Selective Insurance Group Q4 Earnings Call Highlights

Selective Insurance Group (NASDAQ:SIGI) executives highlighted improved profitability, strong investment results, and continued underwriting actions during the company’s fourth-quarter and full-year 2025 earnings call, while also outlining expectations for further margin improvement in 2026 and beyond.

2025 performance and capital return

Chairman, President and CEO John Marchioni said the company “delivered an ROE of 14.4% and an operating ROE of 14.2%” for 2025, exceeding Selective’s 10-year average operating ROE of 12.1% and five-year average of 12.5%. Marchioni said book value per share grew 18% in 2025 and the company returned $182 million to shareholders through dividends and share repurchases.

CFO Patrick Brennan reported fourth-quarter fully diluted EPS of $2.52, up 66% year over year, and operating EPS of $2.57, up 59%. Fourth-quarter ROE was 18.3% and operating ROE was 18.7%, which Brennan attributed to “continued strong investment performance.”

Underwriting results and reserve actions

Selective posted a fourth-quarter GAAP combined ratio of 93.8%, which Brennan said was a 4.7-point improvement from the prior-year quarter “mainly because this quarter had no net prior year reserve development.” For full-year 2025, the combined ratio improved to 97.2% from 103% in 2024, which management attributed primarily to lower prior-year casualty reserve development and lower catastrophe losses.

Marchioni said net premiums written grew 5% for the year as the company took “deliberate actions to improve underwriting profitability,” while also investing in future growth initiatives such as geographic expansion and broadening excess and surplus (E&S) distribution with retail access.

Several lines saw offsetting reserve dynamics in the fourth quarter. Marchioni said favorable workers’ compensation development offset unfavorable emergence in commercial and personal auto lines and E&S casualty, with smaller adjustments across multiple lines including umbrella, “which was driven by auto.” He also said Selective strengthened reserves in both 2024 and 2025 and that the company was “comfortable with our overall carried reserve position.”

Commercial auto was a key focus. Marchioni said the company entered 2025 expecting accident-year margins to improve because it had earned double-digit rate increases over multiple years that exceeded an assumed loss trend of roughly 8%. As the year progressed, however, Selective “increased commercial auto casualty loss costs by nearly 6 points” and raised its expected severity trend for commercial auto liability to approximately 10%, which he said is reflected in results and incorporated into 2026 guidance. In total, Marchioni said Selective strengthened commercial auto reserves by about $190 million in 2025, with most of that tied to the 2024 and 2025 accident years.

Management described underwriting and claims actions in response, including tighter fleet underwriting guidelines, state-specific tactics, and a focused commercial auto telematics rollout in certain segments and states. In general liability, Marchioni reiterated efforts to manage limits in challenging jurisdictions, trim underperforming classes, and prioritize new business in better-performing segments with strengthened pricing.

Segment trends: commercial, E&S, and personal lines

Standard Commercial Lines, described by Marchioni as the company’s “largest segment and our earnings engine,” posted a fourth-quarter combined ratio of 92.9%, which included 1.6 points of favorable prior-year casualty development and 3.2 points of higher current-year casualty loss costs. Brennan said premium growth in the quarter was 5%, driven by a renewal pure price increase of 7.5% (8.5% excluding workers’ compensation). He reported general liability pricing increased 9.8% and commercial auto pricing increased 8.6%, noting liability price increases continued to exceed 10% even as physical damage pricing decelerated. Property renewal premium change was 12.2%, including 4 points of exposure growth. Standard Commercial Lines retention was 82%, stable with recent periods but down three points from a year earlier.

E&S premium grew 4% in the quarter, with average renewal pure price increases of 7.8%. Brennan said the company is “push[ing] higher rate levels in E&S casualty” based on its view of general liability loss trends. The E&S combined ratio was 93.1% for the quarter and 87.8% for the year. Addressing an analyst question about reserve actions in E&S casualty, Marchioni said the fourth-quarter reserve action was $10 million, “spread across the 2020 through 2023 accident years,” which he characterized as “de minimis” and not concentrated by accident year, geography, or segment.

Personal Lines produced a fourth-quarter combined ratio of 103%, deteriorating from 91.7% in the prior-year quarter. Brennan attributed the change to catastrophe losses that were 6.2 points higher and an 8.1-point increase in current-year casualty loss costs, driven by New Jersey personal auto. For the full year, Personal Lines improved to a 100.6% combined ratio from 109.3% in 2024. Marchioni and Brennan emphasized that results outside New Jersey were more favorable, while Marchioni said prior-year development in personal auto was “driven entirely by the state of New Jersey,” which represents about 30% of the personal auto portfolio, and was largely tied to the 2024 accident year. He said the full-year prior-year development impact on the Personal Lines combined ratio was about 3.7 points, and that the company is taking “pretty significant actions” to manage the New Jersey portfolio.

Investments, reinsurance, and 2026 outlook

Brennan reported fourth-quarter after-tax net investment income of $114 million, up 17% from a year earlier, generating 13.6 points of ROE. He said the portfolio remains conservatively positioned, with an average credit quality of A+ and duration of 4.1 years, and that embedded book yield should support investment income even if interest rates decline.

On reinsurance, Brennan said the company renewed its property catastrophe program effective Jan. 1, maintaining a $100 million retention and increasing the coverage exhaustion point to $1.5 billion from $1.4 billion. He said market conditions were attractive and the renewal included “meaningful risk-adjusted pricing decreases and improved terms and conditions.” He added that the company continues to supplement the main tower with a personal lines-only buy-down layer and said peak U.S. hurricane exposure is within risk tolerance at 5% of GAAP equity for a 1-in-250-year net probable maximum loss.

Selective’s 2026 guidance calls for a GAAP combined ratio of 96.5% to 97.5%, assuming six points of catastrophe losses. Management said it does not assume any future reserve development, as it books its best estimate each quarter. After-tax net investment income is expected to be $465 million, up 10% from 2025, with an effective tax rate of about 21.5% and an estimated 61 million weighted average diluted shares (excluding any additional repurchases).

Marchioni said the guidance implies an underlying combined ratio of 90.5% to 91.5%, compared with 91.8% in 2025, with expected underlying improvement in Personal Lines and Commercial Lines and continued strong performance in E&S. Guidance embeds an overall expected loss trend of about 7.5% (up from 7% assumed a year ago), including 3.5% for property and 9% for casualty (closer to 10% excluding workers’ compensation). He also said the 2026 expense ratio is expected to increase by about 0.5 point due to strategic technology investments to support scale, improve decision-making, and enhance operational efficiency. With expected investment income, management said the 2026 outlook implies an operating ROE “in the 14% range.”

During Q&A, Marchioni reiterated confidence in the company’s ability to improve commercial margins through continued casualty pricing and mix actions that differentiate retention and rate changes by expected profitability. Executives also discussed that Selective expects technology investment as a percentage of premium to continue rising over time, with anticipated offsets through lower labor costs and benefits to underwriting and claims outcomes.

Management closed by noting Selective will celebrate its 100th anniversary in 2026, and said the company remains focused on fundamentals in risk selection, policy pricing, and claims outcomes, along with diversification and expanded use of data, analytics, technology, and artificial intelligence.

About Selective Insurance Group (NASDAQ:SIGI)

Selective Insurance Group, Inc is an insurance holding company headquartered in Branchville, New Jersey. The organization traces its roots to a regional provider of property and casualty coverage and became a publicly traded holding company following its initial public offering in 1999. Since its formation, Selective has expanded through strategic acquisitions and organic growth initiatives to broaden its product offerings and strengthen its market position.

The company’s core business encompasses a broad range of property and casualty insurance products designed to serve both commercial and personal lines customers.