SELECTIVE INSURANCE GROUP INC Q1 FY2025 earnings call

• Delivered solid start to the year with overall combined ratio 96.1%, after-tax net investment income $96M, ROE 14.4%. Net premiums written grew 7% driven by excess and surplus lines and standard commercial lines, personal lines premium decreased 12% for profitability. - Focused on improving underwriting margin despite social inflation impacts on casualty severities. - Renewal pure pricing across segments: overall 10.3%, up 2.2 points from year ago, ~3 points above loss trend. - Corporate strategy includes geographic expansion (added 30 agencies in 1Q, net 200 in 2024, 13 states added since 2017 with 5 last year), technology investments (AI use cases for underwriting and claims, modernizing systems), and regular agency council meetings to align with distribution partners.

Standard Commercial Lines reported a 96.4% combined ratio. Renewal pure price increased to 9.1%, driven by general liability at 12%, retention stable at 85%. Excess and surplus lines had a 92.5% combined ratio and 81 underlying combined ratio, with average renewal pure pricing increases of 8.7% and 20% net premiums written growth. Personal Lines delivered a combined ratio of 98%, renewal pure price was 24.1%, total personal lines net premiums written decreased due to deliberate profit improvement actions.

• 2025 GAAP combined ratio expected between 96-97% including 6 points of catastrophe losses. - Underlying combined ratio target 90-91%. - After-tax net investment income guidance $405M remains unchanged. - Alternative investments could face valuation headwinds in coming months depending on tariffs, economic uncertainty, and financial market volatility.

• External macroeconomic uncertainty including financial market performance, international trade, and possible recession. - Social inflation impacting average casualty severities pressuring underwriting margin. - Alternative investments having inherent economic variability and accounting variability with market value changes flowing through income statement.

Q: Could you drill down on casualty loss trends and pricing?

A: Our view of loss trend unchanged, all-in casualty loss trends at ~8.5%, GL in ~9% range. For commercial auto, multiyear pricing change with earn rate level running slightly above elevated loss trend.

Q: Thoughts on seasonality and workers' comp?

A: Seasonality largely driven by non-cap property, historically typical. Workers' comp on accident year basis for us in high nineties, industry ~100, written rate around negative three, flat frequencies and mid single digit severity inflation.

Q: Competitive environment and retention?

A: Pricing targets above broader market, impact on new business but retention held up well, focus on achieving price target with granular pricing strategy.

Q: Questions on bond book and surety book?

A: Surety book is small (~$40M, 11% of premium), results strong, adjust pricing accordingly to economic impacts.

Q: Follow-up on commercial lines reserve development and macroeconomic sensitivity?

A: No significant reserve changes on commercial line side, surety book not greatly affected by macroeconomic pressures as small mid-market player.