Selective Insurance 4Q Earnings Beat Estimates on Solid Underwriting

Core Insights - Selective Insurance Group (SIGI) reported fourth-quarter 2025 operating income of $2.57 per share, slightly exceeding the Zacks Consensus Estimate by 0.3%, with a year-over-year increase of 59% [1][9] - The company's strong quarterly performance is attributed to significant underwriting income, an average renewal pure price increase, and reduced loss and loss expenses [1] Financial Performance - Total revenues reached $1.4 billion, marking an 8.3% increase from the previous year, primarily driven by higher net premiums earned and net investment income, slightly surpassing the Zacks Consensus Estimate by 0.1% [2] - Net premiums written (NPW) increased by 4% year-over-year to $1.1 billion, supported by renewal pure price increases of 8.3%, although below the estimated $1.2 billion [2] - Net investment income rose 17% year-over-year to $114 million [2] Losses and Underwriting - Net catastrophe losses were $21 million, a decline from a gain of $10.1 million a year ago, while non-catastrophe property losses decreased to $159.6 million from $178.2 million [3] - Underwriting income surged to $76 million, more than quadrupling year-over-year, with the combined ratio improving by 470 basis points to 93.8 from 98.5, outperforming the Zacks Consensus Estimate of 96.7 [3] Expense Overview - Total expenses increased by 2.8% year-over-year to $1.2 billion, primarily due to higher amortization of deferred policy acquisition costs and other expenses, aligning with estimates [4] Segment Performance - Standard Commercial Lines' NPW rose 5% year-over-year to $875.6 million, driven by average renewal pure price increases of 7.5% and a retention rate of 82%, though below the estimate of $908.4 million [5] - Standard Personal Lines' NPW fell 8% year-over-year to $95.5 million due to strategic measures to enhance profitability, with a policy count decline and an average renewal pure price increase of 15.1% [6] - Excess & Surplus Lines' NPW increased by 4% year-over-year to $158.4 million, attributed to average renewal pure price increases of 7.8%, but below the estimate of $170 million [7] Full-Year Highlights - SIGI achieved a record NPW of $4.9 billion for 2025, with net investment income increasing by 16% year-over-year [9][10] - Operating earnings for the full year reached $7.38, a 126% increase year-over-year, surpassing the consensus estimate of $7.04 [10] Financial Position - As of the end of the fourth quarter of 2025, SIGI had total assets of $15.2 billion, a 12.1% increase from December 2024 [11] - Long-term debt rose significantly by 77.6% to $901.9 million, while adjusted book value per share increased by 11.2% to $57.91 [11] Shareholder Returns - In Q4 2025, the company repurchased $30 million worth of shares, with $170 million of authorization remaining [12] - A quarterly cash dividend of 43 cents per common share is scheduled for payment on March 2, 2026 [12] 2026 Guidance - SIGI projects a GAAP combined ratio of 96.5-97.5 and anticipates after-tax net investment income of $465 million for 2026 [13]