Selective(US:SIGI)2024-02-01 20:58Financial Data and Key Metrics Changes - In 2023, the company grew net premiums written by 16% and produced a combined ratio of 96.5% [4][11] - After-tax net investment income increased by 33% to $310 million, with an operating ROE of 14.4% [4][55] - The book value per share increased by 18% for the year, with a 13% increase in the fourth quarter [15][55] Business Line Data and Key Metrics Changes - The Standard Commercial Lines segment showed strong performance with high retention metrics and a focus on underperforming areas [7][52] - The Excess and Surplus Lines segment achieved a record year with net premiums written growing by 24% and an 86% combined ratio [8] - Personal lines, while representing about 10% of the business, saw a renewal pure price increase of 8.9% in the quarter, with expectations for further acceleration in 2024 [54] Market Data and Key Metrics Changes - The overall renewal pure price, excluding exposure change, was 6.8% [87] - The company expects a combined ratio of 95.5% for 2024, reflecting an overall expected loss trend of approximately 7% [60][62] - The company reported a premium to surplus ratio of 1.51x, up from 1.44x in 2022, indicating strong insurance operations growth [15] Company Strategy and Development Direction - The company aims to maintain underwriting discipline and price adequacy across its segments, focusing on profitable growth [52][76] - Plans to refine the portfolio and launch five new states for Standard Commercial Lines in 2024 were highlighted [8] - The company is committed to enhancing its distribution model and leveraging technology for improved risk selection and claims management [76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged elevated and uncertain loss trends influenced by economic and social inflation, necessitating continued focus on adequate pricing [17][18] - The outlook for 2024 includes a healthy ROE exceeding the 12% target, with confidence in managing through market dynamics [18] - Management emphasized the importance of demonstrating value to customers and distribution partners in a competitive market [6] Other Important Information - The company entered its first catastrophe bond transaction, upsizing it to $325 million, providing a new source of reinsurance capital [14] - The capital position remains strong with $3 billion of GAAP equity and $2.7 billion of statutory surplus at year-end [15] - The company reported a 20% increase in after-tax net investment income for the fourth quarter, totaling $78 million [83] Q&A Session All Questions and Answers Question: Regarding the general liability reserve development - Management confirmed that the $55 million reserve increase was included in the updated view and reflects severity trends [103] Question: Is there any spillover into the commercial auto book? - Management indicated that pricing remains constructive and there is no spillover effect observed in the commercial auto segment [68] Question: What is the outlook for pricing power in 2024? - Management expressed confidence in maintaining pricing power despite market expectations of potential declines [94] Question: Has there been any management changes affecting loss assumptions? - Management reassured that the leadership team remains consistent and the changes do not impact the evaluation of results and reserves [69] Question: What are the expectations for workers' compensation rates? - Management noted that while margins are good, they do not expect rate increases in the near term due to competitive pressures [137] Question: What drove the increase in property retention? - Management explained that the increase in retention was aligned with the growth in the property portfolio and market conditions [138]