Selective(US:SIGI)2023-05-07 02:31Financial Data and Key Metrics Changes - The company reported a fully diluted EPS of $1.48 for Q1 2023 and a non-GAAP operating EPS of $1.44, with a non-GAAP operating ROE of 14.6%, exceeding the 12% target [6][56] - The capital position remains strong with $2.7 billion of GAAP equity and $2.5 billion of statutory capital and surplus, while book value per share increased by 5.8% during the quarter [7][56] - The combined ratio for the quarter was 95.7%, slightly above the long-term target of 95%, with an underlying combined ratio of 91% [57][73] Business Line Data and Key Metrics Changes - Net premiums written in the E&S segment grew by 16%, with new business growth of 9% and a renewal pure rate of 7.4% [24] - The Standard Personal Lines segment saw a 31% growth in net premiums written, transitioning towards the mass affluent market [24] - The Standard Commercial Lines produced a combined ratio of 94.7% and an underlying combined ratio of 91.3%, with non-cat losses about three points lower than last year [90] Market Data and Key Metrics Changes - The company experienced a 12% growth in net premiums written across all segments compared to Q1 2022 [73] - The commercial property renewal pure rate increased by 11.8%, while exposure grew by 5.1%, resulting in a total premium change of 17.5% [4] - The commercial auto renewal pure rate was up 10%, with exposure growing by 4.9%, leading to a total premium change of 15.4% [4] Company Strategy and Development Direction - The company is focused on expanding its footprint, having added eight states over the past five years, with plans to open an additional five states in the next two to three years [3] - The transition to the mass affluent market is expected to positively impact long-term profitability, with personal lines representing only 8.5% of premiums in the quarter [15][71] - The company aims to maintain a disciplined approach to underwriting and risk selection, particularly in the commercial property line [90] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic and loss trend uncertainties but expressed confidence in the company's ability to navigate these challenges [5] - The company expects continued pricing trends in commercial lines, with a focus on achieving profitability despite the uncertain loss environment [15][36] - Management highlighted the importance of active portfolio management in investments, with a current book yield of 4.33%, up 20 basis points in the quarter [28][74] Other Important Information - The company did not repurchase any shares during the first quarter but has $84.2 million remaining under its share repurchase authorization [7] - Catastrophe losses for the quarter amounted to $55.3 million, contributing 6.1 points to the combined ratio, which was slightly above expectations [73] - The investment portfolio produced $73 million of after-tax income, a 25% increase from Q1 2022, driven by active management [25][74] Q&A Session Summary Question: Can you provide details on the combined ratio guide for this year? - Management indicated that projecting loss ratios is challenging due to uncertainties in loss trends, but they are focused on achieving profitability [15] Question: What are the trends in claims between private passenger auto and commercial auto? - Management noted that while trends may converge, there are still differences in claims inflation between the two segments [85] Question: How does the company view the competitive environment and pricing trends? - Management believes the competitive environment is shifting favorably, with pricing moving in the right direction due to proactive measures taken [93]