Selective Insurance has reported a net loss of $65.6 million for Q2 of 2024, with a combined ratio of 116.1% in what the firm described as a “challenging” quarter.
According to the firm, a net unfavourable prior year casualty reserve development of $176 million increased the combined ratio by 16.3 points in Q2, while catastrophe losses of $91 million increased the combined ratio by 8.4 points.
The combined ratio, excluding net catastrophe losses and prior year casualty reserve development, was reportedly 91.4%, 1.4 points higher than a year ago. With this in mind, Selective recorded a net underwriting loss of $137.2 million in Q2 of 2024, compared to a loss of $1.2 million in Q2 of 2023.
John J. Marchioni, Chairman, President and Chief Executive Officer, commented, “This was a challenging quarter. We did not meet our high standard as underwriting performance fell below our target.
“The unfavorable prior year casualty reserve development was driven by elevated loss emergence in the quarter reflecting higher severity that we attribute to social inflation. Our reserving action is predicated on our in-depth quarterly reserve review and further strengthening to address elevated and uncertain loss trends.”
Elsewhere, the firm’s net premiums written increased 13%, or $141 million, from Q2 of 2023, with growth across all three insurance segments.
After-tax net investment income was also up, climbing 11% to $86 million. Overall, Selective’s insurance segments reduced ROE by 19.9 points in Q2 of 2024.
Marchioni continued, “We have a very stable underwriting portfolio. To address our updated view of loss costs, we are responding with additional price increases. Our renewal pure price increase across all insurance segments was 9.1% in the quarter, including 7.9% for Standard Commercial Lines.
“General liability renewal pure pricing increased to 7.6%, up over a point from the first quarter. We expect Standard Commercial Lines renewal pure price will trend higher in the second half of 2024.”
Marchioni concluded, “We maintain our disciplined focus and execution in the areas of risk selection, pricing, and claims management in the face of this challenging and dynamic loss trend environment.
“Our capital position remains strong and our underlying combined ratio of 91.4% positions us well moving forward. We are confident that we will quickly re-establish our strong earnings profile, consistently meeting or exceeding our 12% operating ROE target.”
