Exhibit 99.2
Supplemental Investor Package ________________________________________________
First Quarter 2017
Investor Contact: Rohan Pai Senior Vice President, Investor Relations and Treasurer Tel: 973-948-1364 Rohan.Pai @selective.com
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Selective Insurance Group, Inc. & Consolidated Subsidiaries
Selected Balance Sheet Data
(unaudited)
March 31, | March 31, | December 31, | ||||||||||||||||||||||||||||||||||
($ in thousands, except per share amounts) | 2017 | 2016 | 2016 | |||||||||||||||||||||||||||||||||
Unrecognized/ | Unrecognized/ | Unrecognized/ | ||||||||||||||||||||||||||||||||||
Balance | Market | Unrealized | Balance | Market | Unrealized | Balance | Market | Unrealized | ||||||||||||||||||||||||||||
Sheet | Value | Gain | Sheet | Value | Gain | Sheet | Value | Gain | ||||||||||||||||||||||||||||
Invested Assets: | ||||||||||||||||||||||||||||||||||||
Corporate bonds1 | $ | 3,480,965 | 3,482,488 | 34,897 | 3,073,489 | 3,076,144 | 53,348 | $ | 3,332,522 | 3,334,044 | 24,339 | |||||||||||||||||||||||||
Government and Municipal bonds | 1,470,876 | 1,472,856 | 30,350 | 1,690,552 | 1,695,583 | 70,315 | 1,561,574 | 1,563,707 | 18,255 | |||||||||||||||||||||||||||
Total fixed income securities | 4,951,841 | 4,955,344 | 65,247 | 4,764,041 | 4,771,727 | 123,663 | 4,894,096 | 4,897,751 | 42,594 | |||||||||||||||||||||||||||
Equities | 154,918 | 154,918 | 30,304 | 215,789 | 215,789 | 21,611 | 146,753 | 146,753 | 25,864 | |||||||||||||||||||||||||||
Short-term investments | 247,207 | 247,207 | - | 103,132 | 103,132 | - | 221,701 | 221,701 | - | |||||||||||||||||||||||||||
Other investments | 106,796 | 106,796 | - | 80,916 | 80,916 | - | 102,397 | 102,397 | - | |||||||||||||||||||||||||||
Total invested assets | $ | 5,460,762 | 5,464,265 | 95,551 | 5,163,878 | 5,171,564 | 145,274 | $ | 5,364,947 | 5,368,602 | 68,458 | |||||||||||||||||||||||||
Invested assets per $ of stockholders' equity | 3.43 | 3.50 | 3.50 | |||||||||||||||||||||||||||||||||
Total assets | 7,404,096 | 7,022,492 | 7,355,848 | |||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||
Reserve for losses and loss expenses | 3,679,471 | 3,575,496 | 3,691,719 | |||||||||||||||||||||||||||||||||
Unearned premium reserve | 1,299,823 | 1,209,377 | 1,262,819 | |||||||||||||||||||||||||||||||||
Total liabilities | 5,811,517 | 5,546,527 | 5,824,478 | |||||||||||||||||||||||||||||||||
Stockholders' equity | 1,592,579 | 1,475,965 | 1,531,370 | |||||||||||||||||||||||||||||||||
Total debt-to-capitalization ratio | 21.6 | % | 20.8 | % | 22.3 | % | ||||||||||||||||||||||||||||||
Book value per share | 27.34 | 25.61 | 26.42 | |||||||||||||||||||||||||||||||||
Book value per share excluding | ||||||||||||||||||||||||||||||||||||
unrealized gain or loss on bond portfolio | 26.65 | 24.30 | 25.98 | |||||||||||||||||||||||||||||||||
NPW per insurance segment employee | 1,043 | 999 | 1,028 | |||||||||||||||||||||||||||||||||
Statutory premiums to surplus ratio | 1.4 | x | 1.4 | x | 1.4 | x | ||||||||||||||||||||||||||||||
Statutory surplus | 1,622,268 | 1,461,326 | 1,583,781 |
1Includes 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) | 2017 | 2016 | |||||||||||||||
Per diluted share | Per diluted share | ||||||||||||||||
Consolidated | |||||||||||||||||
Revenue | $ | 600,469 | $ | 551,474 | |||||||||||||
Net income | 50,440 | 0.85 | 37,032 | 0.63 | |||||||||||||
Exclude: Net realized losses | 1,045 | 0.02 | 2,704 | 0.05 | |||||||||||||
Exclude: Tax on net realized losses | (366 | ) | (0.01 | ) | (946 | ) | (0.02 | ) | |||||||||
Operating income | 51,119 | 0.86 | 38,790 | 0.66 | |||||||||||||
Total Insurance Operations | |||||||||||||||||
Gross premiums written | $ | 689,511 | 652,598 | ||||||||||||||
Net premiums written | 598,704 | 565,359 | |||||||||||||||
Net premiums earned | 560,854 | 522,458 | |||||||||||||||
Underwriting gain | - before tax | 49,222 | 40,955 | ||||||||||||||
- after tax | 31,994 | 0.54 | 26,621 | 0.46 | |||||||||||||
GAAP combined ratio | 91.2 | % | 92.2 | % | |||||||||||||
Standard Commercial Lines | |||||||||||||||||
Net premiums earned | $ | 438,414 | 402,889 | ||||||||||||||
GAAP combined ratio | 90.3 | % | 92.3 | % | |||||||||||||
Standard Personal Lines | |||||||||||||||||
Net premiums earned | $ | 71,201 | 70,205 | ||||||||||||||
GAAP combined ratio | 92.8 | % | 87.7 | % | |||||||||||||
Excess and Surplus Lines | |||||||||||||||||
Net premiums earned | $ | 51,239 | 49,364 | ||||||||||||||
GAAP combined ratio | 96.9 | % | 97.1 | % | |||||||||||||
Investments | |||||||||||||||||
Net investment income | - before tax | $ | 37,419 | 30,769 | |||||||||||||
- after tax | 27,451 | 0.46 | 23,560 | 0.40 | |||||||||||||
Effective tax rate | 26.6 | % | 23.4 | % | |||||||||||||
Annual after-tax yield on investment portfolio | 2.0 | % | 1.8 | % | |||||||||||||
Annual after-tax, after-interest expense yield | 1.7 | % | 1.6 | % | |||||||||||||
Invested assets per $ of stockholders' equity | 3.43 | 3.50 | |||||||||||||||
Other expenses (net of other income) | |||||||||||||||||
Interest expense | - before tax | $ | (6,106 | ) | (5,606 | ) | |||||||||||
- after tax | (3,969 | ) | (0.07 | ) | (3,644 | ) | (0.06 | ) | |||||||||
Other expense - after tax | (4,357 | ) | (0.07 | ) | $ | (7,747 | ) | (0.14 | ) | ||||||||
Diluted weighted avg shares outstanding | 59,148 | 58,507 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries
GAAP Insurance Operations Results
(unaudited)
($ in thousands) | Quarter Ended March 31, 2017 | Quarter Ended March 31, 2016 | ||||||||||||||||||||||||||||||
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 | $ | 483,548 | 64,696 | 50,460 | 598,704 | $ | 455,063 | 61,969 | 48,327 | 565,359 | ||||||||||||||||||||||
Net Premiums Earned | 438,414 | 71,201 | 51,239 | 560,854 | 402,889 | 70,205 | 49,364 | 522,458 | ||||||||||||||||||||||||
Losses and Loss Expenses Incurred | 241,564 | 44,290 | 31,618 | 317,472 | 223,350 | 39,695 | 34,099 | 297,144 | ||||||||||||||||||||||||
Net Underwriting Expenses Incurred | 154,401 | 21,805 | 18,051 | 194,257 | 146,954 | 21,905 | 13,847 | 182,706 | ||||||||||||||||||||||||
Dividends to Policyholders | (97 | ) | - | - | (97 | ) | 1,653 | - | - | 1,653 | ||||||||||||||||||||||
GAAP Underwriting Gain | $ | 42,546 | 5,106 | 1,570 | 49,222 | $ | 30,932 | 8,605 | 1,418 | 40,955 | ||||||||||||||||||||||
GAAP Ratios | ||||||||||||||||||||||||||||||||
Loss and Loss Expense Ratio | 55.1 | % | 62.2 | % | 61.7 | % | 56.6 | % | 55.4 | % | 56.5 | % | 69.1 | % | 56.9 | % | ||||||||||||||||
Underwriting Expense Ratio | 35.2 | % | 30.6 | % | 35.2 | % | 34.6 | % | 36.5 | % | 31.2 | % | 28.0 | % | 35.0 | % | ||||||||||||||||
Dividends to Policyholders Ratio | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.4 | % | 0.0 | % | 0.0 | % | 0.3 | % | ||||||||||||||||
Combined Ratio | 90.3 | % | 92.8 | % | 96.9 | % | 91.2 | % | 92.3 | % | 87.7 | % | 97.1 | % | 92.2 | % | ||||||||||||||||
Selective Insurance Group, Inc. and Consolidated Subsidiaries
GAAP Investment Income
March 2017 (unaudited)
Quarter Ended | % | |||||||||||
March | March | Increase | ||||||||||
($ in thousands, except per share data) | 2017 | 2016 | (Decrease) | |||||||||
Investment Income: | ||||||||||||
Interest: | ||||||||||||
Fixed Income Securities | $ | 36,891 | 31,644 | 17 | ||||||||
Short-term | 250 | 159 | 57 | |||||||||
Other Investments | 1,603 | (1,066 | ) | 250 | ||||||||
Dividends | 1,468 | 2,230 | (34 | ) | ||||||||
40,212 | 32,967 | 22 | ||||||||||
Investment Expense | 2,793 | 2,198 | 27 | |||||||||
Net Investment Income Before Tax | 37,419 | 30,769 | 22 | |||||||||
Tax | 9,968 | 7,209 | 38 | |||||||||
Net Investment Income After Tax | $ | 27,451 | 23,560 | 17 | ||||||||
Net Investment Income per Share | $ | 0.46 | 0.40 | 15 | ||||||||
Effective Tax Rate | 26.6 | % | 23.4 | % | ||||||||
Average Yields: | ||||||||||||
Fixed Income Securities: | ||||||||||||
Pre Tax | 3.00 | % | 2.70 | % | ||||||||
After Tax | 2.18 | % | 2.02 | % | ||||||||
Portfolio: | ||||||||||||
Pre Tax | 2.77 | % | 2.40 | % | ||||||||
After Tax | 2.03 | % | 1.84 | % | ||||||||
Quarter Ended | ||||||||||||
March | March | |||||||||||
Net Realized Losses | 2017 | 2016 | ||||||||||
Fixed Income Securities | (196 | ) | (390 | ) | ||||||||
Equity Securities | (1,314 | ) | (2,310 | ) | ||||||||
Other Investments | 465 | (4 | ) | |||||||||
Total | (1,045 | ) | (2,704 | ) | ||||||||
Net of Tax | (679 | ) | (1,758 | ) |
Year-to-date as of March 31, 2017, new money rates for fixed income securities were 3.1% on a pre-tax basis and 2.1% on an after-tax basis.
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2017 Statutory Results by Line of Business
Quarter Ended March 2017 (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 | 2017 | 2016 | Gain/(Loss) | |||||||||||||||||||||||||||||||||
Standard Personal Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Homeowners | $ | 26,535 | (0.1 | )% | $ | 32,700 | (0.6 | )% | 38.8 | % | 8.5 | % | 39.2 | % | 0.0 | % | 86.5 | % | 86.5 | % | $ | 6,830 | ||||||||||||||||||||||
Auto | 36,719 | 7.9 | % | 36,950 | 3.3 | % | 65.9 | % | 10.9 | % | 33.4 | % | 0.0 | % | 110.1 | % | 104.9 | % | (3,673 | ) | ||||||||||||||||||||||||
Other (including flood) | 1,441 | 5.1 | % | 1,551 | 1.7 | % | 54.9 | % | (24.6 | )% | (151.2 | )% | 0.0 | % | (120.9 | )% | (142.0 | )% | 3,260 | |||||||||||||||||||||||||
Total | $ | 64,696 | 4.4 | % | $ | 71,201 | 1.4 | % | 53.2 | % | 9.0 | % | 31.7 | % | 0.0 | % | 93.9 | % | 90.6 | % | $ | 6,418 | ||||||||||||||||||||||
Standard Commercial Lines: | ||||||||||||||||||||||||||||||||||||||||||||
Commercial property | $ | 80,503 | 6.4 | % | $ | 76,391 | 8.9 | % | 43.3 | % | 5.2 | % | 37.6 | % | (0.4 | )% | 85.8 | % | 91.8 | % | $ | 9,319 | ||||||||||||||||||||||
Workers compensation | 91,840 | 0.6 | % | 79,326 | 4.4 | % | 54.9 | % | 13.6 | % | 26.0 | % | 1.1 | % | 95.6 | % | 81.1 | % | 245 | |||||||||||||||||||||||||
General liability | 155,137 | 7.2 | % | 139,984 | 9.3 | % | 31.9 | % | 7.5 | % | 34.1 | % | (0.2 | )% | 73.2 | % | 83.4 | % | 32,295 | |||||||||||||||||||||||||
Auto | 117,387 | 8.5 | % | 107,129 | 12.3 | % | 63.7 | % | 10.4 | % | 32.0 | % | (0.3 | )% | 105.7 | % | 104.9 | % | (9,384 | ) | ||||||||||||||||||||||||
Businessowners' policies | 26,201 | 5.7 | % | 24,845 | 3.9 | % | 46.3 | % | 11.3 | % | 37.2 | % | 0.0 | % | 94.8 | % | 95.0 | % | 793 | |||||||||||||||||||||||||
Bonds | 7,792 | 31.5 | % | 6,498 | 18.9 | % | 11.1 | % | 6.5 | % | 51.9 | % | 0.0 | % | 69.4 | % | 81.6 | % | 1,315 | |||||||||||||||||||||||||
Other | 4,690 | 4.8 | % | 4,241 | 10.5 | % | (0.2 | )% | 0.3 | % | 54.8 | % | 0.0 | % | 55.1 | % | 53.8 | % | 1,660 | |||||||||||||||||||||||||
Total | $ | 483,548 | 6.3 | % | $ | 438,414 | 8.8 | % | 46.0 | % | 9.1 | % | 33.2 | % | (0.0 | )% | 88.3 | % | 89.7 | % | $ | 36,244 | ||||||||||||||||||||||
E&S | 50,460 | 4.4 | % | 51,239 | 3.8 | % | 45.5 | % | 16.3 | % | 34.1 | % | 0.0 | % | 95.9 | % | 98.4 | % | 2,347 | |||||||||||||||||||||||||
Total Insurance Operations | $ | 598,704 | 5.9 | % | $ | 560,854 | 7.3 | % | 46.9 | % | 9.7 | % | 33.1 | % | (0.0 | )% | 89.7 | % | 90.7 | % | $ | 45,009 | ||||||||||||||||||||||
Note: Some amounts may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid | 241,979 | 210,673 | ||||||||||||||||||||||||||||||||||||||||||
LAE Paid | 48,513 | 46,124 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid | $ | 290,492 | $ | 256,797 | ||||||||||||||||||||||||||||||||||||||||
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
2017 Net Catastrophe Losses and Prior Year Casualty Reserve Development
Statutory Results by Line of Business
(unaudited)
Quarter Ended | ||||||||||||||||
Net Catastrophe Losses Incurred | March 31, 2017 | March 31, 2016 | ||||||||||||||
($ in thousands) | Losses and Loss Expenses Incurred | Impact on Losses and Loss Expense Ratio | Losses and Loss Expenses Incurred | Impact on Losses and Loss Expense Ratio | ||||||||||||
Standard Personal Lines | $ | 3,909 | 5.5 | % | $ | 2,225 | 3.2 | % | ||||||||
Standard Commercial Lines | 6,899 | 1.6 | % | 11,649 | 2.9 | % | ||||||||||
E&S | 1,403 | 2.7 | % | 495 | 1.0 | % | ||||||||||
Total Insurance Operations | $ | 12,212 | 2.2 | % | $ | 14,369 | 2.8 | % | ||||||||
Prior Year Casualty Reserve Development | Quarter Ended | |||||||||||||||
(Favorable) / Unfavorable | March 31, 2017 | March 31, 2016 | ||||||||||||||
($ in thousands) | Losses and Loss Expenses Incurred | Impact on Losses and Loss Expense Ratio | Losses and Loss Expenses Incurred | Impact on Losses and Loss Expense Ratio | ||||||||||||
Standard Personal Lines | $ | 2,000 | 2.8 | % | $ | - | 0.0 | % | ||||||||
Standard Commercial Lines | (16,400 | ) | (3.7 | )% | (18,000 | ) | (4.5 | )% | ||||||||
E&S | - | 0.0 | % | 1,000 | 2.0 | % | ||||||||||
Total Insurance Operations | $ | (14,400 | ) | (2.6 | )% | $ | (17,000 | ) | (3.3 | )% |
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) | 2017 | 2016 | ||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed income securities, held-to-maturity – at carrying value (fair value: $88,339 – 2017; $105,211 – 2016) | $ | 84,836 | 101,556 | |||||
Fixed income securities, available-for-sale – at fair value (amortized cost: $4,805,368 – 2017; $4,753,759 – 2016) | 4,867,005 | 4,792,540 | ||||||
Equity securities, available-for-sale – at fair value (cost: $124,614 – 2017; $120,889 – 2016) | 154,918 | 146,753 | ||||||
Short-term investments (at cost which approximates fair value) | 247,207 | 221,701 | ||||||
Other investments | 106,796 | 102,397 | ||||||
Total investments | 5,460,762 | 5,364,947 | ||||||
Cash | 483 | 458 | ||||||
Interest and dividends due or accrued | 40,239 | 40,164 | ||||||
Premiums receivable, net of allowance for uncollectible accounts of: $6,613 – 2017; $5,980 – 2016 | 707,677 | 681,611 | ||||||
Reinsurance recoverable, net of allowance for uncollectible accounts of: $5,000 – 2017; $5,500 – 2016 | 580,386 | 621,537 | ||||||
Prepaid reinsurance premiums | 145,436 | 146,282 | ||||||
Current federal income tax | — | 2,486 | ||||||
Deferred federal income tax | 72,218 | 84,840 | ||||||
Property and equipment – at cost, net of accumulated depreciation and amortization of: $202,917 – 2017; $198,729 – 2016 | 68,503 | 69,576 | ||||||
Deferred policy acquisition costs | 227,622 | 222,564 | ||||||
Goodwill | 7,849 | 7,849 | ||||||
Other assets | 92,921 | 113,534 | ||||||
Total assets | $ | 7,404,096 | 7,355,848 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Reserve for losses and loss expenses | $ | 3,679,471 | 3,691,719 | |||||
Unearned premiums | 1,299,823 | 1,262,819 | ||||||
Long-term debt | 438,782 | 438,667 | ||||||
Current federal income tax | 11,552 | — | ||||||
Accrued salaries and benefits | 96,322 | 132,880 | ||||||
Other liabilities | 285,567 | 298,393 | ||||||
Total liabilities | $ | 5,811,517 | 5,824,478 | |||||
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: 102,028,447 – 2017; 101,620,436 – 2016 | 204,057 | 203,241 | ||||||
Additional paid-in capital | 354,239 | 347,295 | ||||||
Retained earnings | 1,609,862 | 1,568,881 | ||||||
Accumulated other comprehensive income (loss) | 2,090 | (15,950 | ) | |||||
Treasury stock – at cost (shares: 43,780,884 – 2017; 43,653,237 – 2016) | (577,669 | ) | (572,097 | ) | ||||
Total stockholders’ equity | $ | 1,592,579 | 1,531,370 | |||||
Commitments and contingencies | ||||||||
Total liabilities and stockholders’ equity | $ | 7,404,096 | 7,355,848 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries | ||||||||
Unaudited Consolidated Statements of Income | ||||||||
Quarter Ended March 31, | ||||||||
($ in thousands, except per share amounts) | 2017 | 2016 | ||||||
Revenues: | ||||||||
Net premiums earned | $ | 560,854 | 522,458 | |||||
Net investment income earned | 37,419 | 30,769 | ||||||
Net realized losses: | ||||||||
Net realized investment gains | 2,430 | 889 | ||||||
Other-than-temporary impairments | (3,475 | ) | (3,593 | ) | ||||
Total net realized losses | (1,045 | ) | (2,704 | ) | ||||
Other income | 3,241 | 951 | ||||||
Total revenues | 600,469 | 551,474 | ||||||
Expenses: | ||||||||
Losses and loss expenses incurred | 317,472 | 297,144 | ||||||
Policy acquisition costs | 196,228 | 183,227 | ||||||
Interest expense | 6,106 | 5,606 | ||||||
Other expenses | 13,089 | 13,622 | ||||||
Total expenses | 532,895 | 499,599 | ||||||
Income before federal income tax | 67,574 | 51,875 | ||||||
Federal income tax expense: | ||||||||
Current | 14,273 | 14,084 | ||||||
Deferred | 2,861 | 759 | ||||||
Total federal income tax expense | 17,134 | 14,843 | ||||||
Net income | $ | 50,440 | 37,032 | |||||
Earnings per share: | ||||||||
Basic net income | $ | 0.87 | 0.64 | |||||
Diluted net income | $ | 0.85 | 0.63 | |||||
Dividends to stockholders | $ | 0.16 | 0.15 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries | ||||||||
Unaudited Consolidated Statements of Comprehensive Income | ||||||||
Quarter Ended March 31, | ||||||||
($ in thousands) | 2017 | 2016 | ||||||
Net income | $ | 50,440 | 37,032 | |||||
Other comprehensive income, net of tax: | ||||||||
Unrealized gains on investment securities: | ||||||||
Unrealized holding gains arising during period | 16,761 | 42,729 | ||||||
Amounts reclassified into net income: | ||||||||
Held-to-maturity securities | (32 | ) | (47 | ) | ||||
Realized losses on available-for-sale securities | 981 | 1,754 | ||||||
Total unrealized gains on investment securities | 17,710 | 44,436 | ||||||
Defined benefit pension and post-retirement plans: | ||||||||
Amounts reclassified into net income: | ||||||||
Net actuarial loss | 330 | 986 | ||||||
Total defined benefit pension and post-retirement plans | 330 | 986 | ||||||
Other comprehensive income | 18,040 | 45,422 | ||||||
Comprehensive income | $ | 68,480 | 82,454 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries | ||||||||
Unaudited Consolidated Statements of Stockholders’ Equity | ||||||||
Quarter Ended March 31, | ||||||||
($ in thousands) | 2017 | 2016 | ||||||
Common stock: | ||||||||
Beginning of year | $ | 203,241 | 201,723 | |||||
Dividend reinvestment plan (shares: 8,249 – 2017; 10,931 – 2016) | 16 | 22 | ||||||
Stock purchase and compensation plans (shares: 399,762 – 2017; 386,567 – 2016) | 800 | 773 | ||||||
End of period | 204,057 | 202,518 | ||||||
Additional paid-in capital: | ||||||||
Beginning of year | 347,295 | 326,656 | ||||||
Dividend reinvestment plan | 348 | 351 | ||||||
Stock purchase and compensation plans | 6,596 | 6,958 | ||||||
End of period | 354,239 | 333,965 | ||||||
Retained earnings: | ||||||||
Beginning of year | 1,568,881 | 1,446,192 | ||||||
Net income | 50,440 | 37,032 | ||||||
Dividends to stockholders ($0.16 per share – 2017; $0.15 per share – 2016) | (9,459 | ) | (8,789 | ) | ||||
End of period | 1,609,862 | 1,474,435 | ||||||
Accumulated other comprehensive income: | ||||||||
Beginning of year | (15,950 | ) | (9,425 | ) | ||||
Other comprehensive income | 18,040 | 45,422 | ||||||
End of period | 2,090 | 35,997 | ||||||
Treasury stock: | ||||||||
Beginning of year | (572,097 | ) | (567,105 | ) | ||||
Acquisition of treasury stock (shares: 127,647 – 2017; 122,250 – 2016) | (5,572 | ) | (3,845 | ) | ||||
End of period | (577,669 | ) | (570,950 | ) | ||||
Total stockholders’ equity | $ | 1,592,579 | 1,475,965 |
Selective Insurance Group, Inc. & Consolidated Subsidiaries | ||||||||
Unaudited Consolidated Statements of Cash Flows | ||||||||
Quarter Ended March 31, | ||||||||
($ in thousands) | 2017 | 2016 | ||||||
Operating Activities | ||||||||
Net income | $ | 50,440 | 37,032 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 12,882 | 14,627 | ||||||
Stock-based compensation expense | 5,273 | 4,377 | ||||||
Undistributed (gains) losses of equity method investments | (665 | ) | 1,066 | |||||
Loss on disposal of fixed assets | 998 | — | ||||||
Net realized losses | 1,045 | 2,704 | ||||||
Changes in assets and liabilities: | ||||||||
Increase in reserve for losses and loss expenses, net of reinsurance recoverable | 28,903 | 42,390 | ||||||
Increase in unearned premiums, net of prepaid reinsurance | 37,850 | 42,901 | ||||||
Decrease in net federal income taxes | 16,946 | 5,296 | ||||||
Increase in premiums receivable | (26,066 | ) | (39,180 | ) | ||||
Increase in deferred policy acquisition costs | (5,058 | ) | (7,789 | ) | ||||
(Increase) decrease in interest and dividends due or accrued | (218 | ) | 528 | |||||
Decrease in accrued salaries and benefits | (36,558 | ) | (27,115 | ) | ||||
Decrease (increase) in other assets | 15,998 | (10,128 | ) | |||||
Decrease in other liabilities | (55,175 | ) | (52,902 | ) | ||||
Net cash provided by operating activities | 46,595 | 13,807 | ||||||
Investing Activities | ||||||||
Purchase of fixed income securities, available-for-sale | (724,880 | ) | (264,828 | ) | ||||
Purchase of equity securities, available-for-sale | (14,083 | ) | (7,574 | ) | ||||
Purchase of other investments | (11,211 | ) | (12,723 | ) | ||||
Purchase of short-term investments | (1,027,885 | ) | (303,228 | ) | ||||
Sale of fixed income securities, available-for-sale | 594,805 | 12,905 | ||||||
Sale of short-term investments | 1,010,917 | 394,915 | ||||||
Redemption and maturities of fixed income securities, held-to-maturity | 16,527 | 37,400 | ||||||
Redemption and maturities of fixed income securities, available-for-sale | 116,357 | 130,641 | ||||||
Sale of equity securities, available-for-sale | 5,503 | 4,285 | ||||||
Distributions from other investments | 6,428 | 7,994 | ||||||
Purchase of property and equipment | (4,937 | ) | (3,439 | ) | ||||
Net cash used in investing activities | (32,459 | ) | (3,652 | ) | ||||
Financing Activities | ||||||||
Dividends to stockholders | (8,955 | ) | (8,270 | ) | ||||
Acquisition of treasury stock | (5,572 | ) | (3,845 | ) | ||||
Net proceeds from stock purchase and compensation plans | 1,563 | 1,478 | ||||||
Proceeds from borrowings | 64,000 | 25,000 | ||||||
Repayments of borrowings | (64,000 | ) | (25,000 | ) | ||||
Excess tax benefits from share-based payment arrangements | — | 1,361 | ||||||
Repayments of capital lease obligations | (1,147 | ) | (1,094 | ) | ||||
Net cash used in financing activities | (14,111 | ) | (10,370 | ) | ||||
Net increase (decrease) in cash | 25 | (215 | ) | |||||
Cash, beginning of year | 458 | 898 | ||||||
Cash, end of period | $ | 483 | 683 |
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Statutory Balance Sheets
(unaudited)
March 31, | March 31, | December 31, | ||||||||||
($ in thousands) | 2017 | 2016 | 2016 | |||||||||
ASSETS | ||||||||||||
Bonds | $ | 4,824,921 | 4,583,540 | 4,780,269 | ||||||||
Common stocks | 138,331 | 202,619 | 130,608 | |||||||||
Preferred stocks | 16,107 | 12,807 | 15,871 | |||||||||
Affiliated mortgage loan | 34,108 | 34,957 | 34,324 | |||||||||
Other investments | 151,770 | 130,365 | 147,364 | |||||||||
Short-term investments | 221,505 | 81,011 | 203,924 | |||||||||
Total investments | 5,386,742 | 5,045,299 | 5,312,360 | |||||||||
Cash on hand and in banks | (4,415 | ) | (12,429 | ) | 13,911 | |||||||
Interest and dividends due and accrued | 40,102 | 37,891 | 40,038 | |||||||||
Premiums receivable | 699,630 | 649,660 | 673,649 | |||||||||
Reinsurance recoverable on paid losses and expenses | 8,455 | 9,025 | 10,337 | |||||||||
Deferred tax recoverable | 159,702 | 144,761 | 161,165 | |||||||||
EDP equipment | 1,732 | 397 | 549 | |||||||||
Equities and deposits in pools and associations | 12,050 | 10,864 | 12,683 | |||||||||
Receivable for sold securities | 373 | 647 | 5,176 | |||||||||
Other assets | 30,153 | 28,245 | 29,040 | |||||||||
Total assets | $ | 6,334,524 | 5,914,360 | 6,258,908 | ||||||||
LIABILITIES | ||||||||||||
Reserve for losses | $ | 2,518,967 | 2,456,286 | 2,497,916 | ||||||||
Reinsurance payable on paid loss and loss expense | 3,400 | 3,057 | 3,163 | |||||||||
Reserve for loss expenses | 570,944 | 534,949 | 564,976 | |||||||||
Unearned premiums | 1,154,386 | 1,071,722 | 1,116,536 | |||||||||
Reserve for commissions payable | 53,402 | 50,382 | 92,763 | |||||||||
Ceded balances payable | 40,690 | 41,112 | 62,939 | |||||||||
Federal income tax payable | 38,411 | 34,247 | 17,394 | |||||||||
Premium and other taxes payable | 21,741 | 19,411 | 24,149 | |||||||||
Borrowed money | 110,214 | 60,031 | 110,212 | |||||||||
Reserve for dividends to policyholders | 4,111 | 6,439 | 5,706 | |||||||||
Reserves for unauthorized reinsurance | 1,755 | 2,030 | 1,755 | |||||||||
Payable for securities | 86,288 | 25,563 | 41,603 | |||||||||
Funds withheld on account of others | 10,776 | 7,928 | 7,501 | |||||||||
Accrued salaries and benefits | 48,280 | 52,230 | 83,718 | |||||||||
Other liabilities | 48,891 | 87,647 | 44,796 | |||||||||
Total liabilities | 4,712,256 | 4,453,034 | 4,675,127 | |||||||||
POLICYHOLDERS' SURPLUS | ||||||||||||
Capital | 42,725 | 42,725 | 42,725 | |||||||||
Paid in surplus | 492,869 | 492,869 | 492,869 | |||||||||
Unassigned surplus | 1,086,674 | 925,732 | 1,048,187 | |||||||||
Total policyholders' surplus | 1,622,268 | 1,461,326 | 1,583,781 | |||||||||
Total liabilities and policyholders' surplus | $ | 6,334,524 | 5,914,360 | 6,258,908 |
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Statutory Statements of Income
(unaudited)
Quarter Ended | ||||||||||||||||
March | ||||||||||||||||
($ in thousands) | 2017 | 2016 | ||||||||||||||
UNDERWRITING | ||||||||||||||||
Net premiums written | $ | 598,704 | 565,359 | |||||||||||||
Net premiums earned | 560,854 | 522,458 | ||||||||||||||
Net losses paid | 241,979 | 210,673 | ||||||||||||||
Change in reserve for losses | 21,051 | 29,703 | ||||||||||||||
Net losses incurred | 263,030 | 46.9 | % | 240,376 | 46.0 | % | ||||||||||
Net loss expenses paid | 48,513 | 46,124 | ||||||||||||||
Change in reserve for loss expenses | 5,969 | 9,627 | ||||||||||||||
Net loss expenses incurred | 54,482 | 9.7 | % | 55,751 | 10.7 | % | ||||||||||
Net underwriting expenses incurred | 201,060 | 33.5 | % | 190,917 | 33.7 | % | ||||||||||
Total deductions | 518,572 | 487,044 | ||||||||||||||
Statutory underwriting gain | 42,282 | 35,414 | ||||||||||||||
Net loss from premium balances charged off | (645 | ) | (691 | ) | ||||||||||||
Finance charges and other income | 3,275 | 962 | ||||||||||||||
Total other income | 2,630 | -0.4 | % | 271 | 0.0 | % | ||||||||||
Policyholders' dividends incurred | 97 | 0.0 | % | (1,653 | ) | 0.3 | % | |||||||||
Total underwriting gain | 45,009 | 89.7 | % | 34,032 | 90.7 | % | ||||||||||
INVESTMENT | ||||||||||||||||
Net investment income earned | 35,757 | 30,623 | ||||||||||||||
Net realized losses | (1,082 | ) | (2,704 | ) | ||||||||||||
Total income before income tax | 79,684 | 61,951 | ||||||||||||||
Federal income tax expense | 21,016 | 16,603 | ||||||||||||||
Net income | $ | 58,668 | 45,348 | |||||||||||||
Policyholders' surplus | ||||||||||||||||
Surplus, beginning of period | $ | 1,583,781 | 1,426,320 | |||||||||||||
Net income | 58,668 | 45,348 | ||||||||||||||
Change in deferred taxes | (1,752 | ) | 352 | |||||||||||||
Change in net unrealized capital losses | 3,771 | 5,311 | ||||||||||||||
Dividends to stockholders | (20,024 | ) | (15,254 | ) | ||||||||||||
Change in non-admitted assets | (2,656 | ) | (2,182 | ) | ||||||||||||
Change in Overfunded Contra Asset | (1,282 | ) | (1,047 | ) | ||||||||||||
Qual Pen Trans Liab | 1,744 | 2,456 | ||||||||||||||
Excess Plan Trans Liab | 8 | 19 | ||||||||||||||
PRL Plan Trans Liab | 10 | 3 | ||||||||||||||
Net change in surplus for period | 38,487 | 35,006 | ||||||||||||||
Surplus, end of period | $ | 1,622,268 | 1,461,326 | |||||||||||||
Statutory underwriting gain | $ | 45,009 | 34,032 | |||||||||||||
Adjustments under GAAP: | ||||||||||||||||
Deferred policy acquisition costs | 5,058 | 7,789 | ||||||||||||||
Other, net | (845 | ) | (866 | ) | ||||||||||||
GAAP underwriting gain | $ | 49,222 | 40,955 | |||||||||||||
Note: Some amounts or ratios may not foot due to rounding.
Selective Insurance Group, Inc. and Consolidated Subsidiaries | ||||||||||||||||
Alternative Investments | ||||||||||||||||
March 31, 2017 | ||||||||||||||||
(unaudited) | ||||||||||||||||
Number | Original | Remaining | Current | |||||||||||||
Strategy | of Funds | Commitment | Commitment | Market Value | ||||||||||||
Private Equity | 20 | 176,515,538 | 74,669,031 | 41,354,303 | ||||||||||||
Private Credit | 10 | 109,000,000 | 40,745,221 | 31,026,212 | ||||||||||||
Real Assets | 7 | 92,000,000 | 27,763,706 | 16,264,503 | ||||||||||||
TOTAL - ALTERNATIVE INVESTMENTS | 37 | 377,515,538 | 143,177,958 | 88,645,018 |
Exhibit may not foot due to rounding