Selective Insurance Group, Inc.

Good day, everyone. Welcome to Selective Insurance Group's third 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.

Thanks, and good morning. We are simulcasting this call on our website, selective.com, and a replay will be available until December 1st. We use three measures to discuss our results and 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 per common share differs from book value per common share by excluding total after-tax unrealized gains and losses on investments included in accumulated other comprehensive loss or income. GAAP reconciliations to any reference non-GAAP financial measures are in our supplemental investor package found on the investor's 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. Mark Wilcox, our Executive Vice President, Chief Financial Officer, will follow John.

Good morning, and thank you for joining us. We delivered strong earnings in the third quarter with excellent top-line growth. Our annualized non-GAAP operating ROE was 15%, bringing our year-to-date result to 13.2%. This puts us ahead of our 12% operating ROE target we strive to consistently meet or exceed. We continue to see a meaningful increase in ROE contribution from investment income and solid underwriting performance. With a quarter to go, we are well positioned to deliver our 10th consecutive year of double-digit operating ROEs. Since 2014, our average operating ROE is 12%. Few in our industry can match this track record. As we proved across pricing cycles over the past dozen years, we have consistently achieved renewal pure rate equal to or exceeding expected loss trend. We are focused on ensuring this continues going forward as we manage our new and renewal portfolio. The ability to underwrite at a granular level enabled by sophisticated tools is a key reason for our strong and stable underwriting performance over time. We have highlighted the industry's elevated uncertainty of loss trends influenced by economic inflation, social inflation, the unusual frequency and severity patterns resulting from the pandemic, and a heightened frequency of catastrophe losses. These factors have put pressure on loss costs, necessitating continued industry focus on adequate pricing. We achieved standard commercial lines renewal pure price increases of 7.1 percent in the quarter and 6.9 percent year-to-date versus our expected loss trend of 6.5% coming into 2023. Our 2023 accident year loss estimates are generally holding up as expected, but pockets of pressure exist, particularly in personal and commercial auto liability. Mark will discuss some of the actions we have taken. Within general liability, we have been embedding higher severity picks in our initial estimates in recent years, and they have come to fruition. Lower frequency has largely offset the higher severities in the most recent accident years. If the favorable frequency trend moderates and severity has emerged higher than expected, we could see additional pressure on this line. We believe this is an industry-wide dynamic and therefore expect pricing to reflect these elevated trends. Despite the higher interest rates that are providing a meaningful tailwind to investment income, we are maintaining our long-term target combined ratio of 95%. This reflects elevated uncertainty about emerging casualty loss trends, inflationary impacts in property, and increased weather event frequency. Standard commercial lines and excess surplus lines representing approximately 90% of our business are running at this target or better due to our consistent efforts to achieve renewal pure price consistent with expected loss trends. As a result, we can avoid more draconian actions that some competitors may need to take to address profitability challenges, disrupting their customers and agents. The remaining 10% of our business, standard personal lines, is clearly short of target profitability, which we are addressing through aggressive rate increases. These final rate increases began to take effect on a written basis during the first quarter of 2023. We expect our overall written renewal rate will be approximately 9 percent in the fourth quarter and in the range of 20 to 25 percent in 2024, subject to regulatory approvals. As we file these rate changes, we are also refining our pricing for both cat and non-cat perils, including severe convective storm. At the same time, we are seeking to further improve homeowners' performance through terms and conditions. We are introducing actual cash value rather than replacement costs on older roofs. And in states most exposed to severe convective storm, we are implementing mandatory wind and hail deductibles. We expect these and other coverage changes to take greater hold as the market continues to evolve. Finally, we are taking further actions to accelerate the migration of the portfolio to our target market, which presents greater potential for long-term profitability. Overall, top-line growth continues to be excellent. Our distribution partners appreciate our franchise value, open communication, and consistent approach to managing rate and retention. In total, net premiums increased 17 percent in the quarter to $1.1 billion, and we are on our way to exceeding $4 billion in annual premiums for the first time in our nearly 100-year history. Across all our segments, renewal peer price was 7 percent for the quarter, and new business grew 26 percent. New states since 2017 added approximately two points to premium growth in the quarter. In our flagship standard commercial lines segment, net premiums written grew 15 percent in the quarter, with 13 percent growth in new business. Notably, the commercial lines marketplace continues to be constructive, as evidenced by our renewal pure price of 7.1 percent in the quarter and strong retention of 86 percent. Manageable policy count growth of 2.5 percent also contributed to the top line. During the quarter, property renewal pure rate was up 12.3 percent, with exposure increasing 4.7 percent, and total renewal premium up 17.6 percent. In commercial auto, renewal pure rate was 9.6 percent, with increased exposure of 4.3 percent, resulting in a 14.3 percent total renewal premium increase. Geographic expansion continues to provide us runway to expand our business and diversify our portfolio. Our deliberate approach to adding new states has manifested in a repeatable process and generated strong results. We are adding West Virginia and Maine to our commercial lines footprint in the coming months and are excited to announce we expect to launch Washington, Oregon, and Nevada in late 2024. Ultimately, we plan to write standard commercial lines in most of the continuous United States. Excess and surplus lines continues to perform very well with 25 percent premium growth in the quarter and an excellent all-in combined ratio of 83.9 or 80.4 on an underlying basis. For the first nine months, premium growth was 21 percent with a combined ratio of 89.7 and underlying combined ratio of 82.5. I'll now turn the call over to Mark to review our financial performance in more detail.