Selective (SIGI) Q1 2025 Earnings Call

Core Viewpoint - Selective Insurance reported solid Q1 2025 results, maintaining full-year GAAP guidance of a 96%-97% combined ratio, driven by pricing discipline and portfolio optimization [4][8][11] Financial Performance - Combined ratio for Q1 2025 was 96.1%, including 3.7 points of catastrophe losses and 0.4 points of unfavorable prior year casualty reserve development [11] - Return on equity and operating return on equity were both 14.4% [3][11] - Net premiums written grew by 7%, primarily from excess and surplus lines and standard commercial lines, while personal lines premiums decreased by 12% due to profit improvement actions [8][11] - After-tax net investment income was $96 million, up 12% year-over-year [3][11] - Book value per share increased by 5% during the quarter [3] Pricing and Underwriting - Overall renewal pure pricing increased by 10.3%, up 2.2 points year-over-year, with personal lines renewal pure price at 24.1% [3][4][9] - Standard commercial lines renewal pure price was 9.1%, with general liability at 12% and commercial property and auto both exceeding 10% [3][9] - Workers' compensation pricing remained negative at approximately -3% [5][9] Strategic Initiatives - The company added 30 new agency locations in Q1 2025 and expanded into 13 new states since 2017, contributing $350 million in premiums written for standard commercial lines during 2024 [5][9] - Management expects rate changes to remain above loss trends but moderate compared to 2024 increases [5][9] Market Environment - The insurance industry faces significant macroeconomic uncertainty, including financial market performance and potential recession risks [9][10] - Social inflation continues to impact average casualty severities, prompting the company to focus on restoring consistent underwriting margins and operating ROEs [9][10] Investment Strategy - The investment portfolio remains conservatively positioned, with total fixed income and short-term investments representing 92% of the portfolio at quarter-end [11] - The average credit quality of the portfolio is A plus, with a duration of 4.1 years [11]