Selective Insurance Group, Inc.

Good day, everyone. Welcome to Selective Insurance Group's second quarter 2023 earnings call. At this time, for opening remarks and introductions, I would like to turn the call over to Senior Vice President, Investor Relations and Treasurer, Brad Wilson. You may begin.

Thanks, and good morning. We are simulcasting this call on our website, selective.com, and a replay will be available until September 1st. We use three measures to discuss our results in business operations. First, we use GAAP financial measures reported in our annual, quarterly, and current reports filed with the SEC. Second, we use non-GAAP operating measures, which we believe make it easier for investors to evaluate our insurance business. Non-GAAP operating income is net income available to common stockholders, excluding the after-tax impact of net realized gains or losses on investments and unrealized gains or losses on equity securities. Non-GAAP operating return on common equity is non-GAAP operating income divided by average common stockholders' equity. Adjusted book value for common share differs from book value for common share by the exclusion of total after-tax unrealized gains and losses on investments included in accumulated other comprehensive loss or income. Gap reconciliations to any referenced non-gap financial measures are in our supplemental investor package found on the investors page of our website. Third, we make statements and projections about our future performance. These are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They are not guarantees of future performance and are subject to risks and uncertainties. We discuss these risks and uncertainties in detail in our annual, quarterly, and current reports filed with the SEC. We undertake no obligation to update or revise any forward-looking statement. Now, I'll turn the call over to John Marcioni, our Chairman of the Board, President, and Chief Executive Officer, who will be followed by Mark Wilcox, our Executive Vice President, Chief Financial Officer.

Thank you, Brad. Good morning, and thank you for joining us. The second quarter property casualty industry results were impacted by elevated catastrophe losses. We were no exception, and these losses affected all three of our underwriting segments, driven mainly by storms in our Midwest and East Coast footprint states. However, with our strong balance sheet, sophisticated underwriting capabilities, and robust risk management, Selective is well positioned to navigate the industry's elevated and uncertain loss trends. In the first half of the year, despite catastrophe losses being about three points above expected levels, our operating ROE was 12.2 percent, slightly above our 12 percent target. In the quarter, Net Preview's written growth was an excellent 17 percent. Our distribution relationships and unique field-based model allowed us to deliver strong new business production while effectively managing our renewal book. Our consistent approach to underwriting and pricing throughout market cycles is one of the primary reasons our distribution partners make us their carrier of choice. Our strong written premium growth was attributable to new business premiums, which were up 33%, and renewal premiums driven by an overall renewal pure price change of 6.4%, strong exposure growth, and generally stable retentions. In commercial lines, our flagship segment, new business was up 23%, renewal rate was 6.7%, and exposure growth was 4.6 percent. Across new and renewal, commercial lines exposure counts were up a manageable 3 percent, highlighting the impact of rate and exposure. Personal lines and E&S also turned in excellent growth of 32 percent and 20 percent, respectively. Our proven, disciplined execution has positioned us well, and our underlying combined ratio is 90 percent in the quarter and 90.5 percent year to date. There are three main reasons for the improved underlying combined ratio. Lower non-catastrophe property losses year to date, continued benefit from your renewal pure rate, and a lower expense ratio due to expense discipline and top line growth. Most importantly, our strong investment income and underlying profitability allowed us to generate an operating ROE in line with our target for the first half of the year. and maintain our full-year combined ratio guidance, despite increasing our catastrophe loss assumption to six points from four and a half points. Weather is inherently volatile, but we have robust risk management, including a prudent reinsurance program, strong aggregation management, and a predominant underwriting focus on low to medium hazard risks. Our long-term combined ratio target of 95 is embedded in our pricing plans. Consequently, we should be able to generate ROEs at or above our 12 percent target given elevated interest rates and a significant ROE contribution from investments assuming catastrophe losses are at a normalized level. With our strong capital position and underlying profitability, we continue to pursue attractive growth opportunities, including increasing agency market share and share of wallet in existing states, expansion of excess and surplus lines capabilities, transitioning to a mass affluent portfolio and personal lines, and targeted geographic expansion. Geographic expansion is a lower risk way for us to deploy capital. We have a repeatable process and successful approach that is allowing us to accelerate this critical organic growth opportunity. Since 2017, we've added eight states to our standard commercial lines footprint. These states contributed two points of premium growth in the first half of 23. We plan to introduce five new states to our standard commercial lines footprint over the next two to three years. West Virginia and Maine are on track for early 2024, followed by targeted state expansion in the western half of the country. Ultimately, we plan to write standard commercial lines in most of the contiguous United States. This expansion should continue to drive top line growth and further diversify our property book. Our ability to underwrite at a granular level enabled by sophisticated tools, best-in-class talent, strong distribution partner relationships, and a customer experience focus differentiate Selective. Throughout pricing cycles over the past dozen years, we consistently achieved renewal pure rate equal to or exceeding expected loss trend. At the same time, our renewal retention levels increased. We continue to strengthen our portfolio by achieving the necessary renewal pure price and exposure changes through our standard commercial lines property and auto books. During the quarter, property renewal pure rate was up 11.7%, with increased exposure of 5.8%, resulting in total renewal premium increase of 18.2%. In commercial auto, renewal pure rate was 9.5%, with increased exposure of 4.3%, resulting in a total renewal premium increase of 14.3%. Excess and surplus lines continued to perform well, with 20 percent premium growth in the quarter and an excellent underlying combined ratio. E&S was negatively impacted by elevated catastrophe losses in the quarter, which we view as normal quarterly variability, resulting in break-even underwriting results. However, our strong new and renewal rates and recent underwriting improvements position us well to take advantage of opportunities in the E&S market and continue our profitable growth strategy in this segment. It was a difficult Personal Lines quarter with an elevated combined ratio driven by catastrophe losses and pressure on personal auto margins. Personal Lines Net Pre is written grew 32% off a small base. Profitability in this segment is not where it needs to be. We are executing a detailed plan as we reposition the book, taking the necessary steps to improve profitability. That said, it will take time to reach target levels of profitability. As we've discussed in recent quarters, we are transitioning to a mass affluent customer base. We see positive early signs that our product and service are hitting the mark as our distribution partners are giving us positive feedback and growing their book with us. In home, our target customer base represents approximately half of our in-force premium. We believe that focusing on a less price sensitive customer who values coverage and service better aligns our organizational capabilities with a market where we believe we can succeed over the long term. We are focused on increasing rate to address profitability challenges within this segment. New business rate, which is more responsive to file changes, increased 8 percent in the quarter compared to 5 percent in the first quarter. Directionally, we expect a greater number of rate filings with more meaningful increases in the third and fourth quarters, further accelerating new and renewal pricing. At the same time, we are taking underwriting actions to improve terms and conditions and restrict new business in areas outside our target market. Overall, Selective is operating from a position of strength. We have the capital to support growth, well-established and differentiated relationships with our distribution partners, and the organizational capability to drive disciplined execution to enhance profitability. In a market disrupted by underwriting and appetite changes and increased frequency and severity of weather-related and liability losses, we continue to be a stable carrier for our distribution partners. In early July, we published our third sustainability report. As the industry experiences heightened frequency and severity trends, the report highlights our robust risk management processes that enhance our organization's sustainability. Our strategy includes bringing value to our employees, customers, and distribution partners, which drives returns for our shareholders. Ultimately, our people and the relationships they foster are our most enduring competitive advantage and drive the superior financial performance we have generated in recent years. I am confident we have the strategy and execution-oriented culture to continue delivering profitable growth. With that, I will turn the call over to Mark to review our financial performance in more detail.