SIGI - Earnings call transcript Q2 2021 | Selective Insurance Group, Inc.

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Operator

Good day, everyone. Welcome to Selective Insurance Group’s Second Quarter 2021 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. Thank you.

You may begin.

Rohan Pai

everyone. morning, good and Thanks,

We’re simulcasting replay selective.com, the our call be available on will XXXX. website, until and this August XX,

investor and trends of use and our business securities. GAAP provides measured Today, average we measures on is package, to our unrealized gains any insurance website. operations we on supplemental is realized net results it common discuss divided available operating page financial which also referenced make operating reconciliations the easier Investors of the or operations Non-GAAP will Non-GAAP equity non-GAAP today is return Our investments of equity on investors which analyze net as our non-GAAP non-GAAP GAAP in measures that common Securities annual, return report non-GAAP evaluate current stockholders’ and equity. the equity, financial by excluding are U.S. income our and and using to filed Exchange and operating available on impact gains stockholders, common or and Commission common to believe quarterly income income operating also included on operating income for losses with after-tax business. losses in

projections under future guarantees Reform about statements These forward-looking performance performance. and statements future of We use of XXXX, also risks to the uncertainties. and and Litigation Securities not Private our Act are are subject

filed U.S. risks pandemic. of the disclosures these annual please reports COVID-XX to supplemental refer quarterly uncertainties, which the discussion and detailed a For and with related Exchange includes our and Securities Commission, to

team, Marchioni, Chief Mark are Selective’s forward-looking Officer; Executive undertakes revise the President statements. call and no today’s Wilcox, be obligation John Selective Chief management to any You of Officer. should following executive members Financial or aware On that and update

call the over turn I’ll to John. Now,

John Marchioni

the on provide excellent initiatives return financial and in will non-GAAP financial second Thank our on then results the with an us quarter. company. generated and strong some and some of and quarter investment financial and higher-level morning. results comments for the introductory I’ll underwriting the outperformance. We to good results, then discuss Both for I’ll highlight annualized you, were results our of themes operations industry strategic some the our impacting make Rohan, sustained to Mark the contributors our XX.X% position financial that operating ROE. and operating update a

half XX.X% alternative Similar strong For income quarter, our are to our with was underlying of year, full of investment the non-GAAP operating target the year underwriting year. the ROE while prior first first excellent and outperformance, of drove ROE target of annualized well reserve investment the record favorable our strong and operating above performance the continuing year development casualty results. XX%, our on line track for ROE in

year and for pure price averaging prior For and after growth the growth net COVID rates. new of XX% commercial business premiums quarter, adjusting was written increases credits by X.X%, stable ‘XX driven the related auto personal retention solid our overall renewal strong

XX% X.X in our totaled quality the performance reflects prior underwriting for ratio and quarter, business. of reserve development. of underlying combined year Net after the $XX benefited income the book benefiting million moderate The casualty combined our alternative points and the XX.X% losses exceptional catastrophe Our tax from portfolio. of favorable investment of ratio from quarter investment from superior our capabilities

this few far coming a highlight equity, I’d like in to particularly investments, private quarters. While have themes. outsized normalize year, performance we alternative the expect generated our returns so key to

to capabilities. is First, tools distribution a relationships, to around sophisticated and objectives granular our testament profitable servicing superior ability growth consistently our and execute underwriting our pricing strong partner on capabilities, customer

and a on unique foundation a operational of centricity have customer excellence. We built franchise

at focus on or and have above our disciplined price increases helped that pricing growth, equally trends underwriting renewal resurgence our While continued loss strong important. positive tailwinds expected have and been economic pure market are obtaining

Our book risk confidence our characteristics give understanding of deeper to of us with profitability and sophisticated opportunities a underwriting rates and when the provide market generate arise. tools us higher growth

the averaged X%, Commercial and first X.X%, line Lines pure year, was half retention XX%, price up with year business increases ago renewal new For the was rate of period. the the in renewal

on accounts, For point larger highest for of premium smaller in Commercial accounts of $XX,XXX, $XXX,XXX and in profitability renewal our our premium which cohorts, X.X% excess increases premiums renewal retention than expectations, first pure Lines XX%. year, year, increased size XX% generated with all pure produced of policy price price in while quality based half of first the of of of constituted X.X% the less of future pure renewal renewal Across X.X%. rate the accounts half the

comprising accounts XX% of our pure challenged point retention of rate generated premium, and of XX% most Our XX%. renewal renewal

Our loss to generating while improvement appropriate understanding administering the granular to and maintain ratio has allowed an approach us risk strong retention improved mix business. price of through

poised yields decline is book a result after-tax to prolonged contribution multiyear investment to reduced lower in investment the portfolios, on Second, of in in rate environment resulting income interest ROEs.

performance consistently While overall of market contributor that to important. during replicating alternative investment a strong rally level equity will underwriting be increasingly performance be higher will over from to have Maintaining investments the the discipline returns our difficult. been deliver past decade,

underwriting with maintaining we an supporting high-quality a to with adequate standpoint, well From towards and a capital to intend We liquidity are positioned remain conservative, investment position. operations our goal strong do allocation so. portfolio

in building This has a theme greater loss be losses chains lines continued shortages. To being labor additional the The lower-than-expected the create by short-tail expectations. and for that third need inflationary catastrophe on materials, inflationary significant pressures impact Medical forward are stress surge demand putting these lines. same those trend workers’ extent of benign. CPI, they supply remained on severe compensation loss offset is on key fairly pressures by persist, Current largely be driver exacerbated frequencies could to trend loss reflected inflation. will

reemerge. to social continue trends courts are addressed, and As inflation to backlogs reopen expect we

factored a process have would picks, loss we into term, which transparent. been Over expected and diligent higher-than-expected for sustained into be trend longer companies always the our need build to inflation how

increases disciplined planning record has Our or along pure loss XX-year renewal positioned. at price above obtaining our well trend process, with track us of

to highlight that strongest standpoint. financial our like and position from in the operating an I’d Selective in remains Finally, history

We growth. and extremely our well executing consistent are generate profitable to on plans

with the the capital to the to position opportunities. commentary, provides the strong but the to Mark back review over results Our in quarter. additional invest us provide turn to come flexibility most now attractive I’ll for I’ll call

Mark Wilcox

and morning. consolidated I’ll Thank you, with for XXXX. segment performance John, our update position good and an our results, discuss capital operating review on guidance our finish and

share operating meaningful earnings per stockholders and net of non-GAAP non-GAAP investment we For annualized of $X.XX ROE the $X.XX. insurance excellent to both reported second diluted XX.X% quarter, common from reported our of operations. of share an with contributions and income a We XX.X%, operating and available per ROE

or rates line For renewal well the net year ratio quarter. business with losses for in catastrophe growth with is primary XX% and X.X quarter. year pure or of million reserve in or X premiums extremely casualty compared period. Overall, written our price above solid Consolidated items. year. consolidated Lines when development credits retention combined was ended the in development, performance million of second of strong million premiums E&S the the reserve $XX.X adjusted new our the premium months catastrophes prior when increased our underlying ago written XX% combined pleased XX% prior related year. an XX.X% prior year of XX% our or Included XX% Year-to-date, favorable of premium have segments. a Standard combined quarter excluding ratio an for We XX% target for increased and The extremely points and the COVID-XX top or growth points. in net adjusted ratio drivers second basis of $XX.X June related we increases, the the prior reported strong XX.X% of this and X.X very On so strong Commercial for net for XX, non-GAAP operating our annualized ROE COVID-XX was year casualty year are far $XX the

an ratio half of combined of of XX.X% the and For reported we a the ratio year, combined underlying first XX.X%.

a and expense non-cat Our reflects year. the combined underlying favorably to guidance of lower-than-expected ratio first and compares ratio underlying for of the losses ratio better-than-expected our of XX% XXXX half year-to-date property a initial XX.X% combined

Moving to expenses.

expense the the travel and ratio compared provisions earned X.X with Year-to-date, ago ratio expense XX.X% and of overhead of for premium bad was expenses. debt and for year The second and our lower-than-expected period. for audit quarter COVID-XX reflects XX.X% included related administrative year ratio Our related general XX.X% COVID-XX specific the expense the accrual. points entertainment, impact of prior including the items,

expense half putting ratio. these of levels of We normal some pressure year, on upward the start second the expenses expect in reverting to to some more the

However, which over million relative expect a was increase compensation of long-term period. the next component as to million variable our in expenses, stock driven are $X.X principally which group by our impacted the The totaled both improvement quarter performance of we year price, stock an to in strong incentive-based the continue the increase ago. as well peer long-term our X-year compensation our to to company of compared plan. holding ratio ongoing $X.X comprised Corporate costs and expense

Turning to our segments.

Drivers net million For year XX% adjusted of related step commercial quarter, of when written $XX.X Lines Line the Commercial premiums COVID-XX Standard XX% increased credits. ago premium the for second Commercial XX%, of or Standard increases retention quarter factor. economic for the was XX% stable price growth a pure also X.X%. and new growth activity of business growth averaging included written premiums Exposure renewal from revived second excellent auto

compensation personal flat at net X%. Renewal X.X%. a profitable was for The business we ago. a reported XX.X%. for was the XX% increases credits. auto ago, pure continued averaged premiums ratio prior the down particularly X.X% development premiums price E&S Commercial was to XX% The was profitable Net Lines year million emergence although pure reflect adjusted combined year relating quarter, underlying for the increases or averaged liability a claims the combined our million for ago profitable price million written, losses year personal underlying casualty X% segment, of new reserve market year the when XX.X%. flat items. points profitable net a lower-than-expected Line related first X workers In accident X.X prior second the For reported development. favorable reserve we for Personal XXXX when consisted of included was XX% prior. The for for net written COVID-XX points combined year was premium prior to of and $XX net in and our growth In Renewal the relative and $X auto. retention written premiums competitive premium segment, the combined ratio to $X.X XX.X%, catastrophe XX% was of The XX.X% and months, general relative and favorable written for year ratio down ratio quarter, adjusted quarter premiums conditions, COVID-XX-related increased X.X for year a trends quarter a

business New ratio quarter increased. and XX.X%. X X.X the a to was XX.X% prior The up ratio favorable points catastrophe losses offset strong was The combined driven casualty underlying by development. combined the XX% equating retention by year net which a partially points, of was segment reserve profitable in for was

to Moving Investments.

remains investment Our well portfolio positioned.

quarter and end, fixed short-term of of an liquidity. an investments was with of of duration A income in XX% As of our years a rating high effective portfolio and invested offering degree plus, credit X.X and average

RMBS sector accelerated the As fixed as the we minus, allocation the meaningful in portfolio prepayments our have the maturity have average expected. rates had Agency on in reduction in plus decline recent the AA we interest our A of lower to reflects credit been past from year rating as quarter to over preempting calls,

by return very low, not bonds and view, in our which sectors, private the The asset a cash XX.X% equities other low assets currently non-sale income XX.X% higher limited fixed allocation disposal investments risk year-end these strategies our into primarily public portfolio. AAA Given in asset but was from in income, high-yield for including rating, within have that our increase risk ABS a and we partnership and better classes this Risk class, credit do flows valuations. equity, reinvestment other represent private contained corporate rates include of at driven offer to our high-quality fixed real reallocated carry profile. investment assets, and XX.X%

up investment after-tax investment compared was primarily For the comparative quarter, the million year alternative ago $XX of by million period, after investment $XX.X million to from million in the tax net gains of of after-tax alternative quarter. losses income driven $XX $XX.X

pullback income period. on for which delivering quarter, the the securities. tax income well asset reported new interest of a ago reminder, alternative as a benchmark credit performance X.X% on portfolio the on value strong slightly tightening and the on As increased XX.X as investments quarter in our is fixed portfolio total quarter, fixed The after-tax the which rates spreads, from income fixed in strong a The was yields slight million the money the lag. points income with for the average reflecting investment net in period. purchases is compared of the X.X% flow total alternative a a after after-tax for of net on ROE X.X% longer-dated The very of XX% written. ago was the was to cash portfolio of of yield the year was Strong the quarter equated securities $XXX down year second The during yield contribution. first the X X.X% X.X% from for year half operating return X.X% premiums quarter,

capital. to Turning

value $X.X the our strong $XX.XX, increased extremely capital earnings. strong the per Book half Our from remains first share year of equity. billion to of during GAAP X% benefiting position with

have holding investments with $XXX flexibility and at million cash company. significant financial of We built our

net to of Our target slightly X.XXx, is written below ratio premiums our debt-to-capital surplus June at XX. was range XX% ratio our

capital the and did we quarter above during repurchase X% our position, to quarter the X% second have to find to any the We under strong share rates future, grow to our our subsequent rate $XXX end shares growth continue at financial for attractive we foreseeable million the well or program. flexibility sustainable opportunities. not repurchase Given

some have for finish we million months million. the available I’ll year, an use of approximately we of XX% still development under net on During of average reserve a strong $XX.X to catastrophe of of half We inclusive first at price opportunistically. share which total the an remaining outlook ratio, $X.X updated XX,XXX plan in first program, now of the We casualty our capacity X $XX.XX GAAP reflects losses, repurchased XX%. excluding This of our and from repurchase guidance commentary shares XXXX. with for expect is the our of improvement year. combined favorable profitability, the prior

Our no prior guidance year accident additional assumes reserve casualty development.

points catastrophe loss combined X remains assumption ratio. Our on the

investment prior million $XXX increased $XX alternative up $XXX investments. respectively, net net and from after-tax investment in alternative projecting from gains million, income after-tax from This guidance now income reflects expected and as are year-to-date $XX of after-tax investments. is We of million million including well our as our our principally

items. very investment effective XX% a of of which approximately expect includes for overall effective to income other remain to XX.X on an start In XX% And tax and XXXX. in we’re shares continue We rate rate XX.X%, weighted an tax for a summary, million strong average net all diluted basis. up

We are with after last ROE. year-to-date our adjusting XX% growth XX.X% XX% items year-to-date year’s COVID-XX operating and pleased for our of or rate

reflect benefits, underlying results nonrecurring income, While strong. our our alternative and development, reserve investment reported as favorable some higher-than-expected are cats results lower-than-expected such

and well long John. to over continue to are to the to financial strong call superior the back We positioned that, our shareholders continuing -- term. results I’ll turn delivering With over returns

John Marchioni

Mark. Thanks,

on customers our by our of bring to and profitable additional our ways identifying partners. value execute to growth objective and to continue We distribution generating consistent

Our by long-term our and our is partners predicated initiatives share. seek increase market appointing Commercial to of X%, is share states. on in market to distribution We new increasing which a premium augment overall agent goal expanding achieve these XX% partners share into of distribution XX% to our new to Lines

partners initiatives. has strategic and grow some The well. insights to of progress MarketMax business overall our their rollout Let tool, our identifies of and seen been ongoing among to me has with The to with XXX our business which currently tool has provides continues target highlight been portfolio us by distribution to MarketMax a growth contributor the our distribution their accounts of over new XXX year. strong to our strong partners targeted our acceptance partners into past approximately in distribution key grow deployed year-end. is and over

We the realize investment. just of to are full this still beginning value

business roll updated platform small Our successfully. to continues out

of in line business since changes on are product more than targeting eligible for strong owners, XX%. quoting general saw lines tends by such, the end business is and And homeowners small issuance for eligible streamlined are This business XXXX now from business value business agents our a available of customers cyber less The on in became market the June. Our coverage sensitive. of to business, our as lines, service. the Personal quarter significantly premium price which a new the that owners available small platform. platform and greater and accounts fourth new launched submissions automobile, and line to increase new umbrella we affluent increase rollout. experiencing place We the process in base mass In the liability, at successfully customer

growth Our Later serve coverage plan to saw already begun solid moving performance this continue that submitting this forward have and our to during and roll segment. out segment designed enhance automation position. competitive platform customer better to quarter launch E&S year, enhancements our further will strong business. agents our new in as second favorably this agency product to our responded the we more expect have continued We of auto we

mitigate to understanding and in E&S lays of the creating an recently how generation, This highly mitigation By the value values at ESG Sustainable to to Impact, lower and creativity, focus to business segment we and the out continues serve highlight embedded a by idea of the levels do These solutions long-term and equity environmental, execution we inclusion stakeholders, into attempting engaged developing innovation priorities. of customers a engaged from change, all celebrates and outperformance. hazard higher are non-admitted organization. climate I small, and and culture impact of team big will the which that of way and and interest interest within all our employees published increased Driving social want accounts. responsive remains diversity, the deal integral flow leaders. to Enhancing in include providing report, also governance and shareholders Our space. of sustained the our with benefit seek providing we our our services of claim increase is acting and part risk generating financial diversity pricing to

ROE As to that, of we’ll to our I up our the record look XXXX, I’m performance confident can market and pleased to targets. call we am superior Operator? long-term track for meets extremely continue we of or exceeds on ability position our remainder With build questions. with that the open that execute.

Operator

Matt from Securities. JMP first Instructions] question from comes Carletti [Operator Our

Matt Carletti

John, the I do have your a is on in read the question your least taking seriously? My follow-on are is, we’re think that view kind respect comments at appreciated kind inflation. is, what’s you others are treating more you seeing is, of think it. longevity of that to of you do impact And One twofold. then the you industry for it the my industry of have think from the it healthy Or on inflation cycle? transitory? And will the that pricing people some what do

John Marchioni

to their that factored I loss I into trends Yes. the to loss trend least transparent over rate, highly they’ve loss they’ll to think the have can historical basis, we is in earned And portfolio point. what comments go-forward got in back managed to always too confidently have looking the not and manifest and of around much our and And the trend and in loss always have around itself actual shareholders the in read will I that pure decade, from pure just with responses loss to all that, we just have disciplined a terms manifest own certainly, on understand our view you the comment speak loss rate we our discipline questions renewal also the all we the know, you pure which the into and And picks and a discipline And Thanks, inflation peers factored this community picks. we’ve reported doesn’t itself in think versus offset rate who expected. inflation And reserves. expected perspectives. to different I Great only to some trends had loss state ways in your part it important hesitate Matt. as number been at industry. trends they because question. on how of a but investor

would other the that’s discipline make. that speak can’t same I do, whether companies maintain point So take first approach that. to on but I we the we

right the to a I by and loss now, in you will severity, on social impact I obviously, trend is important and And frequency put trends while your one complicated factors. it it for in when Now and and trends. impact your that inflation think clearly, about in everybody mean, is inflation think context. industry frequency seen one to different it’s social severity future evaluating inflation expectations loss historical it’s is going be also few the

accident upcoming it So itself look then change of back to pick thought the manifesting that year? actual the how is you itself is severity in first and litigation? those severity, influence how it that’s what when higher manifesting you do at for in you was impact. that does versus So frequency what that? years, And is prior and exceptional higher respond in And your rates average

be in time cases, the maybe exceptional into offsetting that COVID-XX. then drop inflation XXXX that to continued Second is that. immediate some gone the pace, in frequency third is which lot economic of And and more a that focus in on along more into spent there’s exceptional And how so some a lower at companies but a seeing. increasing factored that’s XXXX, has with the factor severity how also another been needs is clearly think impact, I has evaluate. of partially and is that everybody the And been impact, around lot of albeit

parts largely down realize break that cars and CPI, the you driven when big outliers. it’s used lumber by Although the the of you component are

in bit a see So when areas. of little other pressure upward you

of there. a there’s number So different pieces

driven I of again, update dam the when vehicles in business, of of about total think sight. phys in total also and But particular impact in a loss portion inflation, of was how that a the from think and the the cost cars, and want severity largely not industry in It’s that it loss economic of about increased the lower in think of how repairing perspective, the trend because trends technology one our you And then by we severity in overwhelming always evaluate been for for on to to sellers used phys assumptions. think always more while, immediate the the the you of into you most the want have previously, portion terms in on auto context. losses this it’s auto vehicles on auto frequency. and loss immediate I and to and losses think our line physical severities rise are keep we short-term dam damage you impact , impact is but that factored context about more when subline of always

So there’s I complicated that’s for lumber, that longer, bit regard apologies question. the important going first point. it’s your to but to a With And to a on to context. in then think answer and with keep little my regard also lumber

And been big piece, about clearly, So up when in it’s same about home, impact is be of the lumber And period. just big to in portion the think let is in to CPI has home the drywall. small XX% you relative Lines. other bigger the only going severity. time have Drywall a line, because it driver seller. me homeowners is in loss to first But itself is about now than in lumber the that going talk Commercial average a manifesting

up XX% the sort is for the say, pieces So together and expense and average when for things. XX%. you related And loss is nonbuilding those for put of the extra dollar home, then of contents Personal, items, remember about index construction cost all that about let’s

So the it’s to suggest. our little bit lower as relative to frequency And least property, as that when you also, at not continues non-cat bad for look us, run a anticipated. but in it’s at there, than headline would

probably So X%, construction there. you’ve commercial got is and related. side, Commercial XX% And of sellers in on actual not cost loss then there’s that index an property about property to the the the are closer offset building

think discipline aligned I a that important headline still want risk-adjusted never to that its other of ratios in context well cat the to and target. through. to way normalized how that that we numbers on you around their speak look in others, the at basis. combined industry property That’s work All at So running the look that above it is is puts to insurance I you line ex-cat regard on can’t value. is want an to And have, with basis, a said, area

inflation. So A at values the on with inflationary normal in home on values our times allow we eye you in updating are building our and to constantly and side factored an side coverage and get the towards upfront, of property costs, those least stay

embedding loss changes loss So and and we’re always transitory around if diligence cost to on the the not into our process we’ve going prognosticate is this had picks. or not transitory really focus more

Matt Carletti

really I and numbers them follow-up, That’s have past between line, quick great. by for losses in property, and Mark. think answers commercial given standard A a Very those BOP? insightful do commercial, probably cat you just auto you’ve The in the helpful.

Mark Wilcox

Matt. Sure,

in across million quarter, business. In X.X or X.X And combined were of total commercial BOP Within $XXX,XXX. lines, for the $XX.X line $XX.X commercial or the on in catastrophe points million for the ratio. it’s auto, it’s lines, a $X.X million commercial about commercial on percentage X the that’s is and property, points standard combined standard $X.X the losses in lines So really ratio of spread the million. again

Matt Carletti

to nice really on Congrats a the great. right, year. All start

Operator

Thank you, Matt.

question comes Piper from Paul Our Sandler. next from Newsome

Paul Newsome

Congratulations want in quarter. question. I to the picture ask a you of big kind

from offset or that on improvements? what could the in you about consider we to be think What margin expansion wood, about thinking change embedded versus what claims You’re might that should you factors should knock we might inflation getting underwriting the just maybe that underlying think, rate pieces ‘XX, having above underwriting that keep XXXX is. you

John Marchioni

Yes.

stress So know Paul, trend and do to tried loss loss impact about it emerged? relative it’s and what this, actual about loss trend. into picks, think, my written loss how years you and with and but about the equal what severity influences has upcoming a and impacts it year, had the And trend pick we is back frequency I not forward who to I the That’s is it a around fairly great a the is on it’s accident over discussion saying, ‘XX passing the the last for ties when looking trends. and think at process question. of think just to loss I loss in part, That have least ‘XX, us back expected gets we’ve each just certainly complicated influence, rate? expected your impact the for X okay, disciplined quarter those but of your rigorous of historical

bring then So back rates. prior basis you trended on frequency changes based all look years and a actual fully severity in bring to those and accident when to and them present

point was earned that’s each inflation. So point. be influenced those years, in rate of my starting your could That social what starting by

little for in and consistent I that’s think stable future So before actual a fortunately, up at trend trends and the rate what expected, years basis there, And years, either to fairly the to pick trend. a look we is that for or driven the the certainly very us, therefore, that earning one with hit diligent load been is we’re year than frequency those that we’ve your you we’ve the loss your upcoming and severity, been about. emerging trend extent piece when worse and written prior expected offset the rate social inflation expected on in have by influencing accident embedded back,

one probably that’s the one, their anybody big think the else, from this about lines. I’m everybody or to when in not unknown area for industry, would is of information the do influence next. think and or from on I the a the that not a will us but for And they that I year have say, XXXX prognosticating For forward you would you planning lot would rolling companies the be casualty when

Operator

next question from comes Our KBW. from James Bach

James Bach

Or X.X%, it the was us sense I wondering on you for trajectory here? of increases it’s from just of rate last that that outlook your an was the do of give you commercial side? Can your I us So decelerating? is X.X% you Can X%, where give pricing going a quarter. see know kind -- for idea on on pricing.

John Marchioni

Yes.

an pricing guess in forward rate may short-term because about not may how I maximize forces present this mean, and would environment taken a to they our think stable. we while and the very and you just pricing the obviously, the current be the is conducive. look are. of market whether measured when our it’s driving we continue approach going dynamic starting environment what look we you rate in pricing we opposed relatively those context sustainable why to terms -- think is at argue X I own as the we over is on in trying forward, I and our be based to what’s what or of market first pricing, influence expectation we’re So profitability And performance point also manage trend, to manage understanding we that and would going the to and on have point how targets been if that our quarters,

key ones. hit me let just the So

while rate for yields, roll to is pressure think prepared impact from we portfolios. is something underwriting industry point us. that portfolio entire We the think that that #X where extent a in the on know environment. the on income to that for don’t that, declining that realize really as the margins. we’ve the masking will high-quality certain forward been And income we And strong got when and fixed a alternative core pressure low investment it’s out is those interest our I We comments, put generating investment So is. try returns you

in may years, you about were continue would back reopens. and and to, cat up fully be then reinsurance be be look non-cat in factored included be picks, the perspective, while -- a inflation environment. where is and is, number point -- pricing expect of it the emerging the props to for to loss over same trends we we economy more they has firming to the The estimates and and higher are point. loss us, inflation our would you’ve last you continued we companies, losses Everybody that of got reinsurers to if our the relative drivers, pricing, companies have reserve that prices loss other to pointed as of And seen to quarters. and pre-pandemic, those but reemerge the volatility piece think terms social are with dealing additional and elevated when disappointing bit in. But we you’ve up, non-cat in where and not more think expected still and a a that their in without and to with it little volatile couple pressure from recent pricing property, second a And more trends as they

the the broadly, I were number industry in ratio the would when put margins then be companies loss in think, point is And think in lot when couple many all you And ex-cat to tend lines needs about quarters have some I improvement normal on for realize rate a really starting industry by look it, terms the that most starting underlying of in really down necessary. headline back We with the everybody when the for would improvement. other, the the think underlying results. rate is at still together Now reporting for cat high and industry industry not make been and I load you point. And of -- the that final the the of it level. focus the about you driven strong last a there’s the of

But more hazard, seen bit make little auto, excess up specialty in that D&O, a umbrella, lines, the stability high portfolio. management property in liability, the what’s you’ve liability, lines I commercial think number general overall commercial think So our EPL, down. that’s bringing

James Bach

some of -- And the out mentioned savings I Perfect. expense map expense think the some just ratio on you outside are of comment Mark what improvement moving strategies savings. then mentioned sort forward? that you Can -- COVID temporary

Mark Wilcox

Certainly. Yes.

put guidance, XX% expense combined we ratio. went a adjusted of ratio, underlying we combined which points we ratio. off year our that forth for full into the was about was when after an the expectations So XX XXXX And improvement. XXXX, basis that expense And talked embedded ratio within

COVID-XX pluses and minuses, on for number was XX.X%. XX.X% As adjusted was the you but XXXX it a It reported of items. had really know, a basis, a

ratio, overhead XX bit have but little XXXX, be of basis So we’re lower-than-expected on had travel of points rate, improvement supplies, come into XX% our first the actually stationary, T&E basis Year-to-date, really includes really, a an and things basis. and audit It entertainment. going expectation we or like below We fees and improvement expected in at a for And underlying expectations. of the that And was benefited couple then actual XX.X%, there. XX than is points consulting drivers come to in a expected. versus year overall of expense our so XX And half rent, have things in expense the expected. the general run items that ratio. it’s some that, than less like just fees, that’s about

some as the of be into expense to think for an by XXXX. on revert of into we an our getting a to the XXXX. efficient for and of company, will so We’ve around down. as expect continuing appropriate the a a ratio, items have line for year XXXX, plan pressure talked XX%. next end to that get that And past today a stand in reflected a of year expense about in ratio little company. bring there mix maybe to to be going a going there’s as back place, into And upward business we we we back ratio able expense levels, normal the be our pathway in We those expect more the sight us do of full expected at level path to more to to perhaps more bit and XXXX But of

of about how So expense ratio. we’re overall the that’s sort thinking

Operator

comes Carter Grace next from Our from Bank of America. question

Grace Carter

Thinking versus to in there’s recent lines. today book? impact mass about is trends personal started towards rollout uptake the see kind the we severity of current or the as or severity play was the wondering growth of on meantime? your appetite wait any about I speed thinking pricing the originally where these the out, expected how in increases ya’ll affluent And outlook the in when transition if

John Marchioni

I Yes, sure. and the And what at our in pronounced own mean, honestly, side but we’ve our side. talked view auto auto, always you in the personal commercial don’t know was changed when at commercial on and the auto higher a offsetting side even drop look again, I that has portfolio, frequency it we’re certainly on it the seeing about all. in was than the severity on was personal it side, pickup more on lot than that was a

were our they we I’m of of personal severity in -- with data the in anything in don’t surprised pricing middle course, I from regard auto. significant a been a there’s a So that have lot that perspective pricing And in as don’t were -- suggesting to environment, actually of actions COVID. dramatic as shift the the

frequency didn’t and the to of term. I on shift So severity, the base We flat. permanent some significantly were auto think, a is in competitive hurt your rather our adjusting notion it credits providing that. position that rate the what deemed assuming basis, pricing near the And We do relatively be caught a some than go-forward auto appropriate, short. in participants kept of market

certainly, a a a where we it price account as to package as that personal the way starting the is segment we’re that And we business through that But think about more are as is that more of not pressure is expectation our think auto and auto now we decision-making basis. results on think recent its start on consideration upward moving pricing, of think will to marketplace. in is again, some big sensitive. into I put home make and

going market we the how that’s think So about forward.

Grace Carter

I a they quarters. And commercial, Thanks. look talk recent a lot one about non-cat out quick elevated if with look commercial. don’t losses of of I those at We’ve heard peers in had Okay. But, particularly on standard quarter. property in then standard the line losses property

there’s saw to didn’t just wondering avoid well? So about anything you -- you extent your I if was all you which book that Or particular the of that if the helps makeup that? as

John Marchioni

the our to year it non-cat you little the compare prior a non-cat non-cat of the When property. light own a mentioned we’re frequency bit. a frequency from when property question the an all impacting normal to side a earlier offsetting But them little year, we’re year. half better-than-expected together, Our been on expectations, little on an a bit we non-cat think rate, bit property benefit. the property some exceptionally inflationary relative run response little was in our to severity impacts, better-than-expected But are first on year. our portfolio, around properties And driven. better-than-expected there’s has about of for bit put last in those We I the

Operator

question comes Market. Capital Scott next RBC Heleniak from from Our

Scott Heleniak

quick. into of I was was second wondering few think most couple of in that that. on could kind the the of quarters? Most I’m will But quantify little there And second -- next answered, assuming the but any the more able if kind you that in I half impact what year. that on any are Is versus what past imagine way and of to mentioned benefit a growth I be you quarter talk of benefit the would you have a questions real of units. exposure way audit quantify a there Is you -- just had been it can premium

John Marchioni

Yes.

me this for you. let to So try answer

difference some when change. So that portfolio. from book there companies or And the We that change pure and in look overall on think for quarter, us because And in exposure think then between the our total the about our exposure generally way to others different are move not. best just points the that might pieces in -- will rate at change there perspective, was speaking, you that the consider about X.X the premium renewal about X.X%. around

of about business quarter. XX% the renewal in is that premium So the

exposure points quarter to would growth been change. the have of the little assume X attributable So a in over

Scott Heleniak

over to Okay. share definitely switch in active buybacks, in to share and the you were I QX That’s QX. And in wanted you helpful. then buybacks weren’t

just market you’re just how appetite, the play buybacks and look lot factored at rest but wondering And your might still on provide I’m how you thoughts if as for could just a obviously, in you the business, come running So into about your and buybacks thinking current you’re of of year? is levels? I be wonder attractive the

Mark Wilcox

program. program an mentioned, share is We And the Scott, put in as we back it’s Mark. buyback this in opportunistic Sure. December. buyback place

years. We’re attractive of growth above to right you’ve the significantly is our seen business. last now where very we’ve And rate number for the seeing grow been opportunities

be opportunistic. program. plan and We look for time, market the would like is of budget per buyback and it And to core It We really strong just and the about is us, a to the of grow quarters. that think a we’re When our set it operations capital an we’ll generating but into back to shareholders. going over opportunistic. profitability patient capital attractive we’re judicious the the execute of over deploy program, it very business so the because put to buyback don’t generating, or opportunity for se period it’s have we use to is best to for enter number execute the returns be our a

Scott Heleniak

it Okay. year. momentum last premium And I have sounds a like and like momentum, was second the going new sounds you mentioned And just E&S, there, platform. into had guess good on good of I you the it you had the half question

into And expansion talk how through you that about if is there’s some obviously, of that terms And And out expanding organic where to standard. talk just much that of just a But you distribution can more you on E&S in is of more than XXXX? kind so -- partners. this with lot playing risk can going see is of distribution?

John Marchioni

that reference The which automation a platform business other pretty out. is a through the We but all partner, organic that’s add driving distribution And the coming E&S submission seen a talked about -- a market as and in activity It’s really mentioned, through just more small will we’ve participants lot lot space. lot enhancements, occasionally the we new distribution. to Yes. increase. platform rolling we’re we talk

roll as balance we’re our the with E&S rolling a we full think similar, wholesalers E&S, quote to really bind positioning the competitive For this next early for and those into through rate business, out year which of continues which enhance out will and system small is that something very year.

is rate profile level E&S, quarter the market also the flow. types of writing from So we of like X% the you just the habitational, the is driven, of as but in binding similar our profile strong strong very casualty position in submission saw, the market in under and rate, the benefiting pretty smaller to business if business, we’re It’s But accounts. authority book. that those small contractors, of our

Operator

have Speakers, queue. Thank questions you, [Operator any we Scott. do not in Instructions]

John Marchioni

morning. always, there’s your And up appreciate you. as Rohan time thank all further If additional with questions. We please Well, with Great. Thank you. no any questions, follow this

Operator

for everyone, That concludes you, Thank conference. joining. today’s

now may disconnect. You

Selective Insurance (SIGI) 31 Jul 212021 Q2 Earnings call transcript