Skip to content
    SIGI
    Earnings call· Mar 2026(Q1 FY26)

    SELECTIVE INSURANCE GROUP Q1 FY26 earnings call SIGI

    Apr 23, 2026 Source

    Executive summary

    Selective Q1 FY26 — Solid Start with Underwriting Discipline Amid Competitive Casualty Market

    Selective Insurance Group delivered a solid Q1 FY26, achieving a 12% operating ROE for the seventh consecutive quarter and reporting no prior-year casualty reserve development. The company maintained underwriting discipline in a competitive market, leading to a 1% decline in overall premiums due to strategic pricing actions and lower retention on underperforming accounts. Management remains confident in its full-year guidance, leveraging AI for efficiency and focusing on portfolio mix diversification to drive long-term profitability.

    Highlights

    5

    • Generated an operating ROE of 12%, marking the seventh consecutive quarter of double-digit operating returns.

    • Reported no prior year casualty reserve development at the segment or line of business level.

    • Achieved an underlying combined ratio of 92.1%, with full-year expectation of 90.5%-91.5%.

    • After-tax net investment income increased 18% year-over-year to $113 million.

    • Personal Lines combined ratio improved to 92.8% for the quarter from 98.0% in Q1 2025.

    Concerns

    4

    • Premiums declined 1% year-over-year, with Standard Commercial Lines down 1% and Standard Personal Lines down 6%.

    • Overall retention was 82%, down 3 points from a year ago due to pricing and underwriting actions.

    • General liability underlying combined ratio was 2.3 points higher than full year 2025 due to elevated severity growth.

    • Industry-wide reserve pressure continues in commercial casualty, particularly general liability, commercial auto liability, and umbrella.

    Guidance & targets

    5
    CategoryTargetConfidence
    GAAP combined ratio
    96.5% to 97.5%
    high materiality
    High
    After-tax net investment income
    $465 million
    medium materiality
    High
    Effective tax rate
    approximately 21.5%
    low materiality
    High
    Fully diluted weighted average share count
    approximately 60.5 million
    low materiality
    High
    Full year underlying combined ratio
    90.5% to 91.5%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Standard Commercial Lines
    Net premiums written declined due to lower policy counts offsetting renewal pure price increases and stronger new business pricing. The company is intentionally driving higher retention on best-performing accounts and lower retention on underperforming businesses to improve underwriting margins.
    Renewal pure price increases: 7.1%General liability underlying combined ratio: 2.3 points higher than full year 2025Commercial auto underlying combined ratio: 98.0% (1.1 points better than full year 2025)Retention: 82% (down 3 points from a year ago)General liability pricing: 9.8%Commercial auto pricing: 9.1%Auto liability price increases: approaching 12%Property renewal premium increase: 10% (including 3.7 points of exposure growth)
    		—-1%——
    Excess and Surplus Lines
    Premiums written grew 1%. The combined ratio improved by 3 points from a year ago. The company continues to push higher rate levels in E&S casualty based on its view of general liability loss trends, while property pricing was slightly negative due to heightened competition.
    Average renewal pure price increases: 4.1%
    		—1%—89.5% combined ratio
    Personal Lines
    Net premiums written declined 6% year-over-year, though target mass affluent market business grew by 1%. The combined ratio improved significantly from 98.0% in Q1 2025 and 100.6% for full year 2025, with results even stronger outside of New Jersey.
    Target mass affluent market business growth: 1%Renewal pure price: 10.6%
    		—-6%—92.8% combined ratio

    Operational metrics

    7
    Non-GAAP operating EPS
    $1.69
    Q1 FY26

    Resulted in a 12% operating ROE.

    Share repurchases
    $30 millionbuilding on $86 million repurchased in FY25
    Q1 FY26

    Part of capital management strategy, balancing opportunistic repurchases with capital for underwriting and investment opportunities.

    Remaining share repurchase authorization
    $140 million
    Q1 FY26 end

    As of quarter end.

    Investment portfolio average credit quality
    A+
    Q1 FY26

    Portfolio is conservatively positioned.

    Fixed income portfolio duration
    4.3 yearsmodestly extended
    Q1 FY26

    Extended to support the durability of the book yield.

    AI claims ingestion tool documents processed
    over 0.5 million
    Q1 FY26

    Allows adjusters to focus on higher-value work.

    AI contractual risk transfer adequacy tool return rate
    >90%
    Q1 FY26

    A key element of the underwriting process for contractors, improving productivity.

    Industry KPIs

    9
    MetricValueDetails
    Combined ratio98.3% GAAP, 92.1% underlying%
    Capital returns$30 million repurchasedUSD
    ROE operating ROE12% operating ROE%
    Catastrophe losses6.2 pointspoints
    Net investment income$113 million after-taxUSD
    Retention persistency82%%
    Net premiums written earned-1% overall%
    Renewal rate change pricing10% GL, approaching 12% commercial auto liability%
    Prior year reserve developmentno prior year casualty reserve development

    Risks & headwinds

    3
    Elevated commercial casualty loss trendsOngoing

    Industry-wide pressure, particularly in general liability (AM Best estimate GL at 108 range) and commercial auto liability (AM Best estimate 107-108 range).

    Mitigation: Responsive planning and reserving processes, integrating loss trends into pricing strategies and underwriting decisions, delivering high renewal pure price increases (10% for GL, approaching 12% for commercial auto liability).

    Competitive market and pricing pressureCurrent

    Market pricing, especially in other liability occurrence, has not adjusted upward despite industry-wide reserve pressure. Premiums declined 1% YoY, and retention was down 3 points YoY to 82%.

    Mitigation: Prioritizing underwriting margins over top-line growth, granular segmentation of the renewal portfolio, targeting profitable new business, and leveraging technology for efficiency.

    Negative price environment in Workers' CompensationOngoing

    Continuing negative price environment and severity trend.

    Mitigation: Taking a more conservative stance relative to recent accident years in booking loss ratios and applying a cautious philosophy.

    What to watch in Q2 FY26

    5

    Industry GL pricing response

    Next couple of quarters
    CurrentIndustry surveys show mid-single-digit rate increases, while Selective delivers 10%.
    TargetIndustry pricing for GL to become more responsive to elevated loss trends.

    Why it matters

    General liability pricing lags behind loss trends, impacting industry profitability and Selective's competitive positioning. A shift in industry pricing would validate Selective's strategy.

    I think the bigger challenge is on the GL side, and I pointed to that in the prepared comments. If you look at where GL is, and this is other liability, both products and non-products, and again, there are different estimates out there on an industry basis, but AM best has GL at the 108 range. And I would say when you look at what happened in 2025, there's another $8 billion of adverse emergence booked by the industry. And even so, a lot of that was still '23 and prior. And I don't know that you've seen that fully reflected in 2024 and '25. I think that's the part of the market that hasn't been as responsive. ... I would expect that recognition to start to come through on GL in the next couple of quarters.

    Q&A highlights

    6

    What caused the downturn in premium growth for GL and commercial auto, was it competition or deliberate actions?

    The decline was primarily driven by lower new business hit ratios due to the company's consistent pricing philosophy. Retention management is granular, maximizing retention on profitable accounts while allowing it to drop on underperforming ones, which is a deliberate action.

    “New business is the biggest driver of the drop in premium, and that's really, I think, predominantly driven by hit ratios.”

    asked by Michael Phillips · answered by John J. Marchioni

    2 min read5 chapters

    Detailed Narrative

    01

    Underwriting Discipline and Market Positioning

    Selective prioritized underwriting margins over top-line growth, particularly in commercial casualty, where renewal pure price increases were 10% for general liability and approaching 12% for commercial auto liability. This discipline, while impacting competitive positioning, led to a 1% decline in overall premiums but is expected to drive improved underlying margins over time⏳. The company believes its pricing posture fully reflects its view on current loss trends.

    02

    Portfolio Mix and Retention Strategy

    The company is actively managing its portfolio mix, with its relative exposure to contractors declining within new business to enhance margin durability. Overall retention stood at 82%, a 3-point decrease year-over-year, reflecting an intentional strategy to drive lower retention on underperforming accounts and stronger retention on well-performing ones. These actions accelerated through the quarter and are expected to contribute to improved underwriting margins.

    03

    AI and Technology Investments

    Selective is investing significantly in AI capabilities to improve risk selection, pricing accuracy, and productivity. Key achievements include an AI claims ingestion tool that has processed over 0.5 million documents, allowing adjusters to focus on higher-value work. Additionally, automation supports the evaluation of contractual risk transfer adequacy, with over 90% of results returned within 2 minutes, enhancing underwriting efficiency for contractors.

    04

    Reserve Stability and Loss Trends

    The company reported no prior-year casualty reserve development at the segment or line of business level, indicating stable reserves. Management asserts that its planning and reserving processes are responsive to social inflation trends, which continue to pressure industry-wide profitability, particularly in general liability, commercial auto liability, and umbrella. Selective's view of loss trends is integrated into its pricing and underwriting decisions.

    05

    Capital Management and Investment Portfolio

    Selective repurchased $30 million of common stock during Q1, with $140 million remaining on its authorization. The company's capital management philosophy prioritizes profitable growth and aims to return 20% to 25% of earnings to shareholders through dividends. The investment portfolio is conservatively positioned with an A+ average credit quality, and the duration of the fixed income portfolio was modestly extended to 4.3 years to support the durability of its book yield.

    AI-generated summary of the company’s earnings call. Not investment advice.