Summary of Selective Insurance Group Q4 2025 Earnings Call

1Key Financial Results and Metrics

Earnings Per Share (EPS): Fully diluted EPS was $2.52, up 66% year-over-year; non-GAAP operating EPS was $2.57, up 59%.

Return on Equity (ROE): Reported ROE was 18.3%; non-GAAP operating ROE was 18.7%.

Combined Ratio: GAAP combined ratio improved to 93.8%, a 4.7-point improvement from Q4 2024; underlying combined ratio was 92.1%.

Net Premiums Written: Grew 5% for the year, with a 5% increase in Standard Commercial Lines driven by pricing increases.

Book Value per Share: Increased by 18% year-over-year.

Investment Income: Q4 after-tax net investment income was $114 million, up 17% from the previous year.

2Strategic Updates and Business Highlights

Capital Management: Returned $182 million to shareholders through dividends and share repurchases; $170 million remains on the share repurchase authorization.

Geographic Expansion: Continued efforts to expand geographic footprint and enhance E&S distribution capabilities.

Underwriting Discipline: Implemented tighter underwriting guidelines, particularly in commercial auto and general liability, to improve profitability.

Technology Investments: Increased focus on leveraging data and technology to enhance operational efficiency and underwriting outcomes.

3Forward Guidance and Outlook

2026 Guidance: Expected GAAP combined ratio between 96.5% and 97.5%, assuming 6 points of catastrophe losses. Operating ROE is projected to be around 14%.

Investment Income: Forecasted after-tax net investment income of $465 million, a 10% increase from 2025.

Expense Ratio: Anticipated increase of about 0.5 points due to strategic technology investments.

4Bad News, Challenges, or Points of Concern

Personal Lines Performance: Personal lines combined ratio was 103%, significantly impacted by catastrophe losses and current year casualty loss costs, particularly in New Jersey.

Commercial Auto Reserves: Strengthened commercial auto reserves by approximately $190 million, indicating ongoing challenges in this segment.

Retention Rates: Retention for the quarter was stable at 82%, but down 3 points from the previous year, raising concerns about maintaining profitable business.

Market Conditions: Competitive pressures and pricing deceleration noted in commercial lines, particularly in property, could affect future margins.

5Notable Q&A Insights

Commercial Lines Confidence: Management expressed confidence in maintaining or improving commercial line margins despite pricing deceleration, citing strong pricing discipline and risk selection capabilities.

Reserve Adequacy: Management indicated that their reserving process is robust, with no significant disconnect between paid activity and initial case reserves.

E&S Segment Growth: While E&S growth has slowed, management remains optimistic about its long-term potential, emphasizing the importance of maintaining pricing discipline.

Technology Investments: Investments in technology are expected to yield operational efficiencies, with a focus on improving decision-making and claims outcomes. Overall, Selective Insurance Group demonstrated strong financial performance in Q4 2025, with a solid outlook for 2026, though challenges in personal lines and commercial auto reserves remain areas of concern.