Selective Insurance Group, Inc. (NASDAQ:SIGI) Q4 2022 Earnings Call Transcript

Meyer Shields: Okay, no, that’s tremendously helpful. And that also, I guess, answers my next question, which is your willingness to add a little bit more net property risk, given pricing conditions for commercial property? Sounds like you’re saying, yes.

John Marchioni: Yes, I, so that’s really not how we manage the business in terms of opportunities. So we’re looking line by line, we continue to be a package underwriter, we continue to acquire new business based on the individual risk underwriting and the individual risk pricing guidance we provide to our underwriters, I think they make, do make really good decisions. And our growth will be driven more by that individual decision making in the context of the opportunities that are presented, then it will be opportunistic around our current view of where pricing is or isn’t.

Meyer Shields: Okay, no, that’s fair. That’s more sophisticated than the way I was looking at it. And it’s a quick lesson if I can. First is it reasonable to assume that your yearend €˜22 casualty reserves incorporated the 7% trend that you’re looking for ’23?

John Marchioni: So I now, yes, that’s a question that’s a little challenging to answer. I would say that our casualty reserve position at the end of the quarter continues to reflect our best estimate as it always has. And I think, and we don’t plan for this, we don’t budget for it. But we have a track record of favorable emergency and casualty that we’re proud of. And I think it speaks to the manner in which and this was part of my response to earlier question the manner in which we actually build our forward expectation of loss trend into our casualty loss pick. But that initial casualty loss pick is influenced meaningfully by actual historical loss trends. So the actual changes in frequency severity over the last number of years is your historical loss trend that sets your starting point for a casualty loss pick.

We then add that 6.5 for casualty forward loss trend. I’m sorry, 6% for casualty forward loss trend into assumes loss ratio. So it’s in there on a go forward basis with the starting point is influenced by your actual historical trends.

Meyer Shields: Okay, no, perfect, that helps. And then Mark, I can be tedious and get the cats by product line for the quarter?

Mark Wilcox: Sure, certainly. So going through the different lines of business starting with standard commercial lines for the quarter and commercial order $0.8 million, in commercial property $29.9 million and $9.5 million, that should add up to $40.2 million for standard commercial lines, within personal lines, auto $0.9 million, home $3.2 million. And then property within E&S $1.4 million for a total of $45.7 million for cat losses for Q4.

Operator: Our next question comes from the line of Grace Carter with Bank of America.

Grace Carter: Hi, I’m going back to the loss ratio guidance on an underlying basis, a little bit over 59% for this year, I guess just looking at the non-cap property loss ratio last year trending up a little bit. What sort of expectations for that particular component are y’all thinking for this year just kind of considering the expectations for loss cost trends versus the firm pricing environment? Just trying to I guess, understand how property versus casualty contributes to that improvement?

John Marchioni: Yes, it’s a good question, the way we disclose the non-cap property loss ratio, it’s non-cap property losses divided by the total net earned premium. And if you think about €˜23 expectations versus €˜22, it’s basically flat. So I believe we came in at about 18.4 for the full year across, let me just double check that number 18.3, for the full year across all segments, in 2022. And we’d expect that to be basically that, our expectation for 2023 better than the guidance is that something essentially the same.