Selective(SIGI) - 2025 Q2 - Quarterly Report

Financial Performance - Revenues for the second quarter of 2025 reached $1,326,745, an 11% increase from $1,196,005 in the second quarter of 2024[83] - After-tax net investment income increased by 18% to $101,421 in the second quarter of 2025, compared to $86,262 in the same period of 2024[83] - The company reported a net income of $85,943 for the second quarter of 2025, a significant recovery from a net loss of $63,319 in the second quarter of 2024, representing a 236% change[83] - Non-GAAP operating income for the second quarter of 2025 was $80,348, compared to a loss of $66,644 in the second quarter of 2024, marking a 221% improvement[84] - Diluted net income per share for the second quarter of 2025 was $1.36, a turnaround from a loss of $1.08 per share in the same quarter of 2024[83] - The book value per share increased by 16% to $52.09 in the second quarter of 2025, up from $44.74 in the second quarter of 2024[83] - In Q2 2025, the company achieved a Return on Equity (ROE) of 10.7% and a non-GAAP operating ROE of 10.3%, reflecting a significant improvement of 20.2 points and 19.9 points, respectively, compared to Q2 2024[85][90] - For the first six months of 2025, the ROE was 12.5% and the non-GAAP operating ROE was 12.3%, exceeding the company's target of 12%[86] Underwriting Performance - The combined ratio improved to 100.2% in the second quarter of 2025, down from 116.1% in the second quarter of 2024, indicating better underwriting performance[83] - The underwriting income for the first six months of 2025 was $43.2 million, a significant recovery from an underwriting loss of $154.7 million in the same period last year[90] - The combined ratio improved to 100.2% in Q2 2025, a 15.9-point decrease from 116.1% in Q2 2024, indicating better underwriting performance[90] - The combined ratio improved to 102.8% in Q2 2025, down from 118.8% in Q2 2024, reflecting better underwriting performance[99] - The combined ratio improved to 91.6 in Q2 2025 from 118.1 in Q2 2024, and to 94.9 from 111.7 in the first six months of 2025 compared to the same prior-year periods[122] Premiums and Pricing - Net Premiums Written (NPW) grew by 5% in Q2 2025 and 6% in the first six months of 2025, driven by renewal pure price increases of 10.1%, up 1.5 points from the previous year[90][91] - Net premiums written (NPW) grew by 6% to $1,018 million in Q2 2025 compared to $963 million in Q2 2024[99] - Renewal pure price increases were 8.9% in Q2 2025, up from 7.9% in Q2 2024[100] - Renewal pure price increases were 19.0% in Q2 2025 and 21.3% in the first six months of 2025, reflecting the company's efforts to refine pricing factors[122] Investment Performance - Total invested assets increased by 9% to $10,553,552,000 as of June 30, 2025, compared to $9,651,297,000 at December 31, 2024[139] - Net investment income earned increased by 18% to $101,421,000 in Q2 2025 compared to $86,262,000 in Q2 2024, driven by active portfolio management and net proceeds from the issuance of 5.9% Senior Notes[140] - The annualized after-tax yield on fixed income investments improved to 4.2% in Q2 2025, compared to 3.9% in Q2 2024[140] - Net unrealized losses before tax decreased by 44% to $(177,312,000) in the first half of 2025, primarily due to lower interest rates and strong performance of U.S. equities[139] Capital Management - As of June 30, 2025, the company had GAAP stockholders' equity of $3.4 billion and statutory surplus of $3.3 billion, with total debt of $902.7 million, resulting in a debt-to-capital ratio of 21.1%[162] - The company issued $400 million of 5.90% Senior Notes due 2035, resulting in net proceeds of $395.9 million, which will support organic growth with a $200 million capital contribution to the Insurance Subsidiaries[157] - The company repurchased 233,611 shares of common stock for $19.4 million, averaging $82.87 per share, with $56.1 million remaining under the share repurchase program as of June 30, 2025[158] - The company declared a quarterly cash dividend of $0.38 per common share payable on September 2, 2025, and a quarterly cash dividend of $287.50 per share on its 4.60% Non-Cumulative Preferred Stock, Series B[160] Risk Management - The company is closely monitoring jurisdictions with expanded liability theories and higher damage awards due to elevated social inflation trends[110] - The unfavorable prior year casualty reserve development in Q2 2025 was $45 million, a decrease of 74% compared to $176 million in Q2 2024[101] - Current year casualty loss costs increased by 11% to $439 million in Q2 2025 from $397 million in Q2 2024[101] - The company renewed its Casualty Excess of Loss Treaty with coverage for $87 million in excess of $3 million retention per loss occurrence, increasing retention by $1 million[132] - The Property Excess of Loss Treaty was renewed with a $30 million increase in limit, now providing coverage for $95 million in excess of a $5 million retention for losses on a per risk basis[133]