Investment Proposition

Corporate Strategy

Franchise Distribution Model Enabled By Strong Technological Capabilities

Our unique, high-tech, high-touch field model allows us to effectively deliver products and services to our franchise distribution partners and customers. High- touch refers to the relationship-based field model we have in place with dedicated field underwriters we refer to as Agency Management Specialists (AMS), field claims adjusters or Claims Management Specialists (CMS) and loss control services through Safety Management Specialists (SMS). This high-touch model enables us to provide our 1,350 independent agent distribution partners and customers with industry-leading servicing capabilities.

The high-tech aspect of our business model is how we provide agency facing, easy-to-use technology to transact business. We enable our field-based and renewal underwriters with sophisticated underwriting and pricing tools that allow us to analyze our business on a very granular level, which we believe gives us a significant competitive advantage to grow profitably.

History of Financial Strength

Selective has maintained a financial strength rating of A or better by A.M. Best Rating Services for more than 89 years. This rating demonstrates the financial stability of the organization that is so important to our customers, agents and shareholders. We have an extremely strong capital base with $2.2 billion of equity and a prudent debt-to-capital ratio of 20.1% as of year-end 2019.

Selective maintains a $6.7 billion investment portfolio with a conservative fixed income portfolio average rating of “AA-“. Our higher-than-industry average investment leverage (as measured by invested assets per dollar of stockholder’s equity) allows us to generate higher return on equity from investments. We also target a low-hazard business mix, protect our balance sheet with a conservative reinsurance program, and maintain prudent reserving practices. Our premium-to-surplus ratio of 1.4x is at the lower end of our target range of 1.4x – 1.6x, but allows us to generate a higher return on equity than peers with the same level of combined ratio.

Customer Focus

In the last several years, we have focused on enhancing the customer experience by providing our customers with a seamless “omni-channel” experience whereby they are able to engage with us in a 24-hour, 365-day environment – in the manner of their choosing. In addition to developing customer self-servicing capabilities, we have introduced initiatives such as proactive messaging and other value-added services such as our telematics and fleet management tool, SelectiveDrive, for our commercial auto customers. These efforts should help differentiate us in the marketplace while increasing customer loyalty, and ultimately improve retention and profitability.

Growth

Looking into the future, we believe we are well positioned for profitable growth. We will continue to invest in and focus on building out our sophisticated pricing tools, enhancing the customer experience, and increasing our overall market share through agent appointments and increasing our share of wallet with our distribution partners. We believe we have ample opportunity to grow within our 27 state footprint for commercial lines, 15 states for personal lines and all 50 states for excess and surplus lines.

Financial Strength Ratings

• A.M. Best's “A” (Excellent) rating for Selective is based on the group’s solid capitalization, its recognized position in its targeted regional markets, which is reinforced by its strong independent agency relationships, and consistently profitable operating performance. The rating also considers Selective’s position as a top 50 property/casualty enterprise, experienced management team, and SIGI’s financial flexibility.
• Standard & Poor’s “A” rating for Selective is based on the group’s improved operating performance, reduced property exposure concentrations, and improved geographic diversification.
• Moody’s Investor Service rates Selective A2, noting the company’s solid regional franchise with established independent agency support, along with its solid risk adjusted capitalization and strong invested asset quality.
• Fitch Ratings rates Selective “A+”, citing Selective’s strong underwriting results, solid capitalization with growth in shareholders’ equity and stable leverage metrics along with improved interest coverage metrics.