BRANCHVILLE, N.J.,
Oct. 28, 2020 /PRNewswire/ --
In the third quarter of 2020:
- Strong net premiums written ("NPW") growth of 6% compared to
the third quarter of 2019;
- Profitable GAAP combined ratio of 97.0% despite 11.4 percentage
points of catastrophe losses in the quarter;
- Annualized return on equity ("ROE") was 11.9% and non-GAAP
operating ROE1 was 10.9%;
- Overall renewal pure price increased 4.4%; and
- After-tax net investment income of $55
million, up 22% compared to the third quarter of 2019.
Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported
financial results for the third quarter ended September 30, 2020, with net income per diluted
share of $1.16 and non-GAAP operating
income1 per diluted share of $1.06.
"We delivered strong results despite a quarter of unusually high
weather-related catastrophe losses for Selective and the industry.
We produced a 97.0% combined ratio, an excellent 10.9% non-GAAP
operating ROE, and $1.06 of non-GAAP
operating income per share, despite experiencing $80 million, or 11.4 points on the combined
ratio, of catastrophe losses in the quarter. The Midwest derecho
and Hurricane Isaias accounted for a combined $50 million of the catastrophe losses, with 19
smaller events accounting for the remainder," said John Marchioni, President and CEO.
"We grew NPW 6% in the quarter, driven by excellent results in
our core business, standard commercial lines. With an average
account size of approximately $12,000, this segment produced healthy growth of
8% as renewal pure price increased to 4.6% and retention improved
to 86%. Our consistent multi-year track record of generating
strong renewal pure price relative to expected claims trend has us
well positioned to deliver continued profitable growth.
Investment income also was a strong contributor to the results,
increasing 22% to $55 million
after-tax, as it benefited from a rebound in the value of
alternative investments."
"Our solid growth and profitability in a challenging environment
reflects our strong relationships with best-in-class distribution
partners, our sophisticated underwriting and pricing tools, and
excellent customer servicing capabilities," continued Mr.
Marchioni. "We are extremely proud of our Claims team for
their prompt response and excellent customer service, demonstrating
the value we provide to our customers in the most challenging
times."
Operating Highlights
Consolidated
Financial Results
|
Quarter ended
September 30,
|
Change
|
Year-to-Date
September 30,
|
Change
|
$ and shares in
millions, except per share data
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
719.5
|
|
|
676.9
|
|
6
|
|
%
|
$
|
2,091.6
|
|
|
2,051.3
|
|
2
|
|
%
|
Net premiums
earned
|
694.5
|
|
|
653.6
|
|
6
|
|
|
1,976.9
|
|
|
1,928.8
|
|
2
|
|
|
Net investment income
earned
|
68.2
|
|
|
55.8
|
|
22
|
|
|
158.6
|
|
|
164.9
|
|
(4)
|
|
|
Net realized and
unrealized gains (losses), pre-tax
|
7.7
|
|
|
(2.2)
|
|
(454)
|
|
|
(24.3)
|
|
|
15.3
|
|
(259)
|
|
|
Total
revenues
|
776.6
|
|
|
710.4
|
|
9
|
|
|
2,123.8
|
|
|
2,117.6
|
|
—
|
|
|
Net underwriting
income, after-tax
|
16.6
|
|
|
24.7
|
|
(33)
|
|
|
41.3
|
|
|
86.5
|
|
(52)
|
|
|
Net investment
income, after-tax
|
55.1
|
|
|
45.4
|
|
22
|
|
|
129.2
|
|
|
134.3
|
|
(4)
|
|
|
Net income
|
69.9
|
|
|
56.2
|
|
24
|
|
|
119.3
|
|
|
189.8
|
|
(37)
|
|
|
Non-GAAP operating
income1
|
63.8
|
|
|
58.8
|
|
9
|
|
|
138.5
|
|
|
181.9
|
|
(24)
|
|
|
Combined
ratio
|
97.0
|
|
%
|
95.2
|
|
1.8
|
|
pts
|
97.4
|
|
%
|
94.3
|
|
3.1
|
|
pts
|
Loss and loss expense
ratio
|
64.5
|
|
|
60.9
|
|
3.6
|
|
|
63.4
|
|
|
60.5
|
|
2.9
|
|
|
Underwriting expense
ratio
|
32.4
|
|
|
34.1
|
|
(1.7)
|
|
|
33.9
|
|
|
33.6
|
|
0.3
|
|
|
Dividends to
policyholders ratio
|
0.1
|
|
|
0.2
|
|
(0.1)
|
|
|
0.1
|
|
|
0.2
|
|
(0.1)
|
|
|
Catastrophe
losses
|
11.4
|
|
pts
|
3.7
|
|
7.7
|
|
|
9.9
|
|
pts
|
3.9
|
|
6.0
|
|
|
Non-catastrophe
property losses and loss expenses
|
15.2
|
|
|
16.7
|
|
(1.5)
|
|
|
14.9
|
|
|
16.1
|
|
(1.2)
|
|
|
(Favorable) prior
year reserve development on casualty lines
|
(3.6)
|
|
|
(2.1)
|
|
(1.5)
|
|
|
(2.5)
|
|
|
(2.1)
|
|
(0.4)
|
|
|
Net income per
diluted share
|
$
|
1.16
|
|
|
0.93
|
|
25
|
|
%
|
$
|
1.98
|
|
|
3.16
|
|
(37)
|
|
%
|
Non-GAAP operating
income per diluted share1
|
1.06
|
|
|
0.97
|
|
9
|
|
|
2.30
|
|
|
3.02
|
|
(24)
|
|
|
Weighted average
diluted shares
|
60.4
|
|
|
60.1
|
|
—
|
|
|
60.3
|
|
|
60.0
|
|
—
|
|
|
Book value per
share
|
$
|
40.00
|
|
|
35.98
|
|
11
|
|
|
40.00
|
|
|
35.98
|
|
11
|
|
|
Overall Insurance Operations
For the quarter, overall NPW increased 6% compared to the third
quarter of 2019, due to increased retention and 4.4% in overall
renewal pure price increases. The 97.0% combined ratio
reflects the elevated catastrophe losses that were offset partially
by (i) the impact of favorable prior year casualty reserve
development, (ii) lower non-catastrophe property losses compared to
a year ago, and (iii) our on-going expense management
initiatives. Insurance operations generated 2.8 points of
non-GAAP operating ROE in the quarter.
Standard Commercial Lines Segment
Standard Commercial Lines premiums, which are 80% of total NPW,
were up a very strong 8%, driven by (i) 4.6% in renewal pure price
increases, (ii) a 3% increase in new business from a year ago, to
$99 million, and (iii) strong
retention at 86%. The third quarter 92.3% combined ratio
included 7.0 points of catastrophe losses. The items in the
following table drove the changes in the combined ratio between
third quarter 2020 and
2019:
Standard
Commercial Lines Segment
|
Quarter ended
September 30,
|
Change
|
Year-to-Date
September 30,
|
Change
|
$ in
millions
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
577.8
|
|
|
532.9
|
|
8
|
|
%
|
$
|
1,679.5
|
|
|
1,637.0
|
|
3
|
|
%
|
Net premiums
earned
|
558.1
|
|
|
515.2
|
|
8
|
|
|
1,575.7
|
|
|
1,519.0
|
|
4
|
|
|
Combined
ratio
|
92.3
|
|
%
|
94.2
|
|
(1.9)
|
|
pts
|
95.1
|
|
%
|
93.9
|
|
1.2
|
|
pts
|
Loss and loss expense
ratio
|
59.3
|
|
|
59.0
|
|
0.3
|
|
|
60.3
|
|
|
59.0
|
|
1.3
|
|
|
Underwriting expense
ratio
|
32.9
|
|
|
35.0
|
|
(2.1)
|
|
|
34.7
|
|
|
34.6
|
|
0.1
|
|
|
Dividends to
policyholders ratio
|
0.1
|
|
|
0.2
|
|
(0.1)
|
|
|
0.1
|
|
|
0.3
|
|
(0.2)
|
|
|
Catastrophe
losses
|
7.0
|
|
pts
|
2.9
|
|
4.1
|
|
|
7.0
|
|
pts
|
3.4
|
|
3.6
|
|
|
Non-catastrophe
property losses and loss expenses
|
13.5
|
|
|
14.9
|
|
(1.4)
|
|
|
13.7
|
|
|
14.1
|
|
(0.4)
|
|
|
(Favorable) prior
year reserve development on casualty lines
|
(4.5)
|
|
|
(3.1)
|
|
(1.4)
|
|
|
(3.2)
|
|
|
(2.8)
|
|
(0.4)
|
|
|
Standard Personal Lines Segment
Standard Personal Lines premiums, which are 11% of total NPW,
were down 2% in the quarter compared to 2019. Renewal pure
price increases were 1.8%, retention was 83%, and new business was
up 18% compared to last year. The third quarter combined
ratio was 119.0%, up 18.2 points from a year ago, driven by
elevated catastrophe losses, which were 27.1 points higher than the
third quarter of 2019. A 3.3 point reduction in
non-catastrophe property losses was a partial
offset.
Standard Personal
Lines Segment
|
Quarter ended
September 30,
|
Change
|
Year-to-Date
September 30,
|
Change
|
$ in
millions
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
79.7
|
|
|
81.6
|
|
(2)
|
|
%
|
$
|
225.5
|
|
|
233.7
|
|
(4)
|
|
%
|
Net premiums
earned
|
76.0
|
|
|
76.7
|
|
(1)
|
|
|
223.7
|
|
|
231.2
|
|
(3)
|
|
|
Combined
ratio
|
119.0
|
|
%
|
100.8
|
|
18.2
|
|
pts
|
109.1
|
|
%
|
96.9
|
|
12.2
|
|
pts
|
Loss and loss expense
ratio
|
91.7
|
|
|
71.4
|
|
20.3
|
|
|
81.4
|
|
|
68.5
|
|
12.9
|
|
|
Underwriting expense
ratio
|
27.3
|
|
|
29.4
|
|
(2.1)
|
|
|
27.7
|
|
|
28.4
|
|
(0.7)
|
|
|
Catastrophe
losses
|
37.4
|
|
pts
|
10.3
|
|
27.1
|
|
|
29.7
|
|
pts
|
7.8
|
|
21.9
|
|
|
Non-catastrophe
property losses and loss expenses
|
29.5
|
|
|
32.8
|
|
(3.3)
|
|
|
27.1
|
|
|
34.1
|
|
(7.0)
|
|
|
Unfavorable prior
year reserve development on casualty lines
|
—
|
|
|
2.6
|
|
(2.6)
|
|
|
—
|
|
|
0.9
|
|
(0.9)
|
|
|
Excess and Surplus Lines Segment
Excess and Surplus Lines premiums, which represented 9% of total
NPW, were stable compared to the third quarter of 2019.
Strong new business growth of 29% and renewal pure price increases
of 7.0% were offset by a reduction in renewal and endorsement
activity. The combined ratio was 112.0%, a 15.1-point
increase compared to a year ago, driven by elevated catastrophe
losses that were 17.1 points higher than a year ago.
Excess and Surplus
Lines Segment
|
Quarter ended
September 30,
|
Change
|
Year-to-Date
September 30,
|
Change
|
$ in
millions
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
62.1
|
|
|
62.4
|
|
—
|
|
%
|
$
|
186.6
|
|
|
180.6
|
|
3
|
|
%
|
Net premiums
earned
|
60.5
|
|
|
61.7
|
|
(2)
|
|
|
177.5
|
|
|
178.7
|
|
(1)
|
|
|
Combined
ratio
|
112.0
|
|
%
|
96.9
|
|
15.1
|
|
pts
|
102.2
|
|
%
|
94.7
|
|
7.5
|
|
pts
|
Loss and loss expense
ratio
|
77.8
|
|
|
64.5
|
|
13.3
|
|
|
67.4
|
|
|
62.5
|
|
4.9
|
|
|
Underwriting expense
ratio
|
34.2
|
|
|
32.4
|
|
1.8
|
|
|
34.8
|
|
|
32.2
|
|
2.6
|
|
|
Catastrophe
losses
|
19.5
|
|
pts
|
2.4
|
|
17.1
|
|
|
10.6
|
|
pts
|
2.4
|
|
8.2
|
|
|
Non-catastrophe
property losses and loss expenses
|
13.2
|
|
|
11.4
|
|
1.8
|
|
|
10.9
|
|
|
9.6
|
|
1.3
|
|
|
Investments Segment
Net investment income, after-tax, was up a very strong 22% in
the quarter, to $55.1 million.
The increase was driven by alternative investment gains of
$19 million pre-tax, or $15 million after-tax, which are reported on a
one-quarter lag and reflect the market rebound during second
quarter 2020. The after-tax earned income yield on the
portfolio averaged 3.1%. Invested assets per dollar of
stockholders' equity was $3.04 at
September 30, 2020, and the
investment portfolio generated 9.4 points of non-GAAP operating ROE
in the
quarter.
Investments
Segment
|
Quarter ended
September 30,
|
Change
|
Year-to-Date
September 30,
|
Change
|
$ in millions,
except per share data
|
2020
|
2019
|
2020
|
2019
|
Net investment income
earned, after-tax
|
$
|
55.1
|
|
|
45.4
|
|
22
|
|
%
|
$
|
129.2
|
|
|
134.3
|
|
(4)
|
|
%
|
Net investment income
per share
|
0.91
|
|
|
0.76
|
|
20
|
|
|
2.14
|
|
|
2.24
|
|
(4)
|
|
|
Effective tax
rate
|
19.1
|
|
%
|
18.7
|
|
0.4
|
|
pts
|
18.6
|
|
%
|
18.6
|
|
—
|
|
pts
|
Average
yields:
|
|
|
|
|
|
|
|
|
|
|
Fixed income
securities:
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
3.2
|
|
%
|
3.5
|
|
(0.3)
|
|
pts
|
3.2
|
|
%
|
3.6
|
|
(0.4)
|
|
pts
|
After-tax
|
2.6
|
|
|
2.8
|
|
(0.2)
|
|
|
2.6
|
|
|
2.9
|
|
(0.3)
|
|
|
Portfolio:
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
3.8
|
|
|
3.4
|
|
0.4
|
|
|
3.0
|
|
|
3.5
|
|
(0.5)
|
|
|
After-tax
|
3.1
|
|
|
2.8
|
|
0.3
|
|
|
2.5
|
|
|
2.9
|
|
(0.4)
|
|
|
Annualized ROE
contribution
|
9.4
|
|
|
8.6
|
|
0.8
|
|
|
7.5
|
|
|
9.1
|
|
(1.6)
|
|
|
Balance Sheet
$ in millions, except
per share data
|
September 30,
2020
|
December 31,
2019
|
Change
|
Total
assets
|
$
|
9,514.9
|
|
8,797.2
|
|
8
|
%
|
Total
investments
|
7,277.5
|
|
6,688.7
|
|
9
|
|
Short-term
debt
|
167.0
|
|
—
|
|
NA
|
Long-term
debt
|
550.6
|
|
550.6
|
|
—
|
|
Stockholders'
equity
|
2,393.6
|
|
2,194.9
|
|
9
|
|
Invested assets per
dollar of stockholders' equity
|
3.04
|
|
3.05
|
|
—
|
|
Net premiums written
to policyholders' surplus
|
1.4x
|
|
1.4x
|
|
—
|
|
Book value per
share
|
40.00
|
|
36.91
|
|
8
|
|
Our long-term debt balance did not change from December 31, 2019. We, however, increased
our short-term debt by $302 million
during the first quarter of 2020 as a contingency in light of the
COVID-19-related volatility and uncertainty in the financial
markets. We repaid the $50
million borrowing on our line of credit in May and
$85 million in Federal Home Loan Bank
short-term borrowings in September. We currently expect the
remaining short-term borrowings to be repaid by year-end 2020.
Book value per share increased 8% for the first nine months of
the year, driven by $1.73 of net
unrealized gains on our fixed income securities portfolio and
$1.98 of net income per diluted
share, partially offset by $0.69 of
dividends paid to shareholders. Selective's Board of
Directors declared a 9% increase in the quarterly cash dividend on
common stock, to $0.25 per share,
that is payable December 1, 2020, to
stockholders of record as of November 13,
2020.
Guidance
For 2020, our revised full-year guidance to reflect our current
estimated full-year impact of COVID-19, is as follows:
- A GAAP combined ratio, excluding catastrophe losses, between
88% and 89%. Our combined ratio estimate assumes no additional
prior-year casualty reserve development in the fourth quarter;
- Catastrophe losses of 8.0 points on the combined ratio. As
COVID-19 has not been designated a catastrophe event by the
Insurance Services Office's Property Claims Services unit, such
losses are not included as catastrophes;
- After-tax net investment income of $175
million, that includes between $10
million and $15 million in
after-tax net investment income from our alternative
investments;
- An overall effective tax rate of approximately 18.5%, which
includes an effective tax rate of 18.5% for net investment income,
5.25% for tax-advantaged municipal bonds, and 21% for all other
items; and
- Weighted average shares of 60.5 million on a diluted
basis.
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 10:00 a.m.
ET, on Thursday, October 29,
2020 at www.Selective.com. The webcast will be
available for rebroadcast until the close of business on
November 28, 2020.
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 to Non-GAAP
Operating Income and Certain Other Non-GAAP Measures
Non-GAAP operating income, non-GAAP operating income per diluted
share, and non-GAAP operating return on equity differ from net
income, net income per diluted share, and return on equity,
respectively, by the exclusion of: (i) after-tax net realized
and unrealized gains and losses on investments; and (ii) after-tax
debt retirement costs. They are used as important financial
measures by management, analysts, and investors, because the
realization of net investment gains and losses on sales of
securities in any given period is largely discretionary as to
timing. In addition, these net realized investment gains and
losses, other-than-temporary investment impairments that are
charged to earnings, unrealized gains and losses on equity
securities, and the debt retirement costs could distort the
analysis of trends. These operating measurements are not
intended as a substitute for net income, income 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
non-GAAP operating income, non-GAAP operating income per diluted
share, and non-GAAP operating return on equity, respectively, are
provided in the tables below.
Note: All amounts included in this release exclude intercompany
transactions.
Reconciliation of Net Income to Non-GAAP Operating
Income
$ in
millions
|
Quarter ended
September 30,
|
|
Year-to-Date
September 30,
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
|
$
|
69.9
|
|
|
56.2
|
|
|
119.3
|
|
|
189.8
|
|
Net realized and
unrealized (gains) losses, before tax
|
(7.7)
|
|
|
2.2
|
|
|
24.3
|
|
|
(15.3)
|
|
Debt retirement
costs, before tax
|
—
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
Tax on reconciling
items
|
1.6
|
|
|
0.4
|
|
|
(5.1)
|
|
|
3.2
|
|
Non-GAAP operating
income
|
$
|
63.8
|
|
|
58.8
|
|
|
138.5
|
|
|
181.9
|
|
Reconciliation of Net Income per Diluted Share to Non-GAAP
Operating Income per Diluted Share
|
Quarter ended
September 30,
|
|
Year-to-Date
September 30,
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income per
diluted share
|
$
|
1.16
|
|
|
0.93
|
|
|
1.98
|
|
|
3.16
|
|
Net realized and
unrealized (gains) losses, before tax
|
(0.13)
|
|
|
0.04
|
|
|
0.40
|
|
|
(0.26)
|
|
Debt retirement
costs, before tax
|
—
|
|
|
—
|
|
|
—
|
|
|
0.07
|
|
Tax on reconciling
items
|
0.03
|
|
|
—
|
|
|
(0.08)
|
|
|
0.05
|
|
Non-GAAP operating
income per diluted share
|
$
|
1.06
|
|
|
0.97
|
|
|
2.30
|
|
|
3.02
|
|
Reconciliation of Return on Equity to Non-GAAP Operating
Return on Equity
|
Quarter ended
September 30,
|
|
Year-to-Date
September 30,
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Annualized Return on
Equity
|
11.9
|
|
%
|
10.7
|
|
|
6.9
|
|
|
12.9
|
|
Net realized and
unrealized (gains) losses, before tax
|
(1.3)
|
|
|
0.4
|
|
|
1.4
|
|
|
(1.0)
|
|
Debt retirement
costs, before tax
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
Tax on reconciling
items
|
0.3
|
|
|
0.1
|
|
|
(0.3)
|
|
|
0.1
|
|
Annualized Non-GAAP
Operating Return on Equity
|
10.9
|
|
%
|
11.2
|
|
|
8.0
|
|
|
12.3
|
|
Note: Amounts in the tables above may not foot due to
rounding.
Forward-Looking Statements
In this press release, Selective and its management discuss and
make statements based on currently available information regarding
their intentions, beliefs, current expectations, and projections
regarding Selective's future operations and performance.
Certain statements and information incorporated by reference in
this press release are "forward-looking statements" under the
Private Securities Litigation Reform Act of 1995. These statements
about our intentions, beliefs, projections, estimations, or
forecasts of future events or our future financial performance
involve known and unknown risks, uncertainties, and other factors
that may cause our actual results, levels of activity, or
performance to differ materially from what we indicated or implied.
In many cases, forward-looking statements contain 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 like terms. These statements are not guarantees
of future performance. 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:
- Related to COVID-19:
-
- Governmental directives to contain or delay the spread of the
COVID-19 pandemic have disrupted ordinary business commerce and
impacted financial markets. These governmental actions, the extent,
duration, and possible alteration based on future COVID-19-related
developments that we cannot predict, could materially and adversely
affect our results of operations, net investment income, financial
position, and liquidity.
- The amount of premium we record may be reduced and our
underwriting results may be adversely impacted by (i) voluntary
premium credits on in-force commercial and personal automobile
policies, (ii) state insurance commissioner or other regulatory
directives to implement premium-based credit in lines other than
commercial and personal automobile, and we may be required to
return more premium than warranted by our filed rating plans and
actual loss experience, (iii) the effects of our voluntary efforts
or the directives from various state insurance regulators to extend
individualized payment flexibility and suspend policy
cancellations, late payment notices, and late or reinstatement
fees, (iv) return premiums that could be significant because our
general liability and workers compensation policies provide for
premium audit of revenues and payrolls, and (v) collectability of
premiums, which may be impacted by policyholder financial distress
and insolvency.
- Our loss and loss expenses may increase, our related reserves
may not be adequate, and our financial condition and liquidity may
be materially impacted if litigation or changes in statutory or
common law (i) require payment of COVID-19-related business
interruption losses despite contrary terms, conditions, and
exclusions in our policies or (ii) presume that COVID-19 is a
work-related illness compensable under workers compensation
policies for employees who contract the virus, regardless of
whether they worked in industries defined as essential in various
COVID-19-related governmental directives or interacted with the
public as part of their job duties.
- Our net investment income may be impacted by the significant
equity and debt financial market volatility resulting from the
COVID-19 pandemic and the related governmental orders because (i)
financial market volatility is reflected in our alternative
investments' performance, (ii) increased spreads on fixed income
securities may create mark-to-market investment valuation losses
that reduce unrealized capital gains and impact GAAP equity, and
(iii) OTTI losses may increase if we intend to sell more
securities, particularly in asset classes that are more
significantly impacted by COVID-19-related governmental directives
and to which the Federal Reserve Board is providing liquidity and
structural support.
- 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
interest rate fluctuations;
- Ratings downgrades on individual securities we own could affect
investment values and, therefore, statutory surplus;
- The adequacy of our loss reserves and loss expense
reserves;
- Frequency and severity of natural and man-made catastrophic
events, including without limitation hurricanes, tornadoes,
windstorms, earthquakes, hail, terrorism, including cyber-attacks,
explosions, severe winter weather, floods, and fires;
- Adverse market, governmental, regulatory, legal, or judicial
conditions or actions;
- The geographic concentration of our business in the eastern
portion of the United States;
- The cost and availability of reinsurance;
- Our ability to collect on reinsurance and the solvency of our
reinsurers;
- The impact of changes in U.S. trade policies and imposition of
tariffs on imports that may lead to higher than anticipated
inflationary trends for our loss and loss expenses;
- 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;
- The effects of data privacy or cyber security laws and
regulations on our operations;
- Major defect or failure in our internal controls or information
technology and application systems that result in harm to our brand
in the marketplace, increased senior executive focus on crisis and
reputational management issues and/or increased expenses,
particularly if we experience a significant privacy breach;
- 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
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.