Attached files
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8-K - FORM 8-K - SELECTIVE INSURANCE GROUP INC | f8k_102710.htm |
EX-99 - EXHIBIT 99.1 - SELECTIVE INSURANCE GROUP INC | exh_991.htm |
Supplemental Investor Package
_______________________________________________
Third Quarter 2010
Investor Contact:
Jennifer DiBerardino
Senior Vice President, Investor Relations and Treasurer
Tel: 973-948-1364
jennifer.diberardino@selective.com
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Selective Insurance Group, Inc.
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Selected Balance Sheet Data (unaudited)
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($ in thousands, except per share amounts)
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September 30,
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September 30,
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December 31,
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2010
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2009
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2009
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Unrealized/
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Unrecognized/
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Unrecognized/
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Balance
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Market
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Unrecognized
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Balance
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Market
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Unrealized
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Balance
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Market
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Unrealized
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Sheet
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Value
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Gain/(Loss)
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Sheet
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Value
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(Loss)/Gain
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Sheet
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Value
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(Loss)/Gain
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Invested Assets:
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Corporate bonds1
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$ | 1,548,160 | 1,569,975 | 73,054 | $ | 1,122,000 | 1,134,012 | (23,009 | ) | $ | 1,144,692 | 1,163,973 | (13,031 | ) | |||||||||||||||||
Government and municipal bonds
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1,939,587 | 1,985,217 | 121,589 | 2,170,426 | 2,194,067 | 96,828 | 2,201,580 | 2,212,107 | 72,101 | ||||||||||||||||||||||
Total bonds
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3,487,747 | 3,555,192 | 194,643 | 3,292,426 | 3,328,079 | 73,819 | 3,346,272 | 3,376,080 | 59,070 | ||||||||||||||||||||||
Equities
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63,116 | 63,116 | 8,065 | 89,892 | 89,892 | 13,087 | 80,264 | 80,264 | 15,874 | ||||||||||||||||||||||
Short-term investments
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265,043 | 265,043 | - | 236,896 | 236,896 | - | 213,848 | 213,848 | - | ||||||||||||||||||||||
Other investments
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154,728 | 154,728 | (19,452 | ) | 147,482 | 147,482 | (20,381 | ) | 140,667 | 140,667 | (25,774 | ) | |||||||||||||||||||
Total invested assets
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3,970,634 | 4,038,079 | 183,256 | 3,766,696 | 3,802,349 | 66,525 | 3,781,051 | 3,810,859 | 49,170 | ||||||||||||||||||||||
Invested assets per $ of stockholders' equity
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3.64 | 3.82 | 3.77 | ||||||||||||||||||||||||||||
Total assets
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5,334,521 | 5,158,303 | 5,114,827 | ||||||||||||||||||||||||||||
Liabilities:
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Reserve for losses and loss expenses
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2,809,797 | 2,718,855 | 2,745,799 | ||||||||||||||||||||||||||||
Unearned premium reserve
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880,698 | 895,446 | 844,847 | ||||||||||||||||||||||||||||
Total liabilities
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4,242,205 | 4,171,974 | 4,112,452 | ||||||||||||||||||||||||||||
Stockholders' equity
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1,092,316 | 986,329 | 1,002,375 | ||||||||||||||||||||||||||||
Total debt to capitalization ratio
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19.4 | % | 21.0 | % | 21.5 | % | |||||||||||||||||||||||||
Adjusted total debt to capitalization ratio 2
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13.8 | % | 15.0 | % | 15.6 | % | |||||||||||||||||||||||||
Book value per share
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20.41 | 18.58 | 18.83 | ||||||||||||||||||||||||||||
Book value per share excluding
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unrealized gain or loss on bond portfolio
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18.87 | 18.12 | 18.47 | ||||||||||||||||||||||||||||
NPW per insurance segment employee
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760 | 772 | 766 | ||||||||||||||||||||||||||||
Statutory premiums to surplus ratio
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1.4 | x | 1.6 | x | 1.5 | x | |||||||||||||||||||||||||
Statutory surplus
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1,034,321 | 903,505 | 981,955 | ||||||||||||||||||||||||||||
1 Includes mortgage-backed and asset-backed securities.
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2 The adjusted debt to capitalization ratio reflects an estimated equity treatment of 75% applied to our $100 million Junior Subordinated Notes issued September 25, 2006.
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1
Selective Insurance Group, Inc.
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Selected Income Statement Data (unaudited)
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September 2010
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THREE MONTHS ENDED September 30,
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NINE MONTHS ENDED September 30,
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($ in thousands, except per share amounts)
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2010
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2009
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2010
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2009
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Per diluted share | Per diluted share | Per diluted share | Per diluted share | ||||||||||||||||||||||||||||||
Consolidated
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Revenue
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$ | 389,702 | $ | 390,175 | $ | 1,170,532 | $ | 1,124,216 | |||||||||||||||||||||||||
Operating income
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18,794 | 0.35 | 23,845 | 0.44 | 47,641 | 0.88 | 49,211 | 0.92 | |||||||||||||||||||||||||
Net realized gains (losses), after tax
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37 | - | (3,239 | ) | (0.06 | ) | (2,126 | ) | (0.04 | ) | (26,197 | ) | (0.49 | ) | |||||||||||||||||||
Income from continuing operations
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18,831 | 0.35 | 20,606 | 0.38 | 45,515 | 0.84 | 23,014 | 0.43 | |||||||||||||||||||||||||
Loss on discontinued operations, after tax
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(1,634 | ) | (0.03 | ) | (7,599 | ) | (0.14 | ) | (3,749 | ) | (0.07 | ) | (7,196 | ) | (0.13 | ) | |||||||||||||||||
Net income
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17,197 | 0.32 | 13,007 | 0.24 | 41,766 | 0.77 | 15,818 | 0.30 | |||||||||||||||||||||||||
Operating return on equity
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7.0 | % | 9.9 | % | 6.1 | % | 7.0 | % | |||||||||||||||||||||||||
Insurance Operations
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Gross premiums written
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446,684 | 446,419 | 1,295,622 | 1,312,630 | |||||||||||||||||||||||||||||
Net premiums written
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367,114 | 376,718 | 1,088,729 | 1,117,764 | |||||||||||||||||||||||||||||
Net premiums earned
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354,709 | 355,906 | 1,063,101 | 1,078,090 | |||||||||||||||||||||||||||||
Underwriting (loss) gain
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- before tax
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(3,933 | ) | (142 | ) | (21,699 | ) | 2,927 | |||||||||||||||||||||||||
- after tax
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(2,556 | ) | (0.05 | ) | (92 | ) | - | (14,104 | ) | (0.26 | ) | 1,903 | 0.04 | ||||||||||||||||||||
GAAP combined ratio
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101.1 | % | 100.0 | % | 102.0 | % | 99.7 | % | |||||||||||||||||||||||||
Commercial lines
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Net premiums earned
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293,225 | 301,279 | 884,134 | 918,069 | |||||||||||||||||||||||||||||
GAAP combined ratio
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100.0 | % | 99.3 | % | 100.9 | % | 98.9 | % | |||||||||||||||||||||||||
Personal lines
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Net premiums earned
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61,484 | 54,627 | 178,967 | 160,021 | |||||||||||||||||||||||||||||
GAAP combined ratio
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106.4 | % | 104.2 | % | 107.8 | % | 104.5 | % | |||||||||||||||||||||||||
Investments
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Net investment income
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- before tax
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32,986 | 36,585 | 104,237 | 78,670 | ||||||||||||||||||||||||||||
- after tax
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25,305 | 0.46 | 28,382 | 0.53 | 80,058 | 1.47 | 65,392 | 1.23 | |||||||||||||||||||||||||
Effective tax rate
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23.3 | % | 22.4 | % | 23.2 | % | 16.9 | % | |||||||||||||||||||||||||
Annual after-tax yield on investment portfolio
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2.8 | % | 2.4 | % | |||||||||||||||||||||||||||||
Annual after-tax, after-interest expense yield
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2.4 | % | 2.0 | % | |||||||||||||||||||||||||||||
Invested assets per $ of stockholders' equity
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3.64 | 3.82 | |||||||||||||||||||||||||||||||
Other expenses (net of other income)
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Interest expense
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- before tax
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(4,559 | ) | (4,751 | ) | (14,056 | ) | (14,618 | ) | ||||||||||||||||||||||||
- after tax
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(2,963 | ) | (0.05 | ) | (3,089 | ) | (0.06 | ) | (9,136 | ) | (0.17 | ) | (9,502 | ) | (0.18 | ) | |||||||||||||||||
Other - after tax
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$ | (992 | ) | (0.01 | ) | $ | (1,356 | ) | (0.03 | ) | (9,177 | ) | (0.16 | ) | $ | (8,582 | ) | (0.17 | ) | ||||||||||||||
Diluted weighted avg. shares outstanding
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54,573 | 53,548 | 54,390 | 53,312 |
2
Selective Insurance Group, Inc. and Consolidated Subsidiaries
GAAP Investment Income
(unaudited)
($ in thousands)
For the three months ended
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%
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Year to Date
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%
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September
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September
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Increase
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September
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September
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Increase
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2010
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2009
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(Decrease)
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2010
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2009
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(Decrease)
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Investment Income:
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Interest:
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Fixed Maturity Securities
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31,741 | 34,747 | (8.7 | ) | 97,914 | 106,980 | (8.5 | ) | |||||||||||||||||
Short-term
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134 | 237 | (43.5 | ) | 367 | 1,161 | (68.4 | ) | |||||||||||||||||
Alternative Investments
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2,359 | 2,660 | (11.3 | ) | 11,122 | (26,744 | ) | 141.6 | |||||||||||||||||
Dividends
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347 | 551 | (37.0 | ) | 1,279 | 1,562 | (18.1 | ) | |||||||||||||||||
Changes in Fair Value
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- | - | N/M | - | 262 | (100.0 | ) | ||||||||||||||||||
Miscellaneous
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41 | 53 | (22.6 | ) | 94 | 293 | (67.9 | ) | |||||||||||||||||
34,622 | 38,248 | (9.5 | ) | 110,776 | 83,514 | 32.6 | |||||||||||||||||||
Investment Expense
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1,636 | 1,663 | (1.6 | ) | 6,539 | 4,844 | 35.0 | ||||||||||||||||||
Net Investment Income Before Tax
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32,986 | 36,585 | (9.8 | ) | 104,237 | 78,670 | 32.5 | ||||||||||||||||||
Tax
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7,681 | 8,203 | (6.4 | ) | 24,179 | 13,278 | 82.1 | ||||||||||||||||||
Net Investment Income After Tax
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$ | 25,305 | 28,382 | (10.8 | ) | $ | 80,058 | 65,392 | 22.4 | ||||||||||||||||
Net Investment Income per Share
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$ | 0.46 | 0.53 | (13.2 | ) | $ | 1.47 | 1.23 | 19.5 | ||||||||||||||||
Effective Tax Rate
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23.3 | % | 22.4 | % | 23.2 | % | 16.9 | % | |||||||||||||||||
Average Yields :
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Fixed Maturity Securities:
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Pre Tax
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3.60 | % | 4.25 | % | |||||||||||||||||||||
After Tax
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2.81 | % | 3.35 | % | |||||||||||||||||||||
Portfolio:
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Pre Tax
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3.59 | % | 2.87 | % | |||||||||||||||||||||
After Tax
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2.75 | % | 2.39 | % | |||||||||||||||||||||
For the three months ended
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Year to date: | ||||||||||||||||||||||||
September
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September
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September
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September
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Net Realized Gains(Losses)
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2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||
Total Fixed Maturities
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1,791 | (4,392 | ) | (14,806 | ) | (38,038 | ) | ||||||||||||||||||
Total Equity Securities
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(1,734 | ) | 259 | 11,535 | (225 | ) | |||||||||||||||||||
Total Other Investments
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- | (850 | ) | - | (2,039 | ) | |||||||||||||||||||
Total
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57 | (4,983 | ) | (3,271 | ) | (40,302 | ) | ||||||||||||||||||
Net of Tax
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37 | (3,239 | ) | (2,126 | ) | (26,197 | ) |
3
Selective Insurance Group, Inc.
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2010 Statutory Results by Line of Business
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3rd Qtr 2010 (unaudited)
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($ in thousands)
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Net
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Net
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Underwriting
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Dividends to
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Premiums
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Percent
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Premiums
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Percent
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Loss
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LAE
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Expense
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Policyholders
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Combined Ratio
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Combined Ratio
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Underwriting
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Written
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Change
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Earned
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Change
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Ratio
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Ratio
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Ratio
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Ratio
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2010
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2009
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Gain/(Loss)
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Personal Lines:
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Homeowners
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$ | 28,261 | 20.1 | % | $ | 22,544 | 21.1 | % | 70.9 | % | 7.6 | % | 29.9 | % | 0.0 | % | 108.4 | % | 100.1 | % | $ | (3,589 | ) | |||||||||||||||||||||
Auto
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38,445 | 7.9 | % | 35,928 | 7.8 | % | 67.6 | % | 11.9 | % | 29.5 | % | 0.0 | % | 109.0 | % | 110.9 | % | (3,959 | ) | ||||||||||||||||||||||||
Other (including flood)
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3,403 | 8.6 | % | 3,013 | 11.7 | % | 73.8 | % | (17.2 | )% | (62.0 | )% | 0.0 | % | (5.4 | )% | 2.5 | % | 3,419 | |||||||||||||||||||||||||
Total
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$ | 70,110 | 12.6 | % | $ | 61,484 | 12.6 | % | 69.1 | % | 8.9 | % | 25.2 | % | 0.0 | % | 103.2 | % | 101.8 | % | $ | (4,129 | ) | |||||||||||||||||||||
Commercial Lines:
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Fire/IM
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$ | 53,764 | (3.2 | )% | $ | 49,558 | (0.6 | )% | 50.1 | % | 4.6 | % | 35.6 | % | (0.1 | )% | 90.2 | % | 81.2 | % | $ | 3,352 | ||||||||||||||||||||||
Workers compensation
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57,997 | (12.3 | )% | 61,179 | (5.5 | )% | 85.9 | % | 15.0 | % | 28.0 | % | 1.3 | % | 130.2 | % | 110.9 | % | (17,598 | ) | ||||||||||||||||||||||||
General liability
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84,141 | (5.3 | )% | 83,249 | (5.7 | )% | 47.6 | % | 17.3 | % | 34.2 | % | 0.0 | % | 99.1 | % | 103.9 | % | 442 | |||||||||||||||||||||||||
Auto
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75,425 | (5.9 | )% | 73,440 | (2.7 | )% | 45.0 | % | 9.2 | % | 29.1 | % | 0.0 | % | 83.3 | % | 98.5 | % | 11,688 | |||||||||||||||||||||||||
BOP
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15,632 | (1.3 | )% | 16,400 | 3.8 | % | 57.5 | % | 13.4 | % | 34.8 | % | 0.0 | % | 105.7 | % | 101.2 | % | (667 | ) | ||||||||||||||||||||||||
Bonds
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5,295 | 0.5 | % | 4,884 | 5.4 | % | 11.9 | % | 7.6 | % | 56.8 | % | 0.0 | % | 76.3 | % | 89.5 | % | 922 | |||||||||||||||||||||||||
Other
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2,764 | 5.2 | % | 2,529 | 4.2 | % | 0.9 | % | 0.2 | % | 46.5 | % | 0.0 | % | 47.6 | % | 47.1 | % | 1,215 | |||||||||||||||||||||||||
Total
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$ | 295,019 | (6.2 | )% | $ | 291,239 | (3.3 | )% | 55.0 | % | 12.1 | % | 32.4 | % | 0.3 | % | 99.8 | % | 99.5 | % | $ | (646 | ) | |||||||||||||||||||||
Grand Total
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$ | 365,129 | (3.1 | )% | $ | 352,723 | (0.9 | )% | 57.4 | % | 11.5 | % | 31.2 | % | 0.2 | % | 100.3 | % | 99.8 | % | $ | (4,775 | ) | |||||||||||||||||||||
Note: Some amounts may not foot due to rounding.
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2010 | 2009 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid
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$ | 219,404 | $ | 177,750 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid
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40,101 | 38,686 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid
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$ | 259,505 | $ | 216,436 | ||||||||||||||||||||||||||||||||||||||||
4
Selective Insurance Group, Inc.
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2010 Statutory Results by Line of Business
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September 2010 YTD (unaudited)
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($ in thousands)
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Net
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Net
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Underwriting
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Dividends to
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Premiums
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Percent
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Premiums
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Percent
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Loss
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LAE
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Expense
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Policyholders
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Combined Ratio
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Combined Ratio
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Underwriting
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Written
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Change
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Earned
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Change
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Ratio
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Ratio
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Ratio
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Ratio
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2010
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2009
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Gain/(Loss)
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Personal Lines:
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Homeowners
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$ | 71,656 | 19.9 | % | $ | 64,163 | 20.3 | % | 70.6 | % | 7.6 | % | 31.9 | % | 0.0 | % | 110.1 | % | 107.6 | % | $ | (8,840 | ) | |||||||||||||||||||||
Auto
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112,278 | 8.7 | % | 105,490 | 6.3 | % | 71.1 | % | 11.6 | % | 29.6 | % | 0.0 | % | 112.3 | % | 108.4 | % | $ | (14,936 | ) | |||||||||||||||||||||||
Other (including flood)
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9,000 | 9.2 | % | 9,314 | 24.5 | % | 57.5 | % | (18.0 | )% | (43.1 | )% | 0.0 | % | (3.6 | )% | 12.0 | % | 9,517 | |||||||||||||||||||||||||
Total
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$ | 192,934 | 12.7 | % | $ | 178,967 | 11.8 | % | 70.2 | % | 8.6 | % | 27.1 | % | 0.0 | % | 105.9 | % | 103.6 | % | $ | (14,259 | ) | |||||||||||||||||||||
Commercial Lines:
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Fire/IM
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$ | 153,405 | (1.6 | )% | $ | 150,188 | 1.7 | % | 54.9 | % | 4.2 | % | 37.3 | % | (0.1 | )% | 96.3 | % | 86.8 | % | $ | 4,384 | ||||||||||||||||||||||
Workers compensation
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187,540 | (7.6 | )% | 187,889 | (6.9 | )% | 79.9 | % | 15.6 | % | 27.1 | % | 1.8 | % | 124.4 | % | 101.2 | % | (45,833 | ) | ||||||||||||||||||||||||
General liability
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257,188 | (8.5 | )% | 252,438 | (8.0 | )% | 44.0 | % | 17.0 | % | 34.2 | % | (0.1 | )% | 95.1 | % | 104.0 | % | 10,704 | |||||||||||||||||||||||||
Auto
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223,680 | (5.3 | )% | 220,932 | (2.5 | )% | 49.7 | % | 8.3 | % | 29.5 | % | (0.1 | )% | 87.4 | % | 97.9 | % | 27,120 | |||||||||||||||||||||||||
BOP
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48,887 | 1.9 | % | 48,838 | 4.9 | % | 73.3 | % | 13.7 | % | 34.5 | % | 0.0 | % | 121.5 | % | 112.9 | % | (10,532 | ) | ||||||||||||||||||||||||
Bonds
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15,136 | 4.6 | % | 14,315 | 3.6 | % | 15.2 | % | 6.3 | % | 59.8 | % | 0.0 | % | 81.3 | % | 91.2 | % | 2,178 | |||||||||||||||||||||||||
Other
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7,972 | 2.9 | % | 7,549 | 5.0 | % | 1.9 | % | 0.3 | % | 44.8 | % | 0.0 | % | 47.0 | % | 45.7 | % | 3,812 | |||||||||||||||||||||||||
Total
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$ | 893,809 | (5.6 | )% | $ | 882,148 | (3.9 | )% | 55.7 | % | 11.8 | % | 32.7 | % | 0.3 | % | 100.5 | % | 98.9 | % | $ | (8,167 | ) | |||||||||||||||||||||
Grand Total
|
$ | 1,086,744 | (2.8 | )% | $ | 1,061,116 | (1.6 | )% | 58.2 | % | 11.3 | % | 31.6 | % | 0.3 | % | 101.4 | % | 99.6 | % | $ | (22,426 | ) | |||||||||||||||||||||
Note: Some amounts may not foot due to rounding.
|
||||||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||||||||||||||||||
Losses Paid
|
$ | 588,974 | $ | 572,020 | ||||||||||||||||||||||||||||||||||||||||
LAE Paid
|
114,703 | 116,193 | ||||||||||||||||||||||||||||||||||||||||||
Total Paid
|
$ | 703,677 | $ | 688,213 | ||||||||||||||||||||||||||||||||||||||||
5
SELECTIVE INSURANCE GROUP, INC.
|
Unaudited
|
|||||||
CONSOLIDATED BALANCE SHEETS
|
September 30,
|
December 31,
|
||||||
($ in thousands, except share amounts)
|
2010
|
2009
|
||||||
ASSETS
|
||||||||
Investments:
|
||||||||
Fixed maturity securities, held-to-maturity – at carry value
|
||||||||
(fair value: $1,440,143 – 2010; $1,740,211 – 2009)
|
$ | 1,372,698 | 1,710,403 | |||||
Fixed maturity securities, available-for-sale – at fair value
|
||||||||
(amortized cost: $2,006,685 – 2010; $1,616,456 – 2009)
|
2,115,049 | 1,635,869 | ||||||
Equity securities, available-for-sale – at fair value
|
||||||||
(cost of: $55,051 – 2010; $64,390 – 2009)
|
63,116 | 80,264 | ||||||
Short-term investments (at cost which approximates fair value)
|
265,043 | 213,848 | ||||||
Other investments
|
154,728 | 140,667 | ||||||
Total investments
|
3,970,634 | 3,781,051 | ||||||
Cash
|
422 | 811 | ||||||
Interest and dividends due or accrued
|
36,283 | 34,651 | ||||||
Premiums receivable, net of allowance for uncollectible
|
||||||||
accounts of: $4,856 – 2010; $5,880 – 2009
|
460,394 | 446,577 | ||||||
Reinsurance recoverables, net
|
307,105 | 276,018 | ||||||
Prepaid reinsurance premiums
|
115,745 | 105,522 | ||||||
Current federal income tax
|
24,760 | 17,662 | ||||||
Deferred federal income tax
|
79,799 | 111,038 | ||||||
Property and equipment – at cost, net of accumulated
|
||||||||
depreciation and amortization of: $149,255 – 2010; $141,251 – 2009
|
41,832 | 46,287 | ||||||
Deferred policy acquisition costs
|
218,590 | 218,601 | ||||||
Goodwill
|
7,849 | 7,849 | ||||||
Other assets
|
71,108 | 68,760 | ||||||
Total assets
|
$ | 5,334,521 | 5,114,827 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Liabilities:
|
||||||||
Reserve for losses and loss expenses
|
$ | 2,809,797 | 2,745,799 | |||||
Unearned premiums
|
880,698 | 844,847 | ||||||
Notes payable
|
262,326 | 274,606 | ||||||
Accrued salaries and benefits
|
101,464 | 103,802 | ||||||
Other liabilities
|
187,920 | 143,398 | ||||||
Total liabilities
|
$ | 4,242,205 | 4,112,452 | |||||
Stockholders’ Equity:
|
||||||||
Preferred stock of $0 par value per share:
|
||||||||
Authorized shares 5,000,000; no shares issued or outstanding
|
$ | - | - | |||||
Common stock of $2 par value per share
|
||||||||
Authorized shares 360,000,000
|
||||||||
Issued: 96,189,223 – 2010; 95,822,959 – 2009
|
192,378 | 191,646 | ||||||
Additional paid-in capital
|
241,472 | 231,933 | ||||||
Retained earnings
|
1,159,496 | 1,138,978 | ||||||
Accumulated other comprehensive income (loss)
|
48,220 | (12,460 | ) | |||||
Treasury stock – at cost (shares: 42,677,198 – 2010; 42,578,779 – 2009)
|
(549,250 | ) | (547,722 | ) | ||||
Total stockholders’ equity
|
1,092,316 | 1,002,375 | ||||||
Commitments and contingencies
|
||||||||
Total liabilities and stockholders’ equity
|
$ | 5,334,521 | 5,114,827 |
6
SELECTIVE INSURANCE GROUP, INC.
|
||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
|
Quarter ended
|
Nine Months ended
|
||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
($ in thousands, except per share amounts)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Revenues:
|
||||||||||||||||
Net premiums earned
|
$ | 354,709 | 355,906 | 1,063,101 | 1,078,090 | |||||||||||
Net investment income earned
|
32,986 | 36,585 | 104,237 | 78,670 | ||||||||||||
Net realized gains (losses):
|
||||||||||||||||
Net realized investment gains (losses)
|
2,864 | (741 | ) | 13,960 | 3,515 | |||||||||||
Other-than-temporary impairments
|
(4,091 | ) | (5,833 | ) | (16,326 | ) | (45,467 | ) | ||||||||
Other-than-temporary impairments on fixed maturity securities
|
||||||||||||||||
recognized in other comprehensive income
|
1,284 | 1,591 | (905 | ) | 1,650 | |||||||||||
Total net realized gains (losses)
|
57 | (4,983 | ) | (3,271 | ) | (40,302 | ) | |||||||||
Other income
|
1,950 | 2,667 | 6,465 | 7,758 | ||||||||||||
Total revenues
|
389,702 | 390,175 | 1,170,532 | 1,124,216 | ||||||||||||
Expenses:
|
||||||||||||||||
Losses and loss expenses incurred
|
245,019 | 242,032 | 739,142 | 733,275 | ||||||||||||
Policy acquisition costs
|
114,042 | 114,520 | 346,143 | 342,148 | ||||||||||||
Interest expense
|
4,559 | 4,751 | 14,056 | 14,618 | ||||||||||||
Other expenses
|
4,022 | 7,045 | 18,636 | 21,083 | ||||||||||||
Total expenses
|
367,642 | 368,348 | 1,117,977 | 1,111,124 | ||||||||||||
Income from continuing operations, before federal income tax
|
22,060 | 21,827 | 52,555 | 13,092 | ||||||||||||
Federal income tax expense (benefit):
|
||||||||||||||||
Current
|
(1,691 | ) | (426 | ) | 8,475 | 3,818 | ||||||||||
Deferred
|
4,920 | 1,647 | (1,435 | ) | (13,740 | ) | ||||||||||
Total federal income tax expense (benefit)
|
3,229 | 1,221 | 7,040 | (9,922 | ) | |||||||||||
Net income from continuing operations
|
18,831 | 20,606 | 45,515 | 23,014 | ||||||||||||
Loss from discontinued operations, net of tax of $(4,147) for Third
|
||||||||||||||||
Quarter 2009 and $(4,106) for Nine Months 2009
|
- | (7,599 | ) | - | (7,196 | ) | ||||||||||
Loss on disposal of discontinued operations, net of tax of $(880) for
|
||||||||||||||||
Third Quarter 2010 and $(2,019) for Nine Months 2010
|
(1,634 | ) | - | (3,749 | ) | - | ||||||||||
Total discontinued operations, net of tax
|
(1,634 | ) | (7,599 | ) | (3,749 | ) | (7,196 | ) | ||||||||
Net income
|
$ | 17,197 | 13,007 | 41,766 | 15,818 | |||||||||||
Earnings per share:
|
||||||||||||||||
Basic net income from continuing operations
|
0.35 | 0.39 | 0.85 | 0.44 | ||||||||||||
Basic net loss from disposal of discontinued operations
|
(0.03 | ) | (0.14 | ) | (0.07 | ) | (0.14 | ) | ||||||||
Basic net income
|
$ | 0.32 | 0.25 | 0.78 | 0.30 | |||||||||||
Diluted net income from continuing operations
|
0.35 | 0.38 | 0.84 | 0.43 | ||||||||||||
Diluted net loss from disposal of discontinued operations
|
(0.03 | ) | (0.14 | ) | (0.07 | ) | (0.13 | ) | ||||||||
Diluted net income
|
$ | 0.32 | 0.24 | 0.77 | 0.30 | |||||||||||
Dividends to stockholders
|
$ | 0.13 | 0.13 | 0.39 | 0.39 |
7
SELECTIVE INSURANCE GROUP, INC.
|
||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF
|
||||||||||||||||
STOCKHOLDERS’ EQUITY
|
||||||||||||||||
Nine Months ended September 30,
|
||||||||||||||||
($ in thousands, except per share amounts)
|
2010
|
2009
|
||||||||||||||
Common stock:
|
||||||||||||||||
Beginning of year
|
$ | 191,646 | 190,527 | |||||||||||||
Dividend reinvestment plan
|
||||||||||||||||
(shares: 81,471 – 2010; 96,265 – 2009)
|
163 | 193 | ||||||||||||||
Stock purchase and compensation plans
|
||||||||||||||||
(shares: 284,793 – 2010; 274,517 – 2009)
|
569 | 549 | ||||||||||||||
End of period
|
192,378 | 191,269 | ||||||||||||||
Additional paid-in capital:
|
||||||||||||||||
Beginning of year
|
231,933 | 217,195 | ||||||||||||||
Dividend reinvestment plan
|
1,098 | 1,136 | ||||||||||||||
Stock purchase and compensation plans
|
8,441 | 9,873 | ||||||||||||||
End of period
|
241,472 | 228,204 | ||||||||||||||
Retained earnings:
|
||||||||||||||||
Beginning of year
|
1,138,978 | 1,128,149 | ||||||||||||||
Cumulative effect adjustment due to adoption of other-than-temporary
|
||||||||||||||||
impairment guidance under ASC 320, net of deferred income tax
|
- | 2,380 | ||||||||||||||
Net income
|
41,766 | 41,766 | 15,818 | 15,818 | ||||||||||||
Cash dividends to stockholders ($0.39 per share – 2010;
|
||||||||||||||||
$0.39 per share – 2009)
|
(21,248 | ) | (20,932 | ) | ||||||||||||
End of period
|
1,159,496 | 1,125,415 | ||||||||||||||
Accumulated other comprehensive income (loss):
|
||||||||||||||||
Beginning of year
|
(12,460 | ) | (100,666 | ) | ||||||||||||
Cumulative-effect adjustment due to adoption of other-than-temporary
|
||||||||||||||||
impairment guidance under ASC 320, net of deferred income tax
|
- | (2,380 | ) | |||||||||||||
Other comprehensive income (loss), increase (decrease) in:
|
||||||||||||||||
Unrealized gains on investment securities:
|
||||||||||||||||
Non-credit portion of other-than-temporary impairment losses
|
||||||||||||||||
recognized in other comprehensive income, net of deferred income tax
|
3,026 | (998 | ) | |||||||||||||
Other net unrealized gains on investment securities, net of
|
||||||||||||||||
deferred income tax
|
55,556 | 91,529 | ||||||||||||||
Total unrealized gains on investment securities
|
58,582 | 58,582 | 90,531 | 90,531 | ||||||||||||
Defined benefit pension plans, net of deferred income tax
|
2,098 | 2,098 | 1,377 | 1,377 | ||||||||||||
End of period
|
48,220 | (11,138 | ) | |||||||||||||
Comprehensive income
|
102,446 | 107,726 | ||||||||||||||
Treasury stock:
|
||||||||||||||||
Beginning of year
|
(547,722 | ) | (544,712 | ) | ||||||||||||
Acquisition of treasury stock
|
||||||||||||||||
(shares: 98,419 – 2010; 172,937 – 2009)
|
(1,528 | ) | (2,709 | ) | ||||||||||||
End of period
|
(549,250 | ) | (547,421 | ) | ||||||||||||
Total stockholders’ equity
|
$ | 1,092,316 | 986,329 |
8
SELECTIVE INSURANCE GROUP, INC.
|
||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
|
Nine Months ended
|
|||||||
September 30,
|
||||||||
($ in thousands)
|
2010 | 2009 | ||||||
Operating Activities
|
||||||||
Net Income
|
$ | 41,766 | 15,818 | |||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
23,175 | 21,045 | ||||||
Loss on disposal of discontinued operations
|
3,749 | - | ||||||
Stock-based compensation expense
|
9,774 | 9,178 | ||||||
Undistributed (income) losses of equity method investments
|
(6,338 | ) | 26,744 | |||||
Net realized losses
|
3,271 | 40,302 | ||||||
Postretirement life curtailment benefit
|
- | (4,217 | ) | |||||
Unrealized gain on trading securities
|
- | (262 | ) | |||||
Goodwill impairment
|
- | 12,214 | ||||||
Deferred tax benefit
|
(1,435 | ) | (17,666 | ) | ||||
Changes in assets and liabilities:
|
||||||||
Increase in reserves for losses and loss expenses, net of reinsurance recoverables
|
32,912 | 47,631 | ||||||
Increase in unearned premiums, net of prepaid reinsurance and advance premiums
|
25,123 | 39,121 | ||||||
Increase (decrease) in net federal income tax recoverable
|
(5,079 | ) | 13,252 | |||||
Increase in premiums receivable
|
(13,817 | ) | (10,275 | ) | ||||
Decrease (increase) in deferred policy acquisition costs
|
11 | (11,375 | ) | |||||
(Increase) decrease in interest and dividends due or accrued
|
(1,491 | ) | 1,038 | |||||
Decrease in accrued salaries and benefits
|
(2,749 | ) | (10,920 | ) | ||||
Decrease in accrued insurance expenses
|
(6,872 | ) | (4,242 | ) | ||||
Sale of trading securities
|
- | 2,831 | ||||||
Other-net
|
1,284 | (2,905 | ) | |||||
Net adjustments
|
61,518 | 151,494 | ||||||
Net cash provided by operating activities
|
103,284 | 167,312 | ||||||
Investing Activities
|
||||||||
Purchase of fixed maturity securities, held-to-maturity
|
- | (158,827 | ) | |||||
Purchase of fixed maturity securities, available-for-sale
|
(699,133 | ) | (757,538 | ) | ||||
Purchase of equity securities, available-for-sale
|
(47,930 | ) | (75,856 | ) | ||||
Purchase of other investments
|
(14,348 | ) | (13,466 | ) | ||||
Purchase of short-term investments
|
(1,409,971 | ) | (1,600,685 | ) | ||||
Sale of subsidiary
|
681 | - | ||||||
Sale of fixed maturity securities, held-to-maturity
|
- | 5,819 | ||||||
Sale of fixed maturity securities, available-for-sale
|
157,823 | 470,202 | ||||||
Sale of short-term investments
|
1,358,779 | 1,561,901 | ||||||
Redemption and maturities of fixed maturity securities, held-to-maturity
|
238,923 | 197,095 | ||||||
Redemption and maturities of fixed maturity securities, available-for-sale
|
251,875 | 88,402 | ||||||
Sale of equity securities, available-for-sale
|
76,277 | 125,211 | ||||||
Proceeds from other investments
|
18,468 | 23,149 | ||||||
Purchase of property and equipment
|
(4,062 | ) | (4,139 | ) | ||||
Net cash used in investing activities
|
(72,618 | ) | (138,732 | ) | ||||
Financing Activities
|
||||||||
Dividends to stockholders
|
(19,516 | ) | (19,833 | ) | ||||
Acquisition of treasury stock
|
(1,528 | ) | (2,709 | ) | ||||
Principal payment of notes payable
|
(12,300 | ) | (12,300 | ) | ||||
Net proceeds from stock purchase and compensation plans
|
3,084 | 2,914 | ||||||
Excess tax benefits from share-based payment arrangements
|
(795 | ) | (1,125 | ) | ||||
Net cash used in financing activities
|
(31,055 | ) | (33,053 | ) | ||||
Net decrease in cash and cash equivalents
|
(389 | ) | (4,473 | ) | ||||
Net decrease in cash and cash equivalents from discontinued operations
|
- | (1,609 | ) | |||||
Net decrease in cash from continuing operations
|
(389 | ) | (2,864 | ) | ||||
Cash from continuing operations, beginning of year
|
811 | 3,606 | ||||||
Cash from continuing operations, end of period
|
$ | 422 | 742 |
9
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Balance Sheets
($ in thousands)
Sep-30
|
Sep-30
|
Dec-31
|
||||||||||
2010
|
2009
|
2009
|
||||||||||
ASSETS
|
||||||||||||
Bonds
|
$ | 3,355,540 | 3,224,083 | 3,289,336 | ||||||||
Common stocks
|
63,116 | 89,892 | 80,264 | |||||||||
Affiliated mortgage loan
|
38,944 | 39,559 | 39,408 | |||||||||
Other investments
|
190,958 | 162,798 | 176,983 | |||||||||
Short-term investments
|
212,664 | 198,818 | 165,957 | |||||||||
Total investments
|
3,861,222 | 3,715,150 | 3,751,948 | |||||||||
Cash on hand and in banks*
|
(33,420 | ) | (31,761 | ) | (29,110 | ) | ||||||
Interest and dividends due and accrued
|
36,448 | 35,649 | 34,808 | |||||||||
Premiums receivable
|
456,588 | 487,220 | 443,223 | |||||||||
Reinsurance recoverable on paid losses and expenses
|
6,097 | 5,202 | 4,408 | |||||||||
Federal income tax recoverable
|
14,679 | 369 | 1,608 | |||||||||
Deferred tax recoverable
|
123,873 | 88,821 | 119,377 | |||||||||
EDP equipment
|
1,331 | 2,361 | 2,134 | |||||||||
Equities and deposits in pools and associations
|
7,530 | 8,297 | 4,886 | |||||||||
Receivable for sold securities
|
23,698 | 5,150 | 19,655 | |||||||||
Other assets
|
31,964 | 29,462 | 29,747 | |||||||||
Total assets
|
$ | 4,530,010 | 4,345,920 | 4,382,684 | ||||||||
LIABILITIES
|
||||||||||||
Reserve for losses
|
$ | 2,100,648 | 2,061,817 | 2,072,376 | ||||||||
Reinsurance payable on paid loss and loss expense
|
1,191 | 924 | 1,011 | |||||||||
Reserve for loss expenses
|
404,738 | 397,863 | 399,457 | |||||||||
Unearned premiums
|
764,953 | 787,390 | 739,325 | |||||||||
Reserve for commissions payable
|
41,525 | 43,666 | 49,237 | |||||||||
Ceded balances payable
|
13,313 | 12,437 | 9,856 | |||||||||
Premium and other taxes payable
|
23,129 | 21,372 | 22,283 | |||||||||
Borrowed money
|
13,017 | - | 13,016 | |||||||||
Reserve for dividends to policyholders
|
2,568 | 3,657 | 3,718 | |||||||||
Reserves for unauthorized reinsurance
|
1,013 | 1,416 | 1,013 | |||||||||
Payable for securities
|
45,918 | 24,962 | - | |||||||||
Funds withheld on account of others
|
5,771 | 5,154 | 6,261 | |||||||||
Accrued salaries and benefits
|
64,405 | 68,323 | 66,847 | |||||||||
Other liabilities
|
13,500 | 13,434 | 16,329 | |||||||||
Total liabilities
|
3,495,689 | 3,442,415 | 3,400,729 | |||||||||
POLICYHOLDERS' SURPLUS
|
||||||||||||
Capital
|
28,325 | 28,325 | 28,325 | |||||||||
Aggregate write-ins for special surplus funds
|
34,971 | - | 33,951 | |||||||||
Paid in surplus
|
255,792 | 255,792 | 255,792 | |||||||||
Unassigned surplus*
|
715,233 | 619,388 | 663,887 | |||||||||
Total policyholders' surplus
|
1,034,321 | 903,505 | 981,955 | |||||||||
Total liabilities and policyholders' surplus
|
$ | 4,530,010 | 4,345,920 | 4,382,684 |
* Prior year balances have been adjusted for $17K elimination entry
10
Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Statements Of Income
($ in thousands)
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September
|
September
|
|||||||||||||||||||||||||||||||
UNDERWRITING
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||||||||||||
Net premiums written
|
$ | 365,129 | 376,718 | 1,086,744 | 1,117,764 | |||||||||||||||||||||||||||
Net premiums earned
|
352,723 | 355,906 | 1,061,115 | 1,078,090 | ||||||||||||||||||||||||||||
Net losses paid
|
219,404 | 177,750 | 588,974 | 572,020 | ||||||||||||||||||||||||||||
Change in reserve for losses
|
(16,787 | ) | 20,698 | 28,272 | 29,869 | |||||||||||||||||||||||||||
Net losses incurred
|
202,617 | 57.4 | % | 198,448 | 55.8 | % | 617,246 | 58.2 | % | 601,889 | 55.8 | % | ||||||||||||||||||||
Net loss expenses paid
|
40,101 | 38,686 | 114,703 | 116,193 | ||||||||||||||||||||||||||||
Change in reserve for loss expenses
|
608 | 4,925 | 5,281 | 15,067 | ||||||||||||||||||||||||||||
Net loss expenses incurred
|
40,709 | 11.5 | % | 43,611 | 12.3 | % | 119,984 | 11.3 | % | 131,260 | 12.2 | % | ||||||||||||||||||||
Net underwriting expenses incurred
|
114,210 | 31.4 | % | 120,436 | 32.0 | % | 346,042 | 31.8 | % | 355,291 | 31.8 | % | ||||||||||||||||||||
Total deductions
|
357,536 | 362,495 | 1,083,272 | 1,088,440 | ||||||||||||||||||||||||||||
Statutory underwriting loss
|
(4,813 | ) | (6,589 | ) | (22,157 | ) | (10,350 | ) | ||||||||||||||||||||||||
Net loss from premium balances charged off
|
(1,239 | ) | (1,078 | ) | (4,085 | ) | (3,446 | ) | ||||||||||||||||||||||||
Finance charges and other income
|
2,005 | 2,656 | 6,683 | 7,720 | ||||||||||||||||||||||||||||
Total other income
|
766 | -0.2 | % | 1,578 | -0.6 | % | 2,598 | -0.2 | % | 4,274 | -0.4 | % | ||||||||||||||||||||
Policyholders' dividends incurred
|
(728 | ) | 0.2 | % | (991 | ) | 0.3 | % | (2,867 | ) | 0.3 | % | (2,268 | ) | 0.2 | % | ||||||||||||||||
Total underwriting loss
|
(4,775 | ) | 100.3 | % | (6,002 | ) | 99.8 | % | (22,426 | ) | 101.4 | % | (8,344 | ) | 99.6 | % | ||||||||||||||||
INVESTMENT
|
||||||||||||||||||||||||||||||||
Net investment income earned
|
31,750 | 35,481 | 98,659 | 95,980 | ||||||||||||||||||||||||||||
Net realized loss
|
(108 | ) | (4,878 | ) | (3,373 | ) | (41,392 | ) | ||||||||||||||||||||||||
Total income before income tax
|
26,867 | 24,601 | 72,860 | 46,244 | ||||||||||||||||||||||||||||
Federal income tax expense
|
990 | 3,269 | 17,304 | 17,362 | ||||||||||||||||||||||||||||
Net income
|
$ | 25,877 | 21,332 | 55,556 | 28,882 | |||||||||||||||||||||||||||
Policyholders' Surplus
|
||||||||||||||||||||||||||||||||
Surplus, beginning of period
|
$ | 1,008,534 | 873,365 | 981,955 | 884,431 | |||||||||||||||||||||||||||
Net income
|
25,877 | 21,332 | 55,556 | 28,882 | ||||||||||||||||||||||||||||
Change in deferred tax
|
(8,831 | ) | (919 | ) | (772 | ) | 14,638 | |||||||||||||||||||||||||
Change in unrealized losses
|
6,771 | 10,450 | 13,692 | (11,245 | ) | |||||||||||||||||||||||||||
Dividends to stockholders
|
(12,003 | ) | (12,515 | ) | (36,008 | ) | (24,518 | ) | ||||||||||||||||||||||||
Paid in surplus
|
- | - | - | 20,000 | ||||||||||||||||||||||||||||
Change in cum. effect of acctg principle
|
- | 2,540 | - | 2,540 | ||||||||||||||||||||||||||||
Change in non-admitted assets
|
15,279 | 9,252 | 19,114 | (11,282 | ) | |||||||||||||||||||||||||||
Change in additional admitted deferred tax
|
(1,446 | ) | - | 1,020 | - | |||||||||||||||||||||||||||
Surplus adjustments
|
140 | - | (236 | ) | 59 | |||||||||||||||||||||||||||
Net change in surplus for period
|
25,787 | 30,140 | 52,366 | 19,074 | ||||||||||||||||||||||||||||
Surplus, end of period
|
$ | 1,034,321 | 903,505 | 1,034,321 | 903,505 | |||||||||||||||||||||||||||
Statutory underwriting loss:
|
$ | (4,775 | ) | (6,002 | ) | (22,426 | ) | (8,344 | ) | |||||||||||||||||||||||
Adjustments under GAAP:
|
||||||||||||||||||||||||||||||||
Deferred policy acquisition costs
|
390 | 5,678 | (11 | ) | 11,376 | |||||||||||||||||||||||||||
Other, net
|
452 | 182 | 738 | (105 | ) | |||||||||||||||||||||||||||
GAAP underwriting (loss) gain
|
$ | (3,933 | ) | (142 | ) | (21,699 | ) | 2,927 | ||||||||||||||||||||||||
Note: Some amounts or ratios may not foot due to rounding
11
Selective Insurance Group, Inc. and Consolidated Subsidiaries
|
|||||||||
Alternative Investments (Insurance Companies' Portfolio)
|
|||||||||
as of September 30, 2010
|
|||||||||
(unaudited)
|
|||||||||
Paid in
|
|||||||||
Inception
|
Original
|
Contributed
|
Remaining
|
Total
|
Current
|
YTD
|
DPI(1)
|
TVPI(2)
|
|
Fund
|
Year
|
Commitment
|
Capital
|
Commitment
|
Distributions
|
Market Value
|
Income
|
Ratio
|
Ratio
|
Real Estate
|
|||||||||
LEH RE II
|
2005
|
20,000,000
|
17,301,168
|
2,698,832
|
7,438,741
|
10,006,633
|
(283,777)
|
0.43
|
1.01
|
GS Whitehall 2007
|
2007
|
15,000,000
|
14,250,000
|
750,000
|
-
|
2,753,703
|
(1,397,182)
|
-
|
0.19
|
LEH RE III
|
2008
|
15,000,000
|
6,256,937
|
8,743,063
|
29,004
|
2,948,792
|
(374,733)
|
0.00
|
0.48
|
Total - Real Estate
|
50,000,000
|
37,808,105
|
12,191,895
|
7,467,745
|
15,709,128
|
(2,055,692)
|
0.20
|
0.61
|
|
Mezzanine Financing
|
|||||||||
GS Mezz III
|
2003
|
10,000,000
|
4,362,674
|
5,637,326
|
7,596,979
|
3,722,882
|
197,330
|
1.74
|
2.59
|
LEH Euro Mezz
|
2004
|
9,000,000
|
9,000,000
|
-
|
12,355,149
|
1,740,876
|
(599,037)
|
1.37
|
1.57
|
GS Mezz 2006
|
2006
|
15,000,000
|
9,771,217
|
5,228,783
|
1,875,410
|
8,439,788
|
2,705,439
|
0.19
|
1.06
|
GS Mezz V
|
2007
|
25,000,000
|
9,747,331
|
15,252,669
|
3,104,720
|
9,505,955
|
702,225
|
0.32
|
1.29
|
Total - Mezz. Financing
|
59,000,000
|
32,881,222
|
26,118,778
|
24,932,258
|
23,409,501
|
3,005,957
|
0.76
|
1.47
|
|
Distressed Debt
|
|||||||||
Varde LP
|
1997
|
4,000,000
|
4,000,000
|
-
|
12,146,213
|
-
|
16,619
|
3.04
|
3.04
|
Varde VIII
|
2006
|
10,000,000
|
10,000,000
|
-
|
-
|
11,719,123
|
(58,002)
|
-
|
1.17
|
GS Distressed Opp III
|
2007
|
15,000,000
|
10,389,138
|
4,610,862
|
512,894
|
8,660,524
|
1,236,658
|
0.05
|
0.88
|
Total - Distressed Debt
|
29,000,000
|
24,389,138
|
4,610,862
|
12,659,107
|
20,379,647
|
1,195,274
|
0.52
|
1.35
|
|
Private Equity
|
|||||||||
Prospector
|
1997
|
5,000,000
|
5,000,000
|
-
|
13,965,078
|
411,566
|
(82,745)
|
2.79
|
2.88
|
Trilantic Capital Partners III
|
2004
|
10,000,000
|
9,076,175
|
923,825
|
5,943,965
|
7,097,044
|
48,705
|
0.65
|
1.44
|
NB Co-Invest
|
2006
|
15,000,000
|
11,190,692
|
3,809,308
|
3,685,797
|
8,548,788
|
776,035
|
0.33
|
1.09
|
GS PEP Asia
|
2007
|
7,000,000
|
2,300,371
|
4,699,629
|
25,606
|
2,013,111
|
51,342
|
0.01
|
0.89
|
Trilantic Capital Partners IV
|
2007
|
11,098,351
|
5,104,390
|
5,993,961
|
13,611
|
5,164,301
|
556,271
|
0.00
|
1.01
|
Total - Private Equity
|
48,098,351
|
32,671,628
|
15,426,724
|
23,634,057
|
23,234,810
|
1,349,609
|
0.72
|
1.43
|
|
Private Equity, Secondary Market
|
|||||||||
NB SOF
|
2005
|
12,000,000
|
11,100,506
|
899,494
|
5,255,537
|
7,257,635
|
654,808
|
0.47
|
1.13
|
GS Vintage IV
|
2007
|
20,000,000
|
14,414,450
|
5,585,550
|
2,064,628
|
13,650,620
|
2,385,301
|
0.14
|
1.09
|
NB SOF II
|
2008
|
12,000,000
|
3,972,476
|
8,027,524
|
502,534
|
4,422,045
|
656,368
|
0.13
|
1.24
|
GS Vintage V
|
2008
|
10,000,000
|
3,328,337
|
6,671,663
|
179,522
|
3,274,561
|
228,037
|
0.05
|
1.04
|
Total - Pvt. Eq. Sec. Mkt.
|
54,000,000
|
32,815,769
|
21,184,231
|
8,002,220
|
28,604,861
|
3,924,514
|
0.24
|
1.12
|
|
Energy/Power Generation
|
|||||||||
ArcLight I
|
2002
|
15,000,000
|
13,344,495
|
1,655,505
|
27,358,382
|
1,326,936
|
201,209
|
2.05
|
2.15
|
ArcLight II
|
2003
|
15,000,000
|
12,704,508
|
2,295,492
|
17,071,041
|
6,484,004
|
1,347,372
|
1.34
|
1.85
|
ArcLight III
|
2006
|
15,000,000
|
12,962,206
|
2,037,794
|
3,998,052
|
13,070,723
|
616,920
|
0.31
|
1.32
|
Quintana Energy
|
2006
|
10,000,000
|
7,840,628
|
2,159,372
|
392,978
|
6,630,326
|
217,049
|
0.05
|
0.90
|
ArcLight IV
|
2007
|
10,000,000
|
7,009,043
|
2,990,957
|
3,320,050
|
6,700,093
|
1,057,149
|
0.47
|
1.43
|
Total - Energy/Power Generation
|
65,000,000
|
53,860,880
|
11,139,120
|
52,140,503
|
34,212,082
|
3,439,699
|
0.97
|
1.60
|
|
Venture Capital
|
|||||||||
Venture V
|
2001
|
10,000,000
|
8,600,000
|
1,400,000
|
1,999,996
|
6,341,205
|
262,870
|
0.23
|
0.97
|
Total - Venture Capital
|
10,000,000
|
8,600,000
|
1,400,000
|
1,999,996
|
6,341,205
|
262,870
|
0.23
|
0.97
|
|
TOTAL - ALTERNATIVE INVESTMENTS
|
$ 315,098,351
|
223,026,741
|
92,071,610
|
130,835,886
|
151,891,234
|
11,122,231
|
0.59
|
1.27
|
|
(1) Distributed to paid in ratio
|
|||||||||
(2) Total value to paid in ratio
|
12
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Municipal Bond Portfolio
State and Repayment Source Composition
September 30, 2010
($s in thousands)
(unaudited)
Exposure = 69% Held-to-Maturity; 31% Available-for-Sale
Repayment Source Composition by State %s
Market Values
State
|
Revenue
|
% of State
|
General
Obligation
(GO)-Local
|
% of State
|
General
Obligation
(GO)-State
|
% of State
|
Pre-
refunded
|
% of State
|
TX -Permanent
School Fund
(PSF)
|
% of State
|
Total
|
% of Total
|
TX
|
65,549
|
52%
|
53,910
|
43%
|
6,141
|
5%
|
-
|
0%
|
-
|
0%
|
125,600
|
8%
|
TX-PSF
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
49,894
|
100%
|
49,894
|
3%
|
WA
|
47,407
|
49%
|
48,679
|
51%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
96,086
|
6%
|
FL
|
82,404
|
99%
|
-
|
0%
|
515
|
1%
|
-
|
0%
|
-
|
0%
|
82,919
|
5%
|
AZ
|
70,483
|
91%
|
7,071
|
9%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
77,554
|
5%
|
NC
|
28,930
|
40%
|
42,567
|
60%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
71,497
|
5%
|
NY
|
70,463
|
100%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
70,463
|
5%
|
IL
|
46,612
|
69%
|
20,865
|
31%
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
67,477
|
4%
|
OH
|
38,317
|
64%
|
14,069
|
23%
|
7,511
|
13%
|
-
|
0%
|
-
|
0%
|
59,897
|
4%
|
CO
|
23,331
|
39%
|
34,328
|
58%
|
1,712
|
3%
|
-
|
0%
|
-
|
0%
|
59,371
|
4%
|
MN
|
12,722
|
23%
|
5,317
|
10%
|
36,609
|
67%
|
-
|
0%
|
-
|
0%
|
54,648
|
4%
|
Pre-refunded
|
-
|
0%
|
-
|
0%
|
-
|
0%
|
74,670
|
100%
|
-
|
0%
|
74,670
|
5%
|
Other
|
439,400
|
68%
|
134,013
|
21%
|
75,444
|
12%
|
-
|
0%
|
-
|
0%
|
648,857
|
42%
|
Grand Total
|
925,618
|
60%
|
360,819
|
23%
|
127,932
|
8%
|
74,670
|
5%
|
49,894
|
3%
|
1,538,933
|
100%
|
13
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Structured Securities
September 30, 2010
($ in thousands)
(unaudited)
Market Value
|
606,373
|
Unrealized/Unrecognized Gain/(Losses)
|
17,567
|
Held to Maturity (HTM)
|
30%
|
Available for Sale (AFS)
|
70%
|
Structured Security Portfolio Average Rating
|
AA+
|
Structured Security % of Total Portfolio
|
17%
|
14
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Residential Mortgage Backed (RMBS) and Residential ABS (RABS) Securities
September 30, 2010
($ in thousands)
(unaudited)
Market Value
|
407,574
|
Unrealized/Unrecognized Gain/(Losses)
|
12,993
|
Held to Maturity (HTM)
|
26%
|
Available for Sale (AFS)
|
74%
|
RMBS & RABS Portfolio Average Rating
|
AA+
|
RMBS & RABS % of Total Portfolio
|
11.5%
|
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Commercial Mortgage Backed (CMBS) Securities
September 30, 2010
($ in thousands)
(unaudited)
Market Value
|
166,451
|
Unrealized/Unrecognized Gain/(Losses)
|
3,758
|
Held to Maturity (HTM)
|
39%
|
Available for Sale (AFS)
|
61%
|
CMBS Portfolio Average Rating
|
AA
|
CMBS % of Total Portfolio
|
4.7%
|
15
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Available-for-Sale Fixed Maturity Securities
September 30, 2010
($ in millions)
(unaudited)
Fair
Value
|
Unrealized
Gain (Loss)
|
Credit
Quality
|
||||||||||
AFS Fixed Maturity Portfolio:
|
||||||||||||
U.S. government obligations1
|
$ | 330.6 | 11.9 |
AAA
|
||||||||
Foreign government obligations
|
8.5 | 0.6 |
AA-
|
|||||||||
State and municipal obligations
|
480.3 | 33.6 |
AA+
|
|||||||||
Corporate securities
|
869.5 | 48.5 | A+ | |||||||||
Mortgage-backed securities ("MBS")
|
402.1 | 13.1 |
AA+
|
|||||||||
Asset-backed securities ("ABS")2
|
24.0 | 0.7 |
AA+
|
|||||||||
Total AFS fixed maturity portfolio
|
$ | 2,115.0 | 108.4 |
AA
|
||||||||
State and Municipal Obligations:
|
||||||||||||
Government obligations
|
$ | 281.8 | 19.5 |
AA+
|
||||||||
Special revenue obligations
|
198.5 | 14.1 | A+ | |||||||||
Total state and municipal obligations
|
$ | 480.3 | 33.6 |
AA+
|
||||||||
Corporate Securities:
|
||||||||||||
Financial
|
$ | 261.7 | 11.5 | A+ | ||||||||
Industrials
|
74.1 | 6.2 | A- | |||||||||
Utilities
|
49.7 | 2.4 | A- | |||||||||
Consumer discretion
|
70.2 | 3.9 | A | |||||||||
Consumer staples
|
87.2 | 5.0 | A- | |||||||||
Health care
|
132.1 | 8.7 |
AA-
|
|||||||||
Materials
|
45.3 | 2.5 | A- | |||||||||
Energy
|
39.9 | 2.4 | A+ | |||||||||
Information technology
|
47.8 | 2.0 | A+ | |||||||||
Telecommunications services
|
37.5 | 1.5 | A | |||||||||
Other
|
24.0 | 2.4 | A | |||||||||
Total corporate securities
|
$ | 869.5 | 48.5 | A+ | ||||||||
Mortgage-backed securities:
|
||||||||||||
Gov't Guaranteed Agency CMBS
|
$ | 74.7 | 5.7 |
AAA
|
||||||||
Non-agency CMBS
|
27.3 | (2.0 | ) | A- | ||||||||
Gov't Guaranteed Agency RMBS
|
93.6 | 3.4 |
AAA
|
|||||||||
Other Agency RMBS
|
160.2 | 7.4 |
AAA
|
|||||||||
Non-agency RMBS
|
36.0 | (1.1 | ) | A- | ||||||||
Alternative-A ("Alt-A") RMBS
|
10.3 | (0.3 | ) |
AAA
|
||||||||
Total MBS
|
$ | 402.1 | 13.1 |
AA+
|
||||||||
Asset-backed securities:
|
||||||||||||
ABS
|
$ | 23.1 | 0.9 |
AAA
|
||||||||
Sub-prime ABS2,3
|
0.9 | (0.2 | ) | D | ||||||||
Total ABS
|
$ | 24.0 | 0.7 |
AA+
|
1 U.S. Government includes coporate securities fully guaranteed by the FDIC.
|
2 We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650.
|
3 Sub-prime ABS includes one security which is currently expected to defualt on its obligations according to the rating agencies.
|
16
Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Held-to-Maturity Securities
September 30, 2010
($ in millions)
(unaudited)
Fair Value
|
Carry Value
|
Unrecognized
Holding
Gain (Loss)
|
Unrealized Gain
(Loss)
in Accumulated
Other
Comprehensive
Income
|
Total Unrealized
/ Unrecognized
Gain (Loss)
|
Credit
Quality
|
|||||||||||||||||||
HTM Fixed Maturity Portfolio:
|
||||||||||||||||||||||||
U.S. government obligations1
|
$ | 107.1 | 99.6 | 7.5 | 4.9 | 12.4 |
AAA
|
|||||||||||||||||
State and municipal obligations
|
1,058.6 | 1,020.5 | 38.1 | 25.0 | 63.1 |
AA-
|
||||||||||||||||||
Corporate securities
|
94.1 | 83.2 | 10.9 | (4.0 | ) | 6.9 | A- | |||||||||||||||||
Mortgage-backed securities ("MBS")
|
167.5 | 157.8 | 9.7 | (4.5 | ) | 5.2 |
AA+
|
|||||||||||||||||
Asset-backed securities ("ABS")2
|
12.8 | 11.6 | 1.2 | (2.6 | ) | (1.4 | ) | A | ||||||||||||||||
Total HTM fixed maturity portfolio
|
$ | 1,440.1 | 1,372.7 | 67.4 | 18.8 | 86.2 |
AA-
|
|||||||||||||||||
State and Municipal Obligations:
|
||||||||||||||||||||||||
Government obligations
|
$ | 286.1 | 277.2 | 8.9 | 11.2 | 20.1 |
AA-
|
|||||||||||||||||
Special revenue obligations
|
772.5 | 743.3 | 29.2 | 13.8 | 43.0 |
AA-
|
||||||||||||||||||
Total state and municipal obligations
|
$ | 1,058.6 | 1,020.5 | 38.1 | 25.0 | 63.1 |
AA-
|
|||||||||||||||||
Corporate Securities:
|
||||||||||||||||||||||||
Financial
|
$ | 29.4 | 25.4 | 4.0 | (2.4 | ) | 1.6 |
BBB+
|
||||||||||||||||
Industrials
|
23.1 | 19.3 | 3.8 | (1.3 | ) | 2.5 |
BBB+
|
|||||||||||||||||
Utilities
|
17.6 | 16.2 | 1.4 | (0.1 | ) | 1.3 | A- | |||||||||||||||||
Consumer discretion
|
12.8 | 12.2 | 0.6 | 0.2 | 0.8 | A+ | ||||||||||||||||||
Consumer staples
|
5.4 | 4.9 | 0.5 | (0.1 | ) | 0.4 | A | |||||||||||||||||
Materials
|
2.2 | 1.9 | 0.3 | (0.1 | ) | 0.2 |
BBB-
|
|||||||||||||||||
Energy
|
3.6 | 3.3 | 0.3 | (0.2 | ) | 0.1 |
BBB-
|
|||||||||||||||||
Total corporate securities
|
$ | 94.1 | 83.2 | 10.9 | (4.0 | ) | 6.9 | A- | ||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||||||||||
Gov't guaranteed agency CMBS
|
$ | 10.2 | 9.9 | 0.3 | - | 0.3 |
AAA
|
|||||||||||||||||
Other agency CMBS
|
3.6 | 3.6 | - | - | - |
AA
|
||||||||||||||||||
Non-agency CMBS
|
50.5 | 44.8 | 5.7 | (6.0 | ) | (0.3 | ) |
AA+
|
||||||||||||||||
Gov't guaranteed agency RMBS
|
4.4 | 4.0 | 0.4 | - | 0.4 |
AA
|
||||||||||||||||||
Other agency RMBS
|
98.7 | 95.4 | 3.3 | 1.5 | 4.8 |
AA
|
||||||||||||||||||
Non-agency RMBS
|
0.1 | 0.1 | - | - | - |
AA
|
||||||||||||||||||
Total mortgage-backed securities
|
$ | 167.5 | 157.8 | 9.7 | (4.5 | ) | 5.2 |
AA+
|
||||||||||||||||
Asset-backed securities:
|
||||||||||||||||||||||||
ABS
|
$ | 9.9 | 9.1 | 0.8 | (1.1 | ) | (0.3 | ) | A | |||||||||||||||
Alt-A ABS
|
2.9 | 2.5 | 0.4 | (1.5 | ) | (1.1 | ) | A+ | ||||||||||||||||
Total ABS
|
$ | 12.8 | 11.6 | 1.2 | (2.6 | ) | (1.4 | ) | A |
1 U.S. Government includes coporate securities fully guaranteed by the FDIC.