BRANCHVILLE, N.J.--( BUSINESS WIRE)--Selective Insurance Group, Inc. (NASDAQ: SIGI) reported financial results for the fourth quarter ended December 31, 2024, with net income per diluted common share of $1.52 and non-GAAP operating income¹ per diluted common share of $1.62. Return on common equity was 12.7% and non-GAAP operating ROE¹ was 13.5%.

For the quarter, Selective reported a combined ratio of 98.5%. Net unfavorable prior year casualty reserve development of $100 million increased the combined ratio by 8.8 points. NPW increased 10% from a year ago driven by renewal pure price increases of 10.7%. Net investment income generated 13.2 points of annualized ROE in the quarter, increasing to $97 million after-tax, up 24% from a year ago.

For the year, Selective reported net income per diluted common share of $3.23 and non-GAAP operating income¹ per diluted common share of $3.27. The 2024 combined ratio was 103.0% including prior year casualty reserve strengthening of $311 million, which increased the combined ratio by 7.1 points. NPW increased 12% with renewal pure price increases of 9.5%. After-tax net investment income was $363 million, up 17% from a year ago, and generated 12.8 points of ROE.

“Despite strong investment results, overall financial performance in 2024 did not meet our expectations. Within insurance operations, we delivered solid underlying profitability but took meaningful actions to strengthen casualty reserves in response to social inflation. We also increased Standard Commercial Lines renewal pure pricing, achieving 8.8% in the fourth quarter and 8.3% for the year. We continue to focus on returning our performance to the combination of growth and profitability investors expect of us and we expect of ourselves. With these pricing actions and our ability to manage renewal pure price and retention at a granular level, we are well-positioned to capitalize on our competitive strengths. These include our unique field model, the strength of our distribution partner relationships, and our customer experience focus,” said John J. Marchioni, Chairman, President and Chief Executive Officer.

“In 2024, we advanced important strategic initiatives that position Selective for long-term, profitable growth. We exceeded $500 million of NPW in Excess & Surplus Lines, added five states to our Standard Commercial Lines operating footprint, and took significant actions to reposition and drive our Personal Lines business toward improved profitability,” concluded Mr. Marchioni.

Operating Highlights

Overall Insurance Operations

For the fourth quarter, overall NPW increased 10% from a year ago. Average renewal pure price increased 10.7%, up 3.3 points from a year ago. Our 98.5% combined ratio was 4.8 points higher than a year ago. We recorded $100 million of unfavorable prior year casualty reserve development driven by recent accident years in general liability and excess and surplus lines. This was partially offset by lower catastrophe and non-catastrophe property losses and a lower expense ratio. Overall, our insurance segments contributed 1.8 points of ROE in the fourth quarter of 2024.

Standard Commercial Lines Segment

For the fourth quarter, Standard Commercial Lines premiums (representing 76% of total NPW) grew 9% from a year ago. The premium growth reflected average renewal pure price increases of 8.8% and stable retention of 85%. The fourth quarter combined ratio was 100.2%, up 7.1 points from a year ago. This was driven by net unfavorable prior year casualty reserve development of $75 million, partially offset by lower catastrophe and non-catastrophe losses. The fourth quarter 2024 prior year casualty reserve development included unfavorable development of $100 million in general liability. This was partially offset by favorable development of $25 million in workers compensation.

The following table shows the variances in key quarter-to-date and year-to-date measures:

Investments Segment

For the fourth quarter, after-tax net investment income of $97 million was up 24% from a year ago. The after-tax income yield averaged 4.0% for the overall and fixed income securities portfolios. With this and invested assets per dollar of common stockholders' equity of $3.31 as of December 31, 2024, net investment income generated 13.2 points of annualized ROE.

Balance Sheet

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” defined in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a forward-looking statement safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements discuss 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 our industry’s actual results, activity levels, or performance to materially differ from those in or implied by the forward-looking statements. In some cases, forward-looking statements include the words “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “attribute,” “confident,” “strong,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” “continue,” or comparable terms. Our forward-looking statements are only predictions; we cannot guarantee or assure that such expectations will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements for any reason, except as may be required by law.

Factors that could cause our actual results to differ materially from what we project, forecast, or estimate in forward-looking statements include, without limitation:

• Challenging conditions in the economy, global capital markets, the banking sector, and commercial real estate, including prolonged higher inflation, could increase loss costs and negatively impact investment portfolios;
• Deterioration in the public debt, public equity, or private investment markets 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 development and adequacy of our loss reserves and loss expense reserves;
• Frequency and severity of catastrophic events, including natural events that may be impacted by climate change, such as hurricanes, severe convective storms, 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, political, or judicial rulings, conditions or actions, including the impact of social inflation;
• The significant 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, we have successfully defended 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.
• Ongoing wars and conflicts 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 valuations;
• 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 financial ratings, which may include sustainability considerations, 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 our Annual Report on Form 10-K and other periodic reports.