Combined ratio | 93.7 | % | 112.0 | (18.3) | pts | 96.3 | % | 102.2 | (5.9) | pts | ||||
Loss and loss expense ratio | 62.8 | 77.8 | (15.0) | 64.7 | 67.4 | (2.7) | ||||||||
Underwriting expense ratio | 30.9 | 34.2 | (3.3) | 31.6 | 34.8 | (3.2) | ||||||||
Net catastrophe losses | 9.2 | pts | 19.5 | (10.3) | 10.5 | pts | 10.6 | (0.1) | ||||||
Non-catastrophe property losses and loss expenses | 6.5 | 13.2 | (6.7) | 10.5 | 10.9 | (0.4) | ||||||||
(Favorable) prior year reserve development on casualty lines | — | — | — | (3.4) | — | (3.4) |
Investments Segment
For the third quarter, net investment income, after-tax, of $75 million was up $20 million, or 35%, compared to the third quarter of 2020. Alternative investments, which are reported on a one-quarter lag, drove the increase with $34 million in after-tax gains, an increase of $19 million from the third quarter of 2020. For the quarter, the after-tax earned income yield on the overall portfolio averaged 3.8%, and the after-tax earned income yield on the fixed income securities portfolio averaged 2.5%. For the third quarter, the investment portfolio generated 11.0 points of annualized ROE. Invested assets per dollar of common stockholders' equity was $2.89 at September 30, 2021.
Investments Segment | Quarter ended September 30, | Change | Year-to-Date September 30, | Change | ||||||||||
$ in millions, except per share data | 2021 | 2020 | 2021 | 2020 | ||||||||||
Net investment income earned, after-tax | $ | 74.7 | 55.1 | 35 | % | $ | 198.5 | 129.2 | 54 | % | ||||
Net investment income per common share | 1.23 | 0.91 | 35 | 3.28 | 2.14 | 53 | ||||||||
Effective tax rate | 19.7 | % | 19.1 | 0.6 | pts | 19.5 | % | 18.6 | 0.9 | pts | ||||
Average yields: | ||||||||||||||
Portfolio: | ||||||||||||||
Pre-tax | 4.8 | 3.8 | 1.0 | 4.3 | 3.0 | 1.3 | ||||||||
After-tax | 3.8 | 3.1 | 0.7 | 3.4 | 2.5 | 0.9 | ||||||||
Fixed income securities: | ||||||||||||||
Pre-tax | 3.1 | % | 3.2 | (0.1) | pts | 3.2 | % | 3.2 | — | pts | ||||
After-tax | 2.5 | 2.6 | (0.1) | 2.6 | 2.6 | — | ||||||||
Annualized ROE contribution | 11.0 | 9.4 | 1.6 | 10.1 | 7.5 | 2.6 |
Balance Sheet | |||||||||
$ in millions, except per share data | September 30, 2021 | December 31, 2020 | Change | ||||||
Total assets | $ | 10,442.2 | 9,687.9 | 8 | % | ||||
Total investments | 7,859.2 | 7,505.6 | 5 | ||||||
Long-term debt | 500.9 | 550.7 | (9) | ||||||
Stockholders' equity | 2,922.1 | 2,738.9 | 7 | ||||||
Common stockholders' equity | 2,722.1 | 2,538.9 | 7 | ||||||
Invested assets per dollar of common stockholders' equity | 2.89 | 2.96 | (2) | ||||||
Net premiums written to policyholders' surplus | 1.35 | x | 1.30 | x | 0.05 | x | |||
Book value per common share | $ | 45.27 | 42.38 | 7 | |||||
Debt to total capitalization | 14.6 | % | 16.7 | % | (2.1) | pts |
Book value per common share was up 7% in the first nine months of 2021. The increase was driven by $4.92 of net income per diluted common share, partially offset by (i) a $1.36 reduction in net unrealized gains on our fixed income securities portfolio from higher long-term interest rates in 2021, and (ii) $0.75 of dividends on our common stock paid to shareholders. During the first nine months of 2021, the Company repurchased 52,781 shares at an average price of $64.49 per share for a total of $3.4 million, with all share repurchases made in the first quarter. Capacity under our existing repurchase authorization remained at $96.6 million as of September 30, 2021.
Selective's Board of Directors declared:
Guidance
For 2021, Selective has revised its full-year guidance as follows:
The supplemental investor package, including financial information that is not part of 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 9:00 a.m. ET, on Thursday, October 28, 2021, at www.Selective.com. The webcast will be available for rebroadcast until the close of business on November 27, 2021.
About Selective Insurance Group, Inc.
Selective Insurance Group, Inc. is a holding company for 10 property and casualty insurance companies rated "A" (Excellent) 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's unique position as both a leading insurance group and an employer of choice is recognized in a wide variety of awards and honors, including listing in the Fortune 1000 and being named one of "America's Best Mid-Size Employers" by Forbes Magazine. 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 |
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 September 30, | Year-to-Date September 30, | ||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Net income available to common stockholders | $ | 71.4 | 69.9 | 297.8 | 119.3 | |||||||
Net realized and unrealized (gains) losses, before tax | (0.2) | (7.7) | (15.4) | 24.3 | ||||||||
Tax on reconciling items | — | 1.6 | 3.2 | (5.1) | ||||||||
Non-GAAP operating income | $ | 71.3 | 63.8 | 285.7 | 138.5 | |||||||
Reconciliation of Net Income Available to Common Stockholders per Diluted Common Share to Non-GAAP Operating Income per | ||||||||||||
Quarter ended September 30, | Year-to-Date September 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Net income available to common stockholders per diluted common share | $ | 1.18 | 1.16 | 4.92 | 1.98 | |||||||
Net realized and unrealized (gains) losses, before tax | — | (0.13) | (0.25) | 0.40 | ||||||||
Tax on reconciling items | — | 0.03 | 0.05 | (0.08) | ||||||||
Non-GAAP operating income per diluted common share | $ | 1.18 | 1.06 | 4.72 | 2.30 | |||||||
Reconciliation of Return on Equity to Non-GAAP Operating Return on Equity | ||||||||||||
Quarter ended September 30, | Year-to-Date September 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Annualized Return on Equity | 10.6 | % | 11.9 | 15.1 | 6.9 | |||||||
Net realized and unrealized (gains) losses, before tax | — | (1.3) | (0.8) | 1.4 | ||||||||
Tax on reconciling items | — | 0.3 | 0.2 | (0.3) | ||||||||
Annualized Non-GAAP Operating Return on Equity | 10.6 | % | 10.9 | 14.5 | 8.0 |
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 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 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 continually changing business environment, and new risk factors that we cannot predict or assess may emerge from time-to-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 2021 PR Newswire
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