(Selective Logo) Selective Insurance
40 Wantage Avenue
Branchville, New Jersey 07890
www.selective.com
FOR IMMEDIATE RELEASE:
Media Contact: Sharon Cooper
973-948-1324, sharon.cooper@selective.com
Investor Contact: Dale Thatcher
973-948-1774, dale.thatcher@selective.com
Selective Insurance Group, Inc., Reports
1st Quarter 2003 Earnings
A.M. Best Rates Selective "A+" (Superior) for 42nd year
Commercial renewal prices up 15%
Branchville, NJ - May 6, 2003 - Selective Insurance Group, Inc.
(NASDAQ: SIGI) today reported net income of $8.0 million, or
$0.29 per diluted share, for the first quarter ended March 31,
2003, compared with $10.3 million, or $0.39 per diluted share
for the same period last year. Operating income(1) from
continuing operations was $5.5 million, or $0.20 per diluted
share for the period, compared with $10.2 million, or $0.39
per diluted share in the first quarter of 2002. Net and
operating income were affected by catastrophe losses stemming
from some of the worst winter storms to hit the East Coast
in a decade.
Catastrophe losses for the first quarter of 2003, on an
after-tax basis, were approximately $7.7 million, or $0.28
per diluted share, compared with $1.1 million or $0.04 per
diluted share in the first quarter of 2002. The first quarter
2003 statutory combined ratio was 104.4%, compared with 102.7%
one year ago. Included in the first quarter 2003 ratio is 4.4
points of catastrophe losses, compared with 0.7 points for
the same period last year.
On April 29, 2003, the A.M. Best rating agency affirmed
Selective's financial strength rating of "A+" (Superior) for
the 42nd year. A.M. Best stated: "the ratings reflect
Selective's solid capitalization, quality management team,
well controlled execution capabilities, stable balance sheet
and strong regional market presence...assisted by the leveraging
of its agency relationships." The ratings also recognize the
company's "disciplined underwriting culture, conservative
investment philosophy and prudent capital management, which
have contributed to consistent operating profitability."
According to Selective Insurance Group, Inc., Chairman,
President and CEO Gregory E. Murphy: "We are honored to
rank among the very best in our industry, as only about 10%
of property and casualty companies currently hold an
"A+" (Superior) or higher rating from A.M. Best. The rating
agency's favorable comments reflect our significant commitment
to creating profitable growth and long-term shareholder value.
"Concurrently, our progress during the quarter on pricing,
retention and other strategic initiatives, continues to
favorably affect our outlook. Although property results were
impacted by extreme weather in January and February, we
continue to expect solid premium growth in 2003, building
off our strong 2002 performance. The statutory combined ratios
for our major commercial casualty lines continued to improve,
with renewal price increases for all commercial lines continuing
their upward positive trend - reaching 15%. There is still
pricing power in commercial lines, which accounts for over 83%
of our total premium volume, as this was the twelfth straight
quarter of double-digit price increases. Commercial lines net
premiums written advanced 16% for the quarter and pushed our
overall premium growth to 15%, while retention at point of
renewal for commercial lines edged higher to 86%.
"The ongoing progress in our core commercial lines business is
driven, in part, by our 'high tech-high touch' approach that
makes it easy for agents and customers to do business with us.
In less than two years, our independent agents have delivered
premiums of more than $27 million from their small-to-mid
sized commercial accounts to Selective's underwriting Service
Center - at a policy retention rate of about 92%. A portion
of this business comes directly from our One & Done small
business processing system - enabling agents to seamlessly
process and service their accounts with Selective - and freeing
them up to grow their agencies and increase the amount of
profitable business they place with us."
Murphy added: "We are encouraged by our improving personal
lines underwriting performance, reflecting significant price
increases in all of our operating territories and tightened
underwriting. For the quarter, our personal automobile statutory
combined ratio narrowed to 104.2%, from 111.4% for the same
period last year. In New Jersey, our personal automobile ratio
was 102.2% for the quarter, down over six points from this
period last year, while average premium per vehicle continues
to move higher due to a series of rate increases and tiering
modifications. Our overall personal lines statutory combined
ratio dropped to 105.3% for the quarter, including 3.1 points
of catastrophe losses, down from a 109.8% last year that
included 1.1 points of catastrophe losses."
Revenue from continuing operations for the first quarter
2003 increased 15% over the prior year period to $320.5
million. Revenue growth reflected the continued upward trend
in net premiums earned - up 14% to $267.0 million for the
first quarter 2003; higher net investment income of 12% to
$27.3 million for the quarter; and revenue from the company's
continuing Diversified Insurance Services for the quarter of
$21.3 million, up 13% over the prior year period. Return on
revenue for the diversified businesses improved to 6.1% for
the quarter, up from 5.0% in first quarter 2002.
The Board has declared a $0.15 per share quarterly cash dividend
on its common stock payable June 2, 2003 to stockholders of
record on May 19, 2003. The supplemental investor packet,
including financial information that is not part of this press
release, is available on the Investors page of Selective's
public website at www.selective.com. The webcast of Selective's
quarterly analyst conference call will be simulcast at
8:30am EST, on May 7, 2003, at www.selective.com. The webcast
will be available for rebroadcast until the close of business
on June 6, 2003.
Selective Insurance Group, Inc., headquartered in Branchville,
New Jersey, is a holding company for five property and
casualty insurance companies that offer primary and alternative
market insurance for commercial and personal risks. The insurance
companies are rated "A+" (Superior) by A.M. Best. Through other
subsidiaries, the company offers medical claim management
services; human resources benefits and administration services;
risk management products and services; and flood insurance
policy, administration and claim services. Selective maintains
a website at www.selective.com
This press release contains certain statements that are not
historical facts and are considered forward-looking statements
as defined in the Private Securities Litigation Reform Act
of 1995, which can be identified by terms such as may, will,
could, would, should, expect, plan, anticipate, target,
project, intend, believe, estimate, predict, potential, seek,
likely, or continue or other comparable terminology. Such
forward-looking statements relate to our intentions, beliefs,
projections, estimations or forecasts of future events or our
future financial performance and involve known and unknown risks,
uncertainties and other factors that may cause our actual results
to be materially different from those expressed or implied by
the forward-looking statements. These statements are only
predictions and we can give no assurance that such expectations
will prove to be correct. These risks and uncertainties include,
but are not limited to:
* The frequency and severity of catastrophic events, including
hurricanes, tornadoes, windstorms, earthquakes, hail, severe
winter weather, fires, explosions and terrorism;
* Adverse economic, market or regulatory conditions;
* Our concentration in a number of east coast and Midwestern
states;
* The adequacy of loss reserves;
* Reinsurance costs and availability;
* Our ability to collect on reinsurance and the solvency of
Selective's reinsurers;
* Uncertainties related to insurance rate increases and business
retention;
* Changes in insurance regulations that impact our ability to
write and/or cease writing insurance policies in one or more
states, particularly changes in New Jersey automobile
insurance laws and regulations;
* Our ability to maintain favorable ratings from A.M. Best,
Standard & Poor's, Moody's and Fitch;
* Fluctuations in interest rates and the performance of the
financial markets;
* Our entry into new markets and businesses; and
* Other risks and uncertainties we identify in filings with
the Securities and Exchange Commission, including, but not
limited to the Annual Report on Form 10-K; although we do
not promise to update such forward-looking statements to
reflect actual results or changes in assumptions or other
factors that could affect these statements.
(1) Operating income from continuing operations differs from
net income by the exclusion of realized gains or losses on
investment sales, as well as net income from the discontinued
software operation. It is used as an important financial
measure by management, analysts and investors because the
realization of investment gains and losses in any given period
is largely discretionary as to timing and could distort the
analysis of trends; however, it is not intended as a substitute
for net income prepared in accordance with accounting principles
generally accepted in the United States (GAAP). A
reconciliation of operating income to net income is provided
in the attached GAAP highlights. Statutory data is prepared
in accordance with statutory accounting rules as defined by
the National Association of Insurance Commissioners
Accounting Practices and Procedures Manual and, therefore,
is not reconciled to GAAP.
Selective Insurance Group, Inc. (Nasdaq: SIGI) *
GAAP Highlights and Reconciliation to Comparable GAAP Measures
(in thousands, except shares and per share data)
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3 months ended March 31: 2003 2002
Net premiums written $323,403 $281,445
Net premiums earned 267,047 234,295
Net investment income 27,343 24,504
Diversified insurance services
revenue from continuing operations 21,338 18,833
Total revenues from continuing
Operations 320,485 278,540
Operating income from
continuing operations 5,454 10,228
Capital gain, after-tax 2,584 71
------- -------
Income from continuing
operations, net of tax 8,038 10,299
Income from discontinued
operations, net of tax - 2
------- -------
Net income $8,038 $10,301
------- -------
------- -------
Operating income from continuing
operations per share:
Basic $0.21 $0.41
Diluted 0.20 0.39
Net income per share:
Basic 0.31 0.41
Diluted 0.29 0.39
Weighted average shares:
Basic 25,906 24,869
Diluted 27,336 26,591
Book value per share $24.42 $23.03
* All amounts exclude inter-company transactions.
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