Selective(US:SIGI)2021-05-01 10:16Financial Data and Key Metrics Changes - The company reported a net income available to common stockholders per diluted share of $1.77 and non-GAAP operating earnings per share of $1.70 for the first quarter [22] - The annualized non-GAAP operating return on equity (ROE) was 16.2%, significantly above the target of 11% [8][22] - Consolidated net premiums written increased by 23% year-over-year, or 11% when adjusted for the prior year's COVID-19-related audit premium accrual [23] Business Line Data and Key Metrics Changes - In the Standard Commercial Lines, net premiums written increased by 28% or 12% when adjusted for the prior year's audit premium accrual [27] - The Personal Lines segment experienced a 4% decline in net premiums written, reflecting competitive market conditions [30] - The E&S segment reported a 10% growth in net premiums written, with renewal pure price increases averaging 7.3% [31] Market Data and Key Metrics Changes - The company achieved a combined ratio of 89.3% for the quarter, benefiting from $30 million in catastrophe losses and $35 million in favorable prior year casualty reserve development [24] - The underlying combined ratio, excluding catastrophes and prior year reserve development, was 90% compared to 93.1% in the prior year [24] Company Strategy and Development Direction - The company aims to balance growth and profitability, focusing on generating consistent and profitable growth [13] - Strategic initiatives include increasing market share with distribution partners and enhancing technology tools for agents [41][42] - The company plans to launch new products targeting the mass affluent market in Personal Lines and expand its E&S segment [44][45] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are early signs of a return to normal economic activity, uncertainty remains regarding late reported claims and increased severities [12] - The company expects continued elevated losses from catastrophe and non-catastrophe weather-related events, emphasizing the importance of climate risk mitigation [18] - The capital position remains strong, with $2.74 billion in GAAP equity, allowing for growth above the sustainable rate of 7% to 9% [35] Other Important Information - The company has initiated a $100 million share repurchase program, with approximately $3.4 million repurchased in the quarter [36] - The guidance for 2021 includes a GAAP combined ratio of 90%, improved from prior guidance, and projected after-tax net investment income of $195 million [37][38] Q&A Session Summary Question: Clarification on audit premium impact - The audit premium related to COVID-19 was $75 million, with $29 million in workers compensation and $46 million in general liability [48] Question: Growth drivers in Standard Commercial - Growth is attributed to price increases, improved exposure, and a 100 basis point increase in retention rates [49][50] Question: Marketplace dynamics and retention rates - The company does not see a difference in expected performance when winning accounts from larger versus smaller competitors [58] Question: Frequency versus severity in claims - Frequency has improved, while severity has emerged slightly worse than expected, but not enough to offset the frequency benefits [70][71] Question: Details on reserve releases - The net favorable casualty reserve development was $35 million, with significant contributions from workers compensation and general liability [74][75]