Selective Insurance Q4 Earnings Miss Estimates on Poor Underwriting

Core Insights - Selective Insurance Group, Inc. (SIGI) reported fourth-quarter 2024 operating income of $1.62 per share, missing the Zacks Consensus Estimate by 18.1% and reflecting a 16% decrease from the previous year [1] - Total revenues reached $1.3 billion, a 14.4% increase year-over-year, primarily driven by higher premiums earned and net investment income, although it missed the Zacks Consensus Estimate by 1% [3] - The company experienced a 10% rise in net premiums written (NPW) to $1.1 billion, supported by renewal pure price increases of 10.7% [4] Financial Performance - After-tax net underwriting income fell to $13.3 million, a 73.5% decrease year-over-year, with catastrophe events favorably impacting results [5] - The combined ratio deteriorated to 98.5%, worsening by 480 basis points year-over-year, while the loss and loss expense ratio increased to 67.8% [6] - Total expenses rose by 19.2% year-over-year to $1.1 billion, attributed to higher loss expenses and other insurance costs [6] Segmental Results - Standard Commercial Lines' NPW increased by 9% year-over-year to $833.4 million, with average renewal pure price increases of 8.8% [7] - Standard Personal Lines' NPW decreased by 3% year-over-year to $103.6 million, with retention dropping to 75% [9] - Excess & Surplus Lines' NPW surged by 27% year-over-year to $152.6 million, driven by new business growth of 29% [10] Full-Year Highlights - For the full year, operating earnings were $3.27 per share, down 44% year-over-year, with NPW reaching a record $4.6 billion, up 12% [11] - The combined ratio for the year deteriorated to 103%, with an underwriting loss of $104.7 million [11] Financial Update - As of the end of 2024, total assets stood at $13.5 billion, a 15% increase from the previous year, while long-term debt rose by 1% to $507.9 million [12] - Book value per share increased by 6% year-over-year to $47.99 [12] Shareholder Returns - In 2024, SIGI repurchased shares worth $8.7 million and had $75.5 million remaining under authorization [13] - A quarterly cash dividend of 38 cents per share was authorized, payable on March 3, 2025 [13] 2025 Guidance - SIGI anticipates a GAAP combined ratio of 96% to 97% for 2025, including net catastrophe losses of 6 points [14] - The company projects after-tax net investment income of $405 million and an effective tax rate of 21.5% [14]