EX-99.2 3 exh_992.htm EXHIBIT 99.2

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Investor Package

 

 

 

Second Quarter 2016

 

 

 

 

 

 

 

 

 

 

Investor Contact:

Dale A. Thatcher

Tel: 973-948-3000

Investor.Relations@Selective.com

 

 

 

 
 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Balance Sheet Data

(unaudited)

 

   June 30,  June 30,  December 31,
($ in thousands, except per share data)  2016  2015  2015
         Unrecognized/        Unrecognized/        Unrecognized/
   Balance  Market  Unrealized  Balance  Market  Unrealized  Balance  Market  Unrealized
   Sheet  Value  Gain  Sheet  Value  Gain  Sheet  Value  Gain
Invested Assets:                                             
Corporate bonds 1  $3,132,689    3,135,192    80,119   $2,782,479    2,785,884    36,643   $2,955,001    2,957,427    8,276 
Government and Municipal bonds   1,699,394    1,703,655    92,059    1,658,198    1,666,636    35,307    1,654,556    1,660,320    55,901 
Total fixed income securities   4,832,083    4,838,847    172,178    4,440,677    4,452,520    71,950    4,609,557    4,617,747    64,177 
Equities   152,938    152,938    26,057    228,883    228,883    10,745    207,051    207,051    13,235 
Short-term investments   205,451    205,451    -    168,349    168,349    -    194,819    194,819    - 
Other investments   76,051    76,051    -    85,420    85,420    -    77,842    77,842    - 
Total invested assets  $5,266,523    5,273,287    198,235    4,923,329    4,935,172    82,695    5,089,269    5,097,459    77,412 
                                              
                                              
Invested assets per $ of stockholders' equity   3.39              3.76              3.64           
                                              
Total assets   7,189,641              6,777,952              6,904,433           
                                              
Liabilities:                                             
Reserve for loss and loss expenses   3,590,169              3,535,433              3,517,728           
Unearned premium reserve   1,263,450              1,177,901              1,169,710           
                                              
Total liabilities   5,636,904              5,467,639              5,506,392           
                                              
Stockholders' equity   1,552,737              1,310,313              1,398,041           
                                              
Total debt to capitalization ratio   20.0%             22.8%             21.7%          
                                              
Book value per share   26.86              22.95              24.37           
                                              
Book value per share excluding                                             
unrealized gain or loss on fixed income portfolio   25.00              22.26              23.74           
                                              
NPW per insurance segment employee   1,011              945              979           
                                              
Statutory premiums to surplus ratio   1.4x             1.5x             1.5x          
                                              
Statutory surplus   1,506,535              1,344,630              1,426,320           

 

1 Includes mortgage-backed and asset-backed securities.

 

 
 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Income Statement Data

(unaudited)

 

   Quarter Ended June 30,   Year-to-Date June 30,
($ in thousands, except per share amounts)  2016   2015   2016   2015
      Per diluted share     Per diluted share     Per diluted share     Per diluted share
 Consolidated                                        
Revenue  $568,747        $521,973        $1,120,221        $1,045,865      
Operating income   42,454    0.72    35,991    0.62    81,244    1.39    63,425    1.10 
Net realized gains (losses), after tax   1,147    0.02    (2,223)   (0.04)   (611)   (0.01)   10,051    0.17 
Net income   43,601    0.74    33,768    0.58    80,633    1.38    73,476    1.27 
Return on equity   11.5%        10.3%        10.9%        11.4%     
Operating return on equity   11.2%        11.0%        11.0%        9.8%     
                                         
 Total Insurance Operations                                        
Gross premiums written   673,650         626,368         1,326,248         1,231,232      
Net premiums written   578,140         532,133         1,143,499         1,050,221      
Net premiums earned   531,932         490,309         1,054,390         966,432      
Underwriting gain - before tax   43,777         29,124         84,732         55,145      
  - after tax   28,455    0.49    18,930    0.33    55,076    0.94    35,844    0.62 
GAAP combined ratio   91.8%        94.1%        92.0%        94.3%     
                                         
 Standard Commercial Lines                                        
Net premiums earned   411,277         377,205         814,166         742,738      
GAAP combined ratio   90.2%        90.7%        91.3%        91.2%     
 Standard Personal Lines                                        
Net premiums earned   70,824         72,071         141,029         144,550      
GAAP combined ratio   91.4%        106.5%        89.6%        104.9%     
 Excess and Surplus Lines                                        
Net premiums earned   49,831         41,033         99,195         79,144      
GAAP combined ratio   105.1%        103.6%        101.1%        103.8%     
                                         
 Investments                                        
Net investment income    - before tax   31,182         32,230         61,951         59,147      
  - after tax   23,525    0.40    24,779    0.43    47,085    0.80    45,987    0.80 
Effective tax rate   24.6%        23.1%        24.0%        22.2%     
Annualized after-tax yield on investment portfolio                       1.8%        1.9%     
Annualized after-tax, after-interest expense yield                       1.5%        1.6%     
Invested assets per $ of stockholders' equity                       3.39         3.76      
                                         
 Other expenses (net of other income)                                        
Interest expense - before tax   (5,620)        (5,612)        (11,226)        (11,216)     
  - after tax   (3,653)   (0.06)   (3,649)   (0.06)   (7,297)   (0.12)   (7,291)   (0.13)
                                         
Other expense - after tax  $(5,873)   (0.11)  $(4,069)   (0.08)  $(13,620)   (0.23)  $(11,115)   (0.19)
                                         
 Diluted weighted avg shares outstanding   58,598         57,805         58,552         57,761      

 

 

 
 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

 

Second Quarter                  
($ in thousands) Quarter Ended June 30, 2016   Quarter Ended June 30, 2015
                   
  Standard Commercial Lines Standard Personal Lines Excess & Surplus Lines Grand Total   Standard Commercial Lines Standard Personal Lines Excess & Surplus Lines Grand Total
Net Premiums Written 449,008    75,576    53,556    578,140      410,821    75,986    45,326    532,133   
Net Premiums Earned 411,277    70,824    49,831    531,932      377,205    72,071    41,033    490,309   
Loss and Loss Expense Incurred 221,618    42,212    34,649    298,479      210,088    53,933    27,540    291,561   
Net Underwriting Expenses Incurred 147,868    22,487    17,703    188,058      130,032    22,793    14,955    167,780   
Dividends to Policyholders 1,618    -    -    1,618      1,844    -    -    1,844   
GAAP Underwriting Gain (Loss)  40,173    6,125    (2,521)   43,777      35,241    (4,655)   (1,462)   29,124   
                   
GAAP Ratios                  
Loss and Loss Expense Ratio 53.9% 59.6% 69.5% 56.1%   55.7% 74.8% 67.1% 59.5%
Underwriting Expense Ratio 35.9% 31.8% 35.6% 35.4%   34.5% 31.7% 36.5% 34.2%
Dividends to Policyholders Ratio 0.4% 0.0% 0.0% 0.3%   0.5% 0.0% 0.0% 0.4%
Combined Ratio 90.2% 91.4% 105.1% 91.8%   90.7% 106.5% 103.6% 94.1%
                   

 

 

 

Year-to-Date                  
($ in thousands) Year-to-Date June 30, 2016   Year-to-Date June 30, 2015
                   
  Standard Commercial Lines Standard Personal Lines Excess & Surplus Lines Grand Total   Standard Commercial Lines Standard Personal Lines Excess & Surplus Lines Grand Total
Net Premiums Written 904,071    137,545    101,883    1,143,499      826,079    141,010    83,132    1,050,221   
Net Premiums Earned 814,166    141,029    99,195    1,054,390      742,738    144,550    79,144    966,432   
Loss and Loss Expense Incurred 444,968    81,907    68,748    595,623      416,236    106,902    53,422    576,560   
Net Underwriting Expenses Incurred 294,822    44,392    31,550    370,764      257,856    44,769    28,733    331,358   
Dividends to Policyholders 3,271    -    -    3,271      3,369    -    -    3,369   
GAAP Underwriting Gain (Loss) 71,105    14,730    (1,103)   84,732      65,277    (7,121)   (3,011)   55,145   
                   
GAAP Ratios                  
Loss and Loss Expense Ratio 54.7% 58.1% 69.3% 56.5%   56.0% 74.0% 67.5% 59.7%
Underwriting Expense Ratio 36.2% 31.5% 31.8% 35.2%   34.7% 30.9% 36.3% 34.3%
Dividends to Policyholders Ratio 0.4% 0.0% 0.0% 0.3%   0.5% 0.0% 0.0% 0.3%
Combined Ratio 91.3% 89.6% 101.1% 92.0%   91.2% 104.9% 103.8% 94.3%
                   

 

 
 

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

June 2016 (unaudited)

 

    Quarter Ended   %   Year-to-Date   %
    June   June   Increase   June   June   Increase

($ in thousands, except per share data)

   2016   2015   (Decrease)   2016   2015   (Decrease)
Investment Income:                        
  Interest:                        
    Fixed Income Securities   $31,753      30,659      4      $63,397      61,626      3   
    Short-term   142      23      517      301      48      527   
  Other Investments   (611)     1,422      (143)     (1,677)     (2,118)     21   
  Dividends   2,204      2,384      (8)     4,434      4,176      6   
        33,488      34,488      (3)     66,455      63,732      4   
                             
Investment Expense   2,306      2,258      2      4,504      4,585      (2)  
                             
Net Investment Income Before Tax   31,182      32,230      (3)     61,951      59,147      5   
                             
Tax       7,657      7,451      3      14,866      13,160      13   
                             
Net Investment Income After Tax   $23,525      24,779      (5)     $47,085      45,987      2   
                             
Net Investment Income per Share   $    0.40      0.43      (7)     $    0.80      0.80      0   
                             
                             
Effective Tax Rate   24.6%   23.1%       24.0%   22.2%    
                             
Average Yields :                        
                             
     Fixed Income Securities:                        
  Pre Tax                 2.69%   2.79%    
  After Tax                 2.01%   2.12%    
                             
     Portfolio:                          
  Pre Tax                 2.39%   2.43%    
  After Tax                 1.82%   1.89%    
                             
                             
        Quarter Ended       Year-to-Date    
        June   June       June   June    
Net Realized Gains (Losses)   2016   2015       2016   2015    
    Fixed Income Securities   171      288          (219)     667       
    Equity Securities   1,594      (3,708)         (716)     15,450       
    Other Investments   -      -          (4)     (654)      
                             
    Total   1,765      (3,420)         (939)     15,463       
    Net of Tax   1,147      (2,223)         (611)     10,051       
                             

 

As of June 30, 2016 year-to-date new money rates for fixed income securities were 3.0% on a pre-tax basis and 2.1% on an after-tax basis.

 

 
 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Quarter Ended June 2016 (unaudited)

 

   Net       Net               Underwriting   Dividends to             
   Premiums   Percent   Premiums   Percent   Loss   LAE   Expense   Policyholders   Combined Ratio   Combined Ratio   Underwriting 
($ in thousands)  Written   Change   Earned   Change   Ratio   Ratio   Ratio   Ratio   2016   2015   Gain (Loss) 
Standard Personal Lines:                                                       
                                                        
Homeowners  $35,993    (0.8)%  $33,411    (0.9)%   40.2%   8.8%   35.3%   0.0%   84.4%   114.3%  $4,308 
Auto   37,956    0.1%   35,881    (2.3)%   58.7%   11.4%   34.2%   0.0%   104.3%   106.4%   (2,248)
Other (including flood)   1,627    (8.7)%   1,532    (4.3)%   68.1%   (23.9)%   (173.5)%   0.0%   (129.2)%   (93.1)%   2,503 
Total  $75,576    (0.5)%  $70,824    (1.7)%   50.2%   9.4%   30.3%   0.0%   89.9%   105.4%  $5,737 
                                                        
Standard Commercial Lines:                                                       
                                                        
Commercial property  $79,354    12.2%  $73,591    10.6%   35.4%   5.0%   37.5%   0.3%   78.2%   95.3%  $13,883 
Workers compensation   79,074    4.8%   75,251    6.1%   43.6%   14.1%   28.7%   1.3%   87.7%   89.2%   8,167 
General liability   145,489    8.1%   129,283    8.5%   34.4%   13.9%   35.0%   0.2%   83.5%   77.6%   15,696 
Auto   108,888    12.2%   98,896    11.5%   64.4%   9.9%   32.5%   0.2%   107.0%   100.6%   (10,191)
Businessowners' policies   25,275    7.2%   24,651    6.4%   33.3%   11.5%   37.6%   0.0%   82.4%   108.6%   4,114 
Bonds   6,846    17.7%   5,665    11.0%   12.8%   7.4%   54.3%   0.0%   74.6%   86.6%   800 
Other   4,082    14.9%   3,940    10.9%   0.3%   0.2%   55.9%   0.0%   56.4%   55.8%   1,639 
Total  $449,008    9.3%  $411,277    9.0%   42.8%   11.0%   34.4%   0.4%   88.6%   90.1%  $34,107 
                                                        
E&S  $53,556    18.2%  $49,831    21.4%   49.1%   20.5%   33.1%   0.0%   102.7%   102.7%  $(2,571)
                                                        
Total Insurance Operations  $578,140    8.6%  $531,932    8.5%   44.3%   11.7%   33.8%   0.3%   90.1%   93.5%  $37,274 
                                                        
Note: Some amounts may not foot due to rounding.  
                                                        
         2016    2015                                         
    Losses Paid   $  241,720   $224,744                                         
    LAE Paid    51,045    49,067                                         
    Total Paid   $292,765   $273,811                                         
                                                        

 

 
 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Year-to-Date June 2016 (unaudited)

 

   Net       Net               Underwriting   Dividends to             
   Premiums   Percent   Premiums   Percent   Loss   LAE   Expense   Policyholders   Combined Ratio   Combined Ratio   Underwriting 
($ in thousands)  Written   Change   Earned   Change   Ratio   Ratio   Ratio   Ratio   2016   2015   Gain (Loss) 
Standard Personal Lines:                                                       
                                                        
Homeowners  $62,566    (2.8)%  $66,311    (1.7)%   38.6%   8.4%   38.0%   0.0%   85.0%   113.8%  $11,380 
Auto   71,979    (2.1)%   71,661    (2.8)%   58.2%   11.2%   35.1%   0.0%   104.5%   106.5%   (3,368)
Other (including flood)   3,000    (4.7)%   3,057    (8.7)%   64.3%   (31.8)%   (168.6)%   0.0%   (136.1)%   (103.0)%   7,119 
Total  $137,545    (2.5)%  $141,029    (2.4)%   49.1%   9.0%   32.0%   0.0%   90.1%   105.2%  $15,131 
                                                        
Standard Commercial Lines:                                                       
                                                        
Commercial property  $154,998    9.4%  $143,769    9.7%   41.4%   4.8%   38.6%   0.4%   84.8%   96.9%  $17,483 
Workers compensation   170,386    7.0%   151,251    8.5%   41.8%   14.0%   27.3%   1.1%   84.3%   89.9%   18,531 
General liability   290,195    9.5%   257,368    9.9%   35.5%   12.6%   35.0%   0.2%   83.4%   75.3%   31,106 
Auto   217,096    12.1%   194,315    11.0%   63.9%   9.4%   32.4%   0.3%   106.0%   100.0%   (19,021)
Businessowners' policies   50,069    4.7%   48,555    5.8%   38.2%   11.5%   38.9%   0.0%   88.6%   113.6%   4,961 
Bonds   12,771    15.8%   11,129    10.1%   12.8%   7.4%   57.5%   0.0%   77.8%   85.6%   1,526 
Other   8,556    13.0%   7,779    10.8%   (0.4)%   0.2%   55.3%   0.0%   55.1%   53.9%   3,064 
Total  $904,071    9.4%  $814,166    9.6%   44.0%   10.5%   34.2%   0.4%   89.1%   89.9%  $57,650 
                                                        
E&S  $101,883    22.6%  $99,195    25.3%   49.3%   20.0%   31.3%   0.0%   100.6%   102.5%  $(1,475)
                                                        
Total Insurance Operations  $1,143,499    8.9%  $1,054,390    9.1%   45.2%   11.2%   33.7%   0.3%   90.4%   93.2%  $71,306 
                                                        
Note: Some amounts may not foot due to rounding.  
                                                        
         2016    2015                                         
    Losses Paid   $  452,393   $419,110                                         
    LAE Paid    97,169    94,061                                         
    Total Paid   $549,562   $513,171                                         
                                                        

 

 
 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Net Catastrophe Losses and Prior Year Casualty Reserve Development

Statutory Results by Line of Business

(unaudited)

 

   Quarter Ended  Year-to-Date
Net Catastrophe Losses Incurred  June 30, 2016  June 30, 2015  June 30, 2016  June 30, 2015
($ in thousands)  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio
                         
Standard Personal Lines  $2,104    3.0%  $8,279    11.5%  $4,329    3.1%  $14,597    10.1%
                                         
Standard Commercial Lines  $3,623    0.9%  $13,609    3.6%  $15,272    1.9%  $32,258    4.3%
                                         
E&S  $2,689    5.4%  $2,092    5.1%  $3,184    3.2%  $2,444    3.1%
                                         
Total Insurance Operations  $8,416    1.6%  $23,980    4.9%  $22,785    2.2%  $49,299    5.1%

 

 

 

Prior Year Casualty Reserve Development  Quarter Ended  Year-to-Date
(Favorable) / Unfavorable  June 30, 2016  June 30, 2015  June 30, 2016  June 30, 2015
($ in thousands)  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio  Loss and Loss Expense Incurred  Impact on Loss and Loss Expense Ratio
                         
Standard Personal Lines  $-    0.0%  $-    0.0%  $-    0.0%  $-    0.0%
                                         
Standard Commercial Lines  $(12,000)   (2.9)%  $(21,000)   (5.6)%  $(30,000)   (3.7)%  $(42,000)   (5.7)%
                                         
E&S  $2,000    4.0%  $1,000    2.4%  $3,000    3.0%  $2,000    2.5%
                                         
Total Insurance Operations  $(10,000)   (1.9)%  $(20,000)   (4.1)%  $(27,000)   (2.6)%  $(40,000)   (4.1)%

 

 

Note: Some amounts may not foot due to rounding.

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Consolidated Balance Sheets

 

   Unaudited   
($ in thousands, except share amounts)  June 30,
 2016		  December 31,
 2015
ASSETS          
Investments:          
Fixed income securities, held-to-maturity – at carrying value
(fair value:  $167,061 – 2016; $209,544 – 2015)		  $160,297    201,354 
Fixed income securities, available-for-sale – at fair value
(amortized cost: $4,506,580 – 2016; $4,352,514 – 2015)		   4,671,786    4,408,203 
Equity securities, available-for-sale – at fair value
(cost:  $126,881 – 2016; $193,816 – 2015)		   152,938    207,051 
Short-term investments (at cost which approximates fair value)   205,451    194,819 
Other investments   76,051    77,842 
Total investments   5,266,523    5,089,269 
Cash   1,530    898 
Interest and dividends due or accrued   39,941    38,501 
Premiums receivable, net of allowance for uncollectible
accounts of:  $4,624 – 2016; $4,422 – 2015		   706,555    615,164 
Reinsurance recoverables, net of allowance for
uncollectible accounts of: $6,100 – 2016; $5,700 – 2015		   592,423    561,968 
Prepaid reinsurance premiums   145,520    140,889 
Deferred federal income tax   47,696    92,696 
Property and equipment – at cost, net of accumulated
depreciation and amortization of: $193,997 – 2016; $188,548 – 2015		   68,573    65,701 
Deferred policy acquisition costs   228,554    213,159 
Goodwill   7,849    7,849 
Other assets   84,477    78,339 
Total assets  $7,189,641    6,904,433 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Reserve for loss and loss expenses  $3,590,169    3,517,728 
Unearned premiums   1,263,450    1,169,710 
Short-term debt   60,000    60,000 
Long-term debt   328,433    328,192 
Current federal income tax   8,670    7,442 
Accrued salaries and benefits   118,733    167,336 
Other liabilities   267,449    255,984 
Total liabilities  $5,636,904    5,506,392 
           
Stockholders’ Equity:          
Preferred stock of $0 par value per share:  $—    — 
Authorized shares 5,000,000; no shares issued or outstanding          
Common stock of $2 par value per share:          
Authorized shares 360,000,000          
Issued: 101,451,214 – 2016; 100,861,372 – 2015   202,903    201,723 
Additional paid-in capital   340,109    326,656 
Retained earnings   1,509,242    1,446,192 
Accumulated other comprehensive income (loss)   72,007    (9,425)
Treasury stock – at cost
(shares:  43,638,649 – 2016; 43,500,642 – 2015)		   (571,524)   (567,105)
Total stockholders’ equity  $1,552,737    1,398,041 
Commitments and contingencies          
Total liabilities and stockholders’ equity  $7,189,641    6,904,433 

 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Income

 

   Quarter Ended
June 30,		  Six Months Ended
June 30,
($ in thousands, except per share amounts)  2016  2015  2016  2015
Revenues:                    
Net premiums earned  $531,932    490,309    1,054,390    966,432 
Net investment income earned   31,182    32,230    61,951    59,147 
Net realized gains (losses):                    
Net realized investment gains   2,314    1,031    3,203    22,008 
Other-than-temporary impairments   (559)   (4,451)   (4,152)   (6,545)
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income   10    —    10    — 
Total net realized gains (losses)   1,765    (3,420)   (939)   15,463 
Other income   3,868    2,854    4,819    4,823 
Total revenues   568,747    521,973    1,120,221    1,045,865 
                     
Expenses:                    
Loss and loss expense incurred   298,479    291,561    595,623    576,560 
Policy acquisition costs   190,731    169,770    373,958    334,493 
Interest expense   5,620    5,612    11,226    11,216 
Other expenses   11,606    8,265    25,228    20,541 
Total expenses   506,436    475,208    1,006,035    942,810 
                     
Income before federal income tax   62,311    46,765    114,186    103,055 
                     
Federal income tax expense:                    
Current   18,318    7,733    32,402    19,987 
Deferred   392    5,264    1,151    9,592 
Total federal income tax expense   18,710    12,997    33,553    29,579 
                     
Net income  $43,601    33,768    80,633    73,476 
                     
Earnings per share:                    
Basic net income  $0.75    0.59    1.40    1.29 
                     
Diluted net income  $0.74    0.58    1.38    1.27 
                     
Dividends to stockholders  $0.15    0.14    0.30    0.28 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Comprehensive Income

 

   Quarter Ended
June 30,		  Six Months Ended
June 30,
($ in thousands)  2016  2015  2016  2015
Net income  $43,601    33,768    80,633    73,476 
                     
Other comprehensive income (loss), net of tax:                    
Unrealized gains on investment securities:                    
Unrealized holding gains (losses) arising during period   36,188    (39,160)   78,917    (23,574)
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income   (6)   —    (6)   — 
Amounts reclassified into net income:                    
Held-to-maturity securities   (12)   (120)   (59)   (290)
Non-credit other-than-temporary impairments   —    —    —    232 
Realized (gains) losses on available-for-sale securities   (1,145)   2,225    609    (10,707)
Total unrealized gains (losses) on investment securities   35,025    (37,055)   79,461    (34,339)
                     
Defined benefit pension and post-retirement plans:                    
Amounts reclassified into net income:                    
Net actuarial loss   985    1,111    1,971    2,222 
Total defined benefit pension and post-retirement plans   985    1,111    1,971    2,222 
Other comprehensive income (loss)   36,010    (35,944)   81,432    (32,117)
Comprehensive income (loss)  $79,611    (2,176)   162,065    41,359 

 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Stockholders’ Equity

 

 

   Six Months Ended
June 30,
($ in thousands)  2016  2015
Common stock:          
Beginning of year  $201,723    199,896 
Dividend reinvestment plan (shares:  20,808 – 2016; 26,843 – 2015)   42    54 
Stock purchase and compensation plans (shares:  569,034 – 2016; 611,076 – 2015)   1,138    1,222 
End of period   202,903    201,172 
           
Additional paid-in capital:          
Beginning of year   326,656    305,385 
Dividend reinvestment plan   696    677 
Stock purchase and compensation plans   12,757    11,233 
End of period   340,109    317,295 
           
Retained earnings:          
Beginning of year   1,446,192    1,313,440 
Net income   80,633    73,476 
Dividends to stockholders ($0.30 per share – 2016; $0.28 per share – 2015)   (17,583)   (16,235)
End of period   1,509,242    1,370,681 
           
Accumulated other comprehensive income (loss):          
Beginning of year   (9,425)   19,788 
Other comprehensive income (loss)   81,432    (32,117)
End of period   72,007    (12,329)
           
Treasury stock:          
Beginning of year   (567,105)   (562,923)
Acquisition of treasury stock (shares: 138,007 – 2016; 129,352 – 2015)   (4,419)   (3,583)
End of period   (571,524)   (566,506)
Total stockholders’ equity  $1,552,737    1,310,313 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Cash Flow

 

 

   Six Months Ended
June 30,
($ in thousands)  2016  2015
Operating Activities          
Net income  $80,633    73,476 
           
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   30,155    29,085 
Stock-based compensation expense   7,203    6,049 
Undistributed losses of equity method investments   1,677    2,117 
Net realized losses (gains)   939    (15,463)
           
Changes in assets and liabilities:          
Increase in reserve for loss and loss expenses, net of reinsurance recoverables   41,986    66,609 
Increase in unearned premiums, net of prepaid reinsurance   89,109    83,789 
Decrease in net federal income taxes   2,380    19,232 
Increase in premiums receivable   (91,391)   (88,813)
Increase in deferred policy acquisition costs   (15,395)   (17,616)
(Increase) decrease in interest and dividends due or accrued   (1,030)   395 
Decrease in accrued salaries and benefits   (48,603)   (18,171)
Increase in other assets   (3,877)   (743)
(Decrease) increase in other liabilities   (34,659)   25,651 
Net adjustments   (21,506)   92,121 
Net cash provided by operating activities   59,127    165,597 
           
Investing Activities          
Purchase of fixed income securities, available-for-sale   (411,538)   (463,758)
Purchase of fixed income securities, held-to-maturity   (4,235)   — 
Purchase of equity securities, available-for-sale   (16,796)   (177,386)
Purchase of other investments   (17,734)   (2,947)
Purchase of short-term investments   (691,496)   (732,278)
Sale of fixed income securities, available-for-sale   22,114    22,323 
Sale of short-term investments   680,865    695,901 
Redemption and maturities of fixed income securities, held-to-maturity   44,615    68,704 
Redemption and maturities of fixed income securities, available-for-sale   264,244    254,995 
Sale of equity securities, available-for-sale   83,793    135,548 
Distributions from other investments   13,380    17,840 
Purchase of property and equipment   (8,187)   (7,591)
Net cash used in investing activities   (40,975)   (188,649)
           
Financing Activities          
Dividends to stockholders   (16,569)   (15,211)
Acquisition of treasury stock   (4,419)   (3,583)
Net proceeds from stock purchase and compensation plans   4,368    4,037 
Proceeds from borrowings   55,000    15,000 
Repayments of borrowings   (55,000)   — 
Excess tax benefits from share-based payment arrangements   1,761    1,549 
Repayments of capital lease obligations   (2,661)   (2,331)
Net cash used in financing activities   (17,520)   (539)
Net increase (decrease) in cash   632    (23,591)
Cash, beginning of year   898    23,959 
Cash, end of period  $1,530    368 

 

 

 

 

 Selective Insurance Group, Inc.

 Combined Insurance Company Subsidiaries

 Statutory Balance Sheets

 (unaudited) 

 

 

   June 30,  June 30,  December 31,
($ in thousands)  2016  2015  2015
                
ASSETS               
Bonds  $4,604,199    4,317,425    4,491,136 
Common stocks   139,419    211,119    194,789 
Preferred stocks   12,950    17,742    11,856 
Affiliated mortgage loan   34,749    35,567    35,163 
Other investments   124,004    137,366    128,788 
Short-term investments   177,354    144,696    165,678 
Total investments   5,092,675    4,863,915    5,027,410 
                
Cash on hand and in banks   (18,294)   (27,701)   (34,378)
Interest and dividends due and accrued   39,892    38,438    38,466 
Premiums receivable   700,827    644,590    609,146 
Reinsurance recoverable on paid losses and expenses   15,482    7,224    10,949 
Deferred tax recoverable   152,565    140,904    142,066 
EDP equipment   448    406    390 
Equities and deposits in pools and associations   11,827    10,930    10,920 
Receivable for sold securities   2,295    3,695    17 
Other assets   27,075    25,226    28,300 
Total assets  $6,024,792    5,707,627    5,833,286 
                
LIABILITIES               
Reserve for losses  $2,450,518    2,438,075    2,426,583 
Reinsurance payable on paid loss and loss expense   3,337    3,301    2,841 
Reserve for loss expenses   546,060    518,171    525,322 
Unearned premiums   1,117,930    1,032,615    1,028,820 
Reserve for commissions payable   74,020    62,229    89,740 
Ceded balances payable   35,741    28,475    37,222 
Federal income tax payable   17,505    15,291    25,644 
Premium and other taxes payable   21,474    23,076    23,998 
Borrowed money   60,029    60,029    60,031 
Reserve for dividends to policyholders   7,225    5,192    5,805 
Reserves for unauthorized reinsurance   2,030    7,661    2,030 
Payable for securities   51,981    15,929    6,204 
Funds withheld on account of others   7,490    7,503    6,806 
Accrued salaries and benefits   59,827    53,551    77,933 
Other liabilities   63,090    91,899    87,987 
Total liabilities   4,518,257    4,362,997    4,406,966 
                
                
POLICYHOLDERS' SURPLUS               
Capital   42,725    42,725    42,725 
Paid in surplus   492,869    492,869    492,869 
Unassigned surplus   970,941    809,036    890,726 
Total policyholders' surplus   1,506,535    1,344,630    1,426,320 
Total liabilities and policyholders' surplus  $6,024,792    5,707,627    5,833,286 

 

 

 

 

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

 

 

   Quarter Ended     Six Months Ended   
   June     June   
($ in thousands)  2016     2015     2016     2015   
UNDERWRITING                                        
Net premiums written  $578,140         532,133         1,143,499         1,050,221      
                                         
Net premiums earned   531,932         490,309         1,054,390         966,432      
                                         
Net losses paid   241,720         224,744         452,393         419,110      
Change in reserve for losses   (5,768)        5,530         23,935         39,544      
Net losses incurred   235,952    44.3%   230,274    47.0%   476,328    45.2%   458,654    47.5%
                                         
Net loss expenses paid   51,045         49,067         97,169         94,061      
Change in reserve for loss expenses   11,111         12,418         20,738         24,661      
Net loss expenses incurred   62,156    11.7%   61,485    12.5%   117,907    11.2%   118,722    12.2%
                                         
Net underwriting expenses incurred   198,201    34.4%   180,898    33.9%   389,118    34.0%   351,836    33.5%
                                         
Total deductions   496,309         472,657         983,353         929,212      
Statutory underwriting gain   35,623         17,652         71,037         37,220      
                                         
Net loss from premium balances charged off   (633)        (703)        (1,324)        (1,313)     
Finance charges and other income   3,902         2,922         4,864         4,916      
Total other income   3,269    -0.6%   2,219    -0.3%   3,540    -0.3%   3,603    -0.3%
Policyholders' dividends incurred   (1,618)   0.3%   (1,844)   0.4%   (3,271)   0.3%   (3,369)   0.3%
Total underwriting gain   37,274    90.1%   18,027    93.5%   71,306    90.4%   37,454    93.2%
                                         
INVESTMENT                                        
Net investment income earned   30,899         32,155         61,522         59,282      
Net realized gain   1,762         (3,422)        (942)        15,461      
Total income before income tax   69,935         46,760         131,886         112,197      
                                         
Federal income tax expense   21,902         12,530         38,505         19,791      
                                         
Net income  $48,033         34,230         93,381         92,406      
                                         
Policyholders' Surplus                                        
Surplus, beginning of period  $1,461,326         1,322,422         1,426,320         1,307,842      
                                         
Net income   48,033         34,230         93,381         92,406      
Change in deferred taxes   1,149         (1,959)        1,501         (12,153)     
Change in net unrealized capital gains / (losses)   2,926         (637)        8,237         (13,547)     
Dividends to stockholders   (15,253)        (14,438)        (30,507)        (28,876)     
Change in non-admitted assets   6,924         3,398         4,742         (4,271)     
Change in Overfunded Contra Asset   (22,653)        (280)        (23,700)        (561)     
Qual Pen Trans Liab   24,061         1,843         26,517         3,689      
Excess Plan Trans Liab   19         43         38         86      
PRL Plan Trans Liab   3         8         6         15      
                                         
Net change in surplus for period   45,209         22,208         80,215         36,788      
                                         
Surplus, end of period  $1,506,535         1,344,630         1,506,535         1,344,630      
                                         
Statutory underwriting gain  $37,274         18,027         71,306         37,454      
                                         
Adjustments under GAAP:                                        
Deferred policy acquisition costs   7,606         11,268         15,395         17,616      
Other, net   (1,103)        (171)        (1,969)        75      
GAAP underwriting gain  $43,777         29,124         84,732         55,145      
                                         

 

Note: Some amounts or ratios may not foot due to rounding

 

 

 

 

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments 
June 30, 2016
(unaudited)
         
  Number Original Remaining Current
Strategy of Funds Commitment Commitment Market Value
Private Equity 10           118,498,351           34,116,513           28,438,848
Private Credit 7             80,000,000           23,242,735           23,336,118
Real Assets 7           100,000,000           30,273,409           14,132,399
TOTAL - ALTERNATIVE INVESTMENTS 24           298,498,351           87,632,657           65,907,365
         
         
Exhibit may not foot due to rounding