Selective Insurance Group Inc. said it expects to post third-quarter pretax catastrophe losses of about $70 million, net of reinsurance recoveries, the majority of which are related to Hurricane Irene.
"In my 31-year career, I have never encountered such a confluence of extreme weather events in one quarter," Selective Chairman, President and Chief Executive Officer Gregory E. Murphy said in a written statement. He noted ISO's Property Claim Services has given a preliminary estimate $3.7 billion for Irene-related losses, including $2.1 billion in Selective's top premium states — New Jersey, Pennsylvania, New York and Maryland.
The cat losses will add 20 points to its combined ratio, Selective said.
"We believe this year's unprecedented catastrophic weather activity is further evidence of the need for higher pricing," said Murphy. During the quarter, Selective achieved price increases of 2.7% in its commercial segment, and 5.9% in its personal lines segment, Murphy said.
Selective Insurance Group, which plans to report third-quarter results after the market close on Oct. 26, is comprised of seven pooled property/casualty insurance companies and ranks among the 50 largest writers in the United States based on net premiums written, according to BestLink, which provides online access to A.M. Best's database of insurance information. Selective sells insurance in 22 states. New Jersey represented 25.7% of the group's direct premiums written last year. The company targets small and midsize commercial accounts, and commercial lines represent about 82% of net premiums written, according to BestLink.
In the year-earlier third quarter, Selective reported net income of $17.2 million on revenue of $389.7 million. Cat losses totaled $7.8 million, after tax.
The company's combined ratio was 101.1 under generally accepted accounting principles.
Selective Insurance, which entered the excess and surplus lines business in July, last month purchased Montpelier U.S. Insurance Co., an E&S company, from Montpelier Re U.S. Holdings Ltd. in a transaction valued at about $55 million.