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SI

SELECTIVE INSURANCE GROUP INC (SIGI)·Q2 2025 Earnings Summary

Executive Summary

  • Mixed print: total revenues modestly beat, but EPS missed. Q2 revenues were $1.33B vs S&P Global consensus $1.32B (slight beat), while Primary EPS was $1.31 vs $1.52 consensus (miss). GAAP EPS was $1.36. Combined ratio rose to 100.2% on 6.7 pts of cats and 3.8 pts of unfavorable casualty reserve development ($45M) . EPS/Revenue estimates from S&P Global: see asterisks and disclaimer below.*
  • Profit levers in motion: Renewal pure price up 9.9% overall; Commercial Lines pricing 8.9% with retention 83%; E&S pricing 9.3%; Personal Lines pricing 19.0% with sharply improved CR (91.6%) as remediation continues .
  • Guidance: FY25 combined ratio widened to 97–98% (from 96–97%) on 1 pt higher, reflecting booked PYD through Q2; but after-tax NII raised to $415M (from $405M) on a larger earning asset base; tax rate 21.5%; diluted shares 61.5M .
  • Investment income tailwind: After-tax NII rose 18% YoY to $101M, contributing 13.0 pts of ROE; book value per share rose to $52.09; adjusted BVPS to $54.48 .

What Went Well and What Went Wrong

  • What Went Well

    • Pricing/mix discipline: Overall renewal pure price +9.9% with Commercial +8.9%, E&S +9.3%, Personal +19.0%, supporting forward margin expansion despite slower top-line growth .
    • Personal Lines turnaround: CR improved 26.5 pts YoY to 91.6% on price, lower cats/non-cat property, and lower current-year casualty loss costs .
    • Investment engine: After-tax NII +18% YoY to $101.4M; portfolio after-tax yield 3.9% (fixed income 4.2%); invested assets per $1 of common equity 3.33x .
    • Management focus: “We are diligently working to improve profitability through pricing and underwriting actions… disciplined approach contributed to slowing top-line growth.” – CEO John J. Marchioni .

  • What Went Wrong

    • Casualty severity/social inflation: 3.8 pts of unfavorable casualty PYD (=$45M) in Commercial Lines pressured CR to 100.2% despite strong pricing .
    • Cat exposure: Net catastrophe losses were 6.7 pts in Q2 (E&S property cat pressure notable), weighing on reported CR despite improving underlying trends .
    • Expense ratio uptick vs Q1: Consolidated underwriting expense ratio 30.8% (vs 31.6% in Q1; still elevated vs some peers historically). Management expects ~31.5% for FY25 per prior commentary, which caps near-term CR improvement pace .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($B)$1.26 $1.29 $1.33
GAAP Diluted EPS ($)$1.52 $1.76 $1.36
Non-GAAP Operating EPS ($)$1.62 $1.76 $1.31
Combined Ratio (%)98.5% 96.1% 100.2%
Loss & LAE Ratio (%)67.8% 64.4% 69.3%
Underwriting Expense Ratio (%)30.6% 31.6% 30.8%
Net Catastrophe Losses (pts)-0.9 3.7 6.7
Casualty PYD (pts)8.8 0.4 3.8

Segment breakdown (NPW, CR)

SegmentQ2 2024 NPW ($mm)Q2 2024 CR (%)Q2 2025 NPW ($mm)Q2 2025 CR (%)
Standard Commercial Lines963.1 118.8 1,018.0 102.8
Standard Personal Lines116.1 118.1 110.5 91.6
Excess & Surplus Lines146.8 94.6 160.2 89.8

Key KPIs

KPIQ1 2025Q2 2025
Renewal Pure Price (overall)10.3% 9.9%
Direct New Business ($mm)251.3 248.1
After-tax Net Investment Income ($mm)95.6 101.4
Book Value Per Share ($)50.33 52.09
Adjusted BVPS ($)53.39 54.48
Weighted Avg Diluted Shares (mm)61.3 61.3
Debt to Total Capitalization (%)21.7% 21.1%

Estimate vs. Actual (S&P Global consensus*)

MetricQ1 2025Q2 2025
EPS (Primary) – Consensus ($)1.86*1.52*
EPS (Primary) – Actual ($)1.76*1.31*
Revenues – Consensus ($B)1.31*1.32*
Revenues – Actual ($B)1.29*1.33*

*Values retrieved from S&P Global.

Context: Company-reported Q2 GAAP EPS was $1.36; Non-GAAP operating EPS $1.31; Total revenues $1.3267B .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP Combined RatioFY202596%–97% 97%–98% Raised (worse) by 1 pt
After-tax Net Investment IncomeFY2025$405M $415M Raised
Overall Effective Tax RateFY202521.5% 21.5% Maintained
Weighted Avg Diluted SharesFY202561.5M 61.5M Maintained
Dividend (Quarterly)Q3 2025 pay date$0.38/sh (continuation) $0.38/sh, payable Sep 2, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Casualty severity/social inflation2024 had multiple reserve strengthens; Q4 PYD +8.8 pts; stressed elevated casualty trends and higher loss picks “Combined ratio of 100.2% reflects continued pressures from elevated severities due to social inflation;” $45M casualty PYD in Commercial Persistent pressure
Pricing disciplineRenewal pure price 10.7% in Q4; 10.3% in Q1; GL +12% in Q1; focus on granular rate/retention Overall +9.9%; Commercial +8.9%; E&S +9.3%; Personal +19.0% Still strong; slightly moderating vs Q1 overall
Personal Lines remediationQ4 CR 91.7%, retention down as rate actions bite CR 91.6% with lower cats/non-cat losses; new business -41% YoY Improvement continuing
E&S growth/profitabilityQ4 NPW +27%; CR 93.1%; competitive market flagged Q2 NPW +9% YoY; CR 89.8%; property cats a headwind but better non-cat Healthy growth, margins resilient
Investment incomeAfter-tax NII strong; portfolio A+/~4-year duration; alt income variability flagged NII +18% YoY; after-tax yield 3.9%; 13.0 ROE pts Tailwind intact
Technology/AIQ1: underwriting scalability and claims outcomes use cases; modernized systems Continued focus (per investor deck) on tools enabling granular pricing/claims Ongoing execution

Note: Q2 2025 earnings call transcript was not available in our document set; current-period insights reflect the press release and investor presentation –.

Management Commentary

  • “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.” – John J. Marchioni, Chairman, President & CEO .
  • “To address the continued elevated level of loss costs, we are diligently working to improve profitability through pricing and underwriting actions… this quarter, our disciplined approach contributed to slowing top-line growth.” – CEO .
  • “We believe that strong execution of our strategic initiatives will position us to deliver profitable growth in the current market environment.” – CEO .

Q&A Highlights

  • Q2 2025 call transcript was not available via our sources; therefore, Q&A details specific to Q2 are unavailable. The company held its call on July 24, 2025, per the press release .
  • Context from Q1 Q&A: Seasonality typically elevates Q1 underlying CR by ~1 pt; management reaffirmed FY guidance then and highlighted alt-investment variability risk and pricing discipline .

Estimates Context

  • Q2 2025: EPS (Primary) $1.31 vs $1.52 consensus (miss); Revenues $1.33B vs $1.32B consensus (slight beat). Q1 2025: EPS $1.76 vs $1.86 (miss); Revenues $1.29B vs $1.31B (miss). Values from S&P Global.*
  • Implications: Sell-side may lift NII forecasts given the guide raise to $415M and stronger fixed income yields, but likely raise loss ratio/PYD assumptions and full-year combined ratio given widened CR guidance and Q2 casualty PYD. Near-term operating EPS trajectories may skew more to investment income than underwriting margin until casualty severity abates .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Underwriting vs. investment tug-of-war: NII is a clear tailwind (+18% YoY), but casualty severity/social inflation is still driving PYD; watch Commercial GL loss cost trends and reserve signals each quarter .
  • Pricing remains constructive: Overall +9.9% with strong segment dispersion; monitor whether Commercial pricing can stay ~300 bps above loss trends to deliver underlying CR improvement into 2H25 .
  • Personal Lines turnaround is gaining traction: 91.6% CR and continued rate actions should support sustained improvement, albeit with constrained new business near-term .
  • E&S margins resilient despite cats: 89.8% CR; property cats still a swing factor, but non-cat losses improved; growth remains healthy .
  • FY25 guidance reset: Higher combined ratio range offsets stronger NII; model slightly lower underwriting margins but higher portfolio income; tax and share count unchanged .
  • Capital and book value strengthening: BVPS $52.09; adj. BVPS $54.48; debt/cap ~21% after February notes; no Q2 buybacks, $56.1M authorization capacity remained at 6/30 .
  • Catalysts: Evidence of stabilizing casualty severity/PYD, sustained pricing above loss trend, benign cat environment, and continuation of NII momentum could re-rate the earnings power and narrow CR guidance in subsequent updates .