BRANCHVILLE, N.J., Jan. 28, 2021 /PRNewswire/ -- Selective Insurance
Group, Inc. (NASDAQ: SIGI) today reported financial results for the
fourth quarter ended December 31,
2020, with net income per diluted common share of
$2.10 and non-GAAP operating
income1 per diluted common share of $1.84.
"We delivered excellent financial results this quarter with an
18.0% non-GAAP operating ROE, non-GAAP operating income per diluted
common share of $1.84, and an 88.1%
combined ratio. We had strong commercial lines NPW growth of
10% despite a challenging macroeconomic backdrop, driven by 5.1%
renewal pure price increases, solid 86% retention, and new business
growth of 2% - a continued testament to our franchise distribution
partner relationships, superior underwriting tools, and talented
employees. Our insurance and investment segments were both
strong contributors to our results in the quarter," said
John Marchioni, President and
CEO.
"For the year, despite the significant economic and social
impacts created by COVID-19 as well as the elevated catastrophe
losses totaling 8.0 points on the combined ratio, we generated our
seventh consecutive year of double-digit non-GAAP operating ROEs, a
truly impressive achievement. By assisting our customers
through the challenges posed by COVID-19, and our superior claims
handling and customer service related to the numerous catastrophic
losses, we once again reinforced the value we bring to the
market. Our ability to generate consistent and superior
financial performance over time is based on our longstanding
commitment to serving all of our stakeholders. Our franchise
relationships with best-in-class distribution partners,
sophisticated underwriting tools, unique operating model, and
customer experience focus position us well for continued profitable
growth," continued Mr. Marchioni.
As an ongoing demonstration of our corporate success, on
December 2, 2020, Selective issued
$200 million of perpetual preferred
stock, which was well received by the capital markets as evidenced
by the attractive 4.60% dividend rate. Proceeds from the
offering will be used for general corporate purposes, which may
include the repurchase of common stock. This marks the first
preferred stock offering in the Company's 94-year history. In
conjunction with the offering, the Company announced that its Board
of Directors authorized a new $100
million share repurchase program. Mr. Marchioni
stated, "With the preferred stock transaction, we continued to
enhance the Company's financial flexibility and optimize our
capital structure. Our share repurchase program gives us the option
to opportunistically buy back shares when it is in the best
interest of our shareholders."
Operating Highlights
Consolidated
Financial Results
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ and shares in
millions, except per share data
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
681.5
|
|
|
628.2
|
|
8
|
|
%
|
$
|
2,773.1
|
|
|
2,679.4
|
|
3
|
|
%
|
Net premiums
earned
|
704.9
|
|
|
668.4
|
|
5
|
|
|
2,681.8
|
|
|
2,597.2
|
|
3
|
|
|
Net investment income
earned
|
68.5
|
|
|
57.6
|
|
19
|
|
|
227.1
|
|
|
222.5
|
|
2
|
|
|
Net realized and
unrealized gains (losses), pre-tax
|
20.1
|
|
|
(0.9)
|
|
n/m
|
|
(4.2)
|
|
|
14.4
|
|
(129)
|
|
|
Total
revenues
|
798.4
|
|
|
728.9
|
|
10
|
|
|
2,922.3
|
|
|
2,846.5
|
|
3
|
|
|
Net underwriting
income, after-tax
|
66.4
|
|
|
43.1
|
|
54
|
|
|
107.7
|
|
|
129.6
|
|
(17)
|
|
|
Net investment
income, after-tax
|
55.5
|
|
|
46.8
|
|
18
|
|
|
184.6
|
|
|
181.2
|
|
2
|
|
|
Net income available
to common stockholders
|
127.1
|
|
|
81.9
|
|
55
|
|
|
246.4
|
|
|
271.6
|
|
(9)
|
|
|
Non-GAAP operating
income1
|
111.2
|
|
|
82.5
|
|
35
|
|
|
249.7
|
|
|
264.4
|
|
(6)
|
|
|
Combined
ratio
|
88.1
|
|
%
|
91.8
|
|
(3.7)
|
|
pts
|
94.9
|
|
%
|
93.7
|
|
1.2
|
|
pts
|
Loss and loss expense
ratio
|
54.4
|
|
|
57.6
|
|
(3.2)
|
|
|
61.0
|
|
|
59.7
|
|
1.3
|
|
|
Underwriting expense
ratio
|
33.4
|
|
|
34.1
|
|
(0.7)
|
|
|
33.8
|
|
|
33.8
|
|
—
|
|
|
Dividends to
policyholders ratio
|
0.3
|
|
|
0.1
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
(0.1)
|
|
|
Catastrophe
losses
|
2.8
|
|
pts
|
1.0
|
|
1.8
|
|
|
8.0
|
|
pts
|
3.1
|
|
4.9
|
|
|
Non-catastrophe
property losses and loss expenses
|
16.2
|
|
|
15.1
|
|
1.1
|
|
|
15.3
|
|
|
15.8
|
|
(0.5)
|
|
|
(Favorable) prior
year reserve development on casualty lines
|
(5.0)
|
|
|
(3.0)
|
|
(2.0)
|
|
|
(3.2)
|
|
|
(2.3)
|
|
(0.9)
|
|
|
Net income available
to common stockholders per diluted
common
share
|
$
|
2.10
|
|
|
1.36
|
|
54
|
|
%
|
$
|
4.09
|
|
|
4.53
|
|
(10)
|
|
%
|
Non-GAAP operating
income per diluted common share1
|
1.84
|
|
|
1.37
|
|
34
|
|
|
4.15
|
|
|
4.40
|
|
(6)
|
|
|
Weighted average
diluted common shares
|
60.4
|
|
60.1
|
—
|
|
|
60.3
|
|
60.0
|
—
|
|
|
Book value per common
share
|
$
|
42.38
|
|
|
36.91
|
|
15
|
|
|
42.38
|
|
|
36.91
|
|
15
|
|
|
Overall Insurance Operations
For the fourth quarter, the overall NPW growth of 8% compared to
the fourth quarter of 2019, was due to solid retention, new
business growth, and strong 4.8% renewal pure price
increases. Our combined ratio was an excellent 88.1% in the
quarter, compared to 91.8% in the prior year period, driven by
favorable reserve development, generating 10.8 points of annualized
ROE.
For the year, NPW growth was 3% and included 4 points of
negative impact from specific COVID-19-related items. The combined
ratio of 94.9% included elevated catastrophe losses, that were
partially offset by favorable prior year casualty reserve
development and lower non-catastrophe property losses. Our
Insurance operations contributed 4.6 points of ROE for the
year.
Standard Commercial Lines Segment
For the fourth quarter, Standard Commercial Lines premiums,
which were 80% of total NPW in 2020, were up a significant 10%
compared to the prior year period, driven by 5.1% renewal pure
price increases, 2% increase in new business, to $97 million, and strong retention of 86%.
The improvement in the fourth quarter combined ratio of 86.8%
compared to 90.0% in the prior year period reflects the impact of
the items outlined in the table below.
Standard
Commercial Lines Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in
millions
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
551.1
|
|
|
500.1
|
|
10
|
|
%
|
$
|
2,230.6
|
|
|
2,137.1
|
|
4
|
|
%
|
Net premiums
earned
|
567.5
|
|
|
530.6
|
|
7
|
|
|
2,143.2
|
|
|
2,049.6
|
|
5
|
|
|
Combined
ratio
|
86.8
|
|
%
|
90.0
|
|
(3.2)
|
|
pts
|
92.9
|
|
%
|
92.9
|
|
—
|
|
pts
|
Loss and loss expense
ratio
|
52.1
|
|
|
55.0
|
|
(2.9)
|
|
|
58.1
|
|
|
58.0
|
|
0.1
|
|
|
Underwriting expense
ratio
|
34.4
|
|
|
34.9
|
|
(0.5)
|
|
|
34.6
|
|
|
34.7
|
|
(0.1)
|
|
|
Dividends to
policyholders ratio
|
0.3
|
|
|
0.1
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
—
|
|
|
Catastrophe
losses
|
1.3
|
|
pts
|
0.4
|
|
0.9
|
|
|
5.5
|
|
pts
|
2.6
|
|
2.9
|
|
|
Non-catastrophe
property losses and loss expenses
|
14.2
|
|
|
13.2
|
|
1.0
|
|
|
13.8
|
|
|
13.8
|
|
—
|
|
|
(Favorable) prior
year reserve development on casualty lines
|
(6.2)
|
|
|
(4.9)
|
|
(1.3)
|
|
|
(4.0)
|
|
|
(3.4)
|
|
(0.6)
|
|
|
Standard Personal Lines Segment
For the fourth quarter, Standard Personal Lines premiums, which
represented 11% of total NPW in 2020, were down 2% compared to the
prior year period. Renewal pure price increases were 1.1%,
retention was 84%, and new business was up 13% compared to the
prior year. The fourth quarter combined ratio was 93.6%, down
4.9 points from a year ago, driven by the items outlined in the
table below.
Standard Personal
Lines Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in
millions
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
69.7
|
|
|
70.9
|
|
(2)
|
|
%
|
$
|
295.2
|
|
|
304.6
|
|
(3)
|
|
%
|
Net premiums
earned
|
75.4
|
|
|
76.6
|
|
(2)
|
|
|
299.1
|
|
|
307.7
|
|
(3)
|
|
|
Combined
ratio
|
93.6
|
|
%
|
98.5
|
|
(4.9)
|
|
pts
|
105.2
|
|
%
|
97.3
|
|
7.9
|
|
pts
|
Loss and loss expense
ratio
|
67.8
|
|
|
69.0
|
|
(1.2)
|
|
|
78.0
|
|
|
68.6
|
|
9.4
|
|
|
Underwriting expense
ratio
|
25.8
|
|
|
29.5
|
|
(3.7)
|
|
|
27.2
|
|
|
28.7
|
|
(1.5)
|
|
|
Catastrophe
losses
|
14.8
|
|
pts
|
3.9
|
|
10.9
|
|
|
25.9
|
|
pts
|
6.8
|
|
19.1
|
|
|
Non-catastrophe
property losses and loss expenses
|
33.7
|
|
|
33.9
|
|
(0.2)
|
|
|
28.7
|
|
|
34.0
|
|
(5.3)
|
|
|
Unfavorable prior
year reserve development on casualty lines
|
—
|
|
|
5.2
|
|
(5.2)
|
|
|
—
|
|
|
1.9
|
|
(1.9)
|
|
|
Excess and Surplus Lines Segment
For the fourth quarter, Excess and Surplus Lines premiums, which
represented 9% of total NPW in 2020, were up a solid 6% compared to
the prior year period, driven by strong new business growth of 23%
and renewal pure price increases of 7.4%. The fourth quarter
combined ratio was 93.4%, down 6.1 points from a year ago, driven
by the items outlined in the table below.
Excess and Surplus
Lines Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in
millions
|
2020
|
2019
|
2020
|
2019
|
Net premiums
written
|
$
|
60.7
|
|
|
57.2
|
|
6
|
|
%
|
$
|
247.3
|
|
|
237.8
|
|
4
|
|
%
|
Net premiums
earned
|
62.0
|
|
|
61.2
|
|
1
|
|
|
239.5
|
|
|
239.8
|
|
—
|
|
|
Combined
ratio
|
93.4
|
|
%
|
99.5
|
|
(6.1)
|
|
pts
|
99.9
|
|
%
|
95.9
|
|
4.0
|
|
pts
|
Loss and loss expense
ratio
|
60.1
|
|
|
66.3
|
|
(6.2)
|
|
|
65.5
|
|
|
63.5
|
|
2.0
|
|
|
Underwriting expense
ratio
|
33.3
|
|
|
33.2
|
|
0.1
|
|
|
34.4
|
|
|
32.4
|
|
2.0
|
|
|
Catastrophe
losses
|
1.9
|
|
pts
|
2.3
|
|
(0.4)
|
|
|
8.4
|
|
pts
|
2.4
|
|
6.0
|
|
|
Non-catastrophe
property losses and loss expenses
|
13.8
|
|
|
8.4
|
|
5.4
|
|
|
11.6
|
|
|
9.3
|
|
2.3
|
|
|
Unfavorable prior
year reserve development on casualty lines
|
—
|
|
|
3.3
|
|
(3.3)
|
|
|
—
|
|
|
0.8
|
|
(0.8)
|
|
|
Investments Segment
Net investment income, after-tax, was up a healthy 18% in the
quarter, to $55.5 million. The
increase was driven by alternative investment gains of $14 million after-tax, which are reported on a
one-quarter lag. For the year, after-tax investment income
was up 2% from 2019 and the after-tax earned income yield on the
portfolio averaged 2.6%. Invested assets per dollar of common
stockholders' equity was $2.96 at
December 31, 2020, and the investment
portfolio generated 7.8 points of non-GAAP operating ROE in
2020.
Investments
Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in millions,
except per share data
|
2020
|
2019
|
2020
|
2019
|
Net investment income
earned, after-tax
|
$
|
55.5
|
|
|
46.8
|
|
18
|
|
%
|
$
|
184.6
|
|
|
181.2
|
|
2
|
|
%
|
Net investment income
per common share
|
0.92
|
|
|
0.78
|
|
18
|
|
|
3.06
|
|
|
3.02
|
|
1
|
|
|
Effective tax
rate
|
19.1
|
|
%
|
18.7
|
|
0.4
|
|
pts
|
18.7
|
|
%
|
18.6
|
|
0.1
|
|
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
|
3.7
|
|
|
3.5
|
|
0.2
|
|
|
3.2
|
|
|
3.5
|
|
(0.3)
|
|
|
After-tax
|
3.0
|
|
|
2.8
|
|
0.2
|
|
|
2.6
|
|
|
2.9
|
|
(0.3)
|
|
|
Annualized ROE
contribution
|
9.0
|
|
|
8.6
|
|
0.4
|
|
|
7.8
|
|
|
9.1
|
|
(1.3)
|
|
|
Balance Sheet
$ in millions, except
per share data
|
December 31,
2020
|
December 31,
2019
|
Change
|
Total
assets
|
$
|
9,687.9
|
|
8,797.2
|
|
10
|
%
|
Total
investments
|
7,505.6
|
|
6,688.7
|
|
12
|
|
Long-term
debt
|
550.7
|
|
550.6
|
|
—
|
|
Stockholders'
equity
|
2,738.9
|
|
2,194.9
|
|
25
|
|
Common stockholders'
equity
|
2,538.9
|
|
2,194.9
|
|
16
|
|
Invested assets per
dollar of common stockholders' equity
|
2.96
|
|
3.05
|
|
(3)
|
|
Net premiums written
to policyholders' surplus
|
1.30x
|
1.39x
|
(0.9x)
|
Book value per common
share
|
42.38
|
|
36.91
|
|
15
|
|
Book value per common share increased 15% during the year,
driven by $4.09 of net income per
diluted common share and $2.25 of net
unrealized gains on our fixed income securities portfolio,
partially offset by $0.94 of
dividends on our common stock paid to shareholders. During the
fourth quarter, the company did not repurchase any of its common
stock under the newly authorized repurchase program. We
repaid our remaining $167 million of
short-term Federal Home Loan Bank borrowings in December. Our
debt to capitalization ratio decreased to 16.7% at December 31, 2020, from 23.1% at September 30, 2020.
Selective's Board of Directors declared:
- A cash dividend of $0.25 per
common share that is payable March 1,
2021, to holders of record on February 12, 2021; and
- A cash dividend of $306.6666667
per share of 4.60% Non-Cumulative Preferred Stock, Series B
(equivalent to $0.3066666667 per
depository share) that is payable on March
15, 2021 to holders of record as of March 1, 2021.
Guidance
For 2021, our full-year guidance is as follows:
- A GAAP combined ratio, excluding catastrophe losses, of 91.0%.
Our combined ratio estimate assumes no prior-year casualty reserve
development;
- Catastrophe losses of 4.0 points on the combined ratio;
- After-tax net investment income of $182.0 million that includes $16.0 million in after-tax net investment income
from our alternative investments;
- An overall effective tax rate of approximately 20.5%, which
includes an effective tax rate of 19.0% for net investment income
and 21.0% for all other items; and
- Weighted average shares of 60.5 million on a fully 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 Friday, January 29,
2021 at www.Selective.com. The webcast will be
available for rebroadcast until the close of business on
March 2, 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
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: (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,
net realized and unrealized gains and losses on investments that
are charged to earnings and the debt retirement costs 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, and return on common equity 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, and return on common equity to non-GAAP
operating income, non-GAAP operating income per diluted common
share, and non-GAAP operating return on common equity,
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,
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income available
to common stockholders
|
$
|
127.1
|
|
|
81.9
|
|
|
246.4
|
|
|
271.6
|
|
Net realized and
unrealized (gains) losses, before tax
|
(20.1)
|
|
|
0.9
|
|
|
4.2
|
|
|
(14.4)
|
|
Debt retirement
costs, before tax
|
—
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
Tax on reconciling
items
|
4.2
|
|
|
(0.2)
|
|
|
(0.9)
|
|
|
3.0
|
|
Non-GAAP operating
income
|
$
|
111.2
|
|
|
82.5
|
|
|
249.7
|
|
|
264.4
|
|
Reconciliation of Net Income Available to Common Stockholders
per Diluted Common Share to Non-GAAP Operating Income per Diluted
Common Share
|
Quarter ended
December 31,
|
|
Year-to-Date
December 31,
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income available
to common stockholders per diluted common share
|
$
|
2.10
|
|
|
1.36
|
|
|
4.09
|
|
|
4.53
|
|
Net realized and
unrealized (gains) losses, before tax
|
(0.33)
|
|
|
0.01
|
|
|
0.07
|
|
|
(0.24)
|
|
Debt retirement
costs, before tax
|
—
|
|
|
—
|
|
|
—
|
|
|
0.07
|
|
Tax on reconciling
items
|
0.07
|
|
|
—
|
|
|
(0.01)
|
|
|
0.04
|
|
Non-GAAP operating
income per diluted common share
|
$
|
1.84
|
|
|
1.37
|
|
|
4.15
|
|
|
4.40
|
|
Reconciliation of Return on Equity to Non-GAAP Operating
Return on Equity
|
Quarter ended
December 31,
|
|
Year-to-Date
December 31,
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Annualized Return on
Equity
|
20.6
|
|
%
|
15.1
|
|
|
10.4
|
|
|
13.6
|
|
Net realized and
unrealized (gains) losses, before tax
|
(3.3)
|
|
|
0.2
|
|
|
0.2
|
|
|
(0.7)
|
|
Debt retirement
costs, before tax
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Tax on reconciling
items
|
0.7
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
0.2
|
|
Annualized Non-GAAP
Operating Return on Equity
|
18.0
|
|
%
|
15.2
|
|
|
10.5
|
|
|
13.3
|
|
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) net realized 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, terms and conditions, 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.