Selective(SIGI) - 2025 Q4 - Annual Report

Investment Income and Revenue - Net investment income consists primarily of interest earned on fixed income investments, dividends on equity securities, and income from alternative investments, partially offset by investment expenses[28]. - The company generates revenue primarily from one-year term insurance policies, with significant costs associated with loss and loss expenses for covered events[29]. - The company aims to maximize its investment portfolio's economic value by maintaining a well-diversified portfolio and achieving stable, risk-adjusted after-tax net investment income[73]. Expansion and Market Presence - The company expects to enter Montana and Wyoming by the end of 2026, following its recent expansion into Kansas in 2025[38]. - The company has approximately 1,680 distribution partners selling standard lines products through about 2,940 office locations[45]. - The company introduced a new specialty lines construction division in 2025, investing in operational efficiency and expanding distribution capabilities[64]. Technology and Innovation - The company employs predictive models, including traditional AI, to enhance underwriting and pricing processes for its insurance products[36]. - The company utilizes technology investments to improve operational efficiency and decision-making speed, leveraging AI and cloud-based solutions[49]. - The company has established a dedicated innovation team to enhance its culture of innovation and monitor industry trends, aiming to deliver long-term value to customers and partners[55]. Risk Management - The company employs 88 field-based Risk Management Specialists to support policyholders, enhancing underwriting decisions and risk management programs[58]. - The company has executed a multi-year claims system modernization strategy to improve claims processing efficiency and customer experience, expecting reduced cycle times and costs[66]. - The company’s risk governance structure includes multiple committees overseeing various risk categories, ensuring comprehensive risk management[98]. Financial Health and Compliance - The Insurance Subsidiaries consistently met most IRIS ratio tests, indicating strong financial health[79]. - All Insurance Subsidiaries had total adjusted capital substantially exceeding the NAIC-required capital level based on 2025 statutory financial statements[79]. - The Group Capital Calculation (GCC) ratio exceeded the regulatory action minimum threshold, providing additional analytical information for assessing group risks[79]. Employee Engagement and Workplace Culture - The company has approximately 2,800 employees and was recognized as a Great Place to Work Certified organization for the sixth consecutive year[100]. - The company is committed to maintaining competitive compensation and analyzing internal equity to attract and retain talent[101]. - Women represented 57% of the non-officer workforce and 37% of the officer workforce, with ethnic diversity consistent with national averages for financial services[108]. Sustainability and Environmental Impact - The company integrates sustainability principles into its business, focusing on employee development and addressing climate change impacts[99]. - The company generated approximately 3.3 million kWh of electricity from solar photovoltaic systems in 2025, which were sold to others[122]. - The company prohibits new direct equity or debt investments in thermal coal enterprises, reflecting its commitment to sustainability[120]. Employee Development and Training - The company is committed to ongoing employee learning and development, with programs aimed at talent retention and leadership preparation[105]. - The company employs inclusive leadership training for newly promoted officers and managers to foster a diverse workplace culture[107]. - The company offers competitive health and wellness programs, including a 401(k) plan with employer matching contributions and tuition reimbursement programs[102]. Operational Continuity - The company employs robust plans for operational continuity, including business continuity plans for key data processing facilities[122]. - The company has a robust business continuity plan to ensure operational continuity during unforeseen events, reviewed and tested annually[122]. - The established catastrophic risk tolerance requires that no more than 10% of stockholders' equity be exposed to a loss from a hurricane event at a 99.6% confidence level[119].