BRANCHVILLE, N.J., April 29, 2015 /PRNewswire/ --
In the first quarter of 2015:
- Net premiums written grew 9%
- GAAP combined ratio was 94.5%
- Statutory combined ratio was 93.0%
- After-tax net investment income declined 20%
- Total return on equity was 12.3% and operating return on equity
was 8.5%
Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported
its financial results for the first quarter ended March 31, 2015. Net income per diluted share was
$0.69, compared to $0.31 in 2014, and operating income1
per diluted share was $0.48, compared
to $0.23 in 2014.
"We are seeing the benefits of our strategic initiatives that
drive progress towards our longer-term combined ratio and operating
return on equity targets. For the first quarter, we generated
a very profitable 93% statutory combined ratio," said Gregory E. Murphy, Chairman and Chief Executive
Officer. "Written and earned renewal pure price increases
above expected claim inflation, stable retention, and our
multi-disciplinary workers compensation efforts will continue to
drive profitability improvement."
"Growth in the quarter was strong, as overall net premiums
written increased 9% with 26% growth in Excess and Surplus Lines
and excellent Standard Commercial Lines new business production of
$88 million, up 28% from a year
ago. Overall renewal pure price increases in the quarter were
3.9%, in-line with our expectations of 4% increases for 2015."
Consolidated
Financial Results
$ in millions,
except per share data
|
Quarter Ended
March 31,
|
Change
|
2015
|
2014
|
Net premiums
written
|
$518.1
|
$476.8
|
9%
|
Net premiums
earned
|
$476.1
|
$456.5
|
4%
|
Net investment income
earned
|
$26.9
|
$35.5
|
(24)%
|
Net realized gains,
pre-tax
|
$18.9
|
$7.2
|
162%
|
Total
revenues
|
$523.9
|
$509.1
|
3%
|
Operating
income1
|
$27.4
|
$13.3
|
107%
|
Capital gains, net of
tax
|
$12.3
|
$4.7
|
162%
|
Net income
|
$39.7
|
$18.0
|
121%
|
Statutory combined
ratio
|
93.0%
|
100.8%
|
(7.8) pts
|
Catastrophe
losses
|
5.3 pts
|
7.5 pts
|
(2.2) pts
|
Non-catastrophe
property losses
|
14.9 pts
|
20.0 pts
|
(5.1) pts
|
(Favorable) prior
year statutory reserve development on casualty lines
|
(4.2) pts
|
(3.1) pts
|
(1.1) pts
|
GAAP combined
ratio
|
94.5%
|
101.1%
|
(6.6) pts
|
Operating income per
diluted share1
|
$0.48
|
$0.23
|
109%
|
Net income per
diluted share
|
$0.69
|
$0.31
|
123%
|
Weighted average
diluted shares
|
57.7M
|
57.2M
|
1%
|
Book value per
share
|
$23.11
|
$21.09
|
10%
|
1Operating income differs from net
income by the exclusion of realized gains or losses on investments.
It is used as an important financial measure by management,
analysts, and investors, because the realization of investment
gains and losses on sales in any given period is largely
discretionary as to timing. In addition, these investment gains and
losses, as well as other-than-temporary investment impairments that
are charged to earnings, could distort the analysis of trends.
Operating income is not intended as a substitute for net income
prepared in accordance with U.S. generally accepted accounting
principles (GAAP). A reconciliation of operating income to net
income is provided in the Consolidated Financial Results table.
Statutory data is prepared in accordance with statutory accounting
rules as defined by the National Association of Insurance
Commissioners Accounting Practices and Procedures Manual and,
therefore, is not reconciled to GAAP.
|
Note: All amounts
included in this release exclude intercompany
transactions.
|
Operating Highlights
Standard Commercial Lines
Standard Commercial Lines premiums were up 9% in the first
quarter, reflecting renewal pure price increases of 3.5%, stable
retention at 84%, and a 28% increase in new business. The
quarter's statutory combined ratio improved by 10.6 points, driven
by earned rate exceeding claim inflation, higher levels of
favorable prior year casualty reserve development at $21 million or 5.7 points, and lower catastrophe
and non-catastrophe weather-related losses.
Standard
Commercial Lines
$ in millions,
statutory results
|
Quarter Ended
March 31,
|
Change
|
2015
|
2014
|
Net premiums
written
|
$415.3
|
$379.4
|
9%
|
Net premiums
earned
|
$365.5
|
$349.5
|
5%
|
Loss & loss
expense ratio
|
56.5%
|
69.4%
|
(12.9) pts
|
Underwriting expense
ratio
|
32.8%
|
30.5%
|
2.3
pts
|
Dividends to
policyholders ratio
|
0.4%
|
0.4%
|
-
|
Combined
ratio
|
89.7%
|
100.3%
|
(10.6) pts
|
GAAP combined
ratio
|
91.8%
|
101.0%
|
(9.2) pts
|
Standard Personal Lines
Standard Personal Lines premiums decreased 3% in the quarter
compared to a year ago from targeted non-renewals of less
profitable accounts coupled with a decrease in new business.
Retention remained at 82% and renewal pure price was 6.4%,
including a 9.9% renewal pure price increase in homeowners.
Our rollout of The Selective EdgeTM product continues to
be well received by our agents and we are encouraged by early
results.
The statutory combined ratio in Standard Personal Lines was
105.1%, which included 8.7 points of catastrophe losses.
There was no prior year casualty reserve development this quarter
in Standard Personal Lines, although there was favorable prior year
casualty development of $2 million or
2.7 combined ratio points in the first quarter of 2014.
Standard Personal
Lines
$ in millions,
statutory results
|
Quarter Ended
March 31,
|
Change
|
2015
|
2014
|
Net premiums
written
|
$65.0
|
$67.3
|
(3)%
|
Net premiums
earned
|
$72.5
|
$74.8
|
(3)%
|
Loss & loss
expense ratio
|
73.5%
|
77.6%
|
(4.1) pts
|
Underwriting expense
ratio
|
31.6%
|
26.9%
|
4.7 pts
|
Combined
ratio
|
105.1%
|
104.5%
|
0.6 pts
|
GAAP combined
ratio
|
103.4%
|
103.2%
|
0.2 pts
|
Excess and Surplus Lines
Excess and Surplus Lines continued to generate strong growth,
with a 26% increase in net premiums written. We have
opportunities to write a greater share of our retail agents' Excess
and Surplus Lines business and grow through our 50-state footprint
of wholesale agents. The statutory combined ratio in the
quarter was 102.1%, including adverse prior year casualty
development of $1 million or 2.6
points and the impact of catastrophe and non-catastrophe losses
which increased the combined ratio by 0.9 points compared to a year
ago.
Excess &
Surplus Lines
$ in millions,
statutory results
|
Quarter Ended
March 31,
|
Change
|
2015
|
2014
|
Net premiums
written
|
$37.8
|
$30.1
|
26%
|
Net premiums
earned
|
$38.1
|
$32.2
|
18%
|
Loss & loss
expense ratio
|
67.7%
|
61.7%
|
6.0 pts
|
Underwriting expense
ratio
|
34.4%
|
36.2%
|
(1.8) pts
|
Combined
ratio
|
102.1%
|
97.9%
|
4.2 pts
|
GAAP combined
ratio
|
104.1%
|
97.0%
|
7.1 pts
|
Investment Income
After-tax investment income in the first quarter was
$21 million, down 20% compared to a
year ago. The decline was largely driven by losses in
energy-exposed limited partnerships that were negatively impacted
by lower oil prices in the fourth quarter of 2014. The
decline in alternative investment income and the continued low
interest rate environment reduced earned after tax portfolio yields
to 1.7% from 2.3% a year ago. After-tax new money yields
averaged 1.8% in the quarter.
Investments
$ in millions,
except per share data
|
Quarter Ended
March 31,
|
Change
|
2015
|
2014
|
Invested assets per
dollar of
stockholders' equity
|
$3.72
|
$3.91
|
(5)%
|
Net investment income
earned, after-tax
|
$21.2
|
$26.5
|
(20)%
|
Net investment income per
share
|
$0.37
|
$0.46
|
(20)%
|
Effective tax
rate
|
21.2%
|
25.5%
|
(4.3) pts
|
Average
yields:
|
|
|
|
Fixed Income
Securities:
|
|
|
|
Pre-tax
|
2.8%
|
3.0%
|
(0.2) pts
|
After-tax
|
2.1%
|
2.2%
|
(0.1) pts
|
Portfolio:
|
|
|
|
Pre-tax
|
2.2%
|
3.1%
|
(0.9) pts
|
After-tax
|
1.7%
|
2.3%
|
(0.6) pts
|
Balance Sheet
Balance
Sheet
$ in millions,
except per share data
|
March
31,
|
December
31,
|
Change
|
2015
|
2014
|
Total
assets
|
$6,701
|
$6,582
|
2%
|
Investment
portfolio
|
$4,902
|
$4,807
|
2%
|
Notes
payable
|
$394
|
$379
|
4%
|
Statutory
surplus
|
$1,322
|
$1,308
|
1%
|
Stockholders'
equity
|
$1,316
|
$1,276
|
3%
|
Book value per
share
|
$23.11
|
$22.54
|
3%
|
The increase in book value reflects $0.69 in net income, partially offset by
$0.14 in shareholders' dividends.
Selective's Board of Directors declared a $0.14 per share quarterly cash dividend on common
stock payable June 1, 2015 to
stockholders of record as of May 15,
2015.
Guidance
For 2015, Selective expects to generate the following
results:
- Statutory combined ratio of 91.0%, excluding catastrophes and
any further prior year casualty reserve development
- 4 points of catastrophe losses
- After-tax investment income of approximately $100 million
- Weighted average shares of approximately 58 million
The supplemental investor package, including financial
information that is not part of this press release, is available on
the Investor Relations' page of Selective's public website at
www.selective.com. Selective's quarterly analyst conference call
will be simulcast at 8:30 a.m. ET, on
April 30, 2015 at www.selective.com.
The webcast will be available for rebroadcast until the close of
business on June 1, 2015.
About Selective Insurance Group, Inc.
Selective Insurance Group, Inc. is a holding company for ten
property and casualty insurance companies rated "A" (Excellent) by
A.M. Best. Through independent agents, the insurance companies
offer standard and specialty insurance for commercial and personal
risks, and flood insurance underwritten by the National Flood
Insurance Program. Selective maintains a website at
www.selective.com.
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 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, whether as a result of new information,
future events or otherwise.
Factors that could cause our actual results to differ materially
from those projected, forecasted or estimated by us in
forward-looking statements, include, but are not limited to:
- 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
fluctuations in interest rates;
- ratings downgrades could affect investment values and therefore
statutory surplus;
- the adequacy of our loss reserves and loss expense
reserves;
- the frequency and severity of natural and man-made catastrophic
events, including, but not limited to, hurricanes, tornadoes,
windstorms, earthquakes, hail, terrorism, explosions, severe winter
weather, floods and fires;
- adverse market, governmental, regulatory, legal or judicial
conditions or actions;
- the concentration of our business in the Eastern Region;
- the cost and availability of reinsurance;
- our ability to collect on reinsurance and the solvency of our
reinsurers;
- 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;
- 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
emerge from time-to-time. We can neither predict such new risk
factors nor can we assess the impact, if any, of such new risk
factors on our businesses or the extent to which any factor or
combination of factors may cause actual results to differ
materially from those expressed or implied in any forward-looking
statements in this report. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this
report might not occur.
Selective's SEC filings can be accessed through the Investor
Relations' section 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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visit:http://www.prnewswire.com/news-releases/selective-reports-net-income-per-diluted-share-of-069-and-operating-income-per-diluted-share-of-048-for-the-first-quarter-of-2015-300074479.html
SOURCE Selective Insurance Group, Inc.