Investment Proposition

Our success is based on a unique combination of competitive advantages. Taken together, they create a winning formula for Selective. They include the following: 

• Our unique field model, placing empowered underwriting staff in proximity to our distribution partners and customers; 
• Our ability to develop and integrate sophisticated tools for risk selection, pricing, and claims management;
• Our franchise value distribution model, defined by meaningful business relationships with a group of top-notch independent agents and brokers;
• Our commitment to delivering a superior omnichannel customer experience, enhanced by digital platforms and value-added services; and 
• Our highly engaged and aligned team of extremely talented employees. 

Financial Performance

Over the past 10 years, we have generated consistent and profitable net premiums written growth that has exceeded the industry average. Selective marked a significant milestone in 2023 as we exceeded $4 billion in net premiums written for the first time in our history and delivered an operating ROE of 14.4%. This marked the 10th consecutive year of achieving a double-digit operating ROE. Our disciplined execution, strong underwriting culture, and enterprise risk management have, over time, delivered profitable growth and a track record that few in our industry can match – ultimately resulting in long-term value creation for our shareholders. 

Path for Profitable Growth

With our strong capital position and operational results, we are well-positioned to navigate the on-going challenges of elevated economic and social inflation and financial market volatility. In 2024, we are focused on delivering on our strategy for disciplined and profitable growth within our insurance operation segments including:

• Continuing to expand our Standard Commercial Lines market share by (i) increasing our share towards our 12% target of our agents’ premiums, (ii) strategically appointing new agents, and (iii) maximizing new business growth in the small business market through the use of our enhanced small business platform;
• Expanding our geographic footprint. We began writing new business in West Virginia and Maine in early April and expect to write new business in Washington, Oregon, and Nevada in late 2024. Over time, we plan to expand our Standard Commercial Lines footprint into most of the contiguous U.S.;
• Continuing to invest in product expansion, risk evaluation, and operational efficiency for middle market E&S accounts;
• Aggressively pursuing profitability in our Standard Personal Lines segment by prioritizing additional rate filings on a state-by-state basis and further refining our pricing factors. These filed rate increases began to take effect in early 2023, increasing in number and magnitude through the year, and are expected to continue through 2024. We expect our overall written renewal rate increase to be in excess of 20% in 2024.

Customer Focus

We continue to enhance our customer servicing capabilities, which remain a differentiator in the marketplace. Over the past several years, we have focused on providing our customers with a superior “omni-channel” experience whereby they are able to engage with us in a 24-hour, 365-day environment – in the manner of their choosing. In addition to developing customer self-servicing capabilities, we have introduced initiatives such as proactive messaging and other value-added services. These value-added services are designed to enhance our customers’ resilience and sustainability. This blend of employee- and technology-driven services and solutions offers our customers choices for engagement and promotes a superior experience across all channels. 

History of Financial Strength

Selective has maintained a financial strength rating of A or better by A.M. Best Rating Services for more than 90 years. This rating demonstrates the financial stability of the organization that is so important to our customers, distribution partners, and shareholders. In late 2021, A.M. Best upgraded our financial strength rating to A+, reflecting our consistently superior operating performance and solid financial position. We have a strong capital base with $3 billion of equity and a prudent debt-to-capital ratio of 14.6% as of year-end 2023.

As of year-end 2023, Selective maintained an $8.7 billion investment portfolio with a conservative fixed income securities and short-term investments average rating of “AA-“. We also target a low-hazard business mix, protect our balance sheet with a conservative reinsurance program, and maintain prudent reserving practices. 

Financial Strength Ratings

As of September 30, 2023

• A.M. Best's “A+” (Superior) rating for Selective is based on the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management. The rating also considers Selective’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is assessed at the strongest level.
• Standard & Poor’s “A” rating for Selective is based on the group’s improved operating performance, reduced property exposure concentrations, and improved geographic diversification.
• Moody’s Investor Service rates Selective A2, noting the company’s solid regional franchise with established independent agency support, along with its solid risk adjusted capitalization and strong invested asset quality. Moody’s raised Selective’s rating outlook from “stable” to “positive” in July 2023 based on the company’s consistent underwriting profitability and measured geographic expansion while maintaining a sound balance sheet.
• Fitch Ratings rates Selective “A+”, citing Selective’s strong underwriting results, solid capitalization with growth in shareholders’ equity and stable leverage metrics along with improved interest coverage metrics.