EXHIBIT 99.2
Supplemental Investor Package Second Quarter 2014 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)
June 30, | June 30, | December 31, | ||||||||||||||||||||||||||||||||||
($ in thousands, except per share data) | 2014 | 2013 | 2013 | |||||||||||||||||||||||||||||||||
Balance Sheet | Market Value | Unrecognized/ Unrealized | Balance Sheet | Market Value | Unrecognized/ Unrealized | Balance Sheet | Market Value | Unrecognized/ Unrealized | ||||||||||||||||||||||||||||
Invested Assets: | ||||||||||||||||||||||||||||||||||||
Corporate bonds 1 | $ | 2,625,026 | 2,629,567 | 63,986 | $ | 2,365,465 | 2,372,903 | 38,028 | $ | 2,595,256 | 2,601,556 | 27,812 | ||||||||||||||||||||||||
Government and Municipal bonds | 1,630,112 | 1,646,135 | 56,322 | 1,533,853 | 1,554,533 | 48,520 | 1,513,159 | 1,530,961 | 38,106 | |||||||||||||||||||||||||||
Total fixed income securities | 4,255,138 | 4,275,702 | 120,308 | 3,899,318 | 3,927,436 | 86,548 | 4,108,415 | 4,132,517 | 65,918 | |||||||||||||||||||||||||||
Equities | 211,348 | 211,348 | 45,134 | 172,064 | 172,064 | 29,630 | 192,771 | 192,771 | 37,420 | |||||||||||||||||||||||||||
Short-term investments | 166,488 | 166,488 | - | 186,499 | 186,499 | - | 174,251 | 174,251 | - | |||||||||||||||||||||||||||
Other investments | 106,125 | 106,125 | - | 109,077 | 109,077 | - | 107,875 | 107,875 | - | |||||||||||||||||||||||||||
Total invested assets | $ | 4,739,099 | 4,759,663 | 165,442 | $ | 4,366,958 | 4,395,076 | 116,178 | $ | 4,583,312 | 4,607,414 | 103,338 | ||||||||||||||||||||||||
Invested assets per $ of stockholders' equity | 3.83 | 3.97 | 3.97 | |||||||||||||||||||||||||||||||||
Total assets | 6,490,585 | 6,112,627 | 6,270,170 | |||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||
Reserve for loss and loss expenses | 3,451,306 | 3,270,114 | 3,349,770 | |||||||||||||||||||||||||||||||||
Unearned premium reserve | 1,100,864 | 1,048,011 | 1,059,155 | |||||||||||||||||||||||||||||||||
Total liabilities | 5,252,510 | 5,013,582 | 5,116,242 | |||||||||||||||||||||||||||||||||
Stockholders' equity | 1,238,075 | 1,099,045 | 1,153,928 | |||||||||||||||||||||||||||||||||
Total debt to capitalization ratio | 24.1 | % | 26.3 | % | 25.4 | % | ||||||||||||||||||||||||||||||
Book value per share | 21.96 | 19.72 | 20.63 | |||||||||||||||||||||||||||||||||
Book value per share excluding unrealized gain or loss on bond portfolio | 20.81 | 19.04 | 20.15 | |||||||||||||||||||||||||||||||||
NPW per insurance segment employee | 927 | 886 | 908 | |||||||||||||||||||||||||||||||||
Statutory premiums to surplus ratio | 1.4 | x | 1.5 | x | 1.4 | x | ||||||||||||||||||||||||||||||
Statutory surplus | 1,292,961 | 1,170,612 | 1,256,431 |
1 Includes mortgage-backed and asset-backed securities.
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Selected Income Statement Data
(unaudited)
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
($ in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Per diluted share | Per diluted share | Per diluted share | Per diluted share | ||||||||||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||||||||||||
Revenue | $ | 506,849 | $ | 468,945 | $ | 1,015,920 | $ | 928,894 | |||||||||||||||||||||||||
Operating income | 26,390 | 0.46 | 23,773 | 0.42 | 39,673 | 0.70 | 43,897 | 0.78 | |||||||||||||||||||||||||
Net realized gains, after tax | 2,951 | 0.05 | 3,349 | 0.06 | 7,642 | 0.13 | 5,530 | 0.10 | |||||||||||||||||||||||||
Income from continuing operations | 29,341 | 0.51 | 27,122 | 0.48 | 47,315 | 0.83 | 49,427 | 0.88 | |||||||||||||||||||||||||
Loss on discontinued operations, after tax | - | - | - | - | - | - | (997 | ) | (0.02 | ) | |||||||||||||||||||||||
Net income | 29,341 | 0.51 | 27,122 | 0.48 | 47,315 | 0.83 | 48,430 | 0.86 | |||||||||||||||||||||||||
Operating return on equity | 8.7 | % | 8.5 | % | 6.6 | % | 8.0 | % | |||||||||||||||||||||||||
Total Insurance Operations | |||||||||||||||||||||||||||||||||
Gross premiums written | 578,151 | 555,568 | 1,143,892 | 1,092,866 | |||||||||||||||||||||||||||||
Net premiums written | 479,823 | 462,177 | 956,573 | 912,301 | |||||||||||||||||||||||||||||
Net premiums earned | 463,625 | 426,252 | 920,120 | 847,192 | |||||||||||||||||||||||||||||
Underwriting gain | - before tax | 10,084 | 4,483 | 5,069 | 16,644 | ||||||||||||||||||||||||||||
- after tax | 6,555 | 0.11 | 2,914 | 0.05 | 3,295 | 0.06 | 10,819 | 0.19 | |||||||||||||||||||||||||
GAAP combined ratio | 97.8 | % | 98.9 | % | 99.4 | % | 98.0 | % | |||||||||||||||||||||||||
�� | |||||||||||||||||||||||||||||||||
Total Standard lines | |||||||||||||||||||||||||||||||||
Net premiums earned | 429,051 | 396,205 | 853,310 | 787,086 | |||||||||||||||||||||||||||||
GAAP combined ratio | 97.6 | % | 98.3 | % | 99.5 | % | 97.6 | % | |||||||||||||||||||||||||
Standard Commercial lines | |||||||||||||||||||||||||||||||||
Net premiums earned | 354,507 | 322,657 | 703,948 | 640,502 | |||||||||||||||||||||||||||||
GAAP combined ratio | 95.6 | % | 97.0 | % | 98.3 | % | 97.5 | % | |||||||||||||||||||||||||
Standard Personal lines | |||||||||||||||||||||||||||||||||
Net premiums earned | 74,544 | 73,548 | 149,362 | 146,584 | |||||||||||||||||||||||||||||
GAAP combined ratio | 107.5 | % | 104.0 | % | 105.3 | % | 98.0 | % | |||||||||||||||||||||||||
Excess and Surplus lines | |||||||||||||||||||||||||||||||||
Net premiums earned | 34,574 | 30,047 | 66,810 | 60,106 | |||||||||||||||||||||||||||||
GAAP combined ratio | 100.1 | % | 107.6 | % | 98.6 | % | 103.7 | % | |||||||||||||||||||||||||
Investments | |||||||||||||||||||||||||||||||||
Net investment income | - before tax | 36,774 | 34,003 | 72,308 | 66,873 | ||||||||||||||||||||||||||||
- after tax | 27,421 | 0.48 | 25,700 | 0.45 | 53,907 | 0.94 | 50,539 | 0.89 | |||||||||||||||||||||||||
Effective tax rate | 25.4 | % | 24.4 | % | 25.4 | % | 24.4 | % | |||||||||||||||||||||||||
Annualized after-tax yield on investment portfolio | 2.3 | % | 2.3 | % | |||||||||||||||||||||||||||||
Annualized after-tax, after-interest expense yield | 2.0 | % | 2.0 | % | |||||||||||||||||||||||||||||
Invested assets per $ of stockholders' equity | 3.83 | 3.97 | |||||||||||||||||||||||||||||||
Other expenses (net of other income) | |||||||||||||||||||||||||||||||||
Interest expense | - before tax | (5,425 | ) | (5,570 | ) | (10,986 | ) | (11,401 | ) | ||||||||||||||||||||||||
- after tax | (3,526 | ) | (0.06 | ) | (3,621 | ) | (0.06 | ) | (7,141 | ) | (0.12 | ) | (7,411 | ) | (0.13 | ) | |||||||||||||||||
Other Expense - after tax | $ | (4,060 | ) | (0.07 | ) | $ | (1,220 | ) | (0.02 | ) | $ | (10,388 | ) | (0.18 | ) | $ | (10,050 | ) | (0.17 | ) | |||||||||||||
Diluted weighted avg shares outstanding | 57,260 | 56,616 | 57,215 | 56,530 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries |
GAAP Insurance Operations Results |
(Unaudited) |
Second Quarter | ||||||||||||||||||||||||||||||||||||||||
($ in thousands) | Quarter Ended June 30, 2014 | Quarter Ended June 30, 2013 | ||||||||||||||||||||||||||||||||||||||
Standard Commercial Lines | Standard Personal Lines | Total Standard Lines | Excess & Surplus Lines | Grand Total | Standard Commercial Lines | Standard Personal Lines | Total Standard Lines | Excess & Surplus Lines | Grand Total | |||||||||||||||||||||||||||||||
Net Premiums Written | 363,860 | 78,181 | 442,041 | 37,782 | 479,823 | 350,651 | 78,860 | 429,511 | 32,666 | 462,177 | ||||||||||||||||||||||||||||||
Net Premiums Earned | 354,507 | 74,544 | 429,051 | 34,574 | 463,625 | 322,657 | 73,548 | 396,205 | 30,047 | 426,252 | ||||||||||||||||||||||||||||||
Loss and Loss Expense Incurred | 216,532 | 58,863 | 275,395 | 22,400 | 297,795 | 201,316 | 57,204 | 258,520 | 21,074 | 279,594 | ||||||||||||||||||||||||||||||
Net Underwriting Expenses Incurred | 120,723 | 21,263 | 141,986 | 12,211 | 154,197 | 110,617 | 19,319 | 129,936 | 11,258 | 141,194 | ||||||||||||||||||||||||||||||
Dividends to Policyholders | 1,549 | - | 1,549 | - | 1,549 | 981 | - | 981 | - | 981 | ||||||||||||||||||||||||||||||
GAAP Underwriting Gain (Loss) | 15,703 | (5,582 | ) | 10,121 | (37 | ) | 10,084 | 9,743 | (2,975 | ) | 6,768 | (2,285 | ) | 4,483 | ||||||||||||||||||||||||||
GAAP Ratios | ||||||||||||||||||||||||||||||||||||||||
Loss and Loss Expense Ratio | 61.1 | % | 79.0 | % | 64.2 | % | 64.8 | % | 64.2 | % | 62.4 | % | 77.8 | % | 65.2 | % | 70.1 | % | 65.6 | % | ||||||||||||||||||||
Underwriting Expense Ratio | 34.1 | % | 28.5 | % | 33.0 | % | 35.3 | % | 33.3 | % | 34.3 | % | 26.2 | % | 32.9 | % | 37.5 | % | 33.1 | % | ||||||||||||||||||||
Dividends to Policyholders Ratio | 0.4 | % | 0.0 | % | 0.4 | % | 0.0 | % | 0.3 | % | 0.3 | % | 0.0 | % | 0.2 | % | 0.0 | % | 0.2 | % | ||||||||||||||||||||
Combined Ratio | 95.6 | % | 107.5 | % | 97.6 | % | 100.1 | % | 97.8 | % | 97.0 | % | 104.0 | % | 98.3 | % | 107.6 | % | 98.9 | % | ||||||||||||||||||||
Year to Date | ||||||||||||||||||||||||||||||||||||||||
($ in thousands) | Year to Date June 30, 2014 | Year to Date June 30, 2013 | ||||||||||||||||||||||||||||||||||||||
Standard Commercial Lines | Standard Personal Lines | Total Standard Lines | Excess & Surplus Lines | Grand Total | Standard Commercial Lines | Standard Personal Lines | Total Standard Lines | Excess & Surplus Lines | Grand Total | |||||||||||||||||||||||||||||||
Net Premiums Written | 743,210 | 145,519 | 888,729 | 67,844 | 956,573 | 703,840 | 147,415 | 851,255 | 61,046 | 912,301 | ||||||||||||||||||||||||||||||
Net Premiums Earned | 703,948 | 149,362 | 853,310 | 66,810 | 920,120 | 640,502 | 146,584 | 787,086 | 60,106 | 847,192 | ||||||||||||||||||||||||||||||
Loss and Loss Expense Incurred | 459,171 | 116,890 | 576,061 | 42,280 | 618,341 | 404,455 | 104,796 | 509,251 | 40,192 | 549,443 | ||||||||||||||||||||||||||||||
Net Underwriting Expenses Incurred | 229,917 | 40,414 | 270,331 | 23,592 | 293,923 | 218,135 | 38,790 | 256,925 | 22,113 | 279,038 | ||||||||||||||||||||||||||||||
Dividends to Policyholders | 2,787 | - | 2,787 | - | 2,787 | 2,067 | - | 2,067 | - | 2,067 | ||||||||||||||||||||||||||||||
GAAP Underwriting Gain (Loss) | 12,073 | (7,942 | ) | 4,131 | 938 | 5,069 | 15,845 | 2,998 | 18,843 | (2,199 | ) | 16,644 | ||||||||||||||||||||||||||||
GAAP Ratios | ||||||||||||||||||||||||||||||||||||||||
Loss and Loss Expense Ratio | 65.2 | % | 78.3 | % | 67.5 | % | 63.3 | % | 67.2 | % | 63.1 | % | 71.5 | % | 64.7 | % | 66.9 | % | 64.9 | % | ||||||||||||||||||||
Underwriting Expense Ratio | 32.7 | % | 27.0 | % | 31.7 | % | 35.3 | % | 31.9 | % | 34.1 | % | 26.5 | % | 32.6 | % | 36.8 | % | 32.9 | % | ||||||||||||||||||||
Dividends to Policyholders Ratio | 0.4 | % | 0.0 | % | 0.3 | % | 0.0 | % | 0.3 | % | 0.3 | % | 0.0 | % | 0.3 | % | 0.0 | % | 0.2 | % | ||||||||||||||||||||
Combined Ratio | 98.3 | % | 105.3 | % | 99.5 | % | 98.6 | % | 99.4 | % | 97.5 | % | 98.0 | % | 97.6 | % | 103.7 | % | 98.0 | % | ||||||||||||||||||||
Selective Insurance Group, Inc. and Consolidated Subsidiaries
GAAP Investment Income
June 2014 (unaudited)
Quarter Ended | % | Year to Date | % | |||||||||||||||||||||
($ in thousands, except per share data) | June 2014 | June 2013 | Increase (Decrease) | June 2014 | June 2013 | Increase (Decrease) | ||||||||||||||||||
Investment Income: | ||||||||||||||||||||||||
Interest: | ||||||||||||||||||||||||
Fixed Income Securities | $ | 33,781 | 30,298 | 11 | $ | 64,809 | 60,387 | 7 | ||||||||||||||||
Short-term | 14 | 29 | (52 | ) | 33 | 81 | (59 | ) | ||||||||||||||||
Other Investments: | ||||||||||||||||||||||||
Alternative Investments | 3,553 | 3,869 | (8 | ) | 8,771 | 8,109 | 8 | |||||||||||||||||
Other | - | - | - | - | (638 | ) | 100 | |||||||||||||||||
Dividends | 1,736 | 1,874 | (7 | ) | 3,185 | 3,081 | 3 | |||||||||||||||||
39,084 | 36,070 | 8 | 76,798 | 71,020 | 8 | |||||||||||||||||||
Investment Expense | 2,310 | 2,067 | 12 | 4,490 | 4,147 | 8 | ||||||||||||||||||
Net Investment Income Before Tax | 36,774 | 34,003 | 8 | 72,308 | 66,873 | 8 | ||||||||||||||||||
Tax | 9,353 | 8,303 | 13 | 18,401 | 16,334 | 13 | ||||||||||||||||||
Net Investment Income After Tax | $ | 27,421 | 25,700 | 7 | $ | 53,907 | 50,539 | 7 | ||||||||||||||||
Net Investment Income per Share | $ | 0.48 | 0.45 | 7 | $ | 0.94 | 0.89 | 6 | ||||||||||||||||
Effective Tax Rate | 25.4 | % | 24.4 | % | 25.4 | % | 24.4 | % | ||||||||||||||||
Average Yields : | ||||||||||||||||||||||||
Fixed Income Securities: | ||||||||||||||||||||||||
Pre Tax | 3.10 | % | 3.12 | % | ||||||||||||||||||||
After Tax | 2.31 | % | 2.36 | % | ||||||||||||||||||||
Portfolio: | ||||||||||||||||||||||||
Pre Tax | 3.10 | % | 3.08 | % | ||||||||||||||||||||
After Tax | 2.31 | % | 2.32 | % | ||||||||||||||||||||
Quarter Ended | Year to date | |||||||||||||||||||||||
June | June | June | June | |||||||||||||||||||||
Net Realized Gains (Losses) | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Fixed Income Securities | 749 | 911 | 784 | 1,562 | ||||||||||||||||||||
Equity Securities | 3,790 | 4,367 | 10,973 | 9,654 | ||||||||||||||||||||
Other Investments | - | (124 | ) | - | (2,707 | ) | ||||||||||||||||||
Total | 4,539 | 5,154 | 11,757 | 8,509 | ||||||||||||||||||||
Net of Tax | 2,951 | 3,349 | 7,642 | 5,530 |
As of June 30, 2014 year-to-date new money rates for fixed income securities were 2.6% on a pre-tax basis and 2.1% on an after tax-basis.
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2014 Statutory Results by Line of Business
Quarter Ended June 2014 (unaudited)
Net | Net | Underwriting | Dividends to | Combined | Combined | |||||||||||||||||||||||||||||||||||||||
Premiums | Percent | Premiums | Percent | Loss | LAE | Expense | Policyholders | Ratio | Ratio | Underwriting | ||||||||||||||||||||||||||||||||||
($ in thousands) | Written | Change | Earned | Change | Ratio | Ratio | Ratio | Ratio | 2014 | 2013 | Gain/(Loss) | |||||||||||||||||||||||||||||||||
Standard Personal Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Homeowners | $ | 36,936 | 5.3 | % | $ | 33,575 | 5.9 | % | 83.9 | % | 8.6 | % | 32.0 | % | 0.0 | % | 124.5 | % | 108.0 | % | $ | (9,301 | ) | |||||||||||||||||||||
Auto | 39,152 | (2.6 | )% | 38,021 | (1.3 | )% | 61.0 | % | 8.2 | % | 31.0 | % | 0.0 | % | 100.2 | % | 112.7 | % | (426 | ) | ||||||||||||||||||||||||
Other (including flood) | 2,093 | (41.9 | )% | 2,948 | (11.2 | )% | 57.1 | % | 13.3 | % | (153.0 | )% | 0.0 | % | (82.6 | )% | (59.1 | )% | 4,224 | |||||||||||||||||||||||||
Total | $ | 78,181 | (0.9 | )% | $ | 74,544 | 1.4 | % | 71.1 | % | 7.9 | % | 27.1 | % | 0.0 | % | 106.1 | % | 102.9 | % | $ | (5,503 | ) | |||||||||||||||||||||
Standard Commercial Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Commerical property | $ | 62,630 | 5.8 | % | $ | 61,226 | 11.4 | % | 59.2 | % | 4.9 | % | 37.5 | % | 0.1 | % | 101.7 | % | 80.9 | % | $ | (1,537 | ) | |||||||||||||||||||||
Workers compensation | 65,210 | (4.9 | )% | 68,993 | 6.4 | % | 64.8 | % | 15.7 | % | 29.8 | % | 2.0 | % | 112.1 | % | 118.3 | % | (7,255 | ) | ||||||||||||||||||||||||
General liability | 118,176 | 7.2 | % | 111,591 | 11.9 | % | 30.3 | % | 16.6 | % | 33.7 | % | 0.1 | % | 80.7 | % | 94.9 | % | 19,316 | |||||||||||||||||||||||||
Auto | 87,412 | 3.7 | % | 83,472 | 8.8 | % | 53.8 | % | 7.6 | % | 32.0 | % | 0.1 | % | 93.5 | % | 95.3 | % | 4,193 | |||||||||||||||||||||||||
Business owners policies | 21,964 | 10.1 | % | 21,279 | 14.2 | % | 70.4 | % | 10.2 | % | 37.2 | % | 0.0 | % | 117.7 | % | 76.0 | % | (4,027 | ) | ||||||||||||||||||||||||
Bonds | 5,313 | (1.8 | )% | 4,734 | (0.9 | )% | 16.5 | % | 3.6 | % | 64.0 | % | 0.0 | % | 84.1 | % | 79.4 | % | 382 | |||||||||||||||||||||||||
Other | 3,154 | 4.1 | % | 3,213 | 7.3 | % | (1.1 | )% | 0.3 | % | 51.8 | % | 0.0 | % | 51.0 | % | 49.0 | % | 1,606 | |||||||||||||||||||||||||
Total | $ | 363,860 | 3.8 | % | $ | 354,507 | 9.9 | % | 49.5 | % | 11.6 | % | 34.0 | % | 0.4 | % | 95.5 | % | 95.6 | % | $ | 12,677 | ||||||||||||||||||||||
Total Standard Operations | $ | 442,041 | 2.9 | % | $ | 429,051 | 8.3 | % | 53.3 | % | 10.9 | % | 32.7 | % | 0.4 | % | 97.3 | % | 97.0 | % | $ | 7,174 | ||||||||||||||||||||||
E&S | $ | 37,782 | 15.7 | % | $ | 34,574 | 15.1 | % | 51.0 | % | 14.0 | % | 34.9 | % | 0.0 | % | 99.9 | % | 106.8 | % | $ | - | ||||||||||||||||||||||
Total Insurance Operations | $ | 479,823 | 3.8 | % | $ | 463,625 | 8.8 | % | 53.1 | % | 11.1 | % | 33.0 | % | 0.3 | % | 97.5 | % | 97.7 | % | $ | 6,101 | ||||||||||||||||||||||
Note: Some amounts may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid | $ | 221,989 | $ | 207,023 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid | 44,075 | 43,620 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid | $ | 266,064 | $ | 250,643 | ||||||||||||||||||||||||||||||||||||||||
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2014 Statutory Results by Line of Business
Year-to-date June 2014 (unaudited)
Net | Net | Underwriting | Dividends to | Combined | Combined | |||||||||||||||||||||||||||||||||||||||
Premiums | Percent | Premiums | Percent | Loss | LAE | Expense | Policyholders | Ratio | Ratio | Underwriting | ||||||||||||||||||||||||||||||||||
($ in thousands) | Written | Change | Earned | Change | Ratio | Ratio | Ratio | Ratio | 2014 | 2013 | Gain/(Loss) | |||||||||||||||||||||||||||||||||
Standard Personal Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Homeowners | $ | 65,636 | 4.3 | % | $ | 66,874 | 6.4 | % | 81.9 | % | 8.3 | % | 32.8 | % | 0.0 | % | 123.0 | % | 97.8 | % | $ | (14,969 | ) | |||||||||||||||||||||
Auto | 75,969 | (2.4 | )% | 76,248 | (0.9 | )% | 60.4 | % | 9.6 | % | 30.6 | % | 0.0 | % | 100.6 | % | 109.2 | % | (365 | ) | ||||||||||||||||||||||||
Other (including flood) | 3,914 | (41.0 | )% | 6,238 | (8.6 | )% | 53.8 | % | 8.8 | % | (150.4 | )% | 0.0 | % | (87.8 | )% | (39.6 | )% | 8,487 | |||||||||||||||||||||||||
Total | $ | 145,519 | (1.3 | )% | $ | 149,362 | 1.9 | % | 69.8 | % | 8.5 | % | 27.0 | % | 0.0 | % | 105.3 | % | 97.6 | % | $ | (6,847 | ) | |||||||||||||||||||||
Standard Commercial Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Commerical property | $ | 126,726 | 8.4 | % | $ | 121,412 | 12.1 | % | 75.4 | % | 5.0 | % | 35.9 | % | 0.1 | % | 116.4 | % | 83.7 | % | $ | (21,757 | ) | |||||||||||||||||||||
Workers compensation | 141,181 | (2.0 | )% | 138,405 | 5.7 | % | 64.7 | % | 15.6 | % | 26.7 | % | 1.8 | % | 108.8 | % | 118.6 | % | (12,941 | ) | ||||||||||||||||||||||||
General liability | 237,680 | 8.2 | % | 220,409 | 11.6 | % | 31.6 | % | 16.6 | % | 32.4 | % | 0.1 | % | 80.7 | % | 95.4 | % | 37,029 | |||||||||||||||||||||||||
Auto | 176,535 | 6.3 | % | 165,688 | 9.7 | % | 55.9 | % | 7.6 | % | 30.6 | % | 0.1 | % | 94.2 | % | 96.6 | % | 6,346 | |||||||||||||||||||||||||
Business owners policies | 44,088 | 9.4 | % | 42,148 | 13.4 | % | 76.9 | % | 10.3 | % | 36.5 | % | 0.0 | % | 123.7 | % | 76.5 | % | (10,693 | ) | ||||||||||||||||||||||||
Bonds | 10,180 | (1.8 | )% | 9,490 | (0.5 | )% | 16.4 | % | 6.1 | % | 58.4 | % | 0.0 | % | 80.8 | % | 78.7 | % | 1,421 | |||||||||||||||||||||||||
Other | 6,819 | 5.5 | % | 6,396 | 6.9 | % | (0.8 | )% | 0.2 | % | 47.0 | % | 0.0 | % | 46.5 | % | 43.5 | % | 3,223 | |||||||||||||||||||||||||
Total | $ | 743,210 | 5.6 | % | $ | 703,948 | 9.9 | % | 53.6 | % | 11.6 | % | 32.2 | % | 0.4 | % | 97.8 | % | 96.6 | % | $ | 2,628 | ||||||||||||||||||||||
Total Standard Operations | $ | 888,729 | 4.4 | % | $ | 853,310 | 8.4 | % | 56.4 | % | 11.1 | % | 31.4 | % | 0.3 | % | 99.2 | % | 96.9 | % | $ | (4,220 | ) | |||||||||||||||||||||
E&S | $ | 67,844 | 11.1 | % | $ | 66,810 | 11.2 | % | 49.0 | % | 14.4 | % | 35.4 | % | 0.0 | % | 98.8 | % | 102.6 | % | $ | 406 | ||||||||||||||||||||||
Total Insurance Operations | $ | 956,573 | 4.9 | % | $ | 920,120 | 8.6 | % | 55.9 | % | 11.3 | % | 31.7 | % | 0.3 | % | 99.2 | % | 97.3 | % | $ | (3,813 | ) | |||||||||||||||||||||
Note: Some amounts may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid | $ | 435,286 | $ | 394,308 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid | 88,839 | 88,609 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid | $ | 524,125 | $ | 482,917 | ||||||||||||||||||||||||||||||||||||||||
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2014 Net Catastrophe Losses and Prior Year Casualty Reserve Development
Statutory Results by Line of Business
(unaudited)
Quarter Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Net Catastrophe Losses Incurred | June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||||||||||||||
($ 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 | $ | 12,733 | 17.1 | % | $ | 7,868 | 10.7 | % | $ | 21,013 | 14.1 | % | $ | 8,403 | 5.7 | % | ||||||||||||||||
Standard Commercial Lines | $ | 12,781 | 3.6 | % | $ | 9,195 | 2.8 | % | $ | 38,687 | 5.5 | % | $ | 9,933 | 1.6 | % | ||||||||||||||||
Total Standard Operations | $ | 25,514 | 5.9 | % | $ | 17,063 | 4.3 | % | $ | 59,700 | 7.0 | % | $ | 18,336 | 2.3 | % | ||||||||||||||||
E&S | $ | 1,688 | 4.9 | % | $ | 2,557 | 8.5 | % | $ | 1,874 | 2.8 | % | $ | 2,860 | 4.8 | % | ||||||||||||||||
Total Insurance Operations | $ | 27,202 | 5.9 | % | $ | 19,620 | 4.6 | % | $ | 61,574 | 6.7 | % | $ | 21,196 | 2.5 | % | ||||||||||||||||
Prior Year Casualty Reserve Development | Quarter Ended | Six Months Ended | ||||||||||||||||||||||||||||||
(Favorable) / Unfavorable | June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||||||||||||||
($ 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 | $ | (2,000 | ) | (2.7 | )% | $ | 1,000 | 1.4 | % | $ | (4,000 | ) | (2.7 | )% | $ | (1,500 | ) | (1.0 | )% | |||||||||||||
Standard Commercial Lines | $ | (15,500 | ) | (4.4 | )% | $ | (5,000 | ) | (1.5 | )% | $ | (27,500 | ) | (3.9 | )% | $ | (4,500 | ) | (0.7 | )% | ||||||||||||
Total Standard Operations | $ | (17,500 | ) | (4.1 | )% | $ | (4,000 | ) | (0.9 | )% | $ | (31,500 | ) | (3.7 | )% | $ | (6,000 | ) | (0.7 | )% | ||||||||||||
E&S | $ | - | 0.0 | % | $ | 2,000 | 6.7 | % | $ | - | 0.0 | % | $ | 2,500 | 4.2 | % | ||||||||||||||||
Total Insurance Operations | $ | (17,500 | ) | (3.8 | )% | $ | (2,000 | ) | (0.4 | )% | $ | (31,500 | ) | (3.4 | )% | $ | (3,500 | ) | (0.4 | )% | ||||||||||||
Note: Some amounts may not foot due to rounding. |
Selective Insurance Group, Inc. & Consolidated Subsidiaries Consolidated Balance Sheets | ||||||||
($ in thousands) | (Unaudited) June 30, 2014 | December 31, 2013 | ||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed income securities, held-to-maturity – at carrying value (fair value: $385,502 – 2014; $416,981 – 2013) | $ | 364,938 | 392,879 | |||||
Fixed income securities, available-for-sale – at fair value (amortized cost: $3,792,036 – 2014; $3,675,977 – 2013) | 3,890,200 | 3,715,536 | ||||||
Equity securities, available-for-sale – at fair value (cost: $166,214 – 2014; $155,350 – 2013) | 211,348 | 192,771 | ||||||
Short-term investments (at cost which approximates fair value) | 166,488 | 174,251 | ||||||
Other investments | 106,125 | 107,875 | ||||||
Total investments | 4,739,099 | 4,583,312 | ||||||
Cash | 1,547 | 193 | ||||||
Interest and dividends due or accrued | 37,747 | 37,382 | ||||||
Premiums receivable, net of allowance for uncollectible accounts of: $3,733 – 2014; $4,442 – 2013 | 589,617 | 524,870 | ||||||
Reinsurance recoverable, net | 558,758 | 550,897 | ||||||
Prepaid reinsurance premiums | 148,256 | 143,000 | ||||||
Current federal income tax | — | 512 | ||||||
Deferred federal income tax | 97,401 | 122,613 | ||||||
Property and equipment – at cost, net of accumulated depreciation and amortization of: $184,748 – 2014; $179,192 – 2013 | 53,836 | 50,834 | ||||||
Deferred policy acquisition costs | 182,087 | 172,981 | ||||||
Goodwill | 7,849 | 7,849 | ||||||
Other assets | 74,388 | 75,727 | ||||||
Total assets | $ | 6,490,585 | 6,270,170 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Reserve for loss and loss expenses | $ | 3,451,306 | 3,349,770 | |||||
Unearned premiums | 1,100,864 | 1,059,155 | ||||||
Notes payable | 392,290 | 392,414 | ||||||
Current federal income tax | 10,150 | — | ||||||
Accrued salaries and benefits | 84,870 | 111,427 | ||||||
Other liabilities | 213,030 | 203,476 | ||||||
Total liabilities | $ | 5,252,510 | 5,116,242 | |||||
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: 99,697,374 – 2014; 99,120,235 – 2013 | 199,395 | 198,240 | ||||||
Additional paid-in capital | 298,352 | 288,182 | ||||||
Retained earnings | 1,234,462 | 1,202,015 | ||||||
Accumulated other comprehensive income | 68,012 | 24,851 | ||||||
Treasury stock – at cost (shares: 43,323,441– 2014; 43,198,622 – 2013) | (562,146 | ) | (559,360 | ) | ||||
Total stockholders’ equity | 1,238,075 | 1,153,928 | ||||||
Commitments and contingencies | ||||||||
Total liabilities and stockholders’ equity | $ | 6,490,585 | 6,270,170 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Income
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
($ in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | ||||||||||||||||
Net premiums earned | $ | 463,625 | 426,252 | 920,120 | 847,192 | |||||||||||
Net investment income earned | 36,774 | 34,003 | 72,308 | 66,873 | ||||||||||||
Net realized gains: | ||||||||||||||||
Net realized investment gains | 4,958 | 5,709 | 13,139 | 11,013 | ||||||||||||
Other-than-temporary impairments | (419 | ) | (508 | ) | (1,382 | ) | (2,427 | ) | ||||||||
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income | — | (47 | ) | — | (77 | ) | ||||||||||
Total net realized gains | 4,539 | 5,154 | 11,757 | 8,509 | ||||||||||||
Other income | 1,911 | 3,536 | 11,735 | 6,320 | ||||||||||||
Total revenues | 506,849 | 468,945 | 1,015,920 | 928,894 | ||||||||||||
Expenses: | ||||||||||||||||
Loss and loss expenses incurred | 297,795 | 279,594 | 618,341 | 549,443 | ||||||||||||
Policy acquisition costs | 155,173 | 143,728 | 304,439 | 283,256 | ||||||||||||
Interest expense | 5,425 | 5,570 | 10,986 | 11,401 | ||||||||||||
Other expenses | 8,935 | 3,852 | 17,549 | 19,725 | ||||||||||||
Total expenses | 467,328 | 432,744 | 951,315 | 863,825 | ||||||||||||
Income from continuing operations, before federal income tax | 39,521 | 36,201 | 64,605 | 65,069 | ||||||||||||
Federal income tax expense: | ||||||||||||||||
Current | 8,781 | 6,221 | 15,319 | 13,674 | ||||||||||||
Deferred | 1,399 | 2,858 | 1,971 | 1,968 | ||||||||||||
Total federal income tax expense | 10,180 | 9,079 | 17,290 | 15,642 | ||||||||||||
Net income from continuing operations | 29,341 | 27,122 | 47,315 | 49,427 | ||||||||||||
Loss on disposal of discontinued operations, net of tax of $(538) - 2013 | ||||||||||||||||
— | — | — | (997 | ) | ||||||||||||
Net income | $ | 29,341 | 27,122 | 47,315 | 48,430 | |||||||||||
Earnings per share: | ||||||||||||||||
Basic net income from continuing operations | $ | 0.52 | 0.49 | 0.84 | 0.89 | |||||||||||
Basic net loss from discontinued operations | — | — | — | (0.02 | ) | |||||||||||
Basic net income | $ | 0.52 | 0.49 | 0.84 | 0.87 | |||||||||||
Diluted net income from continuing operations | $ | 0.51 | 0.48 | 0.83 | 0.88 | |||||||||||
Diluted net loss from discontinued operations | — | — | — | (0.02 | ) | |||||||||||
Diluted net income | $ | 0.51 | 0.48 | 0.83 | 0.86 | |||||||||||
Dividends to stockholders | $ | 0.13 | 0.13 | 0.26 | 0.26 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Comprehensive Income | Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
($ in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income | $ | 29,341 | 27,122 | 47,315 | 48,430 | |||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Unrealized gains (losses) on investment securities: | ||||||||||||||||
Unrealized holding gains (losses) arising during period | 29,329 | (59,353 | ) | 50,755 | (56,959 | ) | ||||||||||
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income | — | 31 | — | 50 | ||||||||||||
Amount reclassified into net income: | ||||||||||||||||
Held-to-maturity securities | (144 | ) | (399 | ) | (440 | ) | (865 | ) | ||||||||
Non-credit other-than-temporary impairments | 305 | 3 | 305 | 8 | ||||||||||||
Realized gains on available for sale securities | (3,255 | ) | (3,438 | ) | (7,954 | ) | (7,322 | ) | ||||||||
Total unrealized gains (losses) on investment securities | 26,235 | (63,156 | ) | 42,666 | (65,088 | ) | ||||||||||
Defined benefit pension and post-retirement plans: | ||||||||||||||||
Net actuarial gain | — | — | — | 28,600 | ||||||||||||
Amounts reclassified into net income: | ||||||||||||||||
Net actuarial loss | 248 | 513 | 495 | 1,709 | ||||||||||||
Prior service cost | — | — | — | 6 | ||||||||||||
Curtailment expense | — | — | — | 11 | ||||||||||||
Total defined benefit pension and post-retirement plans | 248 | 513 | 495 | 30,326 | ||||||||||||
Other comprehensive income (loss) | 26,483 | (62,643 | ) | 43,161 | (34,762 | ) | ||||||||||
Comprehensive income (loss) | $ | 55,824 | (35,521 | ) | 90,476 | 13,668 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Stockholders’ Equity | Six Months Ended June 30, | |||||||
($ in thousands) | 2014 | 2013 | ||||||
Common stock: | ||||||||
Beginning of year | $ | 198,240 | 196,388 | |||||
Dividend reinvestment plan (shares: 29,949 – 2014; 33,514 – 2013) | 60 | 67 | ||||||
Stock purchase and compensation plans (shares: 547,190 – 2014; 682,661 – 2013) | 1,095 | 1,366 | ||||||
End of period | 199,395 | 197,821 | ||||||
Additional paid-in capital: | ||||||||
Beginning of year | 288,182 | 270,654 | ||||||
Dividend reinvestment plan | 642 | 703 | ||||||
Stock purchase and compensation plans | 9,528 | 10,657 | ||||||
End of period | 298,352 | 282,014 | ||||||
Retained earnings: | ||||||||
Beginning of year | 1,202,015 | 1,125,154 | ||||||
Net income | 47,315 | 48,430 | ||||||
Dividends to stockholders ($0.26 per share – 2014 and 2013) | (14,868 | ) | (14,723 | ) | ||||
End of period | 1,234,462 | 1,158,861 | ||||||
Accumulated other comprehensive income: | ||||||||
Beginning of year | 24,851 | 54,040 | ||||||
Other comprehensive income (loss) | 43,161 | (34,762 | ) | |||||
End of period | 68,012 | 19,278 | ||||||
Treasury stock: | ||||||||
Beginning of year | (559,360 | ) | (555,644 | ) | ||||
Acquisition of treasury stock (shares: 124,819 – 2014; 151,113 – 2013) | (2,786 | ) | (3,285 | ) | ||||
End of period | (562,146 | ) | (558,929 | ) | ||||
Total stockholders’ equity | $ | 1,238,075 | 1,099,045 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Cash Flow | Six Months Ended June 30, | |||||||
($ in thousands) | 2014 | 2013 | ||||||
Operating Activities: | ||||||||
Net Income | $ | 47,315 | 48,430 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 18,912 | 23,103 | ||||||
Sale of renewal rights | (8,000 | ) | — | |||||
Loss on disposal of discontinued operations | — | 997 | ||||||
Stock-based compensation expense | 6,102 | 6,189 | ||||||
Undistributed (gains) losses of equity method investments | (138 | ) | 419 | |||||
Net realized gains | (11,757 | ) | (8,509 | ) | ||||
Retirement income plan curtailment expense | — | 16 | ||||||
Changes in assets and liabilities: | ||||||||
Increase in reserve for loss and loss expenses, net of reinsurance recoverables | 93,675 | 69,790 | ||||||
Increase in unearned premiums, net of prepaid reinsurance and advance premiums | 36,997 | 65,225 | ||||||
Decrease in net federal income taxes | 12,634 | 3,171 | ||||||
Increase in premiums receivable | (64,747 | ) | (84,135 | ) | ||||
Increase in deferred policy acquisition costs | (9,106 | ) | (9,555 | ) | ||||
Decrease in interest and dividends due or accrued | (361 | ) | (1,066 | ) | ||||
Decrease in accrued salaries and benefits | (26,557 | ) | (6,173 | ) | ||||
Decrease in accrued insurance expenses | (16,872 | ) | (5,478 | ) | ||||
Other-net | (5,425 | ) | (4,526 | ) | ||||
Net adjustments | 25,357 | 49,468 | ||||||
Net cash provided by operating activities | 72,672 | 97,898 | ||||||
Investing Activities: | ||||||||
Purchase of fixed income securities, available-for-sale | (339,362 | ) | (530,402 | ) | ||||
Purchase of equity securities, available-for-sale | (111,886 | ) | (42,546 | ) | ||||
Purchase of other investments | (6,039 | ) | (4,393 | ) | ||||
Purchase of short-term investments | (764,692 | ) | (1,116,873 | ) | ||||
Sale of subsidiary | — | 1,225 | ||||||
Sale of fixed income securities, available-for-sale | 19,557 | 6,851 | ||||||
Sale of short-term investments | 772,455 | 1,144,853 | ||||||
Redemption and maturities of fixed income securities, held-to-maturity | 28,595 | 48,186 | ||||||
Redemption and maturities of fixed income securities, available-for-sale | 222,568 | 286,905 | ||||||
Sale of equity securities, available-for-sale | 111,996 | 42,206 | ||||||
Distributions from other investments | 7,726 | 6,077 | ||||||
Purchase of property and equipment | (6,628 | ) | (6,761 | ) | ||||
Sale of renewal rights | 8,000 | — | ||||||
Net cash used in investing activities | (57,710 | ) | (164,672 | ) | ||||
Financing Activities: | ||||||||
Dividends to stockholders | (13,914 | ) | (13,668 | ) | ||||
Acquisition of treasury stock | (2,786 | ) | (3,285 | ) | ||||
Net proceeds from stock purchase and compensation plans | 3,091 | 3,769 | ||||||
Proceeds from issuance of notes payable, net of debt issuance costs | — | 178,435 | ||||||
Repayment of notes payable | — | (100,000 | ) | |||||
Excess tax benefits from share-based payment arrangements | 955 | 1,467 | ||||||
Repayment of capital lease obligations | (954 | ) | — | |||||
Net cash (used in) provided by financing activities | (13,608 | ) | 66,718 | |||||
Net increase (decrease) in cash | 1,354 | (56 | ) | |||||
Cash, beginning of year | 193 | 210 | ||||||
Cash, end of period | $ | 1,547 | 154 |
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Statutory Balance Sheets
(unaudited)
($ in thousands) | June 30, 2014 | June 30, 2013 | December 31, 2013 | |||||||||
ASSETS | ||||||||||||
Bonds | $ | 4,094,993 | 3,794,994 | 4,010,464 | ||||||||
Common stocks | 211,348 | 172,064 | 192,771 | |||||||||
Affiliated mortgage loan | 36,346 | 37,086 | 36,721 | |||||||||
Other investments | 172,089 | 175,080 | 173,856 | |||||||||
Short-term investments | 137,181 | 147,071 | 158,827 | |||||||||
Total investments | 4,651,957 | 4,326,295 | 4,572,639 | |||||||||
Cash on hand and in banks | (18,072 | ) | (34,417 | ) | (31,186 | ) | ||||||
Interest and dividends due and accrued | 37,642 | 36,361 | 37,267 | |||||||||
Premiums receivable | 586,586 | 567,218 | 522,907 | |||||||||
Reinsurance recoverable on paid losses and expenses | 9,995 | 8,087 | 10,059 | |||||||||
Deferred tax recoverable | 149,770 | 157,856 | 154,320 | |||||||||
EDP equipment | 667 | 1,017 | 913 | |||||||||
Equities and deposits in pools and associations | 9,595 | 6,800 | 9,555 | |||||||||
Receivable for sold securities | 7 | 18,730 | 7 | |||||||||
Other assets | 26,544 | 24,017 | 30,671 | |||||||||
Total assets | $ | 5,454,691 | 5,111,964 | 5,307,152 | ||||||||
LIABILITIES | ||||||||||||
Reserve for losses | $ | 2,420,474 | 2,282,379 | 2,341,476 | ||||||||
Reinsurance payable on paid loss and loss expense | 2,853 | 2,247 | 2,557 | |||||||||
Reserve for loss expenses | 471,202 | 438,734 | 455,983 | |||||||||
Unearned premiums | 952,608 | 907,178 | 916,155 | |||||||||
Reserve for commissions payable | 54,191 | 47,100 | 63,482 | |||||||||
Ceded balances payable | 34,379 | 31,243 | 33,721 | |||||||||
Federal income tax payable | 10,953 | 21,415 | 27,749 | |||||||||
Premium and other taxes payable | 20,289 | 24,330 | 27,870 | |||||||||
Borrowed money | 58,042 | 58,042 | 58,044 | |||||||||
Reserve for dividends to policyholders | 2,443 | 2,334 | 2,070 | |||||||||
Reserves for unauthorized reinsurance | 2,735 | 7,498 | 2,735 | |||||||||
Payable for securities | 30,125 | 9,596 | - | |||||||||
Funds withheld on account of others | 7,560 | 8,080 | 6,623 | |||||||||
Accrued salaries and benefits | 46,806 | 44,601 | 65,053 | |||||||||
Other liabilities | 47,070 | 56,575 | 47,203 | |||||||||
Total liabilities | 4,161,730 | 3,941,352 | 4,050,721 | |||||||||
POLICYHOLDERS' SURPLUS | ||||||||||||
Capital | 42,725 | 42,725 | 42,725 | |||||||||
Paid in surplus | 492,869 | 492,869 | 492,869 | |||||||||
Unassigned surplus | 757,367 | 635,018 | 720,837 | |||||||||
Total policyholders' surplus | 1,292,961 | 1,170,612 | 1,256,431 | |||||||||
Total liabilities and policyholders' surplus | $ | 5,454,691 | 5,111,964 | 5,307,152 |
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Statutory Statements Of Income
(unaudited)
Quarter Ended June | Six Months Ended June | |||||||||||||||||||||||||||||||
($ in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||
UNDERWRITING | ||||||||||||||||||||||||||||||||
Net premiums written | $ | 479,823 | 462,177 | 956,573 | 912,301 | |||||||||||||||||||||||||||
Net premiums earned | 463,625 | 426,252 | 920,120 | 847,192 | ||||||||||||||||||||||||||||
Net losses paid | 221,989 | 207,023 | 435,286 | 394,308 | ||||||||||||||||||||||||||||
Change in reserve for losses | 24,057 | 24,363 | 78,998 | 55,521 | ||||||||||||||||||||||||||||
Net losses incurred | 246,046 | 53.1 | % | 231,386 | 54.3 | % | 514,284 | 55.9 | % | 449,829 | 53.1 | % | ||||||||||||||||||||
Net loss expenses paid | 44,075 | 43,620 | 88,839 | 88,609 | ||||||||||||||||||||||||||||
Change in reserve for loss expenses | 7,675 | 4,689 | 15,219 | 11,173 | ||||||||||||||||||||||||||||
Net loss expenses incurred | 51,750 | 11.1 | % | 48,309 | 11.3 | % | 104,058 | 11.3 | % | 99,782 | 11.8 | % | ||||||||||||||||||||
Net underwriting expenses incurred | 159,413 | 33.2 | % | 150,140 | 32.6 | % | 313,203 | 32.8 | % | 298,480 | 32.8 | % | ||||||||||||||||||||
Total deductions | 457,209 | 429,835 | 931,545 | 848,091 | ||||||||||||||||||||||||||||
Statutory underwriting gain / (loss) | 6,416 | (3,583 | ) | (11,425 | ) | (899 | ) | |||||||||||||||||||||||||
Net loss from premium balances charged off | (895 | ) | (616 | ) | (1,769 | ) | (1,350 | ) | ||||||||||||||||||||||||
Finance charges and other income | 2,129 | 3,746 | 12,168 | 6,678 | ||||||||||||||||||||||||||||
Total other income | 1,234 | -0.2 | % | 3,130 | -0.7 | % | 10,399 | -1.1 | % | 5,328 | -0.6 | % | ||||||||||||||||||||
Policyholders' dividends incurred | (1,549 | ) | 0.3 | % | (981 | ) | 0.2 | % | (2,787 | ) | 0.3 | % | (2,067 | ) | 0.2 | % | ||||||||||||||||
Total underwriting gain / (loss) | 6,101 | 97.5 | % | (1,434 | ) | 97.7 | % | (3,813 | ) | 99.2 | % | 2,362 | 97.3 | % | ||||||||||||||||||
INVESTMENT | ||||||||||||||||||||||||||||||||
Net investment income earned | 36,652 | 34,012 | 72,147 | 67,342 | ||||||||||||||||||||||||||||
Net realized gain | 4,537 | 5,150 | 11,752 | 6,362 | ||||||||||||||||||||||||||||
Total income before income tax | 47,290 | 37,728 | 80,086 | 76,066 | ||||||||||||||||||||||||||||
Federal income tax expense | 7,108 | 16,752 | 12,953 | 32,687 | ||||||||||||||||||||||||||||
Net income | $ | 40,182 | 20,976 | 67,133 | 43,379 | |||||||||||||||||||||||||||
Policyholders' Surplus | ||||||||||||||||||||||||||||||||
Surplus, beginning of period | $ | 1,263,795 | 1,151,959 | 1,256,431 | 1,050,107 | |||||||||||||||||||||||||||
Net income | 40,182 | 20,976 | 67,133 | 43,379 | ||||||||||||||||||||||||||||
Change in deferred taxes | (5,403 | ) | 7,815 | (6,685 | ) | 8,069 | ||||||||||||||||||||||||||
Change in unrealized gains | 6,451 | (884 | ) | 5,139 | 8,552 | |||||||||||||||||||||||||||
Dividends to stockholders | (14,378 | ) | (6,662 | ) | (28,754 | ) | (18,782 | ) | ||||||||||||||||||||||||
Paid in surplus | - | - | - | 57,125 | ||||||||||||||||||||||||||||
Change in non-admitted assets | 2,033 | (3,290 | ) | (867 | ) | 13,429 | ||||||||||||||||||||||||||
Change in Overfunded Contra Asset | (1,546 | ) | (1,184 | ) | (3,093 | ) | (9,907 | ) | ||||||||||||||||||||||||
Qual Pen Transitional Liability | 1,815 | 1,846 | 3,631 | (33,879 | ) | |||||||||||||||||||||||||||
Excess Plan Transitional Liability | 7 | 17 | 15 | (578 | ) | |||||||||||||||||||||||||||
PRL Plan Transitional Liability | 5 | 19 | 11 | (1,199 | ) | |||||||||||||||||||||||||||
Change in minimum pension liability | - | - | - | 54,755 | ||||||||||||||||||||||||||||
Surplus adjustments | - | - | - | (459 | ) | |||||||||||||||||||||||||||
Net change in surplus for period | 29,166 | 18,653 | 36,530 | 120,505 | ||||||||||||||||||||||||||||
Surplus, end of period | $ | 1,292,961 | 1,170,612 | 1,292,961 | 1,170,612 | |||||||||||||||||||||||||||
Statutory underwriting gain / (loss) | $ | 6,101 | (1,434 | ) | (3,813 | ) | 2,362 | |||||||||||||||||||||||||
Adjustments under GAAP: | ||||||||||||||||||||||||||||||||
Deferred policy acquisition costs | 4,409 | 6,593 | 9,105 | 9,555 | ||||||||||||||||||||||||||||
Pension costs | (98 | ) | (101 | ) | (195 | ) | 5,824 | |||||||||||||||||||||||||
Other, net | (328 | ) | (575 | ) | (28 | ) | (1,097 | ) | ||||||||||||||||||||||||
GAAP underwriting gain | $ | 10,084 | 4,483 | 5,069 | 16,644 | |||||||||||||||||||||||||||
Note: Some amounts or ratios may not foot due to rounding
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments
as of June 30, 2014
(unaudited)
Fund | Inception Year | Original Commitment | Remaining Commitment | Current Market Value | YTD Income | DPI(1) Ratio | TVPI(2) Ratio | |||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||
Silverpeak RE II | 2005 | 20,000,000 | 2,185,689 | 8,195,022 | 1,091,960 | 0.67 | 1.06 | |||||||||||||||||||
Silverpeak RE III | 2008 | 15,000,000 | 7,945,108 | 2,843,778 | 57,659 | 0.04 | 0.44 | |||||||||||||||||||
Total - Real Estate | 35,000,000 | 10,130,797 | 11,038,800 | 1,149,619 | 0.51 | 0.90 | ||||||||||||||||||||
Mezzanine Financing | ||||||||||||||||||||||||||
Neovara Euro Mezz | 2004 | 9,000,000 | - | 579,578 | - | 0.98 | 1.02 | |||||||||||||||||||
GS Mezz V | 2007 | 25,000,000 | 10,223,976 | 7,612,396 | 414,269 | 0.88 | 1.29 | |||||||||||||||||||
New Canaan V | 2012 | 7,000,000 | 2,169,158 | 4,232,020 | 212,689 | 0.20 | 1.07 | |||||||||||||||||||
Centerfield Capital | 2012 | 3,000,000 | 2,077,118 | 818,831 | 34,680 | 0.08 | 0.97 | |||||||||||||||||||
Total - Mezz. Financing | 44,000,000 | 14,470,253 | 13,242,825 | 661,638 | 0.81 | 1.16 | ||||||||||||||||||||
Distressed Debt | ||||||||||||||||||||||||||
Varde VIII | 2006 | 10,000,000 | - | 3,042,718 | 247,442 | 1.02 | 1.32 | |||||||||||||||||||
Distressed Managers III | 2007 | 15,000,000 | 2,971,463 | 6,904,059 | 529,466 | 0.70 | 1.22 | |||||||||||||||||||
Total - Distressed Debt | 25,000,000 | 2,971,463 | 9,946,777 | 776,908 | 0.84 | 1.26 | ||||||||||||||||||||
Private Equity | ||||||||||||||||||||||||||
Prospector | 1997 | 5,000,000 | - | 413,381 | 2,973 | 2.79 | 2.88 | |||||||||||||||||||
Trilantic Capital Partners III | 2004 | 10,000,000 | 1,455,947 | 2,586,420 | 352,522 | 1.63 | 1.90 | |||||||||||||||||||
NB Co-Invest | 2006 | 15,000,000 | 1,509,555 | 7,319,772 | 964,307 | 0.92 | 1.42 | |||||||||||||||||||
Trilantic Capital Partners IV | 2007 | 11,098,351 | 1,339,289 | 9,875,400 | 1,195,341 | 0.89 | 1.79 | |||||||||||||||||||
Trilantic Capital Partners V | 2012 | 7,000,000 | 5,612,282 | 1,193,300 | 42,513 | - | 0.86 | |||||||||||||||||||
Total - Private Equity | 48,098,351 | 9,917,073 | 21,388,273 | 2,557,655 | 1.27 | 1.79 | ||||||||||||||||||||
Private Equity, Secondary Market | ||||||||||||||||||||||||||
NB SOF | 2005 | 12,000,000 | 899,494 | 3,568,214 | 189,191 | 1.02 | 1.34 | |||||||||||||||||||
Vintage IV | 2007 | 20,000,000 | 4,118,809 | 12,373,512 | 381,639 | 0.70 | 1.33 | |||||||||||||||||||
NB SOF II | 2008 | 12,000,000 | 2,211,904 | 7,633,707 | 655,447 | 0.85 | 1.48 | |||||||||||||||||||
Total - Pvt. Eq. Sec. Mkt. | 44,000,000 | 7,230,207 | 23,575,433 | 1,226,277 | 0.82 | 1.38 | ||||||||||||||||||||
Energy/Power Generation | ||||||||||||||||||||||||||
ArcLight I | 2002 | 15,000,000 | - | 93,896 | (36,918 | ) | 1.80 | 1.81 | ||||||||||||||||||
ArcLight II | 2003 | 15,000,000 | 2,295,492 | 500,980 | (507,577 | ) | 1.38 | 1.41 | ||||||||||||||||||
ArcLight III | 2006 | 15,000,000 | 2,037,794 | 6,214,676 | 461,324 | 1.00 | 1.39 | |||||||||||||||||||
Quintana Energy | 2006 | 10,000,000 | 362,821 | 8,306,003 | 1,038,465 | 0.55 | 1.40 | |||||||||||||||||||
ArcLight IV | 2007 | 10,000,000 | 2,287,578 | 2,686,610 | 847,626 | 1.09 | 1.35 | |||||||||||||||||||
Total - Energy/Power Generation | 65,000,000 | 6,983,685 | 17,802,165 | 1,802,920 | 1.24 | 1.49 | ||||||||||||||||||||
Venture Capital | ||||||||||||||||||||||||||
Venture V | 2001 | 9,600,000 | 350,000 | 7,089,121 | 596,206 | 0.60 | 1.36 | |||||||||||||||||||
Total - Venture Capital | 9,600,000 | 350,000 | 7,089,121 | 596,206 | 0.60 | 1.36 | ||||||||||||||||||||
TOTAL - ALTERNATIVE INVESTMENTS | $ | 270,698,351 | 52,053,477 | 104,083,394 | 8,771,224 | 0.97 | 1.38 |
(1) Distributed to paid in ratio
(2) Total value to paid in ratio
Exhibit may not foot due to rounding
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Available-for-Sale Fixed Income Securities
June 30, 2014
(unaudited)
($ in millions) | Fair Value | Unrealized Gain (Loss) | Average Credit Quality | ||||||||
AFS Fixed Income Portfolio: | |||||||||||
U.S. government obligations | $ | 158.8 | 9.3 | AA+ | |||||||
Foreign government obligations | 28.0 | 1.0 | AA- | ||||||||
State and municipal obligations | 1,107.1 | 27.0 | AA+ | ||||||||
Corporate securities | 1,782.6 | 52.4 | A- | ||||||||
Asset-backed securities (“ABS”) | 132.2 | 0.7 | AAA | ||||||||
Mortgage-backed securities (“MBS”) | 681.5 | 7.8 | AA+ | ||||||||
Total AFS fixed income portfolio | $ | 3,890.2 | 98.2 | AA- | |||||||
State and Municipal Obligations: | |||||||||||
General obligations | $ | 528.0 | 12.4 | AA+ | |||||||
Special revenue obligations | 579.1 | 14.6 | AA | ||||||||
Total state and municipal obligations | $ | 1,107.1 | 27.0 | AA+ | |||||||
Corporate Securities: | |||||||||||
Financial | $ | 550.7 | 16.1 | A | |||||||
Industrials | 140.6 | 5.3 | A- | ||||||||
Utilities | 156.4 | 3.8 | BBB+ | ||||||||
Consumer discretionary | 204.9 | 7.0 | A- | ||||||||
Consumer staples | 171.5 | 4.8 | A | ||||||||
Healthcare | 167.8 | 5.4 | A | ||||||||
Materials | 109.3 | 3.5 | BBB+ | ||||||||
Energy | 108.1 | 2.8 | A- | ||||||||
Information technology | 116.0 | 1.8 | A+ | ||||||||
Telecommunications services | 50.4 | 1.5 | BBB+ | ||||||||
Other | 6.9 | 0.4 | AA+ | ||||||||
Total corporate securities | $ | 1,782.6 | 52.4 | A- | |||||||
ABS: | |||||||||||
ABS | $ | 131.8 | 0.7 | AAA | |||||||
Sub-prime ABS1 | 0.4 | — | D | ||||||||
Total ABS | $ | 132.2 | 0.7 | AAA | |||||||
MBS: | |||||||||||
Government guaranteed agency commercial MBS (“CMBS”) | $ | 23.7 | 0.6 | AA+ | |||||||
Other agency CMBS | 10.8 | (0.1 | ) | AA+ | |||||||
Non-agency CMBS | 138.0 | 1.6 | AA+ | ||||||||
Government guaranteed agency residential MBS (“RMBS”) | 41.8 | 1.2 | AA+ | ||||||||
Other agency RMBS | 422.9 | 3.6 | AA+ | ||||||||
Non-agency RMBS | 40.1 | 0.8 | A- | ||||||||
Alternative-A (“Alt-A”) RMBS | 4.2 | 0.1 | A | ||||||||
Total MBS | $ | 681.5 | 7.8 | AA+ |
1Subprime ABS consists of one security whose issuer is currently expected by rating agencies to default on its obligations. We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650.
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Held-to-Maturity Fixed Income Securities
June 30, 2014
(unaudited)
($ in millions) | Fair Value | Carry Value | Unrecognized Holding Gain | Unrealized Gain (Loss) in Accumulated Other Comprehensive Income | Total Unrealized/ Unrecognized Gain | Average Credit Quality | |||||||||||||||||
HTM Fixed Income Portfolio: | |||||||||||||||||||||||
Foreign government obligations | $ | 5.5 | 5.4 | 0.1 | 0.1 | 0.2 | AA+ | ||||||||||||||||
State and municipal obligations | 346.7 | 330.8 | 15.9 | 2.9 | 18.8 | AA | |||||||||||||||||
Corporate securities | 24.5 | 21.5 | 3.0 | (0.3 | ) | 2.7 | A+ | ||||||||||||||||
ABS | 3.3 | 2.7 | 0.6 | (0.6 | ) | — | AAA | ||||||||||||||||
MBS | 5.5 | 4.5 | 1.0 | (0.5 | ) | 0.5 | AAA | ||||||||||||||||
Total HTM fixed income portfolio | $ | 385.5 | 364.9 | 20.6 | 1.6 | 22.2 | AA | ||||||||||||||||
State and Municipal Obligations: | |||||||||||||||||||||||
General obligations | $ | 110.6 | 105.9 | 4.7 | 1.5 | 6.2 | AA | ||||||||||||||||
Special revenue obligations | 236.1 | 224.9 | 11.2 | 1.4 | 12.6 | AA | |||||||||||||||||
Total state and municipal obligations | $ | 346.7 | 330.8 | 15.9 | 2.9 | 18.8 | AA | ||||||||||||||||
Corporate Securities: | |||||||||||||||||||||||
Financial | $ | 2.3 | 1.9 | 0.4 | (0.1 | ) | 0.3 | A- | |||||||||||||||
Industrials | 7.0 | 5.9 | 1.1 | (0.1 | ) | 1.0 | A+ | ||||||||||||||||
Utilities | 13.7 | 12.2 | 1.5 | (0.1 | ) | 1.4 | A+ | ||||||||||||||||
Consumer discretionary | 1.5 | 1.5 | — | — | — | AA | |||||||||||||||||
Total corporate securities | $ | 24.5 | 21.5 | 3.0 | (0.3 | ) | 2.7 | A+ | |||||||||||||||
ABS: | |||||||||||||||||||||||
ABS | $ | 0.8 | 0.8 | — | — | — | AA | ||||||||||||||||
Alt-A ABS | 2.5 | 1.9 | 0.6 | (0.6 | ) | — | AAA | ||||||||||||||||
Total ABS | $ | 3.3 | 2.7 | 0.6 | (0.6 | ) | — | AAA | |||||||||||||||
MBS: | |||||||||||||||||||||||
Non-agency CMBS | $ | 5.5 | 4.5 | 1.0 | (0.5 | ) | 0.5 | AAA | |||||||||||||||
Total MBS | $ | 5.5 | 4.5 | 1.0 | (0.5 | ) | 0.5 | AAA |