Yesterday, we posted our earnings press release, financial supplement, and investor presentation on selective.com's investors section. These non-GAAP measures include operating income, operating return on common equity, and adjusted book value per common share. This quarter, we delivered an operating return on equity of 13.2%, driven by strong investment income, which increased 18% year-over-year. We are on track to deliver a full-year operating ROE in the 14% range.

However, our combined ratio guidance of 97%-98% exceeds our 95% long-term target. To address this, we are prioritizing profit improvement and moderating premium growth. Second, diversifying revenue and income within and across our three insurance segments. In early September, we deployed an updated rating plan and predictive modeling to provide more granular pricing segmentation for the auto line, incorporating several enhanced variables, including additional vehicle and driver-specific criteria.

Maintaining our focus and sense of urgency is critical to improving underwriting margins and supporting long-term profitable growth. By reacting quickly to current claim trends, we are better positioned to ensure our pricing indications are appropriately positioned to achieve our long-term underwriting margin targets. Third, we continue to invest to deliver long-term profitable growth, even as the market is increasingly competitive. We also prioritize returning approximately 20%-25% of earnings through our shareholder dividend.

What went well
  • After-tax net investment income of $110 million, up 18% year-over-year, generating 13.6 points of return on equity
  • Fully diluted EPS of $1.85 up 26% and non-GAAP operating EPS of $1.75 up 25% year-over-year
  • Catastrophe losses of only 2.1 points, 11.3 points better than the prior-year quarter and well below expectations
  • Excess and Surplus Lines grew 14% with a strong 76.2 combined ratio and renewal pure price up 8.3%
  • Book value per share up 13% in the first nine months, aided by a $2.77 per share reduction in after-tax net unrealized losses
  • Raised the quarterly dividend 13% (12th consecutive annual increase), repurchased $36 million of stock, and authorized a new $200 million buyback
  • Independent third-party reviews confirmed carried reserves were in a reasonable range and above the reviewer's central estimate
What went wrong
  • GAAP combined ratio of 98.6% exceeded the 95% long-term target and the full-year guidance of 97%-98%
  • $40 million (3.3 points) of unfavorable prior-year casualty reserve development, mostly New Jersey commercial auto
  • Underlying combined ratio deteriorated to 93.2 from 86.1 a year ago on higher current-year casualty loss costs
  • Standard Commercial Lines combined ratio of 101.1 (underwriting loss) with premium growth slowing to 4%
  • Personal Lines combined ratio of 110.1 remained unprofitable, hurt by New Jersey personal auto reserving actions
  • Standard Commercial Lines retention fell to 82%, down four points year-over-year amid an increasingly competitive market
  • Personal Lines net premiums written declined 6% in the quarter

More on Selective Insurance Group Inc

Reported 2025-10-23 · figures from the Selective Insurance Group Inc Q3 2025 earnings call.

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