EX-99.2 3 exh_992.htm EXHIBIT 99.2

EXHIBIT 99.2

 

 

 

 

 

 

 

 

Supplemental Investor Package

________________________________________________

 

Third Quarter 2016

 

 

 

 

 

 

 

 

 

 

 

Investor Contact:

Rohan Pai

Tel: 973-948-1364

Rohan.Pai@Selective.com

 

 

 

 
 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Balance Sheet Data

(unaudited)

 

   September 30,  September 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   $3,312,160    3,314,526    77,917    $2,901,352    2,904,449    37,945    $2,955,001    2,957,427    8,276 
Government and Municipal bonds   1,650,844    1,654,100    78,164    1,679,563    1,686,985    50,263    1,654,556    1,660,320    55,901 
Total fixed income securities   4,963,004    4,968,626    156,081    4,580,915    4,591,434    88,208    4,609,557    4,617,747    64,177 
Equities   147,304    147,304    24,323    221,951    221,951    1,131    207,051    207,051    13,235 
Short-term investments   169,604    169,604    -    125,855    125,855    -    194,819    194,819    - 
Other investments   88,512    88,512    -    85,146    85,146    -    77,842    77,842    - 
Total invested assets   $5,368,424    5,374,046    180,404    $5,013,867    5,024,386    89,339    $5,089,269    5,097,459    77,412 
                                              
                                              
Invested assets per $ of stockholders' equity   3.41              3.69              3.64           
                                              
Total assets   7,363,233              6,891,877              6,904,433           
                                              
Liabilities:                                             
Reserve for loss and loss expenses   3,686,586              3,517,751              3,517,728           
Unearned premium reserve   1,306,255              1,218,884              1,169,710           
                                              
Total liabilities   5,788,329              5,532,855              5,506,392           
                                              
Stockholders' equity   1,574,904              1,359,022              1,398,041           
                                              
Total debt to capitalization ratio   21.2%             22.2%             21.7%          
                                              
Book value per share   27.22              23.77              24.37           
                                              
Book value per share excluding                                             
unrealized gain or loss on fixed income portfolio   25.53              22.88              23.74           
                                              
NPW per insurance segment employee   1,021              958              979           
                                              
Statutory premiums to surplus ratio   1.4x             1.5x             1.5x          
                                              
Statutory surplus   1,551,227              1,367,343              1,426,320           

 

1 Includes mortgage-backed and asset-backed securities.

 

 
 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Income Statement Data

(unaudited)

 

   Quarter Ended September 30,   Year-to-Date September 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  $581,691        $540,457        $1,701,912        $1,586,322      
Operating income   36,104    0.62    46,796    0.81    117,348    2.00    110,221    1.90 
Net realized gains, after tax   2,398    0.04    200    -    1,787    0.03    10,251    0.18 
Net income   38,502    0.66    46,996    0.81    119,135    2.03    120,472    2.08 
Return on equity   9.8%        14.1%        10.7%        12.2%     
Operating return on equity   9.2%        14.0%        10.5%        11.2%     
                                         
Total Insurance Operations                                        
Gross premiums written   677,488         637,528         2,003,736         1,868,760      
Net premiums written   578,773         545,025         1,722,272         1,595,246      
Net premiums earned   542,429         507,390         1,596,819         1,473,822      
Underwriting gain - before tax   32,033         44,831         116,765         99,976      
  - after tax   20,821    0.35    29,140    0.50    75,897    1.29    64,984    1.12 
GAAP combined ratio   94.1%        91.2%        92.7%        93.2%     
                                         
Standard Commercial Lines                                        
Net premiums earned   421,586         389,542         1,235,752         1,132,280      
GAAP combined ratio   92.9%        88.7%        91.8%        90.3%     
Standard Personal Lines                                        
Net premiums earned   68,690         72,088         209,719         216,638      
GAAP combined ratio   93.8%        96.1%        90.9%        102.0%     
Excess and Surplus Lines                                        
Net premiums earned   52,153         45,760         151,348         124,904      
GAAP combined ratio   104.5%        104.4%        102.3%        104.0%     
                                         
Investments                                        
Net investment income - before tax   33,375         32,061         95,326         91,208      
  - after tax   24,913    0.42    24,555    0.42    71,998    1.23    70,542    1.22 
Effective tax rate   25.4%        23.4%        24.5%        22.7%     
Annualized after-tax yield on investment portfolio                       1.8%        1.9%     
Annualized after-tax, after-interest expense yield                       1.6%        1.6%     
Invested assets per $ of stockholders' equity                       3.41         3.69      
                                         
Other expenses (net of other income)                                        
Interest expense - before tax   (5,714)        (5,610)        (16,940)        (16,826)     
  - after tax   (3,714)   (0.06)   (3,646)   (0.06)   (11,011)   (0.19)   (10,937)   (0.18)
                                         
Other expense - after tax  $(5,916)   (0.09)  $(3,253)   (0.05)  $(19,536)   (0.33)  $(14,368)   (0.26)
                                         
Diluted weighted avg shares outstanding   58,731         57,984         58,612         57,838      

 

 
 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

 

Third Quarter                                
($ in thousands)  Quarter Ended September 30, 2016   Quarter Ended September 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  $449,544    76,225    53,004    578,773   $414,031    76,927    54,067    545,025 
Net Premiums Earned   421,586    68,690    52,153    542,429    389,542    72,088    45,760    507,390 
Loss and Loss Expense Incurred   238,215    41,582    36,461    316,258    203,621    49,588    31,952    285,161 
Net Underwriting Expenses Incurred   152,706    22,837    18,054    193,597    139,973    19,674    15,830    175,477 
Dividends to Policyholders   541    -    -    541    1,921    -    -    1,921 
GAAP Underwriting Gain (Loss)  $30,124    4,271    (2,362)   32,033   $44,027    2,826    (2,022)   44,831 
                                         
GAAP Ratios                                        
Loss and Loss Expense Ratio   56.5%   60.5%   69.9%   58.3%   52.3%   68.8%   69.8%   56.2%
Underwriting Expense Ratio   36.3%   33.3%   34.6%   35.7%   35.9%   27.3%   34.6%   34.6%
Dividends to Policyholders Ratio   0.1%   0.0%   0.0%   0.1%   0.5%   0.0%   0.0%   0.4%
Combined Ratio   92.9%   93.8%   104.5%   94.1%   88.7%   96.1%   104.4%   91.2%
                                         

 

 

 

Year-to-Date                                
($ in thousands)  Year-to-Date September 30, 2016   Year-to-Date September 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  $1,353,615    213,770    154,887    1,722,272   $1,240,110    217,937    137,199    1,595,246 
Net Premiums Earned   1,235,752    209,719    151,348    1,596,819    1,132,280    216,638    124,904    1,473,822 
Loss and Loss Expense Incurred   683,183    123,489    105,209    911,881    619,857    156,490    85,374    861,721 
Net Underwriting Expenses Incurred   447,528    67,229    49,604    564,361    397,829    64,443    44,563    506,835 
Dividends to Policyholders   3,812    -    -    3,812    5,290    -    -    5,290 
GAAP Underwriting Gain (Loss)  $101,229    19,001    (3,465)   116,765   $109,304    (4,295)   (5,033)   99,976 
                                         
GAAP Ratios                                        
Loss and Loss Expense Ratio   55.3%   58.9%   69.5%   57.1%   54.7%   72.2%   68.4%   58.5%
Underwriting Expense Ratio   36.2%   32.0%   32.8%   35.4%   35.1%   29.8%   35.6%   34.3%
Dividends to Policyholders Ratio   0.3%   0.0%   0.0%   0.2%   0.5%   0.0%   0.0%   0.4%
Combined Ratio   91.8%   90.9%   102.3%   92.7%   90.3%   102.0%   104.0%   93.2%
                                         

 

 
 

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

September 2016 (unaudited)

 

   Quarter Ended  %  Year-to-Date  %
   September  September  Increase  September  September  Increase
($ in thousands, except per share data)  2016  2015  (Decrease)  2016  2015  (Decrease)
Investment Income:                              
Interest:                              
Fixed Income Securities  $32,453    30,601    6   $95,850    92,227    4 
Short-term   192    24    700    493    72    585 
Other Investments   1,628    1,337    22    (49)   (781)   94 
Dividends   1,506    2,370    (36)   5,940    6,546    (9)
    35,779    34,332    4    102,234    98,064    4 
                               
Investment Expense   2,404    2,271    6    6,908    6,856    1 
                               
Net Investment Income Before Tax   33,375    32,061    4    95,326    91,208    5 
                               
Tax   8,462    7,506    13    23,328    20,666    13 
                               
Net Investment Income After Tax  $24,913    24,555    1   $71,998    70,542    2 
                               
Net Investment Income per Share  $0.42    0.42    -   $1.23    1.22    1 
                               
Effective Tax Rate   25.4%   23.4%        24.5%   22.7%     
                               
Average Yields :                              
                               
Fixed Income Securities:                              
Pre Tax                  2.67%   2.74%     
After Tax                  2.00%   2.08%     
                               
Portfolio:                              
Pre Tax                  2.43%   2.48%     
After Tax                  1.84%   1.92%     

 

   Quarter Ended  Year-to-Date
   September  September  September  September
Net Realized Gains (Losses)  2016  2015  2016  2015
Fixed Income Securities  $2,163    (80)  $1,944    587 
Equity Securities   1,522    388    806    15,838 
Other Investments   3    -    (1)   (654)
                     
Total   3,688    308    2,749    15,771 
Net of Tax   2,398    200    1,787    10,251 

 

As of September 30, 2016 year-to-date new money rates for fixed income securities were 2.9% on a pre-tax basis and 2.0% on an after-tax basis.

 

 
 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Quarter Ended September 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  $36,131    (3.6)%  $32,031    (4.9)%   41.9%   8.6%   35.9%   0.0%   86.4%   96.8%  $2,873 
Auto   38,114    1.3%   34,865    (4.8)%   63.3%   11.0%   36.0%   0.0%   110.3%   103.4%   (4,752)
Other (including flood)   1,980    8.4%   1,794    (0.0)%   62.0%   (83.5)%   (143.8)%   0.0%   (165.3)%   (118.3)%   5,028 
Total  $76,225    (0.9)%  $68,690    (4.7)%   53.3%   7.4%   31.3%   0.0%   92.0%   95.0%  $3,149 
                                                        
Standard Commercial Lines:                                                       
                                                        
Commercial property  $82,695    6.5%  $74,052    8.0%   42.0%   5.1%   38.0%   0.1%   85.2%   67.8%  $7,703 
Workers compensation   81,646    9.7%   78,596    5.4%   37.0%   13.4%   29.5%   0.2%   80.2%   84.0%   14,689 
General liability   141,556    8.3%   133,981    8.7%   32.5%   15.8%   36.3%   0.1%   84.7%   89.1%   17,714 
Auto   108,655    10.9%   100,612    10.9%   70.3%   10.4%   33.6%   0.1%   114.5%   104.5%   (17,257)
Businessowners' policies   23,985    0.2%   24,461    3.1%   55.3%   11.9%   39.6%   0.0%   106.8%   100.0%   (1,482)
Bonds   6,723    25.1%   5,795    15.2%   12.8%   7.2%   55.0%   0.0%   75.0%   91.5%   937 
Other   4,282    8.8%   4,089    12.7%   0.3%   0.4%   60.0%   0.0%   60.6%   60.0%   1,494 
Total  $449,544    8.6%  $421,586    8.2%   44.8%   11.7%   35.4%   0.1%   92.0%   88.4%  $23,799 
                                                        
E&S  $53,004    (2.0)%  $52,153    14.0%   52.1%   17.9%   31.4%   0.0%   101.4%   101.1%  $(986)
                                                        
Total Insurance Operations  $578,773    6.2%  $542,429    6.9%   46.5%   11.8%   34.5%   0.1%   92.9%   90.5%  $25,962 
                                                        
Note: Some amounts may not foot due to rounding.    
     
                                                        
         2016    2015                                         
    Losses Paid   $226,037     $237,573                                         
    LAE Paid    48,335    50,084                                         
    Total Paid   $274,372   $287,657                                         
                                                        

 

 

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Year-to-Date September 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  $98,697    (3.1)%  $98,342    (2.7)%   39.7%   8.5%   37.2%   0.0%   85.4%   108.0%  $14,253 
Auto   110,093    (0.9)%   106,526    (3.5)%   59.8%   11.2%   35.4%   0.0%   106.4%   105.5%   (8,120)
Other (including flood)   4,980    0.1%   4,851    (5.7)%   63.4%   (50.9)%   (158.7)%   0.0%   (146.2)%   (108.5)%   12,148 
Total  $213,770    (1.9)%  $209,719    (3.2)%   50.4%   8.5%   31.8%   0.0%   90.7%   101.7%  $18,280 
                                                        
Standard Commercial Lines:                                                       
                                                        
Commercial property  $237,693    8.4%  $217,821    9.1%   41.6%   4.9%   38.5%   0.3%   85.0%   86.9%  $25,186 
Workers compensation   252,032    7.8%   229,847    7.4%   40.2%   13.8%   28.0%   0.8%   82.8%   87.7%   33,220 
General liability   431,751    9.1%   391,349    9.5%   34.5%   13.7%   35.5%   0.2%   83.9%   80.0%   48,820 
Auto   325,751    11.7%   294,927    11.0%   66.1%   9.7%   32.8%   0.2%   108.9%   101.5%   (36,277)
Businessowners' policies   74,055    3.2%   73,016    4.9%   43.9%   11.6%   39.1%   0.0%   94.7%   108.9%   3,479 
Bonds   19,494    18.8%   16,924    11.8%   12.8%   7.4%   56.7%   0.0%   76.8%   87.5%   2,463 
Other   12,839    11.5%   11,868    11.4%   (0.2)%   0.3%   56.9%   0.0%   56.9%   56.0%   4,558 
Total  $1,353,615    9.2%  $1,235,752    9.1%   44.3%   10.9%   34.6%   0.3%   90.1%   89.4%  $81,449 
                                                        
E&S  $154,887    12.9%  $151,348    21.2%   50.2%   19.3%   31.4%   0.0%   100.9%   101.8%  $(2,461)
                                                        
Total Insurance Operations  $1,722,272    8.0%  $1,596,819    8.3%   45.6%   11.4%   34.0%   0.2%   91.2%   92.3%  $97,268 
                                                        
Note: Some amounts may not foot due to rounding.                                       
                                        
                                                       
         2016    2015                                         
    Losses Paid   $678,430     $656,683                                         
    LAE Paid    145,504    144,145                                         
    Total Paid   $823,934   $800,828                                         
                                                        

 

 

 

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  September 30, 2016  September 30, 2015  September 30, 2016  September 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  $2,480    3.6%  $5,784    8.0%  $6,809    3.2%  $20,381    9.4%
                                         
Standard Commercial Lines   6,204    1.5%   757    0.2%   21,476    1.7%   33,016    2.9%
                                         
E&S   1,710    3.3%   308    0.7%   4,895    3.2%   2,752    2.2%
                                         
Total Insurance Operations  $10,394    1.9%  $6,850    1.3%  $33,180    2.1%  $56,149    3.8%
                                         
                                         
                                         
                                         
Prior Year Casualty Reserve Development  Quarter Ended  Year-to-Date
(Favorable) / Unfavorable  September 30, 2016  September 30, 2015  September 30, 2016  September 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   (19,000)   (4.5)%   (19,000)   (4.9)%   (49,000)   (4.0)%   (61,000)   (5.4)%
                                         
E&S   -    0.0%   4,000    8.7%   3,000    2.0%   6,000    4.8%
                                         
Total Insurance Operations  $(19,000)   (3.5)%  $(15,000)   (3.0)%  $(46,000)   (2.9)%  $(55,000)   (3.7)%

 

Note: Some amounts may not foot due to rounding.

 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Consolidated Balance Sheets

  Unaudited   
($ in thousands, except share amounts)  September 30,
 2016		  December 31,
 2015
ASSETS          
Investments:          
Fixed income securities, held-to-maturity – at carrying value (fair value:  $136,094 – 2016; $209,544 – 2015)  $130,472    201,354 
Fixed income securities, available-for-sale – at fair value (amortized cost: $4,682,267 – 2016; $4,352,514 – 2015)   4,832,532    4,408,203 
Equity securities, available-for-sale – at fair value (cost:  $122,981 – 2016; $193,816 – 2015)   147,304    207,051 
Short-term investments (at cost which approximates fair value)   169,604    194,819 
Other investments   88,512    77,842 
Total investments   5,368,424    5,089,269 
Cash   1,493    898 
Interest and dividends due or accrued   39,901    38,501 
Premiums receivable, net of allowance for uncollectible accounts of:  $5,907 – 2016; $4,422 – 2015   711,589    615,164 
Reinsurance recoverables, net of allowance for uncollectible accounts of: $5,500 – 2016; $5,700 – 2015   640,012    561,968 
Prepaid reinsurance premiums   151,981    140,889 
Deferred federal income tax   41,656    92,696 
Property and equipment – at cost, net of accumulated depreciation and amortization of: $198,171 – 2016; $188,548 – 2015   69,812    65,701 
Deferred policy acquisition costs   235,934    213,159 
Goodwill   7,849    7,849 
Other assets   94,582    78,339 
Total assets  $7,363,233    6,904,433 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Reserve for loss and loss expenses  $3,686,586    3,517,728 
Unearned premiums   1,306,255    1,169,710 
Short-term debt   45,000    60,000 
Long-term debt   378,551    328,192 
Current federal income tax   6,509    7,442 
Accrued salaries and benefits   103,583    167,336 
Other liabilities   261,845    255,984 
Total liabilities  $5,788,329    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: 101,505,201 – 2016; 100,861,372 – 2015   203,011    201,723 
Additional paid-in capital   342,846    326,656 
Retained earnings   1,538,928    1,446,192 
Accumulated other comprehensive income (loss)   62,209    (9,425)
Treasury stock – at cost (shares:  43,653,034 – 2016; 43,500,642 – 2015)   (572,090)   (567,105)
Total stockholders’ equity  $1,574,904    1,398,041 
Commitments and contingencies          
Total liabilities and stockholders’ equity  $7,363,233    6,904,433 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Income

 

Quarter ended

September 30,

 

Nine Months ended

September 30,

($ in thousands, except per share amounts)  2016  2015  2016  2015
Revenues:                    
Net premiums earned  $542,429    507,390    1,596,819    1,473,822 
Net investment income earned   33,375    32,061    95,326    91,208 
Net realized gains:                    
Net realized investment gains   4,030    1,590    7,233    23,598 
Other-than-temporary impairments   (342)   (1,282)   (4,494)   (7,827)
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income   —    —    10    — 
Total net realized gains   3,688    308    2,749    15,771 
Other income   2,199    698    7,018    5,521 
Total revenues   581,691    540,457    1,701,912    1,586,322 
                     
Expenses:                    
Loss and loss expense incurred   316,258    285,161    911,881    861,721 
Policy acquisition costs   193,835    174,802    567,793    509,295 
Interest expense   5,714    5,610    16,940    16,826 
Other expenses   10,441    9,045    35,669    29,586 
Total expenses   526,248    474,618    1,532,283    1,417,428 
                     
Income before federal income tax   55,443    65,839    169,629    168,894 
                     
Federal income tax expense:                    
Current   5,625    9,141    38,027    29,128 
Deferred   11,316    9,702    12,467    19,294 
Total federal income tax expense   16,941    18,843    50,494    48,422 
                     
Net income  $38,502    46,996    119,135    120,472 
                     
Earnings per share:                    
Basic net income  $0.66    0.82    2.06    2.11 
                     
Diluted net income  $0.66    0.81    2.03    2.08 
                     
Dividends to stockholders  $0.15    0.14    0.45    0.42 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Comprehensive Income

 

 

Quarter ended
September 30,

  Nine Months ended
September 30,
($ in thousands)  2016  2015  2016  2015
Net income  $38,502    46,996    119,135    120,472 
                     
                     
Other comprehensive (loss) income, net of tax:                    
Unrealized (losses) gains on investment securities:                    
Unrealized holding (losses) gains arising during period   (8,444)   5,442    70,473    (18,132)
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income   —    —    (6)   — 
Amounts reclassified into net income:                    
Held-to-maturity securities   (9)   (63)   (68)   (353)
Non-credit other-than-temporary impairments   —    —    —    232 
Realized gains on available-for-sale securities   (2,395)   (199)   (1,786)   (10,906)
Total unrealized (losses) gains on investment securities   (10,848)   5,180    68,613    (29,159)
                     
Defined benefit pension and post-retirement plans:                    
Amounts reclassified into net income:                    
Net actuarial loss   1,050    1,110    3,021    3,332 
Total defined benefit pension and post-retirement plans   1,050    1,110    3,021    3,332 
Other comprehensive (loss) income   (9,798)   6,290    71,634    (25,827)
Comprehensive income  $28,704    53,286    190,769    94,645 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Stockholders’ Equity

 

 

Nine Months ended
September 30,

($ in thousands, except per share amounts)  2016  2015
Common stock:          
Beginning of year  $201,723    199,896 
Dividend reinvestment plan (shares:  29,865 – 2016; 38,947 – 2015)    60    78 
Stock purchase and compensation plans (shares:  613,964 – 2016; 686,984 – 2015)    1,228    1,374 
End of period   203,011    201,348 
           
Additional paid-in capital:          
Beginning of year   326,656    305,385 
Dividend reinvestment plan   1,035    1,014 
Stock purchase and compensation plans   15,155    14,588 
End of period   342,846    320,987 
           
Retained earnings:          
Beginning of year   1,446,192    1,313,440 
Net income   119,135    120,472 
Dividends to stockholders ($0.45 per share – 2016; $0.42 per share – 2015)    (26,399)   (24,376)
End of period   1,538,928    1,409,536 
           
Accumulated other comprehensive income (loss):          
Beginning of year   (9,425)   19,788 
Other comprehensive income (loss)   71,634    (25,827)
End of period   62,209    (6,039)
           
Treasury stock:          
Beginning of year   (567,105)   (562,923)
Acquisition of treasury stock (shares: 152,392 – 2016; 139,031 – 2015)    (4,985)   (3,887)
End of period   (572,090)   (566,810)
Total stockholders’ equity  $1,574,904    1,359,022 

 

 

 

 

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Unaudited Consolidated Statements of Cash Flow

 

 

Nine Months ended
September 30,

($ in thousands)  2016  2015
Operating Activities      
Net income  $119,135    120,472 
           
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   45,563    43,868 
Stock-based compensation expense   8,950    7,626 
Undistributed losses of equity method investments   49    781 
Net realized gains   (2,749)   (15,771)
           
Changes in assets and liabilities:          
Increase in reserve for loss and loss expenses, net of reinsurance recoverables   90,814    60,065 
Increase in unearned premiums, net of prepaid reinsurance   125,453    121,424 
Decrease in net federal income taxes   11,534    27,980 
Increase in premiums receivable   (96,425)   (95,188)
Increase in deferred policy acquisition costs   (22,775)   (28,058)
(Increase) decrease in interest and dividends due or accrued   (1,356)   979 
Decrease in accrued salaries and benefits   (63,753)   (338)
Increase in other assets   (16,280)   (13,888)
(Decrease) increase in other liabilities   (20,686)   29,081 
Net adjustments   58,339    138,561 
Net cash provided by operating activities   177,474    259,033 
           
Investing Activities          
Purchase of fixed income securities, available-for-sale   (842,253)   (731,154)
Purchase of fixed income securities, held-to-maturity   (4,235)   — 
Purchase of equity securities, available-for-sale   (24,747)   (192,717)
Purchase of other investments   (34,994)   (6,589)
Purchase of short-term investments   (1,307,024)   (1,084,794)
Sale of fixed income securities, available-for-sale   33,448    22,323 
Sale of short-term investments   1,332,239    1,090,911 
Redemption and maturities of fixed income securities, held-to-maturity   74,186    79,972 
Redemption and maturities of fixed income securities, available-for-sale   483,877    403,510 
Sale of equity securities, available-for-sale   99,420    148,228 
Distributions from other investments   18,512    22,038 
Purchase of property and equipment   (13,421)   (11,869)
Net cash used in investing activities   (184,992)   (260,141)
           
Financing Activities          
Dividends to stockholders   (24,885)   (22,848)
Acquisition of treasury stock   (4,985)   (3,887)
Net proceeds from stock purchase and compensation plans   4,906    6,016 
Proceeds from borrowings   105,000    15,000 
Repayments of borrowings   (70,000)   — 
Excess tax benefits from share-based payment arrangements   1,917    1,498 
Repayments of capital lease obligations   (3,840)   (3,517)
Net cash provided by (used in) financing activities   8,113    (7,738)
Net increase (decrease) in cash   595    (8,846)
Cash, beginning of year   898    23,959 
Cash, end of period  $1,493    15,113 

 

 

 Selective Insurance Group, Inc.

 Combined Insurance Company Subsidiaries

 Statutory Balance Sheets

 (unaudited)

               

 

   September 30,  September 30,  December 31,
($ in thousands)  2016  2015  2015
          
ASSETS               
Bonds  $4,737,691    4,438,650    4,491,136 
Common stocks   135,489    210,197    194,789 
Preferred stocks   11,310    11,708    11,856 
Affiliated mortgage loan   34,538    35,366    35,163 
Other investments   134,972    136,591    128,788 
Short-term investments   147,891    109,393    165,678 
Total investments   5,201,891    4,941,905    5,027,410 
                
Cash on hand and in banks   5,581    (6,272)   (34,378)
Interest and dividends due and accrued   39,843    37,944    38,466 
Premiums receivable   705,735    648,264    609,146 
Reinsurance recoverable on paid losses and expenses   9,326    11,288    10,949 
Deferred tax recoverable   159,475    146,936    142,066 
EDP equipment   389    436    390 
Equities and deposits in pools and associations   12,533    12,394    10,920 
Receivable for sold securities   6    64    17 
Other assets   30,343    26,798    28,300 
Total assets  $6,165,122    5,819,757    5,833,286 
                
LIABILITIES               
Reserve for losses  $2,477,012    2,427,024    2,426,583 
Reinsurance payable on paid loss and loss expense   3,472    2,677    2,841 
Reserve for loss expenses   561,520    526,253    525,322 
Unearned premiums   1,154,274    1,070,250    1,028,820 
Reserve for commissions payable   83,202    73,293    89,740 
Ceded balances payable   46,471    32,626    37,222 
Federal income tax payable   18,332    22,996    25,644 
Premium and other taxes payable   21,375    24,257    23,998 
Borrowed money   95,156    60,029    60,031 
Reserve for dividends to policyholders   6,587    5,989    5,805 
Reserves for unauthorized reinsurance   2,030    7,661    2,030 
Payable for securities   31,326    31,974    6,204 
Funds withheld on account of others   10,671    7,695    6,806 
Accrued salaries and benefits   69,337    69,837    77,933 
Other liabilities   33,130    89,853    87,987 
Total liabilities   4,613,895    4,452,414    4,406,966 
                
                
POLICYHOLDERS' SURPLUS               
Capital   42,725    42,725    42,725 
Paid in surplus   492,869    492,869    492,869 
Unassigned surplus   1,015,633    831,749    890,726 
Total policyholders' surplus   1,551,227    1,367,343    1,426,320 
Total liabilities and policyholders' surplus  $6,165,122    5,819,757    5,833,286 

 

 

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

 

   Quarter Ended
September		     Nine Months Ended
September		   
($ in thousands)  2016     2015     2016     2015   
UNDERWRITING                                        
Net premiums written  $578,773         545,025         1,722,272         1,595,246      
                                         
Net premiums earned   542,429         507,390         1,596,819         1,473,822      
                                         
Net losses paid   226,037         237,573         678,430         656,683      
Change in reserve for losses   26,528         (11,051)        50,463         28,493      
Net losses incurred   252,565    46.5%   226,522    44.6%   728,893    45.6%   685,176    46.5%
                                         
Net loss expenses paid   48,335         50,084         145,504         144,145      
Change in reserve for loss expenses   15,460         8,083         36,198         32,744      
Net loss expenses incurred   63,795    11.8%   58,167    11.5%   181,702    11.4%   176,889    12.0%
                                         
Net underwriting expenses incurred   201,060    34.8%   185,183    33.9%   590,178    34.3%   537,019    33.6%
                                         
     Total deductions   517,420         469,872         1,500,773         1,399,084      
Statutory underwriting gain   25,009         37,518         96,046         74,738      
                                         
Net loss from premium balances charged off   (734)        (833)        (2,058)        (2,146)     
Finance charges and other income   2,228         772         7,092         5,688      
Total other income   1,494    -0.3%   (61)   0.1%   5,034    -0.3%   3,542    -0.2%
Policyholders' dividends incurred   (541)   0.1%   (1,921)   0.4%   (3,812)   0.2%   (5,290)   0.4%
Total underwriting gain   25,962    92.9%   35,536    90.5%   97,268    91.2%   72,990    92.3%
                                         
INVESTMENT                                        
Net investment income earned   32,398         31,821         93,920         91,103      
Net realized gain   3,689         309         2,747         15,770      
Total income before income tax   62,049         67,666         193,935         179,863      
                                         
Federal income tax expense   8,778         17,938         47,283         37,729      
                                         
Net income  $53,271         49,728         146,652         142,134      
                                         
Policyholders' Surplus                                        
Surplus, beginning of period  $1,506,535         1,344,630         1,426,320         1,307,842      
                                         
Net income   53,271         49,728         146,652         142,134      
Change in deferred taxes   (10,503)        752         (9,002)        (11,401)     
Change in net unrealized capital (losses) / gains   (1,078)        (6,554)        7,159         (20,101)     
Dividends to stockholders   (15,254)        (14,438)        (45,761)        (43,314)     
Change in non-admitted assets   16,729         (8,390)        21,471         (12,661)     
Change in Overfunded Contra Asset   (28,408)        (281)        (52,108)        (842)     
Qual Pen Trans Liab   29,908         1,845         56,425         5,534      
Excess Plan Trans Liab   22         44         60         130      
PRL Plan Trans Liab   5         7         11         22      
                                         
Net change in surplus for period   44,692         22,713         124,907         59,501      
                                         
Surplus, end of period  $1,551,227         1,367,343         1,551,227         1,367,343      
                                         
Statutory underwriting gain  $25,962         35,536         97,268         72,990      
                                         
Adjustments under GAAP:                                        
Deferred policy acquisition costs   7,380         10,442         22,775         28,058      
Other, net   (1,309)        (1,147)        (3,278)        (1,072)     
GAAP underwriting gain  $32,033         44,831         116,765         99,976      
                                         
                                         

 

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

 

 

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments 
September 30, 2016
(unaudited)
         
  Number Original Remaining Current
Strategy of Funds Commitment Commitment Market Value
Private Equity 15           150,456,790           57,793,283           35,443,848
Private Credit 8             92,000,000           30,762,618           27,708,889
Real Assets 7           100,000,000           22,922,421           15,329,396
TOTAL - ALTERNATIVE INVESTMENTS 30           342,456,790         111,478,322           78,482,133

 

  

         
Exhibit may not foot due to rounding