BRANCHVILLE, N.J., Feb. 4, 2016 /PRNewswire/ --
In the fourth quarter of 2015:
- Net premiums written grew 9.5%
- GAAP combined ratio was 90.5%
- Statutory combined ratio was 93.2%
- After-tax net investment income declined 5%
- Total return on equity was 13.2% and operating return on
equity1 was 13.7%
Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported
its financial results for the fourth quarter ended December 31, 2015. Net income per diluted share
was $0.78, compared to $0.72 in 2014, and operating income1
per diluted share grew 13% to $0.81,
compared to $0.72 in 2014.
"Selective finished 2015 with a strong fourth quarter,
generating a profitable 93.2% statutory combined ratio, or 92.6%
excluding catastrophe losses," said Gregory
E. Murphy, Chairman and Chief Executive Officer. "Growth in
the quarter was solid, as overall net premiums written increased
9.5%. For the full-year 2015, Selective generated 10% net premiums
written growth and a record statutory combined ratio of 92.4%, or
89.4% excluding catastrophe losses, our best since becoming a
listed company."
Murphy continued, "Our success in 2015 reflects Selective's
continued ability to outperform our industry and drive sustainable
and profitable growth. The three-year profitability
improvement plan we laid out in 2012, achieved in 2014 and exceeded
in 2015 is the result of a unique field model armed with
sophisticated underwriting and claims tools, delivering true
franchise value to our distribution partners, and providing
superior customer service. These three pillars have positioned
Selective with a competitive advantage in our industry. With
the benefit of these unique differentiators, our goal for 2016 and
beyond is to continue to outpace industry growth rates while
maintaining profitability margins."
Consolidated
Financial Results
$ in millions,
except per share data
|
Quarter
Ended
December
31,
|
Change
|
Year-to-date
December
31,
|
Change
|
2015
|
2014
|
2015
|
2014
|
Net premiums
written
|
$474.7
|
$433.6
|
9%
|
$2,069.9
|
$1,885.3
|
10%
|
Net premiums
earned
|
$516.1
|
$469.9
|
10%
|
$1,989.9
|
$1,852.6
|
7%
|
Net investment income
earned
|
$30.1
|
$32.1
|
(6)%
|
$121.3
|
$138.7
|
(13)%
|
Net realized (losses)
gains, pre-tax
|
$(2.6)
|
$(0.4)
|
(568)%
|
$13.2
|
$26.6
|
(50)%
|
Total
revenues
|
$545.6
|
$503.6
|
8%
|
$2,131.9
|
$2,034.9
|
5%
|
Operating
income1
|
$47.1
|
$41.6
|
13%
|
$157.3
|
$124.5
|
26%
|
Net realized (losses)
gains, net of tax
|
$(1.7)
|
$(0.3)
|
(568)%
|
$8.6
|
$17.3
|
(50)%
|
Net income
|
$45.4
|
$41.4
|
10%
|
$165.9
|
$141.8
|
17%
|
Statutory combined
ratio
|
93.2%
|
93.2%
|
-
|
92.4%
|
95.7%
|
(3.3) pts
|
Catastrophe
losses
|
0.6 pts
|
(1.5) pts
|
2.1 pts
|
3.0 pts
|
3.2 pts
|
(0.2) pts
|
Non-catastrophe
property losses
|
11.4 pts
|
13.4 pts
|
(2.0) pts
|
13.3 pts
|
15.5 pts
|
(2.2) pts
|
(Favorable) prior
year statutory reserve development on casualty lines
|
(2.3) pts
|
(1.9) pts
|
(0.4) pts
|
(3.4) pts
|
(2.6) pts
|
(0.8) pts
|
GAAP combined
ratio
|
90.5%
|
91.8%
|
(1.3) pts
|
92.5%
|
95.8%
|
(3.3) pts
|
Operating income per
diluted share1
|
$0.81
|
$0.72
|
13%
|
$2.70
|
$2.17
|
24%
|
Net income per
diluted share
|
$0.78
|
$0.72
|
8%
|
$2.85
|
$2.47
|
15%
|
Weighted average
diluted shares
|
58.4M
|
57.5M
|
1%
|
58.2M
|
57.4M
|
1%
|
Book value per
share
|
|
|
|
$24.37
|
$22.54
|
8%
|
|
|
1
Operating 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 77% of total
net premiums written, were up 11% compared to the fourth quarter a
year ago, driven by a 21% increase in new business to $77 million, renewal pure price increases of
2.7%, and strong retention of 83%. The quarter's statutory
combined ratio improved by 6.8 points to 89.2%, largely due to
earned rate continuing to outpace expected claims inflation and
favorable prior year net casualty reserve development of 5.0 points
compared to 2.2 points in the year-ago period.
Standard
Commercial Lines
$ in millions,
statutory results
|
Quarter
Ended
December
31,
|
Change
|
Year-to-date
December
31,
|
Change
|
2015
|
2014
|
2015
|
2014
|
Net premiums
written
|
$356.9
|
$321.4
|
11%
|
$1,597.0
|
$1,441.0
|
11%
|
Net premiums
earned
|
$397.2
|
$359.6
|
10%
|
$1,529.4
|
$1,415.7
|
8%
|
Statutory loss &
loss expense ratio
|
50.2%
|
58.0%
|
(7.8) pts
|
53.6%
|
61.3%
|
(7.7) pts
|
Statutory
underwriting expense ratio
|
38.8%
|
37.4%
|
1.4 pts
|
35.2%
|
33.8%
|
1.4 pts
|
Statutory dividends
to policyholders ratio
|
0.2%
|
0.6%
|
(0.4) pts
|
0.4%
|
0.4%
|
-
|
Statutory combined
ratio
|
89.2%
|
96.0%
|
(6.8) pts
|
89.2%
|
95.5%
|
(6.3) pts
|
GAAP combined
ratio
|
86.1%
|
94.1%
|
(8.0) pts
|
89.2%
|
95.7%
|
(6.5) pts
|
Standard Personal Lines
Standard Personal Lines premiums, which represent 14% of total
net premiums written, decreased 2% in the quarter compared to the
fourth quarter of 2014, largely driven by a decrease in new
business. Retention improved by three points to 83% and
renewal pure price was 4.2%. The take up rate for our
consultative buyer focused product, the Selective
Edgeâ„¢, continued to improve in the fourth
quarter.
The statutory combined ratio in the fourth quarter for Standard
Personal Lines was 94.7%, which included 1.9 points of catastrophe
losses. There was $2 million or
2.8 points of favorable prior year casualty reserve development
this quarter, compared to favorable prior year net casualty reserve
development of $3 million, or 4.1
combined ratio points, in the fourth quarter of 2014.
Standard Personal
Lines
$ in millions,
statutory results
|
Quarter
Ended
December
31,
|
Change
|
Year-to-date
December
31,
|
Change
|
2015
|
2014
|
2015
|
2014
|
Net premiums
written
|
$66.0
|
$67.5
|
(2)%
|
$283.9
|
$292.1
|
(3)%
|
Net premiums
earned
|
$71.5
|
$73.0
|
(2)%
|
$288.1
|
$296.7
|
(3)%
|
Statutory loss &
loss expense ratio
|
61.2%
|
47.6%
|
13.6 pts
|
69.6%
|
66.3%
|
3.3 pts
|
Statutory
underwriting expense ratio
|
33.5%
|
30.6%
|
2.9 pts
|
30.3%
|
28.2%
|
2.1 pts
|
Statutory combined
ratio
|
94.7%
|
78.2%
|
16.5 pts
|
99.9%
|
94.5%
|
5.4 pts
|
GAAP combined
ratio
|
92.1%
|
77.5%
|
14.6 pts
|
99.5%
|
94.4%
|
5.1 pts
|
Excess and Surplus Lines
Our Excess and Surplus lines business, which represents 9% of
net premiums written, reported a 16% increase in net premiums
written in the quarter. The statutory combined ratio in the
fourth quarter was 125.6%, largely due to adverse prior year
casualty reserve development of $10
million, or 21.1 points. We also recorded a
$5 million adjustment to the 2015
accident year.
Excess &
Surplus Lines
$ in millions,
statutory results
|
Quarter
Ended
December
31,
|
Change
|
Year-to-date
December
31,
|
Change
|
2015
|
2014
|
2015
|
2014
|
Net premiums
written
|
$51.8
|
$44.7
|
16%
|
$189.0
|
$152.2
|
24%
|
Net premiums
earned
|
$47.4
|
$37.2
|
27%
|
$172.3
|
$140.2
|
23%
|
Statutory loss &
loss expense ratio
|
91.6%
|
63.7%
|
27.9 pts
|
74.7%
|
64.5%
|
10.2 pts
|
Statutory
underwriting expense ratio
|
34.0%
|
32.9%
|
1.1 pts
|
33.7%
|
34.7%
|
(1.0) pts
|
Statutory combined
ratio
|
125.6%
|
96.6%
|
29.0 pts
|
108.4%
|
99.2%
|
9.2 pts
|
GAAP combined
ratio
|
124.8%
|
97.8%
|
27.0 pts
|
109.8%
|
99.7%
|
10.1 pts
|
Investment Income
After-tax investment income in the fourth quarter was
$23 million, down 5% compared to the
same period a year ago. Investment income continued to be
negatively impacted by lower returns in the alternative investment
portfolio for the fourth quarter, due to the ongoing decline of oil
prices and lower new money yields. The 2015 total after-tax
portfolio yield declined to 1.9% from 2.2% a year ago due to
alternative investment results and the declining interest rate
environment.
Investments
$ in millions,
except per share data
|
Quarter
Ended
December
31,
|
Change
|
Year-to-date
December
31,
|
Change
|
2015
|
2014
|
2015
|
2014
|
Invested assets per
dollar of stockholders' equity
|
|
|
|
$3.64
|
$3.77
|
(3)%
|
Net investment income
earned, after-tax
|
$23.3
|
$24.5
|
(5)%
|
$93.8
|
$104.2
|
(10)%
|
Net investment income
per share
|
$0.40
|
$0.43
|
(7)%
|
$1.61
|
$1.82
|
(12)%
|
Effective tax
rate
|
22.6%
|
23.6%
|
(1.0) pt
|
22.7%
|
24.9%
|
(2.2) pts
|
Average
yields:
|
|
|
|
|
|
|
Fixed Income
Securities:
|
|
|
|
|
|
|
Pre-tax
|
|
|
|
2.7%
|
3.0%
|
(0.3) pts
|
After-tax
|
|
|
|
2.1%
|
2.2%
|
(0.1) pts
|
Portfolio:
|
|
|
|
|
|
|
Pre-tax
|
|
|
|
2.5%
|
3.0%
|
(0.5) pts
|
After-tax
|
|
|
|
1.9%
|
2.2%
|
(0.3) pts
|
Balance Sheet
Balance
Sheet
$ in millions,
except per share data
|
December
31,
|
December
31,
|
Change
|
2015
|
2014
|
Total
assets
|
$6,904.4
|
$6,574.9
|
5%
|
Investment
portfolio
|
$5,089.3
|
$4,806.8
|
6%
|
Notes
payable
|
$388.2
|
$372.7
|
4%
|
Statutory
surplus
|
$1,426.3
|
$1,307.8
|
9%
|
Stockholders'
equity
|
$1,398.0
|
$1,275.6
|
10%
|
Book value per
share
|
$24.37
|
$22.54
|
8%
|
The increase in book value per share reflects $2.85 in net income, partially offset by a
$0.62 reduction in unrealized
investment gains and $0.57 in
shareholders' dividends.
Selective's Board of Directors declared a $0.15 per share quarterly cash dividend on common
stock payable March 1, 2016, to
stockholders of record as of February 16,
2016.
Guidance
For 2016, Selective expects to generate the following
results:
- A statutory combined ratio excluding catastrophes of
approximately 91%;
- Catastrophe losses of 3.5 points;
- After-tax investment income of approximately $100 million; and
- Weighted average shares of approximately 58.5 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
February 5, 2016 at
www.Selective.com. The webcast will be available for rebroadcast
until the close of business on March 4,
2016.
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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SOURCE Selective Insurance Group, Inc.