New Jersey-based Selective Insurance Group, Inc. reported net income of $14.7 million, or $0.53 per diluted share, for the third quarter ended Sept. 30, 2003, up from $11.1 million, or $0.41 per diluted share for the same period last year. Operating income from continuing operations increased to $14.0 million or $0.51 per diluted share for the period, compared with $10.1 million, or $0.38 per diluted share for the third quarter of 2002.
Catastrophe losses were $8.8 million after-tax, or $0.32 per diluted share, for the third quarter 2003, including $6.5 million after-tax from Hurricane Isabel. For the same period last year, catastrophe losses were $2.0 million after-tax, or $0.07 per diluted share.
The company’s statutory combined ratio improved to 100.9 percent for the third quarter of 2003 (including 4.7 points from catastrophes), down from 102.9 percent for the same period last year (including 1.2 points from catastrophes). The quarter’s ongoing improvements were driven by the 14th straight quarter of double-digit commercial renewal price increases, favorable commercial property results excluding catastrophes, and an improving personal automobile market, particularly in New Jersey.
Selective Insurance Group Chairman, President and CEO Gregory Murphy noted, “We responded to a Category Two hurricane in one of our primary operating territories this quarter, yet still increased operating income by almost 40 percent. Our favorable financial performance was led by ongoing improvements in our core commercial lines operation, which generated a statutory combined ratio of 99.3 percent for the quarter, down more than three points from third quarter 2002. Commercial lines premium growth was a substantial 21 percent for the period, including commercial renewal price increases of 12 percent. Our commercial outlook remains favorable, as increases in premiums continue to outpace loss trends. Operating cash flow was again strong during the quarter, up 85 percent, to $107 million over the same period last year – the first time in company history we generated over $100 million in one quarter. The higher level of cash helped drive investment income up 14 percent year-to-date, to $84.1 million. Additionally, we continued to make progress in our personal automobile business, led by a seven-point drop in the line’s statutory combined ratio, compared with third quarter last year, to 103.3 percent. New Jersey personal automobile generated a statutory combined ratio of 100.8 percent for the period.”
Revenue from continuing operations for the third quarter 2003 increased 14 percent over third quarter 2002, to $343.3 million. Revenue growth for the quarter, compared with the same period last year, reflected: continued increases in net premiums earned, up 15 percent to $289.7 million; higher net investment income of $27.3 million, up 12 percent; and revenue from the company’s continuing Diversified Insurance Services of $24.5 million, including $0.8 million from Hurricane Isabel flood administration fees. Return on revenue for the diversified businesses was 7.7 percent for the period, compared with 5.9 percent in the third quarter 2002.
The company reported net income of $42.5 million, or $1.54 per diluted share, for the nine months ended Sept. 30, 2003. Operating income from continuing operations was $37.1 million, or $1.35 per diluted share, for the nine-month period. For the comparable period last year, the company reported net income of $29.7 million, or $1.11 per diluted share, and operating income from continuing operations of $29.0 million, or $1.08 per diluted share. Selective’s statutory combined ratio for the nine months improved to 101.6 percent, down almost two points from the nine-month period ended Sept. 30, 2002.
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