SIGI - Earnings call transcript Q3 2017 | Selective Insurance Group, Inc.

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Operator

Good day, everyone. Welcome to Selective Insurance Group’s Third Quarter 2017 Earnings Call. At this time for opening remarks and introductions, I would like to turn the call over to Senior Vice President, Investor Relations and Treasurer, Rohan Pai.

Rohan Pai

Good morning and welcome to Selective Insurance Group’s earnings conference call. My name is Rohan Pai, Senior Vice President, Investor Relations and Treasurer. simulcast through website November being will the is available be XX, call on and our replay This XXXX. available on A GAAP supplemental call, to website, reconciliations includes Investors is this of non-GAAP of investor financial measures www.selective.com. package, our on the which page referred also on financial are Form quarterly XX-Q will reports. XX-K remarks measures previously our GAAP stated during and in Certain prepared filed the be that included Annual Report Form is in trends use operations, a non-GAAP our which analyze To operating measure. we income, income net realized losses discontinued is Operating after-tax net operations. the income of both excluding investment impact gains and or makes We insurance easier believe that providing this investors non-GAAP our measure evaluate it to for business.

a statements of As made forward-looking as projections defined and by XXXX. Securities the some Act reminder, the statements Reform are during this call Private of Litigation

performance with guarantees are XX-K and update uncertainties. U.S. future undertakes Please Annual statements and risks note to no filed not any that Form Selective Exchange Report for these refer detailed to on to XX-Qs the forward-looking uncertainties. Forward-looking We Form are or statement. discussion and subject you obligation of and a risks Securities revise Commission any Selective’s and of

Marchioni, Officer; Greg Officer. following Joining executive and team; Selective’s are Officer; Murphy, President and Operating John today Chief the members Chief Mark management Wilcox, Executive Financial on call the of Chief

I'll the to call Greg. over Now, turn

Greg Murphy

Thank you, Rohan and good morning.

financial initiatives. the product level the third First color in Irma, Marie appetite, I'll our catastrophe make remained and concentration. catastrophe quarter John our despite quarter of the benefiting the discipline key story on exceeding The losses. $XXX and geographic for themes high Mark detail, big was three the in estimates insured level focus underwriting, comments Selective's our quarter. for then and more from and record results losses, higher some some risk solid billion. With Harvey, hurricanes, additional industry's insurance some on results, introductory will on providing will focus underwriting then operations review

maintaining of opportunities on growth. continue drive our topline We underwriting strategy to finding discipline execute to while

year industry was in of in the Our combined the for consolidated result XX.X, statutory a excellent ratio loss context an months the projected for underwriting XXXX. an of impressive first nine the

Following development, losses development combined produced an E&S losses, for lines The segments year-to-date catastrophe generated standard basis The ratio for reserve and extremely improving quarter we underlying and profitability. and focused quarter the and or loss on personal catastrophe loss our strong adjusting results. on was after excellent third XX.X. underlying addressing a the third commercial remained overall lines

long-term of XX% to On for capital. year Our annualize in the operating The one-year average weighted that X.X%. months months weighted line market underwriting basis a commitment of nine average first the very above cost with achieving on equity XXX of is was rolling first our maintaining cost return points combined our capital our goal our basis, a strong approximately ratio for nine demonstrates in discipline competitive. the is of

in claim maintained price favorably compares segments, months of obtained price although continue X.X% to commercial or price The been heart the overall centricity CLIPS and improve to profitability efforts inflation. outperformance business increases volume exceed to as us pure growth the generate League building enhance match increases averaging first in The on will to ability targeted commercial omnichannel of advantages the franchise segment. out time. shifts. enable We overall underwriting processes; effectively customer Lines Willis over level personal profitability through around Ivy lines lines six the months. strong E&S objectives increases business is these standard lines E&S strategic investments experience Slight expected mix point competitive two, model with tools for Commercial Selective. balance to three, efforts environment focused We financial and and XXXX. growth survey sophisticated reflect; and in premium at topline for the distribution increase we've customer decline Our X.X% one, for or partners; renewal the to X.X competitive for an market the quarter lower our reflected third conditions, obtaining of the renewal the business Towers This in the nine that Watson in

in the ending increases price terms We XX June have, expect quarters XXth, to CLIPS of quarter in fact, well. XXXX as consecutive the past outperform outperformed in the for third and index

view In in higher. pressure recent addition, pricing to years overall another which under property been we drive has as pricing area

meaningfully The remained various experience solid. Our although, not XX margins we lines, business personal third write Irma the standard the Industry footprint some E&S Harvey commercial did The pre-tax in losses implications. our losses and do events catastrophe the impact on basis $XX totaled reinsurance. and have from in manageable a which quarter for we state of country. catastrophe however larger across did million a Hurricane losses net

-- the apparel highlight as they such for for GAAP coverage continued First flood.

XX% low $XX program of stockholders dollars X that's set million conservative reminder serve Second, will price a a We retention also catastrophe reinsurance the that per at tail for event. and XXX return a that take industry exposure needs year managing to volatility events. anticipate loss our period to equity. to of approach And a has and the limit or extreme purchasing and as by X%

new retention Arizona for the million New non-footprint states per for is two Our event Hampshire our $X states. and and

forecasts basis. increasing average three, perspective, for for and nine shares on equity but are investment our for likely of be excluding X.X the -- prior Two, return to and a XXX statutory zero year additional our capacity our maintaining XXXX. won million of -- year the This income of losses Turning no year XXXX combined months first the estimate guidance, forecast XX.X in incorporates the development underlying reserve assumes favorable weighted million quarter. From after-tax catastrophe industry our losses. to the overall ratio fourth XX.X from an outstanding will full on maintaining we for diluted

times renewal highlight industry all no performance many when say you've four results. comes has One, mercy" that about metrics I are heard that improving there me as think to follows. believe key it earned "arithmetic overall we new effective claim As XXXX, the commentary read expected of the income of projected duration rates industry inflation portfolio. underwriting expected trends, a pure fixed lot price XXXX after-tax money about I three, two security and changes, performance. four,

inventory the pure of XXXX most underwriting renewal the opportunity impact on industry has be that of The the its passed. will However to has recorded earned written already next much already year. price policy performance

have versus inflation points. claim an that understand pure X.X renewal points You industry trend commercial leading selected to expected approximately first three added increases are price of

XXX points written or basis X.X sale the of When cash overall points money with inventories. should duration increase. income raised excellent investments Our investment premiums of the rate only years. higher XX our of than after-tax including new is basis year-to-date operating short-term flow after-tax effective net at on coupled running approximately The portfolio XX%

call remind York the wanted November to on to X. Mark, an will Thursday turning Before Day we in you over I New that hosting City quickly Investor be

should invitations. or make If please contact Investor have the already you You not sure get our received that details. Relations team

to to the the Now, review quarter. over for call results Mark I'll turn

Mark Wilcox

as discuss I'll a metrics our key results you, Thank company trends our some the segments. on for and Greg. touch will beginning also whole with and then financial

by operating diluted XX.X%. per and XX% share we the we of annualized a here from of reported and which income XX% excellent For months characterized is This earnings environment. of result million, first share activity fully XXXX up per operating to an $X.XX the is operating far, an and pricing an XXX.X is generated competitive ROE $X.XX ROE thus generated and nine which XXXX, continue of of up lower loss significant rates quarter, operating XXXX we've from of Through interest XX%. earnings cents catastrophe

after-tax generated income X points quarter totaled $XX For GAAP of ROE. and the million third underwriting operating

investment on of X% at which on for with quarter an after-tax our statutory combined to basis, basis and XX.X% and of the year-to-date a period. were year-to-date. portfolio points consolidated that was for XX.X% quarter investment XX.X% On the times X.X addition quarter written basis. the combined the up The net catastrophe percentage third GAAP up X.X development, XX for underlying equity income reserve of premiums year invested operating In was and generated and ratio ratio a Consolidated prior the ratio assets XX.X% X% third statutory generated in our ROE. losses coupled were million through prior

launch loss percentage points by underlying about the order During for deterioration the the commercial increased our increased Which our catastrophe some record ahead total modest stretch third for combined long resulting and ratio to last combined third of our statutory is our quarter year-to-date. business setting of by year-to-date XXXX combined for we still underlying according said XXXX [Indiscernible]. XXXX a quarter underlying basis from our That well was ratio quarter long ratio points and ratio XX third in line industry, the accident year. in combined X.X -- to for some of the low moderate quarter from After the quarter. activity

Hurricanes Irma XX amount includes Carolina. to in for of and from from segment. events. result XX.XX losses from to combined losses commercialized quarter losses incurred million losses other outstanding losses The to E&S in added Georgia catastrophe Harvey Our net the Irma. million Hurricane of and in resulted and million Hurricane Maria. remaining primarily losses and segment the South losses resulted this and primarily the our ratios relates in X.X pre-tax catastrophe All Harvey included X.X points net X.X which principally Hurricane from incurred million relate of We

percentage $X.X favorable cash the quarter's X.X by development quarter which point. of combined During we experienced ratio the reduces net reserve million of

disciplined Our cash produced practice is reserve part and the for the on expense the has development. offsetting reserves for the loss revenues favorable

liability of offset in our reserve commercial and Continued workers' segment. in in partially favorable development by order E&S lines were this our line development general our compensation business loss

quarter the up X% combined the the year. and million first premiums quarter the Moving XX for X.X line Lines XX.X%. million The of from GAAP was X.X benefitted XX.X Commercial months Lines quarterly for written commercial segment Our added segments, points experienced Standard third catastrophe were segment The also prior development. X% of period of ratio losses Commercial net the favorable nine or to reserve net third casualty net Results by which points for Hurricane impacted year-to-date, and GAAP X X% combined the combined XX% In from of Auto were written ratio up were from our up quarter XX.X% increased for capacity Irma. XXXX. Personal Auto. third X% Personal for the Lines was premiums from written catastrophe of X the line up opportunities points Personal from The million including were ratio benefiting Personal losses. segment, premiums net Standard

homeowner's are personal costs pricing with to underlying We long-term book environment. target for line position basis and on close pleased an favorable operating order with our our

In fees. handling to with net adverse XX.X X.X these XXXX with Harvey ratio and Our combined additions quarter and declined third for our prior. XXX.X% development flood year-to-date. reserve the casualty high for the premiums segment, during the related or the operation contributed million but E&S severity principally Irma XX million $X.X catastrophe year for X% years written XX.X% GAAP loss X% Harvey point losses. are million fees -- majority of driving of claims quarter Hurricane of of The prior reserve expected to including The prior relate X.X year fact or million and up

reserves improved with from we While will X.X margins can pricing we've been quarter a points million third improved in from ratio mix over basis ago the the result Hurricane X.X%. included our was expense the -- down -- this ratio down basis basis strengthening, GAAP also The year comparing this we time. statutory and steps from increased catastrophe taking losses the We the are was XXX business XX.X% was period that's points for believe expand Harvey. quarter overall On XXX expense quarter. disappointed which the

full see invest underwriting while in -- our tools to the key customer geographic overall to initiatives employees enhancing efficiency our cost continue in We around category continuing expansion and experience. and savings

to is nine holding basis months long-term first a principally to to due ratio XXth. company down period expectations. XXX comparative to the quarter, the expense appreciation comprised and relative costs expenses Other share our also related expense management. compared year points For the down elevated costs the were disciplined the till the long-term of This from to prior strong is stock compensation approach but arising reflecting our compensation higher price are primarily statutory to our which relative September

volatility savings variable due the stock the there highlighted line plan we compensation the line this of As some item accounting the the long-term in restructuring expense we earlier in year, expect completed treatment continue last we item quarter, a to a this although is of portion to for plan. in given

Turning to investments.

experienced securities from For income the tax our from Fixed income quarter, an net XX% year investment resulting income portfolio, book yield. ago. of investment higher was increase mostly in after which tax net XX% represents a after

compared duration, with fixed of in a quarter investments, an highly time been on we’ve X.X% at investments. principally likely modestly portfolio The X.X% and tax continue X.X% up income pre-tax to after results X.X-year income gain portfolio gradually a risk assets, and modestly allocation on depending tax Risk a quality with The were quarter our X% a alternative during the Alternative our equities solid income over was ago. a the of went will securities, recorded yield include year-end. AA- to averaged short-term money assets, opportunities. increase is portfolio fixed after $X.X The We’ve fixed effective performance yield market X.X%. diversifying and very average one portfolio are strong invested investment due credit third income quarter. lag of total the on private Our rated during the the reported million portfolio. year fixed quarter high including driven in the yield by which portfolio equity on asset

for Our quarter sheet at the months equity the earnings and XXth. year for billion plus from with increased per unrealized net first X% remains the gains. strong of balance benefiting strong investment Book nine September and of GAAP value share XX% $X.X

We per strong account financial into $X.XX dividend our share taking have XX% position. quarterly after liquidity our and to increased by

average. a continue times, capitalized of support the adequately are ratio expected We to to to is X.X growth surplus about our twice and industry target which approximately premium

ROE. to our appetite, risk reserving reinsurance well call each discuss turn portfolio, that, processes, to to We This equating industry with the rate catastrophe operating continue allows This With today's higher insurance point to operating ratio positioned returns respect combined model underwriting to over maintain superior conservative us in low I’ll stance whole our to a generate of about buying us environment. and point leverage John investment to a risk. interest operations. than managing adopt the as with the

John Marchioni

and Mark Thanks, good morning.

opportunities within Our profitable see new segment talked opportunity commercial approximately sophisticated share market on X% price about long-term our leveraging on agents. unique of to to We underwriting $X.X appoint which of represents growing wallet an agency a our with We've granular our finding focus build available growth franchise our represent appointed remains basis. relationships, to XX% and by for footprint current remodels growth our lines. and to this markets commercialized us strategy line top for tools underwriting XX% more risks billion our often Together, in allow lines to share agents premium target than an XX premium and additional commercial in state footprint. stage

So with new two of this our our New Hampshire higher. receptivity Xst, these to Arizona expansion of We're drive New agencies launches million about In and expect Hampshire open points $X of new agents Effective we New footprint with and program with markets of geographic premium. in July XX and appointed new on the and each of product XX. two year, continue Arizona our market our commercial these will of Arizona we've pleased the control available states and Hampshire. new XX% our net write end of the of lines to in excluding approximately premium year. the states agencies with opened far by share We performance XX that case,

underwriting next expansion and and the for XXXX by also hub will Colorado which in Utah of includes early as Our office in end Mexico Arizona year. regional serve our the Southwest New

to price and in risk. allow obtain to a and for the continue technologies capabilities our We tools strengthen underwriting right that invest us given

should prospective year with business account Insights portfolio. risk accounts the underwriter's quality this insights we in operational efficiency. our real-time at to of how Underwriting underwriters overall compares provides already earlier new time field similar into and new and the This selection tool provides our to which deployed tool each Our information high improve decision

to Turning our operations.

strong again results. commercial premiums standard produced Our written which extremely net total year-to-date represented XX% lines segment of

quarter accounts XX%, business renewal compensation. tool. percent. of X% based and Solid net new averaging constantly was a premiums fairly size business retention monitor on for larger level on growth aggressive, our low by portfolio hazard using and of manager pure for granular renewal remains written competition increases Overall, our profitability portfolio price growth underwriting new workers expectations the driven stable especially dynamic We X.X%

highest of Lines the which For XX% represented our Commercial accounts we quality Standard rate in the of quarter, premium X.X%. renewal pure achieved

for increases pricing This mix On premium, allows of down Drilling the of general We to the liability quarter, rate accident business deliver reported and lower which X.X%. our renewal of accounts to achieved largest administering Commercial X% casualty loss prior inflation. claims primarily granular by for pure change, to expected pure a approximately so $XX ratio anticipated renewal our improvement prior. which quality results through line years related of lower achieved while frequencies far year. Lines, increases rate pure represented line to year XX% us achieve price development reserve of that than of for million and continuing additional XXXX we of this to favorable business strategy claim equal severities approach

as year, the this remains as Auto expected average Our price for Commercial million we line a result overall area workers' accident renewals quarter, steps been results. NCCI lower pricing improve financial take claims a reserve casualty has have for been than X.X% filing and of increase prior. compensation overall. as XXXX development compensation negative loss years experienced Workers prior focus state other flat favorable of severities so with and year cost by to an far trending individual the of $XX

primarily and lesser XXXX development, XXXX a claimed reserve quarter, and the For years. unfavorable year to frequencies experienced extent of $X severities third Commercial to for accident relating Auto casualty prior the million higher

reflecting reserve year current $X.X additional expected elevated dollars, been have for We which loss than by so believe implementing the X.X% for rate actively need line quarters addition, higher accident In support loss increases trend trends this year averaged for this million we going recent and forward. far strengthened price the

total have In The quarter an premiums nine the reducing industry segments been combined Lines In Personal experienced for which and on line margins homeowners' profitability renewal new exposures classes. increases, hazard addition targeted with managing strong been price actively we've increasing written, XX% statutory XX.X profitable and ratio. also in book year-to-date to overall price months. first represented of and net higher the

higher of We for a resulted the continue first approximately our we've on increases increases or ratio of book XX topline losses has greater seen to price tick-up averaged Auto, the Personal basis. loss the normal business In declining year. increasing the A of in homeowners' that Renewal of to target months prices an physical new premium points been year. pure Auto has XX for in catastrophe increase sharp years growth in flat for have a a year the Line one catastrophe trends. Auto averaged combined price on volume reflecting book across annual as X.X% Personal damage and X% in Personal first months pure volume. liability nine opportunities Renewal during of our premium Auto quarters nine growth after or recent Personal in X.X% competitors

impact rate of fully filings Personal include XXXX Our earned Auto X%. approximately a

millionof push does represented casualty in been increases losses, impacted Overall adverse the development primarily and total this XXX.X meet Results year-to-date Our alleviated X.X% and to quarter. far We book. higher segment by steps aswell accident reserve from years significantly monitor E&S rate pricing for pricing combined with of and segment, the by inventories comfortable of of to segment lines price renewal rate of written, were in where not We've taking relating go net increases that business. the on our Hurricane new as$XX year and so premiums business generated targets. Harvey closely a deliberate averaged remain a profit levels catastrophe with prior. this let X% appropriate XXXX statutory ratio which across

and changes involve expect to loss going trends outcomes also expense We operation drive to our forward. improvement

the dynamic Our market to improvement quarter. commercial Small was to topline E&S to our clearly slowdown present if attractive core pricing an been the market does drive allow not support line hazard stats, in segment. low that strategy complement profit remains has and our the

to underwriting, continue consistent invest our claims profitability future. and the pricing order sophistication in We deliver in to in

and balancing on our term XXXX maintain to lookout focus longer keen beyond, with around profit we As our we our objectives targets. growth

strengthening continue we – and that relationships, agency tools in our sophisticated operating capabilities the enhancing to invest franchise With high-tech customer Operator? call model. building relationship our underlie questions. together for underwriting out up which of open We our our high-touch

Operator

KBW. Thank question. Instructions] from question go first ahead with with your [Operator Please Soleimani is Our Arash you.

Arash Soleimani

year of Thanks. detail that I severity more large I prior, development. was E&S and got a just pretty want around that the color just provide it just on more exactly drove bit of? XXXX what to you you amount question in a was the said amount what but and consisted it Can terms get know accidents of

John Marchioni

about going prior. how is fact claims A to handling it we to the have tell how came in have in severity organization. forward. at what in about our in business E&S again Arash, this the And management to fact just a XXXX process from and it profitability the of and have news is under back the we've to philosophy is we expectation could about prior tendency time reserve lot a and merge is about of what think you reinforce and well. to an past on that's as certainly and portfolio in point to or to has quarter. year beyond were files at acquire this But for our current not claims actually file because from expense accident comments driving you hands question. is improve and manage and not you our held the which that John is file, day the perspective, relative than we was outcomes one very react we’ve think quickly and overall, from January for had on as from in point do, important and can movement January a little the points but in couple it that and since me other and both thank hard of this changes their year day that the the you current that the with transfer I But XXXX talked a let think back well. in organization one. our more couple been will knowingly we also And past and point the to in what's how accident Starting when perspective year. just which we negative read you year when as XXXX comments There's Greg continues make an do be the made all may that philosophy was what our reiterate, the steady loss is driven reserve would other jump which our said it's have I files starting the more prior just what operation to XXXX opposed to relative frequencies think overall pretty transition our claims from XXXX the in which to prepared Mark the to the in our a development the This

about the future. informs about how us more So the our understand I we when think think that's context provides important about we view what think to and think current relative activities and you to how

dating referenced take make for both way much by our carefully been comments business part was We've book very we're topline basis. overtime, which said very company. and would point segment to willing overall new We relative bottom We've some XXXX. is inventory. manage have in the in and willing you to the the middle that of years recent that clearly we've the were be make. volatility think to trade and a continues basis to to track and XX% new range that topline on pricing to in on what as we've more more also and we said is levels coming to moving on the also the profitability consistent order and target XX% prepared quarter pretty line target I'll that for renewal that the segment by targeted pressure on in this we're pricing towards about kind and started achieving in and in saw be Another performance back through renewal we of this year-to-date across geography and measured very talk to to portfolio the accident like seen a We to a

specifics low limits some So I and the and this segments a development straightforward relative is its profile lower liability, not lot to was. this development, that that's but where very fairly general and have hazard more in industry

Mark Wilcox

to want transition make like the years, position the than touched address but is what don't book year, John's comments, really the business. into we fact about from fact The average. to really that positive the as I John that, is and for add we sure the wanted above feel we have prior final, got that and on anything overall to transition. we reserve it it's really other into that about this we part we ever move of about the of overall the that book to do we next Hope fourth the nothing's quarter solid make sure of felt positioning

Arash Soleimani

Thanks. points non-cap That's had backing loss for the guys property basis quarter, in a in decline the reserves at I I of E&S, for E&S. XQ also think and the just I XXXX you very bit when losses ratio question extend kind the XXX helpful. out adjusting and And cap look little so

to of backed improvement I core XQ basis out in it implies loss when XXXX points ratio that So at of a E&S XXX still about look segment.

of what improvement not changes going is is the trends that E&S loss bearing legacy have business you're on be just today, January higher really of that forward that the guess seeing made. just imply it would forward make function the on any you're seems XXXX was you're signs trying does question this terms that ticks really sense? should my and So writing I'm any there the said ask like to doesn't what you in I that all stuff you've seeing in

Mark Wilcox

So think level out need to the of you Greg trend improving property, rate a about non-cap the what is big ratios. loss part which we on underlying think you're earning have on impact us you is of in but beginning have in refers book driving and performance been that and year-over-year relative when business pointed clearly kind point to positive overall back that's to of other that loss seeing relative to this you the will about comments

John Marchioni

performance relative this would to of underlying going as a favorably, don't to look you're focus unfavorably positive number. I activity on to property that have lumpiness the either when at get move indication more move. view or Another start necessarily year-to-date both negative mean to and an quarter-to-quarter focus I you I turn

So in more book will XX again, tell at rather combined what underlying on overall I the ratio just look is would focus you the this have bit you book I a forward core. the that's when about little and than going

Arash Soleimani

may you be development thought make imply ticks if record the the ask I think that that should higher than would adverse to stuff caused you any differently trends you Okay. money to loss guess doesn't that you your that initial

Greg Murphy

year. seen XXXX XXXX, This have John We adjusted in changes as would XXXX would have prior. mentioned and was you the

Mark Wilcox

Yeah.

commercial it and would in really on sort of than versus quarter cap about book and rate coming with, mentioned reality period or ratio the reflect claims rate order is Arash, the underlying the not in the handling It where right business. was to year-to-date drive book and didn’t earn look non-cap coming underlying if points help perspective ratio period. to prior the the an should XXX future in profitability is XXXX three we to and profitability on and on of focus trend underwriting the loss business. reflect accident basis The points year XXXX is year, course the combined provided which at doesn't basis of we're unlike for that -- and increase back with something you're E&S property the your basis the quarter about the is four ago but improvement add underlying an that you that current excluding during outcomes and as the the our XXX is Just from a accident the that in impact so the earn good the year combined Greg which be XXXX. will with development happy in speak improved well And out math, through better John and to mix the and XXX to

John Marchioni

is talked business improvement. only I this where the to because over our helps add in this mix certain is high Mark the that drive drive then you this about improvement mid for yield in in When opportunity business is your back to and this it’s made certain typical just in XX% the have range, or turn more so non-renewal. the of very cases it past. you John. either quickly can target And is the Arash, you quickly improvement hiding mix classes rate point reference mix remember a We've in segment retention will

Arash Soleimani

combined sense. there but put you know that And fair for make to you I don't just….? if about one target book? you've out know say that think what's Thanks this a ratio

Mark Wilcox

that What said overall points a we we segment time a but of commercial little pay we know get at lines this than our to few bit as generally look there. better you running

told to his John as And this market we're going manage ROE. the comments conditions. that also more with is that business indicated flex by We topline you in a

conditions rapidly you this you market. unit So in grow competitive know market favorable more highly see a

trend. a see You'll

Arash Soleimani

you conditions is of you right know competitive But now. earnings the highly mentioned know the I terms in it also And release. competitive in

So that few the to book competition shrink term? kind should near terms imply of you know that next trend if the of quarters in continue persists does the that

Mark Wilcox

I at pretty say I pretty don't it aggressive condition is say would this competitive point obviously right sub-segments would that want say to reviewing out. we we're say looking pretty would I aggressive, today. now. pretty, But when competitive generally, is I now, that there market right

Greg Murphy

flex been has Year-over-year new pricing us has in primary with of it… some the the business. in on going be And additional for down to it significantly. pressure renewal been Victoria's whereas point unwillingness the on healthy should E&S stance more -- And to as rate our I steady our topline

Arash Soleimani

timeline that? than points commercial for something expect? that about book rough you a the comment the of the few Is made run the kind What's should And book. Thanks. that better you

Greg Murphy

a time you we're our forward bit claim these picks little bring of that going we and our you time got give the things to I us know to think really to for themselves. costs would changes sales say manifest fundamentally have that that -- changing pure reduce premium

segmentations we from run. there had a scale we it's long-term business have continuing I very new a would much we business that will standpoint, we drive He sure today want couple bought book combination in new an that the And well. feel rates. the make of part where say just growth of we're so expense be that overall to targets. needed there in to and the terms think of And And ongoing to pretty I can then our

Arash Soleimani

guidance core. just I quick. know call last the quarter on That's that about you from touch intact real XX.X combined I on for you to you a credit took a the you kept you guidance the if a of Thanks. want to know Okay. one you've helpful. XX.X to then it And know you the favorable out ratio got favorable on how back to you talked point know know And give to and XX.X development. point you

development the should as the any XQ. favorable you based still development is had on in of So know that update we the core think XX.X there a to or you

interpreting So that I'm to make want I guidance? just sure

Mark Wilcox

We anything. haven't changed

our basis that volume how to moving a expense in premium the know. get remember result months months to from there's a as normally the latest a ratio of Just we what spike the of our points premium and about little always premium of represents you nine probably will quarter under always fourth volume XX% XX comes quarter you XX would

at a expense points increase So XX ratio. volume the the to is nine fourth from about basis the bit We months we XX in months always little if quarter get XX% premium an of of look of lower. statutory at a quarter in the

we I is know convert I of looking something us think to Bob our I and and to the movements. since guidance would ratio confusion left we've and it was of way know statutory the will and form GAAP of that going that see this all just out But be year the in forward the guidance for that combined around at. the that's avoid the Mark do some

Arash Soleimani

the I I forward it very to going would yes. thing. helpful, was Okay. ask was same say going be going actually to

Mark Wilcox

It to you're you're up totally or just that. wasn't just here

Arash Soleimani

much you. answers. you. the all for Thank very Thank you Thank

Greg Murphy

Thank you.

Operator

Thank you.

is RBC Doyle ahead with go Markets. with Capital from question next Our Mike Please question. your

Mike Doyle

last I It's round Yeah. a had. most much questions pretty exhausted of what of

Greg Murphy

Holloway are Okay. you way? Mike, -- why by the

Mike Doyle

fine. Doing

Greg Murphy

I by read way love religiously. the I them your pieces

Mike Doyle

much. very you Thank you that. Thank for

set there a get. the improvements already I up correctly way. since is you I one covered there of a standpoint. to opportunity that questions. been last commented in item kind is along clip have diligent upside much is XX that kept less -- to But rate increase you you rate competitors. still is as guess I know ground good the how are of you grab know feel the lot know try last as your positions kind rate to of seek a don't such action that written you you know a So the right Maybe to Or broader from guess that the the you approaching you remains you like some as numbers more impacts selective of taken of the lot out of

John Marchioni

this Mike, John. take that. is as at -- was well. stab I I'll a Yeah.

You look XXXX the granular very that target that in a really in and the pricing we performance factors know survey but at we performance way relative strong. period the that we high very ignore say throughout operating ratios and this combined clubs of we've the And hour the I not are our time. of tried been our highlight to focused on starting marketplace to kept would story pricing manage and constantly we in has that our commercialized way. And if you retentions

We're And that way. time not a it overall target XX% oxygen to or philosophy way. the of We're same pricing ratios to Our inventory to going is manage sure in we performance in year our driving continue think negative manage that going the creating to every so XX margin our more that change. our that exceeds strategy to our manage to renewal actually aggressively is targets. going that at the and to business business we're continue really make percent protect of the

new couple of competitive company workers' also pressured continues a course you would the it's for be that very will one Number So and in very decline loss to That you're the philosophy. business. prepared those seeing things a be places highlighted bit of a said a loss know And a through. either from cost harder be That's to to little control in upon we segment in of comments. many dependent NCCI come state costs be you're company-by-company harder individual it's overcome because a bureaus. what lot filings may filing. a pricing And

more around will over in open pricing line. more. about the we comments of well to the may that quarter a going in trends finally as as auto we our for a where start that's X.X getting Pricing line the what wakeup forward. little on be market need auto been the line, expect the the call industry. third going property in that seen a rate line particular to discussion has a And expressed activity price we points to have seen So entire I you And hand as X.X, commercial to catastrophe know seeing for we're when we're on continue of line look that you trends the for negative But that in for other those then following support the on for market think business. lot you've a prepared at more

altogether know the you our approach to same. pricing managing be put So continue and we philosophy our will to

Greg Murphy

basis tight is into every such with comes as I would no or agile And very on that there just have to and or lens of we zero seek XXX XX has year inventory anybody that be by going much company let can I pricing. and ground by we dial is by agency by bump. got the a that nothing it cohort. of level underwriter. going it industry down be nothing mean and to the I see better answer lot folks of out. to happens with without days we through Mike see the our ability really can here it proud articulated. this XX vertical And see than let's the be agility hurricane what to just work more for XXX inside as it They can hear single irrespective tailwind proud realistic. activity John that as headwind how at points inside to out. We would question see that I large is that's was our region, which -- say for Greg. And Hey, up They you're can we agency, dial right ROE pricing be the got either. me Their your this to

get So costs certain you capitals other about a thinking know industry mean things, the I range and amount and to the in of needs XXX discipline.

they people mega This themselves. have of of reinsurance programs thinking that come protect lot a scared off as dropping. people have the then tale has could event whole this of the think Florida could been extremely I sign where as

-- I people XX hear differently back no and Overall these programs counterparty overall things have all retro auto rate, getting way about you're that make don't been point all then this got getting not and commercial rate rate. before of is I thinking think are thinking that to they about any want then you're my about are to want G.L. get don't had But at should comp. this you differently overall rate. I no it if but if rate I getting happened. and guess

for to -- dialed very we're remember and there you a And medical they should predicated And think you everything higher, everything do permeates when amount and edging more us. tailwinds that trends, on this we in inflation so inventory and got lower. really if on we medical, of this are are property it's the And want go all not we business, anything, in else touching. we claim edging lot medical about are provide sit

that's deployment us. So, again, do and to franchise model, into if a an information, highly company's it, sophistication agile got a

Mike Doyle

appreciate the Okay. Very questions. my comments. much Thanks. That's all

Greg Murphy

Mark. Nice

Operator

your from Instructions] [Operator Please question you. with proceed Sandler with Our is Thank Paul question. next O'Neill. Newsome

Greg Murphy

Paul. Good morning

Paul Newsome

morning. in want might Good the on we've a kind had broadly. these impact you weigh catastrophes little that thought of -- bit more on to I of

lesson your think And opinion in The large for there the And the has is very from so I market taught this risk. in taught us hard a these question hard events. corporate be XXXXs clash I X/XX do market sort potential back of lawsuit really been very, learned and if mean wonder about here learned Mark a about an my your perspective us seem they they the labiality told to lesson from from and something underwriters' need I to There -- be there's the different. perspective. side. in lesson specific industry's to opinion they're underwriters that told a

Mark Wilcox

a quarter jump risk Why is further talked Greg well John in Greg on company price loss and the this this Mark activity about and needs follow-up topic. here. to and the compensated bit to the I Yes, take as for get adequately the can in. and cat the little then don't

that case in and combined of impact points impact -- the call had it with and shipped terms really, a If relatively storm worked really, half really on really been these has Maria, high for ratio. that if place the that the you as it us, us took model events our It shook a the look Texas happened big our out us the new from E&S we was programs had exactly test quarter when for at for think good event. Maria in two or out Irma states, relatively I Florida. significant did for way modest business whether us [Indiscernible] different, which and hit the particular sort have place and perspective had reinsurance track significant of two east and segment coast E&S a well cat in

time the an Texas from part saw to that the Florida From as have of hubris learned, and I the the we'll what I and our claims think and of lessons business again we will we really sheet overall a in that catastrophe model the perspective, be think for lessons stuff -- event will think it I of how sit balance and about Greg that sort model -- exacerbated time reopened sort litigation but we pretty primary reinsurance We do feel claims. risk. of that We what what really the off lower and perspective, and result again, management, of tell there's program in counterparty volatility will business each lessons people and handling are think underwriting Irma. issue think From a really this. I Selective in XXXX, staring value from like claims wise. forecast, about back with But got the the underwriting credit some significant showed of buy, come lot Irma really catastrophe. a Ike is perspective, see down a happens. of reinsurance have this. protection mentioned franchise good of be the business with tell operation have and that caused learned those good [Indiscernible] to the there's will I development appetite about that really strength Hurricane think think the a that have the way risk the Hurricane the we that as forecasts out we will we about learned think model, reinsurance good reinsurance I lessons say always And bad

John Marchioni

there flood relative flood I own to private in exposure in of point out take I for excess was the to and the companies would have to exposure and how to certain other saw really program the either the a of through Paul that add, or exposures. The lot this that's NFIP. impacted understanding an addition in market some in on or your you that flood complete of only was based step is capacities about may provide your some the these a think rethinking Prior John, going aggregation exposure is this write business. quarter, geographies this experience, aggregation raft in wind talk And cases currently of for in appetite business of flood

the unit that appetite pricing ways, think zones. But especially relative their especially shored We program your to reexamine in flood private program. hazard see write to in significant Now, providing a per can companies up in player own insurance, I relative of certain be you think exposure-to-exposure. higher we're may some

Greg Murphy

say -- everybody. into retro. for collateralize from been your And pretty on been trying collateral in will dialed folks to on got programs. deeper our marketplace been opportunities just Greg, to you retro would collateral disclosures, been have the better our folks To I about extent very good into programs the again, we've good pushing I reinsurance always possible. out you in where me, get Paul, sense it's to years; counter-party did capturing that at a there the And tell have on

to So, adequate attachment questioning are sitting tell that to that this cross issues looking relative you not out it's as you return or of their I matter were the become whether large have property to got and relative the to not the and side and periods only a [Indiscernible] at periods event many more diversified, set and would programs that companies well. reinsurers points as into return fall an now

another stretch So, their as long-term that's as easily that's exposure not writer, more diversifying again cat truncated. also companies liabilities

Paul Newsome

very much. you Thank

Operator

point, queue. are this further Thank there you. At no questions on

Greg Murphy

are all great really for as Investor be about indicated Rohan Well, for coming here hopefully, that's a I've I thank times, will you I Day and excited looking attendance. everyone attending. know day the we you many in up is

reach for on list. his today's any and make much. very out in please to thank And sure that the So, follow-up, much invite get Rohan very team, participating And you you you thank call.

Operator

That Thank for XXXX Group third earnings participation. Selective call. quarter Insurance concludes you your

disconnect. may You now

Selective Insurance (SIGI) 26 Oct 172017 Q3 Earnings call transcript