Selective Insurance Group, Inc. (SIGI) Earnings & Analysis

Latest quarter

Selective reported Q3 FY2026 revenue of $1.3 billion, below the consensus estimate of $1.4 billion. Adjusted earnings per share were $2.37, above the $1.91 consensus. Diluted earnings per share were $2.11, compared with $1.85 a year earlier.

The company reported revenue of $1.4 billion in the year-ago quarter. Its filing attributed lower insurance premiums written to reduced new business in a competitive market and pricing actions aimed at retaining fewer underperforming policies. The filing said earned premiums fell as the reduction in premiums written worked through to revenue.

Selective’s filing said its combined ratio, which measures claims and underwriting expenses against earned premiums, improved as lower loss costs more than offset higher underwriting expenses. It recorded no prior-year casualty reserve development during the quarter, unlike the unfavorable development a year earlier. The company reported an operating margin of 13.2%, compared with 11.7% a year earlier, while free cash flow fell to $347.0 million from $397.3 million. Its filing said after-tax investment income increased, supported by higher portfolio yield and the deployment of operating cash flow.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO John Marchioni said Selective is prioritizing underwriting returns over premium volume as it raises prices and reduces retention on underperforming commercial policies. He said those actions, alongside lower new business, reduced premiums written in the quarter. CFO Patrick Brennan said commercial auto and general liability had not yet reached the company’s target profitability, and Selective would continue seeking liability rate increases and refining risk selection.

Marchioni said commercial liability pricing was holding up as property pricing moderated. In response to questions about growth, he said the company’s approach to casualty pricing also puts pressure on new-business conversion rates. He said Selective was expanding its geographic footprint and distribution to find adequately priced accounts, even where fewer submissions become policies.

For excess and surplus lines, Marchioni said retail access had moved into execution, with agency appointments and an underwriting model in place. Asked about competition, he said retail partnerships could increase submissions and help offset lower conversion rates; he also described opportunities to broaden the business offered through wholesale partners.

Brennan said the quarter’s expense ratio reflected lower premium volume. Asked about expenses, he said a change to the premium audit process brought additional premium collections without additional loss exposure, but also caused higher premium write-offs as customers transitioned. He said Selective would keep investing while maintaining cost discipline, and continued to expect an approximately 31.5% full-year underwriting expense ratio.

Marchioni said Selective was integrating analytics and decision support into underwriting and claims workflows, with human oversight of its use of artificial intelligence. Brennan said investment income increased because of higher portfolio book yields and alternative investment returns. He also said Selective increased its quarterly dividend by 12.0% and authorized a new $200.0 million share repurchase program.

For the quarter ahead, Brennan said it was too early to provide specific Hurricane Isaias loss estimates, but Selective expected the event’s losses to be immaterial to its results.

Guidance

Selective raised its FY2026 forecast for after-tax net investment income to $490.0 million from its prior forecast. CFO Patrick Brennan also said the company’s catastrophe-loss assumption for the year had been reduced from the previous quarter’s assumption.