Selective Reports 2012 Q4 Profit of $1.3M; Sandy Losses at $30.3M

February 1, 2013

Branchville, N.J.-based Selective Insurance Group posted 2012 fourth quarter net income of $1.3 million, down more than 92 percent compared to the 2011 fourth quarter when the insurer reported $18.0 million profit.

The 2012 fourth-quarter catastrophe losses were $33.8 million, after tax — including $30.3 million for Superstorm Sandy

However, the full-year net income rose. The insurer reported $38.0 million net income for full-year 2012, up from $22.0 million in full-year 2011.

Net premiums written for 2012 fourth quarter were $370.6 million, up 5 percent from $352 million in 2011 fourth quarter. For full-year 2012, net premiums written were $1.67 billion, up from $1.49 billion for full-year 2011.

The GAAP combined ratio for 2012 fourth quarter was 109.0 percent, deteriorating from 97.9 percent in 2011 fourth quarter. For full-year 2012, the GAAP combined ratio was 104.0 percent, improving from 107.2 percent for full-year 2011.

Investment income earned for the fourth quarter was $34.6 million, up from $28.8 million one year ago. Investment income earned for full-year 2012 was $131.9 million, compared to $147.4 million for full-year 2011.

“Hurricane Sandy was the most significant event in company history, yet we still ended the quarter with positive net income – a testament to our strong underlying insurance operations performance and our comprehensive reinsurance program,” said CEO Gregory Murphy.

Sandy contributed 9.8 points to the combined ratio for the 2012 fourth quarter, but only 2.5 points to the year.

“The hurricane made landfall in our top market share state of New Jersey,” said Murphy.

“Our claims and flood departments have been working tirelessly to resolve claims quickly and fairly, and to inform flood customers of the federally mandated National Flood Insurance Program’s claims process. Personal lines received approximately 8,000 claims and have closed 85 percent and commercial lines received approximately 5,000 claims and have closed 62 percent.”

For personal lines, renewal price increased 8.3 percent for the 2012 fourth quarter, CEO Murphy said. “In personal lines, we continue to file rate increases as well as improve the mix of business and expand the number of agency storefronts,” he said.

In standard commercial lines, the insurer completed its 15th consecutive quarter of price increases, with renewal price up 6.7 percent, and 6.2 percent for the year, Murphy said.

“Our granular pricing strategy and sophisticated underwriting, as well as our strong agency relationships, has given us an edge over the past several years that continues to pay off in strong results,” he said.

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