Selective(US:SIGI)2021-01-29 21:10Financial Data and Key Metrics Changes - The company reported a non-GAAP operating ROE of 10.5% for the full year, with an annualized non-GAAP operating ROE of 18% for Q4 2020, reflecting strong financial results despite industry challenges [10][31] - The book value per share increased by 15% for the year, or 17% when adjusted for dividends [31] - The consolidated combined ratio for Q4 was 88.1%, benefiting from favorable prior year casualty reserve development and lower current year accident losses [36][37] Business Line Data and Key Metrics Changes - The Standard Commercial Lines segment reported a 10% growth in net premiums written for Q4, with a renewal pure price increase of 5.1% and retention rates improving to 86% [45] - Personal Lines experienced a 2% decline in net premiums written, with renewal pure price increases averaging 1.1% [48] - The E&S segment saw a 6% growth in net premiums written, with renewal pure price increases averaging 7.4% [50] Market Data and Key Metrics Changes - The company noted a 4.8% average renewal pure price increase across all lines, with strong retention rates contributing to premium growth [15][34] - The impact of COVID-19 resulted in a 3% growth in consolidated net premiums written for the year, with a negative impact of approximately 4 points due to pandemic-related adjustments [34] Company Strategy and Development Direction - The company plans to focus on profitable growth opportunities, including expanding market share with distribution partners and geographic expansion into new states [68][72] - Investment in technology and tools to enhance market position is a priority, with the rollout of the MarketMax tool to distribution partners [69] - A shift towards the affluent market in Personal Lines is underway, targeting customers with higher income and net worth [116][118] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by record low interest rates and elevated catastrophe losses, indicating a need for increased underwriting margins [21][22] - The company expects continued downward pressure on investment portfolio returns but remains optimistic about its strong financial position and ability to deliver growth [33][65] - Management expressed confidence in the company's competitive position and ability to generate consistent financial returns for shareholders [78] Other Important Information - The company issued $200 million of perpetual preferred stock to enhance capital flexibility and authorized a $100 million share repurchase program [28] - The investment portfolio remains well-positioned, with 92% in fixed income securities and an average credit rating of AA- [51] Q&A Session Summary Question: What is causing the topline growth to accelerate? - Management indicated that exposure changes, competitive environment, and digital improvements contributed to topline growth, with a positive exposure on the renewal portfolio of about 1% [82][85][89] Question: Will Selective be asking for less rate increase than the industry average? - Management noted that while pricing might be lower than average in certain lines, it aligns with profitability expectations, maintaining a disciplined approach to pricing [94][95] Question: Will there be metrics to track diversity levels? - Management confirmed plans to provide more data on diversity in future reports, emphasizing the importance of inclusion and diverse leadership [98][100] Question: Can you discuss the reserve releases in general liability? - Management explained that reserve releases were from multiple accident years, with favorable emergence in workers' compensation and general liability lines [103][106] Question: How is the company shifting towards the mass affluent market in Personal Lines? - Management detailed plans to clarify appetite and messaging to agents, with product and service rollouts expected in mid-2021 [116][118]