EXHIBIT 99.2
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Supplemental Investor Package | ||
First Quarter 2015 | ||
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)
March 31, | March 31, | December 31, | ||||||||||||||||||||||||||||||||||
($ in thousands, except per share data) | 2015 | 2014 | 2014 | |||||||||||||||||||||||||||||||||
Balance Sheet | Market Value | Unrecognized/ Unrealized | Balance Sheet | Market Value | Unrecognized/ Unrealized | Balance Sheet | Market Value | Unrecognized/ Unrealized | ||||||||||||||||||||||||||||
Invested Assets: | ||||||||||||||||||||||||||||||||||||
Corporate bonds 1 | $ | 2,757,212 | 2,761,191 | 69,590 | $ | 2,662,019 | 2,666,877 | 44,021 | $ | 2,693,324 | 2,697,332 | 47,437 | ||||||||||||||||||||||||
Government and Municipal bonds | 1,713,587 | 1,724,144 | 60,852 | 1,535,890 | 1,552,512 | 46,657 | 1,690,935 | 1,702,751 | 59,680 | |||||||||||||||||||||||||||
Total fixed income securities | 4,470,799 | 4,485,335 | 130,442 | 4,197,909 | 4,219,389 | 90,678 | 4,384,259 | 4,400,083 | 107,117 | |||||||||||||||||||||||||||
Equities | 211,571 | 211,571 | 11,954 | 197,687 | 197,687 | 35,317 | 191,400 | 191,400 | 32,389 | |||||||||||||||||||||||||||
Short-term investments | 124,376 | 124,376 | - | 137,733 | 137,733 | - | 131,972 | 131,972 | - | |||||||||||||||||||||||||||
Other investments | 95,020 | 95,020 | - | 106,720 | 106,720 | - | 99,203 | 99,203 | - | |||||||||||||||||||||||||||
Total invested assets | $ | 4,901,766 | 4,916,302 | 142,396 | $ | 4,640,049 | 4,661,529 | 125,995 | $ | 4,806,834 | 4,822,658 | 139,506 | ||||||||||||||||||||||||
Invested assets per $ of stockholders' equity | 3.72 | 3.91 | 3.77 | |||||||||||||||||||||||||||||||||
Total assets | 6,701,145 | 6,370,236 | 6,581,550 | |||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||
Reserve for loss and loss expenses | 3,516,268 | 3,432,432 | 3,477,870 | |||||||||||||||||||||||||||||||||
Unearned premium reserve | 1,132,733 | 1,078,012 | 1,095,819 | |||||||||||||||||||||||||||||||||
Total liabilities | 5,385,207 | 5,184,705 | 5,305,964 | |||||||||||||||||||||||||||||||||
Stockholders' equity | 1,315,938 | 1,185,531 | 1,275,586 | |||||||||||||||||||||||||||||||||
Total debt to capitalization ratio | 23.1 | % | 24.9 | % | 22.9 | % | ||||||||||||||||||||||||||||||
Book value per share | 23.11 | 21.09 | 22.54 | |||||||||||||||||||||||||||||||||
Book value per share excluding unrealized gain or loss on fixed income portfolio | 21.78 | 20.29 | 21.49 | |||||||||||||||||||||||||||||||||
NPW per insurance segment employee | 926 | 925 | 908 | |||||||||||||||||||||||||||||||||
Statutory premiums to surplus ratio | 1.5 | x | 1.5 | x | 1.4 | x | ||||||||||||||||||||||||||||||
Statutory surplus | 1,322,422 | 1,263,795 | 1,307,842 |
1 Includes mortgage-backed and asset-backed securities.
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Selected Income Statement Data
(unaudited)
Quarter Ended March 31, | |||||||||||||||||
($ in thousands, except per share amounts) | 2015 | 2014 | |||||||||||||||
Per diluted share | Per diluted share | ||||||||||||||||
Consolidated | |||||||||||||||||
Revenue | $ | 523,892 | $ | 509,071 | |||||||||||||
Operating income | 27,434 | 0.48 | 13,283 | 0.23 | |||||||||||||
Net realized gains, after tax | 12,274 | 0.21 | 4,691 | 0.08 | |||||||||||||
Net income | 39,708 | 0.69 | 17,974 | 0.31 | |||||||||||||
Operating return on equity | 8.5 | % | 4.5 | % | |||||||||||||
Total Insurance Operations | |||||||||||||||||
Gross premiums written | 604,864 | 565,741 | |||||||||||||||
Net premiums written | 518,088 | 476,750 | |||||||||||||||
Net premiums earned | 476,123 | 456,495 | |||||||||||||||
Underwriting gain | - before tax | 26,021 | (5,015 | ) | |||||||||||||
- after tax | 16,914 | 0.29 | (3,260 | ) | (0.06 | ) | |||||||||||
GAAP combined ratio | 94.5 | % | 101.1 | % | |||||||||||||
Standard Commercial Lines | |||||||||||||||||
Net premiums earned | 365,533 | 349,441 | |||||||||||||||
GAAP combined ratio | 91.8 | % | 101.0 | % | |||||||||||||
Standard Personal Lines | |||||||||||||||||
Net premiums earned | 72,479 | 74,818 | |||||||||||||||
GAAP combined ratio | 103.4 | % | 103.2 | % | |||||||||||||
Excess and Surplus Lines | |||||||||||||||||
Net premiums earned | 38,111 | 32,236 | |||||||||||||||
GAAP combined ratio | 104.1 | % | 97.0 | % | |||||||||||||
Investments | |||||||||||||||||
Net investment income | - before tax | 26,917 | 35,534 | ||||||||||||||
- after tax | 21,208 | 0.37 | 26,486 | 0.46 | |||||||||||||
Effective tax rate | 21.2 | % | 25.5 | % | |||||||||||||
Annualized after-tax yield on investment portfolio | 1.7 | % | 2.3 | % | |||||||||||||
Annualized after-tax, after-interest expense yield | 1.5 | % | 2.0 | % | |||||||||||||
Invested assets per $ of stockholders' equity | 3.72 | 3.91 | |||||||||||||||
Other expenses (net of other income) | |||||||||||||||||
Interest expense | - before tax | (5,479 | ) | (5,561 | ) | ||||||||||||
- after tax | (3,561 | ) | (0.06 | ) | (3,615 | ) | (0.06 | ) | |||||||||
Other Expense - after tax | $ | (7,127 | ) | (0.12 | ) | $ | (6,328 | ) | (0.11 | ) | |||||||
Diluted weighted avg shares outstanding | 57,720 | 57,172 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries
GAAP Insurance Operations Results
(unaudited)
First Quarter | ||||||||||||||||||||||||||||||||
($ in thousands) | Quarter Ended March 31, 2015 | Quarter Ended March 31, 2014 | ||||||||||||||||||||||||||||||
Standard Commercial Lines | Standard Personal Lines | Excess & Surplus Lines | Grand Total | Standard Commercial Lines | Standard Personal Lines | Excess & Surplus Lines | Grand Total | |||||||||||||||||||||||||
Net Premiums Written | 415,258 | 65,024 | 37,806 | 518,088 | 379,350 | 67,338 | 30,062 | 476,750 | ||||||||||||||||||||||||
Net Premiums Earned | 365,533 | 72,479 | 38,111 | 476,123 | 349,441 | 74,818 | 32,236 | 456,495 | ||||||||||||||||||||||||
Loss and Loss Expense Incurred | 206,148 | 52,969 | 25,882 | 284,999 | 242,639 | 58,027 | 19,880 | 320,546 | ||||||||||||||||||||||||
Net Underwriting Expenses Incurred | 127,824 | 21,976 | 13,778 | 163,578 | 109,194 | 19,151 | 11,381 | 139,726 | ||||||||||||||||||||||||
Dividends to Policyholders | 1,525 | - | - | 1,525 | 1,238 | - | - | 1,238 | ||||||||||||||||||||||||
GAAP Underwriting Gain (Loss) | 30,036 | (2,466 | ) | (1,549 | ) | 26,021 | (3,630 | ) | (2,360 | ) | 975 | (5,015 | ) | |||||||||||||||||||
GAAP Ratios | ||||||||||||||||||||||||||||||||
Loss and Loss Expense Ratio | 56.4 | % | 73.1 | % | 67.9 | % | 59.9 | % | 69.4 | % | 77.6 | % | 61.7 | % | 70.2 | % | ||||||||||||||||
Underwriting Expense Ratio | 35.0 | % | 30.3 | % | 36.2 | % | 34.3 | % | 31.2 | % | 25.6 | % | 35.3 | % | 30.6 | % | ||||||||||||||||
Dividends to Policyholders Ratio | 0.4 | % | 0.0 | % | 0.0 | % | 0.3 | % | 0.4 | % | 0.0 | % | 0.0 | % | 0.3 | % | ||||||||||||||||
Combined Ratio | 91.8 | % | 103.4 | % | 104.1 | % | 94.5 | % | 101.0 | % | 103.2 | % | 97.0 | % | 101.1 | % | ||||||||||||||||
Selective Insurance Group, Inc. and Consolidated Subsidiaries
GAAP Investment Income
March 2015 (unaudited)
Quarter Ended: | % | |||||||||||
March | March | Increase/ | ||||||||||
($ in thousands, except per share data) | 2015 | 2014 | (Decrease) | |||||||||
Investment Income: | ||||||||||||
Interest: | ||||||||||||
Fixed Income Securities | $ | 30,967 | 31,028 | (0.2 | ) | |||||||
Short-term | 25 | 19 | 31.6 | |||||||||
Other Investments | (3,540 | ) | 5,218 | (167.8 | ) | |||||||
Dividends | 1,792 | 1,449 | 23.7 | |||||||||
29,244 | 37,714 | (22.5 | ) | |||||||||
Investment Expense | 2,327 | 2,180 | 6.7 | |||||||||
Net Investment Income Before Tax | 26,917 | 35,534 | (24.3 | ) | ||||||||
Tax | 5,709 | 9,048 | (36.9 | ) | ||||||||
Net Investment Income After Tax | $ | 21,208 | 26,486 | (19.9 | ) | |||||||
Net Investment Income per Share | $ | 0.37 | 0.46 | (19.6 | ) | |||||||
Effective Tax Rate | 21.2 | % | 25.5 | % | ||||||||
Average Yields : | ||||||||||||
Fixed Income Securities: | ||||||||||||
Pre Tax | 2.80 | % | 2.99 | % | ||||||||
After Tax | 2.12 | % | 2.24 | % | ||||||||
Portfolio: | ||||||||||||
Pre Tax | 2.22 | % | 3.08 | % | ||||||||
After Tax | 1.75 | % | 2.30 | % | ||||||||
Quarter Ended: | ||||||||||||
March | March | |||||||||||
Net Realized Gains (Losses) | 2015 | 2014 | ||||||||||
Fixed Income Securities | 379 | 35 | ||||||||||
Equity Securities | 19,158 | 7,183 | ||||||||||
Other Investments | (654 | ) | - | |||||||||
Total | 18,883 | 7,218 | ||||||||||
Net of Tax | 12,274 | 4,691 |
As of March 31, 2015 year-to-date new money rates for fixed income securities were 2.4% on a pre-tax basis and 1.8% on an after tax-basis.
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2015 Statutory Results by Line of Business
Quarter Ended March 2015 (unaudited)
($ in thousands) | Net Premiums | Percent Change | Net Premiums | Percent Change | Loss Ratio | LAE Ratio | Underwriting Expense | Dividends to Policyholders | Combined Ratio 2015 | Combined Ratio 2014 | Underwriting Gain/(Loss) | |||||||||||||||||||||||||||||||||
Standard Personal Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Homeowners | $ | 28,078 | (2.2 | )% | $ | 33,721 | 1.3 | % | 67.7 | % | 7.5 | % | 38.5 | % | 0.0 | % | 113.7 | % | 121.7 | % | $ | (2,442 | ) | |||||||||||||||||||||
Auto | 35,580 | (3.4 | )% | 37,010 | (3.2 | )% | 61.0 | % | 11.2 | % | 34.5 | % | 0.0 | % | 106.7 | % | 100.9 | % | (1,978 | ) | ||||||||||||||||||||||||
Other (including flood) | 1,366 | (25.0 | )% | 1,748 | (46.9 | )% | 65.1 | % | 6.1 | % | (189.6 | )% | 0.0 | % | (118.4 | )% | (93.4 | )% | 3,094 | |||||||||||||||||||||||||
Total | $ | 65,024 | (3.4 | )% | $ | 72,479 | (3.1 | )% | 64.1 | % | 9.4 | % | 31.6 | % | 0.0 | % | 105.1 | % | 104.5 | % | $ | (1,326 | ) | |||||||||||||||||||||
Standard Commercial Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Commerical property | $ | 70,898 | 10.6 | % | $ | 64,563 | 7.3 | % | 56.8 | % | 5.0 | % | 36.5 | % | 0.2 | % | 98.5 | % | 131.4 | % | $ | (1,319 | ) | |||||||||||||||||||||
Workers compensation | 83,805 | 10.3 | % | 68,477 | (1.3 | )% | 48.3 | % | 14.7 | % | 25.9 | % | 1.8 | % | 90.7 | % | 105.9 | % | 2,406 | |||||||||||||||||||||||||
General liability | 130,482 | 9.2 | % | 114,971 | 5.7 | % | 22.2 | % | 17.2 | % | 33.5 | % | 0.1 | % | 73.0 | % | 80.7 | % | 25,905 | |||||||||||||||||||||||||
Auto | 96,587 | 8.4 | % | 86,355 | 5.0 | % | 59.6 | % | 8.4 | % | 31.3 | % | 0.1 | % | 99.4 | % | 94.9 | % | (2,670 | ) | ||||||||||||||||||||||||
Business owners policies | 24,252 | 9.6 | % | 22,699 | 8.8 | % | 69.8 | % | 11.5 | % | 37.5 | % | 0.0 | % | 118.8 | % | 129.8 | % | (4,852 | ) | ||||||||||||||||||||||||
Bonds | 5,212 | 7.1 | % | 5,000 | 5.1 | % | 16.4 | % | 4.2 | % | 64.0 | % | 0.0 | % | 84.6 | % | 76.9 | % | 633 | |||||||||||||||||||||||||
Other | 4,022 | 9.7 | % | 3,468 | 9.0 | % | 0.7 | % | 0.2 | % | 51.5 | % | 0.0 | % | 52.4 | % | 42.7 | % | 1,365 | |||||||||||||||||||||||||
Total | $ | 415,258 | 9.5 | % | $ | 365,533 | 4.6 | % | 44.7 | % | 11.8 | % | 32.8 | % | 0.4 | % | 89.7 | % | 100.3 | % | $ | 21,467 | ||||||||||||||||||||||
E&S | $ | 37,806 | 25.8 | % | $ | 38,111 | 18.2 | % | 48.6 | % | 19.1 | % | 34.4 | % | 0.0 | % | 102.1 | % | 97.9 | % | $ | (714 | ) | |||||||||||||||||||||
Total Insurance Operations | $ | 518,088 | 8.7 | % | $ | 476,123 | 4.3 | % | 48.0 | % | 12.0 | % | 32.7 | % | 0.3 | % | 93.0 | % | 100.8 | % | $ | 19,427 | ||||||||||||||||||||||
Note: Some amounts may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid | $ | 194,366 | $ | 213,297 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid | 44,994 | 44,764 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid | $ | 239,360 | $ | 258,061 | ||||||||||||||||||||||||||||||||||||||||
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2015 Net Catastrophe Losses and Prior Year Casualty Reserve Development
Statutory Results by Line of Business
(unaudited)
Quarter Ended | ||||||||||||||||
Net Catastrophe Losses Incurred | March 31, 2015 | March 31, 2014 | ||||||||||||||
($ 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 | ||||||||||||
Standard Personal Lines | $ | 6,318 | 8.7 | % | $ | 8,280 | 11.1 | % | ||||||||
Standard Commercial Lines | $ | 18,650 | 5.1 | % | $ | 25,906 | 7.4 | % | ||||||||
E&S | $ | 352 | 0.9 | % | $ | 186 | 0.6 | % | ||||||||
Total Insurance Operations | $ | 25,320 | 5.3 | % | $ | 34,372 | 7.5 | % |
Prior Year Casualty Reserve Development | Quarter Ended | |||||||||||||||
(Favorable) / Unfavorable | March 31, 2015 | March 31, 2014 | ||||||||||||||
($ 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 | ||||||||||||
Standard Personal Lines | $ | - | 0.0 | % | $ | (2,000 | ) | (2.7 | )% | |||||||
Standard Commercial Lines | $ | (21,000 | ) | (5.7 | )% | $ | (12,000 | ) | (3.4 | )% | ||||||
E&S | $ | 1,000 | 2.6 | % | $ | - | 0.0 | % | ||||||||
Total Insurance Operations | $ | (20,000 | ) | (4.2 | )% | $ | (14,000 | ) | (3.1 | )% |
Note: Some amounts may not foot due to rounding.
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Balance Sheets
(Unaudited) March 31, | December 31, | |||||||
($ in thousands, except share amounts) | 2015 | 2014 | ||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed income securities, held-to-maturity – at carrying value (fair value: $311,093 – 2015; $333,961 – 2014) | $ | 296,557 | 318,137 | |||||
Fixed income securities, available-for-sale – at fair value (amortized cost: $4,059,034 – 2015; $3,975,786 – 2014) | 4,174,242 | 4,066,122 | ||||||
Equity securities, available-for-sale – at fair value (cost: $199,617 – 2015; $159,011 – 2014) | 211,571 | 191,400 | ||||||
Short-term investments (at cost which approximates fair value) | 124,376 | 131,972 | ||||||
Other investments | 95,020 | 99,203 | ||||||
Total investments | 4,901,766 | 4,806,834 | ||||||
Cash | 14,804 | 23,959 | ||||||
Interest and dividends due or accrued | 38,416 | 38,901 | ||||||
Premiums receivable, net of allowance for uncollectible accounts of: $4,201 – 2015; $4,137 – 2014 | 596,888 | 558,778 | ||||||
Reinsurance recoverable, net | 574,982 | 581,548 | ||||||
Prepaid reinsurance premiums | 141,941 | 146,993 | ||||||
Deferred federal income tax | 92,061 | 98,449 | ||||||
Property and equipment – at cost, net of accumulated depreciation and amortization of: $175,896 – 2015; $172,183 – 2014 | 61,855 | 59,416 | ||||||
Deferred policy acquisition costs | 191,956 | 185,608 | ||||||
Goodwill | 7,849 | 7,849 | ||||||
Other assets | 78,627 | 73,215 | ||||||
Total assets | $ | 6,701,145 | 6,581,550 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Reserve for loss and loss expenses | $ | 3,516,268 | 3,477,870 | |||||
Unearned premiums | 1,132,733 | 1,095,819 | ||||||
Notes payable | 394,301 | 379,297 | ||||||
Current federal income tax | 10,627 | 3,921 | ||||||
Accrued salaries and benefits | 142,092 | 158,382 | ||||||
Other liabilities | 189,186 | 190,675 | ||||||
Total liabilities | $ | 5,385,207 | 5,305,964 | |||||
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: 100,430,480 – 2015; 99,947,933 – 2014 | 200,861 | 199,896 | ||||||
Additional paid-in capital | 312,930 | 305,385 | ||||||
Retained earnings | 1,345,035 | 1,313,440 | ||||||
Accumulated other comprehensive income | 23,615 | 19,788 | ||||||
Treasury stock – at cost (shares: 43,482,438 – 2015; 43,353,181 – 2014) | (566,503 | ) | (562,923 | ) | ||||
Total stockholders’ equity | 1,315,938 | 1,275,586 | ||||||
Commitments and contingencies | ||||||||
Total liabilities and stockholders’ equity | $ | 6,701,145 | 6,581,550 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Income
Quarter Ended March 31, | ||||||||
($ in thousands, except per share amounts) | 2015 | 2014 | ||||||
Revenues: | ||||||||
Net premiums earned | $ | 476,123 | 456,495 | |||||
Net investment income earned | 26,917 | 35,534 | ||||||
Net realized gains: | ||||||||
Net realized investment gains | 20,977 | 8,181 | ||||||
Other-than-temporary impairments | (2,094 | ) | (963 | ) | ||||
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income | — | — | ||||||
Total net realized gains | 18,883 | 7,218 | ||||||
Other income | 1,969 | 9,824 | ||||||
Total revenues | 523,892 | 509,071 | ||||||
Expenses: | ||||||||
Loss and loss expense incurred | 284,999 | 320,546 | ||||||
Policy acquisition costs | 164,723 | 149,266 | ||||||
Interest expense | 5,479 | 5,561 | ||||||
Other expenses | 12,401 | 8,614 | ||||||
Total expenses | 467,602 | 483,987 | ||||||
Income before federal income tax | 56,290 | 25,084 | ||||||
Federal income tax expense: | ||||||||
Current | 12,254 | 6,538 | ||||||
Deferred | 4,328 | 572 | ||||||
Total federal income tax expense | 16,582 | 7,110 | ||||||
Net income | $ | 39,708 | 17,974 | |||||
Earnings per share: | ||||||||
Basic net income | $ | 0.70 | 0.32 | |||||
Diluted net income | $ | 0.69 | 0.31 | |||||
Dividends to stockholders | $ | 0.14 | 0.13 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income
Quarter Ended March 31, | ||||||||
($ in thousands) | 2015 | 2014 | ||||||
Net income | $ | 39,708 | 17,974 | |||||
Other comprehensive income, net of tax: | ||||||||
Unrealized gains on investment securities: | ||||||||
Unrealized holding gains arising during period | 15,586 | 21,426 | ||||||
Amount reclassified into net income: | ||||||||
Held-to-maturity securities | (170 | ) | (296 | ) | ||||
Non-credit other-than-temporary impairments | 232 | — | ||||||
Realized gains on available for sale securities | (12,932 | ) | (4,699 | ) | ||||
Total unrealized gains on investment securities | 2,716 | 16,431 | ||||||
Defined benefit pension and post-retirement plans: | ||||||||
Amounts reclassified into net income: | ||||||||
Net actuarial loss | 1,111 | 247 | ||||||
Total defined benefit pension and post-retirement plans | 1,111 | 247 | ||||||
Other comprehensive income | 3,827 | 16,678 | ||||||
Comprehensive income | $ | 43,535 | 34,652 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries
Unaudited Consolidated Statements of Stockholders’ Equity
Quarter Ended March 31, | ||||||||
($ in thousands, except share amounts) | 2015 | 2014 | ||||||
Common stock: | ||||||||
Beginning of year | $ | 199,896 | 198,240 | |||||
Dividend reinvestment plan (shares: 13,533 – 2015; 15,283 – 2014) | 27 | 31 | ||||||
Stock purchase and compensation plans (shares: 469,014 – 2015; 401,179 – 2014) | 938 | 802 | ||||||
End of period | 200,861 | 199,073 | ||||||
Additional paid-in capital: | ||||||||
Beginning of year | 305,385 | 288,182 | ||||||
Dividend reinvestment plan | 346 | 320 | ||||||
Stock purchase and compensation plans | 7,199 | 5,863 | ||||||
End of period | 312,930 | 294,365 | ||||||
Retained earnings: | ||||||||
Beginning of year | 1,313,440 | 1,202,015 | ||||||
Net income | 39,708 | 17,974 | ||||||
Dividends to stockholders ($0.14 per share – 2015; $0.13 per share – 2014) | (8,113 | ) | (7,412 | ) | ||||
End of period | 1,345,035 | 1,212,577 | ||||||
Accumulated other comprehensive income: | ||||||||
Beginning of year | 19,788 | 24,851 | ||||||
Other comprehensive income | 3,827 | 16,678 | ||||||
End of period | 23,615 | 41,529 | ||||||
Treasury stock: | ||||||||
Beginning of year | (562,923 | ) | (559,360 | ) | ||||
Acquisition of treasury stock (shares: 129,257 – 2015; 118,876 – 2014) | (3,580 | ) | (2,653 | ) | ||||
End of period | (566,503 | ) | (562,013 | ) | ||||
Total stockholders’ equity | $ | 1,315,938 | 1,185,531 |
Selective Insurance Group, Inc.
Unaudited Consolidated Statements of Cash Flow
Quarter Ended March 31, | ||||||||
($ in thousands) | 2015 | 2014 | ||||||
Operating Activities: | ||||||||
Net Income | 39,708 | 17,974 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 14,041 | 10,578 | ||||||
Sale of renewal rights | — | (8,000 | ) | |||||
Stock-based compensation expense | 3,681 | 4,176 | ||||||
Undistributed losses (gains) of equity method investments | 3,541 | (33 | ) | |||||
Net realized gains | (18,883 | ) | (7,218 | ) | ||||
Changes in assets and liabilities: | ||||||||
Increase in reserves for loss and loss expenses, net of reinsurance recoverables | 44,964 | 58,938 | ||||||
Increase in unearned premiums, net of prepaid reinsurance | 41,966 | 20,254 | ||||||
Decrease in net federal income taxes | 11,034 | 4,332 | ||||||
Increase in premiums receivable | (38,110 | ) | (29,042 | ) | ||||
Increase in deferred policy acquisition costs | (6,348 | ) | (4,697 | ) | ||||
Decrease in interest and dividends due or accrued | 510 | 414 | ||||||
Decrease in accrued salaries and benefits | (16,290 | ) | (21,869 | ) | ||||
Decrease in accrued insurance expenses | (24,255 | ) | (26,957 | ) | ||||
Increase in other assets and other liabilities | 5,015 | 16,914 | ||||||
Net adjustments | 20,866 | 17,790 | ||||||
Net cash provided by operating activities | 60,574 | 35,764 | ||||||
Investing Activities: | ||||||||
Purchase of fixed income securities, available-for-sale | (238,000 | ) | (182,809 | ) | ||||
Purchase of equity securities, available-for-sale | (150,500 | ) | (61,360 | ) | ||||
Purchase of other investments | (1,724 | ) | (4,615 | ) | ||||
Purchase of short-term investments | (333,550 | ) | (398,348 | ) | ||||
Sale of fixed maturity securities, available-for-sale | 9,305 | 1,302 | ||||||
Sale of short-term investments | 341,146 | 434,865 | ||||||
Redemption and maturities of fixed income securities, held-to-maturity | 20,720 | 9,396 | ||||||
Redemption and maturities of fixed income securities, available-for-sale | 145,661 | 104,358 | ||||||
Sale of equity securities, available-for-sale | 129,052 | 61,523 | ||||||
Distributions from other investments | 5,845 | 5,704 | ||||||
Purchase of property and equipment | (4,064 | ) | (5,699 | ) | ||||
Sale of renewal rights | — | 8,000 | ||||||
Net cash used in investing activities | (76,109 | ) | (27,683 | ) | ||||
Financing Activities: | ||||||||
Dividends to stockholders | (7,591 | ) | (6,948 | ) | ||||
Acquisition of treasury stock | (3,580 | ) | (2,653 | ) | ||||
Net proceeds from stock purchase and compensation plans | 2,271 | 1,261 | ||||||
Proceeds from borrowings | 15,000 | — | ||||||
Excess tax benefits from share-based payment arrangements | 1,398 | 770 | ||||||
Repayment of capital lease obligations | (1,118 | ) | (459 | ) | ||||
Net cash provided by (used in) financing activities | 6,380 | (8,029 | ) | |||||
Net (decrease) increase in cash | (9,155 | ) | 52 | |||||
Cash, beginning of year | 23,959 | 193 | ||||||
Cash, end of period | $ | 14,804 | 245 |
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Statutory Balance Sheets
(unaudited)
($ in thousands) | March 31, 2015 | March 31, 2014 | December 31, 2014 | |||||||||
ASSETS | ||||||||||||
Bonds | $ | 4,299,029 | 4,072,964 | 4,241,580 | ||||||||
Common stocks | 190,937 | 197,688 | 191,400 | |||||||||
Preferred stocks | 20,521 | - | - | |||||||||
Affiliated mortgage loan | 35,765 | 36,534 | 35,961 | |||||||||
Other investments | 147,468 | 172,691 | 152,154 | |||||||||
Short-term investments | 113,117 | 122,118 | 115,342 | |||||||||
Total investments | 4,806,837 | 4,601,995 | 4,736,437 | |||||||||
Cash on hand and in banks | 1,538 | (40,405 | ) | 12,381 | ||||||||
Interest and dividends due and accrued | 38,376 | 36,862 | 38,908 | |||||||||
Premiums receivable | 593,248 | 551,784 | 556,086 | |||||||||
Reinsurance recoverable on paid losses and expenses | 10,919 | 13,068 | 9,570 | |||||||||
Deferred tax recoverable | 143,060 | 154,620 | 147,610 | |||||||||
EDP equipment | 460 | 834 | 518 | |||||||||
Equities and deposits in pools and associations | 10,373 | 8,557 | 9,915 | |||||||||
Receivable for sold securities | 8 | 8 | 34 | |||||||||
Other assets | 27,206 | 26,535 | 26,629 | |||||||||
Total assets | $ | 5,632,025 | 5,353,858 | 5,538,088 | ||||||||
LIABILITIES | ||||||||||||
Reserve for losses | $ | 2,432,544 | 2,396,417 | 2,398,531 | ||||||||
Reinsurance payable on paid loss and loss expense | 3,297 | 2,098 | 2,957 | |||||||||
Reserve for loss expenses | 505,752 | 463,527 | 493,510 | |||||||||
Unearned premiums | 990,791 | 936,409 | 948,826 | |||||||||
Reserve for commissions payable | 46,691 | 41,455 | 70,259 | |||||||||
Ceded balances payable | 29,303 | 29,728 | 29,624 | |||||||||
Federal income tax payable | 23,786 | 31,587 | 20,524 | |||||||||
Premium and other taxes payable | 19,450 | 22,940 | 20,137 | |||||||||
Borrowed money | 60,031 | 58,044 | 45,027 | |||||||||
Reserve for dividends to policyholders | 4,486 | 2,019 | 3,895 | |||||||||
Reserves for unauthorized reinsurance | 7,661 | 2,735 | 7,661 | |||||||||
Payable for securities | 31,790 | 1,773 | 19,950 | |||||||||
Funds withheld on account of others | 7,485 | 7,724 | 7,473 | |||||||||
Accrued salaries and benefits | 48,287 | 46,499 | 64,207 | |||||||||
Other liabilities | 98,249 | 47,108 | 97,665 | |||||||||
Total liabilities | 4,309,603 | 4,090,063 | 4,230,246 | |||||||||
POLICYHOLDERS' SURPLUS | ||||||||||||
Capital | 42,725 | 42,725 | 42,725 | |||||||||
Paid in surplus | 492,869 | 492,869 | 492,869 | |||||||||
Unassigned surplus | 786,828 | 728,201 | 772,248 | |||||||||
Total policyholders' surplus | 1,322,422 | 1,263,795 | 1,307,842 | |||||||||
Total liabilities and policyholders' surplus | $ | 5,632,025 | 5,353,858 | 5,538,088 |
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Statutory Statements Of Income
(unaudited)
Quarter Ended March | ||||||||||||||
($ in thousands) | 2015 | 2014 | ||||||||||||
UNDERWRITING | ||||||||||||||
Net premiums written | $ | 518,088 | 476,750 | |||||||||||
Net premiums earned | 476,123 | 456,495 | ||||||||||||
Net losses paid | 194,366 | 213,297 | ||||||||||||
Change in reserve for losses | 34,014 | 54,941 | ||||||||||||
Net losses incurred | 228,380 | 48.0 | % | 268,238 | 58.8 | % | ||||||||
Net loss expenses paid | 44,994 | 44,764 | ||||||||||||
Change in reserve for loss expenses | 12,243 | 7,544 | ||||||||||||
Net loss expenses incurred | 57,237 | 12.0 | % | 52,308 | 11.4 | % | ||||||||
Net underwriting expenses incurred | 170,938 | 33.0 | % | 153,790 | 32.2 | % | ||||||||
Total deductions | 456,555 | 474,336 | ||||||||||||
Statutory underwriting gain / (loss) | 19,568 | (17,840 | ) | |||||||||||
Net loss from premium balances charged off | (610 | ) | (874 | ) | ||||||||||
Finance charges and other income | 1,994 | 10,038 | ||||||||||||
Total other income | 1,384 | -0.3 | % | 9,164 | -1.9 | % | ||||||||
Policyholders' dividends incurred | (1,525 | ) | 0.3 | % | (1,238 | ) | 0.3 | % | ||||||
Total underwriting gain / (loss) | 19,427 | 93.0 | % | (9,914 | ) | 100.8 | % | |||||||
INVESTMENT | ||||||||||||||
Net investment income earned | 27,127 | 35,495 | ||||||||||||
Net realized gain | 18,883 | 7,215 | ||||||||||||
Total income before income tax | 65,437 | 32,796 | ||||||||||||
Federal income tax expense | 7,261 | 5,845 | ||||||||||||
Net income | $ | 58,176 | 26,951 | |||||||||||
Policyholders' Surplus | ||||||||||||||
Surplus, beginning of period | $ | 1,307,842 | 1,256,431 | |||||||||||
Net income | 58,176 | 26,951 | ||||||||||||
Change in deferred taxes | (10,194 | ) | (1,282 | ) | ||||||||||
Change in net unrealized capital (losses) | (12,910 | ) | (1,312 | ) | ||||||||||
Dividends to stockholders | (14,438 | ) | (14,376 | ) | ||||||||||
Change in non-admitted assets | (7,669 | ) | (2,900 | ) | ||||||||||
Change in Overfunded Contra Asset | (281 | ) | (1,547 | ) | ||||||||||
Qual Pen Trans Liab | 1,846 | 1,816 | ||||||||||||
Excess Plan Trans Liab | 43 | 8 | ||||||||||||
PRL Plan Trans Liab | 7 | 6 | ||||||||||||
Net change in surplus for period | 14,580 | 7,364 | ||||||||||||
Surplus, end of period | $ | 1,322,422 | 1,263,795 | |||||||||||
Statutory underwriting gain / (loss) | $ | 19,427 | (9,914 | ) | ||||||||||
Adjustments under GAAP: | ||||||||||||||
Deferred policy acquisition costs | 6,348 | 4,697 | ||||||||||||
Other, net | 246 | 202 | ||||||||||||
GAAP underwriting gain / (loss) | $ | 26,021 | (5,015 | ) | ||||||||||
Note: Some amounts or ratios may not foot due to rounding
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments
as of March 31, 2015
(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 | 2,142,141 | 9,583,009 | 708,523 | 0.67 | 1.12 | ||||||||||||||||||
Silverpeak RE III | 2008 | 15,000,000 | 7,873,466 | 2,403,262 | (174,261 | ) | 0.07 | 0.41 | |||||||||||||||||
Total - Real Estate | 35,000,000 | 10,015,607 | 11,986,271 | 534,262 | 0.52 | 0.94 | |||||||||||||||||||
Mezzanine Financing | |||||||||||||||||||||||||
Neovara Euro Mezz | 2004 | 9,000,000 | - | - | - | 0.98 | 0.98 | ||||||||||||||||||
GS Mezz V | 2007 | 25,000,000 | 10,143,611 | 4,513,832 | (56,366 | ) | 1.08 | 1.32 | |||||||||||||||||
New Canaan V | 2012 | 7,000,000 | 1,611,184 | 2,871,839 | (318,713 | ) | 0.57 | 1.06 | |||||||||||||||||
Centerfield Capital | 2012 | 3,000,000 | 1,843,500 | 977,414 | (7,616 | ) | 0.13 | 0.98 | |||||||||||||||||
Total - Mezz. Financing | 44,000,000 | 13,598,296 | 8,363,086 | (382,695 | ) | 0.94 | 1.15 | ||||||||||||||||||
Distressed Debt | |||||||||||||||||||||||||
Varde VIII | 2006 | 10,000,000 | - | 1,934,398 | 39,955 | 1.16 | 1.35 | ||||||||||||||||||
Distressed Managers III | 2007 | 15,000,000 | 2,982,268 | 5,634,231 | (238,142 | ) | 0.79 | 1.21 | |||||||||||||||||
Total - Distressed Debt | 25,000,000 | 2,982,268 | 7,568,629 | (198,187 | ) | 0.95 | 1.27 | ||||||||||||||||||
Private Equity | �� | ||||||||||||||||||||||||
Prospector | 1997 | 5,000,000 | - | 319,799 | 36,726 | 2.82 | 2.88 | ||||||||||||||||||
Trilantic Capital Partners III | 2004 | 10,000,000 | 1,455,947 | 2,089,035 | (405,995 | ) | 1.63 | 1.85 | |||||||||||||||||
NB Co-Invest | 2006 | 15,000,000 | 1,421,610 | 5,877,247 | - | 1.02 | 1.42 | ||||||||||||||||||
Trilantic Capital Partners IV | 2007 | 11,098,351 | 1,382,106 | 7,126,052 | (923,241 | ) | 1.03 | 1.68 | |||||||||||||||||
Trilantic Capital Partners V | 2012 | 7,000,000 | 4,619,329 | 2,107,325 | (169,113 | ) | - | 0.89 | |||||||||||||||||
Total - Private Equity | 48,098,351 | 8,878,992 | 17,519,458 | (1,461,623 | ) | 1.31 | 1.73 | ||||||||||||||||||
Private Equity, Secondary Market | |||||||||||||||||||||||||
NB SOF | 2005 | 12,000,000 | 899,494 | 3,567,806 | (131 | ) | 1.02 | 1.34 | |||||||||||||||||
Vintage IV | 2007 | 20,000,000 | 4,200,580 | 10,517,998 | (249,716 | ) | 0.81 | 1.35 | |||||||||||||||||
NB SOF II | 2008 | 12,000,000 | 1,939,398 | 6,122,079 | (7,878 | ) | 1.00 | 1.50 | |||||||||||||||||
Total - Pvt. Eq. Sec. Mkt. | 44,000,000 | 7,039,472 | 20,207,883 | (257,724 | ) | 0.92 | 1.39 | ||||||||||||||||||
Energy/Power Generation | |||||||||||||||||||||||||
ArcLight I | 2002 | 15,000,000 | - | 12,455 | - | 1.81 | 1.81 | ||||||||||||||||||
ArcLight II | 2003 | 15,000,000 | 2,295,492 | 280,140 | 4,325 | 1.40 | 1.41 | ||||||||||||||||||
ArcLight III | 2006 | 15,000,000 | 2,037,794 | 3,174,516 | 94,636 | 1.23 | 1.43 | ||||||||||||||||||
Quintana Energy | 2006 | 10,000,000 | 284,272 | 6,636,978 | (1,696,040 | ) | 0.60 | 1.28 | |||||||||||||||||
ArcLight IV | 2007 | 10,000,000 | 2,287,578 | 2,289,449 | (177,507 | ) | 1.20 | 1.42 | |||||||||||||||||
Arclight VI | 2014 | 15,000,000 | 15,000,000 | - | - | ||||||||||||||||||||
Total - Energy/Power Generation | 80,000,000 | 21,905,136 | 12,393,538 | (1,774,586 | ) | 1.32 | 1.49 | ||||||||||||||||||
Venture Capital | |||||||||||||||||||||||||
Venture V | 2001 | 9,600,000 | 350,000 | 6,235,634 | - | 0.73 | 1.40 | ||||||||||||||||||
Total - Venture Capital | 9,600,000 | 350,000 | 6,235,634 | - | 0.73 | 1.40 | |||||||||||||||||||
TOTAL - ALTERNATIVE INVESTMENTS | $ | 285,698,351 | 64,769,770 | 84,274,499 | (3,540,554 | ) | 1.05 | 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
March 31, 2015
(unaudited)
($ in millions) | Fair Value | Unrealized Gain (Loss) | Weighted Average Credit Quality | ||||||||
AFS Fixed Income Portfolio: | |||||||||||
U.S. government and government agencies | $ | 119.5 | 7.3 | AA+ | |||||||
Foreign government | 27.9 | 0.9 | AA- | ||||||||
Obligations of states and political subdivisions | 1,294.4 | 40.3 | AA | ||||||||
Corporate securities | 1,824.2 | 53.6 | A- | ||||||||
Asset-backed securities (“ABS”) | 185.4 | 1.1 | AAA | ||||||||
Mortgage-backed securities (“MBS”) | 722.8 | 12.0 | AA+ | ||||||||
Total AFS fixed income portfolio | $ | 4,174.2 | 115.2 | AA- | |||||||
Obligations of States and Political Subdivisions: | |||||||||||
General obligations | $ | 567.5 | 16.8 | AA+ | |||||||
Special revenue obligations | 726.9 | 23.5 | AA | ||||||||
Total obligations of state and political subdivisions | $ | 1,294.4 | 40.3 | AA | |||||||
Corporate Securities: | |||||||||||
Financial | $ | 610.0 | 15.4 | A | |||||||
Industrials | 144.0 | 5.4 | A- | ||||||||
Utilities | 151.3 | 4.8 | BBB+ | ||||||||
Consumer discretionary | 214.8 | 6.8 | A- | ||||||||
Consumer staples | 165.6 | 4.7 | A- | ||||||||
Healthcare | 162.2 | 6.7 | A | ||||||||
Materials | 108.2 | 3.2 | BBB+ | ||||||||
Energy | 97.7 | 1.4 | A- | ||||||||
Information technology | 122.2 | 3.6 | A | ||||||||
Telecommunications services | 47.5 | 1.5 | BBB+ | ||||||||
Other | 0.7 | 0.1 | AA | ||||||||
Total corporate securities | $ | 1,824.2 | 53.6 | A- | |||||||
ABS: | |||||||||||
ABS | $ | 185.1 | 1.0 | AAA | |||||||
Sub-prime ABS1 | 0.3 | 0.1 | D | ||||||||
Total ABS | $ | 185.4 | 1.1 | AAA | |||||||
MBS: | |||||||||||
Government guaranteed agency commercial MBS (“CMBS”) | $ | 12.8 | 0.3 | AA+ | |||||||
Other agency CMBS | 12.4 | 0.1 | AA+ | ||||||||
Non-agency CMBS | 175.3 | 2.9 | AAA | ||||||||
Government guaranteed agency residential MBS (“RMBS”) | 29.1 | 0.7 | AA+ | ||||||||
Other agency RMBS | 468.5 | 7.8 | AA+ | ||||||||
Non-agency RMBS | 21.2 | 0.2 | BB+ | ||||||||
Alternative-A (“Alt-A”) RMBS | 3.5 | — | A | ||||||||
Total MBS | $ | 722.8 | 12.0 | AA+ |
1 Subprime ABS includes 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
March 31, 2015
(unaudited)
($ in millions) | Fair Value | Carry Value | Unrecognized Holding Gain | Unrealized Gain (Loss) in Accumulated Other Comprehensive Income | Total Unrealized/ Unrecognized Gain | Weighted Average Credit Quality | |||||||||||||||||
HTM Fixed Income Portfolio: | |||||||||||||||||||||||
Foreign government | $ | 5.3 | 5.3 | — | — | — | AA+ | ||||||||||||||||
Obligations of states and political subdivisions | 277.0 | 266.5 | 10.5 | 1.7 | 12.2 | AA | |||||||||||||||||
Corporate securities | 21.2 | 18.3 | 2.9 | (0.2 | ) | 2.7 | A+ | ||||||||||||||||
ABS | 2.5 | 2.1 | 0.4 | (0.4 | ) | — | AAA | ||||||||||||||||
MBS | 5.1 | 4.4 | 0.7 | (0.4 | ) | 0.3 | AAA | ||||||||||||||||
Total HTM fixed income portfolio | $ | 311.1 | 296.6 | 14.5 | 0.7 | 15.2 | AA | ||||||||||||||||
Obligations of states and political subdivisions: | |||||||||||||||||||||||
General obligations | $ | 90.3 | 87.4 | 2.9 | 0.8 | 3.7 | AA | ||||||||||||||||
Special revenue obligations | 186.7 | 179.1 | 7.6 | 0.9 | 8.5 | AA | |||||||||||||||||
Total obligations of states and political subdivisions | $ | 277.0 | 266.5 | 10.5 | 1.7 | 12.2 | AA | ||||||||||||||||
Corporate Securities: | |||||||||||||||||||||||
Financial | $ | 2.2 | 1.9 | 0.3 | (0.1 | ) | 0.2 | A- | |||||||||||||||
Industrials | 6.4 | 5.4 | 1.0 | (0.1 | ) | 0.9 | A+ | ||||||||||||||||
Utilities | 12.6 | 11.0 | 1.6 | — | 1.6 | A+ | |||||||||||||||||
Total corporate securities | $ | 21.2 | 18.3 | 2.9 | (0.2 | ) | 2.7 | A+ | |||||||||||||||
ABS: | |||||||||||||||||||||||
ABS | $ | 0.5 | 0.5 | — | — | — | AA | ||||||||||||||||
Alt-A ABS | 2.0 | 1.6 | 0.4 | (0.4 | ) | — | AAA | ||||||||||||||||
Total ABS | $ | 2.5 | 2.1 | 0.4 | (0.4 | ) | — | AAA | |||||||||||||||
MBS: | |||||||||||||||||||||||
Non-agency CMBS | $ | 5.1 | 4.4 | 0.7 | (0.4 | ) | 0.3 | AAA | |||||||||||||||
Total MBS | $ | 5.1 | 4.4 | 0.7 | (0.4 | ) | 0.3 | AAA |