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Selective Reports First-Quarter Results, CEO Sees Commercial Pricing More Rational

Posted on 26 Apr 2012

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Selective Insurance Group, Inc. on Wednesday reported its financial results for the first quarter ended March 31, 2012. Net income per diluted share was $0.33 and operating income was $0.28 per diluted share.

"Overall, we are pleased with our first quarter performance and the progress we continue to drive throughout the organization," said Chairman, President and Chief Executive Officer Gregory E. Murphy. "There is clear evidence of more rational commercial lines pricing, terms and conditions by almost all competitors who are now seeking increases on renewal business. Our nimbleness, combined with pricing sophistication and outstanding agency relationships, provides us with high-quality growth and underwriting opportunities.

"For the quarter, our statutory combined ratio was a profitable 99.1% with both personal and commercial lines achieving combined ratios under 100%," said Murphy. "Commercial lines price was up 5.1% for the quarter, with March generating a 6% increase, and commercial lines retention for the quarter improved 3 points to a very strong 83%.

"Overall net premiums written (NPW) grew 16% in the quarter compared to 2011," continued Murphy. "Excess and surplus (E&S) lines contributed 7 points, with the remainder attributable to renewal price increases in personal and commercial lines that were over 5%; direct new business that rose 36% or $22 million; and overall retention that improved 2 points to a solid 84%.

"Our personal lines operations continue to grow due to filed rate increases that were effective for the quarter that averaged 5.9%, while retention improved 1 point from a year ago to 87%," said Murphy. "The personal lines statutory combined ratio for the quarter was profitable at 97.7%."

Selective's first quarter 2012 highlights compared to first quarter 2011:

Net income was $18.1 million, or $0.33 per diluted share, compared to net income of $20.5 million, or $0.37 per diluted share;

Operating income(1) was $15.3 million, or $0.28 per diluted share, compared to operating income(1) of $16.8 million, or $0.30 per diluted share;

Combined ratio: GAAP: 100.4% compared to 103.6%; Statutory: 99.1% compared to 102.6%;

Total net premiums written were up 16% to $420.2 million:

Commercial Lines NPW were up 18% to $354.6 million, including $25.8 million from E&S lines;

Personal Lines NPW were up 7% to $65.6 million;

Non-catastrophe property losses were $33.7 million, after tax, versus $39.7 million;

Favorable prior year statutory reserve development on our casualty lines totaled $3 million pre-tax compared to $4 million;

Net investment income, after tax, decreased 23% to $24.8 million; and

Total revenue was $419.3 million compared to $403.5 million.

Balance Sheet and Guidance

At March 31, 2012, Selective's assets were $5.6 billion, down 1% over December 31, 2011. Selective's investment portfolio was $4.2 billion, which increased 1% in the quarter.

Stockholders' equity was up 2% for the quarter, to $1.1 billion, and book value per share increased 2% to $19.76 for the quarter. Statutory surplus was up 2% for the quarter to $1.1 billion.

Selective's Board of Directors declared a $0.13 per share quarterly cash dividend on common stock payable June 1, 2012 to stockholders of record as of May 15, 2012.