Selective Posts $16M Q4 Profit; Jan. Commercial Renewal Rates Up 4.5%

Selective Insurance Group, based in Branchville, New Jersey, reported $16.1 million for its 2011 fourth-quarter net income, down 32 percent from one year ago when the insurer posted $23.8 million profit.

For the 2011 full year, Selective posted net income of $19.8 million, down 70 percent from 2010 when it reported $65.5 million net income.

Net written premiums were the 2011 fourth quarter came in at $352.2 million, up 17 percent from $301.8 million during the year-ago period. The 2011 full-year net written premiums were $1.49 billion, up from $1.39 billion in 2010.

Net investment income earned for the fourth quarter was $28.8 million, down 30 percent from $41.5 million reported during the year-ago period. For the 2011 full year, net investment income earned was $147.4 million, up 1.2 percent from $145.7 million in 2010.

The GAAP combined ratio for the 2011 fourth quarter was 98.7 percent, improving from 100.1 percent one year ago. For the 2011 full year, GAAP combined ratio came in at 107.4 percent, deteriorating from 101.6 percent in 2010.

“We produced a statutory combined ratio of 98.7 percent (for the fourth quarter), reflecting a more normal level of catastrophe losses,” said CEO Gregory Murphy. “Most importantly, we achieved our eleventh-consecutive quarter of commercial lines renewal pure price increases with a strong 3.4 percent and retention increased 3 points to 82 percent.”

“We are earning rate slightly above our loss cost trends as our pricing power continues to improve,” CEO Murphy said. He noted that commercial lines renewal price for the month of December was up 3.7 percent, and up 4.5 percent in January 2012. “After several years of price competition, most of our commercial lines competitors now appear to be using more sound underwriting judgment and driving rates higher.”

“We continue to focus our improvement in personal lines on rate increases with renewal price up 6.1 percent for the quarter. For the year, there were 46 rate increases in personal lines, adding $18 million in available premium to our in-force book,” Murphy said.

“This is our fourth consecutive year driving rate and in 2012, we fully expect to file and obtain overall personal lines rate increases of 8.3 percent with homeowners up about 11.5 percent.”

Commenting on the past year, Murphy noted that 2011 was a year marked by extreme weather, market volatility, historically low interest rates and continuing U.S. and European economic woes. “We ended the year with a statutory combined ratio of 106.7 percent, which included $119 million, or 8.3 points, of catastrophe losses. Excluding catastrophes, our statutory combined ratio was 98.4 percent.”