"We produced a statutory combined ratio of 98.7%, reflecting a more normal level of catastrophe losses," said Chairman, President and Chief Executive Officer Gregory E. Murphy. "Most importantly, we achieved our 11th consecutive quarter of commercial lines renewal pure price increases with a strong 3.4% and retention increased 3 points to 82%. We are earning rate slightly above our loss cost trends as our pricing power continues to improve. Commercial Lines renewal price for the month of December was 3.7% and January 2012 was 4.5%. After several years of price competition, most of our commercial lines competitors now appear to be using more sound underwriting judgment and driving rates higher.
"We continue to focus our improvement in Personal Lines on rate increases with renewal price up 6.1% for the quarter. For the year, there were 46 rate increases in Personal Lines, adding $18 million in available premium to our in-force book," continued Murphy. "This is our fourth consecutive year driving rate and in 2012, we fully expect to file and obtain overall Personal Lines rate increases of 8.3% with homeowners up about 11.5%.
"Delivering on our commitment to add new high margin products to our portfolio, we completed the acquisition of MUSIC, our new contract binding authority excess and surplus lines company, from Montpelier Re," said Murphy. "Our agents are excited about the new platform we have to write this business in all 50 states and DC. It gives them a broader opportunity to serve their clients through our expanded product offering."
In the quarter, overall net premiums written grew 17% due to the addition of the new excess and surplus operations that contributed 5.2 points, renewal premium pure price increases in personal and commercial lines that contributed 3.4 points and audit and endorsement premium growth of 3.7 points. The underlying growth of Selective's core book was 4.4% for the quarter, driven mostly by the 3 point increase in our commercial lines retention.
"2011 was a year of extreme weather, market volatility, historically low interest rates and continuing US and European economic woes," continued Murphy. We ended the year with a statutory combined ratio of 106.7%, which included $119 million, or 8.3 points, of catastrophe losses. Excluding catastrophes, our statutory combined ratio was 98.4%.
"Although it was an extremely challenging year, we managed the pricing cycle instead of the cycle managing us. We have been one of the only companies increasing commercial lines renewal price for the past three years. During this time, we also improved our commercial lines underwriting mix of business and we're executing significant personal lines rate and underwriting improvements. In addition, our claims initiatives are expected to deliver a 3-point improvement in loss and loss expense ratio by the end of 2013. We believe we are well-positioned to take advantage of a firming market," concluded Murphy.