Selective Insurance Group, Inc. has revealed preliminary Q2 2020 pre-tax net catastrophe losses of approximately $83 million, stemming from numerous events designated by PCS during the period.
The catastrophe events designated by PCS includes two April storms at a cost of $43 million and claims related to civil unrest across the U.S. of $18 million.
“We experienced a record level of catastrophe losses for the second quarter, driven by industry-wide U.S. catastrophe loss activity that significantly exceeded the 10-year historical median,” said the company’s President and Chief Executive Officer (CEO), John J. Marchioni.
As a result of the record level of cat losses in the period, Selective Insurance expects its Q2 2020 combined ratio to be in the range of 98% to 99%, with a combined ratio excluding cats in a range of 85% to 86%.
The company explains that its combined ratio for the quarter includes $15 million of net prior year favourable casualty reserve development, better than expected non-catastrophe property losses, ongoing expense initiatives, and partly offset by the previously disclosed COVID-19 related charges.
“Our claims team is working closely with our distribution partners to process these claims and help our policyholders restore their property. Despite the higher level of catastrophe losses, our underlying performance was strong, as our combined ratio indicates. In addition, our combined ratio guidance continues to reflect our estimates of the full-year impact of COVID-19,” said Marchioni.
Based on its preliminary second-quarter 2020 results, Selective has made a number of changes to its full-year 2020 guidance. This includes an adjustment to the GAAP combined ratio, excluding cat losses, of between 90% and 91%, which is an improvement from the prior range of 92% to 93%. This updated combined ratio guidance assumes no additional prior-year casualty reserve development in H2 2020, says Selective.
The company has also updated its full-year guidance to account for catastrophe losses of 6 percentage points on the combined ratio, which reflects higher than expected cat losses during the first six months of the year.
Additionally, Selective expects to report full-year 2020 after-tax net investment income of $170 million, which represents a $10 million improvement from its prior guidance.
