Selective sees net income growth, cat losses increase CoR in Q3’24

Selective Insurance Group, Inc. has announced its financial result for the third quarter of 2024, reporting an improved net income of $90.0 million and $1,157.6 million net premiums written (NPW).

According to the insurer, NPW increased 9% from a year ago driven by accelerating renewal pure price increases and stable Standard Commercial Lines retention.

For the quarter, Selective also reported a combined ratio of 99.5% with no net prior year casualty reserve development. Elevated catastrophe losses of $149 million increased the combined ratio by 13.4 points, up from 6.6 points a year ago.

Losses resulted from 19 named storms in the quarter, with Hurricane Helene estimated at $85 million of pre-tax losses.

Elevated catastrophe losses were partially offset by lower non-catastrophe property losses and a lower expense ratio, the insurer noted. There was no net unfavourable prior year casualty reserve development in either period.

John J. Marchioni, Chairman, President and Chief Executive Officer, commented: “The continued frequency and severity of storms in the third quarter, including the devastation from Hurricane Helene, underscore our unwavering commitment to our customers, agency partners, and communities.

“During these challenging times for those impacted by the storms, I thank my colleagues for continuing to deliver superior claims service and supporting customers and claimants.”

For the third quarter, Standard Commercial Lines premiums, which account for 78% of total NPW, experienced an 8% growth compared to the previous year.

This premium increase was driven by an average renewal pure price hike of 9.1% and consistent retention at 86%.

However, the combined ratio for the third quarter rose by 4.5 points to 99.2% compared to the previous year, primarily due to losses caused by catastrophes.

There was no net prior year casualty reserve development in the quarter, compared to $3.0 million, or 0.4 points, of favourable development a year ago, Selective added.

The insurer’s Standard Personal Lines premiums, which represent 10% of total NPW, decreased 2% in the quarter, compared to a year ago with renewal pure price of 22.8% and higher average policy sizes.

Retention was 75%, down 13 points from a year ago, and new business decreased 49% due to deliberate profit improvement actions.

In the third quarter of 2024, the combined ratio decreased by 5.3 percentage points year-over-year to 122.1%, despite high catastrophe losses. Unlike the prior year’s unfavorable casualty reserve development of $3 million in personal auto, this quarter saw no such development.

Flood claims handling fees from the National Flood Insurance Program’s Write Your Own program, primarily related to Hurricane Helene, reduced the loss and loss expense ratio by 4.3 points in the quarter, up from 1.2 points in the prior-year period.

Representing 12% of total NPW, Selective’s Excess and Surplus Lines premiums increased 28% compared to the prior-year period, driven by new business growth of 43% and average renewal pure price increases of 8.0%.

Combined ratio saw an improvement going down 0.7 points, to 83.2%, compared to Q3 2023.

Marchioni added: “We maintain a disciplined approach to pricing and underwriting our business. Loss trends remain elevated and uncertain, but we continue to be prudent and vigilant in addressing them. In the quarter, renewal pure price increased 10.5%. In Standard Commercial Lines, renewal pure price accelerated to 9.1%.

“For General Liability, the line most impacted by loss emergence in previous quarters, renewal pure price was 10.2%, up from 7.6% in the second quarter. Importantly, retention was stable in Standard Commercial Lines at 86%.”

He concluded: “Our primary goal is to consistently achieve our 95% combined ratio target. Although catastrophe losses impacted the quarter, our underlying performance was excellent, reflecting our underwriting and pricing actions and disciplined expense management.

“We added Nevada, Oregon, and Washington to our Standard Commercial Lines footprint in early October, now covering 35 states. With our strong capital position, financial flexibility, and strategic execution, we are well positioned to face the uncertainty in the external environment.”

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