SIGI Shareholder/Stockholder Letter Transcript:
2023
ANNUAL
REPORT
OUR
BUSINESS
Selective Insurance Group, Inc.
(NASDAQ: SIGI) is a New Jersey
holding company for ten property
and casualty insurance companies
with $11.8 billion in total assets as
of December 31, 2023.
Our insurance companies
are dedicated to serving our
customers unique insurance
needs through customized risk
management solutions and
value-added services.
A Decade of Disciplined, Pro table Growth
2014 Through 2023
+2X
More than doubling net
premiums written and
book value per share
Nearly tripling
operating income
Averaging an operating
ROE exceeding 12%,
slightly above our target
Expanding our Standard
Commercial Lines footprint
from 22 states and D.C. to
30 states and D.C.
Moving from the 44th
largest P&C insurer in
AM Best s annual ranking
to the 37th largest
Increasing our annual
dividend per share from
$0.53 to $1.25
Generating annualized total shareholder
return of 15.6%, compared to 12.0% for the
S&P 500 and 13.5% for the S&P Property
and Casualty Index
2023 GAAP Financial Highlights
2023
2022
% or Point
Change
Better/(Worse)
$4,134.5
$3,573.6
16%
Combined ratio
96.5%
95.1%
(1.4) pts
Underwriting income after-tax
$104.9
$131.8
(20)%
4.2%
5.4%
(1.2) pts
$309.5
$232.2
33%
$(2.8)
$(90.7)
97%
$8,693.7
$7,837.5
11%
Invested assets per dollar of common stockholders' equity
$3.16
$3.37
(6)%
Annual after-tax yield on investment portfolio
3.7%
2.9%
0.8 pts
12.4%
9.4%
3.0 pts
$4,232.1
$3,558.1
19%
$356.0
$215.7
65%
14.3%
8.8%
5.5 pts
$358.8
$306.4
17%
Non-GAAP operating return on common equity ( operating ROE )*
14.4%
12.4%
2.0 pts
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18.4%
22.5%
(4.1) pts
Total assets
$11,802.5
$10,802.3
9%
Stockholders' equity
$2,954.4
$2,527.6
17%
Common stockholders' equity
$2,754.4
$2,327.6
18%
Diluted net income available to common stockholders
$5.84
$3.54
65%
Diluted non-GAAP operating income*
$5.89
$5.03
17%
Dividends to common stockholders
$1.25
$1.14
10%
$45.42
$38.57
18%
($ in millions, except per share data)
Insurance Operations
Net premiums written
Return on common equity from insurance operations after-tax
Investments
Net investment income after-tax
Net realized and unrealized investment losses after tax
Total invested assets
Return on common equity from net investment income after-tax
Summary Data
Total revenues
Net income available to common stockholders
Return on common equity
Non-GAAP operating income*
Per Common Share Data
Book value
AV E R AG E A N N UA L R E TU R N
$50,000
$40,000
SIGI
S&P 500
S&P Prop/Cas
$30,000
$20,000
$10,000
$0
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
*Non-GAAP (U.S. Generally Accepted
Accounting Principles) operating income, nonGAAP operating income per diluted common
share, and non-GAAP operating return on
common equity are non-GAAP measures. Refer
to the section entitled, Financial Highlights of
Results for Years Ended December 31, 2023,
2022, and 2021 in Item 7: Management s
Discussion and Analysis of Financial Conditions
and Results of Operations in the Company s
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ended December 31, 2023 for a reconciliation
of the non-GAAP measures to the equivalent
GAAP measures.
2023 ANNUAL REPORT | 1
PROVIDING SERVICE AND
DEDICATION TO CUSTOMERS
FOR NEARLY 100 YEARS
Selective plays a vital role in our
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based operating model and deep partner
relationships. As a customer-centric
insurance organization, we take pride
in helping our customers thrive after a
covered loss, while at the same time making
them safer. We support economic growth
by providing capital that protects our
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and peace of mind to our customers.
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exceeded $4 billion Z^ ^Wd `bW]Ze]c gbZddW^ _b dYW bcd
time in our history and delivered an operating ROE of
14.4%, marking the 10th consecutive year of achieving a
double-digit operating ROE.
Selective s Value Proposition:
Our value proposition is clear, and we believe our
success is based on our unique blend of competitive
advantages that deliver value for our stakeholders and
position us to win. These competitive advantages include:
As Selective approaches 100 years in business, our
commitment to our distribution partners, customers,
employees, and communities is unwavering.
Our disciplined execution, strong underwriting culture,
and enterprise risk management have, over time,
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in our industry can match ultimately resulting in longterm value creation for our shareholders.
NET PREMIUMS WRITTEN
9% CAGR*
$4
$4.1
NPW ($ in billions)
$3
$2
$1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
*compound annual growth rate
2 | SELECTIVE
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underwriting authority to our regional operations,
allowing distribution partners to interact with
underwriters and regional management teams
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from our underwriters deep understanding of the
jurisdictional nuances of the business presented
to them and their knowledge and history of the
producing agent, allowing them to make prudent
underwriting decisions.
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management. We work to remain on the leading
edge in our ability to build and, more importantly,
deploy predictive tools to aid decision-making.
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and decision-making processes, empowering our
professionals while improving the ease of doing
business for our distribution partners.
Our disciplined execution, strong underwriting culture,
and enterprise risk management have, over time,
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few in our industry can match ultimately resulting in
long-term value creation for our shareholders.
John J. Marchioni
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Our approach to limiting our agency appointments
to only high-caliber agents willing to make a
meaningful business commitment measured by
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aligned interests. Our agency engagement practices
and development programs focused on ensuring
mutual interests strengthen our relevance with
leading distribution partners and allow us to
consistently be seen as their partner of choice.
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UY ^^W Uecd_]Wb Wh`WbZW^UW W^Y ^UWV T VZXZd
` d _b]c ^V f eW! VVWV cWbfZUWc" This blend
of employee- and technology-driven services and
solutions offers our customers choices for engagement
and promotes a superior experience across all
channels. Our value-added services are designed to
enhance our customers resilience and sustainability.
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d W^dWV W]` _ WWc" While technology plays an
ever-increasing role in our business, our people
who build relationships with distribution partners,
apply underwriting judgment, and promptly, fairly,
and equitably settle covered claims bring our
brand to life every day.
In addition to delivering strong performance through
our value proposition, we believe that how we conduct
business matters is key to our success. Each day, we
strive to operate with the values of trust, integrity,
inclusion, service excellence, and being the best. We
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a long period of time is a formula for outperformance.
Continued Strong Performance
in 2023:
The past year was challenging for the property and
casualty insurance industry due to elevated catastrophe
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this backdrop, our results including our net premiums
written growth of 16%, combined ratio of 96.5%, after-tax
net investment income growth of 33%, and operating ROE
of 14.4% are even more impressive.
While our performance was excellent, we recognize the
impact these heightened losses had on our customers.
Our Claims team worked diligently throughout the
year to deliver empathetic and responsive service. It is
during these times that we have effectively delivered
on our promise to customers to help put their lives and
businesses back together following an unexpected loss.
As we look ahead, Selective is operating from a position
of strength and I am excited about the opportunities
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Commercial and Excess and Surplus Lines segments,
which represent approximately 90% of net premiums
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is in line with or better than our 95% combined ratio
target. Maintaining underwriting discipline and pricing
adequacy in these segments remains a top priority
moving forward.
In Standard Commercial Lines, the marketplace
continues to be constructive as terms and conditions
tighten and our retention metrics remain at historically
high levels. Our team is executing well, and the strong
underwriting performance and top-line growth of this
segment allow us to take targeted actions to further
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approach to granularly manage pricing and retention
2023 ANNUAL REPORT | 3
3/27/2024 Letter Continued (Full PDF)