Summary of Selective Insurance Group (SGZ.CL) 2025 Conference Call Company Overview - **Company**: Selective Insurance Group - **Date of Conference**: September 03, 2025 Key Points Industry Insights - The insurance industry is experiencing higher paid emergence in recent accident years, particularly in commercial auto and general liability lines [2][3] - Selective Insurance has adopted a conservative approach to reserving, especially in workers' compensation, due to observed flattening frequency trends [14][15] - The company is addressing social inflationary trends impacting claims severity across its portfolio [8][30] Financial Performance - The underlying combined ratio in personal lines is reported at 82%, indicating improved profitability [50] - Year-to-date return on equity (ROE) stands at 12.3%, with a target combined ratio of 89% [35] - The company has seen a significant shift in its personal lines portfolio towards the mass affluent market, with average home values for new business around $1,000,000 [48] Reserving Philosophy - Selective Insurance emphasizes a proactive reserving philosophy, reacting quickly to adverse developments in recent accident years [20][34] - The company has increased its expected loss ratios for general liability, positioning itself better for future years [7][11] - The management believes that the current reserving practices are sound, despite market concerns [29][37] Capital Management - The company plans to return 20-25% of its earnings over time through dividends and stock buybacks, having repurchased $19.4 million in stock in the first quarter of 2025 [26][28] - Selective Insurance is cautious about making economically inefficient decisions to appease market concerns regarding reserves [29] E&S Segment Growth - The Excess and Surplus (E&S) segment has been successful, with a shift towards more property opportunities [39] - The company is expanding its non-admitted E&S products to retail distribution partners, aiming for profitable growth [40][41] Technology and AI Implementation - Selective Insurance is investing in technology to enhance agent and customer experiences, improve operational efficiency, and leverage AI for better decision-making [77][78] - The company has numerous active AI use cases and is focused on continuous improvement in data utilization [80][81] Market Positioning - The company is strategically positioned to capitalize on the mass affluent market, with plans to expand its footprint in jurisdictions not currently served [52] - Selective Insurance is focused on maintaining strong margins while navigating the challenges posed by inflation and market dynamics [54][55] Conclusion - Selective Insurance Group is navigating a complex insurance landscape with a focus on proactive reserving, capital management, and technology investments to drive future growth and profitability [85]

Financial Data and Key Metrics Changes - Operating return on equity (ROE) reached 18.7%, a record for the second quarter [10] - Operating earnings were $4.35 per diluted share, with earnings growth of approximately 25% on an ex-cat basis [10] - The overall combined ratio improved by approximately seven points year-over-year, while the ex-cat combined ratio improved by three points [10][24] - Net investment income increased by 16.7% to $105.5 million [25][37] - Book value increased by 6% sequentially and 13.2% year-to-date [38] Business Line Data and Key Metrics Changes - Personal lines achieved a strong current accident year ex-cat combined ratio of 84.8%, reflecting a 5.4-point improvement from the prior year [27] - Core Commercial delivered a combined ratio of 93%, with a combined ratio excluding catastrophes of 88.9% [32] - Specialty segment net written premium growth was 4.6%, with a mid-80s combined ratio [17] - Personal lines growth was 3.7%, with double-digit growth in targeted diversification states [31] Market Data and Key Metrics Changes - The market environment is characterized by significant variability across insurance product lines, with rising competition in property and building pricing pressures in liability [9] - The company is experiencing favorable conditions in the lower mid-market and smaller size account space, particularly in the Specialty segment [18] Company Strategy and Development Direction - The company is focused on a specialized and diversified portfolio of products through a select distribution model targeting top independent agents [8] - Investments in data, analytics, and technology are being made to enhance operational efficiency and scalability [19][20] - The company aims to maintain significant price increases in response to higher severity and unpredictable nature of catastrophe losses [12] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive business outlook, with widespread profitability and target level returns across most segments [9] - The company is well-positioned to capitalize on emerging opportunities and continue delivering high-quality results [10] - Management remains cautious about potential impacts from tariffs and is actively monitoring market conditions [13] Other Important Information - The company completed a successful renewal of its property treaties, reflecting effective property and catastrophe management initiatives [35] - The third quarter catastrophe load is expected to be 6.8%, with ongoing efforts to improve the portfolio's risk profile [39] Q&A Session Summary Question: Specialty segment and decelerating rate environment - Management highlighted the resilience of pricing and ongoing profitability in the Specialty segment, emphasizing differentiation in lower middle market and small business [42][44] Question: Commercial auto charge and trends - Management noted that commercial auto is a relatively small line, with increased reserves being prudent rather than indicative of a larger trend [46][47] Question: Catastrophe load guidance for Q3 - The expected catastrophe load of 6.8% reflects improvements in both personal and commercial lines, with ongoing efforts to manage risk [52][53] Question: Competitive environment in commercial lines - Management discussed the diversification of the portfolio as a strength, with expectations for continued resilience in small commercial despite competitive pressures [54][56] Question: Investment income guidance - Management expressed confidence in the investment income outlook, driven by strong cash flows and favorable reinvestment rates [59][61] Question: Distribution strategy in personal lines - Management is focused on diversifying the business across existing states rather than rapidly expanding into new ones, while adding agents to enhance growth [67][68] Question: Technology and operational efficiency - Management emphasized the importance of targeted tech-driven investments to enhance operating models and efficiency, positioning the company for scalable growth [70][74]

Financial Data and Key Metrics Changes - Operating return on equity (ROE) reached 18.7%, a record for the second quarter [9] - Operating earnings were $4.35 per diluted share, with earnings growth of approximately 25% on an ex-cat basis [9] - The overall combined ratio improved by approximately seven points year-over-year, while the ex-cat combined ratio improved by three points [9][23] - Net investment income increased by 16.7% to $105.5 million [24] Business Line Data and Key Metrics Changes - Personal lines business showed strong profitability with a current accident year ex-cat combined ratio of 84.8%, reflecting a 5.4-point improvement from the prior year [27] - Core Commercial segment delivered a combined ratio of 93%, with a combined ratio excluding catastrophes of 88.9% [32] - Specialty segment achieved a current accident year loss ratio ex-cat of 49%, favorable compared to expectations and the prior year [34] Market Data and Key Metrics Changes - Personal lines growth was 3.7%, with double-digit growth in targeted diversification states [31] - Net written premium growth in Core Commercial improved by 4.4%, led by 5.6% growth in small commercial [33] - Specialty net written premium growth was 4.6%, with retention improving to 81.8% [35] Company Strategy and Development Direction - The company is focused on a diversified portfolio and specialized products through a select distribution model targeting top independent agents [7] - Investments in data, analytics, and technology are prioritized to enhance operational efficiency and customer experience [18][19] - The company aims to capitalize on emerging opportunities in a dynamic market environment characterized by variability across insurance product lines [8] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive business outlook with widespread profitability across most segments [8] - The company is well-positioned to sustain profit margins while executing its targeted growth strategy [12] - Management remains cautious about potential impacts from tariffs but has not yet seen material effects [12] Other Important Information - The company repurchased approximately 295,000 shares of common stock totaling $48.2 million [40] - The third quarter catastrophe load is expected to be 6.8% [40] Q&A Session Summary Question: Inquiry about the Specialty segment and rate environment - Management acknowledged the resilient pricing in the Specialty segment and emphasized their focus on lower middle market and small business [44][46] Question: Concerns regarding commercial auto charges - Management clarified that commercial auto is a relatively small line for them, and the increase in reserves is primarily IBNR [48][49] Question: Catastrophe load guidance for Q3 - Management confirmed a 6.8% catastrophe load for Q3, with improvements expected in both personal and commercial lines [53][54] Question: Competitive environment in commercial lines - Management noted that their diversified portfolio helps maintain pricing stability despite competitive pressures [56][58] Question: Investment income guidance - Management expressed confidence in their investment income performance, driven by strong cash flows and favorable reinvestment rates [61][63]

Core Insights - Cincinnati Financial reported revenue of $2.78 billion for the quarter ended June 2025, reflecting a 15.3% increase year-over-year, with an EPS of $1.97 compared to $1.29 in the same quarter last year [1] - The reported revenue matched the Zacks Consensus Estimate, while the EPS exceeded expectations by 41.73% [1] Financial Performance Metrics - The combined ratio for Commercial Lines Insurance was 92.9%, significantly better than the average estimate of 99.1% from five analysts [4] - The combined ratio for Excess and Surplus Lines Insurance was 91.1%, outperforming the average estimate of 92.7% [4] - The combined ratio for Personal Lines Insurance was 102%, slightly better than the average estimate of 104.1% [4] - Loss and loss expenses for Commercial Lines Insurance were reported at 63.3%, compared to the average estimate of 68% [4] Revenue Breakdown - Earned premiums for Excess and Surplus Lines Insurance were $174 million, exceeding the average estimate of $171.2 million, marking a year-over-year increase of 15.2% [4] - Total revenues for Excess and Surplus Lines Insurance reached $175 million, compared to the average estimate of $172 million, representing a 15.1% year-over-year change [4] - Earned premiums for Property Casualty Insurance were $2.4 billion, matching the average estimate and showing a 15.5% increase year-over-year [4] - Earned premiums for Personal Lines Insurance were $804 million, surpassing the average estimate of $793.28 million, with a year-over-year increase of 27.4% [4] - Earned premiums for the Life Insurance Subsidiary were $83 million, slightly above the average estimate of $82.31 million, reflecting a 2.5% year-over-year change [4] - Earned premiums for Commercial Lines Insurance were $1.21 billion, slightly below the average estimate of $1.22 billion, indicating a 9.5% year-over-year increase [4] - Total earned premiums were reported at $2.48 billion, just below the average estimate of $2.49 billion, with a year-over-year change of 15% [4] - Fee revenues for Property Casualty Insurance were $3 million, slightly below the average estimate of $3.2 million, showing no year-over-year change [4] Stock Performance - Cincinnati Financial's shares returned +2.2% over the past month, while the Zacks S&P 500 composite increased by +4.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Analysts project Cincinnati Financial (CINF) will report quarterly earnings of $1.37 per share, a 6.2% increase year over year, with revenues expected to reach $2.78 billion, reflecting a 15.4% increase from the same quarter last year [1] Earnings Estimates - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a collective reevaluation by analysts [1][2] - Revisions to earnings estimates are crucial for predicting investor actions, with empirical research showing a strong correlation between earnings estimate trends and short-term stock performance [2] Key Metrics Projections - Analysts forecast 'Investment income, net of expenses- Total' to reach $278.79 million, a 15.2% year-over-year increase [4] - 'Revenue- Excess and surplus lines insurance- Earned premiums' is expected to be $171.20 million, indicating a 13.4% year-over-year change [4] - 'Revenues- Personal Lines Insurance- Earned premiums' is projected at $793.28 million, reflecting a 25.7% increase year over year [4] Insurance Metrics - 'Revenues- Life Insurance Subsidiary- Earned premiums' is estimated at $82.31 million, a 1.6% increase from the prior-year quarter [5] - The 'Excess and surplus lines insurance - Combined ratio' is expected to be 92.7%, down from 95.4% a year ago [5] - 'Personal Lines Insurance - Combined ratio' is projected at 104.1%, compared to 106.9% in the previous year [5] Loss and Expense Estimates - 'Commercial Lines Insurance - Loss and loss expenses' is expected to be 68.0%, up from 67.4% in the same quarter last year [6] - 'Excess and surplus lines insurance - Loss and loss expenses' is projected at 65.5%, compared to 67.5% in the previous year [6] - 'Personal Lines Insurance - Loss and loss expenses' is estimated at 74.4%, down from 77.6% a year ago [7] Underwriting Expenses - 'Excess and surplus lines insurance - Underwriting expenses' is projected to be 27.1%, down from 27.9% in the same quarter last year [8] - 'Personal Lines Insurance - Underwriting expenses' is expected to be 29.7%, slightly up from 29.3% in the previous year [8] Stock Performance - Over the past month, shares of Cincinnati Financial have returned +2.9%, compared to the Zacks S&P 500 composite's +5.9% change [8]

Financial Data and Key Metrics Changes - The company achieved operating earnings per share of $3.87, a first-quarter record, and a combined ratio of 94.1%, slightly outperforming expectations [20] - Net written premiums grew by 3.9% in the first quarter [20] - Catastrophe losses were 6.3%, with California wildfire losses accounting for $35 million [21] - Excluding catastrophes, the combined ratio improved to 87.8%, reflecting a 1.7-point improvement over the prior year [21] Business Line Data and Key Metrics Changes - Personal Lines achieved net written premium growth of 3%, with a 7.1% increase excluding the Midwest [7][9] - Core Commercial net written premium growth was 3.8%, driven by middle market momentum [10] - Specialty segment's premium growth was 5.4%, with upper single-digit to double-digit growth in profitable lines [14] Market Data and Key Metrics Changes - The company noted increased competition in the small commercial market, particularly in certain sectors [40][56] - The competitive environment in Personal Lines is becoming more aggressive, especially in the direct channel [56] Company Strategy and Development Direction - The company is focused on profitable growth in high-potential markets while managing exposure in the Midwest [7] - There is an emphasis on targeted catastrophe mitigation efforts and adjusting pricing in states with improved profitability [9][10] - The company plans to leverage investments in field sales and underwriting to accelerate new agency appointments [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, citing a strong book of business and diversified premium streams [17][18] - The company anticipates strong underwriting profitability driven by pricing exceeding loss trends and higher net investment income [36] Other Important Information - The company has repurchased approximately 178,000 shares of common stock year-to-date, with $274 million remaining under the share repurchase program [34] - The second quarter catastrophe load is expected to be 7.9% [35] Q&A Session Summary Question: Comments on small commercial pricing environment - Management acknowledged increased competition in small commercial and indicated adjustments in new business pricing to regain growth momentum [40][41] Question: Competitive environment in Personal Lines - Management confirmed that the competitive landscape is becoming more aggressive, particularly in the auto insurance sector, but expressed confidence in their strategy [55][56] Question: Frequency benefits in home insurance - Management attributed favorable frequency to higher deductibles and customer reluctance to file small claims, indicating this trend may continue [67][70] Question: Casualty loss trend assumptions - Management noted that casualty loss trend assumptions have been raised consistently over the past five years, reflecting ongoing adjustments to market conditions [74] Question: Clarification on catastrophe reserve releases - Management clarified that their guidance does not include prior year development (PYD) and emphasized a prudent approach to managing their balance sheet [75]

Financial Data and Key Metrics Changes - The company achieved operating earnings per share of $3.87, a first-quarter record, and a combined ratio of 94.1%, slightly outperforming expectations [21] - Net written premiums grew by 3.9% in the first quarter [21] - Catastrophe losses were 6.3%, with California wildfire losses accounting for $35 million [22] - Excluding catastrophes, the combined ratio improved to 87.8%, reflecting a 1.7-point improvement over the prior year [22] Business Line Data and Key Metrics Changes - Personal Lines achieved net written premium growth of 3%, with a 7.1% increase excluding the Midwest [9][10] - Core Commercial saw net written premium growth of 3.8%, driven by middle market momentum [11] - Specialty segment's premium growth was 5.4%, with 7.3% growth excluding programs [15] Market Data and Key Metrics Changes - The company noted increased competition in the small commercial market, particularly in certain sectors [41][58] - The personal lines market is becoming more competitive, with increased shopping and consistent terms across markets [59][61] Company Strategy and Development Direction - The company is focused on profitable growth in high-potential markets while managing exposure in the Midwest [10] - There is an emphasis on targeted catastrophe mitigation efforts and adjusting pricing in states where profitability has improved [10][14] - The company plans to leverage investments in field sales and underwriting to accelerate growth in high-opportunity sectors [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, citing a strong book of business and diversified premium streams [18] - The company is prepared to face potential tariffs and recessionary impacts, with a focus on maintaining profitability [19] - Management expects premium growth to increase in the second quarter, driven by strong underwriting profitability and higher net investment income [36][37] Other Important Information - The company repurchased approximately 178,000 shares of common stock year-to-date through April, with $274 million remaining under the share repurchase program [35] - The second quarter catastrophe load is expected to be 7.9% [36] Q&A Session Summary Question: Comments on small commercial pricing environment - Management confirmed increased competition in small commercial and noted adjustments in new business pricing to regain growth momentum [41][43] Question: Clarification on liability pricing expectations - Management indicated that the expectation of liability pricing increases applies to all casualty lines, not just umbrella [45] Question: Insights on competitive environment in Personal Lines - Management discussed the deliberate strategy to diversify the book of business while improving profitability across various states [54][56] Question: Frequency benefits in home insurance - Management attributed favorable frequency to higher deductibles and customer reluctance to submit small claims, which is expected to continue [70][72] Question: Casualty loss trend assumptions - Management refrained from providing specific numbers due to variability across different lines but confirmed that assumptions have increased meaningfully over the years [75] Question: Catastrophe reserve releases and guidance - Management clarified that their guidance does not include prior year development (PYD) for catastrophe loads [76]

Financial Data and Key Metrics Changes - In Q1 2025, Kinsale's operating earnings per share increased by 6% and gross written premium grew by 8% compared to Q1 2024 [6] - The company reported a combined ratio of 82% and an annualized operating return on equity of 22.5% [6][12] - Net investment income rose by 33.1% year-over-year due to growth in the investment portfolio [13] Business Line Data and Key Metrics Changes - The Commercial Property division experienced an 18% decrease in premium, which was the largest underwriting unit last year [9] - Excluding the Commercial Property division, Kinsale's direct written premium grew by 16.7% [10] - Personal lines and small commercial property teams continued to grow at double-digit rates [10] Market Data and Key Metrics Changes - The E&S market remained steady in Q1 2025, but competition continued to increase [11] - Overall rates for the quarter were down 1%, with the Commercial Property division seeing rates down about 20% [20] - Casualty rates overall were up modestly, driven by construction and general casualty [20] Company Strategy and Development Direction - Kinsale focuses on disciplined underwriting and a technology-driven low-cost model, which provides a durable competitive advantage [21][25] - The company is expanding its personal lines book, particularly in high-value homeowners and manufactured homes [18] - Kinsale aims to maintain profitability over growth, prioritizing high-margin segments and controlling underwriting [41][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model and the ability to sustain underwriting performance despite competitive pressures [40][42] - The company is well-positioned to grow even in a contracting economy, with a low expense ratio compared to competitors [46] - Management remains optimistic about growth prospects and the ability to take market share from higher-expense competitors [25] Other Important Information - The estimated loss from the Palisades wildfire was revised to about $41 million gross and $22 million net of reinsurance [7] - Kinsale repurchased $10 million in shares during Q1 2025, with expectations for similar modest levels of repurchases in the future [15] Q&A Session Summary Question: Submission growth trends between property and casualty lines - The commercial property is experiencing the biggest decline in growth rate, while the rest of the properties continue to show strong submission growth [28][29] Question: Impact of competition on property slowdown - Increased competition in the large property account space is noted, with more capital entering the market [34][35] Question: Confidence in sustaining underwriting performance - Management is confident in their business model, focusing on high-margin segments and controlling underwriting [40][42] Question: Kinsale's strategy in a potential recession - The company believes it can continue to grow even in a contracting economy due to its low expense ratio [46] Question: Changes in loss trends for property and casualty lines - A decrease in reported losses and a favorable mix of business contributed to strong underlying loss ratios [54][55] Question: Appetite for large commercial property - Kinsale has not changed its appetite for large commercial property, focusing on the right pricing terms [74][75] Question: Sustainability of high loss ratios in fronting companies - Management believes that high loss ratios are unsustainable for fronting companies, which will eventually change the competitive landscape [84][85] Question: Core loss ratio and willingness to sacrifice margin for growth - Kinsale prioritizes profitability over growth, managing profitability at a granular level [88][90] Question: Competition in the commercial property market - The competitive environment in the commercial property market is described as steady, with no significant changes noted [96][99] Question: Long-term mix between property and casualty - The E&S market is generally viewed as one-third property and two-thirds casualty, with ongoing efforts to expand into homeowners insurance [104][105]

Core Viewpoint - Cincinnati Financial Corporation (CINF) is anticipated to show revenue growth but a significant decline in earnings for the first quarter of 2025, with revenues expected to reach $2.7 billion, reflecting a 16.3% increase year-over-year, while the bottom line is projected to report a loss of 29 cents per share, indicating a 116.9% decrease from the previous year [1][2]. Revenue Expectations - The Zacks Consensus Estimate for CINF's first-quarter revenues is $2.7 billion, which represents a 16.3% growth compared to the same quarter last year [1]. - Earned premiums are expected to be $2.4 billion, up 16.6% from the year-ago figure, aligning with the Zacks Consensus Estimate [4]. - Personal Lines revenues are projected at $763 million, indicating a 29.5% improvement from the previous year [5]. - Excess and Surplus lines revenues are estimated at $163 million, reflecting a 16.4% increase year-over-year [6]. - Net investment income is expected to be $278.4 million, up 12.2% from the prior year [7]. Expense and Loss Projections - Total expenses are anticipated to rise by 40.2% to $2.8 billion, driven by higher insurance losses and various operational costs [7]. - CINF expects catastrophe losses from the California wildfire to be between $450 million and $525 million, with the Personal Lines segment absorbing 73% of this loss [8]. Earnings Prediction Model - CINF has an Earnings ESP of -86.48%, indicating a lower likelihood of an earnings beat, as the Most Accurate Estimate of a loss of 53 cents per share is significantly worse than the consensus estimate of a loss of 29 cents [3]. - CINF holds a Zacks Rank of 3, suggesting a neutral outlook [3].