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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 |
First Quarter Return on Common Equity ("ROE") of 8.1% and Non-GAAP Operating ROE1 of 12.8%
In the first quarter of 2022, we reported:
BRANCHVILLE, N.J., May 4, 2022 /PRNewswire/ -- Selective Insurance Group, Inc. (NASDAQ: SIGI) reported strong financial results for the first quarter ended March 31, 2022, with net income per diluted common share of $0.89 and non-GAAP operating income1 per diluted common share of $1.41. The first quarter combined ratio was a profitable 93.1%, the non-GAAP operating ROE was 12.8%, and NPW increased 11% from a year ago. NPW increased 29% in our E&S segment and 11% in our Standard Commercial Lines segment, with the growth driven by renewal pure price increases, higher retention, exposure growth, and strong new business growth. For the quarter, the Investments segment contributed 8.7 points of annualized ROE.
"Our consistent and strong results are a testament to our constant focus on profitable growth and underwriting discipline. Each of our insurance segments reported solid underwriting results for the quarter, and Investments was a strong contributor to non-GAAP operating income," said John Marchioni, President and CEO.
"We continue to execute on our strategic priorities and enhance our market position. Our decade-long track record of successfully balancing our growth and profitability objectives positions us well in the current environment. Our balance sheet remains strong, and we are confident in our ability to effectively navigate the challenges faced by our industry. Despite greater uncertainty as a result of higher loss trends and increased financial market volatility, we are well positioned to continue generating strong returns on an absolute and relative basis," continued Mr. Marchioni.
Operating Highlights
Consolidated Financial Results | Quarter ended March 31, | Change | |||
$ and shares in millions, except per share data | 2022 | 2021 | |||
Net premiums written | $ 889.8 | 798.2 | 11 | % | |
Net premiums earned | 812.3 | 725.0 | 12 | ||
Net investment income earned | 72.6 | 69.7 | 4 | ||
Net realized and unrealized gains (losses), pre-tax | (40.4) | 5.1 | (888) | ||
Total revenues | 846.1 | 803.9 | 5 | ||
Net underwriting income, after-tax | 44.1 | 61.4 | (28) | ||
Net investment income, after-tax | 58.5 | 56.3 | 4 | ||
Net income available to common stockholders | 54.0 | 106.8 | (49) | ||
Non-GAAP operating income1 | 85.9 | 102.8 | (16) | ||
Combined ratio | 93.1 | % | 89.3 | 3.8 | pts |
Loss and loss expense ratio | 60.8 | 57.0 | 3.8 | ||
Underwriting expense ratio | 32.1 | 32.1 | — | ||
Dividends to policyholders ratio | 0.2 | 0.2 | — | ||
Net catastrophe losses | 2.5 | pts | 4.1 | (1.6) | |
Non-catastrophe property losses and loss expenses | 18.5 | 15.9 | 2.6 | ||
(Favorable) prior year reserve development on casualty lines | (2.5) | (4.8) | 2.3 | ||
Net income available to common stockholders per diluted common share | $ 0.89 | 1.77 | (50) | % | |
Non-GAAP operating income per diluted common share1 | 1.41 | 1.70 | (17) | ||
Weighted average diluted common shares | 60.8 | 60.5 | 1 | ||
Book value per common share | $ 42.73 | 42.38 | 1 | ||
Adjusted book value per common share¹ | 43.80 | 38.73 | 13 |
Overall Insurance Operations
For the first quarter, overall NPW increased 11% from a year ago, reflecting average renewal pure price increases of 4.6%, stronger retention, and new business growth of 14%. Our combined ratio was 93.1% in the quarter, up from 89.3% a year ago, driven primarily by higher non-catastrophe property losses and less favorable prior year casualty reserve development, partially offset by lower catastrophe losses. Our Insurance Operations generated 6.6 points of annualized ROE in the quarter.
Standard Commercial Lines Segment
For the first quarter, Standard Commercial Lines premiums (representing 83% of total NPW) increased 11% compared to a year ago. The premium growth reflected average renewal pure price increases of 4.8%, solid retention of 87%, and new business growth of 12%. The first quarter combined ratio was 93.6%, and the variances driving the increase relative to the 88.2% combined ratio a year ago are shown in the following table:
Standard Commercial Lines Segment | Quarter ended March 31, | Change | |||
$ in millions | 2022 | 2021 | |||
Net premiums written | $ 737.6 | 665.6 | 11 | % | |
Net premiums earned | 661.5 | 589.1 | 12 | ||
Combined ratio | 93.6 | % | 88.2 | 5.4 | pts |
Loss and loss expense ratio | 60.4 | 55.1 | 5.3 | ||
Underwriting expense ratio | 33.0 | 32.9 | 0.1 | ||
Dividends to policyholders ratio | 0.2 | 0.2 | — | ||
Net catastrophe losses | 2.3 | pts | 2.7 | (0.4) | |
Non-catastrophe property losses and loss expenses | 17.5 | 14.2 | 3.3 | ||
(Favorable) prior-year reserve development on casualty lines | (3.0) | (5.1) | 2.1 |
Standard Personal Lines Segment
For the first quarter, Standard Personal Lines premiums (representing 7% of total NPW) were flat compared to the prior-year period. Renewal pure price increases averaged 0.6%, retention was 84%, and new business was down 2% compared to the prior year. The first quarter combined ratio was 91.0%, and the variances driving the increase relative to the 89.6% combined ratio a year ago are shown in the following table:
Standard Personal Lines Segment | Quarter ended March 31, | Change | |||
$ in millions | 2022 | 2021 | |||
Net premiums written | $ 65.1 | 65.1 | — | % | |
Net premiums earned | 72.6 | 73.8 | (2) | ||
Combined ratio | 91.0 | % | 89.6 | 1.4 | pts |
Loss and loss expense ratio | 66.8 | 63.9 | 2.9 | ||
Underwriting expense ratio | 24.2 | 25.7 | (1.5) | ||
Net catastrophe losses | 6.0 | pts | 7.6 | (1.6) | |
Non-catastrophe property losses and loss expenses | 35.2 | 31.3 | 3.9 | ||
(Favorable) prior-year reserve development on casualty lines | — | — | — |
Excess and Surplus Lines Segment
For the first quarter, Excess and Surplus Lines premiums (representing 10% of total NPW) were up 29% compared to the prior-year period, driven by average renewal pure price increases of 7.7% and new business growth of 25%. The first quarter combined ratio was 91.1%, and the variances driving this improvement relative to the 99.2% combined ratio a year ago are shown in the following table:
Excess and Surplus Lines Segment | Quarter ended March 31, | Change | |||
$ in millions | 2022 | 2021 | |||
Net premiums written | $ 87.1 | 67.5 | 29 | % | |
Net premiums earned | 78.2 | 62.0 | 26 | ||
Combined ratio | 91.1 | % | 99.2 | (8.1) | pts |
Loss and loss expense ratio | 59.1 | 66.8 | (7.7) | ||
Underwriting expense ratio | 32.0 | 32.4 | (0.4) | ||
Net catastrophe losses | 1.7 | pts | 13.3 | (11.6) | |
Non-catastrophe property losses and loss expenses | 11.6 | 14.3 | (2.7) | ||
(Favorable) prior year reserve development on casualty lines | — | (8.1) | 8.1 |
Investments Segment
For the first quarter, after-tax net investment income of $59 million was up 4% compared to the prior-year period. For the quarter, the overall portfolio's after-tax earned income yield averaged 3.0%, and the fixed income securities portfolio's after-tax earned income yield averaged 2.6%. Alternative investments contributed $15 million of after-tax gains. The total return on the investment portfolio of negative 3.5% was impacted by the rapid rise in benchmark interest rates and wider credit spreads, resulting in $245 million of after-tax net unrealized losses on our fixed income securities. In addition, we incurred $32 million of after-tax net realized and unrealized losses, principally driven by: (i) $21 million of credit and intent-to-sell losses as more of our fixed income securities were in an unrealized loss position at March 31, 2022 and (ii) $9 million of after-tax realized losses from trading our fixed income securities to build book yield in a higher interest rate environment. Invested assets per dollar of common stockholders' equity was $3.02 at March 31, 2022, and the investment portfolio generated 8.7 points of non-GAAP operating ROE.
Investments Segment | Quarter ended March 31, | Change | |||
$ in millions, except per share data | 2022 | 2021 | |||
Net investment income earned, after-tax | $ 58.5 | 56.3 | 4 | % | |
Net investment income per common share | 0.96 | 0.93 | 3 | ||
Effective tax rate | 19.4 | % | 19.2 | 0.2 | pts |
Average yields: | |||||
Portfolio: | |||||
Pre-tax | 3.7 | 3.7 | — | ||
After-tax | 3.0 | 3.0 | — | ||
Fixed income securities: | |||||
Pre-tax | 3.2 | % | 3.3 | (0.1) | pts |
After-tax | 2.6 | 2.6 | — | ||
Annualized ROE contribution | 8.7 | 8.9 | (0.2) |
Balance Sheet
$ in millions, except per share data | March 31, 2022 | December 31, 2021 | Change | |||||
Total assets | $ 10,310.5 | 10,461.4 | (1)% | |||||
Total investments | 7,774.7 | 8,027.0 | (3) | |||||
Long-term debt | 505.6 | 506.1 | — | |||||
Stockholders' equity | 2,778.2 | 2,982.9 | (7) | |||||
Common stockholders' equity | 2,578.2 | 2,782.9 | (7) | |||||
Invested assets per dollar of common stockholders' equity | 3.02 | 2.88 | 5 | |||||
Net premiums written to policyholders' surplus | 1.36 | x | 1.33 | x | 0.03 | x | ||
Book value per common share | $ 42.73 | 46.24 | (8) | |||||
Adjusted book value per common share¹ | 43.80 | 43.23 | 1 | |||||
Debt to total capitalization | 15.4 | % | 14.5 | % | 0.9 | pts |
Book value per common share declined 8% during the first quarter. The decline was principally driven by (i) a $4.07 change in net unrealized losses on our fixed income securities portfolio from higher long-term interest rates, and (ii) $0.28 of dividends on our common stock paid to shareholders, partially offset by $0.89 of net income per diluted common share. During the first quarter, the Company repurchased 1,000 shares at an average price of $75.49 per share for a total of $75,488. Capacity under our existing repurchase authorization was $96.5 million as of March 31, 2022.
Selective's Board of Directors declared:
Guidance
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 Thursday, May 5, 2022, at www.Selective.com. The webcast will be available for rebroadcast until the close of business on June 4, 2022.
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'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 the Fortune 1000 and being named a Great Place to Work® in 2021. 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. They 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 March 31, | ||
2022 | 2021 | ||
Net income available to common stockholders | $ 54.0 | 106.8 | |
Net realized and unrealized investment losses (gains) included in net income, before tax | 40.4 | (5.1) | |
Tax on reconciling items | (8.5) | 1.1 | |
Non-GAAP operating income | $ 85.9 | 102.8 | |
Reconciliation of Net Income Available to Common Stockholders per Diluted Common Share to Non-GAAP Operating Income per | |||
Quarter ended March 31, | |||
2022 | 2021 | ||
Net income available to common stockholders per diluted common share | $ 0.89 | 1.77 | |
Net realized and unrealized investment losses (gains) included in net income, before tax | 0.66 | (0.08) | |
Tax on reconciling items | (0.14) | 0.01 | |
Non-GAAP operating income per diluted common share | $ 1.41 | 1.70 | |
Reconciliation of Return on Equity to Non-GAAP Operating Return on Equity | |||
Quarter ended March 31, | |||
2022 | 2021 | ||
Annualized Return on Equity | 8.1 | % | 16.8 |
Net realized and unrealized investment losses (gains) included in net income, before tax | 6.0 | (0.8) | |
Tax on reconciling items | (1.3) | 0.2 | |
Annualized Non-GAAP Operating Return on Equity | 12.8 | % | 16.2 |
Reconciliation of Book Value per Common Share to Adjusted Book Value per Common Share | |||
Quarter ended March 31, | |||
2022 | 2021 | ||
Book value per common share | $ 42.73 | 42.38 | |
Total unrealized investment losses (gains) included in accumulated other comprehensive (loss) income, before | 1.35 | (4.62) | |
Tax on reconciling items | (0.28) | 0.97 | |
Adjusted book value per common share | $ 43.80 | 38.73 |
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, you can identify forward-looking statements by words such as "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 continually changing business environment, and new risk factors that we cannot predict or assess may emerge.
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.
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