Selective Insurance Group Inc. (NASDAQ:SIGI) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 10:30 am ET


Selective Insurance Group Inc. (NASDAQ:SIGI) Q2 2020 Earnings Conference Call - Final Transcript


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Good day, everyone. Welcome to Selective Insurance Group's Second Quarter 2020 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, Rohan Pai. Please begin.

Rohan Pai

Good morning, everyone, and welcome. We're simulcasting this call on our website,, and the replay will be available until August 28, 2020. Our supplemental investor package, which provides GAAP reconciliations of any non-GAAP financial measures referenced today also is available on the Investors page of our website. Today, we will discuss our results and business operations using GAAP financial measures that also are included in our filings with our annual quarterly and current report filed with the U.S. Securities and Exchange Commission. Non-GAAP operating income, which we use to analyze trends in operations and believe makes it easier for investors to evaluate our insurance business. Non-GAAP operating income is net income excluding the after-tax impact of net realized gains or losses on investments and unrealized gains or losses on equity securities.

And statements and projections about our future performance. These forward-looking statements under Private Securities Litigation Reform Act of 1995 are not guarantees of future performance and are subject to risk and uncertainties. For a detailed discussion of these risks and uncertainties, please refer to our annual and quarterly reports filed with the U.S. Securities and Exchange Commission, which includes supplemental disclosures related to the COVID-19 pandemic. You should be aware that Selective undertakes no obligation to update or revise any forward-looking statement. On today's call are the following members of Selective's executive management team; John Marchioni, President and Chief Executive Officer; and Mark Wilcox, Chief Financial Officer.

Now I'll turn the call over to John.

John Marchioni

Thank you, Rohan, and good morning. I'll make some introductory remarks and then focus on some high-level themes impacting the industry and our company. Mark then will discuss our financial results, and I'll return to highlight how we continue to invest in strengthening our platform, and remain well-positioned to generate continued superior financial performance. Let me begin by saying I remain extremely proud of how our employees have navigated through this difficult period, delivering exceptional service to our customers and distribution partners despite the various challenges posed by COVID-19. As we stated in our earnings prerelease, elevated catastrophe losses, which were well in excess of the historical mean for the industry, alternative investment losses that we report on a one quarter lag and the impacts of COVID-19 obscure the strong underlying results of our business.

Our premiums written growth remained solid despite the challenging economic environment, and we are pleased to report a profitable all in 98.4% combined ratio despite the higher capacity losses. From financial standpoint, for the second quarter of 2020, Selective reported non-GAAP fully diluted operating earnings per share of $0.40 and an annualized operating ROE of 4.4%. There were three main items that negatively impacted our results during the quarter. First, we reported $83 million of catastrophe losses, which