Executives from Selective Insurance Group (NASDAQ:SIGI) told investors at the Bank of America U.S. Financial Services Conference that the company has responded quickly to higher casualty severity trends in recent accident years, while continuing to invest in pricing precision, technology, and a more diversified portfolio mix.
Reserving actions and the goal of stability
Chairman and CEO John Marchioni acknowledged that the past two years have been more challenging due to reserving actions tied to longer-tailed casualty lines. He said 2024 reserving actions were predominantly in General Liability, while 2025 actions were focused on Commercial Auto Liability. Marchioni framed the actions as a deliberate effort to react quickly to emerging trends such as lawsuit abuse and social inflation, particularly when data is still immature.
He pointed to relative stability in the General Liability line throughout 2025 following 2024 actions as support for the approach. In Commercial Auto, he said Selective also increased the current accident year in 2025, not just prior years, to help ensure sound run-rate profitability.
Data, claims patterns, and trend assumptions
CFO Patrick Brennan said he was “pleasantly surprised” by the amount of data available at Selective and described opportunities to unlock additional value, including more targeted, granular pricing actions. He highlighted a “continuous improvement mindset” and a focus on getting better information into decision makers’ hands, supported by increased technology investment. Brennan noted that Selective’s discretionary technology and IT project budget has more than doubled compared with 2023.
Marchioni said claims patterns have shifted post-pandemic and have persisted long enough that the company views the environment as elevated rather than temporary. He said Selective’s all-in casualty severity trend assumptions are around 9%, and closer to 10% excluding workers’ compensation, and that the company’s conviction in those assumptions has increased over the last three accident years.
He cautioned against overreacting to a single data point, especially when paid losses in immature years can have an outsized effect when projected to ultimate. He said Selective evaluates paid and incurred data alongside factors such as case reserve adequacy, disposal rates, and litigation rates to avoid drawing the wrong conclusions from shifting claim emergence patterns.
Independent reviews and how Selective weights recent experience
Marchioni said Selective has long had a Big Four accounting firm review its reserves twice a year, but it also brought in additional independent firms to review reserving practices, the planning process behind expected loss ratio selections, and claims performance for closed and open claims. He said those external reviews found Selective’s carried reserves to be above one firm’s central estimate.
He also said the outside firms validated that:
- Severity trend pressures Selective is seeing are similar to what is occurring across the industry.
- Selective’s actuarial process reacts more quickly and puts more weight on the most recent accident years compared with approaches that rely on longer-term averages.
New Jersey exposure and social inflation
Asked specifically about New Jersey, Marchioni said the state has been a driver of 2025 reserve adjustments in Selective’s Personal Auto book, where New Jersey represents about 30% of premium. He said performance outside New Jersey in Personal Lines is more reflective of the company’s targets, and characterized Personal Auto as a smaller book overall.
In Commercial Auto, Marchioni said New Jersey represents about 15% of premium and vehicles. He described New Jersey as one of several states with higher susceptibility to social inflation due to judicial, legislative, and regulatory factors, and referenced a 2024 RAND study that identified seven states with the highest increases in jury awards. He said several of those states are in Selective’s footprint (including New Jersey, New York, and Pennsylvania), while others are not (California, Texas, and Florida).
Marchioni also cited statutory changes in New Jersey that he said have made the environment more favorable to the plaintiffs’ bar, including higher minimum limits and pre-suit disclosures. Brennan added that Selective’s ultimate litigation rate in New Jersey for Commercial Auto tends to be about twice the countrywide rate, and noted that industry allocated loss adjustment expense (ALAE) for Commercial Auto has been higher in New Jersey than other states.
Path to margins, mix shifts, and capital return
On underwriting performance, Marchioni discussed Selective’s combined ratio framework and how the company expects improvement. He said that compared with 2025 underlying accident-year results, the company’s 2026 ex-cat guidance implies improvement, supported by rate in excess of trend and mix improvement. He noted that Selective’s all-in written rate over the last two years has been about 9.5%, versus trend assumptions of 7% to 7.5%, and said mix improvement is also expected to contribute.
Looking ahead, Marchioni said Selective expects to become more diversified over time. He cited expansion in the commercial lines footprint—from 22 states seven or eight years ago to 36 states today, with plans to reach 40—as well as growth in excess and surplus lines, which he said has expanded from “nothing to 13%” of the business over roughly a decade. He also described a shift in Personal Lines away from mass market toward mass affluent customers, noting that average home values for new business have been running around $1 million.
On distribution, Marchioni said agents may resist higher pricing, but Selective focuses on targeted execution and early portfolio-level communication. He said the commercial insurance market remains fragmented and highly competitive, and that accounts Selective seeks to up-price or exit often find other carriers willing to write them, particularly as property markets soften and competitors seek growth.
On capital management, Marchioni said Selective has been active in share repurchases during 2025 and into early 2026. He said the company targets returning 20% to 25% of earnings over the long term through dividends and noted that Selective returned roughly $100 million to shareholders in 2025 through dividends and repurchases, while emphasizing that investing in a growing business remains the priority.
About Selective Insurance Group (NASDAQ:SIGI)
Selective Insurance Group, Inc is an insurance holding company headquartered in Branchville, New Jersey. The organization traces its roots to a regional provider of property and casualty coverage and became a publicly traded holding company following its initial public offering in 1999. Since its formation, Selective has expanded through strategic acquisitions and organic growth initiatives to broaden its product offerings and strengthen its market position.
The company’s core business encompasses a broad range of property and casualty insurance products designed to serve both commercial and personal lines customers.
