Supplemental Investor Package _______________________________________________ Third Quarter 2010 Investor Contact: Jennifer DiBerardino Senior Vice President, Investor Relations and Treasurer Tel: 973-948-1364 jennifer.diberardino@selective.com |
Selective Insurance Group, Inc. | |||||||||||||||||||||||||||||||
Selected Balance Sheet Data (unaudited) | |||||||||||||||||||||||||||||||
($ in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
September 30, | September 30, | December 31, | |||||||||||||||||||||||||||||
2010 | 2009 | 2009 | |||||||||||||||||||||||||||||
Unrealized/ | Unrecognized/ | Unrecognized/ | �� | ||||||||||||||||||||||||||||
Balance | Market | Unrecognized | Balance | Market | Unrealized | Balance | Market | Unrealized | |||||||||||||||||||||||
Sheet | Value | Gain/(Loss) | Sheet | Value | (Loss)/Gain | Sheet | Value | (Loss)/Gain | |||||||||||||||||||||||
Invested Assets: | |||||||||||||||||||||||||||||||
Corporate bonds1 | $ | 1,548,160 | 1,569,975 | 73,054 | $ | 1,122,000 | 1,134,012 | (23,009 | ) | $ | 1,144,692 | 1,163,973 | (13,031 | ) | |||||||||||||||||
Government and municipal bonds | 1,939,587 | 1,985,217 | 121,589 | 2,170,426 | 2,194,067 | 96,828 | 2,201,580 | 2,212,107 | 72,101 | ||||||||||||||||||||||
Total bonds | 3,487,747 | 3,555,192 | 194,643 | 3,292,426 | 3,328,079 | 73,819 | 3,346,272 | 3,376,080 | 59,070 | ||||||||||||||||||||||
Equities | 63,116 | 63,116 | 8,065 | 89,892 | 89,892 | 13,087 | 80,264 | 80,264 | 15,874 | ||||||||||||||||||||||
Short-term investments | 265,043 | 265,043 | - | 236,896 | 236,896 | - | 213,848 | 213,848 | - | ||||||||||||||||||||||
Other investments | 154,728 | 154,728 | (19,452 | ) | 147,482 | 147,482 | (20,381 | ) | 140,667 | 140,667 | (25,774 | ) | |||||||||||||||||||
Total invested assets | 3,970,634 | 4,038,079 | 183,256 | 3,766,696 | 3,802,349 | 66,525 | 3,781,051 | 3,810,859 | 49,170 | ||||||||||||||||||||||
Invested assets per $ of stockholders' equity | 3.64 | 3.82 | 3.77 | ||||||||||||||||||||||||||||
Total assets | 5,334,521 | 5,158,303 | 5,114,827 | ||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Reserve for losses and loss expenses | 2,809,797 | 2,718,855 | 2,745,799 | ||||||||||||||||||||||||||||
Unearned premium reserve | 880,698 | 895,446 | 844,847 | ||||||||||||||||||||||||||||
Total liabilities | 4,242,205 | 4,171,974 | 4,112,452 | ||||||||||||||||||||||||||||
Stockholders' equity | 1,092,316 | 986,329 | 1,002,375 | ||||||||||||||||||||||||||||
Total debt to capitalization ratio | 19.4 | % | 21.0 | % | 21.5 | % | |||||||||||||||||||||||||
Adjusted total debt to capitalization ratio 2 | 13.8 | % | 15.0 | % | 15.6 | % | |||||||||||||||||||||||||
Book value per share | 20.41 | 18.58 | 18.83 | ||||||||||||||||||||||||||||
Book value per share excluding | |||||||||||||||||||||||||||||||
unrealized gain or loss on bond portfolio | 18.87 | 18.12 | 18.47 | ||||||||||||||||||||||||||||
NPW per insurance segment employee | 760 | 772 | 766 | ||||||||||||||||||||||||||||
Statutory premiums to surplus ratio | 1.4 | x | 1.6 | x | 1.5 | x | |||||||||||||||||||||||||
Statutory surplus | 1,034,321 | 903,505 | 981,955 | ||||||||||||||||||||||||||||
1 Includes mortgage-backed and asset-backed securities. | |||||||||||||||||||||||||||||||
2 The adjusted debt to capitalization ratio reflects an estimated equity treatment of 75% applied to our $100 million Junior Subordinated Notes issued September 25, 2006. |
1
Selective Insurance Group, Inc. | |||||||||||||||||||||||||||||||||
Selected Income Statement Data (unaudited) | |||||||||||||||||||||||||||||||||
September 2010 | THREE MONTHS ENDED September 30, | NINE MONTHS ENDED September 30, | |||||||||||||||||||||||||||||||
($ in thousands, except per share amounts) | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||||||
Per diluted share | Per diluted share | Per diluted share | Per diluted share | ||||||||||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||||||||||||
Revenue | $ | 389,702 | $ | 390,175 | $ | 1,170,532 | $ | 1,124,216 | |||||||||||||||||||||||||
Operating income | 18,794 | 0.35 | 23,845 | 0.44 | 47,641 | 0.88 | 49,211 | 0.92 | |||||||||||||||||||||||||
Net realized gains (losses), after tax | 37 | - | (3,239 | ) | (0.06 | ) | (2,126 | ) | (0.04 | ) | (26,197 | ) | (0.49 | ) | |||||||||||||||||||
Income from continuing operations | 18,831 | 0.35 | 20,606 | 0.38 | 45,515 | 0.84 | 23,014 | 0.43 | |||||||||||||||||||||||||
Loss on discontinued operations, after tax | (1,634 | ) | (0.03 | ) | (7,599 | ) | (0.14 | ) | (3,749 | ) | (0.07 | ) | (7,196 | ) | (0.13 | ) | |||||||||||||||||
Net income | 17,197 | 0.32 | 13,007 | 0.24 | 41,766 | 0.77 | 15,818 | 0.30 | |||||||||||||||||||||||||
Operating return on equity | 7.0 | % | 9.9 | % | 6.1 | % | 7.0 | % | |||||||||||||||||||||||||
Insurance Operations | |||||||||||||||||||||||||||||||||
Gross premiums written | 446,684 | 446,419 | 1,295,622 | 1,312,630 | |||||||||||||||||||||||||||||
Net premiums written | 367,114 | 376,718 | 1,088,729 | 1,117,764 | |||||||||||||||||||||||||||||
Net premiums earned | 354,709 | 355,906 | 1,063,101 | 1,078,090 | |||||||||||||||||||||||||||||
Underwriting (loss) gain | - before tax | (3,933 | ) | (142 | ) | (21,699 | ) | 2,927 | |||||||||||||||||||||||||
- after tax | (2,556 | ) | (0.05 | ) | (92 | ) | - | (14,104 | ) | (0.26 | ) | 1,903 | 0.04 | ||||||||||||||||||||
GAAP combined ratio | 101.1 | % | 100.0 | % | 102.0 | % | 99.7 | % | |||||||||||||||||||||||||
Commercial lines | |||||||||||||||||||||||||||||||||
Net premiums earned | 293,225 | 301,279 | 884,134 | 918,069 | |||||||||||||||||||||||||||||
GAAP combined ratio | 100.0 | % | 99.3 | % | 100.9 | % | 98.9 | % | |||||||||||||||||||||||||
Personal lines | |||||||||||||||||||||||||||||||||
Net premiums earned | 61,484 | 54,627 | 178,967 | 160,021 | |||||||||||||||||||||||||||||
GAAP combined ratio | 106.4 | % | 104.2 | % | 107.8 | % | 104.5 | % | |||||||||||||||||||||||||
Investments | |||||||||||||||||||||||||||||||||
Net investment income | - before tax | 32,986 | 36,585 | 104,237 | 78,670 | ||||||||||||||||||||||||||||
- after tax | 25,305 | 0.46 | 28,382 | 0.53 | 80,058 | 1.47 | 65,392 | 1.23 | |||||||||||||||||||||||||
Effective tax rate | 23.3 | % | 22.4 | % | 23.2 | % | 16.9 | % | |||||||||||||||||||||||||
Annual after-tax yield on investment portfolio | 2.8 | % | 2.4 | % | |||||||||||||||||||||||||||||
Annual after-tax, after-interest expense yield | 2.4 | % | 2.0 | % | |||||||||||||||||||||||||||||
Invested assets per $ of stockholders' equity | 3.64 | 3.82 | |||||||||||||||||||||||||||||||
Other expenses (net of other income) | |||||||||||||||||||||||||||||||||
Interest expense | - before tax | (4,559 | ) | (4,751 | ) | (14,056 | ) | (14,618 | ) | ||||||||||||||||||||||||
- after tax | (2,963 | ) | (0.05 | ) | (3,089 | ) | (0.06 | ) | (9,136 | ) | (0.17 | ) | (9,502 | ) | (0.18 | ) | |||||||||||||||||
Other - after tax | $ | (992 | ) | (0.01 | ) | $ | (1,356 | ) | (0.03 | ) | (9,177 | ) | (0.16 | ) | $ | (8,582 | ) | (0.17 | ) | ||||||||||||||
Diluted weighted avg. shares outstanding | 54,573 | 53,548 | 54,390 | 53,312 |
2
Selective Insurance Group, Inc. and Consolidated Subsidiaries
GAAP Investment Income
(unaudited)
($ in thousands)
For the three months ended | % | Year to Date | % | ||||||||||||||||||||||
September | September | Increase | September | September | Increase | ||||||||||||||||||||
2010 | 2009 | (Decrease) | 2010 | 2009 | (Decrease) | ||||||||||||||||||||
Investment Income: | |||||||||||||||||||||||||
Interest: | |||||||||||||||||||||||||
Fixed Maturity Securities | 31,741 | 34,747 | (8.7 | ) | 97,914 | 106,980 | (8.5 | ) | |||||||||||||||||
Short-term | 134 | 237 | (43.5 | ) | 367 | 1,161 | (68.4 | ) | |||||||||||||||||
Alternative Investments | 2,359 | 2,660 | (11.3 | ) | 11,122 | (26,744 | ) | 141.6 | |||||||||||||||||
Dividends | 347 | 551 | (37.0 | ) | 1,279 | 1,562 | (18.1 | ) | |||||||||||||||||
Changes in Fair Value | - | - | N/M | - | 262 | (100.0 | ) | ||||||||||||||||||
Miscellaneous | 41 | 53 | (22.6 | ) | 94 | 293 | (67.9 | ) | |||||||||||||||||
34,622 | 38,248 | (9.5 | ) | 110,776 | 83,514 | 32.6 | |||||||||||||||||||
Investment Expense | 1,636 | 1,663 | (1.6 | ) | 6,539 | 4,844 | 35.0 | ||||||||||||||||||
Net Investment Income Before Tax | 32,986 | 36,585 | (9.8 | ) | 104,237 | 78,670 | 32.5 | ||||||||||||||||||
Tax | 7,681 | 8,203 | (6.4 | ) | 24,179 | 13,278 | 82.1 | ||||||||||||||||||
Net Investment Income After Tax | $ | 25,305 | 28,382 | (10.8 | ) | $ | 80,058 | 65,392 | 22.4 | ||||||||||||||||
Net Investment Income per Share | $ | 0.46 | 0.53 | (13.2 | ) | $ | 1.47 | 1.23 | 19.5 | ||||||||||||||||
Effective Tax Rate | 23.3 | % | 22.4 | % | 23.2 | % | 16.9 | % | |||||||||||||||||
Average Yields : | |||||||||||||||||||||||||
Fixed Maturity Securities: | |||||||||||||||||||||||||
Pre Tax | 3.60 | % | 4.25 | % | |||||||||||||||||||||
After Tax | 2.81 | % | 3.35 | % | |||||||||||||||||||||
Portfolio: | |||||||||||||||||||||||||
Pre Tax | 3.59 | % | 2.87 | % | |||||||||||||||||||||
After Tax | 2.75 | % | 2.39 | % | |||||||||||||||||||||
For the three months ended | Year to date: | ||||||||||||||||||||||||
September | September | September | September | ||||||||||||||||||||||
Net Realized Gains(Losses) | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||
Total Fixed Maturities | 1,791 | (4,392 | ) | (14,806 | ) | (38,038 | ) | ||||||||||||||||||
Total Equity Securities | (1,734 | ) | 259 | 11,535 | (225 | ) | |||||||||||||||||||
Total Other Investments | - | (850 | ) | - | (2,039 | ) | |||||||||||||||||||
Total | 57 | (4,983 | ) | (3,271 | ) | (40,302 | ) | ||||||||||||||||||
Net of Tax | 37 | (3,239 | ) | (2,126 | ) | (26,197 | ) |
3
Selective Insurance Group, Inc. | ||||||||||||||||||||||||||||||||||||||||||||
2010 Statutory Results by Line of Business | ||||||||||||||||||||||||||||||||||||||||||||
3rd Qtr 2010 (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Net | Net | Underwriting | Dividends to | |||||||||||||||||||||||||||||||||||||||||
Premiums | Percent | Premiums | Percent | Loss | LAE | Expense | Policyholders | Combined Ratio | Combined Ratio | Underwriting | ||||||||||||||||||||||||||||||||||
Written | Change | Earned | Change | Ratio | Ratio | Ratio | Ratio | 2010 | 2009 | Gain/(Loss) | ||||||||||||||||||||||||||||||||||
Personal Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Homeowners | $ | 28,261 | 20.1 | % | $ | 22,544 | 21.1 | % | 70.9 | % | 7.6 | % | 29.9 | % | 0.0 | % | 108.4 | % | 100.1 | % | $ | (3,589 | ) | |||||||||||||||||||||
Auto | 38,445 | 7.9 | % | 35,928 | 7.8 | % | 67.6 | % | 11.9 | % | 29.5 | % | 0.0 | % | 109.0 | % | 110.9 | % | (3,959 | ) | ||||||||||||||||||||||||
Other (including flood) | 3,403 | 8.6 | % | 3,013 | 11.7 | % | 73.8 | % | (17.2 | )% | (62.0 | )% | 0.0 | % | (5.4 | )% | 2.5 | % | 3,419 | |||||||||||||||||||||||||
Total | $ | 70,110 | 12.6 | % | $ | 61,484 | 12.6 | % | 69.1 | % | 8.9 | % | 25.2 | % | 0.0 | % | 103.2 | % | 101.8 | % | $ | (4,129 | ) | |||||||||||||||||||||
Commercial Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Fire/IM | $ | 53,764 | (3.2 | )% | $ | 49,558 | (0.6 | )% | 50.1 | % | 4.6 | % | 35.6 | % | (0.1 | )% | 90.2 | % | 81.2 | % | $ | 3,352 | ||||||||||||||||||||||
Workers compensation | 57,997 | (12.3 | )% | 61,179 | (5.5 | )% | 85.9 | % | 15.0 | % | 28.0 | % | 1.3 | % | 130.2 | % | 110.9 | % | (17,598 | ) | ||||||||||||||||||||||||
General liability | 84,141 | (5.3 | )% | 83,249 | (5.7 | )% | 47.6 | % | 17.3 | % | 34.2 | % | 0.0 | % | 99.1 | % | 103.9 | % | 442 | |||||||||||||||||||||||||
Auto | 75,425 | (5.9 | )% | 73,440 | (2.7 | )% | 45.0 | % | 9.2 | % | 29.1 | % | 0.0 | % | 83.3 | % | 98.5 | % | 11,688 | |||||||||||||||||||||||||
BOP | 15,632 | (1.3 | )% | 16,400 | 3.8 | % | 57.5 | % | 13.4 | % | 34.8 | % | 0.0 | % | 105.7 | % | 101.2 | % | (667 | ) | ||||||||||||||||||||||||
Bonds | 5,295 | 0.5 | % | 4,884 | 5.4 | % | 11.9 | % | 7.6 | % | 56.8 | % | 0.0 | % | 76.3 | % | 89.5 | % | 922 | |||||||||||||||||||||||||
Other | 2,764 | 5.2 | % | 2,529 | 4.2 | % | 0.9 | % | 0.2 | % | 46.5 | % | 0.0 | % | 47.6 | % | 47.1 | % | 1,215 | |||||||||||||||||||||||||
Total | $ | 295,019 | (6.2 | )% | $ | 291,239 | (3.3 | )% | 55.0 | % | 12.1 | % | 32.4 | % | 0.3 | % | 99.8 | % | 99.5 | % | $ | (646 | ) | |||||||||||||||||||||
Grand Total | $ | 365,129 | (3.1 | )% | $ | 352,723 | (0.9 | )% | 57.4 | % | 11.5 | % | 31.2 | % | 0.2 | % | 100.3 | % | 99.8 | % | $ | (4,775 | ) | |||||||||||||||||||||
Note: Some amounts may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid | $ | 219,404 | $ | 177,750 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid | 40,101 | 38,686 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid | $ | 259,505 | $ | 216,436 | ||||||||||||||||||||||||||||||||||||||||
4
Selective Insurance Group, Inc. | ||||||||||||||||||||||||||||||||||||||||||||
2010 Statutory Results by Line of Business | ||||||||||||||||||||||||||||||||||||||||||||
September 2010 YTD (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Net | Net | Underwriting | Dividends to | |||||||||||||||||||||||||||||||||||||||||
Premiums | Percent | Premiums | Percent | Loss | LAE | Expense | Policyholders | Combined Ratio | Combined Ratio | Underwriting | ||||||||||||||||||||||||||||||||||
Written | Change | Earned | Change | Ratio | Ratio | Ratio | Ratio | 2010 | 2009 | Gain/(Loss) | ||||||||||||||||||||||||||||||||||
Personal Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Homeowners | $ | 71,656 | 19.9 | % | $ | 64,163 | 20.3 | % | 70.6 | % | 7.6 | % | 31.9 | % | 0.0 | % | 110.1 | % | 107.6 | % | $ | (8,840 | ) | |||||||||||||||||||||
Auto | 112,278 | 8.7 | % | 105,490 | 6.3 | % | 71.1 | % | 11.6 | % | 29.6 | % | 0.0 | % | 112.3 | % | 108.4 | % | $ | (14,936 | ) | |||||||||||||||||||||||
Other (including flood) | 9,000 | 9.2 | % | 9,314 | 24.5 | % | 57.5 | % | (18.0 | )% | (43.1 | )% | 0.0 | % | (3.6 | )% | 12.0 | % | 9,517 | |||||||||||||||||||||||||
Total | $ | 192,934 | 12.7 | % | $ | 178,967 | 11.8 | % | 70.2 | % | 8.6 | % | 27.1 | % | 0.0 | % | 105.9 | % | 103.6 | % | $ | (14,259 | ) | |||||||||||||||||||||
Commercial Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Fire/IM | $ | 153,405 | (1.6 | )% | $ | 150,188 | 1.7 | % | 54.9 | % | 4.2 | % | 37.3 | % | (0.1 | )% | 96.3 | % | 86.8 | % | $ | 4,384 | ||||||||||||||||||||||
Workers compensation | 187,540 | (7.6 | )% | 187,889 | (6.9 | )% | 79.9 | % | 15.6 | % | 27.1 | % | 1.8 | % | 124.4 | % | 101.2 | % | (45,833 | ) | ||||||||||||||||||||||||
General liability | 257,188 | (8.5 | )% | 252,438 | (8.0 | )% | 44.0 | % | 17.0 | % | 34.2 | % | (0.1 | )% | 95.1 | % | 104.0 | % | 10,704 | |||||||||||||||||||||||||
Auto | 223,680 | (5.3 | )% | 220,932 | (2.5 | )% | 49.7 | % | 8.3 | % | 29.5 | % | (0.1 | )% | 87.4 | % | 97.9 | % | 27,120 | |||||||||||||||||||||||||
BOP | 48,887 | 1.9 | % | 48,838 | 4.9 | % | 73.3 | % | 13.7 | % | 34.5 | % | 0.0 | % | 121.5 | % | 112.9 | % | (10,532 | ) | ||||||||||||||||||||||||
Bonds | 15,136 | 4.6 | % | 14,315 | 3.6 | % | 15.2 | % | 6.3 | % | 59.8 | % | 0.0 | % | 81.3 | % | 91.2 | % | 2,178 | |||||||||||||||||||||||||
Other | 7,972 | 2.9 | % | 7,549 | 5.0 | % | 1.9 | % | 0.3 | % | 44.8 | % | 0.0 | % | 47.0 | % | 45.7 | % | 3,812 | |||||||||||||||||||||||||
Total | $ | 893,809 | (5.6 | )% | $ | 882,148 | (3.9 | )% | 55.7 | % | 11.8 | % | 32.7 | % | 0.3 | % | 100.5 | % | 98.9 | % | $ | (8,167 | ) | |||||||||||||||||||||
Grand Total | $ | 1,086,744 | (2.8 | )% | $ | 1,061,116 | (1.6 | )% | 58.2 | % | 11.3 | % | 31.6 | % | 0.3 | % | 101.4 | % | 99.6 | % | $ | (22,426 | ) | |||||||||||||||||||||
Note: Some amounts may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid | $ | 588,974 | $ | 572,020 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid | 114,703 | 116,193 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid | $ | 703,677 | $ | 688,213 | ||||||||||||||||||||||||||||||||||||||||
5
SELECTIVE INSURANCE GROUP, INC. | Unaudited | |||||||
CONSOLIDATED BALANCE SHEETS | September 30, | December 31, | ||||||
($ in thousands, except share amounts) | 2010 | 2009 | ||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturity securities, held-to-maturity – at carry value | ||||||||
(fair value: $1,440,143 – 2010; $1,740,211 – 2009) | $ | 1,372,698 | 1,710,403 | |||||
Fixed maturity securities, available-for-sale – at fair value | ||||||||
(amortized cost: $2,006,685 – 2010; $1,616,456 – 2009) | 2,115,049 | 1,635,869 | ||||||
Equity securities, available-for-sale – at fair value | ||||||||
(cost of: $55,051 – 2010; $64,390 – 2009) | 63,116 | 80,264 | ||||||
Short-term investments (at cost which approximates fair value) | 265,043 | 213,848 | ||||||
Other investments | 154,728 | 140,667 | ||||||
Total investments | 3,970,634 | 3,781,051 | ||||||
Cash | 422 | 811 | ||||||
Interest and dividends due or accrued | 36,283 | 34,651 | ||||||
Premiums receivable, net of allowance for uncollectible | ||||||||
accounts of: $4,856 – 2010; $5,880 – 2009 | 460,394 | 446,577 | ||||||
Reinsurance recoverables, net | 307,105 | 276,018 | ||||||
Prepaid reinsurance premiums | 115,745 | 105,522 | ||||||
Current federal income tax | 24,760 | 17,662 | ||||||
Deferred federal income tax | 79,799 | 111,038 | ||||||
Property and equipment – at cost, net of accumulated | ||||||||
depreciation and amortization of: $149,255 – 2010; $141,251 – 2009 | 41,832 | 46,287 | ||||||
Deferred policy acquisition costs | 218,590 | 218,601 | ||||||
Goodwill | 7,849 | 7,849 | ||||||
Other assets | 71,108 | 68,760 | ||||||
Total assets | $ | 5,334,521 | 5,114,827 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Reserve for losses and loss expenses | $ | 2,809,797 | 2,745,799 | |||||
Unearned premiums | 880,698 | 844,847 | ||||||
Notes payable | 262,326 | 274,606 | ||||||
Accrued salaries and benefits | 101,464 | 103,802 | ||||||
Other liabilities | 187,920 | 143,398 | ||||||
Total liabilities | $ | 4,242,205 | 4,112,452 | |||||
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: 96,189,223 – 2010; 95,822,959 – 2009 | 192,378 | 191,646 | ||||||
Additional paid-in capital | 241,472 | 231,933 | ||||||
Retained earnings | 1,159,496 | 1,138,978 | ||||||
Accumulated other comprehensive income (loss) | 48,220 | (12,460 | ) | |||||
Treasury stock – at cost (shares: 42,677,198 – 2010; 42,578,779 – 2009) | (549,250 | ) | (547,722 | ) | ||||
Total stockholders’ equity | 1,092,316 | 1,002,375 | ||||||
Commitments and contingencies | ||||||||
Total liabilities and stockholders’ equity | $ | 5,334,521 | 5,114,827 |
6
SELECTIVE INSURANCE GROUP, INC. | ||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | Quarter ended | Nine Months ended | ||||||||||||||
September 30, | September 30, | |||||||||||||||
($ in thousands, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Revenues: | ||||||||||||||||
Net premiums earned | $ | 354,709 | 355,906 | 1,063,101 | 1,078,090 | |||||||||||
Net investment income earned | 32,986 | 36,585 | 104,237 | 78,670 | ||||||||||||
Net realized gains (losses): | ||||||||||||||||
Net realized investment gains (losses) | 2,864 | (741 | ) | 13,960 | 3,515 | |||||||||||
Other-than-temporary impairments | (4,091 | ) | (5,833 | ) | (16,326 | ) | (45,467 | ) | ||||||||
Other-than-temporary impairments on fixed maturity securities | ||||||||||||||||
recognized in other comprehensive income | 1,284 | 1,591 | (905 | ) | 1,650 | |||||||||||
Total net realized gains (losses) | 57 | (4,983 | ) | (3,271 | ) | (40,302 | ) | |||||||||
Other income | 1,950 | 2,667 | 6,465 | 7,758 | ||||||||||||
Total revenues | 389,702 | 390,175 | 1,170,532 | 1,124,216 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses incurred | 245,019 | 242,032 | 739,142 | 733,275 | ||||||||||||
Policy acquisition costs | 114,042 | 114,520 | 346,143 | 342,148 | ||||||||||||
Interest expense | 4,559 | 4,751 | 14,056 | 14,618 | ||||||||||||
Other expenses | 4,022 | 7,045 | 18,636 | 21,083 | ||||||||||||
Total expenses | 367,642 | 368,348 | 1,117,977 | 1,111,124 | ||||||||||||
Income from continuing operations, before federal income tax | 22,060 | 21,827 | 52,555 | 13,092 | ||||||||||||
Federal income tax expense (benefit): | ||||||||||||||||
Current | (1,691 | ) | (426 | ) | 8,475 | 3,818 | ||||||||||
Deferred | 4,920 | 1,647 | (1,435 | ) | (13,740 | ) | ||||||||||
Total federal income tax expense (benefit) | 3,229 | 1,221 | 7,040 | (9,922 | ) | |||||||||||
Net income from continuing operations | 18,831 | 20,606 | 45,515 | 23,014 | ||||||||||||
Loss from discontinued operations, net of tax of $(4,147) for Third | ||||||||||||||||
Quarter 2009 and $(4,106) for Nine Months 2009 | - | (7,599 | ) | - | (7,196 | ) | ||||||||||
Loss on disposal of discontinued operations, net of tax of $(880) for | ||||||||||||||||
Third Quarter 2010 and $(2,019) for Nine Months 2010 | (1,634 | ) | - | (3,749 | ) | - | ||||||||||
Total discontinued operations, net of tax | (1,634 | ) | (7,599 | ) | (3,749 | ) | (7,196 | ) | ||||||||
Net income | $ | 17,197 | 13,007 | 41,766 | 15,818 | |||||||||||
Earnings per share: | ||||||||||||||||
Basic net income from continuing operations | 0.35 | 0.39 | 0.85 | 0.44 | ||||||||||||
Basic net loss from disposal of discontinued operations | (0.03 | ) | (0.14 | ) | (0.07 | ) | (0.14 | ) | ||||||||
Basic net income | $ | 0.32 | 0.25 | 0.78 | 0.30 | |||||||||||
Diluted net income from continuing operations | 0.35 | 0.38 | 0.84 | 0.43 | ||||||||||||
Diluted net loss from disposal of discontinued operations | (0.03 | ) | (0.14 | ) | (0.07 | ) | (0.13 | ) | ||||||||
Diluted net income | $ | 0.32 | 0.24 | 0.77 | 0.30 | |||||||||||
Dividends to stockholders | $ | 0.13 | 0.13 | 0.39 | 0.39 |
7
SELECTIVE INSURANCE GROUP, INC. | ||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF | ||||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||
Nine Months ended September 30, | ||||||||||||||||
($ in thousands, except per share amounts) | 2010 | 2009 | ||||||||||||||
Common stock: | ||||||||||||||||
Beginning of year | $ | 191,646 | 190,527 | |||||||||||||
Dividend reinvestment plan | ||||||||||||||||
(shares: 81,471 – 2010; 96,265 – 2009) | 163 | 193 | ||||||||||||||
Stock purchase and compensation plans | ||||||||||||||||
(shares: 284,793 – 2010; 274,517 – 2009) | 569 | 549 | ||||||||||||||
End of period | 192,378 | 191,269 | ||||||||||||||
Additional paid-in capital: | ||||||||||||||||
Beginning of year | 231,933 | 217,195 | ||||||||||||||
Dividend reinvestment plan | 1,098 | 1,136 | ||||||||||||||
Stock purchase and compensation plans | 8,441 | 9,873 | ||||||||||||||
End of period | 241,472 | 228,204 | ||||||||||||||
Retained earnings: | ||||||||||||||||
Beginning of year | 1,138,978 | 1,128,149 | ||||||||||||||
Cumulative effect adjustment due to adoption of other-than-temporary | ||||||||||||||||
impairment guidance under ASC 320, net of deferred income tax | - | 2,380 | ||||||||||||||
Net income | 41,766 | 41,766 | 15,818 | 15,818 | ||||||||||||
Cash dividends to stockholders ($0.39 per share – 2010; | ||||||||||||||||
$0.39 per share – 2009) | (21,248 | ) | (20,932 | ) | ||||||||||||
End of period | 1,159,496 | 1,125,415 | ||||||||||||||
Accumulated other comprehensive income (loss): | ||||||||||||||||
Beginning of year | (12,460 | ) | (100,666 | ) | ||||||||||||
Cumulative-effect adjustment due to adoption of other-than-temporary | ||||||||||||||||
impairment guidance under ASC 320, net of deferred income tax | - | (2,380 | ) | |||||||||||||
Other comprehensive income (loss), increase (decrease) in: | ||||||||||||||||
Unrealized gains on investment securities: | ||||||||||||||||
Non-credit portion of other-than-temporary impairment losses | ||||||||||||||||
recognized in other comprehensive income, net of deferred income tax | 3,026 | (998 | ) | |||||||||||||
Other net unrealized gains on investment securities, net of | ||||||||||||||||
deferred income tax | 55,556 | 91,529 | ||||||||||||||
Total unrealized gains on investment securities | 58,582 | 58,582 | 90,531 | 90,531 | ||||||||||||
Defined benefit pension plans, net of deferred income tax | 2,098 | 2,098 | 1,377 | 1,377 | ||||||||||||
End of period | 48,220 | (11,138 | ) | |||||||||||||
Comprehensive income | 102,446 | 107,726 | ||||||||||||||
Treasury stock: | ||||||||||||||||
Beginning of year | (547,722 | ) | (544,712 | ) | ||||||||||||
Acquisition of treasury stock | ||||||||||||||||
(shares: 98,419 – 2010; 172,937 – 2009) | (1,528 | ) | (2,709 | ) | ||||||||||||
End of period | (549,250 | ) | (547,421 | ) | ||||||||||||
Total stockholders’ equity | $ | 1,092,316 | 986,329 |
8
SELECTIVE INSURANCE GROUP, INC. | ||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW | Nine Months ended | |||||||
September 30, | ||||||||
($ in thousands) | 2010 | 2009 | ||||||
Operating Activities | ||||||||
Net Income | $ | 41,766 | 15,818 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 23,175 | 21,045 | ||||||
Loss on disposal of discontinued operations | 3,749 | - | ||||||
Stock-based compensation expense | 9,774 | 9,178 | ||||||
Undistributed (income) losses of equity method investments | (6,338 | ) | 26,744 | |||||
Net realized losses | 3,271 | 40,302 | ||||||
Postretirement life curtailment benefit | - | (4,217 | ) | |||||
Unrealized gain on trading securities | - | (262 | ) | |||||
Goodwill impairment | - | 12,214 | ||||||
Deferred tax benefit | (1,435 | ) | (17,666 | ) | ||||
Changes in assets and liabilities: | ||||||||
Increase in reserves for losses and loss expenses, net of reinsurance recoverables | 32,912 | 47,631 | ||||||
Increase in unearned premiums, net of prepaid reinsurance and advance premiums | 25,123 | 39,121 | ||||||
Increase (decrease) in net federal income tax recoverable | (5,079 | ) | 13,252 | |||||
Increase in premiums receivable | (13,817 | ) | (10,275 | ) | ||||
Decrease (increase) in deferred policy acquisition costs | 11 | (11,375 | ) | |||||
(Increase) decrease in interest and dividends due or accrued | (1,491 | ) | 1,038 | |||||
Decrease in accrued salaries and benefits | (2,749 | ) | (10,920 | ) | ||||
Decrease in accrued insurance expenses | (6,872 | ) | (4,242 | ) | ||||
Sale of trading securities | - | 2,831 | ||||||
Other-net | 1,284 | (2,905 | ) | |||||
Net adjustments | 61,518 | 151,494 | ||||||
Net cash provided by operating activities | 103,284 | 167,312 | ||||||
Investing Activities | ||||||||
Purchase of fixed maturity securities, held-to-maturity | - | (158,827 | ) | |||||
Purchase of fixed maturity securities, available-for-sale | (699,133 | ) | (757,538 | ) | ||||
Purchase of equity securities, available-for-sale | (47,930 | ) | (75,856 | ) | ||||
Purchase of other investments | (14,348 | ) | (13,466 | ) | ||||
Purchase of short-term investments | (1,409,971 | ) | (1,600,685 | ) | ||||
Sale of subsidiary | 681 | - | ||||||
Sale of fixed maturity securities, held-to-maturity | - | 5,819 | ||||||
Sale of fixed maturity securities, available-for-sale | 157,823 | 470,202 | ||||||
Sale of short-term investments | 1,358,779 | 1,561,901 | ||||||
Redemption and maturities of fixed maturity securities, held-to-maturity | 238,923 | 197,095 | ||||||
Redemption and maturities of fixed maturity securities, available-for-sale | 251,875 | 88,402 | ||||||
Sale of equity securities, available-for-sale | 76,277 | 125,211 | ||||||
Proceeds from other investments | 18,468 | 23,149 | ||||||
Purchase of property and equipment | (4,062 | ) | (4,139 | ) | ||||
Net cash used in investing activities | (72,618 | ) | (138,732 | ) | ||||
Financing Activities | ||||||||
Dividends to stockholders | (19,516 | ) | (19,833 | ) | ||||
Acquisition of treasury stock | (1,528 | ) | (2,709 | ) | ||||
Principal payment of notes payable | (12,300 | ) | (12,300 | ) | ||||
Net proceeds from stock purchase and compensation plans | 3,084 | 2,914 | ||||||
Excess tax benefits from share-based payment arrangements | (795 | ) | (1,125 | ) | ||||
Net cash used in financing activities | (31,055 | ) | (33,053 | ) | ||||
Net decrease in cash and cash equivalents | (389 | ) | (4,473 | ) | ||||
Net decrease in cash and cash equivalents from discontinued operations | - | (1,609 | ) | |||||
Net decrease in cash from continuing operations | (389 | ) | (2,864 | ) | ||||
Cash from continuing operations, beginning of year | 811 | 3,606 | ||||||
Cash from continuing operations, end of period | $ | 422 | 742 |
9
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Balance Sheets
($ in thousands)
Sep-30 | Sep-30 | Dec-31 | ||||||||||
2010 | 2009 | 2009 | ||||||||||
ASSETS | ||||||||||||
Bonds | $ | 3,355,540 | 3,224,083 | 3,289,336 | ||||||||
Common stocks | 63,116 | 89,892 | 80,264 | |||||||||
Affiliated mortgage loan | 38,944 | 39,559 | 39,408 | |||||||||
Other investments | 190,958 | 162,798 | 176,983 | |||||||||
Short-term investments | 212,664 | 198,818 | 165,957 | |||||||||
Total investments | 3,861,222 | 3,715,150 | 3,751,948 | |||||||||
Cash on hand and in banks* | (33,420 | ) | (31,761 | ) | (29,110 | ) | ||||||
Interest and dividends due and accrued | 36,448 | 35,649 | 34,808 | |||||||||
Premiums receivable | 456,588 | 487,220 | 443,223 | |||||||||
Reinsurance recoverable on paid losses and expenses | 6,097 | 5,202 | 4,408 | |||||||||
Federal income tax recoverable | 14,679 | 369 | 1,608 | |||||||||
Deferred tax recoverable | 123,873 | 88,821 | 119,377 | |||||||||
EDP equipment | 1,331 | 2,361 | 2,134 | |||||||||
Equities and deposits in pools and associations | 7,530 | 8,297 | 4,886 | |||||||||
Receivable for sold securities | 23,698 | 5,150 | 19,655 | |||||||||
Other assets | 31,964 | 29,462 | 29,747 | |||||||||
Total assets | $ | 4,530,010 | 4,345,920 | 4,382,684 | ||||||||
LIABILITIES | ||||||||||||
Reserve for losses | $ | 2,100,648 | 2,061,817 | 2,072,376 | ||||||||
Reinsurance payable on paid loss and loss expense | 1,191 | 924 | 1,011 | |||||||||
Reserve for loss expenses | 404,738 | 397,863 | 399,457 | |||||||||
Unearned premiums | 764,953 | 787,390 | 739,325 | |||||||||
Reserve for commissions payable | 41,525 | 43,666 | 49,237 | |||||||||
Ceded balances payable | 13,313 | 12,437 | 9,856 | |||||||||
Premium and other taxes payable | 23,129 | 21,372 | 22,283 | |||||||||
Borrowed money | 13,017 | - | 13,016 | |||||||||
Reserve for dividends to policyholders | 2,568 | 3,657 | 3,718 | |||||||||
Reserves for unauthorized reinsurance | 1,013 | 1,416 | 1,013 | |||||||||
Payable for securities | 45,918 | 24,962 | - | |||||||||
Funds withheld on account of others | 5,771 | 5,154 | 6,261 | |||||||||
Accrued salaries and benefits | 64,405 | 68,323 | 66,847 | |||||||||
Other liabilities | 13,500 | 13,434 | 16,329 | |||||||||
Total liabilities | 3,495,689 | 3,442,415 | 3,400,729 | |||||||||
POLICYHOLDERS' SURPLUS | ||||||||||||
Capital | 28,325 | 28,325 | 28,325 | |||||||||
Aggregate write-ins for special surplus funds | 34,971 | - | 33,951 | |||||||||
Paid in surplus | 255,792 | 255,792 | 255,792 | |||||||||
Unassigned surplus* | 715,233 | 619,388 | 663,887 | |||||||||
Total policyholders' surplus | 1,034,321 | 903,505 | 981,955 | |||||||||
Total liabilities and policyholders' surplus | $ | 4,530,010 | 4,345,920 | 4,382,684 |
* Prior year balances have been adjusted for $17K elimination entry
10
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Statements Of Income
($ in thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September | September | |||||||||||||||||||||||||||||||
UNDERWRITING | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||
Net premiums written | $ | 365,129 | 376,718 | 1,086,744 | 1,117,764 | |||||||||||||||||||||||||||
Net premiums earned | 352,723 | 355,906 | 1,061,115 | 1,078,090 | ||||||||||||||||||||||||||||
Net losses paid | 219,404 | 177,750 | 588,974 | 572,020 | ||||||||||||||||||||||||||||
Change in reserve for losses | (16,787 | ) | 20,698 | 28,272 | 29,869 | |||||||||||||||||||||||||||
Net losses incurred | 202,617 | 57.4 | % | 198,448 | 55.8 | % | 617,246 | 58.2 | % | 601,889 | 55.8 | % | ||||||||||||||||||||
Net loss expenses paid | 40,101 | 38,686 | 114,703 | 116,193 | ||||||||||||||||||||||||||||
Change in reserve for loss expenses | 608 | 4,925 | 5,281 | 15,067 | ||||||||||||||||||||||||||||
Net loss expenses incurred | 40,709 | 11.5 | % | 43,611 | 12.3 | % | 119,984 | 11.3 | % | 131,260 | 12.2 | % | ||||||||||||||||||||
Net underwriting expenses incurred | 114,210 | 31.4 | % | 120,436 | 32.0 | % | 346,042 | 31.8 | % | 355,291 | 31.8 | % | ||||||||||||||||||||
Total deductions | 357,536 | 362,495 | 1,083,272 | 1,088,440 | ||||||||||||||||||||||||||||
Statutory underwriting loss | (4,813 | ) | (6,589 | ) | (22,157 | ) | (10,350 | ) | ||||||||||||||||||||||||
Net loss from premium balances charged off | (1,239 | ) | (1,078 | ) | (4,085 | ) | (3,446 | ) | ||||||||||||||||||||||||
Finance charges and other income | 2,005 | 2,656 | 6,683 | 7,720 | ||||||||||||||||||||||||||||
Total other income | 766 | -0.2 | % | 1,578 | -0.6 | % | 2,598 | -0.2 | % | 4,274 | -0.4 | % | ||||||||||||||||||||
Policyholders' dividends incurred | (728 | ) | 0.2 | % | (991 | ) | 0.3 | % | (2,867 | ) | 0.3 | % | (2,268 | ) | 0.2 | % | ||||||||||||||||
Total underwriting loss | (4,775 | ) | 100.3 | % | (6,002 | ) | 99.8 | % | (22,426 | ) | 101.4 | % | (8,344 | ) | 99.6 | % | ||||||||||||||||
INVESTMENT | ||||||||||||||||||||||||||||||||
Net investment income earned | 31,750 | 35,481 | 98,659 | 95,980 | ||||||||||||||||||||||||||||
Net realized loss | (108 | ) | (4,878 | ) | (3,373 | ) | (41,392 | ) | ||||||||||||||||||||||||
Total income before income tax | 26,867 | 24,601 | 72,860 | 46,244 | ||||||||||||||||||||||||||||
Federal income tax expense | 990 | 3,269 | 17,304 | 17,362 | ||||||||||||||||||||||||||||
Net income | $ | 25,877 | 21,332 | 55,556 | 28,882 | |||||||||||||||||||||||||||
Policyholders' Surplus | ||||||||||||||||||||||||||||||||
Surplus, beginning of period | $ | 1,008,534 | 873,365 | 981,955 | 884,431 | |||||||||||||||||||||||||||
Net income | 25,877 | 21,332 | 55,556 | 28,882 | ||||||||||||||||||||||||||||
Change in deferred tax | (8,831 | ) | (919 | ) | (772 | ) | 14,638 | |||||||||||||||||||||||||
Change in unrealized losses | 6,771 | 10,450 | 13,692 | (11,245 | ) | |||||||||||||||||||||||||||
Dividends to stockholders | (12,003 | ) | (12,515 | ) | (36,008 | ) | (24,518 | ) | ||||||||||||||||||||||||
Paid in surplus | - | - | - | 20,000 | ||||||||||||||||||||||||||||
Change in cum. effect of acctg principle | - | 2,540 | - | 2,540 | ||||||||||||||||||||||||||||
Change in non-admitted assets | 15,279 | 9,252 | 19,114 | (11,282 | ) | |||||||||||||||||||||||||||
Change in additional admitted deferred tax | (1,446 | ) | - | 1,020 | - | |||||||||||||||||||||||||||
Surplus adjustments | 140 | - | (236 | ) | 59 | |||||||||||||||||||||||||||
Net change in surplus for period | 25,787 | 30,140 | 52,366 | 19,074 | ||||||||||||||||||||||||||||
Surplus, end of period | $ | 1,034,321 | 903,505 | 1,034,321 | 903,505 | |||||||||||||||||||||||||||
Statutory underwriting loss: | $ | (4,775 | ) | (6,002 | ) | (22,426 | ) | (8,344 | ) | |||||||||||||||||||||||
Adjustments under GAAP: | ||||||||||||||||||||||||||||||||
Deferred policy acquisition costs | 390 | 5,678 | (11 | ) | 11,376 | |||||||||||||||||||||||||||
Other, net | 452 | 182 | 738 | (105 | ) | |||||||||||||||||||||||||||
GAAP underwriting (loss) gain | $ | (3,933 | ) | (142 | ) | (21,699 | ) | 2,927 | ||||||||||||||||||||||||
Note: Some amounts or ratios may not foot due to rounding
11
Selective Insurance Group, Inc. and Consolidated Subsidiaries | |||||||||
Alternative Investments (Insurance Companies' Portfolio) | |||||||||
as of September 30, 2010 | |||||||||
(unaudited) | |||||||||
Paid in | |||||||||
Inception | Original | Contributed | Remaining | Total | Current | YTD | DPI(1) | TVPI(2) | |
Fund | Year | Commitment | Capital | Commitment | Distributions | Market Value | Income | Ratio | Ratio |
Real Estate | |||||||||
LEH RE II | 2005 | 20,000,000 | 17,301,168 | 2,698,832 | 7,438,741 | 10,006,633 | (283,777) | 0.43 | 1.01 |
GS Whitehall 2007 | 2007 | 15,000,000 | 14,250,000 | 750,000 | - | 2,753,703 | (1,397,182) | - | 0.19 |
LEH RE III | 2008 | 15,000,000 | 6,256,937 | 8,743,063 | 29,004 | 2,948,792 | (374,733) | 0.00 | 0.48 |
Total - Real Estate | 50,000,000 | 37,808,105 | 12,191,895 | 7,467,745 | 15,709,128 | (2,055,692) | 0.20 | 0.61 | |
Mezzanine Financing | |||||||||
GS Mezz III | 2003 | 10,000,000 | 4,362,674 | 5,637,326 | 7,596,979 | 3,722,882 | 197,330 | 1.74 | 2.59 |
LEH Euro Mezz | 2004 | 9,000,000 | 9,000,000 | - | 12,355,149 | 1,740,876 | (599,037) | 1.37 | 1.57 |
GS Mezz 2006 | 2006 | 15,000,000 | 9,771,217 | 5,228,783 | 1,875,410 | 8,439,788 | 2,705,439 | 0.19 | 1.06 |
GS Mezz V | 2007 | 25,000,000 | 9,747,331 | 15,252,669 | 3,104,720 | 9,505,955 | 702,225 | 0.32 | 1.29 |
Total - Mezz. Financing | 59,000,000 | 32,881,222 | 26,118,778 | 24,932,258 | 23,409,501 | 3,005,957 | 0.76 | 1.47 | |
Distressed Debt | |||||||||
Varde LP | 1997 | 4,000,000 | 4,000,000 | - | 12,146,213 | - | 16,619 | 3.04 | 3.04 |
Varde VIII | 2006 | 10,000,000 | 10,000,000 | - | - | 11,719,123 | (58,002) | - | 1.17 |
GS Distressed Opp III | 2007 | 15,000,000 | 10,389,138 | 4,610,862 | 512,894 | 8,660,524 | 1,236,658 | 0.05 | 0.88 |
Total - Distressed Debt | 29,000,000 | 24,389,138 | 4,610,862 | 12,659,107 | 20,379,647 | 1,195,274 | 0.52 | 1.35 | |
Private Equity | |||||||||
Prospector | 1997 | 5,000,000 | 5,000,000 | - | 13,965,078 | 411,566 | (82,745) | 2.79 | 2.88 |
Trilantic Capital Partners III | 2004 | 10,000,000 | 9,076,175 | 923,825 | 5,943,965 | 7,097,044 | 48,705 | 0.65 | 1.44 |
NB Co-Invest | 2006 | 15,000,000 | 11,190,692 | 3,809,308 | 3,685,797 | 8,548,788 | 776,035 | 0.33 | 1.09 |
GS PEP Asia | 2007 | 7,000,000 | 2,300,371 | 4,699,629 | 25,606 | 2,013,111 | 51,342 | 0.01 | 0.89 |
Trilantic Capital Partners IV | 2007 | 11,098,351 | 5,104,390 | 5,993,961 | 13,611 | 5,164,301 | 556,271 | 0.00 | 1.01 |
Total - Private Equity | 48,098,351 | 32,671,628 | 15,426,724 | 23,634,057 | 23,234,810 | 1,349,609 | 0.72 | 1.43 | |
Private Equity, Secondary Market | |||||||||
NB SOF | 2005 | 12,000,000 | 11,100,506 | 899,494 | 5,255,537 | 7,257,635 | 654,808 | 0.47 | 1.13 |
GS Vintage IV | 2007 | 20,000,000 | 14,414,450 | 5,585,550 | 2,064,628 | 13,650,620 | 2,385,301 | 0.14 | 1.09 |
NB SOF II | 2008 | 12,000,000 | 3,972,476 | 8,027,524 | 502,534 | 4,422,045 | 656,368 | 0.13 | 1.24 |
GS Vintage V | 2008 | 10,000,000 | 3,328,337 | 6,671,663 | 179,522 | 3,274,561 | 228,037 | 0.05 | 1.04 |
Total - Pvt. Eq. Sec. Mkt. | 54,000,000 | 32,815,769 | 21,184,231 | 8,002,220 | 28,604,861 | 3,924,514 | 0.24 | 1.12 | |
Energy/Power Generation | |||||||||
ArcLight I | 2002 | 15,000,000 | 13,344,495 | 1,655,505 | 27,358,382 | 1,326,936 | 201,209 | 2.05 | 2.15 |
ArcLight II | 2003 | 15,000,000 | 12,704,508 | 2,295,492 | 17,071,041 | 6,484,004 | 1,347,372 | 1.34 | 1.85 |
ArcLight III | 2006 | 15,000,000 | 12,962,206 | 2,037,794 | 3,998,052 | 13,070,723 | 616,920 | 0.31 | 1.32 |
Quintana Energy | 2006 | 10,000,000 | 7,840,628 | 2,159,372 | 392,978 | 6,630,326 | 217,049 | 0.05 | 0.90 |
ArcLight IV | 2007 | 10,000,000 | 7,009,043 | 2,990,957 | 3,320,050 | 6,700,093 | 1,057,149 | 0.47 | 1.43 |
Total - Energy/Power Generation | 65,000,000 | 53,860,880 | 11,139,120 | 52,140,503 | 34,212,082 | 3,439,699 | 0.97 | 1.60 | |
Venture Capital | |||||||||
Venture V | 2001 | 10,000,000 | 8,600,000 | 1,400,000 | 1,999,996 | 6,341,205 | 262,870 | 0.23 | 0.97 |
Total - Venture Capital | 10,000,000 | 8,600,000 | 1,400,000 | 1,999,996 | 6,341,205 | 262,870 | 0.23 | 0.97 | |
TOTAL - ALTERNATIVE INVESTMENTS | $ 315,098,351 | 223,026,741 | 92,071,610 | 130,835,886 | 151,891,234 | 11,122,231 | 0.59 | 1.27 | |
(1) Distributed to paid in ratio | |||||||||
(2) Total value to paid in ratio |
12
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Municipal Bond Portfolio
State and Repayment Source Composition
September 30, 2010
($s in thousands)
(unaudited)
Exposure = 69% Held-to-Maturity; 31% Available-for-Sale
Repayment Source Composition by State %s
Market Values
State | Revenue | % of State | General Obligation (GO)-Local | % of State | General Obligation (GO)-State | % of State | Pre- refunded | % of State | TX -Permanent School Fund (PSF) | % of State | Total | % of Total |
TX | 65,549 | 52% | 53,910 | 43% | 6,141 | 5% | - | 0% | - | 0% | 125,600 | 8% |
TX-PSF | - | 0% | - | 0% | - | 0% | - | 0% | 49,894 | 100% | 49,894 | 3% |
WA | 47,407 | 49% | 48,679 | 51% | - | 0% | - | 0% | - | 0% | 96,086 | 6% |
FL | 82,404 | 99% | - | 0% | 515 | 1% | - | 0% | - | 0% | 82,919 | 5% |
AZ | 70,483 | 91% | 7,071 | 9% | - | 0% | - | 0% | - | 0% | 77,554 | 5% |
NC | 28,930 | 40% | 42,567 | 60% | - | 0% | - | 0% | - | 0% | 71,497 | 5% |
NY | 70,463 | 100% | - | 0% | - | 0% | - | 0% | - | 0% | 70,463 | 5% |
IL | 46,612 | 69% | 20,865 | 31% | - | 0% | - | 0% | - | 0% | 67,477 | 4% |
OH | 38,317 | 64% | 14,069 | 23% | 7,511 | 13% | - | 0% | - | 0% | 59,897 | 4% |
CO | 23,331 | 39% | 34,328 | 58% | 1,712 | 3% | - | 0% | - | 0% | 59,371 | 4% |
MN | 12,722 | 23% | 5,317 | 10% | 36,609 | 67% | - | 0% | - | 0% | 54,648 | 4% |
Pre-refunded | - | 0% | - | 0% | - | 0% | 74,670 | 100% | - | 0% | 74,670 | 5% |
Other | 439,400 | 68% | 134,013 | 21% | 75,444 | 12% | - | 0% | - | 0% | 648,857 | 42% |
Grand Total | 925,618 | 60% | 360,819 | 23% | 127,932 | 8% | 74,670 | 5% | 49,894 | 3% | 1,538,933 | 100% |
13
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Structured Securities
September 30, 2010
($ in thousands)
(unaudited)
Market Value | 606,373 |
Unrealized/Unrecognized Gain/(Losses) | 17,567 |
Held to Maturity (HTM) | 30% |
Available for Sale (AFS) | 70% |
Structured Security Portfolio Average Rating | AA+ |
Structured Security % of Total Portfolio | 17% |
14
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Residential Mortgage Backed (RMBS) and Residential ABS (RABS) Securities
September 30, 2010
($ in thousands)
(unaudited)
Market Value | 407,574 |
Unrealized/Unrecognized Gain/(Losses) | 12,993 |
Held to Maturity (HTM) | 26% |
Available for Sale (AFS) | 74% |
RMBS & RABS Portfolio Average Rating | AA+ |
RMBS & RABS % of Total Portfolio | 11.5% |
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Commercial Mortgage Backed (CMBS) Securities
September 30, 2010
($ in thousands)
(unaudited)
Market Value | 166,451 |
Unrealized/Unrecognized Gain/(Losses) | 3,758 |
Held to Maturity (HTM) | 39% |
Available for Sale (AFS) | 61% |
CMBS Portfolio Average Rating | AA |
CMBS % of Total Portfolio | 4.7% |
15
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Available-for-Sale Fixed Maturity Securities
September 30, 2010
($ in millions)
(unaudited)
Fair Value | Unrealized Gain (Loss) | Credit Quality | ||||||||||
AFS Fixed Maturity Portfolio: | ||||||||||||
U.S. government obligations1 | $ | 330.6 | 11.9 | AAA | ||||||||
Foreign government obligations | 8.5 | 0.6 | AA- | |||||||||
State and municipal obligations | 480.3 | 33.6 | AA+ | |||||||||
Corporate securities | 869.5 | 48.5 | A+ | |||||||||
Mortgage-backed securities ("MBS") | 402.1 | 13.1 | AA+ | |||||||||
Asset-backed securities ("ABS")2 | 24.0 | 0.7 | AA+ | |||||||||
Total AFS fixed maturity portfolio | $ | 2,115.0 | 108.4 | AA | ||||||||
State and Municipal Obligations: | ||||||||||||
Government obligations | $ | 281.8 | 19.5 | AA+ | ||||||||
Special revenue obligations | 198.5 | 14.1 | A+ | |||||||||
Total state and municipal obligations | $ | 480.3 | 33.6 | AA+ | ||||||||
Corporate Securities: | ||||||||||||
Financial | $ | 261.7 | 11.5 | A+ | ||||||||
Industrials | 74.1 | 6.2 | A- | |||||||||
Utilities | 49.7 | 2.4 | A- | |||||||||
Consumer discretion | 70.2 | 3.9 | A | |||||||||
Consumer staples | 87.2 | 5.0 | A- | |||||||||
Health care | 132.1 | 8.7 | AA- | |||||||||
Materials | 45.3 | 2.5 | A- | |||||||||
Energy | 39.9 | 2.4 | A+ | |||||||||
Information technology | 47.8 | 2.0 | A+ | |||||||||
Telecommunications services | 37.5 | 1.5 | A | |||||||||
Other | 24.0 | 2.4 | A | |||||||||
Total corporate securities | $ | 869.5 | 48.5 | A+ | ||||||||
Mortgage-backed securities: | ||||||||||||
Gov't Guaranteed Agency CMBS | $ | 74.7 | 5.7 | AAA | ||||||||
Non-agency CMBS | 27.3 | (2.0 | ) | A- | ||||||||
Gov't Guaranteed Agency RMBS | 93.6 | 3.4 | AAA | |||||||||
Other Agency RMBS | 160.2 | 7.4 | AAA | |||||||||
Non-agency RMBS | 36.0 | (1.1 | ) | A- | ||||||||
Alternative-A ("Alt-A") RMBS | 10.3 | (0.3 | ) | AAA | ||||||||
Total MBS | $ | 402.1 | 13.1 | AA+ | ||||||||
Asset-backed securities: | ||||||||||||
ABS | $ | 23.1 | 0.9 | AAA | ||||||||
Sub-prime ABS2,3 | 0.9 | (0.2 | ) | D | ||||||||
Total ABS | $ | 24.0 | 0.7 | AA+ |
1 U.S. Government includes coporate securities fully guaranteed by the FDIC. |
2 We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650. |
3 Sub-prime ABS includes one security which is currently expected to defualt on its obligations according to the rating agencies. |
16
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Held-to-Maturity Securities
September 30, 2010
($ in millions)
(unaudited)
Fair Value | Carry Value | Unrecognized Holding Gain (Loss) | Unrealized Gain (Loss) in Accumulated Other Comprehensive Income | Total Unrealized / Unrecognized Gain (Loss) | Credit Quality | |||||||||||||||||||
HTM Fixed Maturity Portfolio: | ||||||||||||||||||||||||
U.S. government obligations1 | $ | 107.1 | 99.6 | 7.5 | 4.9 | 12.4 | AAA | |||||||||||||||||
State and municipal obligations | 1,058.6 | 1,020.5 | 38.1 | 25.0 | 63.1 | AA- | ||||||||||||||||||
Corporate securities | 94.1 | 83.2 | 10.9 | (4.0 | ) | 6.9 | A- | |||||||||||||||||
Mortgage-backed securities ("MBS") | 167.5 | 157.8 | 9.7 | (4.5 | ) | 5.2 | AA+ | |||||||||||||||||
Asset-backed securities ("ABS")2 | 12.8 | 11.6 | 1.2 | (2.6 | ) | (1.4 | ) | A | ||||||||||||||||
Total HTM fixed maturity portfolio | $ | 1,440.1 | 1,372.7 | 67.4 | 18.8 | 86.2 | AA- | |||||||||||||||||
State and Municipal Obligations: | ||||||||||||||||||||||||
Government obligations | $ | 286.1 | 277.2 | 8.9 | 11.2 | 20.1 | AA- | |||||||||||||||||
Special revenue obligations | 772.5 | 743.3 | 29.2 | 13.8 | 43.0 | AA- | ||||||||||||||||||
Total state and municipal obligations | $ | 1,058.6 | 1,020.5 | 38.1 | 25.0 | 63.1 | AA- | |||||||||||||||||
Corporate Securities: | ||||||||||||||||||||||||
Financial | $ | 29.4 | 25.4 | 4.0 | (2.4 | ) | 1.6 | BBB+ | ||||||||||||||||
Industrials | 23.1 | 19.3 | 3.8 | (1.3 | ) | 2.5 | BBB+ | |||||||||||||||||
Utilities | 17.6 | 16.2 | 1.4 | (0.1 | ) | 1.3 | A- | |||||||||||||||||
Consumer discretion | 12.8 | 12.2 | 0.6 | 0.2 | 0.8 | A+ | ||||||||||||||||||
Consumer staples | 5.4 | 4.9 | 0.5 | (0.1 | ) | 0.4 | A | |||||||||||||||||
Materials | 2.2 | 1.9 | 0.3 | (0.1 | ) | 0.2 | BBB- | |||||||||||||||||
Energy | 3.6 | 3.3 | 0.3 | (0.2 | ) | 0.1 | BBB- | |||||||||||||||||
Total corporate securities | $ | 94.1 | 83.2 | 10.9 | (4.0 | ) | 6.9 | A- | ||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Gov't guaranteed agency CMBS | $ | 10.2 | 9.9 | 0.3 | - | 0.3 | AAA | |||||||||||||||||
Other agency CMBS | 3.6 | 3.6 | - | - | - | AA | ||||||||||||||||||
Non-agency CMBS | 50.5 | 44.8 | 5.7 | (6.0 | ) | (0.3 | ) | AA+ | ||||||||||||||||
Gov't guaranteed agency RMBS | 4.4 | 4.0 | 0.4 | - | 0.4 | AA | ||||||||||||||||||
Other agency RMBS | 98.7 | 95.4 | 3.3 | 1.5 | 4.8 | AA | ||||||||||||||||||
Non-agency RMBS | 0.1 | 0.1 | - | - | - | AA | ||||||||||||||||||
Total mortgage-backed securities | $ | 167.5 | 157.8 | 9.7 | (4.5 | ) | 5.2 | AA+ | ||||||||||||||||
Asset-backed securities: | ||||||||||||||||||||||||
ABS | $ | 9.9 | 9.1 | 0.8 | (1.1 | ) | (0.3 | ) | A | |||||||||||||||
Alt-A ABS | 2.9 | 2.5 | 0.4 | (1.5 | ) | (1.1 | ) | A+ | ||||||||||||||||
Total ABS | $ | 12.8 | 11.6 | 1.2 | (2.6 | ) | (1.4 | ) | A |
1 U.S. Government includes coporate securities fully guaranteed by the FDIC.