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Investing.com -- Selective Insurance Group, Inc. (NASDAQ:SIGI) shares tumbled 5.2% after the insurer reported second-quarter earnings that fell short of analyst expectations, despite showing significant improvement from the prior year.
The company posted non-GAAP operating income of $1.31 per diluted share for Q2 2025, missing the analyst estimate of $1.50. Revenue came in at $1.28 billion, below the consensus forecast of $1.33 billion. Despite the miss, Selective’s results showed substantial improvement from the second quarter of 2024, when the company reported a loss of $1.10 per share.
Selective’s combined ratio improved to 100.2% from 116.1% in the year-ago period, though the company still faced profitability challenges. The results included 3.8 points of unfavorable prior year casualty reserve development, driven by $45 million of reserve strengthening in commercial lines.
"The combined ratio of 100.2% reflects continued pressures from elevated severities due to social inflation, which drove unfavorable prior year casualty reserve development in the quarter," said John J. Marchioni, Chairman, President and Chief Executive Officer. "To address the continued elevated level of loss costs, we are diligently working to improve profitability through pricing and underwriting actions."
Net premiums written increased 5% YoY to $1.29 billion, driven by renewal pure price increases of 9.9%. After-tax net investment income rose 18% to $101 million.
In response to ongoing challenges, Selective updated its 2025 guidance, raising its expected GAAP combined ratio to 97-98% from the previous 96-97%. The company also increased its after-tax net investment income forecast to $415 million from $405 million.
Standard Commercial Lines, which represents 79% of total net premiums written, grew 6% YoY with renewal pure price increases of 8.9%. The segment’s combined ratio improved to 102.8% from 118.8% a year earlier.
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