Selective Insurance Q2 2025 slides: Combined ratio improves, ROE reaches 12.5%

Published 23/07/2025, 22:40
Selective Insurance Q2 2025 slides: Combined ratio improves, ROE reaches 12.5%

Introduction & Market Context

Selective Insurance Group, Inc. (NASDAQ:SIGI) released its second quarter 2025 investor presentation on July 24, showcasing improved performance metrics after a challenging first quarter. As the 34th largest property and casualty (P&C) insurer in the United States with approximately 1.5% market share in commercial lines, Selective has positioned itself as an outperformer against industry peers in key profitability metrics.

The presentation comes after a mixed Q1 2025 earnings report where the company missed EPS expectations ($1.76 vs. forecast of $1.88) but exceeded revenue projections. The latest presentation suggests a stronger second quarter performance, with half-year metrics showing significant improvement over full-year 2024 results.

Quarterly Performance Highlights

Selective reported a non-GAAP operating return on equity (ROE) of 12.5% for the first half of 2025, substantially higher than the 7.0% achieved for full-year 2024. This improvement indicates a strong rebound in Q2 after the challenging first quarter. Similarly, the combined ratio improved to 98.2% for 1H25 compared to 103.0% for full-year 2024.

As shown in the following chart detailing Selective’s performance against peers, the company has consistently outperformed its peer group in ROE metrics over the past decade:

The company’s 10-year average ROE stands at 11.9%, significantly outpacing the peer average of 8.6%. For 1H25, the ROE breakdown shows 12.9% contribution from investments, 2.2% from underwriting, and a -2.8% impact from other factors, resulting in a total of 12.3%.

Selective has demonstrated a consistent track record of profitable growth, with net premiums written growing at a compound annual growth rate of 9.4% from 2015 to 2024, reaching $4.6 billion. The company’s combined ratio performance has also been strong relative to the industry:

Segment Performance

Standard Commercial Lines, representing 79% of Selective’s 2024 net premiums written, showed solid performance in 1H25 with an underlying combined ratio of 90.6% and a reported combined ratio of 99.6%. The segment achieved 5.3% renewal pure price increases while maintaining a strong retention rate of 84%.

As illustrated in the following segment overview:

The company employs a sophisticated portfolio approach to managing its commercial business, segmenting accounts by performance quality and adjusting pricing accordingly. This strategy has allowed Selective to maintain profitability while growing selectively:

Excess and Surplus Lines, accounting for 12% of 2024 net premiums written, has been a standout performer with a combined ratio of 89.7% for 1H25 and 14% growth. The segment achieved 9.0% renewal pure price increases in the first half of 2025:

Standard Personal Lines, representing 9% of the business, is undergoing a strategic shift toward the mass-affluent market. The segment has implemented aggressive pricing actions with renewal pure price increases of 21.3% in 1H25, reflecting the company’s focus on improving profitability in this challenging line:

Strategic Initiatives

Selective outlined its path for profitable growth across all business segments, with a particular focus on geographic expansion. The company has added thirteen states to its Standard Commercial Lines footprint since 2017 and aims to achieve a near-national presence in the coming years:

The company’s strategy includes targeting 3% market share in its existing footprint over the long term, increasing share of wallet with existing distribution partners to 12%, and achieving 25% agent market share in existing markets.

For Personal Lines, Selective is focusing on the mass-affluent segment where its coverage and service capabilities are most competitive. In Excess and Surplus Lines, the company is pursuing opportunistic growth by expanding capabilities and products.

Forward-Looking Statements

Selective provided revised guidance for 2025, projecting a GAAP combined ratio between 97% and 98%, which includes 6 percentage points of catastrophe losses and assumes no additional prior-year casualty reserve development:

The company expects after-tax net investment income of $415 million, an overall effective tax rate of 21.5%, and weighted average diluted shares of 61.5 million.

Selective maintains a strong capital position with $1.1 billion of cash flow generated and $451 million in year-to-date operating cash flow. The company’s net premiums written to surplus ratio stands at 1.45x as of June 30, 2025, and it maintains strong ratings from major agencies, including an A+ rating from AM Best:

The company’s book value per share has shown consistent growth, increasing from $22 in 2014 to $52 by 1H25, reflecting Selective’s long-term focus on building shareholder value:

Selective’s presentation demonstrates a company that has rebounded strongly in Q2 2025 after a challenging first quarter, with improved profitability metrics and a clear strategy for continued growth through geographic expansion and segment-specific initiatives. The revised guidance for 2025 suggests management confidence in maintaining this positive momentum through the remainder of the year.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.