Fourth Quarter 2022 Return on
Common Equity ("ROE") of 14.8% and Non-GAAP Operating
ROE1 of 15.6%
Full Year 2022 ROE of 8.8% and Non-GAAP
Operating ROE1 of 12.4%
In the fourth quarter of 2022, we reported:
- Net premiums written ("NPW") increased 14% compared to the
fourth quarter of 2021;
- GAAP combined ratio of 94.7%, compared to 93.1% in the fourth
quarter of 2021;
- Commercial Lines renewal pure price increases averaged 5.6%,
compared to 5.0% in the fourth quarter of 2021;
- After-tax net investment income of $65
million, up 1% compared to the fourth quarter of 2021;
- Book value per common share of $38.57, up 4% in the fourth quarter; and
- Adjusted book value per common share¹ of $45.49, up 2% in the fourth quarter.
BRANCHVILLE, N.J., Feb. 2, 2023
/PRNewswire/ -- Selective Insurance Group, Inc. (NASDAQ: SIGI)
reported financial results for the fourth quarter ended
December 31, 2022, with net income
per diluted common share of $1.38 and
non-GAAP operating income1 per diluted common share of
$1.46. The fourth quarter
combined ratio was a profitable 94.7%, with 5.2 points of
catastrophe losses. Non-catastrophe property losses were 2.5 points
above a year ago.
![(PRNewsfoto/Selective Insurance Group, Inc.) (PRNewsfoto/Selective Insurance Group, Inc.)](https://mma.prnewswire.com/media/942365/Selective__Logo.jpg)
Catastrophe losses in the quarter were driven by Winter Storm Elliott. This storm impacted 37
states, 26 of which are in our standard lines footprint. We have
recorded $135 million in ultimate
gross losses, or $46.1 million net of
reinsurance. In addition, we incurred $11.7
million in ceded earned reinstatement premium related
to Winter Storm Elliott for a total
negative impact to fourth quarter 2022 underwriting results of
$57.8 million, pre-tax, or
$0.75 per diluted share. Winter Storm Elliott increased our fourth
quarter and full year 2022 combined ratio by 6.5 points and 1.7
points, respectively, and reduced our fourth quarter and full year
2022 ROE by 8.0 points and 1.9 points, respectively.
Despite Winter Storm Elliott,
non-GAAP operating ROE in the quarter was 15.6%. NPW increased 14%
from a year ago and growth was strong across all our underwriting
segments, driven by renewal pure price increases, solid retention,
new business, and exposure growth. For the quarter, the Investments
segment contributed 11.5 points of annualized ROE.
"2022 marks our ninth consecutive
year of double-digit non-GAAP operating ROEs. Against a backdrop of
elevated catastrophe losses, higher loss cost trends, and capital
market volatility, these results reflect the success of our
underwriting discipline and profitable growth strategies," said
John J. Marchioni, Chairman,
President and Chief Executive Officer.
"In 2023, we expect to build on our strong market position. Our
superior distribution partnerships, sophisticated underwriting
tools, and strong capital and liquidity position support our
profitable growth opportunities," Mr. Marchioni
concluded.
Operating
Highlights
|
|
|
Consolidated
Financial Results
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ and shares in
millions, except per share data
|
2022
|
2021
|
2022
|
2021
|
Net premiums
written
|
$
849.7
|
|
745.4
|
14
|
%
|
$ 3,573.6
|
|
3,189.7
|
12
|
%
|
Net premiums
earned
|
872.8
|
|
784.5
|
11
|
|
3,373.4
|
|
3,017.3
|
12
|
|
Net investment income
earned
|
81.4
|
|
80.1
|
2
|
|
288.2
|
|
326.6
|
(12)
|
|
Net realized and
unrealized (losses) gains, pre-tax
|
(5.9)
|
|
2.2
|
(362)
|
|
(114.8)
|
|
17.6
|
(752)
|
|
Total
revenues
|
952.2
|
|
869.7
|
9
|
|
3,558.1
|
|
3,379.2
|
5
|
|
Net underwriting
income, after-tax
|
36.4
|
|
42.7
|
(15)
|
|
131.8
|
|
172.7
|
(24)
|
|
Net investment income,
after-tax
|
65.5
|
|
64.5
|
1
|
|
232.2
|
|
263.0
|
(12)
|
|
Net income available to
common stockholders
|
84.2
|
|
96.7
|
(13)
|
|
215.7
|
|
394.5
|
(45)
|
|
Non-GAAP operating
income1
|
88.9
|
|
94.9
|
(6)
|
|
306.4
|
|
380.6
|
(19)
|
|
Combined
ratio
|
94.7
|
%
|
93.1
|
1.6
|
pts
|
95.1
|
%
|
92.8
|
2.3
|
pts
|
Loss and loss expense
ratio
|
62.4
|
|
60.4
|
2.0
|
|
62.7
|
|
60.1
|
2.6
|
|
Underwriting expense
ratio
|
32.1
|
|
32.5
|
(0.4)
|
|
32.3
|
|
32.5
|
(0.2)
|
|
Dividends to
policyholders ratio
|
0.2
|
|
0.2
|
—
|
|
0.1
|
|
0.2
|
(0.1)
|
|
Net catastrophe
losses
|
5.2
|
pts
|
4.5
|
0.7
|
|
4.3
|
pts
|
5.4
|
(1.1)
|
|
Non-catastrophe
property losses and loss expenses
|
18.5
|
|
16.0
|
2.5
|
|
18.3
|
|
15.6
|
2.7
|
|
(Favorable) prior-year
reserve development on casualty lines
|
(4.4)
|
|
(1.9)
|
(2.5)
|
|
(2.5)
|
|
(2.7)
|
0.2
|
|
Net income available to
common stockholders per diluted common share
|
$
1.38
|
|
1.59
|
(13)
|
%
|
$
3.54
|
|
6.50
|
(46)
|
%
|
Non-GAAP operating
income per diluted common share1
|
1.46
|
|
1.56
|
(6)
|
|
5.03
|
|
6.27
|
(20)
|
|
Weighted average
diluted common shares
|
60.9
|
|
60.8
|
—
|
|
60.9
|
|
60.7
|
—
|
|
Book value per common
share
|
$
38.57
|
|
46.24
|
(17)
|
|
38.57
|
|
46.24
|
(17)
|
|
Adjusted book value per
common share1
|
45.49
|
|
43.23
|
5
|
|
45.49
|
|
43.23
|
5
|
|
Overall Insurance Operations
For the
fourth quarter, overall NPW increased 14% from a year ago,
reflecting average renewal pure price increases of 5.3%, solid
retention, new business, and exposure growth. Our 94.7%
combined ratio in the quarter was up from 93.1% a year ago, driven
principally by higher catastrophe and non-catastrophe property
losses. The quarter's catastrophe losses were driven by
$46.1 million of net losses related
to Winter Storm Elliott. We also
incurred $11.7 million in
reinstatement premium for a total negative impact to our
underwriting results of $57.8
million, pre-tax. The non-catastrophe property loss increase
was primarily a result of higher severities from inflationary
pressures on items such as new and used car prices, auto repair
costs, building materials, and labor costs. These items were
partially offset by prior-year favorable casualty reserve
development of $38.0 million,
including $30.0 million on our
workers compensation line of business. Our Insurance Operations
generated 6.4 points of annualized ROE in the quarter.
Standard Commercial Lines Segment
For the fourth
quarter, Standard Commercial Lines premiums (representing 80% of
total NPW) increased 13% compared to a year ago. The premium growth
reflected average renewal pure price increases of 5.6%, new
business growth of 22%, and consistently solid retention of 86%.
The fourth quarter combined ratio was 95.5%. The following table
shows the variances relative to the 93.1% combined ratio a year
ago:
Standard Commercial
Lines Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in
millions
|
2022
|
2021
|
2022
|
2021
|
Net premiums
written
|
$
676.6
|
|
597.7
|
13
|
%
|
$ 2,902.0
|
|
2,593.0
|
12
|
%
|
Net premiums
earned
|
705.7
|
|
635.4
|
11
|
|
2,739.8
|
|
2,443.9
|
12
|
|
Combined
ratio
|
95.5
|
%
|
93.1
|
2.4
|
pts
|
94.8
|
%
|
91.9
|
2.9
|
pts
|
Loss and loss expense
ratio
|
62.3
|
|
59.5
|
2.8
|
|
61.5
|
|
58.4
|
3.1
|
|
Underwriting expense
ratio
|
33.0
|
|
33.3
|
(0.3)
|
|
33.1
|
|
33.3
|
(0.2)
|
|
Dividends to
policyholders ratio
|
0.2
|
|
0.3
|
(0.1)
|
|
0.2
|
|
0.2
|
—
|
|
Net catastrophe
losses
|
5.7
|
pts
|
4.2
|
1.5
|
|
3.5
|
pts
|
4.3
|
(0.8)
|
|
Non-catastrophe
property losses and loss expenses
|
16.5
|
|
14.5
|
2.0
|
|
16.8
|
|
13.9
|
2.9
|
|
(Favorable) prior-year
reserve development on casualty lines
|
(4.7)
|
|
(2.4)
|
(2.3)
|
|
(3.0)
|
|
(3.0)
|
—
|
|
Standard Personal Lines Segment
For the
fourth quarter, Standard Personal Lines premiums (representing
10% of total NPW) increased 20% compared to a year ago. Renewal
pure price increases averaged 1.0%, retention was 87%, and new
business was up $12.5 million, or
126%, compared to last year. The fourth quarter combined ratio
was 99.9%. The following table shows the variances relative to the
97.6% combined ratio a year ago:
Standard Personal
Lines Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in
millions
|
2022
|
2021
|
2022
|
2021
|
Net premiums
written
|
$
84.6
|
|
70.4
|
20
|
%
|
$
319.1
|
|
292.3
|
9
|
%
|
Net premiums
earned
|
77.8
|
|
73.1
|
6
|
|
299.4
|
|
293.6
|
2
|
|
Combined
ratio
|
99.9
|
%
|
97.6
|
2.3
|
pts
|
102.4
|
%
|
98.6
|
3.8
|
pts
|
Loss and loss expense
ratio
|
75.4
|
|
71.0
|
4.4
|
|
77.2
|
|
72.2
|
5.0
|
|
Underwriting expense
ratio
|
24.5
|
|
26.6
|
(2.1)
|
|
25.2
|
|
26.4
|
(1.2)
|
|
Net catastrophe
losses
|
5.3
|
pts
|
9.9
|
(4.6)
|
|
13.6
|
pts
|
12.7
|
0.9
|
|
Non-catastrophe
property losses and loss expenses
|
45.7
|
|
35.7
|
10.0
|
|
39.1
|
|
35.0
|
4.1
|
|
(Favorable) prior-year
reserve development on casualty lines
|
—
|
|
—
|
—
|
|
—
|
|
—
|
—
|
|
Excess and Surplus Lines Segment
For the fourth
quarter, Excess and Surplus Lines premiums (representing 10% of
total NPW) increased 14% compared to the prior-year period, driven
by average renewal pure price increases of 7.9% and new business
growth of 5%. The fourth quarter combined ratio was 84.3%. The
following table shows the variances relative to the 88.8% combined
ratio a year ago:
Excess and Surplus
Lines Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in
millions
|
2022
|
2021
|
2022
|
2021
|
Net premiums
written
|
$
88.5
|
|
77.3
|
14
|
%
|
$
352.5
|
|
304.4
|
16
|
%
|
Net premiums
earned
|
89.3
|
|
76.0
|
17
|
|
334.2
|
|
279.8
|
19
|
|
Combined
ratio
|
84.3
|
%
|
88.8
|
(4.5)
|
pts
|
90.9
|
%
|
94.3
|
(3.4)
|
pts
|
Loss and loss expense
ratio
|
52.3
|
|
56.9
|
(4.6)
|
|
58.8
|
|
62.6
|
(3.8)
|
|
Underwriting expense
ratio
|
32.0
|
|
31.9
|
0.1
|
|
32.1
|
|
31.7
|
0.4
|
|
Net catastrophe
losses
|
1.6
|
pts
|
1.6
|
—
|
|
2.9
|
pts
|
8.1
|
(5.2)
|
|
Non-catastrophe
property losses and loss expenses
|
10.5
|
|
8.9
|
1.6
|
|
11.9
|
|
10.1
|
1.8
|
|
(Favorable) prior-year
reserve development on casualty lines
|
(5.6)
|
|
—
|
(5.6)
|
|
(1.5)
|
|
(2.5)
|
1.0
|
|
Investments Segment
For the fourth quarter, after-tax net investment income of
$65 million was up 1%, compared to
last year. After-tax alternative investment income of $0.1 million was $19
million lower in fourth quarter 2022 than the prior-year
period. Higher income from our fixed income securities
portfolio due to higher book yields and the investment of operating
cash flow during the year were an offset. For the quarter, the
after-tax earned income yield averaged 3.4% for the overall
portfolio, and 3.7% for the fixed income securities portfolio.
Invested assets per dollar of common stockholders' equity was
$3.37 at December 31, 2022, and the investment portfolio
generated 11.5 points of non-GAAP operating ROE for the
quarter.
Investments
Segment
|
Quarter ended
December 31,
|
Change
|
Year-to-Date
December 31,
|
Change
|
$ in millions,
except per share data
|
2022
|
2021
|
2022
|
2021
|
Net investment income
earned, after-tax
|
$
65.5
|
|
64.5
|
1
|
%
|
$
232.2
|
|
263.0
|
(12)
|
%
|
Net investment income
per common share
|
1.08
|
|
1.06
|
2
|
|
3.81
|
|
4.34
|
(12)
|
|
Effective tax
rate
|
19.6
|
%
|
19.5
|
0.1
|
pts
|
19.4
|
%
|
19.5
|
(0.1)
|
pts
|
Average
yields:
|
|
|
|
|
|
|
|
|
|
|
Portfolio:
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
4.2
|
|
4.0
|
0.2
|
|
3.6
|
|
4.2
|
(0.6)
|
|
After-tax
|
3.4
|
|
3.2
|
0.2
|
|
2.9
|
|
3.4
|
(0.5)
|
|
Fixed income
securities:
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
4.6
|
%
|
3.1
|
1.5
|
pts
|
3.9
|
%
|
3.2
|
0.7
|
pts
|
After-tax
|
3.7
|
|
2.5
|
1.2
|
|
3.1
|
|
2.6
|
0.5
|
|
Annualized ROE
contribution
|
11.5
|
|
9.4
|
2.1
|
|
9.4
|
|
9.9
|
(0.5)
|
|
Balance
Sheet
|
|
$ in millions, except
per share data
|
December 31,
2022
|
|
December 31,
2021
|
|
Change
|
Total assets
|
$
10,802.3
|
|
|
10,461.4
|
|
|
3 %
|
|
Total
investments
|
7,837.5
|
|
|
8,027.0
|
|
|
(2)
|
|
Long-term
debt
|
504.7
|
|
|
506.1
|
|
|
—
|
|
Stockholders'
equity
|
2,527.6
|
|
|
2,982.9
|
|
|
(15)
|
|
Common stockholders'
equity
|
2,327.6
|
|
|
2,782.9
|
|
|
(16)
|
|
Invested assets per
dollar of common stockholders' equity
|
3.37
|
|
|
2.88
|
|
|
17
|
|
Net premiums written to
policyholders' surplus
|
1.44
|
|
|
1.33
|
|
|
0.11
|
|
Book value per common
share
|
$
38.57
|
|
|
46.24
|
|
|
(17)
|
|
Adjusted book value per
common share1
|
45.49
|
|
|
43.23
|
|
|
5
|
|
Debt to total
capitalization
|
16.6
|
%
|
|
14.5
|
%
|
|
2.1
|
pts
|
Book value per common share declined by $7.67, or 17%, during 2022. The decline was
principally driven by (i) a $9.91
change in after-tax net unrealized losses on our fixed income
securities portfolio from higher interest rates, and (ii)
$1.14 of dividends on our common
stock paid to shareholders, partially offset by $3.54 of net income per diluted common share.
During 2022, the Company repurchased 165,159 shares for
$12.4 million, or an average price of
$75.20 per share. Capacity under our
existing repurchase authorization was $84.2
million as of December 31,
2022.
Selective's Board of Directors declared:
- A quarterly cash dividend on common stock of $0.30 per common share that is payable
March 1, 2023, to holders of record
on February 15, 2023; and
- A cash dividend of $287.50 per
share on our 4.60% Non-Cumulative Preferred Stock, Series B
(equivalent to $0.28750 per
depository share) payable on March 15,
2023, to holders of record as of February 28, 2023.
Guidance
For 2023, our full-year expectations are as
follows:
- A GAAP combined ratio of 96.5%, including net catastrophe
losses of 4.5 points. Our combined ratio estimate assumes no
prior-year casualty reserve development;
- After-tax net investment income of $300
million that includes after-tax net investment income from
our alternative investments of $30
million;
- An overall effective tax rate of approximately 21%, which
assumes an effective tax rate of 20% for net investment income and
21% for all other items; and
- Weighted average shares of 61 million on a fully diluted
basis.
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 Friday, February 3, 2023, at www.Selective.com.
The webcast will be available for rebroadcast until the close of
business on March 5, 2023.
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 has been honored and awarded for
its unique position as a leading insurance group and employer of
choice, including listing in the Fortune 1000 and three consecutive
years as a certified Great Place to Work®. 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. These non-GAAP measures 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 December 31,
|
|
Year-to-Date December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net income available to
common stockholders
|
$
84.2
|
|
96.7
|
|
215.7
|
|
394.5
|
|
Net realized and
unrealized investment losses (gains) included in net income, before
tax
|
5.9
|
|
(2.2)
|
|
114.8
|
|
(17.6)
|
|
Tax on reconciling
items
|
(1.2)
|
|
0.5
|
|
(24.1)
|
|
3.7
|
|
Non-GAAP operating
income
|
$
88.9
|
|
94.9
|
|
306.4
|
|
380.6
|
|
|
|
|
|
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net income available to
common stockholders per diluted common share
|
$
1.38
|
|
1.59
|
|
3.54
|
|
6.50
|
|
Net realized and
unrealized investment losses (gains) included in net income, before
tax
|
0.10
|
|
(0.04)
|
|
1.89
|
|
(0.29)
|
|
Tax on reconciling
items
|
(0.02)
|
|
0.01
|
|
(0.40)
|
|
0.06
|
|
Non-GAAP operating
income per diluted common share
|
$
1.46
|
|
1.56
|
|
5.03
|
|
6.27
|
|
|
|
|
Reconciliation of Return on Common Equity to Non-GAAP
Operating Return on Common Equity
|
|
|
|
|
Quarter ended December 31,
|
|
Year-to-Date December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Return on Common
Equity
|
14.8 %
|
|
14.0
|
|
8.8
|
|
14.8
|
|
Net realized and
unrealized investment losses (gains) included in net income, before
tax
|
1.0
|
|
(0.3)
|
|
4.7
|
|
(0.7)
|
|
Tax on reconciling
items
|
(0.2)
|
|
0.1
|
|
(1.1)
|
|
0.2
|
|
Non-GAAP Operating
Return on Common Equity
|
15.6 %
|
|
13.8
|
|
12.4
|
|
14.3
|
|
|
|
|
|
Reconciliation of Book Value per Common Share to
Adjusted Book Value per Common Share
|
|
|
|
|
Quarter ended December 31,
|
|
Year-to-Date December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Book value per common
share
|
$
38.57
|
|
46.24
|
|
38.57
|
|
46.24
|
|
Total unrealized
investment losses (gains) included in accumulated other
comprehensive (loss) income, before tax
|
8.75
|
|
(3.80)
|
|
8.75
|
|
(3.80)
|
|
Tax on reconciling
items
|
(1.83)
|
|
0.79
|
|
(1.83)
|
|
0.79
|
|
Adjusted book value per
common share
|
45.49
|
|
43.23
|
|
45.49
|
|
43.23
|
|
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, forward-looking
statements include the words "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:
- Difficult conditions in global capital markets and the economy,
including prolonged higher inflation, could increase loss costs and
negatively impact investment portfolios;
- 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 catastrophic events, including
natural events such as hurricanes, tornadoes, windstorms,
earthquakes, hail, severe winter weather, floods, and fires and
man-made events such as criminal and terrorist acts, including
cyber-attacks, explosions, and civil unrest;
- 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;
- Related to COVID-19:
-
- From enactment in 2020 until expiration, governmental
directives to contain or delay the spread of COVID-19 disrupted
ordinary business commerce and impacted financial markets. Should
new directives be issued or implemented, we cannot predict the
extent, duration, or possible impact on our results of operations,
net investment income, financial position, and liquidity.
- Similarly, we cannot predict the amount our premiums may be
reduced, or the impact on our underwriting results, from any future
(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, (iii) voluntary
efforts or directives from various state insurance regulators to
extend individualized payment flexibility or suspend policy
cancellation, late payment notices, and late or reinstatement fees,
or (iv) litigation brought by policyholders to recover premiums
they allege were excessive during the period of any governmental
directive.
- We have been successful to date in defending against payment of
COVID-19-related business interruption losses based on our
policies' terms, conditions, and exclusions. However, should the
highest courts determine otherwise, our loss and loss expenses may
increase, our related reserves may not be adequate, and our
financial condition and liquidity may be materially impacted.
- To varying degrees, the effect, lifting, or lapsing of
COVID-19-related governmental directives can disrupt supply chains
and cause shortages of products, services, and labor. These
shortages may impact our ability to attract and retain labor,
including increasing attrition rates, wages, and the cost and
difficulty of obtaining third-party non-U.S.-based resources.
- The ongoing Russian war against Ukraine is impacting global economic, banking,
commodity, and financial markets, exacerbating ongoing economic
challenges, including inflation and supply chain disruption, which
influences insurance loss costs, premiums and investment
valuation;
- 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;
- Potential tax or federal financial regulatory reform provisions
that could pose certain risks to our operations;
- Our ability to maintain favorable ratings from rating agencies,
including AM 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
constantly changing business environment, and new risk factors may
emerge any 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.