Selective Insurance Group, Inc. expects a preliminary Q2 2023 combined ratio of 100.2%, which includes catastrophe losses of 10.6 points and net prior year favourable casualty reserve development of 0.4 points.
The firm predicts pre-tax net catastrophe losses totalling approximately $100 million. Every underwriting segment was impacted this quarter. Net cat losses in Standard Commercial Lines were $63 million pre-tax, $21 million in Standard Personal Lines, and $16 million in Excess and Surplus Lines.
According to the company, 19 named events have impacted the results. Most storms were in Midwest and East Coast footprint states, and none were large enough to attach to its catastrophe reinsurance treaty.
Net investment income, after-tax, is expected to be $78 million, inclusive of the $9 million of after-tax alternative investment income. Selective reports a 9.1% return on common equity and 9.8% non-GAAP operating ROE in this quarter.
Chairman, President and Chief Executive Officer, John J. Marchioni, commented, “In a challenging operating environment with elevated catastrophe losses throughout the insurance sector, our team worked hard to serve our customers and distribution partners.
“Through the first half of the year, our expected operating ROE of 12.2% was in line with our 12% target and we are on track to meet our full-year guidance of a 96.5% combined ratio and $300 million of after-tax net investment income. In addition, we produced excellent net premiums written growth.”
Taking the preliminary Q2 results as its basis the company increased its expectations for 2023 net catastrophe losses. Other full-year expectations are a GAAP combined ratio of 96.5%, including net catastrophe losses of 6.0 points, up from prior guidance of 4.5 points.
