Branchville, NJ – Selective Insurance Group, Inc. (NASDAQ: SIGI) recently reported financial results for the fourth quarter ended December 31, 2022, with net income per diluted common share of $1.38 and non-GAAP operating income1 per diluted common share of $1.46. The fourth quarter combined ratio was a profitable 94.7%, with 5.2 points of catastrophe losses. Non-catastrophe property losses were 2.5 points above a year ago.
Catastrophe losses in the quarter were driven by Winter Storm Elliott. This storm impacted 37 states, 26 of which are in our standard lines footprint. We have recorded $135 million in ultimate gross losses, or $46.1 million net of reinsurance. In addition, we incurred $11.7 million in ceded earned reinstatement premium related to Winter Storm Elliott for a total negative impact to fourth quarter 2022 underwriting results of $57.8 million, pre-tax, or $0.75 per diluted share. Winter Storm Elliott increased our fourth quarter and full year 2022 combined ratio by 6.5 points and 1.7 points, respectively, and reduced our fourth quarter and full year 2022 ROE by 8.0 points and 1.9 points, respectively.
Despite Winter Storm Elliott, non-GAAP operating ROE in the quarter was 15.6%. NPW increased 14% from a year ago and growth was strong across all our underwriting segments, driven by renewal pure price increases, solid retention, new business, and exposure growth. For the quarter, the Investments segment contributed 11.5 points of annualized ROE.
“2022 marks our ninth consecutive year of double-digit non-GAAP operating ROEs. Against a backdrop of elevated catastrophe losses, higher loss cost trends, and capital market volatility, these results reflect the success of our underwriting discipline and profitable growth strategies,” said John J. Marchioni, Chairman, President and Chief Executive Officer.
“In 2023, we expect to build on our strong market position. Our superior distribution partnerships, sophisticated underwriting tools, and strong capital and liquidity position support our profitable growth opportunities,” Mr. Marchioni concluded.
Overall Insurance Operations
For the fourth quarter, overall NPW increased 14% from a year ago, reflecting average renewal pure price increases of 5.3%, solid retention, new business, and exposure growth. Our 94.7% combined ratio in the quarter was up from 93.1% a year ago, driven principally by higher catastrophe and non-catastrophe property losses.
The quarter’s catastrophe losses were driven by $46.1 million of net losses related to Winter Storm Elliott. We also incurred $11.7 million in reinstatement premium for a total negative impact to our underwriting results of $57.8 million, pre-tax. The non-catastrophe property loss increase was primarily a result of higher severities from inflationary pressures on items such as new and used car prices, auto repair costs, building materials, and labor costs.
These items were partially offset by prior-year favorable casualty reserve development of $38.0 million, including $30.0 million on our workers compensation line of business. Our Insurance Operations generated 6.4 points of annualized ROE in the quarter.
The complete results release is available here: Selective Fourth Quarter 2022 Results (PDF)
Source: Selective