Selective Insurance Group, Inc.

Good day and welcome to Selective Insurance Group third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Brad Wilson, Senior Vice President, Investor Relations and Treasurer. Please go ahead.

Good morning. Thank you for joining Selective's third quarter 2025 earnings conference call. Yesterday, we posted our earnings press release, financial supplement, and investor presentation on Selective.com's investor section. A replay of the webcast will be available there shortly after this call. John Marcioni, our Chairman of the Board, President and Chief Executive Officer, and Patrick Brennan, Executive Vice President and Chief Financial Officer, We'll discuss third quarter results and take your questions. We will reference non-GAAP measures that insurance and investment professionals use to evaluate operational and financial performance. These non-GAAP measures include operating income, operating return on common equity, and adjusted book value per common share. The financial supplements on our website include GAAP reconciliations to any reference non-GAAP financial measures. We will also make statements and projections about our future performance. These are forward-looking statements under the Private Securities Litigation Reform Act of 1995, not guarantees of future performance. These statements are subject to risks and uncertainties that we disclose in our annual, quarterly, and current reports filed with the SEC. We undertake no obligation to update or revise any forward-looking statements. Now, I'll turn the call over to John.

Thanks, Brad, and good morning. This quarter, we delivered an operating return on equity of 13.2%, driven by strong investment income, which increased 18% year over year. We are on track to deliver a full year operating ROE in the 14% range. However, our combined ratio guidance of 97 to 98 exceeds our 95 long-term target. To address this, we are prioritizing profit improvement and moderating premium growth. Risk selection, Granular and accurate risk pricing and prompt, fair claims adjudication are foundational capabilities we have built over many decades. We have a solid foundation, but are continuing to strengthen these core competencies to compete effectively in this dynamic environment. Across the company, we are sharpening our focus on a set of key priorities. First, relentlessly improving on the fundamentals across risk selection, individual policy pricing, and claim outcomes. Second, diversifying revenue and income within and across our three insurance segments. And third, further leveraging our use of data, analytics, and technology, including artificial intelligence, to drive operational efficiency and improved underwriting and claim outcomes. Turning to results, we recorded unfavorable prior year casualty reserve development of 40 million, or 3.3 points in the quarter. Thirty-five million relates to commercial auto. and five millionth of personal auto. Unfavorable prior year development in both lines is attributed to the 2024 accident year and is primarily driven by the state of New Jersey. With recent prior accident year reserve strengthening in each of the last two quarters, we refined our view of the current accident year for commercial auto. This adjustment added just under five points to the current year casualty loss cost for the lines year to date combined ratio. For the quarter, The pressure in casualty lines was offset by light property catastrophe activity and favorable non-catastrophe property results. In total, our combined ratio for the quarter was 98.6. As you know, we book our best estimate each quarter, incorporating new and emerging information as it becomes available. Consistent with our longstanding practice, we continue to engage an independent party to conduct semiannual reserve reviews and sign our actuarial statement of opinions. Over the past 15 months, we have supplemented these external reviews by engaging other independent third parties to evaluate our reserving, planning, and claims processes. Through their reviews, the outside firms have provided us with additional industry perspective on current loss trends and best practices. The reviews confirm that our actuarial processes are reasonable and consistent with best practices for methodology, data, and approach. Most recently, we had an independent review of our overall casualty reserve adequacy completed. It indicated that our book reserves were in a reasonable range and importantly, above the third party's central estimate. The third party review confirmed that our approach was somewhat more responsive to recent elevated trends they are seeing industry-wide. Consequently, we have greater confidence in our overall reserves and we maintained our actuarial approach and management processes to determine our best estimate for the quarter. The claims reviews included evaluations of samples from both open and closed claim files. The findings on open claims indicate that our claims management and reserving practices are consistent with internal guidelines aligned with industry best practices, and that valuations have been reasonable. The review of closed claims is ongoing. We will continue to incorporate enhancement recommendations from these reviews, augmenting our other ongoing claims handling and litigation management process and system improvements. Last quarter, we took reserving action in commercial auto liability, responding to increasing paid severity. This quarter, these trends escalated in specific jurisdictions, most notably New Jersey. Otherwise, auto liability loss ratios have been in line with our expectations, with improving accident year loss ratios driven by consistent rate increases. While rate increases continue to be an important lever, rate alone will not be sufficient to drive and maintain long-term profitability in this line, particularly in certain jurisdictions. The legislative, regulatory, and judicial environments in these jurisdictions present specific challenges, and we intend to take significant targeted underwriting actions. Specifically for commercial auto, several actions are underway. In early September, we deployed an updated rating plan and predictive modeling to provide more granular pricing segmentation for the auto line, incorporating several enhanced variables including additional vehicle and driver-specific criteria. We've implemented tighter underwriting guidelines on fleet exposures, supported by state-level tactics and analytics to better identify and target risks. We are targeting certain segments and states for higher penetration of COMPAS, our telematics solution. And in further support of our risk management specialist engagement on fleet safety with our insureds, we are actively promoting increased use of commercial auto self-assessments in our risk management center, which provides customers online risk management guidance and expertise. We continue to invest in processes and tools to further elevate our underwriting, pricing, and claims sophistication. While this is not a new initiative, there are opportunities to sharpen fundamental disciplines, including risk selection, individual risk pricing, and claims adjudication. Maintaining our focus and sense of urgency is critical to improving underwriting margins and supporting long-term profitable growth. We continue to diversify our portfolio by expanding our standard commercial lines footprint. Since 2017, we have strategically added 14 states with two more planned in 2026. Geographic expansion has significantly increased our addressable market. and we've advanced our stated goal of operating our standard commercialized business with a near national footprint. Going forward, we will continue to pursue opportunities to further diversify our business within and across our three insurance segments. Before I turn the call over to Patrick, I want to reinforce three foundational points shaping our performance and long-term strategy. First, we firmly believe that insurance requires a long-term perspective. particularly with long-tail casualty lines. To that end, we will trade short-term impacts for long-term sustainable success. By reacting quickly to current claim trends, we are better positioned to ensure our pricing indications are appropriately positioned to achieve our long-term underwriting margin targets. Second, we believe that prudent decisions made now with the best information available are the surest way to deliver value over time. Analyzing new information requires us to constantly refine our views of the market and take appropriate and sometimes difficult actions. This ongoing process reinforces the importance of maintaining a long-term perspective. Third, we continue to invest to deliver long-term profitable growth, even as the market is increasingly competitive. Growth levers include achieving greater market share and segment diversification in standard commercial lines, potential geographic expansion in personal lines, and increasing our product and distribution capabilities in E&S and other specialty lines. We also prioritize returning approximately 20 to 25% of earnings through our shareholder dividend. In addition, guided by our capital strength and evaluation of our stock, we will opportunistically repurchase shares as we did this quarter. The $36 million of repurchases in the quarter The new $200 million repurchase authorization and a 13% dividend increase reflect our confidence in the path forward and the value we perceive in our stock. Our full-year guidance implies an underlying combined ratio of 91 to 92, up one point from our expectation at the beginning of the year, driven by our actions to strengthen the current accident year. We remain committed to taking a longer-term perspective making tough decisions when necessary, and investing in profitable growth to deliver long-term value to shareholders. Now I will turn it over to Patrick, who will provide more details about our financial results.