SIGI's Quarterly Report for the Period Ended September 30, 2025

Overview of Financial Performance

Selective Insurance Group, Inc. delivered strong financial results in the third quarter and first nine months of 2025. The company reported a return on equity (ROE) of 14.0% and a non-GAAP operating ROE of 13.2% in the third quarter, driven by robust investment income and improved underwriting performance. For the first nine months of 2025, Selective generated an ROE of 13.0% and a non-GAAP operating ROE of 12.6%, exceeding the company’s 12% target.

The improvement in profitability was primarily attributable to lower catastrophe losses and reduced prior year casualty reserve development, partially offset by higher current year loss costs. Selective’s combined ratio was 98.6% in the third quarter and 98.3% in the first nine months, a 0.9 and 6.3 percentage point improvement, respectively, compared to the same prior-year periods.

Revenue and Profit Trends

Selective’s net premiums written (NPW) grew 4% in the third quarter and 6% in the first nine months of 2025 compared to the same periods in 2024. This growth was driven by renewal pure price increases, which averaged 9.9% year-to-date, partially offset by a modest decline in policy retention.

After-tax net investment income increased 18% in the third quarter and 16% in the first nine months, reflecting active portfolio management, operating cash flow deployment, and proceeds from a senior notes issuance in the first quarter. The company’s annualized after-tax yield on its investment portfolio was 4.1% in the third quarter and 4.0% in the first nine months, up 0.1 percentage points from the prior-year periods.

Underwriting results improved significantly, with the company reporting after-tax underwriting income of $47.3 million in the first nine months of 2025 compared to an underwriting loss of $118.0 million in the same period of 2024. This 140% improvement was driven by lower catastrophe losses and reduced prior year casualty reserve development, partially offset by higher current year loss costs.

Strengths and Weaknesses

Selective’s key strengths include:

• Diversified insurance operations: The company’s mix of standard commercial, standard personal, and excess and surplus (E&S) lines business has historically provided stability, as different lines have been impacted by market conditions at different times.
• Disciplined underwriting and pricing: Selective has been proactive in implementing renewal pure price increases to keep pace with loss trends, averaging 9.9% year-to-date.
• Strong investment performance: The company has generated consistent investment income, with an annualized after-tax yield of 4.0% or higher in recent periods.
• Prudent capital management: Selective has maintained a strong balance sheet, with invested assets per dollar of common stockholders’ equity of $3.36 as of September 30, 2025.

Potential weaknesses or challenges include:

• Elevated loss costs: The company has experienced higher current year casualty loss costs, particularly in its general liability and commercial auto lines, driven by social inflation and other factors.
• Exposure to social inflation: Selective’s relatively higher-than-peer casualty premium mix may cause the current social inflationary environment to have a proportionately greater impact on its results compared to peers.
• Competitive market conditions: While Selective has been able to achieve renewal pure price increases, the insurance market remains highly competitive, which could pressure future growth and profitability.

Outlook and Future Prospects

Looking ahead, Selective remains focused on executing its strategy to manage risk while driving long-term, profitable growth. The company is prioritizing improving underwriting margins, which may temper near-term premium growth, while making investments to support future expansion.

Selective’s full-year 2025 guidance includes:

• A GAAP combined ratio between 97% and 98%, including net catastrophe losses of 4 percentage points and the impact of prior year casualty reserve development reported through the first nine months.
• After-tax net investment income of $420 million.
• An overall effective tax rate of approximately 21.5%.

The company believes it is well-positioned to navigate the current macroeconomic and industry challenges. Key strategies include:

• Achieving renewal pure price increases above expected loss trend.
• Deploying granular underwriting refinements in sectors and jurisdictions where market pricing does not align with its view of rate adequacy.
• Seeking to diversify its insurance segment mix over the long term to mitigate the impact of social inflation.
• Carefully and deliberately expanding its geographic footprint, having added 14 states to its standard commercial lines footprint since 2017.
• Investing in technology to enhance underwriting scalability, risk management, and claims outcomes.

Overall, Selective delivered strong financial results in the first nine months of 2025, demonstrating the resilience of its diversified business model and the effectiveness of its disciplined underwriting and pricing strategies. While the company faces ongoing challenges from the macroeconomic environment and social inflation, it remains focused on improving underwriting margins and making strategic investments to support future profitable growth.