SIGI - Earnings call transcript Q2 2022 | Selective Insurance Group, Inc.

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Operator

Good day, everyone. Welcome to Selective Insurance Group's Second Quarter 2022 Earnings Call. At this time for opening remarks and introductions, I'd like to turn the call over to Senior Vice President, Investor Relations and Treasurer, Rohan Pai.

You may begin.

Rohan Pai

Good morning, everyone.

call website this trans-casting are on selective.com. our We September replay is until available The X. measures results discuss used to We three our and operations. business

the reports GAAP which measures, is is any investments and equity of it or gains unrealized quarterly and common common stockholders' realized to losses financial reported and other Investors included we deferred filed reconciliations our total equity. current divided second, in SEC package book and found with to the after-tax excluding non-GAAP accumulated non-GAAP we on insurance operating by and for believe by First use share on average the business. GAAP stockholders investors our website. for measures our investments easier and common Non-GAAP investor page exclusion operating operating referenced our annual in evaluate income financial securities. income on value supplemental Non-GAAP from equity comprehensive on of after-tax per non-GAAP value on book the is income Adjusted losses gains net operating common loss unrealized losses net share gains of income available measures in and impact are return to makes common

statements. we guarantees and not statements as of no Private and forward-looking these with forward-looking statements discuss uncertainties risks our or and risks future We Securities future reports and projections under in make we are update performance. revise obligation and undertake and filed performance Third, annual, subject the uncertainties. XXXX. of Litigation detailed the SEC to any quarterly our about current These to They are Reform are Act

Board, Chief Chairman Chief over Marchioni, Officer. our President and John? Officer, by EVP will Mark turn to who Financial the of call Now followed be and I'll Wilcox, Executive John the

John Marchioni

target strong operating of We Thank the us our you, also generating excellent track consistently earnings returns our growth. long-term record you morning noted and for continuing Good today. achieving top Rohan. line quarter, in thank joining while second

and second quarter non-GAAP ROE Our annualized updated operating six first the on was ROE our we forecast operating on for year, for year ROEs. XX% elevated the months ninth and hit to Based track impact our XX.X%. ROE ratio record in quarter. in property of higher the our XX.X% we double-digit XX.X% XXXX the losses Despite non-catastrophe full produced are was consecutive combined annualized for target of slightly economic second inflation, the our a from

second the the lines quarter, rating X.X%, our from in year-to-date Standard slightly a year full renewal second point and price our for XX% commercial premium our total was the a Lines in increases combined strong in solid Commercial lines, renewal with and in guidance. pricing X.X% standard in increase the up In was exposure. Combined XX.X%, pure of period, than increase better was the quarter. driven initial quarter the net in prior Retention from personal lines change rates book quarter was year first pricing and of XX% remains Standard and averaged an ratio renewal X.X%, constructive. X.X%. X in retention environment by premiums Lines, Our Growth of and exposure positive suggesting surplus excess Commercial Commercial up

loss highly in a expected maintained long of have context to trend. We disciplined pricing renewal approach the managing

in past have years, combined several loss We the forward about ratio guidance. extremely transparent the our trend providing been expected this over

the view I trends approach to in and this With the current how we have the high we interest consistently environment. in taken want topic, highlight

is severity. The loss first key both point trend is affected and that by frequency

trend guidance bit When of XXXX impacted of worth pre-pandemic our potential are casualty on assumption to XXXX higher property Increased loss the is loss trend loss noting both assumed hard. and in up that providing was through below have economic trend property a a loss frequencies the quarters, XX% The specifically, assumption Through we all-lines continue particularly offset severity XXXX years. higher at lines. frequencies inflation. approximately expectation we combined across despite impact expectations, emerge by largely our combined elevated assumed all in years. trend an an our primary of is ratio set remained partially our the a have our point amounts to second year while expected X% also loss current across property higher. frequencies a We to levels have January, that inflation severities running Mills recognizes basis our those run included lines pricing business, lines will that continued higher trend We two closer net picks, we higher from launch, see XX remain level being a the X.X% to of initial in Underlying for to in and the accident X% this in which guidance, trend severities, frequencies ratio economic continue that increase than is fully to year to lines. ratio. This better-than-expected well. recent for quarter current property offset severities, running slightly up holding to of the casualty as pre-pandemic an lever come More address of trend, first City that to casualty trends first our lower levels the most relative trends. the and is held lines available in loss we confident It accident more severities reflected which gave see

the pricing was up the was increases quarter. up the by with sequential pure basis with affected property first XX points our of commercialized increase in up commercial second renewal We pure X% over in quarter, and line are X.X%. most price economic Renewal business strong the which inflation auto of commercial pleased in

premium trend. on additional basis generate increases, lever key which as the impacts is to Another offset to serves loss exposure an adjusting inflationary inflation-sensitive

we to in the about X.X%, increase combine through XX%, with renewal exposure line about A X.X% impact in When of property produce an this For they year. exposure severities. we of increase the property, approximately first the example, saw commercial of offset half this the a increase the portion of in total trend severity which line. change rate is over with for of acts

serve We continue we have relative moving strong to strength proven remain effectively to environment. of managing built going stream in deliver us economic in cycles highly record ability market The consistently continues We price well a decade. track our back confident this a forward. through more to organizational over margins uncertain have to underwriting loss

realized first portfolio. have had half of on the first to interest positive due investment year months negative fixed the year impacts by and of value losses and higher our the the investments, Book in XX% to the rates impact of the six portfolio. the for income unrealized dropped both Turning on realized

updates. opportunity of I I pre-tax capital higher yield, economic an basis have basis created our approximately trend XXX the to overall will on points ratio loss to also to business Overall, strong extremely investments yield book the points ROE. marketing the fixed also credit execution have uncertainty. portfolio equity two remain with increase in quarters, times income while few translates quick increased every However, moving additional we pleased up basis close approximate with points of return rates portfolio Through XX an of on with environment X.X our the book a investment first quality. higher XXX despite by

to on plans Our commercial track second during Vermont geographic remain and coming calls are track. expansion lines quarter recent on Idaho well the and discussed open the on in opened We months. Alabama

strong and over business pace expansion the we that Geographic We our lines capabilities is in relatively a opportunity low-risk next leverage expect we us, to as growth several understand attractive similar technical well. and an maintain years. for can underwriting

losses in coverage the continue make quarter lines our during premium put the XX%, out catastrophe affluent mass service outsized segment quarter superior mass written strong Direct results, and toward personal growth affluent capabilities. migrating in While market. reflecting target progress our in at the solid the to was we business

offset expect loss changes rate As the higher obtain year to severities. progresses, we and exposure to continue additional further to

E&S to results. provide a marketplace to and business strong The opportunities. our contributor Our strong pricing remains business financial continues

hazard focus. is AMS and business lower a Our with profile primarily casualty risks accounts smaller

for platform to grow us business operating capacity the while efficiencies. continue enhancing provides package business to property automation with liability new Our and general

to Our has us position the over delivered strong strong continue positioned have consistent the we market I'll With produce over and well results several and that, call to years. this to Mark. challenging turn past environment navigate the

Mark Wilcox

quarter review guidance consolidated operating our good you, the year for the for first capital results our with John, our some segment to Thank comments half finish and position on and discuss performance of I and morning. updated XXXX. will and

$X.XX than and results results and performance for previously had with operating alternative the expected. annualized meaningful of an our we the to an quarter quarter, investment event income second contributors common a of we stockholders half diluted The for of both available $X.XX. net translated first operating the XX.X% and For non-GAAP XX.X% ROE income year. of the to from results share solid EPS reported investment were to Underwriting non-GAAP

particularly Turning catastrophe personal strong lines reported XX% for than second or segment. reserve million our the to that prior-year casualty an million On development for our driven lower lines loss in was storms ratio excluding the catastrophe and prior-year cat of impactful for losses favorable period growth XX.X%, combined combined or non-cat growth Outside the consolidated the underwriting combined points. ratio compared the impacted of property in of a was the a development, frequencies, XX.X% reserve results, consolidated The net X.X activity losses. we our and XX% of and $XX net and from losses. Midwest reported ago quarter, segments. catastrophes were down commercial quarter by with which of losses driven related We underlying benefited personal E&S expectations. in lines, but second In up series favorably non-cat particular, to year-to-date, XX.X% year-ago for $XX quarter The ratio premiums by included first casualty period property points from pandemic in X.X written driven accounted year quarter. net basis

property quarter expectations. of or points combined is year and about ratio second full running This The about above physical combined The higher XX.X%, accounted the expected. higher our a non-cat were reported lower-than-expected for driven on by and a experienced expectations expense is auto property loss offset property first combined which continues severities. the updated year. same than partially XX.X% ratio XX.X% basis. damage non-cat includes point the commercial we Year-to-date a an is on rate point into high we underlying is XX.X the ratio, in which a by For quarter losses and factored ratio losses

expected four GAAP of points, of better year-to-date despite half ratio percentage loss the first our addition, In the than year. for

by implies year, underlying of approximately This the Our updated up probably with the consistent is year. from at the than property combined is it for driven about XX% run an we combined guidance guidance over ex-CAT the ratio but with year. from of will XX.X% our the of XX.X% year non-GAAP losses for at ratio expectations quarter, XX last expected basis start points higher the increase saw

Moving second expense the slightly to relative our in XX.X% ratio prior for year XX.X% quarter, the was to period. expenses, down

of the timing expenses. the benefits rate was other due ratio For expense the primarily year of first to run full below of overhead year, slightly expectations our half of XX.X%, the labor and XX.X%

company principally the longer through while expenses quarter in $X focused of with objective technology with comprised balancing in and expense million this of compared the initiatives remain range ago on the compensation, including investments. improvements, and ratio longer-term year $X process million holding lowering quarter. long-term Corporate stock totaled Over we costs term, a

Lines XX%, increases written segments. averaging excellent our print increased exposure Commercial retention net approximately price driven by to fuel growth Turning of of renewal XX% X.X%, X.X%. and Standard

losses the New of was Lines ago points year combined was as was quarter XX.X% up which year year points the of a in of auto X.X at last and profitable reserve growth year than and strong levels business driven damage than year casualty The for affluent was XX% ratio at Workers' fuel was combined non-GAAP we net and favorable higher with points from catastrophe ago included accident line company accident was business the successful retention the In prior year was our physical severities execution and our this a casualty our bonds by our with XX.X%. the a development, Commercial percentage and X.X from written ago. within as losses. X.X price averaged highlighted favorable to prior ratio prior the Commercial development XXXX net prior segment, reserve Lines $X This losses and Lines from percentage of coming the points were The bit for underlying XXXX. X.X Commercial property period at target premiums Compensation increase million commercial principally year million period. year remaining strategy increases market. mass X.X% higher non-GAAP growth elevated was the well. quarter Renewal XX% expected relative to slightly increased relative X% higher and reflecting Commercial $XX

been unprofitable cash impact ongoing The XX% ratio new quarter ratio solid not the strong and by fuel period, auto of written purchase premium segment X.X growth. again net high increases personal property XX.X% quarter in than transaction losses. period, X.X%, higher physical prior points points the year by loss ratio the XX.X% material and year prior XX%. Renewal XXX.X% price ratio to higher XX% However, in was to The they’ve X.X year made for In the a late XX.X points. by The remained ago. net the segment points of of the our rights X.X points year driven higher combined than grew averaged damage quarter business underlying E&S combined a an retention losses. relative combined The was was one driven ratio was entered cash renewal heavy the the non-GAAP combined of with into combined was by underlying up last for included was X.X the losses. catastrophe a

positioned. our portfolio Moving to investments, well remains

short-term and an prime with average alternatives invested end public quarter. high-yield an degree our investment the allocation quarter in high down A+ and of effective years in XX.X% Risk income and in included and represented which X.X of assets reduced a equities portfolio contained fixed high-yield of we income, rating duration of offering tax portfolio, a of investments As liquidity. and point a equities was the about XX% public exposure of as

$XX.X product For million $X.X which contributed billion million down investments year public period. after-tax expectations was prior $XX.X to after-tax outperforming the period. compared to of relative quarter the one a income of have $XX.X the in Alternative lag, on loss reported investments. benchmark, $XX.X alternative we were our to after-tax down net from the gains ago investment of significantly in Year-to-date were million, for year relative gains but generated quarter quarter, our million

when portfolio we agreement the on get the from in after-tax up quarter which operating third The percentage in basic was quarter points first second the yield X% time $XX in horizon. or after-tax to yield our year, approximately back there in most the X.X% portfolio The full recontribution. short relatively after-tax some income from however over X.X for total particularly annualized precision of returnable to for is is a was other estimate quarter. best the in current securities the X.X% on Our day fixed in excavated non-GAAP million translated gains of income quarter. highlight alternatives likely estimating an for inclined, therefore future of expect investments, inherent the I would

underwriting also our become risk-adjusted to optimize be what we continue attractive to yields fixed has the our income actively market. to manage investment income continues an While portfolio focus, investment generating and

approximately have to the of work the our fixed $X.X of We billion money put income first in half portfolio year. new during

relative yield money have up credit We minus first X.X% have quarter purchases quarter. to which to in The rating. comparative on meaningfully after-tax moved the for quality credit an company was quarter in X.X% averaged AA the these in the X.X%

Since securities securities higher book XX% increase and in year-end, investment In yield income. rates, fixed benchmark and toilet portfolio we income resetting XX quarter. XX-basis book addition, quarter, of remains to and This basis these basis our XX are approximately pre-tax points. invested yield income portfolio addition last the in our increase helping fixed by this the includes point points increased about of have

operating of We income work expect from the new coupons the purchases half to maturities flows put cash an million cash and of second additional flows. from $XXX fixed year, organic in in

X.XX% the a rate negative total is market the and impacted have of total wider-range spreads investment first current return income, the and the prospective year. was on quarter, portfolio's higher the portfolio. negative for half negatively the While in X.XX% investment return thus helping The environment interest

equity position our during to value quarter with and XX Book of $X.X XX. Turning up is June our strong months in capital per XX.X% earnings down of first XX% book an inclusive the second with more year, as than capital, increase offset losses. trailing half as or the X% capital X.X% by share the increased remains billion for over the net declined of is per Adjusted share unrealized and in dividends. the quarter, it X%

strong. remains extremely financial position Our

cash company and has longer-term of exceeded target. holding $XXX investments million Our our

net Our range end of still X.XX target to debt to at X.XX times. to surplus the X.XX to a capital times, is previous but ratio, rent times our lower of

also of is very Our conservative. XX.X%, debt-to-capital ratio

the shares stock average During price million. $X.X total a year, common the first we of of half XX,XXX share, repurchased of of our $XX.XX at for per an

As repurchase we the $X.X under to expect will our total million as on with excluding of I GAAP first we program, of ratio of update net the year. guidance. claims. losses had use an of casualty our development the XX.X%, of currently share the half which combined capacity, to this remaining inclusive the in We reserve catastrophe end quarter, year plan conclude opportunities

our additional, which investment guidance net is an fixed core our our Our income assumes prime ratio. million to loss accident development, million, portfolio. assumption casualty from $XX guidance relative full catastrophe up no year income of prior after-tax reflecting project We now on combined income points remains reserve $XXX higher the

highlight the tax of year, We expect all investment in $XX higher current alternative estimated for rate other but income additional in second we alternative net first XX%, fact questions. which expectations. the income, items call and that net of under with shares for I may operator assumes repurchases, and investments, of effective effective tax half than difficulty in up share or year $XX of million of And this after-tax rate for investment half again would on approximately of ability million the our the our of authorization. I'll to losses a line XX.X%, An no in XX.X% an with the which basis, approximately average income, Overall, come make strong for investment terms that, the open the materially which equates ask overall growth could lower in item profitability. and implies and

Operator

you. Thank

now our portion.[Operator the have We on a will Instructions] question Q&A begin We line.

question Our Phillips from Stanley. first is Michael Morgan from

is sir line open, Your

Michael Phillips

Thanks. Good sure morning, guidance to wording half the I the for talking the of about everybody. make want I guess, first Mark, the year. I the way understand you're

So I little confused a sorry, am if here.

the the in for half XX.X% full ex-cat on That the for about I'm one or booming XX.X%, half for at full or to half first is your the year -- you the first confusion. XX.X%, which XX.X% to XX.X% Are XX.X% it half? year was my about sure. the favorable, For XX.X% first comparing points the So depending the so flat first for two you is are. or

Mark Wilcox

Yes. Mike. Good question,

through let that make you correct So to walk answering question, me sure, correctly. I am your

our So on second. back come in just I'll and basis guidance ex-cat an the a underlying, is to

Year-to-date ex-cat So so we forecasting year, does for second year a we XX.X%. half of the of ratio the full at the combined are for an imply combined it of XX.X%, higher are slightly XX.X%. ratio

year-to-date is, basis spread it on is ratio ex-cat highlighted an was, one take approximately underlying this so reserve an is my XX.X%. reserve developments. then, year-to-date year, when at is full you over underlying prepared look point. it ex-favorable basis guidance development And on what to The I favorable the our combined way comments in underlying Another and

expecting and year. about to year imply combined an would underlying and improvement that QX XX.X% average underlying would then So full XX.X%, the for get XX.X% to QX, in which ratio of margin full the

the the I kind of reconciliation, ex-cat underlying year the detailed that a So guidance do not for on basis. squares up results, but hopefully full on year-to-date

Michael Phillips

thanks. it Yes, does

to XX.X% gets the XX.X%. about million, Right... again So

Mark Wilcox

Correct.

Michael Phillips

Okay.

And so about that let us then. talk

I XX% second back of the earlier quarter John's improvement I that. I guess, loss have that added to what in have, that assuming couple with half you the year, comments you now to the are the help to $XX will we the you to about saw is rise overall guess with the that is that your offset in the severity pricing want perhaps So ratio. I guess that rate

is to going from So half that's come year? the of the where this in back improvement

Mark Wilcox

Yeah.

that's I Mike. right, think

maybe in well. Let then add as and me can start John

are So highlighted a rounding. think about above couple running of losses bit our is a to actually It It XX about. One, point a points. little is basis things is year-to-date. of expectations I non-GAAP about property

started XX% suggesting embedded in our about higher saw talked combined and we guidance year. year points full with have we an what losses on for underlying XX We the We XX.X%. in from property ratio about the year non-GAAP now basis of the are

at bit elevated year, So we are and getting now relative of back perspective, losses the back a credit growth we sustaining expecting also our continued and you exposure healthy to sort and property XX.X% are we half ratio little perhaps from expense although full the for in XX.X the the guidance to squares as of increases year. expect little of non-GAAP a rate a bit that strong improvement

John Marchioni

The context. non-GAAP property I is Mike to the proper that the put add in thing will is Yeah. important think losses this I it John. only to

So basis $XX to That $XX million, is year-to-date above indicated million that as Mark damage. points about it's $XX XX about equates expectations. of physical auto it's million about --

we exposure whereas, we severity that lines together of all a the in dollars combination base, property do a commercial property property plus property, of lines exposure damage is is home the the traditional commercial one wanted highlighted why So expected. the property important together. neutralize but point the impact there it to The why increases with was inflationary that’s only in don’t and we to physical one couple if have line that million is put of property change business as of little and over put particular those that's you exposure and we an rate a kind an inflation in think auto we that E&S industry of bit sensitive have it of because the out

Michael Phillips

guys. Okay. the for No there all that's details helpful. Thanks

I guess smaller, bit on down then relative question there? flat And on may to And prior if just a is are what the it I was kind because guess was second from what read your going of then down. this but So for does book not of line if to happen overall mean quarter's pretty commercial two-part flat sustainability anything top but So Thanks. a new lines quarter on that it dollars a strong and question there's the is pretty little was flat commercial quarter. the exposure Anything this there. read continues. forward, business impact is to economy? It maybe growth. kind If to be the any might business new the that

John Marchioni

Yeah, sure.

discipline. acquisition So be is is going don't and from new because business that, pricing business a in always think this our believe bumpy underwriting probably new focus to what and is the have market. primary little quarter-to-quarter. I heard say others on I bit I And you

pricing QX. not We had dynamics through of pricing sometimes will QX as I I periods flat be we a focus year. but on markets really business might result you pricing comfortable but levels strong a overall new a and are, where time a fairly in say last their business dial with think where different bit that new business the new think this I rational, overall, game. And of remain is little of go up always different market

explain some would at on a levels I differential. where underwriting So that ability our win in an We're our we're levels but writing, basis from we're that just year-over-year accounts quality the comfortable inherent noise on number think part with. pricing to with based you business from and new comfortable will of quarter-to-quarter see that perspective

new little premiums think you of renewal I increase that's size the average evident a to is mentioned factor which well, everybody's favorably in is Now what want business. you book do as probably that exposure impacting on also bit of do in

our you probably basis. being new bounce in is on monitor business on on quality there's we're business bringing We're new little But lift pricing that but down on refer of slightly would level, saying with a would number the I long you around might market we adjusted So the very new and a exposure is. is based comfortable to bit pricing that what out where say business if ability actually an way and books of from closely. to win very what quarter-to-quarter the to and that's something at going depending strip

Michael Phillips

that back? might to non-property side or liability start on I commercial are helpful. commercial some of could That's few Okay. indicate as too of I that property Last and indicate that then might that one are obviously issues issues seeing well. damage there trends commercial the there guys, become a in years auto recent side if But like guess you anything more the line of might problem trial a it was

Mark Wilcox

So there. -- specific I to wouldn't anything point don't I

year casualty point feel XXXX aged commercial auto BI. lines to we also includes years the I is make loss the prepared connection liability First, real had comment I of of have obviously embedded X.X% like the accident frequency picks. back refer we where I that frequency is us, think that the XXXX loss and and part I'll stress all wanted casualty comments liability for there discussion and and had that in auto is my across real. benefit we I current auto in casualty assumption point accident a the done picks included and we've years stayed largely is And that those on because while for to is that our us initial benefit loss But have big trend to a those

severity picks, the We more are staying accident also concerns year current any recent accident through prior would years. loss ultimately in come on in the because over emerging those

that evident of has our not ignoring of that of line essentially, or emerge. it's benefit at largely that loss weren't for picks concerned this whether just the that's recognizing stand for reflective way on I So frequency been reason think might we point that we that recognized business. those severities And

Michael Phillips

Great.

Okay. guys. Thank your for answers you

John Marchioni

you. Thank

Mark Wilcox

Thank you.

Operator

Thank you.

the Sandler. Our is Paul next from of question Piper from Newsome line

is line open. Your

Paul Newsome

and in was liability BOP Thank you're think it. and property property? covered broadly morning. and well? property was talking I of liability, commercial liability talking of you. Commercial I Lines, Does and interested as of sort the mostly the same Good sort sort have but exposures general also just When as auto about impacts that you were you inflationary commercial

John Marchioni

in comments, our casualty So -- perspective. property loss you're trend is asking my and about

Paul Newsome

kind suggestive thing customer, some of I a between perspective the That's among really are right. am things. From if or different companies size differentiation that loss BOP the to seeing be but because seems of is seeing you not trend -- same sure there of

John Marchioni

No.

So split the into that of property the the premium now represents or and XX% I XX% gave component that embedded -- in out and breakdown the And the of that about we do property allocation. component is BOP you. casualty

So it it's and the -- my to non-GAAP the last driving answer say what's was question in there. I in to relative will property.

And question For if make will severity our driven. I combination on better correctly. of part But basis. little more I frequency it a this your the property getting a so sure, bit likely expected am we're running most not year-to-date driven BOP or has I there's a specific basis been sure, a understand to than most in on

Paul Newsome

trends not said. there's just No. differentiation terms a what if it like It loss based the is on you in just BOP sounds big of and

Mark Wilcox

Yes.

a are us a on line are contractor small many is And accounts package. than note segments to bit BOP that our a of for a smaller part a lot The in of is, is not BOP. artisan written GL written other which are our property on of thing too small and Those competitors. of

well. for is us line of So a big as as not it

Paul Newsome

-- similar talking or excess somewhat loss any about sort of liability properties higher at piece in It's if the we're trends of differentiation these the end?

John Marchioni

I accident peers you're I -- would umbrella umbrella seeing high of think and/or And the GL a reserve be we we performer merge that generally that of issues trends strong standard the you writing that for a would we're underlying that. any current say up and are has a this by-line noticeable earlier, is the trend the market the loss most consistently I have recent and supported assumptions us. the basis think say I prior and/or our reflective not auto. is on written probably I no. severity on write We And analysis said would are more reserve been it. years well. line And you expect do seeing auto as seeing our would full umbrella, year have not quite including a unexpectedly seen which shift in the we full meaning holding umbrella in review GL underlies you in we

see before I impact think surprised in concerned thing first of there's saw an would no, that that's that one this but you point. nothing us have you umbrella umbrella way you, saying the at trends our

Paul Newsome

as the always. appreciate you. I Thank Great. help

John Marchioni

you, Thank Paul.

Operator

you. Thank

the question is from Shields KBW. Next line Meyer of from

is line open. Your

Meyer Shields

responsive to all of Good or better John Great. are exposure impact capabilities opportunities for your the was through thanks flow for what even morning. commentary I your actually Thanks. making more inflation? the pricing on that base growth. wondering, of the even given

John Marchioni

that. do I really of a I Well, like guess, good we job feel

which are for I seeing that non-GAAP a think wanting are around include the one do exposure just you is accounts commentary in exposure exposure property you've on are through by sure aspects discipline you the updated then, make the got around the is majority as in you then base exposure that policies property think there think through damage is getting make base line and discipline got the like all auditable lot change feel have recognizing discipline sure we noise possible. impact those I I is making lines right I running that it this inflation-sensitive And charging that are comes exposure around not sure make in non-GAAP quickly certainly and important. base. to your building on write which we change discipline those is, and timely casualty estimators especially your sure where and any of cost this and when you're fiscal have the two because driven of replacement it quickly any the are you the wages, as side, and property of getting materials to

exposure damage increased reflect recurring lot those of which available line. think base, are continue just that's we there on the and on numbers to physical for means side, focused a what of pricing I auto big that your and be primary to in costs tool not the your vehicles replacing is Unfortunately, those drivers. is that

Meyer Shields

that I for And pricing industry question. coverage? not it's costs certainly replacement Is guess, now. know, Understood. I auto in there any was of actually my kind practice right way of the incorporating

John Marchioni

forward. change think I positive going a be that would very

do basis. an that done it I done. It third on highly parties on us. personal we're is dependent for auto all to is In annual think

not as on So got it's But I basis anything have that. have actual don't as very you there in there's lag repair auto, personal to a suggest would lag and of changes a costs of you're really happening a you to it responsive in inflation. seeing terms replacement in similar what bit and

auto of wouldn't You real year. by I we get being call lot -- industry these inflation for the like And costs. some not on those property service us the estimates in are to But in more commercial these change in side doing model sensitive. the on each be I are providers the responsive replacement again your the list would a think

again, circumstance. unusual an in are Now, we

the exposure change period would historically, this. short think this of cost I of going vehicles, of kind I of the to inflation-adjusted vehicles think and learn from forward never but should seen positive in responsive the we a more think be of or and exposures. movement time to used we that I cost a be recurring And have all

Meyer Shields

That’s perfect. Thank helpful. you. very Yes. That's

know year-to-date could question, I business. I that on I if Second-ish missed wonder I previous get and line losses by apologize catastrophe I of I calls. quarterly we've and guess, some this. if gotten

John Marchioni

second a give will those you. find for I Mark to Yes.

Mark Wilcox

and start the Yes. walk mark on are commercial $XX.X through -- for total in -- with outstanding and those lines or X.X million but lines self-explanatory, loss auto, that commercial at it see lines, outstanding I was hits million points and commercial $XXX,XXX think $XX $X,XXX,XXX, personal and at BOP pretty the commercial that lines XX can Maybe, $XX.XXX in property you I but for quarter into the combined commercial cats go for can we and

John Marchioni

line. property on XX.X the So points

Mark Wilcox

Yes. line. on property points the XX.X

John Marchioni

top on XX points line. the

Mark Wilcox

Exactly?

Meyer Shields

you. Thank

John Marchioni

Was it more? Is that good?

Meyer Shields

I in can to quarter, first the hoping for think you. it also follow we mean, with I that you got I don't so but I Yes. date up was numbers,

Mark Wilcox

I give year-to-date Yes. quickly. will the you numbers

year-to-date. you $XX,XXX,XXX million bit $XXX,XXX activity the is $XX.X then most Commercial where USD that of Personal, in in you commercial year-to-date a to on combined. of Personal and property little basis there covers. the a then on split, points So X.X wanted of cap-off BOP if of it And Lines the $X,XXX,XXX gets the

Meyer Shields

Got it. Perfect. Thank much. you so

Operator

you. Thank

Our of next of from Grace Bank line is question the America. Carter from

open. is line Your

Grace Carter

Hi, everyone.

John Marchioni

Grace. morning, Good

Mark Wilcox

morning. Good

Grace Carter

in look was accelerated I mentioned, at increases could all bit. little a wondering, if know So some year. back expecting the of half lines we rate you I maybe personal the

a far. X.X% that think flat XXXX representative some With the just kind the wondering, rate the actually year-to-date, that on -- or there being of lower if is of anything going little bit sequentially. book you that you're related I the is if taking change if year-to-date, may I to be in mix in than was that increases so rate hiding guess,

John Marchioni

Thank Yes. Grace. you,

misled actual to mislead or the is anybody rate it at right that the number. actual That's of want any number. be not I all. So do

of our I has change the that's specific were market overall And of more markets The our mix selling generating growth growth you target your in quarter non-target of And the target much without you though what our mix performed differentials, to growth at than premium quarter. that X% on basis in the book in the and a transformation been versus meaningful. is business better gave direct business XX%, was a happening historically. substantial market historically, think there portfolio. the I too in has into a pointing change is and getting

see substantial change. our in that's generate view will which happening, that in shift can mix you So book a

cannot we said, amounts. a the perspective, just pretty cost that increase from market other to will Now highlight just think overall we and I that’s point in believe longer for we segment change, the to which we it pure appear those final little meaningful. see increasing rate evenly the that impacts responsive will we that loss to But rate reported. we bit mix be credits. is, a provide understate to every will is why into I be take the when you need the then the And C-level got because premium opted of pandemic, It

participants. big in XXXX and level in flat was rate taking rate like number market actually to opposed decreases increases XXXX, rate a Our positive while overall, as of

both do starting to but bit pick is home a we auto little the and not to we the think move point in up lines. that I see forward as want different rate So, not say

Grace Carter

guess loss not as to you core been really past that book. your have I related quite ratio variable outperformance mentioned And in few quarters. over The for you. we Thank the the seen from has market as peers target

peers also there in XX% book ongoing function hovering step-up have the else of to your range. kind that some is change have or sizable unique of seen in precluded this give we might that Just the anything in take a Is that quarter? that or book mix XX% the

John Marchioni

No, I is sensitivity that. impacting some think that be Again the there. the mix would change there would that property thing one be

in else in that better basis, otherwise. on particular non-cash expected than a bit have a there nothing homeowners but seen come would We suggest little there's

Grace Carter

you. Thank

Operator

Capital is next RBC [Operator Heleniak Instructions] Thank Markets. question from Our from you. Scott

line Your is open.

Scott Heleniak

you. Yes, good morning. Thank

year for comments is if to still industry Just levels. that down of I been be for levels I as had exception given across of reopening the has able hear lines versus workers' you question. you're kind frequency would just that think a the of plus. about the to wonder and not your really to claims being at kind around the mentioned the has thoughts lot to current And that And interested a a all. Severity quantify up in pre-pandemic with rebounded comp you your why of

that? anything Just share you can on

John Marchioni

will you pretty going rate basis slight. I albeit tell quantify specifically used pre-pandemic on across Yes. you and see basis, not it frequencies impacts line, all we consistent word to continue when think slight the levels the first on-level to is took an am the an on-level of thing I on out change I low Well, I or but by lines

line. by talked about the about little I single-digit pre-pandemic. bit post-pandemic will mean differently obvious And understand economy and reopening, it have a the in percentages think behaving is shift your think I has at that recognize vary but the I So, the always be I driven. we it will to been than has point is miles the

So are even different. driven type miles if of the they bounce back

have behaviors changed. shopping think I

is there changes. behavior whole I think bunch a of

I home think a working change. the is from people

but you to a stable down been this is that those increases think lines I items to and think get one at of to enough things you hard to false there will and individually, been probably a last you different not have for It of business on in newer you a on-level for pre-pandemic influence of auto. some Again little patterns that has specifically I of frequencies point basis but some where look behavior relative just all out those on-level not again a of could all price instance to in any settled accumulate some frequency. clearly result relatively on trend get consumer you frequencies so the it's might frequency let which not changed change employee this to could frequency because pattern persist. come always am lower predicting couple a will point want time, little if to that price of I in and behavior and long have do want to they've an to change impact because continue period a the of years reading bit

Scott Heleniak

just That's had I the I quick that. business. really on worth helpful. a appreciate net too question high

a bit might think here is the in in how will on learned are the just more in you but just know XX% of the years? of that you couple us been? give growth and you a more you an And but Just you many be running that in loss the anything book covered do based think I that on You states up that you overall far? update? what next where once on stand little could where many versus states so get of terms you how little profile mentioned you had

John Marchioni

Yes.

the we transformation. in footprint, when in footprint the of launched that terms we're same we So, XX-state just were state the in

expect but that. loss to gain -- specifics go into if loss evaluate that continue change we a I means the can right take footprint run immediate portion view has So, it around geographically. difference approach historical have With very what as of gain now go it again, from to not I been terms space. to been want is no right regard ratio of disciplined that our it ratio the geographically to I rather and will to the is our that tell a commercial And the plans will recognizable change but extent, we and and we well I in perspective say you confidence to do And points. to a been there mass loss difference don't and market, topic, to potentially for expand of we would a too deep perspective. now, want, you there through the terms but continue state to us profile traction we're But that I commercially. in in benefit opportunity in affluent into not expanding mix expand our a from lines has

Scott Heleniak

the the little in I have just on like And Sure. two bit quick ones just Yes, The seemed understand. that quarter. may side. other outperformed it investment a alternative

more anything on some that you I class think or you that? on share mentioned outperformed commentary. any Was particular there that, can

John Marchioni

real in market public at QX of a that gain to see then private alternatives allocation assets is benchmarks to fact an to a we Most is have like. and really private public to extent. private outperformance. to invested you assets. of We know our When you million. equity, us. loss extent back extent assets that been and from has credit equity, I were go It the It market of you we lag how QX. and that credit towards the the a a came mentioned lesser for class at way It in so as gain $X.X quarter benchmarks expecting We growing is particularly a and heavier a energy came asset Yes. then about about and infrastructure lesser of a real a bit private lesser look X.X% to total of with It that performed. are

Scott Heleniak

That's then to expect can just helpful. capital to income Okay. you mentioned $XXX anything And going more in fixed the that too on first the half, looked touch second same in or million the in Is the over in areas be the the of one you a year. there? you last deploy half you typically

Mark Wilcox

Yes.

to obviously So perspective quarter economy with anticipation a widening book slowdown portfolio of environment. build a in really at secondly active yield And in this and some rapidly been a rate recession from -- a bit a then have optimize and increasing second credit and of the trying little year we've market interest the would of the the been spreads an investment point. potential very

terms second estimate recontributions the just anticipating cash of an work of So in to the around XX basis of put year mentioned in And meaningful year, of are which is flow the each flow. the with book points, a half our yield I we we range the That's first $X.X that. about that's volume into organic half billion million. of approximately the Selective. cash In in and obviously increased book by $XXX

Year-to-date proactive portfolio. insurance we investment have without sales our when any operation So a from source That's in coupons the from operations. active natural think cash operating you flow mature about very the move maturities, and we can to doing been perspective. trade

a portfolio been it new to flow. money put organic has to So We've not cash work. just created

but In really Agency a of the and credit yield securitized in found not lesser also a the CMBS liked extent taxable a year from perspective securitized first and sector half terms we we've the from mainly and of to CLOs attractive perspective. our in quality allocations, units, RMBS,

the in have from economic mentioned only this allocation guidance of is book perspective that one securities what of a more a couple forward the might the our maybe the not be thing to decreased going investment a income benefits little bit so of higher-rated year higher And downturn I I become accomplishing with an bit embedded a it's really but things. as last of one into that trade defensive portfolio highlighted little yield, So has about about been being the income XX% as well. of of meaningfully that LIBOR for securities XX to we on here grade quality were the SOFR points year-to-date and exposure has a year basis lift today moved every a generated allocations core X.X expectations percentage book the in That's today now that up benefit contributed and nice full yield typically those terms [indiscernible] are and and probably fixed as days. reset have is a

Scott Heleniak

it. all Got Okay. for answer. Thanks the

Operator

back you. Thank to would questions We our have hand for to I queue. don't any further like speakers. on

John Marchioni

Great. joining again you to all Thank Well, look to us next thank quarter. forward speaking and you. for you

Mark Wilcox

Thank you.

Operator

you. all And for today. Thank participating. today's concludes you Thank that for conference

disconnect. now may much. you You very Thank

Selective Insurance (SIGI) 5 Aug 222022 Q2 Earnings call transcript