SIGI Selective Insurance Group Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Date of Report (Date of earliest event reported)			October 28, 2015
SELECTIVE INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey	001-33067	22-2168890
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
40 Wantage Avenue, Branchville, New Jersey		07890
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code		(973) 948-3000
Not Applicable
(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Section 2 – Financial Information

 

Item 2.02. Results of Operations and Financial Condition.

 

On October 28, 2015, Selective Insurance Group, Inc. (the “Company”) issued a press release announcing results for the third quarter ended September 30, 2015. The press release is attached hereto as Exhibit 99.1.

 

Section 7 – Regulation FD

 

Item 7.01. Regulation FD Disclosure.

 

Attached as Exhibit 99.2 is supplemental financial information about the Company.

 

The information contained in this report on Form 8-K, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. The Company makes no admission as to the materiality of any information in this report or the exhibits attached hereto.

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01. Financial Statements and Exhibits.

 

(d)	Exhibits
	99.1	Press Release of Selective Insurance Group, Inc. dated October 28, 2015

99.2

Supplemental Investor Package, Third Quarter 2015

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		SELECTIVE INSURANCE GROUP, INC.
Date: October 28, 2015		By:	/s/ Michael H. Lanza
			Michael H. Lanza
			Executive Vice President and General Counsel

 

 

 

EXHIBIT INDEX

 

Exhibit No.	Description
99.1	Press Release of Selective Insurance Group, Inc. dated October 28, 2015
99.2	Supplemental Investor Package, Third Quarter 2015

 

 

 

 

 

EXHIBIT 99.1

 

 

Selective Reports Net Income per Diluted Share of $0.81 and Operating Income¹ per Diluted Share of $0.81 for the Third Quarter of 2015

Improves Full Year Ex-Catastrophe Statutory Combined Ratio Guidance to 89%

Increases Quarterly Shareholder Dividend 7%

 

In the third quarter of 2015:

·

Net premiums written grew 10%

·

GAAP combined ratio was 91.2%

·

Statutory combined ratio was 90.5%

·

After-tax net investment income declined 5%

·

Total return on equity was 14.1% and operating return on equity1 was 14.0%

 

Branchville, NJ – October 28, 2015 – Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported its financial results for the third quarter ended September 30, 2015. Net income per diluted share was $0.81, compared to $0.93 in 2014, and operating income¹ per diluted share grew 7% to $0.81, compared to $0.76 in 2014.

 

“The strong third quarter and year-to-date results reflect the successful execution of our strategies to achieve rate increases that outpace the industry, to improve underwriting mix and to enhance claim outcomes. We have a consistent track record of achieving our goals and this quarter was no exception. For the first time in my 35-year career at Selective, after-tax underwriting income exceeded after-tax net investment income this quarter,” said Gregory E. Murphy, Chairman and Chief Executive Officer. “We are proud of our performance and in recognition of the continuing strong results, the Board of Directors has approved a 7% increase in the quarterly dividend to $0.15 per share payable December 1, 2015 to shareholders of record as of November 13, 2015.”

 

Murphy continued, “For the third quarter, we generated a profitable 90.5% statutory combined ratio, or 89.2% excluding catastrophe losses. Based on the strength of our statutory underwriting results for the last nine months, we are improving our full year ex-catastrophe statutory combined ratio target to 89% from our original 2015 guidance of 91%.

 

“Growth in the quarter was solid, as overall net premiums written increased 10% driven by improving retention levels, an 18% increase in Standard Commercial Lines new business production, 36% growth in E&S premiums written, and 3.5% overall year-to-date renewal pure price increases. For 2015, we expect to achieve overall renewal pure price between 3.0% and 3.5%,” Murphy concluded.

 

Consolidated Financial Results $ in millions, except per share data	Quarter Ended September 30,		Change	Year-to-date September 30,		Change
	2015	2014		2015	2014
Net premiums written	$545.0	$495.1	10%	$1,595.2	$1,451.7	10%
Net premiums earned	$507.4	$462.6	10%	$1,473.8	$1,382.8	7%
Net investment income earned	$32.1	$34.3	(7)%	$91.2	$106.6	(14)%
Net realized gains, pre-tax	$0.3	$15.2	(98)%	$15.8	$27.0	(42)%
Total revenues	$540.5	$515.4	5%	$1,586.3	$1,531.3	4%
Operating income1	$46.8	$43.3	8%	$110.2	$82.9	33%
Net realized gains, net of tax	$0.2	$9.9	(98)%	$10.3	$17.6	(42)%
Net income	$47.0	$53.2	(12)%	$120.5	$100.5	20%
Statutory combined ratio	90.5%	91.5%	(1.0) pts	92.3%	96.6%	(4.3) pts
Catastrophe losses	1.3 pts	1.2 pts	0.1 pt	3.8 pts	4.8 pts	(1.0) pts
Non-catastrophe property losses	12.9 pts	13.0 pts	(0.1) pts	14.0 pts	16.3 pts	(2.3) pts
(Favorable) prior year statutory reserve development on casualty lines	(3.0) pts	(1.7) pts	(1.3) pts	(3.7) pts	(2.9) pts	(0.8) pts
GAAP combined ratio	91.2%	92.6%	(1.4) pts	93.2%	97.1%	(3.9) pts
Operating income per diluted share1	$0.81	$0.76	7%	$1.90	$1.44	32%
Net income per diluted share	$0.81	$0.93	(13)%	$2.08	$1.75	19%
Weighted average diluted shares	58.0M	57.4M	1%	57.8M	57.3M	1%
Book value per share				$23.77	$22.45	6%

¹Operating income differs from net income by the exclusion of realized gains and 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, which represent 78% of total net premiums written, were up 10% in the third quarter from a year ago, driven by an 18% increase in new business to $84 million, renewal pure price increases of 2.8%, and a strong 84% retention. The quarter’s statutory combined ratio improved by 2.5 points, largely due to earned rate continuing to exceed expected loss inflation, favorable prior year casualty reserve development of 4.9 points compared to 2.8 points in the year-ago period, and lower catastrophe losses.

 

Standard Commercial Lines $ in millions, statutory results	Quarter Ended September 30,		Change	Year-to-date September 30,		Change
	2015	2014		2015	2014
Net premiums written	$414.0	$376.4	10%	$1,240.1	$1,119.6	11%
Net premiums earned	$389.5	$352.1	11%	$1,132.3	$1,056.1	7%
Statutory loss & loss expense ratio	52.2%	56.9%	(4.7) pts	54.7%	62.5%	(7.8) pts
Statutory underwriting expense ratio	35.7%	33.7%	2.0 pts	34.2%	32.6%	1.6 pts
Statutory dividends to policyholders ratio	0.5%	0.3%	0.2 pts	0.5%	0.4%	0.1 pts
Statutory combined ratio	88.4%	90.9%	(2.5) pts	89.4%	95.5%	(6.1) pts
GAAP combined ratio	88.7%	92.1%	(3.4) pts	90.3%	96.2%	(5.9) pts

 

Standard Personal Lines

 

Standard Personal Lines premiums, which represent 14% of total net premiums written, decreased 3% in the quarter compared to the third quarter of 2014, largely driven by targeted non-renewals of less profitable accounts coupled with a decrease in new business. Retention improved by two points to 83% and renewal pure price was 5.4%. We continue to see improvements in the participation rate in the Selective Edge^TM product.

 

The statutory combined ratio in Standard Personal Lines was 95.0%, which included 8.0 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 reserve development of $2 million, or 2.7 combined ratio points, in the third quarter of 2014.

 

Standard Personal Lines $ in millions, statutory results	Quarter Ended September 30,		Change	Year-to-date September 30,		Change
	2015	2014		2015	2014
Net premiums written	$76.9	$79.0	(3)%	$217.9	$224.6	(3)%
Net premiums earned	$72.1	$74.4	(3)%	$216.6	$223.7	(3)%
Statutory loss & loss expense ratio	68.7%	60.7%	8.0 pts	72.4%	72.4%	-
Statutory underwriting expense ratio	26.3%	28.2%	(1.9) pts	29.3%	27.5%	1.8 pts
Statutory combined ratio	95.0%	88.9%	6.1 pts	101.7%	99.9%	1.8 pts
GAAP combined ratio	96.1%	89.2%	6.9 pts	102.0%	100.0%	2.0 pts

 

 

 

Excess and Surplus Lines

 

Our Excess and Surplus lines business, which represents 8% of net premiums written, reported a 36% increase in net premiums written in the quarter. Effective July 1, we included E&S in our main property and casualty excess of loss reinsurance treaties. As a result, it is more reflective of actual growth this quarter to look at it on a direct basis, or a 27% increase in direct premiums written. New business growth was very strong recording a 26% increase. The statutory combined ratio in the third quarter improved by 1.8 points from the same period in 2014 to 101.1%, including adverse prior year casualty reserve development of $4 million, or 8.7 points.

 

Excess & Surplus Lines $ in millions, statutory results	Quarter Ended September 30,		Change	Year-to-date September 30,		Change
	2015	2014		2015	2014
Net premiums written	$54.1	$39.6	36%	$137.2	$107.5	28%
Net premiums earned	$45.8	$36.1	27%	$124.9	$102.9	21%
Statutory loss & loss expense ratio	69.9%	67.6%	2.3 pts	68.3%	64.9%	3.4 pts
Statutory underwriting expense ratio	31.2%	35.3%	(4.1) pts	33.5%	35.4%	(1.9) pts
Statutory combined ratio	101.1%	102.9%	(1.8) pts	101.8%	100.3%	1.5 pts
GAAP combined ratio	104.4%	103.8%	0.6 pts	104.0%	100.4%	3.6 pts

 

Investment Income

 

After-tax investment income in the third quarter was $25 million, down 5% compared to the same period a year ago. Investment income was negatively impacted by lower returns from the alternative investments portfolio, which continues to be impacted by declining oil prices and the portfolio’s exposure to energy-exposed limited partnerships. The after-tax annualized yield on the fixed income portfolio was 2.1% compared with 2.3% a year ago reflecting the continued low interest rate environment. The total annualized after-tax portfolio yield declined to 1.9% from 2.3% a year ago due to alternative investment results along with the declining interest rate environment.

 

Investments $ in millions, except per share data	Quarter Ended September 30,		Change	Year-to-date September 30,		Change
	2015	2014		2015	2014
Invested assets per dollar of stockholders’ equity				$3.69	$3.79	(3)%
Net investment income earned, after-tax	$24.6	$25.8	(5)%	$70.5	$79.7	(11)%
Net investment income per share	$0.42	$0.45	(7)%	$1.22	$1.39	(12)%
Effective tax rate	23.4%	24.9%	(1.5) pts	22.7%	25.3%	(2.6) pts
Average yields:
Fixed Income Securities:
Pre-tax				2.7%	3.0%	(0.3) pts
After-tax				2.1%	2.3%	(0.2) pts
Portfolio:
Pre-tax				2.5%	3.0%	(0.5) pts
After-tax				1.9%	2.3%	(0.4) pts

 

Balance Sheet

 

Balance Sheet $ in millions, except per share data	September 30,	December 31,	Change
	2015	2014
Total assets	$6,898.1	$6,581.6	5%
Investment portfolio	$5,013.9	$4,806.8	4%
Notes payable	$394.3	$379.3	4%
Statutory surplus	$1,367.3	$1,307.8	5%
Stockholders’ equity	$1,359.0	$1,275.6	7%
Book value per share	$23.77	$22.54	5%

 

The increase in book value reflects $2.08 in net income, partially offset by a $0.51 reduction in unrealized investment gains and $0.42 in shareholders’ dividends.

 

Selective’s Board of Directors declared a $0.15 per share quarterly cash dividend on common stock payable December 1, 2015, to stockholders of record as of November 13, 2015.

 

Guidance

 

For 2015, Selective expects to generate the following results:

 

·

A statutory combined ratio excluding catastrophes and any further prior year casualty reserve development of 89.0%, an improvement from our original guidance of 91.0%;

·

4 points of catastrophe losses;

	·	After-tax investment income of approximately $95 million; and
	·	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 October 29, 2015 at www.selective.com. The webcast will be available for rebroadcast until the close of business on December 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).

 

Investor and Media Contact:

Jennifer DiBerardino

973-948-1364

jennifer.diberardino@selective.com

 

 

Selective Insurance Group, Inc.

40 Wantage Avenue

Branchville, New Jersey 07890

www.selective.com

 

5

---

EXHIBIT 99.2

 

 

 

Supplemental Investor Package   Third Quarter 2015         Investor Contact: Jennifer DiBerardino Senior Vice President, Investor Relations and Treasurer Tel: 973-948-1364 jennifer.diberardino@selective.com

 

 

 

 

 

 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Balance Sheet Data

(unaudited)

 

		September 30,												September 30,												December 31,
($ in thousands, except per share data)		2015												2014												2014
										Unrecognized/												Unrecognized/												Unrecognized/
		Balance				Market				Unrealized				Balance				Market				Unrealized				Balance				Market				Unrealized
		Sheet				Value				Gain				Sheet				Value				Gain				Sheet				Value				Gain
Invested Assets:
Corporate bonds 1		$	2,901,352				2,904,449				37,945			$	2,585,882				2,590,023				44,665			$	2,693,324				2,697,332				47,437
Government and Municipal bonds			1,679,563				1,686,985				50,263				1,717,838				1,731,805				58,036				1,690,935				1,702,751				59,680
Total fixed income securities			4,580,915				4,591,434				88,208				4,303,720				4,321,828				102,701				4,384,259				4,400,083				107,117
Equities			221,951				221,951				1,131				211,266				211,266				30,846				191,400				191,400				32,389
Short-term investments			125,855				125,855				-				181,593				181,593				-				131,972				131,972				-
Other investments			85,146				85,146				-				106,548				106,548				-				99,203				99,203				-
Total invested assets		$	5,013,867				5,024,386				89,339			$	4,803,127				4,821,235				133,547			$	4,806,834				4,822,658				139,506
Invested assets per $ of stockholders' equity			3.69												3.79												3.77
Total assets			6,898,117												6,577,419												6,581,550
Liabilities:
Reserve for loss and loss expenses			3,517,751												3,445,706												3,477,870
Unearned premium reserve			1,218,884												1,143,979												1,095,819
Total liabilities			5,539,095												5,310,494												5,305,964
Stockholders' equity			1,359,022												1,266,925												1,275,586
Total debt to capitalization ratio			22.5	%											23.6	%											22.9	%
Book value per share			23.77												22.45												22.54
Book value per share excluding
unrealized gain or loss on fixed income portfolio			22.88												21.48												21.49
NPW per insurance segment employee			958												896												908
Statutory premiums to surplus ratio			1.5	x											1.4	x											1.4	x
Statutory surplus			1,367,343												1,323,097												1,307,842

 

¹ Includes mortgage-backed and asset-backed securities.

 

 Selective Insurance Group, Inc. & Consolidated Subsidiaries

 Selected Income Statement Data

 (unaudited)

 

				Quarter Ended September 30,																Year-to-Date September 30,
($ in thousands, except per share amounts)				2015								2014								2015								2014
								Per diluted share								Per diluted share								Per diluted share								Per diluted share
Consolidated
Revenue				$	540,457							$	515,358							$	1,586,322							$	1,531,278
Operating income					46,796				0.81				43,262				0.76				110,221				1.90				82,935			1.44
Net realized gains, after tax					200				0.00				9,900				0.17				10,251				0.18				17,542			0.31
Net income					46,996				0.81				53,162				0.93				120,472				2.08				100,477			1.75
Operating return on equity					14.0	%							13.8	%							11.2	%							9.1	%
Total Insurance Operations
Gross premiums written					637,528								598,638								1,868,760								1,742,530
Net premiums written					545,025								495,121								1,595,246								1,451,694
Net premiums earned					507,390								462,639								1,473,822								1,382,759
Underwriting gain		- before tax			44,831								34,437								99,976								39,506
		- after tax			29,140				0.50				22,384				0.39				64,984				1.12				25,679			0.45
GAAP combined ratio					91.2	%							92.6	%							93.2	%							97.1	%
Standard Commercial Lines
Net premiums earned					389,542								352,143								1,132,280								1,056,091
GAAP combined ratio					88.7	%							92.1	%							90.3	%							96.2	%
Standard Personal Lines
Net premiums earned					72,088								74,377								216,638								223,739
GAAP combined ratio					96.1	%							89.2	%							102.0	%							100.0	%
Excess and Surplus Lines
Net premiums earned					45,760								36,119								124,904								102,929
GAAP combined ratio					104.4	%							103.8	%							104.0	%							100.4	%
Investments
Net investment income		- before tax			32,061								34,292								91,208								106,600
		- after tax			24,555				0.42				25,765				0.45				70,542				1.22				79,672			1.39
Effective tax rate					23.4	%							24.9	%							22.7	%							25.3	%
Annualized after-tax yield on investment portfolio																					1.9	%							2.3	%
Annualized after-tax, after-interest expense yield																					1.6	%							2.0	%
Invested assets per $ of stockholders' equity																					3.69								3.79
Other expenses (net of other income)
Interest expense		- before tax			(5,489	)							(5,558	)							(16,458	)							(16,544	)
		- after tax			(3,568	)			(0.06	)			(3,613	)			(0.06	)			(10,698	)			(0.18	)			(10,754	)		(0.19)
Other expense - after tax				$	(3,331	)			(0.05	)		$	(1,274	)			(0.02	)		$	(14,607	)			(0.26	)		$	(11,662	)		(0.21)
Diluted weighted avg shares outstanding					57,984								57,406								57,838								57,286

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

 

Third Quarter
($ in thousands)		Quarter Ended September 30, 2015																Quarter Ended September 30, 2014
		Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total				Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total
Net Premiums Written			414,031				76,927				54,067				545,025				376,438				79,048				39,635				495,121
Net Premiums Earned			389,542				72,088				45,760				507,390				352,143				74,377				36,119				462,639
Loss and Loss Expense Incurred			203,621				49,588				31,952				285,161				201,352				45,137				24,443				270,932
Net Underwriting Expenses Incurred			139,973				19,674				15,830				175,477				121,864				21,203				13,047				156,114
Dividends to Policyholders			1,921				-				-				1,921				1,156				-				-				1,156
GAAP Underwriting Gain (Loss)			44,027				2,826				(2,022	)			44,831				27,771				8,037				(1,371	)			34,437
GAAP Ratios
Loss and Loss Expense Ratio			52.3	%			68.8	%			69.8	%			56.2	%			57.2	%			60.7	%			67.7	%			58.6	%
Underwriting Expense Ratio			35.9	%			27.3	%			34.6	%			34.6	%			34.6	%			28.5	%			36.1	%			33.8	%
Dividends to Policyholders Ratio			0.5	%			0.0	%			0.0	%			0.4	%			0.3	%			0.0	%			0.0	%			0.2	%
Combined Ratio			88.7	%			96.1	%			104.4	%			91.2	%			92.1	%			89.2	%			103.8	%			92.6	%
Year-to-Date
($ in thousands)			Year-to-Date September 30, 2015																Year-to-Date September 30, 2014
		Standard Commercial Lines				Standard Personal Lines					Excess & Surplus Lines			Grand Total				Standard Commercial Lines				Standard Personal Lines				Excess & Surplus Lines				Grand Total
Net Premiums Written			1,240,110				217,937				137,199				1,595,246				1,119,648				224,567				107,479				1,451,694
Net Premiums Earned			1,132,280				216,638				124,904				1,473,822				1,056,091				223,739				102,929				1,382,759
Loss and Loss Expense Incurred			619,857				156,490				85,374				861,721				660,523				162,027				66,723				889,273
Net Underwriting Expenses Incurred			397,829				64,443				44,563				506,835				351,781				61,617				36,639				450,037
Dividends to Policyholders			5,290				-				-				5,290				3,943				-				-				3,943
GAAP Underwriting Gain (Loss)			109,304				(4,295	)			(5,033	)			99,976				39,844				95				(433	)			39,506
GAAP Ratios
Loss and Loss Expense Ratio			54.7	%			72.2	%			68.4	%			58.5	%			62.5	%			72.4	%			64.8	%			64.3	%
Underwriting Expense Ratio			35.1	%			29.8	%			35.6	%			34.3	%			33.3	%			27.6	%			35.6	%			32.5	%
Dividends to Policyholders Ratio			0.5	%			0.0	%			0.0	%			0.4	%			0.4	%			0.0	%			0.0	%			0.3	%
Combined Ratio			90.3	%			102.0	%			104.0	%			93.2	%			96.2	%			100.0	%			100.4	%			97.1	%

 

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

September 2015 (unaudited)

 

		Quarter Ended								%				Year-to-Date								%
		September				September				Increase				September				September				Increase
($ in thousands, except per share data)		2015				2014				(Decrease)				2015				2014				(Decrease)
Investment Income:
Interest:
Fixed Income Securities		$	30,601				30,706				(0	)		$	92,227				95,515				(3	)
Short-term			24				15				60				72				48				50
Other Investments			1,337				3,906				(66	)			(781	)			12,677				(106	)
Dividends:			2,370				1,909				24				6,546				5,094				29
			34,332				36,536				(6	)			98,064				113,334				(13	)
Investment Expense			2,271				2,244				1				6,856				6,734				2
Net Investment Income Before Tax			32,061				34,292				(7	)			91,208				106,600				(14	)
Tax			7,506				8,527				(12	)			20,666				26,928				(23	)
Net Investment Income After Tax		$	24,555				25,765				(5	)		$	70,542				79,672				(11	)
Net Investment Income per Share		$	0.42				0.45				(7	)		$	1.22				1.39				(12	)
Effective Tax Rate			23.4	%			24.9	%							22.7	%			25.3	%
Average Yields :
Fixed Income Securities:
Pre Tax															2.74	%			3.03	%
After Tax															2.08	%			2.27	%
Portfolio:
Pre Tax															2.48	%			3.03	%
After Tax															1.92	%			2.26	%
			Quarter Ended												Year-to-Date
			September				September								September				September
Net Realized Gains (Losses)			2015				2014								2015				2014
Fixed Income Securities			(80	)			662								587				1,446
Equity Securities			388				14,568								15,838				25,541
Other Investments			-				1								(654	)			1
Total			308				15,231								15,771				26,988
Net of Tax			200				9,900								10,251				17,542

 

As of September 30, 2015 year-to-date new money rates for fixed income securities were 2.2% on a pre-tax basis and 1.6% on an after-tax basis.      

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2015 Statutory Results by Line of Business

Quarter Ended September 2015 (unaudited)

 

		Net Premiums				Percent				Net Premiums				Percent				Loss				LAE				Underwriting Expense				Dividends to Policyholders				Combined Ratio				Combined Ratio				Underwriting
($ in thousands)		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2015				2014				Gain/(Loss)
Standard Personal Lines:
Homeowners		$	37,491				(2.4	)%		$	33,670				(0.8	)%			56.9	%			8.5	%			31.5	%			0.0	%			96.8	%			86.8	%		$	(115	)
Auto			37,610				(3.4	)%			36,624				(2.8	)%			63.3	%			8.8	%			31.3	%			0.0	%			103.4	%			100.3	%			(1,568	)
Other (including flood)			1,826				6.2	%			1,794				(34.2	)%			67.6	%			(7.2	)%			(178.7	)%			0.0	%			(118.3	)%			(135.3	)%			3,975
Total		$	76,927				(2.7	)%		$	72,088				(3.1	)%			60.4	%			8.3	%			26.3	%			0.0	%			95.0	%			88.9	%		$	2,292
Standard Commercial Lines:
Commercial property		$	77,674				8.7	%		$	68,587				11.9	%			24.5	%			5.2	%			38.1	%			0.0	%			67.8	%			79.9	%		$	18,665
Workers compensation			74,446				13.2	%			74,560				11.7	%			37.1	%			14.2	%			30.2	%			2.5	%			84.0	%			111.2	%			11,996
General liability			130,722				11.0	%			123,252				11.1	%			38.0	%			14.7	%			36.4	%			0.0	%			89.1	%			84.2	%			10,761
Auto			97,941				8.1	%			90,758				8.6	%			62.0	%			8.9	%			33.5	%			0.1	%			104.5	%			92.8	%			(6,478	)
Businessowners' policies			23,936				9.2	%			23,726				9.6	%			46.9	%			12.4	%			40.7	%			0.0	%			100.0	%			90.3	%			(74	)
Bonds			5,375				0.2	%			5,031				5.0	%			16.4	%			8.4	%			66.7	%			0.0	%			91.5	%			86.3	%			197
Other			3,937				8.5	%			3,628				12.1	%			(0.3	)%			0.1	%			60.2	%			0.0	%			60.0	%			55.8	%			1,265
Total		$	414,031				10.0	%		$	389,542				10.6	%			40.9	%			11.3	%			35.7	%			0.5	%			88.4	%			90.9	%		$	36,332
E&S		$	54,067				36.4	%		$	45,760				26.7	%			51.4	%			18.5	%			31.2	%			0.0	%			101.1	%			102.9	%		$	(3,088	)
Total Insurance Operations		$	545,025				10.1	%		$	507,390				9.7	%			44.6	%			11.5	%			34.0	%			0.4	%			90.5	%			91.5	%		$	35,536

 

 

Note: Some amounts may not foot due to rounding.

 

		2015		2014
	Losses Paid	$    237,573		$            227,149
	LAE Paid	50,084		50,339
	Total Paid	$    287,657		$            277,488

 

 

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2015 Statutory Results by Line of Business

Year-to-Date September 2015 (unaudited)

 

		Net Premiums				Percent				Net Premiums				Percent				Loss				LAE				Underwriting Expense				Dividends to Policyholders				Combined Ratio				Combined Ratio				Underwriting
($ in thousands)		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2015				2014				Gain/(Loss)
Standard Personal Lines:
Homeowners		$	101,837				(2.1	)%		$	101,122				0.3	%			65.0	%			8.2	%			34.9	%			0.0	%			108.0	%			110.8	%		$	(8,291	)
Auto			111,125				(3.3	)%			110,374				(3.1	)%			61.5	%			10.6	%			33.4	%			0.0	%			105.5	%			100.5	%			(6,291	)
Other (including flood)			4,975				(11.7	)%			5,142				(42.6	)%			66.5	%			(2.8	)%			(172.2	)%			0.0	%			(108.5	)%			(102.3	)%			10,437
Total		$	217,937				(3.0	)%		$	216,638				(3.2	)%			63.3	%			9.1	%			29.3	%			0.0	%			101.7	%			99.9	%		$	(4,145	)
Standard Commercial Lines:
Commercial property		$	219,308				10.7	%		$	199,699				9.3	%			44.1	%			5.2	%			37.5	%			0.1	%			86.9	%			104.1	%		$	18,868
Workers compensation			233,722				13.0	%			213,991				4.3	%			42.1	%			15.5	%			28.0	%			2.2	%			87.7	%			109.6	%			20,788
General liability			395,840				11.4	%			357,430				7.9	%			29.6	%			15.7	%			34.6	%			0.1	%			80.0	%			81.8	%			58,078
Auto			291,547				9.1	%			265,771				6.6	%			60.0	%			9.2	%			32.3	%			0.1	%			101.5	%			93.7	%			(12,374	)
Businessowners' policies			71,776				8.7	%			69,603				9.1	%			57.8	%			12.1	%			39.0	%			0.0	%			108.9	%			112.4	%			(7,071	)
Bonds			16,404				5.6	%			15,137				6.0	%			16.4	%			7.0	%			64.1	%			0.0	%			87.5	%			82.7	%			1,075
Other			11,513				10.2	%			10,649				10.6	%			0.1	%			0.1	%			55.8	%			0.0	%			56.0	%			49.7	%			4,202
Total		$	1,240,110				10.8	%		$	1,132,280				7.2	%			42.9	%			11.8	%			34.2	%			0.5	%			89.4	%			95.5	%		$	83,566
E&S		$	137,199				27.7	%		$	124,904				21.3	%			49.5	%			18.8	%			33.5	%			0.0	%			101.8	%			100.3	%		$	(6,431	)
Total Insurance Operations		$	1,595,246				9.9	%		$	1,473,822				6.6	%			46.5	%			12.0	%			33.4	%			0.4	%			92.3	%			96.6	%		$	72,990

 

 

Note: Some amounts may not foot due to rounding.

 

		2015		2014
	Losses Paid	$    656,683		$            662,435
	LAE Paid	144,145		139,178
	Total Paid	$    800,828		$            801,613

 

 

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2015 Net Catastrophe Losses and Prior Year Casualty Reserve Development

Statutory Results by Line of Business

(unaudited)

 

		Quarter Ended																Year-to-Date
Net Catastrophe Losses Incurred		September 30, 2015								September 30, 2014								September 30, 2015								September 30, 2014
($ in thousands)		Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio
Standard Personal Lines		$	5,784				8.0	%		$	1,605				2.2	%		$	20,381				9.4	%		$	22,618				10.1	%
Standard Commercial Lines		$	758				0.2	%		$	3,259				0.9	%		$	33,016				2.9	%		$	41,946				4.0	%
E&S		$	308				0.7	%		$	511				1.4	%		$	2,752				2.2	%		$	2,386				2.3	%
Total Insurance Operations		$	6,850				1.3	%		$	5,375				1.2	%		$	56,149				3.8	%		$	66,949				4.8	%
Prior Year Casualty Reserve Development			Quarter Ended																Year-to-Date
(Favorable) / Unfavorable			September 30, 2015								September 30, 2014								September 30, 2015								September 30, 2014
($ in thousands)			Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio				Loss and Loss Expense Incurred				Impact on Loss and Loss Expense Ratio
Standard Personal Lines		$	-				0.0	%		$	(2,000	)			(2.7	)%		$	-				0.0	%		$	(6,000	)			(2.7	)%
Standard Commercial Lines		$	(19,000	)			(4.9	)%		$	(10,000	)			(2.8	)%		$	(61,000	)			(5.4	)%		$	(37,500	)			(3.6	)%
E&S		$	4,000				8.7	%		$	4,000				11.1	%		$	6,000				4.8	%		$	4,000				3.9	%
Total Insurance Operations		$	(15,000	)			(3.0	)%		$	(8,000	)			(1.7	)%		$	(55,000	)			(3.7	)%		$	(39,500	)			(2.9	)%

 

Note: Some amounts may not foot due to rounding.

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Balance Sheets

 

($ in thousands, except share amounts)		(Unaudited) September 30, 2015				December 31, 2014
ASSETS
Investments:
Fixed income securities, held-to-maturity – at carrying value (fair value:  $240,388 – 2015; $333,961 – 2014)		$	229,869				318,137
Fixed income securities, available-for-sale – at fair value (amortized cost:  $4,273,771 – 2015; $3,975,786 – 2014)			4,351,046				4,066,122
Equity securities, available-for-sale – at fair value (cost:  $220,820 – 2015; $159,011 – 2014)			221,951				191,400
Short-term investments (at cost which approximates fair value)			125,855				131,972
Other investments			85,146				99,203
Total investments			5,013,867				4,806,834
Cash			15,113				23,959
Interest and dividends due or accrued			38,009				38,901
Premiums receivable, net of allowance for uncollectible accounts of:  $4,612 – 2015; $4,137 – 2014			653,966				558,778
Reinsurance recoverable, net			561,364				581,548
Prepaid reinsurance premiums			148,634				146,993
Deferred federal income tax			93,062				98,449
Property and equipment – at cost, net of accumulated depreciation and amortization of:  $184,406 – 2015; $172,183 – 2014			65,657				59,416
Deferred policy acquisition costs			213,666				185,608
Goodwill			7,849				7,849
Other assets			86,930				73,215
Total assets		$	6,898,117				6,581,550
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for loss and loss expenses		$	3,517,751				3,477,870
Unearned premiums			1,218,884				1,095,819
Notes payable			394,309				379,297
Current federal income tax			12,607				3,921
Accrued salaries and benefits			158,044				158,382
Other liabilities			237,500				190,675
Total liabilities		$	5,539,095				5,305,964
Stockholders’ Equity:
Preferred stock of $0 par value per share:
Authorized shares 5,000,000; no shares issued or outstanding		$	-				-
Common stock of $2 par value per share:
Authorized shares: 360,000,000
Issued: 100,673,864 – 2015; 99,947,933 – 2014			201,348				199,896
Additional paid-in capital			320,987				305,385
Retained earnings			1,409,536				1,313,440
Accumulated other comprehensive (loss) income			(6,039	)			19,788
Treasury stock – at cost (shares: 43,492,212 – 2015; 43,353,181 – 2014)			(566,810	)			(562,923	)
Total stockholders’ equity		$	1,359,022				1,275,586
Commitments and contingencies
Total liabilities and stockholders’ equity		$	6,898,117				6,581,550

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Income

 

		Quarter Ended September 30,								Nine Months Ended September 30,
($ in thousands, except per share amounts)		2015				2014				2015				2014
Revenues:
Net premiums earned		$	507,390				462,639				1,473,822				1,382,759
Net investment income earned			32,061				34,292				91,208				106,600
Net realized gains:
Net realized investment gains			1,590				15,231				23,598				28,370
Other-than-temporary impairments			(1,282	)			-				(7,827	)			(1,382	)
Total net realized gains			308				15,231				15,771				26,988
Other income			698				3,196				5,521				14,931
Total revenues			540,457				515,358				1,586,322				1,531,278
Expenses:
Loss and loss expense incurred			285,161				270,932				861,721				889,273
Policy acquisition costs			174,802				158,101				509,295				462,540
Interest expense			5,489				5,558				16,458				16,544
Other expenses			9,166				5,441				29,954				22,990
Total expenses			474,618				440,032				1,417,428				1,391,347
Income before federal income tax			65,839				75,326				168,894				139,931
Federal income tax expense:
Current			9,141				7,373				29,128				22,692
Deferred			9,702				14,791				19,294				16,762
Total federal income tax expense			18,843				22,164				48,422				39,454
Net income		$	46,996				53,162				120,472				100,477
Earnings per share:
Basic net income		$	0.82				0.94				2.11				1.79
Diluted net income		$	0.81				0.93				2.08				1.75
Dividends to stockholders		$	0.14				0.13				0.42				0.39

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income		Quarter Ended								Nine Months Ended
		September 30,								September 30,
($ in thousands)		2015				2014				2015				2014
Net income		$	46,996				53,162				120,472				100,477
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) arising during period			5,442				(8,988	)			(18,132	)			41,767
Amount reclassified into net income:
Held-to-maturity securities			(63	)			(243	)			(353	)			(683	)
Non-credit other-than-temporary impairments			—				780				232				1,085
Realized gains on available-for-sale securities			(199	)			(10,683	)			(10,906	)			(18,637	)
Total unrealized gains (losses) on investment securities			5,180				(19,134	)			(29,159	)			23,532
Defined benefit pension and post-retirement plans:
Amounts reclassified into net income:
Net actuarial loss			1,110				247				3,332				742
Total defined benefit pension and post-retirement plans			1,110				247				3,332				742
Other comprehensive income (loss)			6,290				(18,887	)			(25,827	)			24,274
Comprehensive income		$	53,286				34,275				94,645				124,751

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Stockholders’ Equity		Nine Months Ended
		September 30,
($ in thousands, except share amounts)		2015				2014
Common stock:
Beginning of year		$	199,896				198,240
Dividend reinvestment plan   (shares: 38,947 – 2015; 44,322 – 2014)			78				89
Stock purchase and compensation plans   (shares: 686,984 – 2015; 588,858– 2014)			1,374				1,178
End of period			201,348				199,507
Additional paid-in capital:
Beginning of year			305,385				288,182
Dividend reinvestment plan			1,014				957
Stock purchase and compensation plans			14,588				11,286
End of period			320,987				300,425
Retained earnings:
Beginning of year			1,313,440				1,202,015
Net income			120,472				100,477
Dividends to stockholders ($0.42 per share – 2015; $0.39 per share – 2014)			(24,376	)			(22,344	)
End of period			1,409,536				1,280,148
Accumulated other comprehensive (loss) income:
Beginning of year			19,788				24,851
Other comprehensive (loss) income			(25,827	)			24,274
End of period			(6,039	)			49,125
Treasury stock:
Beginning of year			(562,923	)			(559,360	)
Acquisition of treasury stock   (shares: 139,031 – 2015; 130,573 – 2014)			(3,887	)			(2,920	)
End of period			(566,810	)			(562,280	)
Total stockholders’ equity		$	1,359,022				1,266,925

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Cash Flow		Nine Months Ended
		September 30,
($ in thousands)		2015				2014
Operating Activities:
Net Income		$	120,472				100,477
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			43,868				31,059
Sale of renewal rights			—				(8,000	)
Stock-based compensation expense			7,626				7,421
Undistributed losses (gains) of equity method investments			781				(131	)
Net realized gains			(15,771	)			(26,988	)
Changes in assets and liabilities:
Increase in reserve for loss and loss expenses, net of reinsurance recoverables			60,065				86,887
Increase in unearned premiums, net of prepaid reinsurance			121,424				68,935
Decrease in net federal income taxes			27,980				33,596
Increase in premiums receivable			(95,188	)			(66,816	)
Increase in deferred policy acquisition costs			(28,058	)			(16,700	)
Decrease (increase) in interest and dividends due or accrued			979				(82	)
Decrease in accrued salaries and benefits			(338	)			(13,958	)
Increase (decrease) in accrued insurance expenses			7,154				(12,545	)
Increase (decrease) in other assets and other liabilities			8,039				(25,036	)
Net adjustments			138,561				57,642
Net cash provided by operating activities			259,033				158,119
Investing Activities:
Purchase of fixed income securities, available-for-sale			(731,154	)			(560,493	)
Purchase of equity securities, available-for-sale			(192,717	)			(185,529	)
Purchase of other investments			(6,589	)			(8,498	)
Purchase of short-term investments			(1,084,794	)			(1,082,192	)
Sale of fixed income securities, available-for-sale			22,323				35,499
Sale of short-term investments			1,090,911				1,074,850
Redemption and maturities of fixed income securities, held-to-maturity			79,972				56,375
Redemption and maturities of fixed income securities, available-for-sale			403,510				336,939
Sale of equity securities, available-for-sale			148,228				186,001
Distributions from other investments			22,038				13,514
Purchase of property and equipment			(11,869	)			(9,178	)
Sale of renewal rights			—				8,000
Net cash used in investing activities			(260,141	)			(134,712	)
Financing Activities:
Dividends to stockholders			(22,848	)			(20,899	)
Acquisition of treasury stock			(3,887	)			(2,920	)
Net proceeds from stock purchase and compensation plans			6,016				3,554
Proceeds from borrowings			15,000				—
Excess tax benefits from share-based payment arrangements			1,498				1,024
Repayment of capital lease obligations			(3,517	)			(1,858	)
Net cash used in financing activities			(7,738	)			(21,099	)
Net (decrease) increase in cash			(8,846	)			2,308
Cash, beginning of year			23,959				193
Cash, end of period		$	15,113				2,501

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

 Statutory Balance Sheets

(unaudited)

 

		September 30,				September 30,				December 31,
($ in thousands)		2015				2014				2014
ASSETS
Bonds		$	4,438,650				4,166,759				4,241,580
Common stocks			210,197				211,265				191,400
Preferred stocks			11,708				-				-
Affiliated mortgage loan			35,366				36,155				35,961
Other investments			136,591				172,505				152,154
Short-term investments			109,393				139,193				115,342
Total investments			4,941,905				4,725,877				4,736,437
Cash on hand and in banks			(6,272	)			232				12,381
Interest and dividends due and accrued			37,944				37,460				38,908
Premiums receivable			648,264				588,789				556,086
Reinsurance recoverable on paid losses and expenses			11,288				10,558				9,570
Deferred tax recoverable			146,936				153,305				147,610
EDP equipment			436				567				518
Equities and deposits in pools and associations			12,394				9,966				9,915
Receivable for sold securities			64				723				34
Other assets			26,798				27,008				26,629
Total assets		$	5,819,757				5,554,485				5,538,088
LIABILITIES
Reserve for losses		$	2,427,024				2,408,287				2,398,531
Reinsurance payable on paid loss and loss expense			2,677				2,680				2,957
Reserve for loss expenses			526,253				475,933				493,510
Unearned premiums			1,070,250				985,089				948,826
Reserve for commissions payable			73,293				60,739				70,259
Ceded balances payable			32,626				30,036				29,624
Federal income tax payable			22,996				26,750				20,524
Premium and other taxes payable			24,257				18,068				20,137
Borrowed money			60,029				58,042				45,027
Reserve for dividends to policyholders			5,989				2,606				3,895
Reserves for unauthorized reinsurance			7,661				2,735				7,661
Payable for securities			31,974				44,712				19,950
Funds withheld on account of others			7,695				7,933				7,473
Accrued salaries and benefits			69,837				61,074				64,207
Other liabilities			89,853				46,704				97,665
Total liabilities			4,452,414				4,231,388				4,230,246
POLICYHOLDERS' SURPLUS
Capital			42,725				42,725				42,725
Paid in surplus			492,869				492,869				492,869
Unassigned surplus			831,749				787,503				772,248
Total policyholders' surplus			1,367,343				1,323,097				1,307,842
Total liabilities and policyholders' surplus		$	5,819,757				5,554,485				5,538,088

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

 

		Quarter Ended																Nine Months Ended
		September 30,																September 30,
($ in thousands)		2015								2014								2015								2014
UNDERWRITING
Net premiums written		$	545,025								495,121								1,595,246								1,451,694
Net premiums earned			507,390								462,639								1,473,822								1,382,759
Net losses paid			237,573								227,149								656,683								662,435
Change in reserve for losses			(11,051	)							(12,187	)							28,493								66,811
Net losses incurred			226,522				44.6	%			214,962				46.5	%			685,176				46.5	%			729,246				52.7	%
Net loss expenses paid			50,084								50,339								144,145								139,178
Change in reserve for loss expenses			8,083								4,730								32,744								19,949
Net loss expenses incurred			58,167				11.5	%			55,069				11.9	%			176,889				12.0	%			159,127				11.5	%
Net underwriting expenses incurred			185,183				33.9	%			165,184				33.4	%			537,019				33.6	%			478,387				33.0	%
Total deductions			469,872								435,215								1,399,084								1,366,760
Statutory underwriting gain / (loss)			37,518								27,424								74,738								15,999
Net loss from premium balances charged off			(833	)							(999	)							(2,146	)							(2,768	)
Finance charges and other income			772								3,419								5,688								15,587
Total other income			(61	)			0.1	%			2,420				-0.5	%			3,542				-0.2	%			12,819				-0.9	%
Policyholders' dividends incurred			(1,921	)			0.4	%			(1,156	)			0.2	%			(5,290	)			0.4	%			(3,943	)			0.3	%
Total underwriting gain / (loss)			35,536				90.5	%			28,688				91.5	%			72,990				92.3	%			24,875				96.6	%
INVESTMENT
Net investment income earned			31,821								33,778								91,103								105,925
Net realized gain			309								15,231								15,770								26,983
Total income before income tax			67,666								77,697								179,863								157,783
Federal income tax expense			17,938								19,099								37,729								32,052
Net income		$	49,728								58,598								142,134								125,731
Policyholders' Surplus
Surplus, beginning of period		$	1,344,630								1,292,961								1,307,842								1,256,431
Net income			49,728								58,598								142,134								125,731
Change in deferred taxes			752								(3,477	)							(11,401	)							(10,162	)
Change in net unrealized capital (losses)			(6,554	)							(9,553	)							(20,101	)							(4,414	)
Dividends to stockholders			(14,438	)							(14,379	)							(43,314	)							(43,133	)
Change in non-admitted assets			(8,390	)							(1,336	)							(12,661	)							(2,203	)
Change in Overfunded Contra Asset			(281	)							(1,547	)							(842	)							(4,640	)
Qual Pen Trans Liab			1,845								1,815								5,534								5,446
Excess Plan Trans Liab			44								8								130								23
PRL Plan Trans Liab			7								7								22								18
Net change in surplus for period			22,713								30,136								59,501								66,666
Surplus, end of period		$	1,367,343								1,323,097								1,367,343								1,323,097
Statutory underwriting gain		$	35,536								28,688								72,990								24,875
Adjustments under GAAP:
Deferred policy acquisition costs			10,442								7,595								28,058								16,700
Other, net			(1,147	)							(1,846	)							(1,072	)							(2,069	)
GAAP underwriting gain		$	44,831								34,437								99,976								39,506

 

Note: Some amounts or ratios may not foot due to rounding

 

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Alternative Investments

as of September 30, 2015

(unaudited)

 

			Inception				Original				Remaining				Current				YTD				DPI(1)				TVPI(2)
Fund			Year				Commitment				Commitment				Market Value				Income				Ratio				Ratio
Real Estate
Silverpeak RE II			2005				20,000,000				2,070,860				6,516,961				1,635,744				0.86				1.17
Silverpeak RE III			2008				15,000,000				7,847,821				2,337,031				(240,492	)			0.08				0.40
Total - Real Estate							35,000,000				9,918,681				8,853,992				1,395,252				0.66				0.97
Mezzanine Financing
Neovara Euro Mezz			2004				9,000,000				-				-				-				0.98				0.98
GS Mezz V			2007				25,000,000				10,223,976				2,535,000				172,683				1.20				1.33
New Canaan V			2012				7,000,000				1,315,741				3,477,477				110,093				0.57				1.12
Centerfield Capital			2012				3,000,000				1,843,500				935,459				41,656				0.21				1.02
Total - Mezz. Financing							44,000,000				13,383,218				6,947,937				324,432				0.99				1.17
Distressed Debt
Varde VIII			2006				10,000,000				-				1,700,551				67,336				1.18				1.35
Distressed Managers III			2007				15,000,000				3,048,054				5,188,639				(216,722	)			0.82				1.21
Total - Distressed Debt							25,000,000				3,048,054				6,889,190				(149,386	)			0.98				1.27
Private Equity
Prospector			1997				5,000,000				-				442,132				161,758				2.82				2.91
Trilantic Capital Partners III			2004				10,000,000				1,373,537				1,776,610				(646,819	)			1.63				1.82
NB Co-Invest			2006				15,000,000				1,398,786				5,866,795				671,800				1.06				1.47
NB Co-Invest III			2015				15,000,000				15,000,000				-				-				-				-
Trilantic Capital Partners IV			2007				11,098,351				1,512,816				5,628,312				(1,023,151	)			1.16				1.67
Trilantic Capital Partners V			2012				7,000,000				4,540,668				2,077,943				(268,965	)			0.01				0.85
Total - Private Equity							63,098,351				23,825,807				15,791,792				(1,105,376	)			1.36				1.73
Private Equity, Secondary Market
NB SOF			2005				12,000,000				899,494				3,214,009				69,034				1.06				1.35
Vintage IV			2007				20,000,000				4,241,625				8,932,506				124,854				0.91				1.37
NB SOF II			2008				12,000,000				1,953,370				5,356,496				145,951				1.08				1.51
Total - Pvt. Eq. Sec. Mkt.							44,000,000				7,094,489				17,503,011				339,839				1.00				1.40
Energy/Power Generation
ArcLight I			2002				15,000,000				-				12,455				-				1.81				1.81
ArcLight II			2003				15,000,000				-				210,482				51,814				1.41				1.42
ArcLight III			2006				15,000,000				2,037,794				1,163,392				190,825				1.36				1.43
Quintana Energy			2006				10,000,000				284,272				5,299,590				(3,033,428	)			0.60				1.14
ArcLight IV			2007				10,000,000				2,287,578				2,204,965				80,582				1.23				1.45
Arclight VI			2014				15,000,000				12,247,768				2,752,232				-				-				1.00
Total - Energy/Power Generation							80,000,000				16,857,412				11,643,116				(2,710,207	)			1.30				1.46
Venture Capital
Venture V			2001				9,400,000				150,000				6,538,705				1,124,400				0.82				1.53
Total - Venture Capital							9,400,000				150,000				6,538,705				1,124,400				0.82				1.53
TOTAL - ALTERNATIVE INVESTMENTS						$	300,498,351				74,277,660				74,167,743				(781,046	)			1.10				1.38

 

⁽¹⁾ Distributed to paid in ratio

⁽²⁾ Total value to paid in ratio 

Exhibit may not foot due to rounding