Earnings call transcript Q4 2022

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Operator

Good day, everyone. Welcome to Selective Insurance Groups Fourth 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. Sir, you may begin.

Rohan Pai

Thank you and good morning, everyone.

call website, this broadcasting are on selective.com. our We March replay is until available The X. measures results discuss use to We three our and operations. business

current use we annual, SEC. GAAP measures reports and reported the filed First, with in financial quarterly, our

gains and realized we investments stockholders, easier investors losses operating return excluding impact it or income the Second, believe net by defers on and accumulated and income comprehensive equity. from business. net our for investor non-GAAP after-tax which divided to by is operating are investments securities. we Adjusted gains income. use share equity from available on other make Non-GAAP to in insurance any supplemental common our is our on evaluate GAAP unrealized non-GAAP or value measures Non-GAAP losses per measure package income to gains operating website. common on investors financial of share common common found operating total stockholders’ reference equity the losses common book of in of non-GAAP the included book average exclusions reconciliations value unrealized page after-tax

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

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

John Marchioni

XX%, operating capping year. strong pleased for written that profitability. of average along and the full book these Few our value longer-term average share good creation exceeding XX.X% discipline, And the about we ROE Selective, of nine the match off an our accumulated record that best over basis our XX.X% XXXX over deliver returns Rohan Tangible that increased operating dividends on total with quarter annually, results value Over capital industry equity. marks by ROE ninth track and size over you, can plus return company consecutive premiums operating growth results cost view We're to the year industry in and of annually shareholder excellent XX.X%. year for alongside XX% of nearly average approximately as timeframe, XXX of our quarter timeframe. change the another Thank per We doubling indicator years. in report double-digit in our net and X% morning. that which of annualized that period fourth non-GAAP points. past our growth consistent was the weighted

look as performance Although, shortly. our few performance well we several year. we future. we point XXXX, industry first a into this quarter face to maintain our headwinds, highlights and expect out the to I'll level wide back continue for review of to come I'll But the to

in segments XX% pure renewable by for year. increases insurance the this three All and averaged contributed price the up written Net that driven overall operating for quarter Growth were premiums X.X%. was year result. XX% the to full

and growth Solid renewable retentions, exposure strong business. new

development. net losses, catastrophe included offset reserve partially XX.X% catastrophe favorable Our points net year for X.X combined ‘XX prior ratio of of by X.X points

risk losses our our our marginally results million The significant management Underwriting points catastrophe managed in tax the to fixed loss, catastrophe non-catastrophe only net Net for the losses elevated Elliott ratio we XXXX combined reflected a reflecting points efforts. four was from Storm X.X were expectation Our lines. environment. above interest being full of optimize year contributed ROE. risk of to Winter for underlying year, despite property XX.X% rate property our $XXX inflationary a after for actively rising returns our year investment adjusted income and pressures portfolio cost income

approximately During points, basis also increased fixed XXXX, credit while up moving we the in quality. pretax by income yield in book XXX embedded the portfolio

points overall X.X investment of The ROE generated for portfolio XXXX.

excellent In our addition results, I to want some delivering financial accomplishments. highlight key to other of

We trend a coming built the have dynamic lines effectively XXXX. us in a long organizational track favorably of in muscle record into decade positioning commercial pricing loss managing environment,

our Our underwriters maintain discipline against of property inflation. portfolio rapid hard insurance to ratios, value with positioned long our underwriting ITV have this of history backdrop strong to worked and

and excellent Our top pricing our line growth partner tools. a relationships sophisticated to testament distribution very was XXXX, strong in

highly Our underwriting partners. our valued agency by remains model unique field

distribution market Our business target overall our instrumental their been new portfolio, accounts with business high has to us in their insights with identifies generating grow max partners opportunities. tool which in quality provides and

We automation lines new three expanded We in into we And completed of appointed on total business implementation our remain commercial opening open standard small agencies commercial states Alabama. by X,XXX Maine in represented partners. XXXX, and ease platforms XXXX. Vermont, agencies dramatically footprint in additional X,XXX our our West the Virginia to to both of and approximately And both Idaho for early of new distribution during E&S XXX we for year, the which use enhance line storefronts. bringing the track

asset combined in our our team hurdle operating time. invest areas over our XX% with performance on Factoring consistently or in our a leverage, and is exceed We investment need the ratio steadfast XX% of in improvement. to a focus please ROE overall return meet target leverage expectations. in operating long-term While addressing XXXX, in

is which ago impacts year loss combined in property the Our XXXX is XX%, up guidance a is due largely approximately Reflected or ratio excluding our lines. X.X%, combined from guidance overall XX.X% of trend X% catastrophe losses. to inflationary an in ratio

social but trend more importantly loss our inflation, The a captures X% average economic estimate X% reflects are well. trend casualty of our ago, of modestly we to of incorporating compared more currently casualty about our to increased X.X%. year X% increased as a For impacts trend impacts [inaudible]. projection property, view loss reflecting We from for on view inflation claims inflationary our of X%

our we We we claims impacts going drivers continue focused changes and with in line Whereas lines, largely We In these severity will premium of consider portfolio in commercial auto the more XXXX, initiatives severity comfortable quality the these assuming profitability. both pure Therefore primary frequencies favorable can lines, granular in pursue churn. and continue to damage, are along selecting trends commercial driven. And XX% therefore forward support the trends and to within to underwriting tools in our be change I in rate exposure XXXX and with adjustments benefit X% the certain generated combination X% exposure property, XX% with higher considered inflationary rate property. profitability average of address portfolio. of homeowners the to rate generally E&LS review quoted to of frequency and and severity trends remain physical in from flat total renewal the as frequency. on for

success recent pace our coupled this XXXX. state to we in Given of the with the continue marketplace, property expect

continue Our combined target. produce with casualty overall ratio our line in to lines

in As focus loss such, our rate with renewable remain pure trend. remains increases line on expected our achieving that

X.X%. environment year, renewal third pure three quarter commercial achieved and throughout saw year to remains increases January lines, respectively. pricing the all the is a pure series underwriting X.X% combined auto strong renewal X.X% strong pricing casualty, and have an And address and rate pure throughout actions were liability target at business pricing within of In of year and we and X.X%, E&S segments rate of the with the favorable. across producing we price pricing above We with four standard However, personal, real acceleration with strongest X.X% these. ratios. believe averaging fourth in and quarters renewal also of We was rate full commercial

market the us transition to mass affluent lines, the behind from our In fall market caused more in to pricing mass personal ongoing the trends. market

filed coming to fourth close plan that In states changes nine expect quarters. our and several of we in averaging next that X.X% continue rate in pace We months. over to the the gap quarter,

positively optimized points maintaining duration active basis ratio, income our anticipate We and yields income yields conservative results XXXX. Through of Based management XXXX. XXX will higher we and investment while to financial contribute in that impact in additional investment projected income to positions. investment the investments equity expect for credit have our of over our ROE on fixed portfolio, we investment

investment updated to for ratio translate and combined guidance XXXX expectations ROE Our income an XX% target. our above

our with bar Our performance, us perform our for at a best interest. shareholder and financial structure high sets challenges compensation target to our incentive aligns

profitable record generate growth. Overall, results I'm excellent pleased and consistent execution, consistent with plans our and track of to

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

Mark Wilcox

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

diluted retention EPS, and loss Winter quarter percentage operating points. $X.XX XX.X%. are which and our we quarter, to strong full These EPS the with non-GAAP fourth ROE year $X.XX fully by of fourth cat operating the a finish Elliott reported For of $X.XX of Storm eight reduced inclusive our of by a non-GAAP a full ROE results for EPS, a

underlying the franchise. earnings our of power strong results reflect Our

For and EPS EPS the full year, non-GAAP $X.XX. operating $X.XX reported we of of

losses, of in volatility elevated Our operating industry costs. on pressure XXXX capital ROE non-GAAP inflationary and XX.X% the strong and markets loss environment light upward for put of significant particularly catastrophe was

million losses of of results, Turning net ratio reported of $XX.X included or in to development combined quarter, for underwriting of XX.X% consolidated points favorable net a of ratio prior-year and reserve consolidated combined X.X the catastrophe $XX X.X we our the points. casualty million

premium. temperatures announced This were million majority $XXX result As damage water freezing from a of considerable $XX.X pretax lines reinstatement systems pipes, strong were by and period Winter freezing losses of Storm of temperatures. water net and largely The commercial million predominantly burst reported the winds pressurized losses we fire million catastrophe of $XX.X sprinkler January we suppressant storm across cause within driven properties. footprint. our winter as produced commercial of sustained Elliott, gross the pre related, to of on XXrd, inclusive related

the for were the ratio While the quarter was region. the of The impact combined in across for points and the of X.X spread southern impact footprint, X.X our concentrated much was net losses our year. points

$X a Elliott loss million million. us. event Storm the for catastrophe and this Winter included Partially to of meaningful estimates Winter Elliott despite loss $XX Storm a offsetting reduction Ian in is reduction our prior-quarter It manageable Hurricane size So an in ultimate unexpected. was in catastrophe for modest had from not was been

compared development year, XX.X% but or higher ratio expected unfavorable two XX% largely slightly compared expect and X.X of providing which offset the non-cat For Favorable combined points combined prior-year points casualty year we expectations reported the about ratio. we to of original guidance budget to for losses cat benefit, our for property than by of a don't reserve losses. was

expectations, year ratio the about driven non-cat points The X.X largely for and was losses. XX.X% by was of underlying high combined again above property the and

the for for the XXXX. quarter relative XX.X% was ratio to expense our fourth and expenses, modestly improved to Moving year, both XX.X%

previously expect discussed, initiatives have to several due in XXXX our XXXX we expense which do But on our reflected costs, some guidance. As modest in higher combined we is reinsurance pressure containment cost in ratio place. ratio upward

the while million ensuring quarter, the initiatives, objectives. focused which Over longer ratio we're we longer-term expenses and for support $XX.X investing medium stock remain various holding $X.X our Corporate costs on the expense strategic year. and company totaled and principally in million term, to the through include long-term lowering compensation appropriately

our to segments. Turning

commercial was development quarter line in line combined the compensation which The the Partially lines and casualty Winter XX.X% liability was bodily net X.X points standard a casualty XXXX and favorable on lines price XX% Storm For in $XX of of X.X%, year. points and growth by The workers accident $X offset million current increases net above to exposure premium to retention for combined driven growth commercial prior, the endorsements, development. written renewal included business million premiums of the X.X commercial ratio quarter, injury prior-year profitable for the ratio, inclusive for of offsetting was inclusive by $X relate were was XX%, healthy losses, pure line. of new auto increase catastrophe the years partially solid accident change prior-year standard for fourth this by points increased fourth XX%, favorable reinstatement the the quarter, a and the and renewal averaging million reserve impact a was driven the Elliott of reserve The X.X XX%. premium.

lines for commercial XX.X% combined ratio quarter. The was the underlying

the lines net premiums was growth profitable ratio was a underlying net was premiums the quarter XX%. combined written underlying was of ratio ratio dynamics. combined the presence In ratio, the of combined points the mass losses. reflecting expand segment, premium, was a affluent catastrophe in XX% included the the was full XX.X%. and year, quarter, The combined of market personal X.X points Elliott and XX.X% combined our favorable inclusive Winter net The of Storm healthy our XX.X% The to ratio and a reinstatement of competitive on initiatives X.X impact For written XX.X%. our increased

premium. X%. For The renewal the remained net ratio written the growth combined Winter underlying points grew NPW year, quarter, an of our and pure year XX.X%. and In a XXX.X, development. points extremely Elliott impact X.X%. inclusive relative Retention up The XX.X%. was was net X.X business Storm the of points ratio and segment, for The X.X the full reinstatement new combined on was of a $X was price the was The prior-year E&S was underlying or net and X.X in ago, for ratio ratio ago losses was strong XX% ratio segment combined profitable in this average year quarter including million premiums reserve catastrophe relative to combined XX.X% increases combined casualty X%. favorable to

year, the combined year and ratio XX.X% was growth and its build the successes was the combined profitable platform's For years, ratio to a over on strongest XX.X%. recent ago. inception has NPW Overall since a decade its segment continued underlying in E&S XX%, reported just was the very

Moving remains our to positioned. portfolio investments, well

short-term uncertain our year and rating income XX% an investments, XX% against with represented as As a down portfolio years. of ago and the from approximately AA of Risk X.X as our duration an of assets of more modestly macroeconomic portfolio portfolio credit fixed average in of of yearend, effect a de-risk was X.X% yearend double backdrop. minus with

X.X% in For million in to alternatives. in reported the quarter, $XX.X a fourth are income which a total our relative offset a reduction income about income $XX.X ROE healthy compared was translate investment from into growth of investment in generated The $XX.X by fixed one the for income after-tax $XXX,XXX of XXXX portfolio lag ago. quarter tax gains quarter year to from after-tax gains, was on yield portfolio after-tax net million, a points slightly on by and million XX.X driven Alternatives the significant contribution.

$X.X of improving yield income, pretax X.X% above of higher to [inaudible] and was our During the existing simultaneously advantage X.X% in yield new yields we XXXX, approximately average period, and up invested new quality money for purchase taken investment from year liquidity. in fixed credit the quarter pretax portfolio. million on well The and the ago was

quarter. Approximately securities, been allocation XX% fixed floating rates open and our in yield recently, the XX% benchmark remains of income portfolio term meaningful throughout end year, floating our a high decline in income. a More the book reset to rate potential Well, in securities this the invested at year. tailwind rate from rate floating investment third although anticipation short that's at of in The rates increased we've lowering later was this XXXX. of down allocation

of period rates We credit longer targets. from duration quality we're instead current to opting in lock have time, our money and new been managing

fixed rates portfolio of the of points investment total in every XX in basis XXX in interest portfolio the XXX about book by includes approximately translates portfolio negative total reflecting return incremental ROE. points, rapid of points fourth basis we which XXXX, the full yield increase to the The high of for points the income on yield was X.X year, quarter, our of X.X% X.X% During rise on yield the quarter pretax basis our but investment XXXX. approximately

to business both market which We renewed main January covers effective program. catastrophe our standard our Let our and me turn successfully E&S property reinsurance program X.

of it year, expiring of off limit retention retention. $XX $XXX underwriting limit went $XXX million of a of excess in excess in with pay million million XXXX to to million the $XX For we market

reminder a been $XX our XXXX. has million As retention since constant

million The of While $XXX for placed doubled exposure net at limit of million XXXX. in to $XXX program we period. driven premiums purchase base the written size more limit of in co-participation top of than net up growth, and capital the of over XXXX additional that compared was by

our in As is of in probability peril tolerances. with one risk of equity. of of X.X% all very a US and our loss accounts PML given US. that in well PML At three was GAAP eliminated on equity, also in peak X% manageable GAAP adjusted hurricane, XXX net a only or renewal, a X% portfolio exposure the stand of for net in maximum the are we that our Xst, one and XXX capital January These cover program our within position. both line but at Pricing E&S cat modest probable up on X% strong basis of our risk

tightened conditions for addition, and terms In modestly placement. the

our reinsurance treaties the from limit occurrence which impact to losses These to As July reminder, for per and includes casualty on risk for $X property. a X. per [inaudible], due our large were million also million program us $X

our XX.X% strong, of capital, equity increased income securities. GAAP extremely year for and statutory the and book surplus for per value X.X% the the per declined with but share to during Turning X.X% quarter, Book losses the yearend. capital capital to value due of Adjusted year. for position fixed unrealized as share remains $X.X up was after-tax billion

above investment Our parent and stand is million, target. $XXX company which cash our well longer-term at position

is of middle premiums our range. net surplus to the of in target Our written X.XXx

provide our during strategic us ratio capital and the on in shares to with under flexibility repurchase authorization, we $XX.X repurchase million of to share execute the to on which remaining not quarter, have conservative our These fourth did plan XXXX. opportunistically use We of debt Our is significant XX.X% side. initiatives. our metrics our growth we capacity support financial any

XXXX. Let me initial finish on our commentary with guidance for some

XX of losses. both XXXX combined on XX.X% an On prior losses implies development, of guidance XXXX. reflects year ratio retention casualty underlying reinsurance reflect accident or basis After-tax cap reserve of alternatives, in weighted after-tax rate no improvement which ratio relative year prior- tax may The and net from in is $XX inclusive co-participation [inaudible] effective XX% as higher XXXX. of includes investment program. for basis, $XXX This as items, rate our for of slightly An tax investment income gains combined GAAP in of we the well including effective development. assumes up from was basis, a any investment rate expect cat repurchases million, catastrophe we recent main share more cat reserved which low total XX%, trends an and after-tax not catastrophe million higher diluted net XXX income points approximately property Firstly, $XX our the other overall make million of to net under does insurance of and on XX% losses income shares a average all million on authorization. X.X XX%

As operator guidance output is and With up one above year. this John for the healthy the implies to I'd mentioned, ROE target XX% call questions. for the that XXXX ask open for that our

Operator

[Operator Instructions]

of question from Zuranski first BMO. line the comes Our from Mike

Unidentified Analyst

guess Hye, good morning. Thank on inflation. is you. first a question loss I

been have peers of sooner the Selective kind curious, guys from uptick about plus the talking some very or , forever takes. has inflation I'm looks have now like an inflation. data very seen you're about guys disclosure you, are really kind given what you loss than that good of in over loss little year past a it puts You seeing and

business mixes some that to to due feel the account you your taking and was unique. specific ever workers mix. there's your seeing more just Selective different immune of relative maybe some if into the due the much like And feel but just whether underweight business is comp do you of like peers inflationary appreciating is you're some curious, other that rest some more inflation market of to pressures -- are -- Just loss simply analyzed to you it curious

John Marchioni

important Well, business lot the regard model, you on vary could which differ based seen, would a philosophy environmental business. that's say no, about and operating basis, say I both trends, our mixes, with line we've I we're And relative past, have to for we've discussion And with line of a about we and But so on the have and because But go loss unique severity trends largely to Mike, what how by specifically of the loss side. really incorporated it's loss of the and trend, for did think a driven clearly then forward think differently. individual as is. interact trends agents say in ways the and would around to we've I there talked think frequency and them I our to always property casualty, our factors. on underwriting are trends the you in

to we our you inflationary are inflationary for talking were to talked comments casualty about driven attribute that increased more peer trend showing selections loss specifically or outlook But as and inflation seems And impacts loss be again, loss trends. there loss about, severity, portfolio. past, impacts the look to historical have social of your economic offset have we're again, XX ratio couple movement years, And different is when social just as it loss moved would by your below in impacting forward. where going moving how there's do bit much have in little to an nothing Part casualty, in some For bit in And trends, frequency inflationary severity. for you last trends, considerations about up leveled and everybody again, we in belting actually are talked but about the our expected. loss basis to remember, generally And the we in impacted that a trend historical of over frequencies, historical social social off been of and have we've inflationary. But that We've at actual it of our our return pandemic. changes that be evident not casualty. by our speaking, our of provides little that severity inflationary pre points. a been trends

X% little have large our is good at of a actual lines, some different about property, you set a frequencies, back, in story commercial that. mid-market commercial seven. of inflation are, where if looking kind along lower that, end market. of we've got loss And For write look also we year bit of trend those that a the and standard of small had forward a others historical going property. forward, loss on And high Property forward got we've lower with outlook at really XXXX. severity feel And trends our that that for we benefit and

appreciate we're long I been think about But of recognizing, again, not we how loss that a talking selections. it's trends about So, your we've that's forward you our just we important transparent view for incorporated also this time. loss social and our inflation, embedded how we're showing in into ratio

Unidentified Analyst

for of industry. ’XX Okay, light, that's thinking to the but the case at positive investors too than higher too, of their a your a expect of lower and in management your equity of volatility peers it’s versus but for asking has Selective operate next ‘XX return peers historical on I'm just to helpful. ROE about of curious, much. My operate bit teams ROE Selective, it not the a for mix or usually That's, and lot commercial peers maybe as a a commercial many guidance, averages been question on appreciative of or is much

XXX by a ROE hear interest just that you the was points their guidance attributable higher management basis mostly there all to rates. team, guys conference know a full I So calls couldn't lifted

is at something ROE thinking low of digit Or it to think opportunity a you're order right things is double this a growing So kind to about just about? Selective, in you faster of the that is is and than continue just kind structurally to pace peers? set your curious, anything the that way think

John Marchioni

commentary. let want tackle is so this this Mark add I'm will to some additional sure first, And me John. Yes,

ROE we aspirational to set consistently team. including that First provide And over all not our in the our achieve year our as of time. you and employees, for target thing executive an set our I is a variable every would fact, compensation expect for we say It's that target we target is, target.

number important the point one. that's So

contribution years term investment when your we up, than our through higher target this in would target a on why see of the we, would expected that's to return to combined I investment expect portfolio, we coming point, a be have important prepared how an point on income is, in generate other than you is like The comments, your income long long-term ROEs ratio higher ROE expect make I we and basis. where years. your went my those your XX we get to from And

assumes that how we So expected leverage, it essentially then loss portfolio. operating a environment, for gain and position, leverage, our either about of assumes our normal unrealized on GAAP assumes and an invested impact asset the equity it or adjusting the returns think that

So in would a ROE. XX typical produce the year, XX% that

this that. a of XX.X guidance Our year obviously above is

point of talked therefore and Now, our return that above half ratio is that XX% as combined we pay XX.X from because we And portfolio, perspective. ROE target would a our compensation target. lower a will in variable still of that a out higher investment about, produce combined ratio excess but our from of

when target specifically our plans. to you income, higher trying that's we we So higher should together. all have our average but And that's to that And delivering internally do ratio am than than of be or and here, that's it black goes the place. how it again, how tie investment And not your all put we I you out that outsized think expected idea our Mike, sure, combined how compensate structure into about ROE. targets question we it. compensation

Unidentified Analyst

proxy some see the guess bar as where peers isn't of in your see term Okay. high And don't those the use can point, their to I we as that aspirational.

many advantages, when agents, was So model. your My competitive last I of just Selective’s they're curious you're not think , brokerage comped to on when agents, maybe higher insurance terms in question competitors of your the your one of of ROE. we closer that than

business insurance as with office are are anything and much it of you or Now strategy changed, to of terms a bit years kind your interacting now? that usual mostly had insurance your you've in change the as your of brokers, is your pandemic, brokers we're a how the not of in couple kind maybe is

John Marchioni

question. great been some There's change. clearly Ye,

say this, would from agency of is and also, significance perspective, no Now, our agents from say the the I'll perspective relationships I different.

but you has manage those and their point a standing an in of which think underwriting And more balance in therefore, think the was office like that because field I those just just and agents field underwriters that US, office of than this long environment. changes virtual heavily manner the how split modified And our our how to they the work is And less have used I having of basis other maintain be. to build had they're relationships on being regular in work just much shifted, operate, a maintain in always shift schedules, to time between office perspective. and they from they and able a balance. then

it's building think limited in for is us. ones. a appointed think within And I used relationships to huge focus, the focused existing or newly that of than new more a I it lot for more benefit been people relationship agency on person be, is which an whether

virtual field become comfortable more our and I over shift a how in a of years. build last maintain would tools, on of been the part say those. gain because of couple agents have efficiency significant underwriters, a But and lot the definitely also using they our So there's the

Operator

of line the from RBC. of comes question next Dwelle Our Mark

Mark Dwelle

that year, questions. combined improvement to what to to ratio of that ability terms relative relative Oh, that's XXX is year. levers loss improvement, ratio. of points guess then drill about of wanted to yes. guide, about basis With get of kind XX.X are in out your I of down do key kind to pointed out, similarly, relative the that to as Good that of are last this portion expense was what driving Mark morning. just couple And the I improvement thinking of A what respect ratio

Mark Wilcox

impacted So actual maybe sure John, the an felt going improvement about talked different short our pressure, on a is we'd points losses. tail is basis we've an jump ways non-cat this into ago, lines start also on in is particularly Mark, about XXX up and of basis from XXXX. then I’ll basis, XXXX. underlying And underlying from guidance expectations there I it about a couple property in, of that points we ratio as are One think year to am the for XXX of the will combined property but the XX XXXX all year expected

the the talked target of like a to when you versus we frequency of catastrophe bit losses. improve catastrophe work do little X.X from there's that we you XX.X, organization. underwriting we That more in up of level need five the the little back XX.X, we years there at But of we Elliott elevated guidance came about about an the the bit of that's in we the over feel have why So really XXXX. a four of XX to do the the think catastrophes. profitability particularly of loss But on that more points We when year. in activity, of severity a the recent and look late is last above expected the the trend, think

And than points the expense to is a ratio, the for inflation. XX.X, the about that you that. expense of talked the When pressure back XX.X ‘XX, the so loss in the basis bit we're XX bit that impact at as And at of higher on raised called reinsurance expecting in XXXX, at slightly XX was come as guidance in well points a little element dividend the costs, we on upward to say component, better XXXX. came down about basis look that which there's little XXXX, I and we to ratio, in cat I that would

XX you about expense of loss gets including about that's an basis points of So And underlying the the ratio, XXXX. to for XX.X deterioration ratio full that year overall in dividends. kind of

that think improvement. points basis you when of about XXX Now

the cat QX a million the then the in is total represents premiums at of in the business. look premiums half half then and really normalizing $XX about mix reinstatement of it tune between is had that really and to We XXXX. to reinstatement Elliot of driven QX, unusual the about about the two out premiums other reinstatement we casualty way exceeded Another in in had

in I terms bullet consignment to kind So XXXX put into would those of of from our strokes it XXXX.

Mark Dwelle

pretty much that helpful it. Truly nails

obvious expense The kind was highest the the loss the second accident the was personal was nearly, the to on year the saves year, loss in anything of on quarter of kind related is trend lines the for former on the the just pressure of there of was of ratio to either specifically, it fourth lowest question ratio quarter particular in or any kind the year that the I those had expense latter?

Mark Wilcox

of first significant put I'd on some the a that to have did also of the you denominator lines within say premium. the its for share lower little tune personal points. of lines a a bit personal drag losses when We lines pretty losses back ratios in offsetting the from of see property premium reinstatement on and Elliott non-cat percentage reinstatement the we, is XX.X did does the in there quarter personal quarter, the and absorb

you ratio. quarter XX on for really expectations run it it's percentage point that those, the and at a it's you actually our would have increase. And total we If expected driver to loss underlying look above meaningful rate compare what that’s the was full the if a on that

John Marchioni

And expense more then there with casualty I offsetting bit a from fourth one wise, there's the item in be quarter prior only movement, probably income claims was storms year personal that commission the other to item the personalized the think but regard none a little as either in to year, positive related or current would benefit, probably lines.

Operator

line KBW. next of Shields of Our from comes question the Meyer

Meyer Shields

and there? reasonable that out sense higher mutual costs reinsurance maybe attachment a grow? of points you same out look the Because are they're is the there, predominantly there the to able Great, are higher think thanks, sort I that good at, that When of exposure their competitors to morning. less

John Marchioni

Yes, it's I great think Meyer. a question,

reinsurance. one everybody's market they insight in many having same on those be And think and the under without think, dependent likely happened one, the I more to what that That's raise when competitors weren't attachment renewal, costs. as do impact meaningfully pressures in full I assuming highly the effected. point if the else everybody even cases, will loss into their certainly

assume that that would group. I So you're seeing a more on impact outsized

Now, what's think and indicative in market. of I happening this I mentioned this, is the

January meaningful line. in was it from our pretty QX. a get my driven it commercial actually movement sure point the my more lines up by make in sense broadly, is lost than was four And X.X% comments, pricing Just prepared I that to and almost want didn't property it a my was sense, is

So of I I terms whether indicative pretty that's think more larger than reinsurance versus the across of your that's And accurate board. tell but or original smaller of in was felt is couldn't think a renewal really shift marketplace. in the impact the I point you, others. the whether

Meyer Shields

risk, more tremendously like Okay, I no, next a question, bit that Sounds that's property? property willingness guess, which yes. your also, helpful. add given for And you're little is pricing conditions saying, commercial net answers my to

John Marchioni

we Yes, not I, opportunities. in really of how so business terms that's the manage

be making really where are context growth the isn't. the of package individual decision opportunistic guidance pricing it we our presented, So in individual by make, to decisions. around or line view looking we're our driven more line, that is acquire be our the we to continue underwriter, on And will I good of continue be think opportunities and individual new make to provide that we by pricing current then underwriting business the risk a risk based will do they underwriters,

Meyer Shields

than way if that's a it's it. lesson no, I quick the was sophisticated can. That's Okay, And more fair. I looking at

reasonable X% looking you're for First ’XX? that your assume yearend to ‘XX casualty is that trend it the reserves incorporated

John Marchioni

to this, I loss quarter end earlier loss think of that's estimate by record don't favorable yes, this our that which in is of of in always a it casualty And our budget for little that But don't forward manner now, as the and would it manner expectation question to initial challenging of trend meaningfully historical which have I loss loss the say casualty and question emergency the But think, we're actually best casualty it. influenced reserve and reflect casualty response I our our to has. for continues we into a my I position So we part actual the pick that's was speaks proud we of. And plan to that build we a pick. answer. at track trends.

your is of that the number X.X a pick. trend then last your actual loss into So casualty trend. the loss in ratio. changes that years loss severity loss We casualty assumes X% I'm for sorry, loss point forward historical over casualty forward starting frequency sets for trend add for

influenced point there starting on a by forward basis historical in it's your trends. go So is actual with the

Meyer Shields

get tedious for be And by cats quarter? perfect, no, then product and Okay, that the helps. I Mark, can line the

Mark Wilcox

certainly. Sure,

[inaudible] business should million, lines with the through $XX.X $X.X $X.X and standard So property for standard $XX.X million within losses commercial starting lines different auto for commercial add that for commercial quarter $X.X for and going home lines, $X.X within the property million order lines, personal cat in for commercial million, of million. to QX. $XX.X a then And million up total E&S $X.X million, of million

Operator

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

Grace Carter

year loss ratio sort guidance little the over non-cap last basis, I the at improvement? understand casualty year, trends versus of particular XX% to Just property property firm trying to loss looking loss of that are I'm for back just the kind contributes just an that What underlying guess, pricing little this a year for cost to bit ratio I how bit. thinking up for the Hi, guess on considering versus this for component expectations y'all expectations environment? a going trending

John Marchioni

the ratio, way Yes, it's total premium. if basically a disclose the good flat. non-cap you versus about property property earned loss non-cap the we ‘XX it's divided expectations think it's net And ‘XX, by question, losses

our to all basically essentially in XXXX. So is expect number better the I believe about me in that for that, for for expectation XX.X, year just year across we full across, that came segments, the than we'd same. at XXXX full guidance let be that And check double the the something XX.X

Grace Carter

about quarter. you're in in Okay, the what this business thank new the you. And I'm new big is I the the uptick about of segment affluent environment, shopping in lines affluent as business a in mass any personal lines, environment thinking and that mass curious pretty you're target considering how personal just pivot last how seeing penalty market, there on towards potential just for you the work segment? guess cost

John Marchioni

sure. Yes,

new But new it's the or lines. in I a recognize our growth, lines, important all segment relatively liked particular, across into business, renewal. business but than loss we by lines our question, but total we're your that in this. for of to We in mass keep expectations, with personal a loss for do new factored ratio and whether context this personal to proper as plan different our regard lines. think different planning to into segment, And we premium ratio So that's do affluent And that's in segment. for personal no the

were So real the our in the the dollar a big by growth, while it in we personal new in million lines segment in of was quarter. just compared and basis, looks the $XX ‘XX, big million quarter only and for wrote year million $XX business low business. are to was for $XX where grew and very $XX to we million on And really of basis, these that not percentage starting QX numbers, a new a of terms transition

to in relative indicative in space. results market. necessarily compete in that a happening I that that of like is good saying and don't point But So showing our to I what's we really that's my that's some guess we're know business our of segment ability

point would when do. you're And looking a at acknowledge the this the the continue. X.X%. and saw the pricing market prepared written earned action, and of that behind I'll start here ratio was loss quarter I trends. a expect we have environment to rates that'll in reinforce the on is, in I comments, important point, little ultimately other broadly, the states and loss filed us, ratio you we bit impact what to for our at personal of Now, segment, look fourth line pace basis, think falling That in And as our our took this and that in the mass affluent through nine from drive plans we in led us rating to accordingly. update the way transition terms and in you and market And to work to got made mass an meaningful we've we've our

on So I important point think do other to exposure the the more homeowner with. the we've change kept profitability a is work But up perspective. side, from

our feel it right more exposure we through more needed we've of the in discipline pace around catch the estimated automatically had pricing was exposure I So to like kept do the on. always that getting in a updates fed costs in home we with replacement and lot book. up We've

no time Thank further show At this we questions. speakers, you.

proceed. may You

John Marchioni

for Great. us. all joining you Well, thank

As always, follow and speaking to free feel future. forward look for up additional to questions to you, speaking you any in the

Mark Wilcox

you. Thank

Operator

for participating. today’s conclude you everyone conference. Thank That

may disconnect. You now

Selective Insurance (SIGI) 3 Feb 232022 Q4 Earnings call transcript