New Jersey
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22-2168890
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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973
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948-3000
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(Registrant's Telephone Number, Including Area Code)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, par value $2 per share
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SIGI
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NASDAQ Global Select Market
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Large accelerated filer
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☒
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller reporting company
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☐
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Emerging growth company
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☐
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SELECTIVE INSURANCE GROUP, INC.
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Table of Contents
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Page No.
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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December 31, 2019, 2018, and 2017
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December 31, 2019, 2018, and 2017
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December 31, 2019, 2018, and 2017
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December 31, 2019, 2018, and 2017
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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NRSRO
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Financial Strength Rating
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Outlook
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A.M. Best
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A
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Positive
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Standard & Poor’s Global Ratings (“S&P”)
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A
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Stable
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Moody’s Investors Services (“Moody’s”)
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A2
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Stable
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Fitch Ratings (“Fitch”)
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A+
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Stable
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NRSRO
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Credit Rating
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Long-Term Credit Outlook
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A.M. Best
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bbb+
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Positive
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S&P
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BBB
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Stable
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Moody’s
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Baa2
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Stable
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Fitch
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BBB+
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Stable
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•
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Standard Commercial Lines, which is comprised of property and casualty insurance products and services provided in the standard marketplace to commercial enterprises; typically businesses, non-profit organizations, and local government agencies. This business represented approximately 80% of our total insurance operations’ NPW in 2019, 2018, and 2017, and is primarily sold in 27 states and the District of Columbia. The average premium per policyholder in 2019 is approximately $12,000.
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Standard Personal Lines, which is comprised of property and casualty insurance products and services provided primarily to individuals acquiring coverage in the standard marketplace. This business represented approximately 11% of our total insurance operations’ NPW in 2019, 2018, and 2017, and is sold in 15 states. The average premium per policyholder in 2019 is approximately $2,000. Standard Personal Lines includes flood insurance coverage sold through the National Flood Insurance Program ("NFIP"). Based on 2018 direct premiums written ("DPW") as reported in the S&P Market Intelligence platform, we are the fifth largest writer of this coverage through the NFIP. We write flood business in all 50 states and the District of Columbia.
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E&S Lines, which is comprised of property and casualty insurance products and services provided to customers who are unable to obtain coverage in the standard marketplace. We currently only write commercial lines E&S coverages. This business represented approximately 9% of our total insurance operations’ NPW in 2019, 2018, and 2017, and is sold in all 50 states and the District of Columbia. The average premium per policyholder in 2019 is approximately $3,000.
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Investments, which invests the premiums collected by our insurance operations and amounts generated through our capital management strategies, which include the issuance of debt and equity securities.
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Underwriting income/loss from our insurance operations. Underwriting income/loss is comprised of revenues, which are the premiums earned on our insurance products and services, less expenses. Gross premiums are DPW plus premiums assumed from other insurers. NPW is equal to gross premiums less premiums ceded to reinsurers. NPW is recognized as revenue ratably over a policy’s term as net premiums earned (“NPE”).
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Net investment income from the investment segment. We generate income from investing insurance premiums and amounts generated through our capital management strategies. Net investment income consists primarily of (i) interest earned on fixed income investments and preferred stocks, (ii) dividends earned on equity securities, and (iii) other income primarily generated from our alternative investment portfolio.
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Net realized and unrealized gains and losses on investment securities from the investments segment. Realized gains and losses from the investment portfolios of the Insurance Subsidiaries and the Parent are typically the result of sales, calls, and redemptions. They also include write downs from other-than-temporary impairments (“OTTI”) and net unrealized gains and losses on public equities.
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i.
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writing more small-to-medium size accounts within our Standard Commercial Lines segment, that have an average premium per policyholder size of approximately $12,000, with about 87% of our casualty lines business within this segment, having limits of $1 million or less. This excludes policies written in our workers compensation line of business, which do not have statutory policy limits;
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ii.
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maintaining disciplined planning and reserving practices, including ground-up reserve reviews for principally all lines of business quarterly; and
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iii.
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purchasing significant levels of reinsurance protection, including a property catastrophe reinsurance program that limits the net after-tax impact of a 1 in 250 year catastrophe to 5% of our U.S. generally accepted accounting principles ("GAAP") equity and property and casualty excess of loss reinsurance agreements that limit the impact of individual property and casualty claims to $2 million per risk and per occurrence, respectively.
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Property insurance, which generally covers the financial consequences of accidental loss of an insured’s real and/or personal property. Property claims are generally reported and settled in a relatively short period of time.
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Casualty insurance, which generally covers the financial consequences of: (i) employee injuries in the course of employment; (ii) bodily injury and/or property damage to a third party as a result of an insured’s negligent acts, omissions, or legal liabilities; and (iii) the obligation to defend our insured(s). Casualty claims may take several years, and for some casualty claims even several decades, to be reported and settled.
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Types of Policies
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Category of Insurance
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Standard Commercial Lines
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Standard Personal Lines
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E&S Lines
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Commercial Property (including Inland Marine)
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Property
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X
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X
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Commercial Automobile
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Property/Casualty
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X
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X
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General Liability (including Excess Liability/Umbrella)
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Casualty
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X
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X
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Workers Compensation
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Casualty
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X
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Businessowners' Policy
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Property/Casualty
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X
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Bonds (Fidelity and Surety)
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Casualty
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X
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Homeowners
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Property/Casualty
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X
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Personal Automobile
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Property/Casualty
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X
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Personal Umbrella
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Casualty
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X
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Flood1
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Property
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X
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X
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Percentage of Standard Commercial Lines
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Description
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Contractors
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41%
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General contractors and trade contractors
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Mercantile and Services
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25%
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Focuses on retail, office, service businesses, restaurants, golf courses, and hotels
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Community and Public Services
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17%
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Focuses on public entities, social services, religious institutions, and schools
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Manufacturing and Wholesale
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16%
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Includes manufacturers, wholesalers, and distributors
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Bonds
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1%
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Includes fidelity and surety
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Total Standard Commercial Lines
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100%
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Property
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Casualty
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Standard Commercial Lines
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79%
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87%1
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Standard Personal Lines
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85%
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98%
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E&S Lines
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97%
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98%
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•
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Standard Commercial Lines products and services are primarily sold in 27 states located in the Eastern, Midwestern, and Southwestern regions of the U.S. and the District of Columbia.
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Standard Personal Lines products and services are sold in 15 states located in the Eastern, Midwestern, and Southwestern regions of the U.S., except for the flood portion of this segment, which is sold in all 50 states and the District of Columbia.
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E&S Lines products and services are sold in all 50 states and the District of Columbia.
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Region
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Office Location
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Heartland
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Indianapolis, Indiana
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New Jersey
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Hamilton, New Jersey
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Northeast
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Branchville, New Jersey
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Mid-Atlantic
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Allentown, Pennsylvania and Hunt Valley, Maryland
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Southern
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Charlotte, North Carolina
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Southwest
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Scottsdale, Arizona
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Standard Commercial Lines: independent retail agents;
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Standard Personal Lines: independent retail agents; and
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E&S Lines: wholesale general agents.
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Use an empowered field underwriting model to provide our Standard Commercial Lines retail distribution partners with resources within close geographic proximity to their businesses and our mutual customers. For further discussion on this model, see the “Technology and Field Model” section below.
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Develop close relationships with each distribution partner, particularly their principals and producers, by (i) soliciting their feedback on products and services, (ii) advising them concerning our product developments, and (iii) providing education and development focused on producer recruitment, sales training, enhancing customer experience, online marketing, and distribution operations.
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Develop annual goals with each distribution partner, and then carefully monitor these goals regarding (i) types and mix of risks placed with us, (ii) new business and renewal retention expectations, (iii) customer service, (iv) pricing of their in-force book and changes in renewal prices, and (v) profitability of business placed with us.
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Develop brand recognition with our customers through our marketing efforts to be recognized as a proactive risk manager that provides the unique value-added products and services that customers seek. These unique products and services, along with our proactive communication and focus on a superior customer experience, help position us as a leader in the marketplace.
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Our distribution partners with access to accurate business information and the ability to process certain transactions with ease from their locations, seamlessly integrating those transactions into our systems. During 2019, we were recognized as an "All-Star Carrier" by Insurance Business America (IBA) for superior performance in eight key categories, one of which was technology and automation. We were the sole carrier to receive a five-star rating in every category.
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Our customer service representatives with a customer-centric view of our policyholders, as opposed to a traditional policy-centric view, which helps us to better serve our customers when coupled with providing them 24/7 access to transactional capabilities discussed above.
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Our underwriters with predictive underwriting and pricing tools to enhance profitability while efficiently growing the business by automating retrieval of relevant public information on existing policyholders and potential customers.
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Our claims adjusters with predictive tools to indicate when claims are likely to escalate.
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Our Standard Commercial Lines corporate underwriting department, led by a Chief Underwriting Officer ("CUO"), establishes and monitors our underwriting guidelines and philosophy for each industry segment and line of business. The CUO delegates and oversees underwriting authority throughout the organization using formal letter of authority grants based on an individual's job grade and expertise by type of industry and line of business. Our corporate underwriting department also works in coordination with our corporate actuaries to determine adequate pricing levels for all of our Standard Commercial Lines products.
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Our Standard Personal Lines underwriting operations are centralized and highly automated. A significant portion of our new and renewal business is underwritten and priced through an automated template based on a filed class plan. Any underwriting exceptions are approved by our underwriting team under the direction of our CUO for Standard Personal Lines.
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The wholesale general agents that place our E&S Lines provide front-line underwriting in accordance with our prescribed guidelines. Our underwriters approve accounts written outside of our prescribed guidelines. Our E&S Lines territory managers are focused on the generation of new opportunities to grow our E&S Lines.
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Liability claims with high severity or technically complex losses are handled by the Complex Claims and Litigation Unit ("CCU"). The CCU specialists handle losses based on injury type or with expected severities greater than $250,000 in our Standard Commercial Lines and Standard Personal Lines, and severities greater than $100,000 in our E&S Lines.
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Litigated matters not meeting the CCU criteria are handled within our litigation unit. Teams of litigation adjusters are aligned by jurisdictional knowledge and technical experience, and are supervised by regional litigation managers. These claims are segregated from the CMSs to allow for focused management and application of specific technical expertise.
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Workers compensation claims handling is centralized in Charlotte, North Carolina. Jurisdictionally trained and aligned medical-only and lost-time adjusters manage non-complex workers compensation claims within our footprint. Claims with high exposure or significant escalation risk are referred to the workers compensation strategic case management unit.
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Low-severity, high-volume property claims are handled by the claims service center ("CSC"). Certain complex claims that do not involve structural damage (i.e. employee dishonesty and equipment breakdown losses) are handled by a small group of specialists in the CSC.
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The Large Loss Unit ("LLU") handles complex property claims, typically those in excess of $100,000.
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We centralize the following claims to align the highest level of expertise: (i) asbestos and environmental claims; (ii) construction defect claims; and (iii) other latent claims, including those related to abuse and molestation.
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Related to our financial condition: Oversight of matters such as minimum capital, surplus, solvency standards, accounting methods, form and content of statutory financial statements and other reports, loss and loss expense reserves, investments, reinsurance, dividend payments, other distributions to shareholders, security deposits, and periodic financial examinations.
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Related to our property and casualty insurance business: Oversight of matters such as certificates of authority and other insurance company licenses, licensing and compensation of distribution partners, premium rates (which may not be excessive, inadequate, or unfairly discriminatory), policy forms, policy terminations, claims handling and practices, cybersecurity, data protection and customer privacy, reporting of statistical information regarding our premiums and losses, periodic market conduct examinations, unfair trade practices, participation in mandatory shared market mechanisms, such as assigned risk pools and reinsurance pools, participation in mandatory state guaranty funds, and mandated continuing workers compensation coverage post-termination of employment.
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Related to our ownership of the Insurance Subsidiaries: Oversight of insurance holding company system registration in every state where an insurance subsidiary is domiciled and reporting about developments that may materially affect the operations, management, or financial condition of the insurers, including change in control.
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The Insurance Regulatory Information System ("IRIS"). IRIS identifies 13 industry financial ratios and specifies “usual values” for each ratio. Departure from the usual values on four or more of the financial ratios can lead to inquiries from individual state insurance departments about certain aspects of an insurer's business. Our Insurance Subsidiaries have consistently met the majority of the IRIS ratio tests.
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Risk-Based Capital ("RBC"). RBC is measured by four major areas of risk to which property and casualty insurers are exposed: (i) asset risk; (ii) credit risk; (iii) underwriting risk; and (iv) off-balance sheet risk. Regulators increase their scrutiny, up to and including intervention, as an insurer's total adjusted capital declines below three times its "Authorized Control Level." Based on our 2019 statutory financial statements prepared in accordance with SAP, the total adjusted capital for each of our Insurance Subsidiaries substantially exceeded three times their Authorized Control Level.
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Annual Financial Reporting Regulation (referred to as the "Model Audit Rule"). The Model Audit Rule, based closely on the Sarbanes-Oxley Act of 2002, as amended ("Sarbanes-Oxley Act"), regulates (i) auditor independence, (ii) corporate governance, and (iii) internal control over financial reporting. As permitted under the Model Audit Rule, the Audit Committee of the Board of Directors (the “Board”) of the Parent also serves as the audit committee of each of our Insurance Subsidiaries.
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Own Risk and Solvency Assessment ("ORSA"). ORSA requires an insurer to maintain a framework for identifying, assessing, monitoring, managing, and reporting on the “material and relevant risks” associated with the insurers' (or insurance groups') current and future business plans. ORSA, which the state insurance regulators of our Insurance Subsidiaries have adopted, requires an insurer to annually file an internal assessment of its solvency.
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McCarran-Ferguson Act;
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Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA");
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NFIP, which is overseen by the Mitigation Division of the Federal Emergency Management Agency ("FEMA");
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The Medicare, Medicaid, and SCHIP Extension Act of 2007, which subjects our workers compensation business to Mandatory Medicare Secondary Payer Reporting;
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The economic and trade sanctions of the Office of Foreign Assets Control (“OFAC”);
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Various privacy laws related to possession of personal non-public information, including the following:
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Gramm-Leach-Bliley Act;
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Fair Credit Reporting Act;
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Drivers Privacy Protection Act; and
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Health Insurance Portability and Accountability Act.
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The Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which govern, among other things, publicly-traded companies and require or permit national stock exchanges or associations, such as the NASDAQ Stock Market, where our securities are listed, to mandate certain governance practices of their listed companies.
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Establishing the Federal Insurance Office (“FIO”) under the U.S. Department of the Treasury; and
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Granting the Federal Reserve oversight of financial services firms designated as systemically important.
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Asset risk, which stems primarily from our investment portfolio and reinsurance recoverables and includes credit and market risk;
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Underwriting risk, which is the risk that the insured losses are higher than our expectations, including:
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Losses from inadequate loss reserves;
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Larger than expected non-catastrophe current accident year losses; and
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Catastrophe losses that exceed our expectations or our reinsurance treaty limits.
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Liquidity risk, which is the risk we will be unable to meet contractual obligations as they become due because we are unable to liquidate assets or obtain adequate funding without incurring unacceptable losses;
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Pension risk, which is the risk that the obligations under the Retirement Income Plan for Selective Insurance Company of America will exceed our expectations due to underperformance of the invested assets supporting those obligations or adverse changes in the assumptions used in the calculation of our pension liabilities;
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Other risks, including a broad range of operational risks that can be difficult to quantify, such as talent, market conditions, economic, legal, regulatory, reputational, and strategic risks, as well as the risks of fraud, human failure, or failure of controls or systems, including, for example, a rapidly-evolving cybersecurity risk; and
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Emerging risks, which include risks in each of the five categories above, but are either new, rapidly evolving, or increasing substantially compared to historical levels. For example, the increased frequency and intensity of severe wildfires, the exposures created by the legalization of cannabis, and the recent passage of reviver statutes for victims of abuse would all be considered emerging risks.
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Inability to access portions of the impacted areas following a catastrophic event;
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Scarcity of necessary labor and materials that delay repairs and increase our loss costs;
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Regulatory uncertainties, including new or expanded interpretations of coverage;
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Residual market assessment-related increases in our catastrophe losses;
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Potential fraud and unscrupulous contractors inflating repair costs;
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Higher loss adjustment expenses due to shortages of claims adjusters available to appraise damage;
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Late claims reporting;
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Escalation of business interruption costs due to infrastructure disruption; and
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Whether the U.S. Secretary of Treasury certifies that a terrorist event is an act of terrorism under TRIPRA.
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If economic inflation is higher than our assumptions, our loss and loss expense reserves associated with our longer tail lines of business may prove to be insufficient. In particular, our workers compensation line of business is susceptible to this risk, given its extended payment pattern, and the current low medical inflationary environment compared to longer term medical inflation rates, which have historically been higher.
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State legalization of marijuana for medical and recreational use may significantly impact future claims emergence if marijuana use drives higher claims frequencies or severities.
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Several states have expanded or are exploring expanding the statute of limitations for civil actions alleging sexual abuse. By retroactively permitting claims for previously time-barred acts, these “reviver” laws may result in insurance claims that could significantly increase loss costs and require re-evaluation of previously-established reserves or the creation of new reserves. Since reviver statutes have been enacted, we have received notices of claims or potential claims for acts alleged to have occurred as far back as the 1950s. With no prior experience, we cannot estimate how many "reviver" claims notices we may receive. Most notices we have received are sent on behalf of claimants by attorneys unsure of what insurer or policy (if any) may have covered the alleged assailant or supervising entity and may not implicate insurance policies issued by us or a predecessor. For notices we have determined implicate an insured under a policy issued by us or a predecessor, we (i) have investigated or are investigating facts, (ii) have evaluated policy terms, and (iii) believe we have appropriate coverage defenses and reinsurance protections that have been considered in establishing our reserves. As coverage positions may be challenged through litigation or otherwise, we face litigation risks further discussed below in the Risk Factor entitled, “Incidental to our insurance operations, we are engaged in ordinary routine legal proceedings that, because litigation outcomes are inherently unpredictable, could impact our reputation and/or have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.”
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Our reinsurers, which are obligated to make payments to us under our reinsurance agreements. Reinsurance credit risk can fluctuate over time, increasing during periods of high catastrophe loss activity. Reinsurers generally manage their large loss exposure through their own reinsurance programs, known as retrocessions, to which we sometimes do not have full visibility. If our reinsurers experience any difficulty in collecting on their retrocession programs, or in reinstating retrocession coverage after a large loss, it could impede timely and full payment of our reinsurance claims. This means that we have direct and indirect counterparty credit risk from our reinsurers, which operate in a relatively small global community.
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Certain life insurance companies from which we have purchased annuities for our customers under structured claims settlement agreements, if they fail to fulfill their obligations under the annuity contracts.
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Some of our distribution partners, who we allow to collect premiums due to us from our customers.
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Some of our customers, who are obligated to make premium and/or deductible payments directly to us.
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The invested assets in our defined benefit plan. If financial risk adversely impacts the valuation and performance of the invested assets in our defined benefit plan, the funded status of the defined benefit plan could be negatively impacted and the plan's expense, and our obligation to fund it, could increase.
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As independent distribution partners have access to products from multiple carriers and markets, we face competition in our distribution channel and must market our products and services to our distribution partners before they sell them to our mutual customers.
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Our customers rely on our independent distribution partners, and some customers do not differentiate between their insurance agent and their insurance carrier. Developing brand recognition, particularly with these types of customers can be challenging and requires us to coordinate with our distribution partners.
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Growth in our market share is principally dependent on growth in the market share controlled by our distribution partners. Independent retail insurance agencies control 84% of standard commercial lines business and 35% of standard personal lines business in the U.S. Consequently, expansion of our Standard Personal Lines market opportunity could be more limited than our Standard Commercial Lines business. To address the discrepancy in agency control of Standard Personal Lines business, more competitors have focused on lower-cost "direct-to-the-customer" distribution models that emphasize digital ease and technological efficiencies. Continued advancements in "direct-to-the-customer" distribution models may impact the overall market share controlled by our independent distribution partners and make it more difficult for us to grow, or require us to establish relationships with more distribution partners.
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Over the past several years, some publicly-traded and private equity-backed independent distribution partners have employed consolidation strategies to acquire other independent distribution partners and increase their market share ("Aggregators"). As more of our independent distribution partners become Aggregators, or are acquired by Aggregators, their influence and demands on our business could increase. It is possible that Aggregators could develop and implement strategies to consolidate their business with fewer insurance carriers and demand higher base and supplemental commissions. Aggregators accounted for approximately 28% of our DPW at December 31, 2019. Currently, no one distribution partner is responsible for 10% or more of our combined insurance operations' premium.
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Pricing and underwriting practices;
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Claims practices;
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Loss and loss adjustment expense reserves;
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Exiting geographic markets and/or canceling or non-renewing policies;
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Assessments for guaranty funds and second-injury funds, and other mandatory assigned risks and reinsurance;
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The types, quality, and concentration of investments we make;
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Minimum capital requirements for the Insurance Subsidiaries;
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Dividends from our Insurance Subsidiaries to the Parent;
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Privacy and data security;
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Tax;
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Antitrust;
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Consumer protection;
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Advertising;
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Sales;
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Billing and e-commerce;
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Intellectual property ownership and infringement;
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Digital platforms;
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Internet, telecommunications, and mobile communications;
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Media and digital content;
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Availability of third-party software applications and services;
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Labor and employment;
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Anti-money laundering; and
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Environmental, health, and safety.
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Defense of or indemnity for third-party suits brought against our insureds;
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Defense of actions brought against us by our insureds who disagree with our coverage decisions, some of which allege bad faith claims handling and seek extra-contractual damages, punitive damages, or other penalties;
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Actions we file, primarily for declaratory judgment, seeking confirmation that we have made appropriate coverage decisions under our insurance contracts;
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Actions brought against us or competitors alleging improper business practices and sometimes seeking class status. Such actions historically have included issues and allegations, without limitation, related to (i) unfairly discriminatory underwriting practices, including the impact of credit score usage, (ii) managed care practices, such as provider reimbursement, and (iii) automobile claims practices; and
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Actions we file against third parties and other insurers for subrogation and recovery of other amounts we paid on behalf of our insureds.
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Period
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Total Number of Shares Purchased1
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Average Price Paid Per Share
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Total Number of Shares Purchased as Part of Publicly Announced Programs
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Maximum Number of Shares that May Yet Be Purchased Under the Announced Programs
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October 1 – 31, 2019
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1,057
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74.58
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—
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—
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November 1 – 30, 2019
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23
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$
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64.57
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—
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—
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December 1 – 31, 2019
|
|
194
|
|
|
63.93
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
1,274
|
|
|
$
|
72.78
|
|
|
—
|
|
|
—
|
|
Five-Year Financial Highlights1
|
||||||||||||||||||
(All presentations are in accordance with Generally Accepted Accounting Principles ("GAAP") unless noted otherwise; number of weighted average shares and dollars in thousands, except per share amounts)
|
||||||||||||||||||
|
|
2019
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net premiums written
|
|
$
|
2,679,424
|
|
|
|
|
2,514,286
|
|
|
2,370,641
|
|
|
2,237,288
|
|
|
2,069,904
|
|
Net premiums earned
|
|
2,597,171
|
|
|
|
|
2,436,229
|
|
|
2,291,027
|
|
|
2,149,572
|
|
|
1,989,909
|
|
|
Net investment income earned
|
|
222,543
|
|
|
|
|
195,336
|
|
|
161,882
|
|
|
130,754
|
|
|
121,316
|
|
|
Net realized and unrealized gains (losses)2
|
|
14,422
|
|
|
|
|
(54,923
|
)
|
|
6,359
|
|
|
(4,937
|
)
|
|
13,171
|
|
|
Total revenues
|
|
2,846,491
|
|
|
|
|
2,586,080
|
|
|
2,469,984
|
|
|
2,284,270
|
|
|
2,131,852
|
|
|
Catastrophe losses
|
|
81,001
|
|
|
|
|
88,023
|
|
|
67,299
|
|
|
59,735
|
|
|
59,055
|
|
|
Underwriting income
|
|
163,993
|
|
|
|
|
121,173
|
|
|
154,336
|
|
|
151,933
|
|
|
149,029
|
|
|
Net income
|
|
271,623
|
|
|
|
|
178,939
|
|
|
168,826
|
|
|
158,495
|
|
|
165,861
|
|
|
Comprehensive income
|
|
431,329
|
|
|
|
|
105,832
|
|
|
204,946
|
|
|
151,970
|
|
|
136,648
|
|
|
Total assets
|
|
8,797,150
|
|
|
|
|
7,952,729
|
|
|
7,686,431
|
|
|
7,355,848
|
|
|
6,904,433
|
|
|
Short-term debt
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,000
|
|
|
Long-term debt
|
|
550,597
|
|
|
|
|
439,540
|
|
|
439,116
|
|
|
438,667
|
|
|
328,192
|
|
|
Stockholders’ equity
|
|
2,194,936
|
|
|
|
|
1,791,802
|
|
|
1,712,957
|
|
|
1,531,370
|
|
|
1,398,041
|
|
|
Statutory premiums to surplus ratio
|
|
1.4
|
|
|
x
|
|
1.4
|
|
|
1.4
|
|
|
1.4
|
|
|
1.5
|
|
|
Combined ratio
|
|
93.7
|
|
|
%
|
|
95.0
|
|
|
93.3
|
|
|
92.9
|
|
|
92.5
|
|
|
Impact of catastrophe losses on combined ratio
|
|
3.1
|
|
|
pts
|
|
3.6
|
|
|
2.9
|
|
|
2.8
|
|
|
3.0
|
|
|
Invested assets per dollar of stockholders' equity
|
|
$
|
3.05
|
|
|
|
|
3.33
|
|
|
3.32
|
|
|
3.50
|
|
|
3.64
|
|
Yield on investments, after tax
|
|
2.9
|
|
|
%
|
|
2.8
|
|
|
2.1
|
|
|
1.9
|
|
|
1.9
|
|
|
Debt to capitalization ratio
|
|
20.1
|
|
|
|
|
19.7
|
|
|
20.4
|
|
|
22.3
|
|
|
21.7
|
|
|
Return on average equity
|
|
13.6
|
|
|
|
|
10.2
|
|
|
10.4
|
|
|
10.8
|
|
|
12.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP operating income3
|
|
$
|
264,418
|
|
|
|
|
218,567
|
|
|
184,898
|
|
|
161,704
|
|
|
157,300
|
|
Diluted non-GAAP operating income per share3
|
|
4.40
|
|
|
|
|
3.66
|
|
|
3.11
|
|
|
2.75
|
|
|
2.70
|
|
|
Non-GAAP operating ROE3
|
|
13.3
|
|
|
%
|
|
12.5
|
|
|
11.4
|
|
|
11.0
|
|
|
11.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Basic
|
|
$
|
4.57
|
|
|
|
|
3.04
|
|
|
2.89
|
|
|
2.74
|
|
|
2.90
|
|
Diluted
|
|
4.53
|
|
|
|
|
3.00
|
|
|
2.84
|
|
|
2.70
|
|
|
2.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends to stockholders
|
|
$
|
0.83
|
|
|
|
|
0.74
|
|
|
0.66
|
|
|
0.61
|
|
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Book value per share
|
|
36.91
|
|
|
|
|
30.40
|
|
|
29.28
|
|
|
26.42
|
|
|
24.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Price range of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
High
|
|
81.35
|
|
|
|
|
67.17
|
|
|
62.40
|
|
|
44.00
|
|
|
37.91
|
|
|
Low
|
|
58.06
|
|
|
|
|
53.55
|
|
|
38.50
|
|
|
29.27
|
|
|
25.49
|
|
|
Close
|
|
65.19
|
|
|
|
|
60.94
|
|
|
58.70
|
|
|
43.05
|
|
|
33.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Number of weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Basic
|
|
59,421
|
|
|
|
|
58,950
|
|
|
58,458
|
|
|
57,889
|
|
|
57,212
|
|
|
Diluted
|
|
60,004
|
|
|
|
|
59,713
|
|
|
59,357
|
|
|
58,747
|
|
|
58,156
|
|
•
|
Standard Commercial Lines;
|
•
|
Standard Personal Lines;
|
•
|
E&S Lines; and
|
•
|
Investments.
|
•
|
Critical Accounting Policies and Estimates;
|
•
|
Financial Highlights of Results for Years Ended December 31, 2019, 2018, and 2017;
|
•
|
Results of Operations and Related Information by Segment;
|
•
|
Federal Income Taxes;
|
•
|
Financial Condition, Liquidity, and Capital Resources;
|
•
|
Off-Balance Sheet Arrangements; and
|
•
|
Contractual Obligations, Contingent Liabilities, and Commitments.
|
As of December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Loss and Loss Expense Reserves
|
|
|
|
|
||||||||||
($ in thousands)
|
|
Case
Reserves
|
|
IBNR
Reserves
|
|
Total
|
|
Reinsurance Recoverable on Unpaid Loss and Loss Expense
|
|
Net Reserves
|
||||||
General liability
|
|
$
|
247,267
|
|
|
1,269,643
|
|
|
1,516,910
|
|
|
195,830
|
|
|
1,321,080
|
|
Workers compensation
|
|
372,104
|
|
|
729,298
|
|
|
1,101,402
|
|
|
206,414
|
|
|
894,988
|
|
|
Commercial automobile
|
|
216,358
|
|
|
408,371
|
|
|
624,729
|
|
|
14,352
|
|
|
610,377
|
|
|
Businessowners' policies
|
|
35,062
|
|
|
57,929
|
|
|
92,991
|
|
|
3,012
|
|
|
89,979
|
|
|
Commercial property
|
|
63,678
|
|
|
17,083
|
|
|
80,761
|
|
|
26,526
|
|
|
54,235
|
|
|
Other
|
|
14,213
|
|
|
5,357
|
|
|
19,570
|
|
|
9,113
|
|
|
10,457
|
|
|
Total Standard Commercial Lines
|
|
948,682
|
|
|
2,487,681
|
|
|
3,436,363
|
|
|
455,247
|
|
|
2,981,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Personal automobile
|
|
68,605
|
|
|
80,445
|
|
|
149,050
|
|
|
44,104
|
|
|
104,946
|
|
|
Homeowners
|
|
13,616
|
|
|
21,713
|
|
|
35,329
|
|
|
1,182
|
|
|
34,147
|
|
|
Other
|
|
11,600
|
|
|
28,221
|
|
|
39,821
|
|
|
28,993
|
|
|
10,828
|
|
|
Total Standard Personal Lines
|
|
93,821
|
|
|
130,379
|
|
|
224,200
|
|
|
74,279
|
|
|
149,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
E&S casualty lines1
|
|
68,042
|
|
|
328,301
|
|
|
396,343
|
|
|
14,319
|
|
|
382,024
|
|
|
E&S property lines2
|
|
3,146
|
|
|
7,111
|
|
|
10,257
|
|
|
317
|
|
|
9,940
|
|
|
Total E&S Lines
|
|
71,188
|
|
|
335,412
|
|
|
406,600
|
|
|
14,636
|
|
|
391,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
$
|
1,113,691
|
|
|
2,953,472
|
|
|
4,067,163
|
|
|
544,162
|
|
|
3,523,001
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Loss and Loss Expense Reserves
|
|
|
|
|
||||||||||
($ in thousands)
|
|
Case
Reserves
|
|
IBNR
Reserves
|
|
Total
|
|
Reinsurance Recoverable on Unpaid Loss and Loss Expense
|
|
Net Reserves
|
||||||
General liability
|
|
$
|
244,367
|
|
|
1,152,770
|
|
|
1,397,137
|
|
|
181,102
|
|
|
1,216,035
|
|
Workers compensation
|
|
402,732
|
|
|
742,726
|
|
|
1,145,458
|
|
|
220,683
|
|
|
924,775
|
|
|
Commercial auto
|
|
197,777
|
|
|
363,234
|
|
|
561,011
|
|
|
15,641
|
|
|
545,370
|
|
|
Businessowners' policies
|
|
31,631
|
|
|
60,675
|
|
|
92,306
|
|
|
3,473
|
|
|
88,833
|
|
|
Commercial property
|
|
63,651
|
|
|
10,943
|
|
|
74,594
|
|
|
12,620
|
|
|
61,974
|
|
|
Other
|
|
6,339
|
|
|
6,686
|
|
|
13,025
|
|
|
2,909
|
|
|
10,116
|
|
|
Total Standard Commercial Lines
|
|
946,497
|
|
|
2,337,034
|
|
|
3,283,531
|
|
|
436,428
|
|
|
2,847,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Personal automobile
|
|
70,993
|
|
|
75,081
|
|
|
146,074
|
|
|
45,572
|
|
|
100,502
|
|
|
Homeowners
|
|
14,627
|
|
|
20,109
|
|
|
34,736
|
|
|
1,346
|
|
|
33,390
|
|
|
Other
|
|
14,569
|
|
|
27,844
|
|
|
42,413
|
|
|
31,777
|
|
|
10,636
|
|
|
Total Standard Personal Lines
|
|
100,189
|
|
|
123,034
|
|
|
223,223
|
|
|
78,695
|
|
|
144,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
E&S casualty lines1
|
|
66,867
|
|
|
304,864
|
|
|
371,731
|
|
|
21,898
|
|
|
349,833
|
|
|
E&S property lines2
|
|
8,053
|
|
|
7,330
|
|
|
15,383
|
|
|
367
|
|
|
15,016
|
|
|
E&S Lines
|
|
74,920
|
|
|
312,194
|
|
|
387,114
|
|
|
22,265
|
|
|
364,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
$
|
1,121,606
|
|
|
2,772,262
|
|
|
3,893,868
|
|
|
537,388
|
|
|
3,356,480
|
|
i.
|
At its inception, the current accident year’s reserves are recorded based upon the actuarial expectation for the ultimate loss and loss expense ratios. This approach reflects that, at inception, there is no actual loss data from which to project estimates.
|
ii.
|
Prior accident years’ ultimate losses and loss expenses are held constant from the prior period. Similar to the current accident year, the associated IBNR provision is set equal to the ultimate loss and loss expense minus the amounts paid and reserved in case for reported claims.
|
•
|
Taking meaningful rate and underwriting actions on our renewal portfolio. We will continue to leverage our predictive modeling and analytical capabilities to provide more granular insights as to where best to focus our actions.
|
•
|
Aggressively managing new business pricing and hazard mix, co-underwriting selected higher hazard classes by the field and home office, providing better recognition of risk drivers, and improved pricing.
|
•
|
Reducing premium leakage by improving the quality of our rating information. This includes validating application information using third-party data and obtaining more detailed driver information.
|
•
|
Implementing new tools to score drivers to underwrite more effectively and align rate with exposure.
|
•
|
Over the course of late 2015 and early 2016, our E&S casualty lines claims handling function was aligned with our standard operations claims function. E&S casualty lines claims were migrated from the business unit in Scottsdale, Arizona to the appropriate regional claims operation. Complex claims are referred to the corporate Complex Claims Unit ("CCU") for specialized handling.
|
•
|
Claims have been segregated into “litigated” and “non-litigated” categories. Separate claim handling teams have been created, with the required skill sets, to appropriately handle these two types of claims.
|
•
|
We implemented the following expense improvement initiatives regarding outside adjusters and legal counsel:
|
◦
|
Maximized use of staff counsel, increasing staff where necessary to support claims volume;
|
◦
|
Utilized staff coverage attorney for coverage reviews;
|
◦
|
Heightened focus on legal budgeting and expense management;
|
◦
|
Required panel counsel firms to use our electronic legal billing and budgeting system to better manage budgets and expenses associated with litigation; and
|
◦
|
Implemented a panel counsel review process.
|
•
|
The selection of loss and loss expense development factors;
|
•
|
The weight to be applied to each individual actuarial projection method;
|
•
|
Projected future loss trends; and
|
•
|
Expected claim frequencies, severities, and ultimate loss and loss expense ratios for the current accident year.
|
Reconciliation of net income to non-GAAP operating income
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Net income
|
|
$
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
Net realized and unrealized (gains) losses, before tax
|
|
(14,422
|
)
|
|
54,923
|
|
|
(6,359
|
)
|
|
Debt retirement costs, before tax
|
|
4,175
|
|
|
—
|
|
|
—
|
|
|
Tax on reconciling items
|
|
3,042
|
|
|
(15,295
|
)
|
|
2,226
|
|
|
Tax Reform impact
|
|
—
|
|
|
—
|
|
|
20,205
|
|
|
Non-GAAP operating income
|
|
$
|
264,418
|
|
|
218,567
|
|
|
184,898
|
|
Reconciliation of net income per diluted share to non-GAAP operating income per diluted share
|
|
2019
|
|
2018
|
|
2017
|
||||
Net income per diluted share
|
|
$
|
4.53
|
|
|
3.00
|
|
|
2.84
|
|
Net realized and unrealized (gains) losses, before tax
|
|
(0.24
|
)
|
|
0.92
|
|
|
(0.11
|
)
|
|
Debt retirement costs, before tax
|
|
0.07
|
|
|
—
|
|
|
—
|
|
|
Tax on reconciling items
|
|
0.04
|
|
|
(0.26
|
)
|
|
0.04
|
|
|
Tax Reform impact
|
|
—
|
|
|
—
|
|
|
0.34
|
|
|
Non-GAAP operating income per diluted share
|
|
$
|
4.40
|
|
|
3.66
|
|
|
3.11
|
|
Reconciliation of ROE to non-GAAP operating ROE
|
|
2019
|
|
2018
|
|
2017
|
|||
ROE
|
|
13.6
|
%
|
|
10.2
|
|
|
10.4
|
|
Net realized and unrealized (gains) losses, before tax
|
|
(0.7
|
)
|
|
3.1
|
|
|
(0.4
|
)
|
Debt retirement costs, before tax
|
|
0.2
|
|
|
—
|
|
|
—
|
|
Tax on reconciling items
|
|
0.2
|
|
|
(0.8
|
)
|
|
0.2
|
|
Tax Reform impact
|
|
—
|
|
|
—
|
|
|
1.2
|
|
Non-GAAP operating ROE
|
|
13.3
|
%
|
|
12.5
|
|
|
11.4
|
|
ROE Components
|
|
2019
|
|
2018
|
|
Change Points
|
|
2017
|
|
Change
Points
|
|||||
Standard Commercial Lines Segment
|
|
5.8
|
%
|
|
4.9
|
|
|
0.9
|
|
|
6.1
|
|
|
(1.2
|
)
|
Standard Personal Lines Segment
|
|
0.3
|
|
|
0.6
|
|
|
(0.3
|
)
|
|
0.4
|
|
|
0.2
|
|
E&S Lines Segment
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
(0.3
|
)
|
|
0.3
|
|
Total insurance operations
|
|
6.5
|
|
|
5.5
|
|
|
1.0
|
|
|
6.2
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income
|
|
9.1
|
|
|
9.2
|
|
|
(0.1
|
)
|
|
7.3
|
|
|
1.9
|
|
Net realized and unrealized gains (losses)
|
|
0.5
|
|
|
(2.3
|
)
|
|
2.8
|
|
|
0.2
|
|
|
(2.5
|
)
|
Total investments segment
|
|
9.6
|
|
|
6.9
|
|
|
2.7
|
|
|
7.5
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Debt retirement costs
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
Tax Reform impact
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
1.2
|
|
Other
|
|
(2.3
|
)
|
|
(2.2
|
)
|
|
(0.1
|
)
|
|
(2.1
|
)
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||
ROE
|
|
13.6
|
%
|
|
10.2
|
|
|
3.4
|
|
|
10.4
|
|
|
(0.2
|
)
|
All Lines
|
|
|
|
|
|
|
2019
vs. 2018
|
|
|
|
|
2018
vs. 2017
|
|
|||||
($ in thousands)
|
|
2019
|
|
2018
|
|
|
2017
|
|
|
|||||||||
Insurance Operations Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NPW
|
|
$
|
2,679,424
|
|
|
2,514,286
|
|
|
7
|
|
%
|
$
|
2,370,641
|
|
|
6
|
|
%
|
Net premiums earned ("NPE")
|
|
2,597,171
|
|
|
2,436,229
|
|
|
7
|
|
|
2,291,027
|
|
|
6
|
|
|
||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss and loss expense incurred
|
|
1,551,491
|
|
|
1,498,134
|
|
|
4
|
|
|
1,345,074
|
|
|
11
|
|
|
||
Net underwriting expenses incurred
|
|
876,567
|
|
|
808,939
|
|
|
8
|
|
|
786,983
|
|
|
3
|
|
|
||
Dividends to policyholders
|
|
5,120
|
|
|
7,983
|
|
|
(36
|
)
|
|
4,634
|
|
|
72
|
|
|
||
Underwriting income
|
|
$
|
163,993
|
|
|
121,173
|
|
|
35
|
|
%
|
$
|
154,336
|
|
|
(21
|
)
|
%
|
Combined Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Loss and loss expense ratio
|
|
59.7
|
|
%
|
61.5
|
|
|
(1.8
|
)
|
pts
|
58.7
|
|
%
|
2.8
|
|
pts
|
||
Underwriting expense ratio
|
|
33.8
|
|
|
33.2
|
|
|
0.6
|
|
|
34.4
|
|
|
(1.2
|
)
|
|
||
Dividends to policyholders ratio
|
|
0.2
|
|
|
0.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
0.1
|
|
|
||
Combined ratio
|
|
93.7
|
|
|
95.0
|
|
|
(1.3
|
)
|
|
93.3
|
|
|
1.7
|
|
|
($ in millions)
|
Non-Catastrophe Property
Loss and Loss Expenses
|
|
Catastrophe Losses
|
|
|
|
||||||||||||
For the year ended December 31,
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Total Impact on Loss and Loss Expense Ratio
|
(Favorable)/Unfavorable Change in Ratio
|
||||||||
2019
|
$
|
410.5
|
|
|
15.8
|
|
pts
|
$
|
81.0
|
|
|
3.1
|
|
pts
|
18.9
|
|
(1.3
|
)
|
2018
|
405.6
|
|
|
16.6
|
|
|
88.0
|
|
|
3.6
|
|
|
20.2
|
|
2.1
|
|
($ in millions)
|
Favorable Prior Year Casualty Reserve Development
|
|
|
|||||
For the year ended December 31,
|
Loss and Loss
Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
(Favorable)/Unfavorable Change in Ratio
|
|||
2019
|
(61.0
|
)
|
|
(2.3
|
)
|
pts
|
(0.6
|
)
|
2018
|
(41.5
|
)
|
|
(1.7
|
)
|
|
0.4
|
|
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
|
|
|
|
|
|
||||
($ in millions)
|
2019
|
|
2018
|
|
2017
|
||||
General liability
|
$
|
(5.0
|
)
|
|
(9.5
|
)
|
|
(48.3
|
)
|
Commercial automobile
|
4.0
|
|
|
37.5
|
|
|
36.0
|
|
|
Workers compensation
|
(68.0
|
)
|
|
(83.0
|
)
|
|
(52.3
|
)
|
|
Businessowners' policies
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
Other
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
Total Standard Commercial Lines
|
(69.0
|
)
|
|
(58.0
|
)
|
|
(66.6
|
)
|
|
|
|
|
|
|
|
||||
Homeowners
|
—
|
|
|
1.5
|
|
|
1.0
|
|
|
Personal automobile
|
6.0
|
|
|
3.0
|
|
|
7.0
|
|
|
Total Standard Personal Lines
|
6.0
|
|
|
4.5
|
|
|
8.0
|
|
|
|
|
|
|
|
|
||||
E&S
|
2.0
|
|
|
12.0
|
|
|
10.0
|
|
|
|
|
|
|
|
|
||||
Total (favorable) prior year casualty reserve development
|
$
|
(61.0
|
)
|
|
(41.5
|
)
|
|
(48.6
|
)
|
|
|
|
|
|
|
||||
(Favorable) impact on loss ratio
|
(2.3
|
)
|
pts
|
(1.7
|
)
|
|
(2.1
|
)
|
•
|
Actively managing the investment portfolio to minimize the impact of lower interest rates on after-tax yields while managing credit, duration, and liquidity risk.
|
•
|
Continuing to achieve written renewal pure price increases that meet or exceed expected loss trend.
|
•
|
Delivering on our strategy for continued disciplined growth, which will be driven by the addition of new agents, greater share of wallet in our agents’ offices, and geographic expansion over the longer term. Our longer-term Standard Commercial Lines target is to attain a 3% market share in the states in which we operate, by appointing partner relationships approximating 25% of their markets and seeking an average share of wallet of 12% across the relationships. This goal represents an additional premium opportunity in excess of $2.7 billion.
|
•
|
Identifying opportunities to enhance operational efficiencies, including optimizing compensation and commission structures, and evaluating process improvements by better leveraging technologies, automation and robotics, and thereby driving our expense ratio down over time.
|
•
|
A GAAP combined ratio, excluding catastrophe losses, of 91.5%. This assumes no prior-year casualty reserve development;
|
•
|
Catastrophe losses of 3.5 points;
|
•
|
After-tax net investment income of $185 million, which includes $14 million after-tax net investment income from our alternative investments;
|
•
|
An overall effective tax rate of approximately 19.5%, which also includes an effective tax rate of 18.5% for net investment income, reflecting a tax rate of 5.25% for tax-advantaged municipal bonds, and a tax rate of 21% for all other items; and
|
•
|
Weighted average shares outstanding of 60.5 million on a diluted basis.
|
|
||||||||||||||||||
|
|
|
|
|
|
2019
vs. 2018
|
|
|
|
2018
vs. 2017
|
|
|||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
|
2017
|
|
|
|||||||||
Insurance Segments Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
NPW
|
|
$
|
2,137,071
|
|
|
1,975,683
|
|
|
8
|
|
%
|
$
|
1,858,735
|
|
|
6
|
|
%
|
NPE
|
|
2,049,614
|
|
|
1,912,222
|
|
|
7
|
|
|
1,788,499
|
|
|
7
|
|
|
||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loss and loss expense incurred
|
|
1,187,856
|
|
|
1,141,038
|
|
|
4
|
|
|
1,008,150
|
|
|
13
|
|
|
||
Net underwriting expenses incurred
|
|
710,648
|
|
|
654,097
|
|
|
9
|
|
|
626,201
|
|
|
4
|
|
|
||
Dividends to policyholders
|
|
5,120
|
|
|
7,983
|
|
|
(36
|
)
|
|
4,634
|
|
|
72
|
|
|
||
Underwriting income
|
|
$
|
145,990
|
|
|
109,104
|
|
|
34
|
|
%
|
$
|
149,514
|
|
|
(27
|
)
|
%
|
Combined Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loss and loss expense ratio
|
|
58.0
|
|
%
|
59.7
|
|
|
(1.7
|
)
|
pts
|
56.3
|
|
%
|
3.4
|
|
pts
|
||
Underwriting expense ratio
|
|
34.7
|
|
|
34.2
|
|
|
0.5
|
|
|
35.0
|
|
|
(0.8
|
)
|
|
||
Dividends to policyholders ratio
|
|
0.2
|
|
|
0.4
|
|
|
(0.2
|
)
|
|
0.3
|
|
|
0.1
|
|
|
||
Combined ratio
|
|
92.9
|
|
|
94.3
|
|
|
(1.4
|
)
|
|
91.6
|
|
|
2.7
|
|
|
|
|
For the Year Ended December 31,
|
|||||
($ in millions)
|
|
2019
|
|
2018
|
|||
Retention
|
|
83
|
|
%
|
83
|
|
|
Renewal pure price increases on NPW
|
|
3.4
|
|
|
3.5
|
|
|
Direct new business
|
|
$
|
411.2
|
|
|
381.2
|
|
($ in millions)
|
Non-Catastrophe Property Losses
|
|
Catastrophe Losses
|
|
|
||||||||||||||
For the year ended December 31,
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Total Impact on Loss and Loss Expense Ratio
|
|
(Favorable)/Unfavorable Year-Over-Year Change
|
||||||||
2019
|
$
|
283.6
|
|
|
13.8
|
|
pts
|
$
|
54.2
|
|
|
2.6
|
|
pts
|
16.4
|
|
|
(1.3
|
)
|
2018
|
273.9
|
|
|
14.3
|
|
|
64.3
|
|
|
3.4
|
|
|
17.7
|
|
|
2.5
|
|
($ in millions)
|
|
|
|||||||||
|
|
(Favorable) Prior Year Casualty Reserve Development
|
|
|
(Favorable)/Unfavorable Year-Over-Year Change
|
||||||
For the year ended December 31,
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
|
|||||
2019
|
|
$
|
(69.0
|
)
|
|
(3.4
|
)
|
|
pts
|
(0.4
|
)
|
2018
|
|
(58.0
|
)
|
|
(3.0
|
)
|
|
|
0.7
|
|
General Liability
|
||||||||||||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2019
vs. 2018 |
|
2017
|
|
2018
vs. 2017 |
|
|||||||
NPW
|
|
$
|
699,262
|
|
|
639,720
|
|
|
9
|
|
%
|
$
|
594,816
|
|
|
8
|
|
%
|
Direct new business
|
|
119,055
|
|
|
112,683
|
|
|
6
|
|
|
110,069
|
|
|
2
|
|
|
||
Retention
|
|
83
|
|
%
|
83
|
|
|
—
|
|
pts
|
83
|
|
%
|
—
|
|
pts
|
||
Renewal pure price increases
|
|
2.8
|
|
|
2.6
|
|
|
0.2
|
|
|
2.6
|
|
|
—
|
|
|
||
NPE
|
|
$
|
669,895
|
|
|
616,187
|
|
|
9
|
|
%
|
$
|
569,217
|
|
|
8
|
|
%
|
Underwriting income
|
|
69,932
|
|
|
70,268
|
|
|
—
|
|
|
98,229
|
|
|
(28
|
)
|
|
||
Combined ratio
|
|
89.6
|
|
|
88.6
|
|
|
1.0
|
|
|
82.7
|
|
|
5.9
|
|
|
||
% of total standard commercial NPW
|
|
33
|
|
|
32
|
|
|
|
|
|
32
|
|
|
|
|
|
($ in millions)
|
|
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
|
|
|
Unfavorable
Year-Over-Year Change
|
||||||
For the year ended December 31,
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
|
|||||
2019
|
|
$
|
(5.0
|
)
|
|
(0.7
|
)
|
|
pts
|
0.8
|
|
2018
|
|
(9.5
|
)
|
|
(1.5
|
)
|
|
|
7.0
|
|
Commercial Automobile
|
||||||||||||||||||
|
|
|
|
|
|
2019
vs. 2018
|
|
|
|
2018
vs. 2017
|
|
|||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
|
2017
|
|
|
|||||||||
NPW
|
|
$
|
590,011
|
|
|
518,942
|
|
|
14
|
|
%
|
$
|
465,621
|
|
|
11
|
|
%
|
Direct new business
|
|
102,956
|
|
|
94,442
|
|
|
9
|
|
|
78,869
|
|
|
20
|
|
|
||
Retention
|
|
83
|
|
%
|
83
|
|
|
—
|
|
pts
|
84
|
|
%
|
(1
|
)
|
pts
|
||
Renewal pure price increases
|
|
7.5
|
|
|
7.3
|
|
|
0.2
|
|
|
6.7
|
|
|
0.6
|
|
|
||
NPE
|
|
$
|
554,256
|
|
|
493,093
|
|
|
12
|
|
%
|
$
|
442,818
|
|
|
11
|
|
%
|
Underwriting loss
|
|
(43,797
|
)
|
|
(77,403
|
)
|
|
43
|
|
|
(65,267
|
)
|
|
(19
|
)
|
|
||
Combined ratio
|
|
107.9
|
|
|
115.7
|
|
|
(7.8
|
)
|
|
114.7
|
|
|
1.0
|
|
|
||
% of total standard commercial NPW
|
|
28
|
|
|
26
|
|
|
|
|
|
25
|
|
|
|
|
|
($ in millions)
|
Non-Catastrophe Property Losses
|
|
Catastrophe Losses
|
|
|
||||||||||||||
For the year ended December 31,
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Total Impact on Loss and Loss Expense Ratio
|
|
(Favorable)/Unfavorable Year-Over-Year Change
|
||||||||
2019
|
$
|
100.8
|
|
|
18.2
|
|
pts
|
$
|
2.1
|
|
|
0.4
|
|
pts
|
18.6
|
|
|
(0.3
|
)
|
2018
|
90.1
|
|
|
18.3
|
|
|
2.9
|
|
|
0.6
|
|
|
18.9
|
|
|
0.8
|
|
($ in millions)
|
|
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
|
|
|
(Favorable)
Year-Over-Year Change
|
||||||
For the year ended December 31,
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
|
|||||
2019
|
|
$
|
4.0
|
|
|
0.7
|
|
|
pts
|
(6.9
|
)
|
2018
|
|
37.5
|
|
|
7.6
|
|
|
|
(0.5
|
)
|
Workers Compensation
|
||||||||||||||||||
|
|
|
|
|
|
2019
vs. 2018 |
|
|
|
2018
vs. 2017 |
|
|||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
|
2017
|
|
|
|||||||||
NPW
|
|
$
|
309,322
|
|
|
316,647
|
|
|
(2
|
)
|
%
|
$
|
323,263
|
|
|
(2
|
)
|
%
|
Direct new business
|
|
60,139
|
|
|
60,089
|
|
|
—
|
|
|
66,616
|
|
|
(10
|
)
|
|
||
Retention
|
|
84
|
|
%
|
84
|
|
|
—
|
|
pts
|
84
|
|
%
|
—
|
|
pts
|
||
Renewal pure price (decreases) increases
|
|
(2.8
|
)
|
|
(0.2
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
||
NPE
|
|
$
|
311,370
|
|
|
317,616
|
|
|
(2
|
)
|
%
|
$
|
317,982
|
|
|
—
|
|
%
|
Underwriting income
|
|
80,630
|
|
|
94,395
|
|
|
(15
|
)
|
|
61,693
|
|
|
53
|
|
|
||
Combined ratio
|
|
74.1
|
|
|
70.3
|
|
|
3.8
|
|
|
80.6
|
|
|
(10.3
|
)
|
|
||
% of total standard commercial NPW
|
|
14
|
|
|
16
|
|
|
|
|
|
17
|
|
|
|
|
Commercial Property
|
||||||||||||||||||
|
|
|
|
|
|
2019
vs. 2018
|
|
|
|
2018
vs. 2017
|
|
|||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
|
2017
|
|
|
|||||||||
NPW
|
|
$
|
373,809
|
|
|
342,027
|
|
|
9
|
|
%
|
$
|
322,343
|
|
|
6
|
|
%
|
Direct new business
|
|
88,527
|
|
|
76,391
|
|
|
16
|
|
|
73,951
|
|
|
3
|
|
|
||
Retention
|
|
82
|
|
%
|
82
|
|
|
—
|
|
pts
|
82
|
|
%
|
—
|
|
pts
|
||
Renewal pure price increases
|
|
3.3
|
|
|
3.1
|
|
|
0.2
|
|
|
1.7
|
|
|
1.4
|
|
|
||
NPE
|
|
$
|
353,834
|
|
|
329,660
|
|
|
7
|
|
%
|
$
|
311,932
|
|
|
6
|
|
%
|
Underwriting income (loss)
|
|
21,639
|
|
|
(3,211
|
)
|
|
774
|
|
|
31,976
|
|
|
(110
|
)
|
|
||
Combined ratio
|
|
93.9
|
|
|
101.0
|
|
|
(7.1
|
)
|
|
89.7
|
|
|
11.3
|
|
|
||
% of total standard commercial NPW
|
|
17
|
|
|
17
|
|
|
|
|
|
17
|
|
|
|
|
|
($ in millions)
|
Non-Catastrophe Property Losses
|
|
Catastrophe Losses
|
|
|
|
(Favorable)/Unfavorable Year-Over-Year Change
|
||||||||||
For the year ended December 31,
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Total Impact on Loss and Loss Expense Ratio
|
|
|||||||
2019
|
$
|
149.7
|
|
|
42.3
|
pts
|
$
|
44.9
|
|
|
12.7
|
pts
|
55.0
|
|
|
(7.5
|
)
|
2018
|
154.3
|
|
|
46.8
|
|
51.7
|
|
|
15.7
|
|
62.5
|
|
|
11.1
|
|
|
|
|
|
|
|
2019
vs. 2018
|
|
|
|
2018
vs. 2017
|
|
|||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
|
2017
|
|
|
|||||||||
Insurance Segments Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
NPW
|
|
$
|
304,592
|
|
|
309,277
|
|
|
(2
|
)
|
%
|
$
|
296,775
|
|
|
4
|
|
%
|
NPE
|
|
307,739
|
|
|
304,441
|
|
|
1
|
|
|
289,701
|
|
|
5
|
|
|
||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loss and loss expense incurred
|
|
211,300
|
|
|
206,752
|
|
|
2
|
|
|
189,294
|
|
|
9
|
|
|
||
Net underwriting expenses incurred
|
|
88,179
|
|
|
84,925
|
|
|
4
|
|
|
89,303
|
|
|
(5
|
)
|
|
||
Underwriting income
|
|
$
|
8,260
|
|
|
12,764
|
|
|
(35
|
)
|
%
|
$
|
11,104
|
|
|
15
|
|
%
|
Combined Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loss and loss expense ratio
|
|
68.6
|
|
%
|
67.9
|
|
|
0.7
|
|
pts
|
65.4
|
|
%
|
2.5
|
|
pts
|
||
Underwriting expense ratio
|
|
28.7
|
|
|
27.9
|
|
|
0.8
|
|
|
30.8
|
|
|
(2.9
|
)
|
|
||
Combined ratio
|
|
97.3
|
|
|
95.8
|
|
|
1.5
|
|
|
96.2
|
|
|
(0.4
|
)
|
|
($ in millions)
|
|
2019
|
|
2018
|
|||
Retention
|
|
83
|
|
%
|
84
|
|
|
Renewal pure price increases on NPW
|
|
5.0
|
|
|
3.8
|
|
|
Direct new business premiums
|
|
$
|
40.7
|
|
|
51.5
|
|
($ in millions)
|
Non-Catastrophe Property Losses
|
|
Catastrophe Losses
|
|
|
||||||||||||||
For the year ended December 31,
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Total Impact on Loss and Loss Expense Ratio
|
|
Unfavorable Year-Over-Year Change
|
||||||||
2019
|
$
|
104.7
|
|
|
34.0
|
|
pts
|
$
|
21.1
|
|
|
6.8
|
|
pts
|
40.8
|
|
|
0.5
|
|
2018
|
105.3
|
|
|
34.6
|
|
|
17.5
|
|
|
5.7
|
|
|
40.3
|
|
|
3.6
|
|
($ in millions)
|
|
|
|||||||||
|
|
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
|
|
|
Unfavorable/
(Favorable)
Year-Over-Year Change
|
||||||
For the year ended December 31,
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
|
|||||
2019
|
|
$
|
6.0
|
|
|
1.9
|
|
|
pts
|
0.4
|
|
2018
|
|
4.5
|
|
|
1.5
|
|
|
|
(1.3
|
)
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2019
vs. 2018 |
|
2017
|
|
2018
vs. 2017 |
|
|||||||
Insurance Segments Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NPW
|
|
$
|
237,761
|
|
|
229,326
|
|
|
4
|
|
%
|
$
|
215,131
|
|
|
7
|
|
%
|
NPE
|
|
239,818
|
|
|
219,566
|
|
|
9
|
|
|
212,827
|
|
|
3
|
|
|
||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss and loss expense incurred
|
|
152,335
|
|
|
150,344
|
|
|
1
|
|
|
147,630
|
|
|
2
|
|
|
||
Net underwriting expenses incurred
|
|
77,740
|
|
|
69,917
|
|
|
11
|
|
|
71,479
|
|
|
(2
|
)
|
|
||
Underwriting income (loss)
|
|
$
|
9,743
|
|
|
(695
|
)
|
|
1,502
|
|
%
|
$
|
(6,282
|
)
|
|
89
|
|
%
|
Combined Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss and loss expense ratio
|
|
63.5
|
|
%
|
68.5
|
|
|
(5.0
|
)
|
pts
|
69.4
|
|
%
|
(0.9
|
)
|
pts
|
||
Underwriting expense ratio
|
|
32.4
|
|
|
31.8
|
|
|
0.6
|
|
|
33.6
|
|
|
(1.8
|
)
|
|
||
Combined ratio
|
|
95.9
|
|
|
100.3
|
|
|
(4.4
|
)
|
|
103.0
|
|
|
(2.7
|
)
|
|
($ in millions)
|
|
2019
|
|
2018
|
|||
Overall renewal price increases
|
|
4.0
|
|
%
|
4.7
|
|
|
Direct new business premiums
|
|
$
|
96.8
|
|
|
98.0
|
|
($ in millions)
|
Non-Catastrophe Property Losses
|
|
Catastrophe Losses
|
|
|
||||||||||||||
For the year ended December 31,
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
Total Impact on Loss and Loss Expense Ratio
|
|
(Favorable) Year-Over-Year Change
|
||||||||
2019
|
$
|
22.2
|
|
|
9.3
|
|
pts
|
$
|
5.7
|
|
|
2.4
|
|
pts
|
11.7
|
|
|
(3.1
|
)
|
2018
|
26.4
|
|
|
12.0
|
|
|
6.2
|
|
|
2.8
|
|
|
14.8
|
|
|
(2.7
|
)
|
($ in millions)
|
|
Unfavorable Prior Year Casualty Reserve Development
|
|
|
(Favorable)/
Unfavorable
Year-Over-Year
Change
|
||||||
For the year ended December 31,
|
|
Loss and Loss Expense Incurred
|
|
Impact on Loss and Loss Expense Ratio
|
|
|
|||||
2019
|
|
$
|
2.0
|
|
|
0.8
|
|
|
pts
|
(4.7
|
)
|
2018
|
|
12.0
|
|
|
5.5
|
|
|
|
0.8
|
|
•
|
Pool or share proportionately the underwriting profit and loss results of property and casualty insurance underwriting operations through reinsurance;
|
•
|
Prevent any of our Insurance Subsidiaries from suffering undue loss;
|
•
|
Reduce administration expenses; and
|
•
|
Permit all of the Insurance Subsidiaries to obtain a uniform rating from A.M. Best Company ("A.M. Best").
|
Insurance Subsidiary
|
|
Pooling Percentage
|
Selective Insurance Company of America ("SICA")
|
|
32.0%
|
Selective Way Insurance Company ("SWIC")
|
|
21.0%
|
Selective Insurance Company of South Carolina ("SICSC")
|
|
9.0%
|
Selective Insurance Company of the Southeast ("SICSE")
|
|
7.0%
|
Selective Insurance Company of New York ("SICNY")
|
|
7.0%
|
Selective Casualty Insurance Company ("SCIC")
|
|
7.0%
|
Selective Auto Insurance Company of New Jersey ("SAICNJ")
|
|
6.0%
|
Mesa Underwriters Specialty Insurance Company ("MUSIC")
|
|
5.0%
|
Selective Insurance Company of New England ("SICNE")
|
|
3.0%
|
Selective Fire and Casualty Insurance Company ("SFCIC")
|
|
3.0%
|
•
|
Property Reinsurance - includes our property excess of loss treaties purchased for protection against large individual property losses and our property catastrophe treaties purchased to provide protection for the overall property portfolio against severe catastrophic events. Facultative reinsurance is primarily used for property risks that are in excess of our treaty capacity.
|
•
|
Casualty Reinsurance - purchased to provide protection for both individual large casualty losses and catastrophic casualty losses involving multiple claimants or customers. Facultative reinsurance may also be used for casualty risks that are in excess of our treaty capacity.
|
•
|
Terrorism Reinsurance - in addition to protection built into our property and casualty reinsurance treaties, terrorism protection is available as a federal backstop related to terrorism losses as provided under the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA”). For further information regarding this legislation, see Item 1A. “Risk Factors.” of this Form 10-K.
|
•
|
Flood Reinsurance - as a servicing carrier in the WYO, we receive a fee for writing flood business, for which the related premiums and losses are 100% ceded to the federal government.
|
($ in millions)
|
|
Actual Gross Loss
|
|
Net Loss2
|
|
Accident
Year
|
Hurricane Name
|
|
|
|
|||
Superstorm Sandy
|
|
125.5 1
|
|
45.6
|
|
2012
|
Hurricane Irene
|
|
44.9
|
|
40.2
|
|
2011
|
Hurricane Hugo
|
|
26.4
|
|
3.0
|
|
1989
|
Hurricane Isabel
|
|
25.1
|
|
15.7
|
|
2003
|
Hurricane Florence
|
|
15.7 1
|
|
13.8
|
|
2018
|
Occurrence Exceedence Probability
|
|
Modeled Losses
|
|||||
($ in thousands)
|
|
Gross
Losses1
|
|
Net
Losses2
|
|
Net Losses
as a Percent of
Equity3
|
|
4.0% (1 in 25 year event)
|
|
$173,267
|
|
29,276
|
|
1
|
%
|
2.0% (1 in 50 year event)
|
|
289,049
|
|
30,336
|
|
1
|
|
1.0% (1 in 100 year event)
|
|
464,576
|
|
35,318
|
|
2
|
|
0.67% (1 in 150 year event)
|
|
643,902
|
|
52,087
|
|
2
|
|
0.5% (1 in 200 year event)
|
|
747,583
|
|
56,675
|
|
3
|
|
0.4% (1 in 250 year event)
|
|
841,970
|
|
103,698
|
|
5
|
|
0.2% (1 in 500 year event)
|
|
1,227,158
|
|
399,605
|
|
18
|
|
CASUALTY REINSURANCE ON INSURANCE PRODUCTS
|
||||
Treaty Name
|
|
Reinsurance Coverage
|
|
Terrorism Coverage
|
Casualty Excess of Loss
(covers all insurance operations) |
|
There are six layers covering 100% of $88 million in excess of $2 million. Losses other than terrorism losses are subject to the following:
|
|
All NBCR losses are excluded. All other losses stemming from the acts of terrorism are subject to the following:
|
|
- $3 million in excess of $2 million layer
provides 27 reinstatements, $84 million annual aggregate limit; |
|
- $3 million in excess of $2 million layer with
$15 million net annual terrorism aggregate limit; |
|
|
- $7 million in excess of $5 million layer
provides five reinstatements, $42 million annual aggregate limit; |
|
- $7 million in excess of $5 million layer with
$28 million net annual terrorism aggregate limit; |
|
|
- $9 million in excess of $12 million layer
provides three reinstatements; $36 million annual aggregate limit; |
|
- $9 million in excess of $12 million layer with
$27 million net annual terrorism aggregate limit; |
|
|
- $9 million in excess of $21 million layer
provides one reinstatement, $18 million annual aggregate limit; |
|
- $9 million in excess of $21 million layer with
$18 million net annual terrorism aggregate limit; |
|
|
- $20 million in excess of $30 million layer
provides one reinstatement, $40 million annual aggregate limit; and |
|
- $20 million in excess of $30 million layer with
$40 million net annual terrorism aggregate limit; and |
|
|
- $40 million in excess of $50 million layer
provides one reinstatement, $80 million annual aggregate limit. |
|
- $40 million in excess of $50 million layer with
$80 million net annual terrorism aggregate limit. |
|
|
|
|
|
|
Endurance Specialty Quota Share and Loss Development Cover
(covers E&S Lines) |
|
As part of the acquisition of MUSIC, we entered into several reinsurance agreements that together provide protection for losses on policies written prior to the acquisition and any development on reserves established by MUSIC as of the date of acquisition. The reinsurance recoverables under these treaties are 100% collateralized. Montpelier Re was acquired by Endurance Specialty on December 29, 2015. On March 28, 2017, Endurance Specialty was acquired by SOMPO Holdings, Inc.
|
|
Provides full terrorism coverage including NBCR.
|
($ in thousands)
|
|
2019
|
|
2018
|
|
Change
|
||||
Total invested assets
|
|
$
|
6,688,654
|
|
|
5,960,651
|
|
|
12
|
%
|
Invested assets per dollar of stockholders' equity
|
|
3.05
|
|
|
3.33
|
|
|
(8.4
|
)
|
|
Unrealized gain – before tax1
|
|
216,564
|
|
|
11,916
|
|
|
1,717
|
|
|
Unrealized gain – after tax1
|
|
171,085
|
|
|
9,414
|
|
|
1,717
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2019
vs. 2018 |
|
2017
|
|
2018
vs. 2017 |
|
||||||
Fixed income securities
|
|
$
|
203,255
|
|
|
178,104
|
|
|
14
|
|
%
|
153,230
|
|
|
16
|
|
%
|
Equity securities
|
|
6,996
|
|
|
7,764
|
|
|
(10
|
)
|
|
6,442
|
|
|
21
|
|
|
|
Short-term investments
|
|
6,653
|
|
|
3,472
|
|
|
92
|
|
|
1,526
|
|
|
128
|
|
|
|
Other investments
|
|
18,778
|
|
|
17,799
|
|
|
6
|
|
|
12,871
|
|
|
38
|
|
|
|
Investment expenses
|
|
(13,139
|
)
|
|
(11,803
|
)
|
|
(11
|
)
|
|
(12,187
|
)
|
|
3
|
|
|
|
Net investment income earned – before tax
|
|
222,543
|
|
|
195,336
|
|
|
14
|
|
|
161,882
|
|
|
21
|
|
|
|
Net investment income tax expense
|
|
41,382
|
|
|
34,855
|
|
|
19
|
|
|
43,362
|
|
|
(20
|
)
|
|
|
Net investment income earned – after tax
|
|
$
|
181,161
|
|
|
160,481
|
|
|
13
|
|
|
118,520
|
|
|
35
|
|
|
Effective tax rate
|
|
18.6
|
%
|
|
17.8
|
|
|
0.8
|
|
pts
|
26.8
|
|
|
(9.0
|
)
|
pts
|
|
Annual after-tax yield on fixed income securities
|
|
2.9
|
|
|
2.8
|
|
|
0.1
|
|
|
2.2
|
|
|
0.6
|
|
|
|
Annual after-tax yield on investment portfolio
|
|
2.9
|
|
|
2.8
|
|
|
0.1
|
|
|
2.1
|
|
|
0.7
|
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Net realized gains (losses), excluding OTTI
|
|
$
|
26,715
|
|
|
(18,975
|
)
|
|
11,204
|
|
Unrealized losses recognized in income on equity securities
|
|
(8,649
|
)
|
|
(29,369
|
)
|
|
—
|
|
|
OTTI charges
|
|
(3,644
|
)
|
|
(6,579
|
)
|
|
(4,845
|
)
|
|
Total net realized and unrealized gains (losses)
|
|
$
|
14,422
|
|
|
(54,923
|
)
|
|
6,359
|
|
($ in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||
Federal income tax expense
|
|
$
|
64.8
|
|
|
32.8
|
|
|
93.1
|
|
Exclude: Tax Reform impact 1
|
|
—
|
|
|
—
|
|
|
20.2
|
|
|
Federal income tax expense, excluding Tax Reform impact
|
|
64.8
|
|
|
32.8
|
|
|
72.9
|
|
|
|
|
|
|
|
|
|
||||
Statutory Tax Rate
|
|
21.0
|
%
|
|
21.0
|
|
|
35.0
|
|
|
Effective tax rate
|
|
19.3
|
%
|
|
15.5
|
|
|
35.6
|
|
|
Effective tax rate without Tax Reform impact
|
|
19.3
|
|
|
15.5
|
|
|
27.8
|
|
Branch
|
Insurance Subsidiary Member
|
||||||||
Federal Home Loan Bank of Indianapolis ("FHLBI")
|
SICSC1
|
||||||||
SICSE1
|
|||||||||
Federal Home Loan Bank of New York ("FHLBNY")
|
SICA
|
||||||||
SICNY
|
($ in millions)
|
Admitted Assets
|
|
Borrowing Limitation
|
|
Amount Borrowed
|
|
Remaining Capacity
|
|
Additional FHLB Stock Requirements
|
|||||||
As of December 31, 2019
|
|
|
|
|
||||||||||||
SICSC
|
$
|
723.4
|
|
|
$
|
72.3
|
|
|
32.0
|
|
|
40.3
|
|
|
1.7
|
|
SICSE
|
571.0
|
|
|
57.1
|
|
|
28.0
|
|
|
29.1
|
|
|
1.3
|
|
||
SICA
|
2,696.3
|
|
|
269.6
|
|
|
50.0
|
|
|
219.6
|
|
|
9.9
|
|
||
SICNY
|
494.5
|
|
|
24.7
|
|
|
—
|
|
|
24.7
|
|
|
1.1
|
|
||
Total
|
|
|
$
|
423.7
|
|
|
110.0
|
|
|
313.7
|
|
|
14.0
|
|
($ in millions)
|
Admitted Assets
as of December 31, 2019
|
|
Borrowing Limitation
|
|
Amount Borrowed
|
|
Remaining Capacity
|
||||||
As of December 31, 2019
|
|
|
|
||||||||||
SICSC
|
$
|
723.4
|
|
|
$
|
72.3
|
|
|
24.0
|
|
|
48.3
|
|
SICSE
|
571.0
|
|
|
57.1
|
|
|
16.0
|
|
|
41.1
|
|
||
Total
|
|
|
$
|
129.4
|
|
|
40.0
|
|
|
89.4
|
|
Contractual Obligations
|
|
Payment Due by Period
|
||||||||||||||
|
|
|
|
Less than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
||||||
($ in millions)
|
|
Total
|
|
|
|
|
||||||||||
Operating leases
|
|
$
|
34.0
|
|
|
8.3
|
|
|
10.8
|
|
|
6.2
|
|
|
8.7
|
|
Finance leases
|
|
0.8
|
|
|
0.5
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
Notes payable
|
|
560.0
|
|
|
—
|
|
|
50.0
|
|
|
—
|
|
|
510.0
|
|
|
Interest on debt obligations
|
|
651.5
|
|
|
29.1
|
|
|
57.1
|
|
|
56.6
|
|
|
508.7
|
|
|
Subtotal
|
|
1,246.3
|
|
|
37.9
|
|
|
118.2
|
|
|
62.8
|
|
|
1,027.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross loss and loss expense payments
|
|
4,067.2
|
|
|
1,084.5
|
|
|
1,298.6
|
|
|
619.8
|
|
|
1,064.3
|
|
|
Ceded loss and loss expense payments
|
|
(544.2
|
)
|
|
(143.6
|
)
|
|
(129.8
|
)
|
|
(70.1
|
)
|
|
(200.7
|
)
|
|
Net loss and loss expense payments
|
|
3,523.0
|
|
|
940.9
|
|
|
1,168.8
|
|
|
549.7
|
|
|
863.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
$
|
4,769.3
|
|
|
978.8
|
|
|
1,287.0
|
|
|
612.5
|
|
|
1,891.0
|
|
($ in millions)
|
|
Amount of Obligation
|
|
Year of Expiration of Obligation
|
||
Alternative and other investments
|
|
$
|
219.2
|
|
|
2036
|
Non-publicly traded collateralized loan obligations in our fixed income securities portfolio
|
|
35.4
|
|
|
2030
|
|
Non-publicly traded common stock within our equity portfolio
|
|
3.9
|
|
|
2023
|
|
Commercial mortgage loans
|
|
10.0
|
|
|
Less than 1 year
|
|
Privately-placed corporate securities
|
|
15.0
|
|
|
Less than 1 year
|
|
Total
|
|
$
|
283.5
|
|
|
|
|
|
|
2019 Interest Rate Shift in Basis Points
|
|||||||||||||
($ in thousands)
|
|
|
-200
|
|
-100
|
|
0
|
|
100
|
|
200
|
|||||
Fixed income securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of fixed income securities portfolio
|
|
$
|
6,527,669
|
|
|
6,333,983
|
|
|
6,117,595
|
|
|
5,900,088
|
|
|
5,682,254
|
|
Fair value change
|
|
|
410,074
|
|
|
216,388
|
|
|
|
|
|
(217,507
|
)
|
|
(435,341
|
)
|
Fair value change from base (%)
|
|
|
6.7
|
%
|
|
3.5
|
%
|
|
|
|
|
(3.6
|
)%
|
|
(7.1
|
)%
|
December 31, 2019
($ in millions) |
|
Fair
Value
|
|
Carry
Value
|
|
Unrealized/
Unrecognized
Gain (Loss)
|
|
Weighted Average
Credit
Quality
|
||||
U.S. government obligations
|
|
$
|
116.2
|
|
|
116.2
|
|
|
3.5
|
|
|
AAA
|
Foreign government obligations
|
|
18.5
|
|
|
18.5
|
|
|
0.5
|
|
|
BBB+
|
|
Obligations of states and political subdivisions
|
|
1,235.0
|
|
|
1,234.7
|
|
|
62.2
|
|
|
AA-
|
|
Corporate securities
|
|
1,964.6
|
|
|
1,963.7
|
|
|
81.5
|
|
|
BBB+
|
|
CLO and Other ABS
|
|
793.0
|
|
|
793.0
|
|
|
2.5
|
|
|
AA-
|
|
Commercial mortgage-backed securities ("CMBS")
|
|
538.3
|
|
|
538.3
|
|
|
23.6
|
|
|
AA+
|
|
Residential mortgage-backed securities ("RMBS")
|
|
1,452.0
|
|
|
1,452.0
|
|
|
43.0
|
|
|
AAA
|
|
Total fixed income portfolio
|
|
$
|
6,117.6
|
|
|
6,116.4
|
|
|
216.8
|
|
|
AA-
|
December 31, 2018
($ in millions) |
|
Fair
Value
|
|
Carry
Value
|
|
Unrealized/
Unrecognized
Gain (Loss)
|
|
Weighted Average
Credit
Quality
|
||||
U.S. government obligations
|
|
$
|
121.3
|
|
|
121.3
|
|
|
1.2
|
|
|
AAA
|
Foreign government obligations
|
|
23.1
|
|
|
23.1
|
|
|
(0.1
|
)
|
|
A
|
|
Obligations of states and political subdivisions
|
|
1,156.4
|
|
|
1,156.0
|
|
|
17.4
|
|
|
AA-
|
|
Corporate securities
|
|
1,637.8
|
|
|
1,637.0
|
|
|
(21.7
|
)
|
|
BBB+
|
|
CLO and Other ABS
|
|
717.4
|
|
|
717.4
|
|
|
(2.8
|
)
|
|
AA
|
|
CMBS
|
|
527.1
|
|
|
527.1
|
|
|
(0.3
|
)
|
|
AA+
|
|
RMBS
|
|
1,128.3
|
|
|
1,128.3
|
|
|
9.9
|
|
|
AAA
|
|
Total fixed income portfolio
|
|
$
|
5,311.4
|
|
|
5,310.2
|
|
|
3.6
|
|
|
AA-
|
State Exposures of Municipal Bonds
|
|
General Obligation
|
Special
Revenue
|
|
Fair
Value
|
|
|
|
Weighted Average
Credit Quality
|
|||||
($ in thousands)
|
|
State & Local
|
|
|
|
% of Total
|
|
|||||||
New York
|
|
$
|
13,777
|
|
|
139,403
|
|
|
153,180
|
|
|
13%
|
|
AA-
|
California
|
|
39,702
|
|
|
83,882
|
|
|
123,584
|
|
|
10%
|
|
AA-
|
|
Texas1
|
|
49,788
|
|
|
42,212
|
|
|
92,000
|
|
|
7%
|
|
AA
|
|
New Jersey
|
|
—
|
|
|
67,872
|
|
|
67,872
|
|
|
5%
|
|
A
|
|
Washington
|
|
20,679
|
|
|
31,324
|
|
|
52,003
|
|
|
4%
|
|
AA
|
|
Florida
|
|
3,175
|
|
|
46,372
|
|
|
49,547
|
|
|
4%
|
|
AA-
|
|
Pennsylvania
|
|
—
|
|
|
49,064
|
|
|
49,064
|
|
|
4%
|
|
AA-
|
|
Massachusetts
|
|
892
|
|
|
46,693
|
|
|
47,585
|
|
|
4%
|
|
AA
|
|
Arizona
|
|
5,545
|
|
|
32,783
|
|
|
38,328
|
|
|
3%
|
|
AA
|
|
Colorado
|
|
4,769
|
|
|
30,946
|
|
|
35,715
|
|
|
3%
|
|
A+
|
|
Other
|
|
112,428
|
|
|
328,584
|
|
|
441,012
|
|
|
36%
|
|
AA-
|
|
|
|
250,755
|
|
|
899,135
|
|
|
1,149,890
|
|
|
93%
|
|
AA-
|
|
Pre-refunded/escrowed to maturity bonds
|
|
30,276
|
|
|
54,845
|
|
|
85,121
|
|
|
7%
|
|
AAA
|
|
Total
|
|
$
|
281,031
|
|
|
953,980
|
|
|
1,235,011
|
|
|
100%
|
|
AA-
|
|
|
|
|
|
|
|
|
|
|
|
||||
% of Total Municipal Portfolio
|
|
23
|
%
|
|
77
|
%
|
|
100
|
%
|
|
|
|
|
December 31, 2019
|
|
Fair
Value |
|
Carry
Value |
|
Unrealized/ Unrecognized Gain (Loss) |
|
Weighted Average
Credit Quality |
||||
($ in millions)
|
|
|
|
|
||||||||
Investment grade
|
|
$
|
1,775.9
|
|
|
1,775.0
|
|
|
79.8
|
|
|
A-
|
Non-investment grade
|
|
188.7
|
|
|
188.7
|
|
|
1.7
|
|
|
B+
|
|
Total corporate securities
|
|
$
|
1,964.6
|
|
|
1,963.7
|
|
|
81.5
|
|
|
BBB+
|
December 31, 2018
|
|
Fair
Value |
|
Carry
Value |
|
Unrealized/ Unrecognized Gain (Loss) |
|
Weighted Average
Credit Quality |
||||
($ in millions)
|
|
|
|
|
||||||||
Investment grade
|
|
$
|
1,532.6
|
|
|
1,531.8
|
|
|
(14.4
|
)
|
|
A-
|
Non-investment grade
|
|
105.2
|
|
|
105.2
|
|
|
(7.2
|
)
|
|
B+
|
|
Total corporate securities
|
|
$
|
1,637.8
|
|
|
1,637.0
|
|
|
(21.6
|
)
|
|
BBB+
|
December 31, 2019
|
|
Fair
Value |
|
Carry
Value |
|
Unrealized/ Unrecognized Gain (Loss) |
|
Weighted Average
Credit Quality |
||||
($ in millions)
|
|
|
|
|
||||||||
Investment grade:
|
|
|
|
|
|
|
|
|
||||
CLO
|
|
$
|
496.7
|
|
|
496.7
|
|
|
(2.4
|
)
|
|
AA
|
Other ABS
|
|
274.1
|
|
|
274.1
|
|
|
5.8
|
|
|
A+
|
|
Total investment grade
|
|
770.8
|
|
|
770.8
|
|
|
3.4
|
|
|
AA
|
|
|
|
|
|
|
|
|
|
|
||||
Non-investment grade:
|
|
|
|
|
|
|
|
|
||||
CLO
|
|
14.7
|
|
|
14.7
|
|
|
(0.8
|
)
|
|
B+
|
|
Other ABS
|
|
7.5
|
|
|
7.5
|
|
|
(0.1
|
)
|
|
B+
|
|
Total non-investment grade
|
|
22.2
|
|
|
22.2
|
|
|
(0.9
|
)
|
|
B+
|
|
Total CLO and other ABS
|
|
$
|
793.0
|
|
|
793.0
|
|
|
2.5
|
|
|
AA-
|
December 31, 2018
|
|
Fair
Value |
|
Carry
Value |
|
Unrealized/ Unrecognized Gain (Loss) |
|
Weighted Average
Credit Quality |
||||
($ in millions)
|
|
|
|
|
||||||||
Investment grade:
|
|
|
|
|
|
|
|
|
||||
CLO
|
|
$
|
462.3
|
|
|
462.3
|
|
|
(5.2
|
)
|
|
AA+
|
Other ABS
|
|
235.0
|
|
|
235.0
|
|
|
3.2
|
|
|
AA-
|
|
Total investment grade
|
|
697.3
|
|
|
697.3
|
|
|
(2.0
|
)
|
|
AA
|
|
|
|
|
|
|
|
|
|
|
||||
Non-investment grade:
|
|
|
|
|
|
|
|
|
||||
CLO
|
|
15.5
|
|
|
15.5
|
|
|
(0.8
|
)
|
|
B+
|
|
Other ABS
|
|
4.6
|
|
|
4.6
|
|
|
—
|
|
|
B+
|
|
Total non-investment grade
|
|
20.1
|
|
|
20.1
|
|
|
(0.8
|
)
|
|
B+
|
|
Total CLO and other ABS
|
|
$
|
717.4
|
|
|
717.4
|
|
|
(2.8
|
)
|
|
AA
|
|
|
Change in Equity Values in Percent
|
||||||||||||||||||||
($ in thousands)
|
|
(30)%
|
|
(20)%
|
|
(10)%
|
|
0%
|
|
10%
|
|
20%
|
|
30%
|
||||||||
Fair value of AFS equity portfolio
|
|
$
|
51,056
|
|
|
58,349
|
|
|
65,643
|
|
|
72,937
|
|
|
80,231
|
|
|
87,525
|
|
|
94,818
|
|
Fair value change
|
|
(21,881
|
)
|
|
(14,588
|
)
|
|
(7,294
|
)
|
|
|
|
|
7,294
|
|
|
14,588
|
|
|
21,881
|
|
Asset Category
|
Percentage of Invested Assets
|
|
|
Highly-liquid assets
|
74
|
|
%
|
Generally liquid assets, may become less liquid with market stress1
|
22
|
|
|
Generally illiquid assets2
|
4
|
|
|
Total
|
100
|
|
%
|
|
|
|
|
2019
|
|||||
($ in thousands)
|
|
Year of
Maturity
|
|
Carrying
Amount
|
|
Fair
Value
|
|||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
|
|
1.61% Borrowings from FHLBNY
|
|
2021
|
|
$
|
25,000
|
|
|
24,901
|
|
1.56% Borrowings from FHLBNY
|
|
2021
|
|
25,000
|
|
|
24,875
|
|
|
3.03% Borrowings from FHLBI
|
|
2026
|
|
60,000
|
|
|
63,002
|
|
|
7.25% Senior Notes
|
|
2034
|
|
49,910
|
|
|
66,365
|
|
|
6.70% Senior Notes
|
|
2035
|
|
99,480
|
|
|
123,104
|
|
|
5.375% Senior Notes
|
|
2049
|
|
294,157
|
|
|
357,025
|
|
|
Subtotal
|
|
|
|
553,547
|
|
|
659,272
|
|
|
Unamortized debt issuance costs
|
|
|
|
(3,687
|
)
|
|
|
||
Finance lease obligations
|
|
|
|
737
|
|
|
|
||
Total notes payable
|
|
|
|
$
|
550,597
|
|
|
|
•
|
Evaluating the Company’s actuarial techniques by comparing them to generally accepted actuarial techniques;
|
•
|
Developing an independent estimate of reserves for certain lines of business using generally accepted actuarial techniques;
|
•
|
For other lines of business, assessing the Company's internal actuarial analysis by inspecting the assumptions and actuarial techniques used;
|
•
|
Developing an independent consolidated range of reserves based on generally accepted actuarial techniques and comparing to the Company's recorded reserves; and
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
($ in thousands, except share amounts)
|
|
2019
|
|
2018
|
|||
ASSETS
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
Fixed income securities, held-to-maturity – at carrying value
(fair value: $21,975 – 2019; $38,317 – 2018) |
|
$
|
20,800
|
|
|
37,110
|
|
Fixed income securities, available-for-sale – at fair value
(amortized cost: $5,879,986 – 2019; $5,270,798 – 2018) |
|
6,095,620
|
|
|
5,273,100
|
|
|
Equity securities – at fair value
(cost: $72,061 – 2019; $138,114 – 2018) |
|
72,937
|
|
|
147,639
|
|
|
Short-term investments (at cost which approximates fair value)
|
|
282,490
|
|
|
323,864
|
|
|
Other investments
|
|
216,807
|
|
|
178,938
|
|
|
Total investments (Notes 5 and 7)
|
|
6,688,654
|
|
|
5,960,651
|
|
|
Cash
|
|
300
|
|
|
505
|
|
|
Restricted cash
|
|
7,675
|
|
|
16,414
|
|
|
Interest and dividends due or accrued
|
|
44,846
|
|
|
41,620
|
|
|
Premiums receivable, net of allowance for uncollectible
accounts of: $6,400 – 2019; $9,400 – 2018 |
|
823,901
|
|
|
770,518
|
|
|
Reinsurance recoverable, net of allowance for uncollectible
accounts of: $4,400 – 2019; $4,500 – 2018 (Note 8) |
|
573,235
|
|
|
549,172
|
|
|
Prepaid reinsurance premiums (Note 8)
|
|
166,705
|
|
|
157,723
|
|
|
Deferred federal income tax (Note 13)
|
|
6,776
|
|
|
53,540
|
|
|
Property and equipment – at cost, net of accumulated
depreciation and amortization of: $227,566 – 2019; $211,657 – 2018 |
|
77,409
|
|
|
65,248
|
|
|
Deferred policy acquisition costs (Note 2)
|
|
271,186
|
|
|
252,612
|
|
|
Goodwill (Note 11)
|
|
7,849
|
|
|
7,849
|
|
|
Other assets
|
|
128,614
|
|
|
76,877
|
|
|
Total assets
|
|
$
|
8,797,150
|
|
|
7,952,729
|
|
|
|
|
|
|
|||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Reserve for loss and loss expense (Note 9)
|
|
$
|
4,067,163
|
|
|
3,893,868
|
|
Unearned premiums
|
|
1,523,167
|
|
|
1,431,932
|
|
|
Long-term debt (Note 10)
|
|
550,597
|
|
|
439,540
|
|
|
Current federal income tax
|
|
2,987
|
|
|
1,302
|
|
|
Accrued salaries and benefits
|
|
126,753
|
|
|
116,706
|
|
|
Other liabilities
|
|
331,547
|
|
|
277,579
|
|
|
Total liabilities
|
|
$
|
6,602,214
|
|
|
6,160,927
|
|
|
|
|
|
|
|||
Stockholders’ Equity:
|
|
|
|
|
|
||
Preferred stock of $0 par value per share:
|
|
|
|
|
|
|
|
Authorized shares 5,000,000; no shares issued or outstanding
|
|
$
|
—
|
|
|
—
|
|
Common stock of $2 par value per share:
|
|
|
|
|
|||
Authorized shares 360,000,000
|
|
|
|
|
|||
Issued: 103,484,159 – 2019; 102,848,394 – 2018
|
|
206,968
|
|
|
205,697
|
|
|
Additional paid-in capital
|
|
418,521
|
|
|
390,315
|
|
|
Retained earnings
|
|
2,080,529
|
|
|
1,858,414
|
|
|
Accumulated other comprehensive income (loss) (Note 6)
|
|
81,750
|
|
|
(77,956
|
)
|
|
Treasury stock – at cost (shares: 44,023,006 – 2019; 43,899,840 – 2018)
|
|
(592,832
|
)
|
|
(584,668
|
)
|
|
Total stockholders’ equity
|
|
2,194,936
|
|
|
1,791,802
|
|
|
Commitments and contingencies (Notes 17 and 18)
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
8,797,150
|
|
|
7,952,729
|
|
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
($ in thousands, except per share amounts)
|
|
2019
|
|
2018
|
|
2017
|
||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned
|
|
$
|
2,597,171
|
|
|
2,436,229
|
|
|
2,291,027
|
|
Net investment income earned
|
|
222,543
|
|
|
195,336
|
|
|
161,882
|
|
|
Net realized and unrealized gains (losses):
|
|
|
|
|
|
|
|
|
|
|
Net realized investment gains (losses) on disposals
|
|
26,715
|
|
|
(18,975
|
)
|
|
11,204
|
|
|
Net unrealized losses on equity securities
|
|
(8,649
|
)
|
|
(29,369
|
)
|
|
—
|
|
|
Other-than-temporary impairments
|
|
(3,644
|
)
|
|
(6,579
|
)
|
|
(4,809
|
)
|
|
Other-than-temporary impairments on fixed income securities
recognized in other comprehensive income
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
Total net realized and unrealized gains (losses)
|
|
14,422
|
|
|
(54,923
|
)
|
|
6,359
|
|
|
Other income
|
|
12,355
|
|
|
9,438
|
|
|
10,716
|
|
|
Total revenues
|
|
2,846,491
|
|
|
2,586,080
|
|
|
2,469,984
|
|
|
|
|
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Loss and loss expense incurred
|
|
1,551,491
|
|
|
1,498,134
|
|
|
1,345,074
|
|
|
Amortization of deferred policy acquisition costs
|
|
535,973
|
|
|
495,042
|
|
|
469,236
|
|
|
Other insurance expenses
|
|
358,069
|
|
|
331,318
|
|
|
333,097
|
|
|
Interest expense
|
|
33,668
|
|
|
24,419
|
|
|
24,354
|
|
|
Corporate expenses
|
|
30,900
|
|
|
25,446
|
|
|
36,255
|
|
|
Total expenses
|
|
2,510,101
|
|
|
2,374,359
|
|
|
2,208,016
|
|
|
|
|
|
|
|
|
|
||||
Income before federal income tax
|
|
336,390
|
|
|
211,721
|
|
|
261,968
|
|
|
|
|
|
|
|
|
|
||||
Federal income tax expense:
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
60,640
|
|
|
35,012
|
|
|
62,184
|
|
|
Deferred
|
|
4,127
|
|
|
(2,230
|
)
|
|
30,958
|
|
|
Total federal income tax expense
|
|
64,767
|
|
|
32,782
|
|
|
93,142
|
|
|
|
|
|
|
|
|
|
||||
Net income
|
|
$
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic net income
|
|
$
|
4.57
|
|
|
3.04
|
|
|
2.89
|
|
|
|
|
|
|
|
|
||||
Diluted net income
|
|
$
|
4.53
|
|
|
3.00
|
|
|
2.84
|
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
||||
December 31,
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Net income
|
|
$
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||
Unrealized gains (losses) on investment securities:
|
|
|
|
|
|
|
||||
Unrealized holding gains (losses) arising during year
|
|
168,021
|
|
|
(97,284
|
)
|
|
43,015
|
|
|
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income
|
|
—
|
|
|
—
|
|
|
23
|
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
||||
Held-to-maturity securities
|
|
(46
|
)
|
|
87
|
|
|
(116
|
)
|
|
Non-credit other-than-temporary impairments
|
|
—
|
|
|
—
|
|
|
68
|
|
|
Realized losses (gains) on disposals of available-for-sale securities
|
|
530
|
|
|
31,316
|
|
|
(4,537
|
)
|
|
Total unrealized gains (losses) on investment securities
|
|
168,505
|
|
|
(65,881
|
)
|
|
38,453
|
|
|
|
|
|
|
|
|
|
||||
Defined benefit pension and post-retirement plans:
|
|
|
|
|
|
|
||||
Net actuarial loss
|
|
(10,898
|
)
|
|
(8,906
|
)
|
|
(3,700
|
)
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
||||
Net actuarial loss
|
|
2,099
|
|
|
1,680
|
|
|
1,367
|
|
|
Total defined benefit pension and post-retirement plans
|
|
(8,799
|
)
|
|
(7,226
|
)
|
|
(2,333
|
)
|
|
Other comprehensive income (loss)
|
|
159,706
|
|
|
(73,107
|
)
|
|
36,120
|
|
|
Comprehensive income
|
|
$
|
431,329
|
|
|
105,832
|
|
|
204,946
|
|
Consolidated Statements of Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
($ in thousands, except share and per share amounts)
|
|
2019
|
|
2018
|
|
2017
|
||||
Common stock:
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
$
|
205,697
|
|
|
204,569
|
|
|
203,241
|
|
Dividend reinvestment plan
|
|
44
|
|
|
47
|
|
|
57
|
|
|
Stock purchase and compensation plans
|
|
1,227
|
|
|
1,081
|
|
|
1,271
|
|
|
End of year
|
|
206,968
|
|
|
205,697
|
|
|
204,569
|
|
|
|
|
|
|
|
|
|
||||
Additional paid-in capital:
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
390,315
|
|
|
367,717
|
|
|
347,295
|
|
|
Dividend reinvestment plan
|
|
1,510
|
|
|
1,379
|
|
|
1,395
|
|
|
Stock purchase and compensation plans
|
|
26,696
|
|
|
21,219
|
|
|
19,027
|
|
|
End of year
|
|
418,521
|
|
|
390,315
|
|
|
367,717
|
|
|
|
|
|
|
|
|
|
||||
Retained earnings:
|
|
|
|
|
|
|
|
|
|
|
Beginning of year, as previously reported
|
|
1,858,414
|
|
|
1,698,613
|
|
|
1,568,881
|
|
|
Cumulative effect adjustment due to adoption of equity security guidance, net of tax
|
|
—
|
|
|
30,726
|
|
|
—
|
|
|
Cumulative effect adjustment due to adoption of stranded deferred tax guidance
|
|
—
|
|
|
(5,707
|
)
|
|
—
|
|
|
Cumulative effect adjustment due to adoption of lease guidance, net of tax (Note 3)
|
|
342
|
|
|
—
|
|
|
—
|
|
|
Balance at beginning of year, as adjusted
|
|
1,858,756
|
|
|
1,723,632
|
|
|
1,568,881
|
|
|
Net income
|
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
|
Dividends to stockholders
|
|
(49,850
|
)
|
|
(44,157
|
)
|
|
(39,094
|
)
|
|
End of year
|
|
2,080,529
|
|
|
1,858,414
|
|
|
1,698,613
|
|
|
|
|
|
|
|
|
|
||||
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Beginning of year, as previously reported
|
|
(77,956
|
)
|
|
20,170
|
|
|
(15,950
|
)
|
|
Cumulative effect adjustment due to adoption of equity security guidance, net of tax
|
|
—
|
|
|
(30,726
|
)
|
|
—
|
|
|
Cumulative effect adjustment due to adoption of stranded deferred tax guidance
|
|
—
|
|
|
5,707
|
|
|
—
|
|
|
Balance at beginning of year, as adjusted
|
|
(77,956
|
)
|
|
(4,849
|
)
|
|
(15,950
|
)
|
|
Other comprehensive income (loss)
|
|
159,706
|
|
|
(73,107
|
)
|
|
36,120
|
|
|
End of year
|
|
81,750
|
|
|
(77,956
|
)
|
|
20,170
|
|
|
|
|
|
|
|
|
|
||||
Treasury stock:
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
(584,668
|
)
|
|
(578,112
|
)
|
|
(572,097
|
)
|
|
Acquisition of treasury stock
|
|
(8,164
|
)
|
|
(6,556
|
)
|
|
(6,015
|
)
|
|
End of year
|
|
(592,832
|
)
|
|
(584,668
|
)
|
|
(578,112
|
)
|
|
Total stockholders’ equity
|
|
$
|
2,194,936
|
|
|
1,791,802
|
|
|
1,712,957
|
|
|
|
|
|
|
|
|
||||
Dividends declared per share to stockholders
|
|
$
|
0.83
|
|
|
0.74
|
|
|
0.66
|
|
|
|
|
|
|
|
|
||||
Common Stock, shares outstanding:
|
|
|
|
|
|
|
||||
Beginning of year
|
|
58,948,554
|
|
|
58,495,122
|
|
|
57,967,199
|
|
|
Dividend reinvestment plan
|
|
22,087
|
|
|
23,493
|
|
|
28,607
|
|
|
Stock purchase and compensation plan
|
|
613,678
|
|
|
540,337
|
|
|
635,521
|
|
|
Acquisition of treasury stock
|
|
(123,166
|
)
|
|
(110,398
|
)
|
|
(136,205
|
)
|
|
End of year
|
|
59,461,153
|
|
|
58,948,554
|
|
|
58,495,122
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
|
|
|
|
|
|
|
||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
55,205
|
|
|
44,874
|
|
|
52,100
|
|
|
Stock-based compensation expense
|
|
19,077
|
|
|
14,507
|
|
|
12,089
|
|
|
Undistributed gains of equity method investments
|
|
(12,773
|
)
|
|
(8,341
|
)
|
|
(5,362
|
)
|
|
Distributions in excess of current year income of equity method investments
|
|
2,807
|
|
|
2,924
|
|
|
552
|
|
|
Net realized and unrealized (gains) losses
|
|
(14,422
|
)
|
|
54,923
|
|
|
(6,359
|
)
|
|
Loss on disposal of fixed assets
|
|
42
|
|
|
63
|
|
|
998
|
|
|
|
|
|
|
|
|
|
||||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Increase in reserves for loss and loss expense, net of reinsurance recoverables
|
|
149,232
|
|
|
168,288
|
|
|
106,226
|
|
|
Increase in unearned premiums, net of prepaid reinsurance
|
|
82,253
|
|
|
78,058
|
|
|
79,614
|
|
|
Decrease in net federal income taxes
|
|
7,721
|
|
|
2,428
|
|
|
30,918
|
|
|
Increase in premiums receivable
|
|
(53,383
|
)
|
|
(23,489
|
)
|
|
(65,418
|
)
|
|
Increase in deferred policy acquisition costs
|
|
(18,574
|
)
|
|
(17,557
|
)
|
|
(12,491
|
)
|
|
Increase in interest and dividends due or accrued
|
|
(3,226
|
)
|
|
(540
|
)
|
|
(1,088
|
)
|
|
Decrease in accrued salaries and benefits
|
|
(3,748
|
)
|
|
(26,418
|
)
|
|
(5,714
|
)
|
|
Increase in other assets
|
|
(39,337
|
)
|
|
(372
|
)
|
|
(2,643
|
)
|
|
Increase (decrease) in other liabilities
|
|
34,998
|
|
|
(13,343
|
)
|
|
27,297
|
|
|
Net cash provided by operating activities
|
|
477,495
|
|
|
454,944
|
|
|
379,545
|
|
|
|
|
|
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed income securities, held-to-maturity
|
|
—
|
|
|
(7,150
|
)
|
|
—
|
|
|
Purchase of fixed income securities, available-for-sale
|
|
(1,856,125
|
)
|
|
(2,918,203
|
)
|
|
(2,130,362
|
)
|
|
Purchase of equity securities
|
|
(46,397
|
)
|
|
(94,344
|
)
|
|
(61,931
|
)
|
|
Purchase of other investments
|
|
(64,908
|
)
|
|
(68,578
|
)
|
|
(55,830
|
)
|
|
Purchase of short-term investments
|
|
(6,087,909
|
)
|
|
(4,259,734
|
)
|
|
(4,280,553
|
)
|
|
Sale of fixed income securities, available-for-sale
|
|
594,743
|
|
|
2,030,664
|
|
|
1,197,920
|
|
|
Sale of short-term investments
|
|
6,129,885
|
|
|
4,101,530
|
|
|
4,338,318
|
|
|
Redemption and maturities of fixed income securities, held-to-maturity
|
|
16,149
|
|
|
12,106
|
|
|
58,832
|
|
|
Redemption and maturities of fixed income securities, available-for-sale
|
|
626,686
|
|
|
638,916
|
|
|
555,216
|
|
|
Sale of equity securities
|
|
137,294
|
|
|
113,339
|
|
|
37,960
|
|
|
Sale of other investments
|
|
17,964
|
|
|
3,497
|
|
|
—
|
|
|
Distributions from other investments
|
|
19,972
|
|
|
28,379
|
|
|
21,843
|
|
|
Fixed asset disposals
|
|
9
|
|
|
—
|
|
|
—
|
|
|
Purchase of property and equipment
|
|
(30,986
|
)
|
|
(16,110
|
)
|
|
(14,071
|
)
|
|
Net cash used in investing activities
|
|
(543,623
|
)
|
|
(435,688
|
)
|
|
(332,658
|
)
|
|
|
|
|
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Dividends to stockholders
|
|
(47,675
|
)
|
|
(42,097
|
)
|
|
(37,045
|
)
|
|
Acquisition of treasury stock
|
|
(8,164
|
)
|
|
(6,556
|
)
|
|
(6,015
|
)
|
|
Net proceeds from stock purchase and compensation plans
|
|
8,243
|
|
|
7,252
|
|
|
7,599
|
|
|
Proceeds from borrowings
|
|
355,757
|
|
|
130,000
|
|
|
84,000
|
|
|
Repayment of borrowings
|
|
(250,000
|
)
|
|
(130,000
|
)
|
|
(84,000
|
)
|
|
Repayment of finance lease obligations
|
|
(977
|
)
|
|
(5,646
|
)
|
|
(4,121
|
)
|
|
Net cash provided by (used in) financing activities
|
|
57,184
|
|
|
(47,047
|
)
|
|
(39,582
|
)
|
|
Net (decrease) increase in cash and restricted cash
|
|
(8,944
|
)
|
|
(27,791
|
)
|
|
7,305
|
|
|
Cash and restricted cash, beginning of year
|
|
16,919
|
|
|
44,710
|
|
|
37,405
|
|
|
Cash and restricted cash, end of year
|
|
$
|
7,975
|
|
|
16,919
|
|
|
44,710
|
|
•
|
Standard Commercial Lines - comprised of insurance products and services provided in the standard marketplace to commercial enterprises, which are typically businesses, non-profit organizations, and local government agencies.
|
•
|
Standard Personal Lines - comprised of insurance products and services, including flood insurance coverage, provided primarily to individuals acquiring coverage in the standard marketplace.
|
•
|
E&S Lines - comprised of insurance products and services provided to customers who have not obtained coverage in the standard marketplace.
|
•
|
Investments - invests the premiums collected by our insurance operations, as well as amounts generated through our capital management strategies, which may include the issuance of debt and equity securities.
|
•
|
U.S. government and government agency obligations;
|
•
|
Foreign government obligations;
|
•
|
State and municipal obligations, including special revenue and general obligation bonds;
|
•
|
Corporate securities, which may include investment grade and below investment grade bonds, bank loan investments, redeemable preferred stock, and non-redeemable preferred stock with certain debt-like characteristics;
|
•
|
Collateralized loan obligations ("CLOs") and other asset-backed securities ("ABS");
|
•
|
Residential mortgage-backed securities ("RMBS"); and
|
•
|
Commercial mortgage-backed securities ("CMBS").
|
•
|
Federal low income housing tax credits are accounted for under the proportional amortization method; and
|
•
|
All other tax credits in our investment portfolio are accounted for using the equity method.
|
•
|
Interest income, as well as amortization and accretion, on fixed income securities;
|
•
|
Dividend income on equity securities;
|
•
|
Interest income on our short-term investments; and
|
•
|
Income recognized on our alternative and other investments accounted for under the equity method of accounting, except for federal tax credits, as discussed below.
|
•
|
Realized gains and losses on the disposal of investment securities, which are determined on the basis of the cost of the specific investments sold;
|
•
|
Changes in unrealized gains or losses on our equity securities that are recorded at fair value; and
|
•
|
Other-than-temporary impairment ("OTTI") charges that are credit related or related to our intent to sell.
|
•
|
Whether the decline appears to be issuer or industry specific;
|
•
|
The degree to which the issuer is current or in arrears in making principal and interest payments on the fixed income security;
|
•
|
The issuer’s current financial condition and ability to make future scheduled principal and interest payments on a timely basis;
|
•
|
Evaluation of projected cash flows;
|
•
|
Buy/hold/sell recommendations published by outside investment advisors and analysts; and
|
•
|
Relevant rating history, analysis, and guidance provided by rating agencies and analysts.
|
•
|
The current yield in effect at the reporting date to accrete the beneficial interest for RMBS, CMBS, CLO and other ABS that were not of high credit quality at acquisition;
|
•
|
The effective interest rate in effect as of the reporting date for non-fixed rate securities; and
|
•
|
The effective interest rate implicit in the security at the date of acquisition for all other securities.
|
•
|
The current investment strategy;
|
•
|
Changes made or future changes to be made to the investment strategy;
|
•
|
Emerging issues that may affect the success of the strategy; and
|
•
|
The appropriateness of the valuation methodology used regarding the underlying investments.
|
•
|
An adverse development of the expected receipt of remaining tax credits and other tax benefits; and
|
•
|
A significant deterioration in the financial condition or liquidity of the Federal Home Loan Bank.
|
Security Type
|
Methodology
|
Equity Securities; U.S. Treasury Notes
|
Equity and U.S. Treasury Note prices are received from an independent pricing service that are based on observable market transactions. We validate these prices against a second external pricing service, and if established market value comparison thresholds are breached, further analysis is performed to determine the price to be used.
|
Short-Term Investments
|
Short-term investments are generally recorded at cost, which approximates fair value. Given the liquid nature of our short-term investments, we generally validate their fair value by way of active trades within approximately one week of the financial statement close.
|
Security Type
|
Methodology
|
5.875% Senior Notes
|
Based on the quoted market prices.
|
Security Type
|
Methodology
|
7.25% Senior Notes; 6.70% Senior Notes;
5.375% Senior Notes
|
Based on matrix pricing models prepared by external pricing services.
|
Borrowings from Federal Home Loan Banks
|
Evaluations are performed using a DCF model based on current borrowing rates provided by the Federal Home Loan Banks that are consistent with the remaining term of the borrowing.
|
Asset Category
|
|
Years
|
Computer hardware
|
|
3
|
Computer software
|
|
3 to 5
|
Internally developed software
|
|
5
|
Software licenses
|
|
3 to 5
|
Furniture and fixtures
|
|
10
|
Buildings and improvements
|
|
5 to 40
|
•
|
Certain property catastrophe events may be low in frequency and high in severity. These events may affect many insureds simultaneously. Due to the unique nature of these events, ultimate liabilities are estimated for each event, based on surveys of our portfolio of exposures, in conjunction with individual claims estimates. While generally short-tailed, the liabilities associated with these events are subject to a higher degree of uncertainty. We maintain significant reinsurance protection that greatly limits the impact that these extreme events have on net loss and loss expenses.
|
•
|
Some insured events may span multiple years and trigger multiple policies, as in the case of asbestos, environmental, and abuse and molestation claims, where the injury is deemed to occur over an extended period of time. These types of losses often do not lend themselves to traditional actuarial methods. Where we deem appropriate, our experience may be analyzed without differentiating by accident year, using alternative methods and metrics. In these cases, the associated selected ultimate loss and loss expenses are then allocated to the applicable accident years for reporting.
|
•
|
Another example of exposures that do not lend themselves to generally accepted actuarial techniques relate to loss expenses that cannot be attributed to a specific claim (referred to as “unallocated loss expenses”). These expenses are first allocated to line of business, and alternative projection methods are then applied to estimate expenses by calendar year, which are then allocated back to the applicable accident years for reporting.
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
25,089
|
|
|
23,992
|
|
|
23,905
|
|
Federal income tax
|
|
55,825
|
|
|
29,193
|
|
|
62,000
|
|
|
|
|
|
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
||||
Operating cash flows from operating leases1
|
|
8,138
|
|
|
—
|
|
|
—
|
|
|
Operating cash flows from financing leases
|
|
16
|
|
|
—
|
|
|
—
|
|
|
Financing cash flows from finance leases
|
|
977
|
|
|
5,646
|
|
|
4,121
|
|
|
|
|
|
|
|
|
|
||||
Non-cash items:
|
|
|
|
|
|
|
||||
Corporate actions related to fixed income securities, AFS2
|
|
61,369
|
|
|
52,277
|
|
|
22,511
|
|
|
Corporate actions related to equity securities2
|
|
14,250
|
|
|
944
|
|
|
4,725
|
|
|
Assets acquired under finance lease arrangements
|
|
824
|
|
|
4,119
|
|
|
278
|
|
|
Assets acquired under operating lease arrangements1
|
|
13,808
|
|
|
—
|
|
|
—
|
|
|
Non-cash purchase of property and equipment
|
|
89
|
|
|
291
|
|
|
—
|
|
($ in thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
|||
Cash
|
|
$
|
300
|
|
|
505
|
|
Restricted cash
|
|
7,675
|
|
|
16,414
|
|
|
Total cash and restricted cash shown in the Statements of Cash Flows
|
|
$
|
7,975
|
|
|
16,919
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
AFS securities:
|
|
|
|
|
|
|
|
|
|
|
Fixed income securities
|
|
$
|
215,634
|
|
|
2,302
|
|
|
85,806
|
|
Equity securities
|
|
—
|
|
|
—
|
|
|
38,894
|
|
|
Total AFS securities
|
|
215,634
|
|
|
2,302
|
|
|
124,700
|
|
|
|
|
|
|
|
|
|
||||
HTM securities:
|
|
|
|
|
|
|
|
|
|
|
Fixed income securities
|
|
31
|
|
|
89
|
|
|
(21
|
)
|
|
Total HTM securities
|
|
31
|
|
|
89
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
||||
Short-term securities
|
|
23
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
Total net unrealized gains
|
|
215,688
|
|
|
2,391
|
|
|
124,679
|
|
|
Deferred income tax
|
|
(45,294
|
)
|
|
(502
|
)
|
|
(44,103
|
)
|
|
Net unrealized gains, net of deferred income tax
|
|
170,394
|
|
|
1,889
|
|
|
80,576
|
|
|
|
|
|
|
|
|
|
||||
Cumulative effect adjustment due to accounting change for equity unrealized1
|
|
—
|
|
|
30,726
|
|
|
—
|
|
|
Cumulative effect adjustment due to accounting changes due to accounting change for stranded tax assets1
|
|
—
|
|
|
(17,920
|
)
|
|
—
|
|
|
Increase (decrease) in net unrealized gains in OCI, net of deferred income tax
|
|
$
|
168,505
|
|
|
(65,881
|
)
|
|
38,453
|
|
December 31, 2019
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
Unrealized
|
|
|
|
Unrecognized
|
|
Unrecognized
|
|
|
|||||||
|
|
Amortized
|
|
Gains
|
|
Carrying
|
|
Holding
|
|
Holding
|
|
Fair
|
|||||||
($ in thousands)
|
|
Cost
|
|
(Losses)
|
|
Value
|
|
Gains
|
|
Losses
|
|
Value
|
|||||||
Obligations of state and political subdivisions
|
|
$
|
4,573
|
|
|
7
|
|
|
4,580
|
|
|
342
|
|
|
(1
|
)
|
|
4,921
|
|
Corporate securities
|
|
16,196
|
|
|
24
|
|
|
16,220
|
|
|
834
|
|
|
—
|
|
|
17,054
|
|
|
Total HTM fixed income securities
|
|
$
|
20,769
|
|
|
31
|
|
|
20,800
|
|
|
1,176
|
|
|
(1
|
)
|
|
21,975
|
|
December 31, 2018
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
Unrealized
|
|
|
|
Unrecognized
|
|
Unrecognized
|
|
|
|||||||
|
|
Amortized
|
|
Gains
|
|
Carrying
|
|
Holding
|
|
Holding
|
|
Fair
|
|||||||
($ in thousands)
|
|
Cost
|
|
(Losses)
|
|
Value
|
|
Gains
|
|
Losses
|
|
Value
|
|||||||
Obligations of state and political subdivisions
|
|
17,431
|
|
|
39
|
|
|
17,470
|
|
|
504
|
|
|
(5
|
)
|
|
17,969
|
|
|
Corporate securities
|
|
19,590
|
|
|
50
|
|
|
19,640
|
|
|
855
|
|
|
(147
|
)
|
|
20,348
|
|
|
Total HTM fixed income securities
|
|
$
|
37,021
|
|
|
89
|
|
|
37,110
|
|
|
1,359
|
|
|
(152
|
)
|
|
38,317
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|||||
|
|
Cost/
|
|
|
|
|
|
|
|||||
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
Fair
|
|||||
($ in thousands)
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
|||||
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|||||
U.S. government and government agencies
|
|
$
|
112,680
|
|
|
3,506
|
|
|
—
|
|
|
116,186
|
|
Foreign government
|
|
18,011
|
|
|
533
|
|
|
(2
|
)
|
|
18,542
|
|
|
Obligations of states and political subdivisions
|
|
1,168,185
|
|
|
62,175
|
|
|
(270
|
)
|
|
1,230,090
|
|
|
Corporate securities
|
|
1,866,881
|
|
|
81,906
|
|
|
(1,310
|
)
|
|
1,947,477
|
|
|
CLO and other ABS
|
|
790,517
|
|
|
7,929
|
|
|
(5,434
|
)
|
|
793,012
|
|
|
CMBS
|
|
514,709
|
|
|
23,902
|
|
|
(267
|
)
|
|
538,344
|
|
|
RMBS
|
|
1,409,003
|
|
|
43,421
|
|
|
(455
|
)
|
|
1,451,969
|
|
|
Total AFS fixed income securities
|
|
$
|
5,879,986
|
|
|
223,372
|
|
|
(7,738
|
)
|
|
6,095,620
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|||||
|
|
Cost/
|
|
|
|
|
|
|
|||||
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
Fair
|
|||||
($ in thousands)
|
|
Cost
|
|
Gains
|
|
Losses
|
|
Value
|
|||||
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|||||
U.S. government and government agencies
|
|
$
|
120,092
|
|
|
1,810
|
|
|
(592
|
)
|
|
121,310
|
|
Foreign government
|
|
23,202
|
|
|
36
|
|
|
(107
|
)
|
|
23,131
|
|
|
Obligations of states and political subdivisions
|
|
1,121,615
|
|
|
19,485
|
|
|
(2,631
|
)
|
|
1,138,469
|
|
|
Corporate securities
|
|
1,639,852
|
|
|
5,521
|
|
|
(27,965
|
)
|
|
1,617,408
|
|
|
CLO and other ABS
|
|
720,193
|
|
|
4,112
|
|
|
(6,943
|
)
|
|
717,362
|
|
|
CMBS
|
|
527,409
|
|
|
3,417
|
|
|
(3,748
|
)
|
|
527,078
|
|
|
RMBS
|
|
1,118,435
|
|
|
12,988
|
|
|
(3,081
|
)
|
|
1,128,342
|
|
|
Total AFS fixed income securities
|
|
$
|
5,270,798
|
|
|
47,369
|
|
|
(45,067
|
)
|
|
5,273,100
|
|
December 31, 2019
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||
($ in thousands)
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value |
|
Unrealized
Losses |
|||||||
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign government
|
|
1,416
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
1,416
|
|
|
(2
|
)
|
|
Obligations of states and political subdivisions
|
|
35,838
|
|
|
(270
|
)
|
|
—
|
|
|
—
|
|
|
35,838
|
|
|
(270
|
)
|
|
Corporate securities
|
|
84,832
|
|
|
(480
|
)
|
|
20,182
|
|
|
(830
|
)
|
|
105,014
|
|
|
(1,310
|
)
|
|
CLO and other ABS
|
|
205,191
|
|
|
(1,938
|
)
|
|
204,385
|
|
|
(3,496
|
)
|
|
409,576
|
|
|
(5,434
|
)
|
|
CMBS
|
|
62,893
|
|
|
(264
|
)
|
|
828
|
|
|
(3
|
)
|
|
63,721
|
|
|
(267
|
)
|
|
RMBS
|
|
126,089
|
|
|
(425
|
)
|
|
5,375
|
|
|
(30
|
)
|
|
131,464
|
|
|
(455
|
)
|
|
Total AFS fixed income securities
|
|
$
|
516,259
|
|
|
(3,379
|
)
|
|
230,770
|
|
|
(4,359
|
)
|
|
747,029
|
|
|
(7,738
|
)
|
December 31, 2018
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||
($ in thousands)
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value |
|
Unrealized
Losses |
|||||||
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
U.S. government and government agencies
|
|
$
|
6,693
|
|
|
(174
|
)
|
|
23,163
|
|
|
(418
|
)
|
|
29,856
|
|
|
(592
|
)
|
Foreign government
|
|
12,208
|
|
|
(93
|
)
|
|
1,482
|
|
|
(14
|
)
|
|
13,690
|
|
|
(107
|
)
|
|
Obligations of states and political subdivisions
|
|
196,798
|
|
|
(2,074
|
)
|
|
42,821
|
|
|
(557
|
)
|
|
239,619
|
|
|
(2,631
|
)
|
|
Corporate securities
|
|
1,041,952
|
|
|
(23,649
|
)
|
|
78,953
|
|
|
(4,316
|
)
|
|
1,120,905
|
|
|
(27,965
|
)
|
|
CLO and other ABS
|
|
516,106
|
|
|
(6,750
|
)
|
|
16,800
|
|
|
(193
|
)
|
|
532,906
|
|
|
(6,943
|
)
|
|
CMBS
|
|
229,338
|
|
|
(2,548
|
)
|
|
66,294
|
|
|
(1,200
|
)
|
|
295,632
|
|
|
(3,748
|
)
|
|
RMBS
|
|
139,338
|
|
|
(1,660
|
)
|
|
45,661
|
|
|
(1,421
|
)
|
|
184,999
|
|
|
(3,081
|
)
|
|
Total AFS fixed income securities
|
|
$
|
2,142,433
|
|
|
(36,948
|
)
|
|
275,174
|
|
|
(8,119
|
)
|
|
2,417,607
|
|
|
(45,067
|
)
|
|
|
AFS
|
|
HTM
|
||||||
($ in thousands)
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||
Due in one year or less
|
|
$
|
394,027
|
|
|
1,211
|
|
|
1,229
|
|
Due after one year through five years
|
|
3,001,602
|
|
|
13,856
|
|
|
14,820
|
|
|
Due after five years through 10 years
|
|
2,531,172
|
|
|
5,733
|
|
|
5,926
|
|
|
Due after 10 years
|
|
168,819
|
|
|
—
|
|
|
—
|
|
|
Total fixed income securities
|
|
$
|
6,095,620
|
|
|
20,800
|
|
|
21,975
|
|
Other Investments
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||||||||||
($ in thousands)
|
|
Carrying
Value
|
|
Remaining
Commitment
|
|
Maximum
Exposure to Loss1
|
|
Carrying
Value
|
|
Remaining
Commitment |
|
Maximum
Exposure to Loss1 |
|||||||
Alternative Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Private equity
|
|
$
|
118,352
|
|
|
93,138
|
|
|
211,490
|
|
|
84,352
|
|
|
93,688
|
|
|
178,040
|
|
Private credit
|
|
42,532
|
|
|
105,340
|
|
|
147,872
|
|
|
41,682
|
|
|
81,453
|
|
|
123,135
|
|
|
Real assets
|
|
23,256
|
|
|
20,741
|
|
|
43,997
|
|
|
27,862
|
|
|
27,129
|
|
|
54,991
|
|
|
Total alternative investments
|
|
184,140
|
|
|
219,219
|
|
|
403,359
|
|
|
153,896
|
|
|
202,270
|
|
|
356,166
|
|
|
Other securities2
|
|
32,667
|
|
|
—
|
|
|
32,667
|
|
|
25,042
|
|
|
—
|
|
|
25,042
|
|
|
Total other investments
|
|
$
|
216,807
|
|
|
219,219
|
|
|
436,026
|
|
|
178,938
|
|
|
202,270
|
|
|
381,208
|
|
•
|
Primary Private Equity: This strategy makes private equity investments, primarily in established large and middle market companies across diverse industries globally, with an emphasis on North America.
|
•
|
Secondary Private Equity: This strategy purchases seasoned private equity funds from investors desiring liquidity prior to normal fund termination. Investments are made across all sectors of the private equity market, including leveraged buyouts ("LBO"), venture capital, distressed securities, mezzanine financing, real estate, and infrastructure.
|
•
|
Venture Capital: In general, these investments are made principally by investing in equity securities of privately-held corporations, for long-term capital appreciation. This strategy makes private equity investments in growth equity and buyout partnerships.
|
•
|
Direct Lending: This strategy provides privately negotiated loans to U.S. middle market companies. Typically, these are floating rate, senior secured loans diversified across industries. Loans are made to companies that may or may not have private equity sponsors to finance LBOs, recapitalizations, and acquisitions.
|
•
|
Mezzanine Financing: This strategy provides privately-negotiated fixed income securities, generally with an equity component, to LBO firms and private and publicly-traded large, mid, and small-cap companies to finance LBOs, recapitalizations, and acquisitions.
|
•
|
Opportunistic and Distressed Debt: This strategy makes investments in debt and equity securities of companies that are experiencing financial distress, operational issues, or dislocated pricing of publicly-traded securities. Investments include buying indebtedness of bankrupt or financially-troubled companies, small balance loan portfolios, special situations and capital structure arbitrage trades, commercial real estate mortgages, and similar non-U.S. securities and debt obligations.
|
•
|
Infrastructure: This strategy invests in the equity or debt of cash flow generating assets, diversified across a variety of industries, including transportation, energy infrastructure, renewable power, such as wind and solar, social infrastructure, power generation, water, telecom, and other regulated entities principally located in North America and Western Europe.
|
•
|
Real Estate: This strategy invests in real estate in North America, Europe, and Asia via direct property ownership, joint ventures, mortgages, and investments in equity and debt instruments.
|
Balance Sheet Information
|
|
|
|
|
|||
December 31,
|
|
|
|
|
|||
($ in millions)
|
|
2019
|
|
2018
|
|||
Investments
|
|
$
|
43,857
|
|
|
28,292
|
|
Total assets
|
|
45,432
|
|
|
30,377
|
|
|
Total liabilities
|
|
5,670
|
|
|
4,532
|
|
|
Total partners’ capital
|
|
39,762
|
|
|
25,845
|
|
Income Statement Information
|
|
|
|
|
|
|
||||
12 months ended September 30,
|
|
|
|
|
|
|
||||
($ in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||
Net investment (loss) income
|
|
$
|
(8
|
)
|
|
134
|
|
|
(143
|
)
|
Realized gains
|
|
695
|
|
|
1,981
|
|
|
325
|
|
|
Net change in unrealized appreciation
|
|
5,543
|
|
|
1,303
|
|
|
2,894
|
|
|
Net income before tax
|
|
$
|
6,230
|
|
|
3,418
|
|
|
3,076
|
|
|
|
|
|
|
|
|
||||
Insurance Subsidiaries' alternative investments income before tax
|
|
17.9
|
|
|
17.6
|
|
|
12.7
|
|
($ in millions)
|
|
FHLBI Collateral
|
|
FHLBNY Collateral
|
|
State and Regulatory Deposits
|
|
Total
|
|||||
U.S. government and government agencies
|
|
$
|
—
|
|
|
—
|
|
|
22.8
|
|
|
22.8
|
|
Obligations of states and political subdivisions
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|
4.0
|
|
|
Corporate securities
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
|
CMBS
|
|
7.2
|
|
|
17.9
|
|
|
—
|
|
|
25.1
|
|
|
RMBS
|
|
59.0
|
|
|
77.6
|
|
|
—
|
|
|
136.6
|
|
|
Total pledged as collateral
|
|
$
|
66.2
|
|
|
95.5
|
|
|
27.1
|
|
|
188.8
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Fixed income securities
|
|
$
|
203,255
|
|
|
178,104
|
|
|
153,230
|
|
Equity securities
|
|
6,996
|
|
|
7,764
|
|
|
6,442
|
|
|
Short-term investments
|
|
6,653
|
|
|
3,472
|
|
|
1,526
|
|
|
Other investments
|
|
18,778
|
|
|
17,799
|
|
|
12,871
|
|
|
Investment expenses
|
|
(13,139
|
)
|
|
(11,803
|
)
|
|
(12,187
|
)
|
|
Net investment income earned
|
|
$
|
222,543
|
|
|
195,336
|
|
|
161,882
|
|
2019
|
|
|
|
|
|
Recognized in
Earnings
|
||||
($ in thousands)
|
|
Gross
|
|
Included in OCI
|
|
|||||
AFS fixed income securities:
|
|
|
|
|
|
|
||||
Obligations of states and political subdivisions
|
|
66
|
|
|
—
|
|
|
66
|
|
|
Corporate securities
|
|
$
|
2,529
|
|
|
—
|
|
|
2,529
|
|
Total AFS fixed income securities
|
|
2,595
|
|
|
—
|
|
|
2,595
|
|
|
Other investments
|
|
1,049
|
|
|
—
|
|
|
1,049
|
|
|
Total OTTI losses
|
|
$
|
3,644
|
|
|
—
|
|
|
3,644
|
|
2018
|
|
|
|
|
|
Recognized in
Earnings
|
||||
($ in thousands)
|
|
Gross
|
|
Included in OCI
|
|
|||||
AFS fixed income securities:
|
|
|
|
|
|
|
||||
Corporate securities
|
|
$
|
1,783
|
|
|
—
|
|
|
1,783
|
|
RMBS
|
|
2,903
|
|
|
—
|
|
|
2,903
|
|
|
Total AFS fixed income securities
|
|
4,686
|
|
|
—
|
|
|
4,686
|
|
|
Other investments
|
|
1,893
|
|
|
—
|
|
|
1,893
|
|
|
Total OTTI losses
|
|
$
|
6,579
|
|
|
—
|
|
|
6,579
|
|
2017
|
|
|
|
|
|
Recognized in
Earnings
|
||||
($ in thousands)
|
|
Gross
|
|
Included in OCI
|
|
|||||
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government agencies
|
|
$
|
36
|
|
|
—
|
|
|
36
|
|
Obligations of states and political subdivisons
|
|
612
|
|
|
—
|
|
|
612
|
|
|
Corporate securities
|
|
587
|
|
|
—
|
|
|
587
|
|
|
CLO and other ABS
|
|
96
|
|
|
—
|
|
|
96
|
|
|
CMBS
|
|
670
|
|
|
—
|
|
|
670
|
|
|
RMBS
|
|
1,183
|
|
|
(36
|
)
|
|
1,219
|
|
|
Total AFS fixed income securities
|
|
3,184
|
|
|
(36
|
)
|
|
3,220
|
|
|
AFS equity securities:
|
|
|
|
|
|
|
||||
Common stock
|
|
1,435
|
|
|
—
|
|
|
1,435
|
|
|
Total AFS equity securities
|
|
1,435
|
|
|
—
|
|
|
1,435
|
|
|
Other investments
|
|
190
|
|
|
—
|
|
|
190
|
|
|
Total OTTI losses
|
|
$
|
4,809
|
|
|
(36
|
)
|
|
4,845
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Net realized gains (losses) on the disposals of securities:
|
|
|
|
|
|
|
||||
Fixed income securities
|
|
$
|
1,910
|
|
|
(34,953
|
)
|
|
6,944
|
|
Equity securities
|
|
24,844
|
|
|
18,695
|
|
|
4,629
|
|
|
Short-term investments
|
|
(16
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
Other investments
|
|
(23
|
)
|
|
(2,714
|
)
|
|
(365
|
)
|
|
Net realized gains (losses) on the disposal of securities
|
|
26,715
|
|
|
(18,975
|
)
|
|
11,204
|
|
|
OTTI charges
|
|
(3,644
|
)
|
|
(6,579
|
)
|
|
(4,845
|
)
|
|
Net realized gains (losses)
|
|
23,071
|
|
|
(25,554
|
)
|
|
6,359
|
|
|
Unrealized (losses) recognized in income on equity securities
|
|
(8,649
|
)
|
|
(29,369
|
)
|
|
—
|
|
|
Total net realized and unrealized investment gains (losses)
|
|
$
|
14,422
|
|
|
(54,923
|
)
|
|
6,359
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
HTM fixed income securities
|
|
|
|
|
|
|
|
|
|
|
Gains
|
|
$
|
1
|
|
|
2
|
|
|
44
|
|
Losses
|
|
(15
|
)
|
|
—
|
|
|
(1
|
)
|
|
AFS fixed income securities
|
|
|
|
|
|
|
|
|
|
|
Gains
|
|
6,899
|
|
|
5,460
|
|
|
10,193
|
|
|
Losses
|
|
(4,975
|
)
|
|
(40,415
|
)
|
|
(3,292
|
)
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
Gains
|
|
24,980
|
|
|
23,203
|
|
|
5,829
|
|
|
Losses
|
|
(136
|
)
|
|
(4,508
|
)
|
|
(1,200
|
)
|
|
Short-term investments
|
|
|
|
|
|
|
||||
Gains
|
|
24
|
|
|
7
|
|
|
2
|
|
|
Losses
|
|
(40
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
Gains
|
|
6
|
|
|
—
|
|
|
494
|
|
|
Losses
|
|
(29
|
)
|
|
(2,714
|
)
|
|
(859
|
)
|
|
Total net realized investment gains (losses)
|
|
$
|
26,715
|
|
|
(18,975
|
)
|
|
11,204
|
|
•
|
2019: Opportunistic sales in our equity portfolio.
|
•
|
2018: Higher trading volume driven by opportunistic sales in both our fixed income securities and equity portfolios.
|
•
|
2017: Higher trading volume in our fixed income securities portfolio related to a more active external investment management approach and opportunistic sales in our equity portfolio.
|
2019
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
Gross
|
|
Tax
|
|
Net
|
||||
Net income
|
|
$
|
336,390
|
|
|
64,767
|
|
|
271,623
|
|
Components of OCI:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on investment securities:
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains during the year
|
|
212,683
|
|
|
44,662
|
|
|
168,021
|
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
|
|||
HTM securities
|
|
(58
|
)
|
|
(12
|
)
|
|
(46
|
)
|
|
Realized losses on disposals and OTTI of AFS securities
|
|
671
|
|
|
141
|
|
|
530
|
|
|
Total unrealized gains on investment securities
|
|
213,296
|
|
|
44,791
|
|
|
168,505
|
|
|
Defined benefit pension and post-retirement plans:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
(13,795
|
)
|
|
(2,897
|
)
|
|
(10,898
|
)
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
2,657
|
|
|
558
|
|
|
2,099
|
|
|
Total defined benefit pension and post-retirement plans
|
|
(11,138
|
)
|
|
(2,339
|
)
|
|
(8,799
|
)
|
|
Other comprehensive income
|
|
202,158
|
|
|
42,452
|
|
|
159,706
|
|
|
Comprehensive income
|
|
$
|
538,548
|
|
|
107,219
|
|
|
431,329
|
|
2018
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
Gross
|
|
Tax
|
|
Net
|
||||
Net income
|
|
$
|
211,721
|
|
|
32,782
|
|
|
178,939
|
|
Components of OCI:
|
|
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains on investment securities:
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding losses during the year
|
|
(123,145
|
)
|
|
(25,861
|
)
|
|
(97,284
|
)
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
|
|||
HTM securities
|
|
110
|
|
|
23
|
|
|
87
|
|
|
Realized losses on disposals and OTTI of AFS securities
|
|
39,641
|
|
|
8,325
|
|
|
31,316
|
|
|
Total unrealized losses on investment securities
|
|
(83,394
|
)
|
|
(17,513
|
)
|
|
(65,881
|
)
|
|
Defined benefit pension and post-retirement plans:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
(11,273
|
)
|
|
(2,367
|
)
|
|
(8,906
|
)
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
2,127
|
|
|
447
|
|
|
1,680
|
|
|
Total defined benefit pension and post-retirement plans
|
|
(9,146
|
)
|
|
(1,920
|
)
|
|
(7,226
|
)
|
|
Other comprehensive loss
|
|
(92,540
|
)
|
|
(19,433
|
)
|
|
(73,107
|
)
|
|
Comprehensive income
|
|
$
|
119,181
|
|
|
13,349
|
|
|
105,832
|
|
2017
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
Gross
|
|
Tax
|
|
Net
|
||||
Net income
|
|
$
|
261,968
|
|
|
93,142
|
|
|
168,826
|
|
Components of OCI:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on investment securities:
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains during the year
|
|
66,894
|
|
|
23,879
|
|
|
43,015
|
|
|
Non-credit portion of OTTI recognized in OCI
|
|
36
|
|
|
13
|
|
|
23
|
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
|
|||
HTM securities
|
|
(179
|
)
|
|
(63
|
)
|
|
(116
|
)
|
|
Non-credit OTTI
|
|
104
|
|
|
36
|
|
|
68
|
|
|
Realized gains on disposals and OTTI of AFS securities
|
|
(6,979
|
)
|
|
(2,442
|
)
|
|
(4,537
|
)
|
|
Total unrealized gains on investment securities
|
|
59,876
|
|
|
21,423
|
|
|
38,453
|
|
|
Defined benefit pension and post-retirement plans:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
(4,684
|
)
|
|
(984
|
)
|
|
(3,700
|
)
|
|
Amounts reclassified into net income:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
2,102
|
|
|
735
|
|
|
1,367
|
|
|
Total defined benefit pension and post-retirement plans
|
|
(2,582
|
)
|
|
(249
|
)
|
|
(2,333
|
)
|
|
Other comprehensive income
|
|
57,294
|
|
|
21,174
|
|
|
36,120
|
|
|
Comprehensive income
|
|
$
|
319,262
|
|
|
114,316
|
|
|
204,946
|
|
|
|
Net Unrealized (Losses) Gains on Investment Securities
|
|
Defined Benefit Pension and Post-retirement Plans
|
|
|
|||||||||||||
($ in thousands)
|
|
OTTI Related
|
|
HTM Related
|
|
All Other
|
|
Investments Subtotal
|
|
|
Total AOCI
|
||||||||
Balance, December 31, 2017
|
|
$
|
(59
|
)
|
|
(14
|
)
|
|
80,648
|
|
|
80,575
|
|
|
(60,405
|
)
|
|
20,170
|
|
Cumulative effect adjustments1
|
|
(12
|
)
|
|
(2
|
)
|
|
(12,792
|
)
|
|
(12,806
|
)
|
|
(12,213
|
)
|
|
(25,019
|
)
|
|
Balance: December 31, 2017, as adjusted
|
|
(71
|
)
|
|
(16
|
)
|
|
67,856
|
|
|
67,769
|
|
|
(72,618
|
)
|
|
(4,849
|
)
|
|
OCI before reclassifications
|
|
—
|
|
|
—
|
|
|
(97,284
|
)
|
|
(97,284
|
)
|
|
(8,906
|
)
|
|
(106,190
|
)
|
|
Amounts reclassified from AOCI
|
|
—
|
|
|
87
|
|
|
31,316
|
|
|
31,403
|
|
|
1,680
|
|
|
33,083
|
|
|
Net current period OCI
|
|
—
|
|
|
87
|
|
|
(65,968
|
)
|
|
(65,881
|
)
|
|
(7,226
|
)
|
|
(73,107
|
)
|
|
Balance, December 31, 2018
|
|
(71
|
)
|
|
71
|
|
|
1,888
|
|
|
1,888
|
|
|
(79,844
|
)
|
|
(77,956
|
)
|
|
OCI before reclassifications
|
|
—
|
|
|
—
|
|
|
168,021
|
|
|
168,021
|
|
|
(10,898
|
)
|
|
157,123
|
|
|
Amounts reclassified from AOCI
|
|
—
|
|
|
(46
|
)
|
|
530
|
|
|
484
|
|
|
2,099
|
|
|
2,583
|
|
|
Net current period OCI
|
|
—
|
|
|
(46
|
)
|
|
168,551
|
|
|
168,505
|
|
|
(8,799
|
)
|
|
159,706
|
|
|
Balance, December 31, 2019
|
|
$
|
(71
|
)
|
|
25
|
|
|
170,439
|
|
|
170,393
|
|
|
(88,643
|
)
|
|
81,750
|
|
($ in thousands)
|
|
Year ended December 31, 2019
|
|
Year ended December 31, 2018
|
|
Affected Line Item in the Consolidated Statements of Income
|
|||
HTM related
|
|
|
|
|
|
|
|||
Unrealized (gains) losses on HTM disposals
|
|
$
|
(46
|
)
|
|
137
|
|
|
Net realized and unrealized gains (losses)
|
Amortization of net unrealized gains on HTM securities
|
|
(12
|
)
|
|
(27
|
)
|
|
Net investment income earned
|
|
|
|
(58
|
)
|
|
110
|
|
|
Income before federal income tax
|
|
|
|
12
|
|
|
(23
|
)
|
|
Total federal income tax expense
|
|
|
|
(46
|
)
|
|
87
|
|
|
Net income
|
|
Realized losses (gains) on AFS
|
|
|
|
|
|
|
|||
Realized losses on AFS disposals and OTTI
|
|
671
|
|
|
39,641
|
|
|
Net realized and unrealized gains (losses)
|
|
|
|
671
|
|
|
39,641
|
|
|
Income before federal income tax
|
|
|
|
(141
|
)
|
|
(8,325
|
)
|
|
Total federal income tax expense
|
|
|
|
530
|
|
|
31,316
|
|
|
Net income
|
|
Defined benefit pension and post-retirement life plans
|
|
|
|
|
|
|
|||
Net actuarial loss
|
|
582
|
|
|
450
|
|
|
Loss and loss expense incurred
|
|
|
|
2,075
|
|
|
1,677
|
|
|
Other insurance expenses
|
|
Total defined benefit pension and post-retirement life
|
|
2,657
|
|
|
2,127
|
|
|
Income before federal income tax
|
|
|
|
(558
|
)
|
|
(447
|
)
|
|
Total federal income tax expense
|
|
|
|
2,099
|
|
|
1,680
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|||
Total reclassifications for the period
|
|
$
|
2,583
|
|
|
33,083
|
|
|
Net income
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||||
($ in thousands)
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|||||
7.25% Senior Notes
|
|
$
|
49,910
|
|
|
66,365
|
|
|
49,907
|
|
|
57,032
|
|
6.70% Senior Notes
|
|
99,480
|
|
|
123,104
|
|
|
99,462
|
|
|
107,075
|
|
|
5.875% Senior Notes
|
|
—
|
|
|
—
|
|
|
185,000
|
|
|
177,230
|
|
|
5.375% Senior Notes
|
|
294,157
|
|
|
357,025
|
|
|
—
|
|
|
—
|
|
|
1.61% Borrowings from FHLBNY
|
|
25,000
|
|
|
24,901
|
|
|
25,000
|
|
|
24,218
|
|
|
1.56% Borrowings from FHLBNY
|
|
25,000
|
|
|
24,875
|
|
|
25,000
|
|
|
24,162
|
|
|
3.03% Borrowings from FHLBI
|
|
60,000
|
|
|
63,002
|
|
|
60,000
|
|
|
58,905
|
|
|
Subtotal long-term debt
|
|
553,547
|
|
|
659,272
|
|
|
444,369
|
|
|
448,622
|
|
|
Unamortized debt issuance costs
|
|
(3,687
|
)
|
|
|
|
(4,829
|
)
|
|
|
|||
Finance lease obligations
|
|
737
|
|
|
|
|
—
|
|
|
|
|||
Total long-term debt
|
|
$
|
550,597
|
|
|
|
|
|
439,540
|
|
|
|
|
December 31, 2019
|
|
|
|
Fair Value Measurements Using
|
|||||||||
($ in thousands)
|
|
Assets Measured at Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets/ Liabilities
(Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|||||
U.S. government and government agencies
|
|
$
|
116,186
|
|
|
41,083
|
|
|
75,103
|
|
|
—
|
|
Foreign government
|
|
18,542
|
|
|
—
|
|
|
18,542
|
|
|
—
|
|
|
Obligations of states and political subdivisions
|
|
1,230,090
|
|
|
—
|
|
|
1,230,090
|
|
|
—
|
|
|
Corporate securities
|
|
1,947,477
|
|
|
—
|
|
|
1,930,426
|
|
|
17,051
|
|
|
CLO and other ABS
|
|
793,012
|
|
|
3,635
|
|
|
772,343
|
|
|
17,034
|
|
|
CMBS
|
|
538,344
|
|
|
—
|
|
|
538,344
|
|
|
—
|
|
|
RMBS
|
|
1,451,969
|
|
|
—
|
|
|
1,451,969
|
|
|
—
|
|
|
Total AFS fixed income securities
|
|
6,095,620
|
|
|
44,718
|
|
|
6,016,817
|
|
|
34,085
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|||||
Common stock1
|
|
69,900
|
|
|
32,145
|
|
|
—
|
|
|
—
|
|
|
Preferred stock
|
|
3,037
|
|
|
3,037
|
|
|
—
|
|
|
—
|
|
|
Total equity securities
|
|
72,937
|
|
|
35,182
|
|
|
—
|
|
|
—
|
|
|
Short-term investments
|
|
282,490
|
|
|
265,306
|
|
|
17,184
|
|
|
—
|
|
|
Total assets measured at fair value
|
|
$
|
6,451,047
|
|
|
345,206
|
|
|
6,034,001
|
|
|
34,085
|
|
December 31, 2018
|
|
|
|
Fair Value Measurements Using
|
|||||||||
($ in thousands)
|
|
Assets Measured at Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets/ Liabilities
(Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFS fixed income securities:
|
|
|
|
|
|
|
|
|
|||||
U.S. government and government agencies
|
|
$
|
121,310
|
|
|
78,381
|
|
|
42,929
|
|
|
—
|
|
Foreign government
|
|
23,131
|
|
|
—
|
|
|
23,131
|
|
|
—
|
|
|
Obligations of states and political subdivisions
|
|
1,138,469
|
|
|
—
|
|
|
1,138,469
|
|
|
—
|
|
|
Corporate securities
|
|
1,617,408
|
|
|
—
|
|
|
1,617,408
|
|
|
—
|
|
|
CLO and other ABS
|
|
717,362
|
|
|
—
|
|
|
709,953
|
|
|
7,409
|
|
|
CMBS
|
|
527,078
|
|
|
—
|
|
|
527,078
|
|
|
—
|
|
|
RMBS
|
|
1,128,342
|
|
|
—
|
|
|
1,128,342
|
|
|
—
|
|
|
Total AFS fixed income securities
|
|
5,273,100
|
|
|
78,381
|
|
|
5,187,310
|
|
|
7,409
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|||||
Common stock1
|
|
144,727
|
|
|
107,397
|
|
|
—
|
|
|
—
|
|
|
Preferred stock
|
|
2,912
|
|
|
2,912
|
|
|
—
|
|
|
—
|
|
|
Total equity securities
|
|
147,639
|
|
|
110,309
|
|
|
—
|
|
|
—
|
|
|
Short-term investments
|
|
323,864
|
|
|
321,370
|
|
|
2,494
|
|
|
—
|
|
|
Total assets measured at fair value
|
|
$
|
5,744,603
|
|
|
510,060
|
|
|
5,189,804
|
|
|
7,409
|
|
2019
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
Corporate Securities
|
|
CLO and Other ABS
|
|
Total
|
||||
Fair value, December 31, 2018
|
|
$
|
—
|
|
|
7,409
|
|
|
7,409
|
|
Total net (losses) gains for the period included in:
|
|
|
|
|
|
|
|
|
|
|
OCI
|
|
(118
|
)
|
|
(261
|
)
|
|
(379
|
)
|
|
Net income
|
|
—
|
|
|
245
|
|
|
245
|
|
|
Purchases
|
|
—
|
|
|
21,282
|
|
|
21,282
|
|
|
Sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Settlements
|
|
—
|
|
|
(279
|
)
|
|
(279
|
)
|
|
Transfers into Level 3
|
|
17,169
|
|
|
18,853
|
|
|
36,022
|
|
|
Transfers out of Level 3
|
|
—
|
|
|
(30,215
|
)
|
|
(30,215
|
)
|
|
Fair value, December 31, 2019
|
|
$
|
17,051
|
|
|
17,034
|
|
|
34,085
|
|
December 31, 2019
|
|
|
|
Fair Value Measurements Using
|
|||||||||
($ in thousands)
|
|
Assets/Liabilities Disclosed at
Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|||||
Financial Assets
|
|
|
|
|
|
|
|
|
|||||
HTM:
|
|
|
|
|
|
|
|
|
|||||
Obligations of states and political subdivisions
|
|
$
|
4,921
|
|
|
—
|
|
|
4,921
|
|
|
—
|
|
Corporate securities
|
|
17,054
|
|
|
—
|
|
|
17,054
|
|
|
—
|
|
|
Total HTM fixed income securities
|
|
$
|
21,975
|
|
|
—
|
|
|
21,975
|
|
|
—
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|||||
7.25% Senior Notes
|
|
$
|
66,365
|
|
|
—
|
|
|
66,365
|
|
|
—
|
|
6.70% Senior Notes
|
|
123,104
|
|
|
—
|
|
|
123,104
|
|
|
—
|
|
|
5.375% Senior Notes
|
|
357,025
|
|
|
—
|
|
|
357,025
|
|
|
—
|
|
|
1.61% Borrowings from FHLBNY
|
|
24,901
|
|
|
—
|
|
|
24,901
|
|
|
—
|
|
|
1.56% Borrowings from FHLBNY
|
|
24,875
|
|
|
—
|
|
|
24,875
|
|
|
—
|
|
|
3.03% Borrowings from FHLBI
|
|
63,002
|
|
|
—
|
|
|
63,002
|
|
|
—
|
|
|
Total long-term debt
|
|
$
|
659,272
|
|
|
—
|
|
|
659,272
|
|
|
—
|
|
December 31, 2018
|
|
|
|
Fair Value Measurements Using
|
|||||||||
($ in thousands)
|
|
Assets/Liabilities Disclosed at
Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|||||
Financial Assets
|
|
|
|
|
|
|
|
|
|||||
HTM:
|
|
|
|
|
|
|
|
|
|||||
Obligations of states and political subdivisions
|
|
$
|
17,969
|
|
|
—
|
|
|
17,969
|
|
|
—
|
|
Corporate securities
|
|
20,348
|
|
|
—
|
|
|
20,348
|
|
|
—
|
|
|
Total HTM fixed income securities
|
|
$
|
38,317
|
|
|
—
|
|
|
38,317
|
|
|
—
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|||||
7.25% Senior Notes
|
|
$
|
57,032
|
|
|
—
|
|
|
57,032
|
|
|
—
|
|
6.70% Senior Notes
|
|
107,075
|
|
|
—
|
|
|
107,075
|
|
|
—
|
|
|
5.875% Senior Notes
|
|
177,230
|
|
|
177,230
|
|
|
—
|
|
|
—
|
|
|
1.61% Borrowings from FHLBNY
|
|
24,218
|
|
|
—
|
|
|
24,218
|
|
|
—
|
|
|
1.56% Borrowings from FHLBNY
|
|
24,162
|
|
|
—
|
|
|
24,162
|
|
|
—
|
|
|
3.03% Borrowings from FHLBI
|
|
58,905
|
|
|
—
|
|
|
58,905
|
|
|
—
|
|
|
Total long-term debt
|
|
$
|
448,622
|
|
|
177,230
|
|
|
271,392
|
|
|
—
|
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||
($ in thousands)
|
|
Reinsurance Balances
|
|
% of Reinsurance Balance
|
|
Reinsurance Balances
|
|
% of Reinsurance Balance
|
||||||
Total reinsurance recoverables
|
|
$
|
573,235
|
|
|
|
|
|
$
|
549,172
|
|
|
|
|
Total prepaid reinsurance premiums
|
|
166,705
|
|
|
|
|
|
157,723
|
|
|
|
|
||
Total reinsurance balance
|
|
739,940
|
|
|
|
|
|
706,895
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Federal and state pools1:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
NFIP
|
|
175,472
|
|
|
24
|
%
|
|
170,453
|
|
|
24
|
%
|
||
New Jersey Unsatisfied Claim Judgment Fund
|
|
53,732
|
|
|
6
|
|
|
55,167
|
|
|
7
|
|
||
Other
|
|
2,449
|
|
|
1
|
|
|
3,602
|
|
|
1
|
|
||
Total federal and state pools
|
|
231,653
|
|
|
31
|
|
|
229,222
|
|
|
32
|
|
||
Remaining reinsurance balance
|
|
$
|
508,287
|
|
|
69
|
|
|
$
|
477,673
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
||||||
Munich Re Group (A.M. Best rated "A+")
|
|
$
|
119,748
|
|
|
16
|
|
|
$
|
112,841
|
|
|
16
|
|
Hannover Ruckversicherungs AG (A.M. Best rated "A+")
|
|
107,474
|
|
|
15
|
|
|
101,835
|
|
|
14
|
|
||
AXIS Reinsurance Company (A.M. Best rated "A+")
|
|
73,009
|
|
|
10
|
|
|
69,102
|
|
|
10
|
|
||
Swiss Re Group (A.M. Best rated "A+")
|
|
37,190
|
|
|
5
|
|
|
37,519
|
|
|
5
|
|
||
Transatlantic Reinsurance Company (A.M. Best rated “A+”)
|
|
21,824
|
|
|
3
|
|
|
17,686
|
|
|
3
|
|
||
All other reinsurers
|
|
149,042
|
|
|
20
|
|
|
138,690
|
|
|
20
|
|
||
Total reinsurers
|
|
508,287
|
|
|
69
|
%
|
|
477,673
|
|
|
68
|
%
|
||
Less: collateral2
|
|
(110,549
|
)
|
|
|
|
(112,201
|
)
|
|
|
||||
Reinsurers, net of collateral
|
|
$
|
397,738
|
|
|
|
|
$
|
365,472
|
|
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Premiums written:
|
|
|
|
|
|
|
|
|
|
|
Direct
|
|
$
|
3,084,451
|
|
|
2,890,633
|
|
|
2,733,459
|
|
Assumed
|
|
24,339
|
|
|
26,250
|
|
|
26,685
|
|
|
Ceded
|
|
(429,366
|
)
|
|
(402,597
|
)
|
|
(389,503
|
)
|
|
Net
|
|
$
|
2,679,424
|
|
|
2,514,286
|
|
|
2,370,641
|
|
|
|
|
|
|
|
|
||||
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
Direct
|
|
$
|
2,993,157
|
|
|
2,808,764
|
|
|
2,647,488
|
|
Assumed
|
|
24,399
|
|
|
25,831
|
|
|
25,831
|
|
|
Ceded
|
|
(420,385
|
)
|
|
(398,366
|
)
|
|
(382,292
|
)
|
|
Net
|
|
$
|
2,597,171
|
|
|
2,436,229
|
|
|
2,291,027
|
|
|
|
|
|
|
|
|
||||
Loss and loss expense incurred:
|
|
|
|
|
|
|
|
|
|
|
Direct
|
|
$
|
1,714,880
|
|
|
1,706,951
|
|
|
1,570,678
|
|
Assumed
|
|
22,879
|
|
|
21,469
|
|
|
17,588
|
|
|
Ceded
|
|
(186,268
|
)
|
|
(230,286
|
)
|
|
(243,192
|
)
|
|
Net
|
|
$
|
1,551,491
|
|
|
1,498,134
|
|
|
1,345,074
|
|
Ceded to NFIP ($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Ceded premiums written
|
|
$
|
(266,925
|
)
|
|
(248,053
|
)
|
|
(241,345
|
)
|
Ceded premiums earned
|
|
(259,119
|
)
|
|
(244,238
|
)
|
|
(235,088
|
)
|
|
Ceded loss and loss expense incurred
|
|
(71,676
|
)
|
|
(144,967
|
)
|
|
(160,922
|
)
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Gross reserves for loss and loss expense, at beginning of year
|
|
$
|
3,893,868
|
|
|
3,771,240
|
|
|
3,691,719
|
|
Less: reinsurance recoverable on unpaid loss and loss expense, at beginning of year
|
|
537,388
|
|
|
585,855
|
|
|
611,200
|
|
|
Net reserves for loss and loss expense, at beginning of year
|
|
3,356,480
|
|
|
3,185,385
|
|
|
3,080,519
|
|
|
Incurred loss and loss expense for claims occurring in the:
|
|
|
|
|
|
|
|
|
|
|
Current year
|
|
1,601,780
|
|
|
1,527,997
|
|
|
1,384,266
|
|
|
Prior years
|
|
(50,289
|
)
|
|
(29,863
|
)
|
|
(39,192
|
)
|
|
Total incurred loss and loss expense
|
|
1,551,491
|
|
|
1,498,134
|
|
|
1,345,074
|
|
|
Paid loss and loss expense for claims occurring in the:
|
|
|
|
|
|
|
|
|
|
|
Current year
|
|
579,527
|
|
|
573,718
|
|
|
497,486
|
|
|
Prior years
|
|
805,443
|
|
|
753,321
|
|
|
742,722
|
|
|
Total paid loss and loss expense
|
|
1,384,970
|
|
|
1,327,039
|
|
|
1,240,208
|
|
|
Net reserves for loss and loss expense, at end of year
|
|
3,523,001
|
|
|
3,356,480
|
|
|
3,185,385
|
|
|
Add: Reinsurance recoverable on unpaid loss and loss expense, at end of year
|
|
544,162
|
|
|
537,388
|
|
|
585,855
|
|
|
Gross reserves for loss and loss expense at end of year
|
|
$
|
4,067,163
|
|
|
3,893,868
|
|
|
3,771,240
|
|
|
|
2019
|
|||||
($ in millions)
|
|
Gross
|
|
Net
|
|||
Asbestos
|
|
$
|
6.3
|
|
|
5.1
|
|
Landfill sites
|
|
12.1
|
|
|
7.3
|
|
|
Underground storage tanks
|
|
10.3
|
|
|
9.2
|
|
|
Total
|
|
$
|
28.7
|
|
|
21.6
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||
($ in thousands)
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|||||||
Asbestos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves for loss and loss expense at beginning of year
|
|
$
|
7,328
|
|
|
6,097
|
|
|
7,577
|
|
|
6,346
|
|
|
7,847
|
|
|
6,615
|
|
Incurred loss and loss expense
|
|
(375
|
)
|
|
(375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Less: loss and loss expense paid
|
|
(665
|
)
|
|
(665
|
)
|
|
(249
|
)
|
|
(249
|
)
|
|
(270
|
)
|
|
(269
|
)
|
|
Reserves for loss and loss expense at the end of year
|
|
$
|
6,288
|
|
|
5,057
|
|
|
7,328
|
|
|
6,097
|
|
|
7,577
|
|
|
6,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Environmental
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves for loss and loss expense at beginning of year
|
|
$
|
22,692
|
|
|
16,686
|
|
|
20,838
|
|
|
14,866
|
|
|
22,115
|
|
|
16,101
|
|
Incurred loss and loss expense
|
|
723
|
|
|
609
|
|
|
3,059
|
|
|
2,877
|
|
|
126
|
|
|
—
|
|
|
Less: loss and loss expense paid
|
|
(1,002
|
)
|
|
(763
|
)
|
|
(1,205
|
)
|
|
(1,057
|
)
|
|
(1,403
|
)
|
|
(1,235
|
)
|
|
Reserves for loss and loss expense at the end of year
|
|
$
|
22,413
|
|
|
16,532
|
|
|
22,692
|
|
|
16,686
|
|
|
20,838
|
|
|
14,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Asbestos and Environmental Claims
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves for loss and loss expense at beginning of year
|
|
$
|
30,020
|
|
|
22,783
|
|
|
28,415
|
|
|
21,212
|
|
|
29,962
|
|
|
22,716
|
|
Incurred loss and loss expense
|
|
348
|
|
|
234
|
|
|
3,059
|
|
|
2,877
|
|
|
126
|
|
|
—
|
|
|
Less: loss and loss expense paid
|
|
(1,667
|
)
|
|
(1,428
|
)
|
|
(1,454
|
)
|
|
(1,306
|
)
|
|
(1,673
|
)
|
|
(1,504
|
)
|
|
Reserves for loss and loss expense at the end of year
|
|
$
|
28,701
|
|
|
21,589
|
|
|
30,020
|
|
|
22,783
|
|
|
28,415
|
|
|
21,212
|
|
All Lines
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
950,114
|
|
973,742
|
|
977,959
|
|
956,600
|
|
943,118
|
|
922,404
|
|
915,131
|
|
907,074
|
|
904,561
|
|
902,258
|
|
|
38,152
|
|
94,526
|
2011
|
|
1,042,576
|
|
1,061,667
|
|
1,062,233
|
|
1,056,107
|
|
1,033,518
|
|
1,023,726
|
|
1,019,351
|
|
1,013,115
|
|
1,013,175
|
|
|
44,453
|
|
104,861
|
||
2012
|
|
|
1,065,437
|
|
1,071,290
|
|
1,020,655
|
|
998,028
|
|
973,089
|
|
973,644
|
|
973,411
|
|
968,536
|
|
|
50,942
|
|
104,148
|
|||
2013
|
|
|
|
1,044,142
|
|
1,062,045
|
|
1,047,230
|
|
1,021,007
|
|
1,002,316
|
|
987,763
|
|
984,858
|
|
|
72,970
|
|
91,326
|
||||
2014
|
|
|
|
|
1,107,513
|
|
1,133,798
|
|
1,146,990
|
|
1,124,014
|
|
1,104,218
|
|
1,100,208
|
|
|
83,392
|
|
95,081
|
|||||
2015
|
|
|
|
|
|
1,114,081
|
|
1,130,513
|
|
1,144,830
|
|
1,138,313
|
|
1,119,441
|
|
|
111,657
|
|
94,128
|
||||||
2016
|
|
|
|
|
|
|
1,188,608
|
|
1,203,634
|
|
1,227,142
|
|
1,199,734
|
|
|
205,126
|
|
94,579
|
|||||||
2017
|
|
|
|
|
|
|
|
1,270,110
|
|
1,313,372
|
|
1,313,585
|
|
|
336,155
|
|
98,014
|
||||||||
2018
|
|
|
|
|
|
|
|
|
1,413,800
|
|
1,461,603
|
|
|
501,519
|
|
104,187
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
1,483,945
|
|
|
759,853
|
|
93,947
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
11,547,343
|
|
|
|
|
All Lines
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
328,826
|
|
509,910
|
|
625,229
|
|
704,895
|
|
773,536
|
|
803,773
|
|
823,770
|
|
835,532
|
|
846,386
|
|
851,633
|
|
2011
|
|
391,944
|
|
585,867
|
|
692,730
|
|
782,655
|
|
852,202
|
|
901,801
|
|
924,111
|
|
940,626
|
|
950,836
|
|
||
2012
|
|
|
378,067
|
|
555,819
|
|
651,544
|
|
743,742
|
|
810,135
|
|
856,195
|
|
879,372
|
|
898,269
|
|
|||
2013
|
|
|
|
335,956
|
|
518,872
|
|
644,475
|
|
748,758
|
|
833,823
|
|
872,331
|
|
891,841
|
|
||||
2014
|
|
|
|
|
405,898
|
|
614,075
|
|
736,154
|
|
855,959
|
|
936,425
|
|
981,868
|
|
|||||
2015
|
|
|
|
|
|
376,641
|
|
581,203
|
|
725,385
|
|
845,868
|
|
929,222
|
|
||||||
2016
|
|
|
|
|
|
|
387,272
|
|
617,958
|
|
764,331
|
|
892,390
|
|
|||||||
2017
|
|
|
|
|
|
|
|
433,440
|
|
678,453
|
|
829,134
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
511,271
|
|
779,466
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
510,091
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
8,514,750
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
360,119
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
3,392,713
|
|
General Liability
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
215,208
|
|
228,680
|
|
242,499
|
|
237,154
|
|
222,328
|
|
211,619
|
|
208,968
|
|
202,394
|
|
206,146
|
|
205,322
|
|
|
17,542
|
|
12,705
|
2011
|
|
227,769
|
|
228,720
|
|
239,480
|
|
230,785
|
|
217,256
|
|
211,196
|
|
212,011
|
|
211,500
|
|
213,485
|
|
|
19,913
|
|
11,649
|
||
2012
|
|
|
238,979
|
|
245,561
|
|
215,083
|
|
194,144
|
|
175,305
|
|
175,268
|
|
180,659
|
|
182,085
|
|
|
21,005
|
|
9,994
|
|||
2013
|
|
|
|
250,609
|
|
251,421
|
|
239,776
|
|
225,709
|
|
210,785
|
|
203,831
|
|
202,697
|
|
|
28,857
|
|
10,378
|
||||
2014
|
|
|
|
|
244,312
|
|
249,946
|
|
257,132
|
|
239,333
|
|
234,082
|
|
237,125
|
|
|
42,388
|
|
10,586
|
|||||
2015
|
|
|
|
|
|
254,720
|
|
245,710
|
|
246,990
|
|
233,249
|
|
219,204
|
|
|
55,244
|
|
10,381
|
||||||
2016
|
|
|
|
|
|
|
277,214
|
|
272,048
|
|
277,986
|
|
263,245
|
|
|
98,385
|
|
10,526
|
|||||||
2017
|
|
|
|
|
|
|
|
293,747
|
|
293,128
|
|
301,384
|
|
|
161,114
|
|
10,706
|
||||||||
2018
|
|
|
|
|
|
|
|
|
317,934
|
|
336,326
|
|
|
223,228
|
|
10,656
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
347,150
|
|
|
296,257
|
|
8,626
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
2,508,023
|
|
|
|
|
General Liability
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
15,726
|
|
46,201
|
|
80,018
|
|
113,050
|
|
143,360
|
|
161,487
|
|
172,394
|
|
178,179
|
|
183,988
|
|
185,962
|
|
2011
|
|
13,924
|
|
42,692
|
|
73,643
|
|
102,978
|
|
135,377
|
|
159,768
|
|
170,525
|
|
181,856
|
|
187,276
|
|
||
2012
|
|
|
13,030
|
|
35,241
|
|
56,580
|
|
89,008
|
|
109,448
|
|
130,866
|
|
144,451
|
|
156,186
|
|
|||
2013
|
|
|
|
12,789
|
|
35,113
|
|
72,127
|
|
104,587
|
|
139,114
|
|
153,628
|
|
163,764
|
|
||||
2014
|
|
|
|
|
14,901
|
|
46,825
|
|
79,972
|
|
121,969
|
|
154,957
|
|
179,192
|
|
|||||
2015
|
|
|
|
|
|
14,665
|
|
39,978
|
|
78,668
|
|
116,804
|
|
144,216
|
|
||||||
2016
|
|
|
|
|
|
|
15,684
|
|
46,549
|
|
89,431
|
|
133,757
|
|
|||||||
2017
|
|
|
|
|
|
|
|
17,366
|
|
49,470
|
|
92,355
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
19,531
|
|
60,784
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
18,097
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,321,589
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
93,982
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
1,280,416
|
|
Workers Compensation
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
198,371
|
|
214,469
|
|
212,815
|
|
211,030
|
|
214,916
|
|
212,448
|
|
208,155
|
|
204,423
|
|
199,539
|
|
197,095
|
|
|
19,514
|
|
12,192
|
2011
|
|
205,238
|
|
218,973
|
|
214,743
|
|
215,114
|
|
210,591
|
|
205,708
|
|
200,674
|
|
194,821
|
|
192,863
|
|
|
22,717
|
|
11,860
|
||
2012
|
|
|
203,864
|
|
208,036
|
|
199,360
|
|
195,197
|
|
188,596
|
|
187,359
|
|
183,314
|
|
178,774
|
|
|
24,605
|
|
11,618
|
|||
2013
|
|
|
|
199,794
|
|
194,318
|
|
187,658
|
|
173,160
|
|
166,662
|
|
162,787
|
|
159,767
|
|
|
26,260
|
|
11,375
|
||||
2014
|
|
|
|
|
199,346
|
|
187,065
|
|
182,579
|
|
172,515
|
|
164,420
|
|
160,646
|
|
|
28,320
|
|
10,495
|
|||||
2015
|
|
|
|
|
|
193,729
|
|
194,639
|
|
183,604
|
|
179,642
|
|
176,242
|
|
|
27,927
|
|
10,549
|
||||||
2016
|
|
|
|
|
|
|
196,774
|
|
184,946
|
|
176,248
|
|
166,009
|
|
|
41,146
|
|
10,572
|
|||||||
2017
|
|
|
|
|
|
|
|
195,202
|
|
184,306
|
|
175,853
|
|
|
53,654
|
|
10,793
|
||||||||
2018
|
|
|
|
|
|
|
|
|
193,894
|
|
193,818
|
|
|
74,399
|
|
11,078
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
188,625
|
|
|
100,336
|
|
9,805
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,789,692
|
|
|
|
|
Workers Compensation
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
46,795
|
|
93,281
|
|
122,442
|
|
137,184
|
|
149,086
|
|
153,795
|
|
158,078
|
|
162,796
|
|
165,526
|
|
167,478
|
|
2011
|
|
42,941
|
|
90,836
|
|
118,847
|
|
134,646
|
|
139,232
|
|
149,269
|
|
154,320
|
|
158,535
|
|
161,696
|
|
||
2012
|
|
|
40,911
|
|
86,909
|
|
108,211
|
|
122,755
|
|
132,052
|
|
139,477
|
|
143,281
|
|
146,739
|
|
|||
2013
|
|
|
|
36,829
|
|
74,568
|
|
96,376
|
|
109,739
|
|
118,669
|
|
124,130
|
|
126,822
|
|
||||
2014
|
|
|
|
|
35,924
|
|
78,944
|
|
100,876
|
|
113,626
|
|
119,392
|
|
124,077
|
|
|||||
2015
|
|
|
|
|
|
33,857
|
|
77,320
|
|
98,195
|
|
112,601
|
|
120,097
|
|
||||||
2016
|
|
|
|
|
|
|
34,525
|
|
78,531
|
|
98,037
|
|
109,166
|
|
|||||||
2017
|
|
|
|
|
|
|
|
40,375
|
|
82,216
|
|
100,645
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
41,122
|
|
84,780
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
37,826
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,179,326
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
240,140
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
850,505
|
|
Commercial Automobile
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
187,562
|
|
189,305
|
|
187,778
|
|
181,923
|
|
179,854
|
|
172,969
|
|
173,157
|
|
173,471
|
|
173,080
|
|
172,995
|
|
|
682
|
|
25,512
|
2011
|
|
174,006
|
|
183,044
|
|
182,325
|
|
178,421
|
|
172,617
|
|
174,882
|
|
174,514
|
|
173,507
|
|
173,401
|
|
|
899
|
|
25,524
|
||
2012
|
|
|
179,551
|
|
191,947
|
|
183,527
|
|
184,289
|
|
184,367
|
|
186,128
|
|
184,633
|
|
185,357
|
|
|
1,920
|
|
24,160
|
|||
2013
|
|
|
|
188,289
|
|
205,282
|
|
209,197
|
|
207,994
|
|
210,410
|
|
207,975
|
|
209,602
|
|
|
2,928
|
|
25,722
|
||||
2014
|
|
|
|
|
200,534
|
|
212,725
|
|
216,824
|
|
219,925
|
|
218,172
|
|
217,334
|
|
|
4,831
|
|
27,714
|
|||||
2015
|
|
|
|
|
|
220,994
|
|
240,958
|
|
253,074
|
|
259,495
|
|
260,565
|
|
|
7,966
|
|
29,340
|
||||||
2016
|
|
|
|
|
|
|
255,187
|
|
274,367
|
|
285,302
|
|
285,304
|
|
|
21,279
|
|
31,167
|
|||||||
2017
|
|
|
|
|
|
|
|
301,274
|
|
329,389
|
|
324,291
|
|
|
57,165
|
|
32,474
|
||||||||
2018
|
|
|
|
|
|
|
|
|
347,908
|
|
352,487
|
|
|
109,922
|
|
35,034
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
385,212
|
|
|
183,477
|
|
33,438
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
2,566,548
|
|
|
|
|
Commercial Automobile
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
68,098
|
|
99,254
|
|
128,015
|
|
146,913
|
|
163,513
|
|
167,227
|
|
169,100
|
|
169,793
|
|
171,693
|
|
171,941
|
|
2011
|
|
69,849
|
|
99,196
|
|
121,576
|
|
142,507
|
|
157,291
|
|
166,082
|
|
170,000
|
|
170,913
|
|
172,365
|
|
||
2012
|
|
|
73,316
|
|
105,371
|
|
127,235
|
|
148,669
|
|
168,114
|
|
176,656
|
|
179,501
|
|
181,353
|
|
|||
2013
|
|
|
|
76,469
|
|
109,893
|
|
140,015
|
|
169,850
|
|
189,626
|
|
200,750
|
|
202,622
|
|
||||
2014
|
|
|
|
|
80,810
|
|
117,169
|
|
148,884
|
|
180,701
|
|
202,821
|
|
209,655
|
|
|||||
2015
|
|
|
|
|
|
91,347
|
|
132,260
|
|
175,866
|
|
211,515
|
|
238,142
|
|
||||||
2016
|
|
|
|
|
|
|
106,022
|
|
155,720
|
|
200,701
|
|
233,939
|
|
|||||||
2017
|
|
|
|
|
|
|
|
117,287
|
|
178,823
|
|
220,422
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
134,867
|
|
193,788
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
149,538
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,973,765
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
3,904
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
596,686
|
|
Businessowners' Policies
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
53,669
|
|
49,285
|
|
42,408
|
|
39,915
|
|
40,899
|
|
40,581
|
|
41,239
|
|
41,197
|
|
40,920
|
|
41,156
|
|
|
333
|
|
3,920
|
2011
|
|
54,469
|
|
57,083
|
|
51,047
|
|
58,242
|
|
59,256
|
|
58,966
|
|
58,456
|
|
58,735
|
|
58,948
|
|
|
362
|
|
4,960
|
||
2012
|
|
|
54,342
|
|
48,029
|
|
46,303
|
|
44,172
|
|
44,077
|
|
43,747
|
|
43,418
|
|
43,717
|
|
|
703
|
|
5,543
|
|||
2013
|
|
|
|
49,617
|
|
42,618
|
|
41,005
|
|
40,624
|
|
41,369
|
|
39,709
|
|
39,699
|
|
|
803
|
|
3,482
|
||||
2014
|
|
|
|
|
55,962
|
|
60,949
|
|
62,548
|
|
59,806
|
|
58,517
|
|
58,093
|
|
|
1,390
|
|
4,064
|
|||||
2015
|
|
|
|
|
|
52,871
|
|
53,768
|
|
57,245
|
|
55,925
|
|
54,454
|
|
|
3,235
|
|
3,959
|
||||||
2016
|
|
|
|
|
|
|
52,335
|
|
53,792
|
|
54,993
|
|
53,835
|
|
|
4,245
|
|
3,843
|
|||||||
2017
|
|
|
|
|
|
|
|
46,624
|
|
48,698
|
|
51,524
|
|
|
10,252
|
|
3,864
|
||||||||
2018
|
|
|
|
|
|
|
|
|
55,024
|
|
57,202
|
|
|
12,432
|
|
4,159
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
53,531
|
|
|
15,068
|
|
3,210
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
512,159
|
|
|
|
|
Businessowners' Policies
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
20,821
|
|
28,131
|
|
31,027
|
|
34,705
|
|
37,819
|
|
38,900
|
|
40,279
|
|
40,395
|
|
40,439
|
|
40,823
|
|
2011
|
|
27,884
|
|
37,362
|
|
41,011
|
|
46,444
|
|
52,114
|
|
55,856
|
|
57,045
|
|
57,365
|
|
57,380
|
|
||
2012
|
|
|
22,199
|
|
31,833
|
|
35,089
|
|
37,215
|
|
38,766
|
|
40,627
|
|
41,326
|
|
41,356
|
|
|||
2013
|
|
|
|
17,412
|
|
26,592
|
|
30,845
|
|
34,760
|
|
37,993
|
|
38,464
|
|
39,085
|
|
||||
2014
|
|
|
|
|
28,914
|
|
40,584
|
|
44,911
|
|
49,460
|
|
52,940
|
|
55,458
|
|
|||||
2015
|
|
|
|
|
|
24,189
|
|
36,014
|
|
42,710
|
|
46,571
|
|
49,073
|
|
||||||
2016
|
|
|
|
|
|
|
24,655
|
|
36,848
|
|
39,973
|
|
45,308
|
|
|||||||
2017
|
|
|
|
|
|
|
|
21,865
|
|
31,337
|
|
36,950
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
29,995
|
|
39,791
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
27,718
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
432,942
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
7,530
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
86,747
|
|
Commercial Property
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
105,647
|
|
96,851
|
|
97,386
|
|
96,127
|
|
95,530
|
|
95,363
|
|
95,178
|
|
95,155
|
|
95,142
|
|
95,338
|
|
|
4
|
|
7,669
|
2011
|
|
136,954
|
|
131,667
|
|
130,942
|
|
131,282
|
|
131,353
|
|
131,113
|
|
131,049
|
|
131,009
|
|
131,002
|
|
|
7
|
|
9,038
|
||
2012
|
|
|
118,464
|
|
114,224
|
|
115,375
|
|
116,658
|
|
117,102
|
|
117,170
|
|
117,225
|
|
117,220
|
|
|
10
|
|
8,517
|
|||
2013
|
|
|
|
88,101
|
|
90,639
|
|
90,103
|
|
90,005
|
|
90,436
|
|
90,278
|
|
90,218
|
|
|
18
|
|
5,713
|
||||
2014
|
|
|
|
|
141,192
|
|
136,249
|
|
136,820
|
|
138,751
|
|
138,155
|
|
136,212
|
|
|
33
|
|
6,515
|
|||||
2015
|
|
|
|
|
|
110,270
|
|
109,513
|
|
111,750
|
|
111,566
|
|
112,496
|
|
|
56
|
|
6,404
|
||||||
2016
|
|
|
|
|
|
|
121,927
|
|
126,185
|
|
125,937
|
|
124,487
|
|
|
(96
|
)
|
6,739
|
|||||||
2017
|
|
|
|
|
|
|
|
138,773
|
|
149,106
|
|
149,044
|
|
|
(884
|
)
|
6,886
|
||||||||
2018
|
|
|
|
|
|
|
|
|
183,177
|
|
190,834
|
|
|
(329
|
)
|
8,240
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
173,826
|
|
|
15,732
|
|
6,722
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,320,677
|
|
|
|
|
Commercial Property
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
69,543
|
|
91,918
|
|
94,602
|
|
95,111
|
|
95,270
|
|
95,147
|
|
95,156
|
|
95,150
|
|
95,138
|
|
95,334
|
|
2011
|
|
94,538
|
|
127,580
|
|
129,579
|
|
130,681
|
|
131,060
|
|
131,115
|
|
131,089
|
|
131,100
|
|
131,092
|
|
||
2012
|
|
|
81,528
|
|
108,834
|
|
111,503
|
|
114,699
|
|
116,291
|
|
116,625
|
|
116,671
|
|
116,674
|
|
|||
2013
|
|
|
|
60,244
|
|
87,874
|
|
90,446
|
|
90,350
|
|
90,840
|
|
90,696
|
|
90,646
|
|
||||
2014
|
|
|
|
|
101,131
|
|
132,909
|
|
136,634
|
|
137,883
|
|
137,418
|
|
136,008
|
|
|||||
2015
|
|
|
|
|
|
79,048
|
|
106,182
|
|
109,829
|
|
110,994
|
|
110,969
|
|
||||||
2016
|
|
|
|
|
|
|
83,966
|
|
118,789
|
|
122,930
|
|
123,828
|
|
|||||||
2017
|
|
|
|
|
|
|
|
99,047
|
|
142,338
|
|
148,589
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
135,416
|
|
184,813
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
130,891
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,268,844
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
237
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
52,071
|
|
Personal Automobile
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
103,340
|
|
110,075
|
|
112,346
|
|
109,515
|
|
107,490
|
|
107,405
|
|
107,224
|
|
107,054
|
|
106,887
|
|
106,785
|
|
|
64
|
|
20,823
|
2011
|
|
113,232
|
|
116,164
|
|
113,686
|
|
112,993
|
|
114,241
|
|
113,830
|
|
113,988
|
|
113,921
|
|
114,056
|
|
|
121
|
|
22,700
|
||
2012
|
|
|
113,771
|
|
114,921
|
|
109,832
|
|
109,324
|
|
110,294
|
|
110,300
|
|
109,795
|
|
109,701
|
|
|
155
|
|
22,332
|
|||
2013
|
|
|
|
108,417
|
|
109,620
|
|
106,225
|
|
106,703
|
|
107,759
|
|
107,680
|
|
107,916
|
|
|
348
|
|
22,375
|
||||
2014
|
|
|
|
|
102,250
|
|
109,325
|
|
106,757
|
|
107,452
|
|
106,821
|
|
107,104
|
|
|
307
|
|
22,506
|
|||||
2015
|
|
|
|
|
|
96,387
|
|
99,698
|
|
100,214
|
|
99,570
|
|
98,718
|
|
|
742
|
|
20,863
|
||||||
2016
|
|
|
|
|
|
|
92,727
|
|
98,032
|
|
100,202
|
|
101,140
|
|
|
2,565
|
|
19,819
|
|||||||
2017
|
|
|
|
|
|
|
|
101,880
|
|
105,139
|
|
103,653
|
|
|
6,342
|
|
20,725
|
||||||||
2018
|
|
|
|
|
|
|
|
|
111,594
|
|
113,569
|
|
|
14,259
|
|
22,621
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
114,043
|
|
|
25,832
|
|
21,988
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
1,076,685
|
|
|
|
|
Personal Automobile
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
58,786
|
|
82,490
|
|
95,300
|
|
101,540
|
|
104,061
|
|
105,849
|
|
106,453
|
|
106,733
|
|
106,722
|
|
106,716
|
|
2011
|
|
61,323
|
|
82,102
|
|
93,878
|
|
105,068
|
|
111,085
|
|
112,732
|
|
113,551
|
|
113,664
|
|
113,856
|
|
||
2012
|
|
|
63,704
|
|
82,729
|
|
94,842
|
|
102,977
|
|
107,890
|
|
109,355
|
|
109,447
|
|
109,482
|
|
|||
2013
|
|
|
|
61,384
|
|
80,861
|
|
92,637
|
|
100,528
|
|
105,131
|
|
106,679
|
|
106,876
|
|
||||
2014
|
|
|
|
|
62,519
|
|
83,739
|
|
92,589
|
|
99,173
|
|
104,055
|
|
105,709
|
|
|||||
2015
|
|
|
|
|
|
58,725
|
|
76,470
|
|
87,163
|
|
92,102
|
|
95,997
|
|
||||||
2016
|
|
|
|
|
|
|
57,961
|
|
76,823
|
|
86,752
|
|
94,372
|
|
|||||||
2017
|
|
|
|
|
|
|
|
62,854
|
|
82,730
|
|
91,479
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
69,721
|
|
89,628
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
69,699
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
983,814
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
7,462
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
100,331
|
|
Homeowners
(in thousands, except for claim counts)
|
|
|
|||||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
|||||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
68,373
|
|
67,525
|
|
63,285
|
|
61,927
|
|
62,462
|
|
62,402
|
|
62,339
|
|
62,392
|
|
62,402
|
|
62,380
|
|
|
48
|
|
9,132
|
2011
|
|
103,804
|
|
98,211
|
|
97,761
|
|
94,167
|
|
94,543
|
|
94,183
|
|
94,378
|
|
94,587
|
|
94,572
|
|
|
82
|
|
15,111
|
||
2012
|
|
|
87,260
|
|
82,744
|
|
86,560
|
|
86,667
|
|
86,271
|
|
86,330
|
|
86,483
|
|
86,567
|
|
|
94
|
|
16,941
|
|||
2013
|
|
|
|
73,670
|
|
72,528
|
|
71,494
|
|
72,145
|
|
71,714
|
|
72,148
|
|
72,318
|
|
|
420
|
|
7,749
|
||||
2014
|
|
|
|
|
80,111
|
|
82,461
|
|
83,637
|
|
83,844
|
|
83,539
|
|
83,824
|
|
|
682
|
|
8,773
|
|||||
2015
|
|
|
|
|
|
76,637
|
|
76,400
|
|
76,559
|
|
74,723
|
|
74,978
|
|
|
660
|
|
7,746
|
||||||
2016
|
|
|
|
|
|
|
60,105
|
|
60,931
|
|
62,391
|
|
61,723
|
|
|
1,221
|
|
6,885
|
|||||||
2017
|
|
|
|
|
|
|
|
59,167
|
|
67,978
|
|
70,365
|
|
|
2,500
|
|
7,370
|
||||||||
2018
|
|
|
|
|
|
|
|
|
62,961
|
|
68,526
|
|
|
2,366
|
|
7,554
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
64,306
|
|
|
6,299
|
|
6,468
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
739,559
|
|
|
|
|
Homeowners
(in thousands)
|
|||||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
|||||||||||||||||||||
Accident Year
|
Unaudited
|
|
|||||||||||||||||||
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
43,699
|
|
58,638
|
|
60,295
|
|
61,106
|
|
62,155
|
|
62,227
|
|
62,241
|
|
62,272
|
|
62,283
|
|
62,329
|
|
2011
|
|
71,668
|
|
89,963
|
|
91,718
|
|
92,185
|
|
93,312
|
|
93,720
|
|
94,007
|
|
94,412
|
|
94,458
|
|
||
2012
|
|
|
69,056
|
|
79,584
|
|
82,720
|
|
84,250
|
|
85,196
|
|
85,562
|
|
85,642
|
|
85,897
|
|
|||
2013
|
|
|
|
50,664
|
|
65,528
|
|
67,838
|
|
69,775
|
|
71,776
|
|
72,197
|
|
72,433
|
|
||||
2014
|
|
|
|
|
61,561
|
|
76,007
|
|
79,751
|
|
81,664
|
|
82,583
|
|
82,836
|
|
|||||
2015
|
|
|
|
|
|
52,589
|
|
70,078
|
|
72,202
|
|
72,927
|
|
74,079
|
|
||||||
2016
|
|
|
|
|
|
|
42,252
|
|
57,333
|
|
59,546
|
|
60,082
|
|
|||||||
2017
|
|
|
|
|
|
|
|
45,466
|
|
63,290
|
|
67,193
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
49,430
|
|
64,137
|
|
|||||||||
2019
|
|
|
|
|
|
|
|
|
|
49,680
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total
|
|
713,124
|
|
|||||||||
|
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
5,316
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
31,752
|
|
E&S Casualty Lines
(in thousands, except for claim counts)
|
|
|
|
|||||||||||||||||||||
Incurred Loss and Allocated Loss Expenses, Net of Reinsurance
|
|
As of
December 31, 2019 |
||||||||||||||||||||||
Accident Year
|
|
Unaudited
|
|
|
IBNR
|
Cumulative Number of Reported Claims
|
||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|||||||||||||||
2010
|
$
|
3,294
|
|
$
|
4,106
|
|
3,369
|
|
4,299
|
|
3,831
|
|
3,055
|
|
4,932
|
|
5,168
|
|
5,534
|
|
|
—
|
|
815
|
2011
|
8,127
|
|
7,102
|
|
9,853
|
|
12,207
|
|
10,273
|
|
9,652
|
|
10,228
|
|
12,119
|
|
11,554
|
|
|
177
|
|
1,332
|
||
2012
|
|
42,367
|
|
42,621
|
|
43,175
|
|
46,149
|
|
46,165
|
|
45,988
|
|
46,444
|
|
44,622
|
|
|
2,474
|
|
2,045
|
|||
2013
|
|
|
|
55,468
|
|
60,309
|
|
67,099
|
|
69,112
|
|
67,647
|
|
68,972
|
|
68,451
|
|
|
13,816
|
|
2,280
|
|||
2014
|
|
|
|
|
|
55,316
|
|
63,505
|
|
69,929
|
|
71,719
|
|
71,206
|
|
71,153
|
|
|
5,559
|
|
2,071
|
|||
2015
|
|
|
|
|
|
|
|
75,498
|
|
76,432
|
|
82,404
|
|
90,488
|
|
90,355
|
|
|
15,752
|
|
2,799
|
|||
2016
|
|
|
|
|
|
|
94,451
|
|
96,416
|
|
104,655
|
|
105,120
|
|
|
35,987
|
|
2,859
|
||||||
2017
|
|
|
|
|
|
|
|
91,438
|
|
95,783
|
|
99,866
|
|
|
47,074
|
|
2,614
|
|||||||
2018
|
|
|
|
|
|
|
|
|
98,324
|
|
103,004
|
|
|
62,754
|
|
2,392
|
||||||||
2019
|
|
|
|
|
|
|
|
|
|
117,087
|
|
|
103,146
|
|
1,679
|
|||||||||
|
|
|
|
|
|
|
|
Total
|
|
716,746
|
|
|
|
|
E&S Casualty Lines
(in thousands)
|
|
|||||||||||||||||||
Cumulative Paid Loss and Allocated Loss Expenses, Net of Reinsurance
|
||||||||||||||||||||
Accident
Year
|
|
Unaudited
|
|
|||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
2010
|
$
|
—
|
|
$
|
1,218
|
|
2,570
|
|
3,574
|
|
4,078
|
|
4,513
|
|
4,610
|
|
4,908
|
|
5,362
|
|
2011
|
—
|
|
806
|
|
3,200
|
|
6,445
|
|
9,954
|
|
9,912
|
|
10,256
|
|
9,819
|
|
9,604
|
|
||
2012
|
|
3,722
|
|
7,914
|
|
16,430
|
|
25,064
|
|
32,343
|
|
36,278
|
|
38,298
|
|
39,832
|
|
|||
2013
|
|
|
|
2,715
|
|
9,470
|
|
21,980
|
|
35,200
|
|
46,108
|
|
51,142
|
|
54,974
|
|
|||
2014
|
|
|
|
|
|
2,353
|
|
12,234
|
|
25,571
|
|
43,877
|
|
53,780
|
|
60,092
|
|
|||
2015
|
|
|
|
|
|
|
|
3,036
|
|
13,057
|
|
29,389
|
|
50,712
|
|
64,529
|
|
|||
2016
|
|
|
|
|
|
|
3,720
|
|
16,195
|
|
33,950
|
|
56,581
|
|
||||||
2017
|
|
|
|
|
|
|
|
|
5,057
|
|
14,672
|
|
34,179
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|
5,509
|
|
21,337
|
|
||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
4,422
|
|
||||||
|
|
|
|
|
|
|
|
Total
|
|
350,912
|
|
|||||||||
|
|
|
|
All outstanding liabilities before 2010, net of reinsurance
|
|
109
|
|
|||||||||||||
|
|
|
|
Liabilities for loss and loss expenses, net of reinsurance
|
|
365,943
|
|
(in thousands)
|
December 31, 2019
|
||
Net outstanding liabilities:
|
|
||
Standard Commercial Lines
|
|
||
General liability
|
$
|
1,280,416
|
|
Workers compensation
|
850,505
|
|
|
Commercial automobile
|
596,686
|
|
|
Businessowners' policies
|
86,747
|
|
|
Commercial property
|
52,071
|
|
|
Other Standard Commercial Lines
|
9,399
|
|
|
Total Standard Commercial Lines net outstanding liabilities
|
2,875,824
|
|
|
|
|
||
Standard Personal Lines
|
|
||
Personal automobile
|
100,331
|
|
|
Homeowners
|
31,752
|
|
|
Other Standard Personal Lines
|
10,664
|
|
|
Total Standard Personal Lines net outstanding liabilities
|
142,747
|
|
|
|
|
||
E&S Lines
|
|
||
Casualty lines
|
365,943
|
|
|
Property lines
|
8,199
|
|
|
Total E&S Lines net outstanding liabilities
|
374,142
|
|
|
|
|
||
Total liabilities for unpaid loss and loss expenses, net of reinsurance
|
3,392,713
|
|
|
|
|
||
Reinsurance recoverable on unpaid claims:
|
|
||
Standard Commercial Lines
|
|
||
General liability
|
195,830
|
|
|
Workers compensation
|
206,414
|
|
|
Commercial automobile
|
14,352
|
|
|
Businessowners' policies
|
3,012
|
|
|
Commercial property
|
26,526
|
|
|
Other Standard Commercial Lines
|
9,113
|
|
|
Total Standard Commercial Lines reinsurance recoverable on unpaid loss
|
455,247
|
|
|
|
|
||
Standard Personal Lines
|
|
||
Personal automobile
|
44,104
|
|
|
Homeowners
|
1,182
|
|
|
Other Standard Personal Lines
|
28,993
|
|
|
Total Standard Personal Lines reinsurance recoverable on unpaid loss
|
74,279
|
|
|
|
|
||
E&S Lines
|
|
||
Casualty lines
|
14,319
|
|
|
Property lines
|
317
|
|
|
Total E&S Lines reinsurance recoverable on unpaid loss
|
14,636
|
|
|
|
|
||
Total reinsurance recoverable on unpaid loss
|
544,162
|
|
|
|
|
||
Unallocated loss expenses
|
130,288
|
|
|
|
|
||
Total gross liability for unpaid loss and loss expenses
|
$
|
4,067,163
|
|
Outstanding Debt
|
|
|
|
|
|
|
|
|
|
2019
|
|
Carry Value
|
||||||||||
|
|
Issuance Date
|
|
Maturity Date
|
|
Interest Rate
|
|
Original Amount
|
|
Unamortized Issuance Costs
|
Debt Discount
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||||||||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Long term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(1) Senior Notes
|
|
3/1/2019
|
|
3/1/2049
|
|
5.375
|
%
|
|
$
|
300,000
|
|
|
(3,147
|
)
|
(5,843
|
)
|
|
291,010
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Redemption:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(1) Senior Notes
|
|
2/8/2013
|
|
2/9/2043
|
|
5.875
|
%
|
|
185,000
|
|
|
—
|
|
—
|
|
|
—
|
|
|
180,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(2) FHLBI
|
|
12/16/2016
|
|
12/16/2026
|
|
3.03
|
%
|
|
60,000
|
|
|
—
|
|
—
|
|
|
60,000
|
|
|
60,000
|
|
|
(3) FHLBNY
|
|
8/15/2016
|
|
8/16/2021
|
|
1.56
|
%
|
|
25,000
|
|
|
—
|
|
—
|
|
|
25,000
|
|
|
25,000
|
|
|
(3) FHLBNY
|
|
7/21/2016
|
|
7/21/2021
|
|
1.61
|
%
|
|
25,000
|
|
|
—
|
|
—
|
|
|
25,000
|
|
|
25,000
|
|
|
(4) Senior Notes
|
|
11/3/2005
|
|
11/1/2035
|
|
6.70
|
%
|
|
100,000
|
|
|
(355
|
)
|
(520
|
)
|
|
99,125
|
|
|
99,069
|
|
|
(5) Senior Notes
|
|
11/16/2004
|
|
11/15/2034
|
|
7.25
|
%
|
|
50,000
|
|
|
(185
|
)
|
(90
|
)
|
|
49,725
|
|
|
49,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Finance lease obligations1
|
|
|
|
|
|
|
|
|
|
|
|
|
737
|
|
|
—
|
|
|||||
Total long-term debt
|
|
|
|
|
|
|
|
|
|
(3,687
|
)
|
(6,453
|
)
|
|
550,597
|
|
|
439,540
|
|
•
|
On March 7, 2019, Selective Insurance Company of America ("SICA") borrowed short-term funds of $50 million from the FHLBNY at an interest rate of 2.64%. This borrowing was repaid on March 28, 2019.
|
•
|
On August 5, 2019, SICA borrowed short-term funds of $15 million from the FHLBNY at an interest rate of 2.29%. This borrowing was repaid on August 12, 2019.
|
|
|
Required as of
|
|
Actual as of
|
|
|
December 31, 2019
|
|
December 31, 2019
|
Consolidated net worth1
|
|
Not less than $1.4 billion
|
|
$2.1 billion
|
Debt to total capitalization ratio1
|
|
Not to exceed 35%
|
|
20.7%
|
•
|
Our Standard Commercial Lines, Standard Personal Lines, and E&S Lines are evaluated based on before and after-tax underwriting results (net premiums earned, incurred loss and loss expense, policyholders dividends, policy acquisition costs, and other underwriting expenses), return on equity ("ROE") contribution, and combined ratios.
|
•
|
Our Investments segment is evaluated based on after-tax net investment income and its ROE contribution. Also included in our Investment segment results are after-tax net realized and unrealized gains and losses, which are not included in non-GAAP operating income.
|
Revenue by Segment
|
|
Years ended December 31,
|
||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Standard Commercial Lines:
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned:
|
|
|
|
|
|
|
|
|
|
|
Commercial automobile
|
|
$
|
554,256
|
|
|
493,093
|
|
|
442,818
|
|
Workers compensation
|
|
311,370
|
|
|
317,616
|
|
|
317,982
|
|
|
General liability
|
|
669,895
|
|
|
616,187
|
|
|
569,217
|
|
|
Commercial property
|
|
353,834
|
|
|
329,660
|
|
|
311,932
|
|
|
Businessowners’ policies
|
|
105,252
|
|
|
103,412
|
|
|
100,266
|
|
|
Bonds
|
|
35,726
|
|
|
33,991
|
|
|
29,086
|
|
|
Other
|
|
19,281
|
|
|
18,263
|
|
|
17,198
|
|
|
Miscellaneous income
|
|
10,889
|
|
|
8,180
|
|
|
9,488
|
|
|
Total Standard Commercial Lines revenue
|
|
2,060,503
|
|
|
1,920,402
|
|
|
1,797,987
|
|
|
Standard Personal Lines:
|
|
|
|
|
|
|
||||
Net premiums earned:
|
|
|
|
|
|
|
||||
Personal automobile
|
|
172,606
|
|
|
168,250
|
|
|
153,147
|
|
|
Homeowners
|
|
127,543
|
|
|
128,961
|
|
|
129,699
|
|
|
Other
|
|
7,590
|
|
|
7,230
|
|
|
6,855
|
|
|
Miscellaneous income
|
|
1,466
|
|
|
1,257
|
|
|
1,228
|
|
|
Total Standard Personal Lines revenue
|
|
309,205
|
|
|
305,698
|
|
|
290,929
|
|
|
E&S Lines:
|
|
|
|
|
|
|
||||
Net premiums earned:
|
|
|
|
|
|
|
||||
Casualty lines
|
|
182,864
|
|
|
164,313
|
|
|
157,366
|
|
|
Property lines
|
|
56,954
|
|
|
55,253
|
|
|
55,461
|
|
|
Miscellaneous income
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Total E&S Lines revenue
|
|
239,818
|
|
|
219,567
|
|
|
212,827
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
222,543
|
|
|
195,336
|
|
|
161,882
|
|
|
Net realized and unrealized investment gains (losses)
|
|
14,422
|
|
|
(54,923
|
)
|
|
6,359
|
|
|
Total Investments revenues
|
|
236,965
|
|
|
140,413
|
|
|
168,241
|
|
|
Total revenues
|
|
$
|
2,846,491
|
|
|
2,586,080
|
|
|
2,469,984
|
|
Income Before and After Federal Income Tax
|
|
Years ended December 31,
|
||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Standard Commercial Lines:
|
|
|
|
|
|
|
|
|
|
|
Underwriting gain, before federal income tax
|
|
$
|
145,990
|
|
|
109,104
|
|
|
149,514
|
|
Underwriting gain, after federal income tax
|
|
115,332
|
|
|
86,192
|
|
|
97,184
|
|
|
Combined ratio
|
|
92.9
|
%
|
|
94.3
|
%
|
|
91.6
|
%
|
|
ROE contribution
|
|
5.8
|
%
|
|
4.9
|
|
|
6.1
|
|
|
|
|
|
|
|
|
|
||||
Standard Personal Lines:
|
|
|
|
|
|
|
||||
Underwriting gain, before federal income tax
|
|
8,260
|
|
|
12,764
|
|
|
11,104
|
|
|
Underwriting gain, after federal income tax
|
|
6,525
|
|
|
10,084
|
|
|
7,217
|
|
|
Combined ratio
|
|
97.3
|
%
|
|
95.8
|
%
|
|
96.2
|
%
|
|
ROE contribution
|
|
0.3
|
%
|
|
0.6
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
||||
E&S Lines:
|
|
|
|
|
|
|
||||
Underwriting gain (loss), before federal income tax
|
|
9,743
|
|
|
(695
|
)
|
|
(6,282
|
)
|
|
Underwriting gain (loss), after federal income tax
|
|
7,697
|
|
|
(549
|
)
|
|
(4,083
|
)
|
|
Combined ratio
|
|
95.9
|
%
|
|
100.3
|
%
|
|
103.0
|
%
|
|
ROE contribution
|
|
0.4
|
%
|
|
—
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
||||
Investments:
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
222,543
|
|
|
195,336
|
|
|
161,882
|
|
Net realized and unrealized investment gains (losses)
|
|
14,422
|
|
|
(54,923
|
)
|
|
6,359
|
|
|
Total investment segment income, before federal income tax
|
|
236,965
|
|
|
140,413
|
|
|
168,241
|
|
|
Tax on investment segment income
|
|
45,301
|
|
|
19,560
|
|
|
45,588
|
|
|
Total investment segment income, after federal income tax
|
|
$
|
191,664
|
|
|
120,853
|
|
|
122,653
|
|
ROE contribution of after-tax net investment income
|
|
9.6
|
%
|
|
6.9
|
|
|
7.5
|
|
Reconciliation of Segment Results to Income Before Federal Income Tax
|
|
Years ended December 31,
|
||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Underwriting gain (loss)
|
|
|
|
|
|
|
||||
Standard Commercial Lines
|
|
$
|
145,990
|
|
|
109,104
|
|
|
149,514
|
|
Standard Personal Lines
|
|
8,260
|
|
|
12,764
|
|
|
11,104
|
|
|
E&S Lines
|
|
9,743
|
|
|
(695
|
)
|
|
(6,282
|
)
|
|
Investment income
|
|
236,965
|
|
|
140,413
|
|
|
168,241
|
|
|
Total all segments
|
|
400,958
|
|
|
261,586
|
|
|
322,577
|
|
|
Interest expense
|
|
(33,668
|
)
|
|
(24,419
|
)
|
|
(24,354
|
)
|
|
Corporate expenses
|
|
(30,900
|
)
|
|
(25,446
|
)
|
|
(36,255
|
)
|
|
Income, before federal income tax
|
|
$
|
336,390
|
|
|
211,721
|
|
|
261,968
|
|
2019
|
|
Income
|
|
Shares
|
|
Per Share
|
|||||
($ in thousands, except per share amounts)
|
|
(Numerator)
|
|
(Denominator)
|
|
Amount
|
|||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
||
Net income available to common stockholders
|
|
$
|
271,623
|
|
|
59,421
|
|
|
$
|
4.57
|
|
|
|
|
|
|
|
|
|||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
||
Stock compensation plans
|
|
—
|
|
|
583
|
|
|
|
|
||
|
|
|
|
|
|
|
|||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
||
Net income available to common stockholders
|
|
$
|
271,623
|
|
|
60,004
|
|
|
$
|
4.53
|
|
2018
|
|
Income
|
|
Shares
|
|
Per Share
|
|||||
($ in thousands, except per share amounts)
|
|
(Numerator)
|
|
(Denominator)
|
|
Amount
|
|||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
||
Net income available to common stockholders
|
|
$
|
178,939
|
|
|
58,950
|
|
|
$
|
3.04
|
|
|
|
|
|
|
|
|
|||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
||
Stock compensation plans
|
|
—
|
|
|
763
|
|
|
|
|
||
|
|
|
|
|
|
|
|||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
||
Net income available to common stockholders
|
|
$
|
178,939
|
|
|
59,713
|
|
|
$
|
3.00
|
|
2017
|
|
Income
|
|
Shares
|
|
Per Share
|
|||||
($ in thousands, except per share amounts)
|
|
(Numerator)
|
|
(Denominator)
|
|
Amount
|
|||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
||
Net income available to common stockholders
|
|
$
|
168,826
|
|
|
58,458
|
|
|
$
|
2.89
|
|
|
|
|
|
|
|
|
|||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
||
Stock compensation plans
|
|
—
|
|
|
899
|
|
|
|
|
||
|
|
|
|
|
|
|
|||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
||
Net income available to common stockholders
|
|
$
|
168,826
|
|
|
59,357
|
|
|
$
|
2.84
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Tax at statutory rate (21% in 2019 and 2018 and 35% in 2017)
|
|
$
|
70,642
|
|
|
44,461
|
|
|
91,689
|
|
Tax-advantaged interest
|
|
(4,909
|
)
|
|
(5,518
|
)
|
|
(11,510
|
)
|
|
Dividends received deduction
|
|
(443
|
)
|
|
(647
|
)
|
|
(1,961
|
)
|
|
Executive compensation
|
|
2,985
|
|
|
2,279
|
|
|
—
|
|
|
Stock-based compensation
|
|
(3,253
|
)
|
|
(3,093
|
)
|
|
(4,281
|
)
|
|
Tax Reform deferred tax write off
|
|
—
|
|
|
—
|
|
|
20,205
|
|
|
Other 1
|
|
(255
|
)
|
|
(4,700
|
)
|
|
(1,000
|
)
|
|
Federal income tax expense
|
|
$
|
64,767
|
|
|
32,782
|
|
|
93,142
|
|
($ in thousands)
|
|
2019
|
|
2018
|
|||
Deferred tax assets:
|
|
|
|
|
|
|
|
Net loss reserve discounting
|
|
$
|
48,193
|
|
|
43,285
|
|
Net unearned premiums
|
|
57,004
|
|
|
53,556
|
|
|
Employee benefits
|
|
10,646
|
|
|
8,862
|
|
|
Long-term incentive compensation plans
|
|
5,727
|
|
|
9,095
|
|
|
Temporary investment write-downs
|
|
1,059
|
|
|
1,155
|
|
|
Other
|
|
6,478
|
|
|
5,744
|
|
|
Total deferred tax assets
|
|
129,107
|
|
|
121,697
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Deferred policy acquisition costs
|
|
56,949
|
|
|
53,049
|
|
|
Unrealized gains on investment securities
|
|
45,294
|
|
|
502
|
|
|
Other investment-related items, net
|
|
7,576
|
|
|
4,904
|
|
|
Accelerated depreciation and amortization
|
|
12,512
|
|
|
9,702
|
|
|
Total deferred tax liabilities
|
|
122,331
|
|
|
68,157
|
|
|
Net deferred federal income tax asset
|
|
$
|
6,776
|
|
|
53,540
|
|
December 31,
|
|
Pension Plan
|
|||||
($ in thousands)
|
|
2019
|
|
2018
|
|||
Change in Benefit Obligation:
|
|
|
|
|
|
|
|
Benefit obligation, beginning of year
|
|
$
|
334,679
|
|
|
364,411
|
|
Interest cost
|
|
13,506
|
|
|
12,428
|
|
|
Actuarial losses (gains)
|
|
54,478
|
|
|
(31,738
|
)
|
|
Benefits paid
|
|
(11,642
|
)
|
|
(10,422
|
)
|
|
Benefit obligation, end of year
|
|
$
|
391,021
|
|
|
334,679
|
|
|
|
|
|
|
|||
Change in Fair Value of Assets:
|
|
|
|
|
|
|
|
Fair value of assets, beginning of year
|
|
$
|
331,680
|
|
|
363,673
|
|
Actual return on plan assets, net of expenses
|
|
63,949
|
|
|
(21,571
|
)
|
|
Contributions by the employer to funded plans
|
|
1,100
|
|
|
—
|
|
|
Benefits paid
|
|
(11,642
|
)
|
|
(10,422
|
)
|
|
Fair value of assets, end of year
|
|
$
|
385,087
|
|
|
331,680
|
|
|
|
|
|
|
|||
Funded status
|
|
$
|
(5,934
|
)
|
|
(2,999
|
)
|
Amounts Recognized in the Consolidated Balance Sheet:
|
|
|
|
|
|
|
|
Liabilities
|
|
$
|
(5,934
|
)
|
|
(2,999
|
)
|
Net pension liability, end of year
|
|
$
|
(5,934
|
)
|
|
(2,999
|
)
|
Amounts Recognized in AOCI:
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
$
|
107,125
|
|
|
98,057
|
|
Total
|
|
$
|
107,125
|
|
|
98,057
|
|
Other Information as of December 31:
|
|
|
|
|
|
|
|
Accumulated benefit obligation
|
|
$
|
391,021
|
|
|
334,679
|
|
Weighted-Average Liability Assumptions as of December 31:
|
|
|
|
|
|
Discount rate
|
|
3.33
|
%
|
|
4.46
|
|
|
Pension Plan
|
||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Periodic Benefit Cost (Benefit):
|
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
13,506
|
|
|
12,428
|
|
|
12,490
|
|
Expected return on plan assets
|
|
(21,114
|
)
|
|
(22,767
|
)
|
|
(19,419
|
)
|
|
Amortization of unrecognized actuarial loss
|
|
2,575
|
|
|
1,981
|
|
|
2,001
|
|
|
Total net periodic pension cost (benefit)1
|
|
$
|
(5,033
|
)
|
|
(8,358
|
)
|
|
(4,928
|
)
|
|
|
|
|
|
|
|
||||
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss (gain)
|
|
$
|
11,643
|
|
|
12,600
|
|
|
3,594
|
|
Reversal of amortization of net actuarial loss
|
|
(2,575
|
)
|
|
(1,981
|
)
|
|
(2,001
|
)
|
|
Total recognized in other comprehensive income
|
|
$
|
9,068
|
|
|
10,619
|
|
|
1,593
|
|
|
|
|
|
|
|
|
||||
Total recognized in net periodic benefit cost and other comprehensive income
|
|
$
|
4,035
|
|
|
2,261
|
|
|
(3,335
|
)
|
|
|
Pension Plan
|
|||||
|
|
2019
|
|
2018
|
|
2017
|
|
Weighted-Average Expense Assumptions for the years ended December 31:
|
|
|
|
|
|
|
|
Discount rate
|
|
4.46
|
%
|
|
3.78
|
|
4.41
|
Expected return on plan assets
|
|
6.50
|
|
|
6.36
|
|
6.24
|
|
|
2019
|
|
2018
|
|||||
|
|
Target Percentage
|
|
Actual Percentage
|
|
Actual Percentage
|
|||
Return seeking assets1
|
|
15%-70%
|
|
|
59
|
%
|
|
43
|
%
|
Liability hedging assets
|
|
35%-75%
|
|
|
38
|
%
|
|
38
|
%
|
Short-term investments
|
|
-
|
|
|
3
|
%
|
|
19
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
•
|
The investments in the equities and liability hedging funds include collective investment funds and fund of funds that utilize a market approach wherein the published prices in the active market for identical assets are used. These investments are traded at their net asset value per share. These investments are classified as Level 1 in the fair value hierarchy.
|
•
|
The investments in private limited partnerships and other private equity securities are valued utilizing net asset value as a practical expedient for fair value. These investments are not classified in the fair value hierarchy.
|
•
|
Short-term investments are recorded at cost, which approximates fair value. Given that these investments are listed on active exchanges, coupled with their liquid nature, these investments are classified as Level 1 in the fair value hierarchy.
|
•
|
The deposit administration contract is recorded at cost, which approximates fair value. Given the liquid nature of the underlying investments in overnight cash deposits and other short-term duration products, we have determined that a correlation exists between the deposit administration contract and other short-term investments, such as money market funds. As such, this investment is classified as Level 2 in the fair value hierarchy.
|
|
|||||||||||||
December 31, 2019
|
|
|
|
Fair Value Measurements at 12/31/19 Using
|
|||||||||
($ in thousands)
|
|
Assets Measured at Fair Value At 12/31/19
|
|
Quoted Prices in Active Markets for Identical Assets/ Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return seeking assets:
|
|
|
|
|
|
|
|
|
|||||
Equities:
|
|
|
|
|
|
|
|
|
|||||
Global Equity
|
|
$
|
113,212
|
|
|
113,212
|
|
|
—
|
|
|
—
|
|
Diversified Credit
|
|
59,009
|
|
|
59,009
|
|
|
—
|
|
|
—
|
|
|
Real Assets
|
|
57,414
|
|
|
57,414
|
|
|
—
|
|
|
—
|
|
|
Total Equities
|
|
229,635
|
|
|
229,635
|
|
|
—
|
|
|
—
|
|
|
Limited partnerships (at net asset value)1:
|
|
|
|
|
|
|
|
|
|||||
Real assets
|
|
228
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Private equity
|
|
583
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Private credit
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total limited partnerships
|
|
854
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total return seeking assets
|
|
230,489
|
|
|
229,635
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liability hedging assets:
|
|
|
|
|
|
|
|
|
|||||
Fixed income
|
|
114,395
|
|
|
114,395
|
|
|
—
|
|
|
—
|
|
|
U.S. Treasury overlay
|
|
30,997
|
|
|
30,997
|
|
|
—
|
|
|
—
|
|
|
Total liability hedging assets
|
|
145,392
|
|
|
145,392
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and short-term investments:
|
|
|
|
|
|
|
|
|
|||||
Short-term investments
|
|
8,824
|
|
|
8,824
|
|
|
—
|
|
|
—
|
|
|
Deposit administration contracts
|
|
2,215
|
|
|
—
|
|
|
2,215
|
|
|
—
|
|
|
Total cash and short-term investments
|
|
11,039
|
|
|
8,824
|
|
|
2,215
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total invested assets
|
|
$
|
386,920
|
|
|
383,851
|
|
|
2,215
|
|
|
—
|
|
December 31, 2018
|
|
|
|
Fair Value Measurements at 12/31/18 Using
|
|||||||||
($ in thousands)
|
|
Assets Measured at Fair Value At 12/31/18
|
|
Quoted Prices in Active Markets for Identical Assets/ Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return seeking assets:
|
|
|
|
|
|
|
|
|
|||||
Global Equity
|
|
$
|
113,409
|
|
|
113,409
|
|
|
—
|
|
|
—
|
|
Private assets1:
|
|
|
|
|
|
|
|
|
|||||
Limited partnerships (at net asset value):
|
|
|
|
|
|
|
|
|
|
||||
Real assets
|
|
16,818
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Private equity
|
|
878
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Private credit
|
|
262
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Hedge fund
|
|
7,889
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total limited partnerships
|
|
25,847
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other private assets
|
|
3,780
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total private assets
|
|
29,627
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total return seeking assets
|
|
143,036
|
|
|
113,409
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liability hedging assets:
|
|
|
|
|
|
|
|
|
|||||
Fixed income
|
|
106,000
|
|
|
106,000
|
|
|
—
|
|
|
—
|
|
|
U.S. Treasury overlay
|
|
18,528
|
|
|
18,528
|
|
|
—
|
|
|
—
|
|
|
Total liability hedging assets
|
|
124,528
|
|
|
124,528
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and short-term investments:
|
|
|
|
|
|
|
|
|
|||||
Short-term investments
|
|
62,788
|
|
|
62,788
|
|
|
—
|
|
|
—
|
|
|
Deposit administration contracts
|
|
1,482
|
|
|
—
|
|
|
1,482
|
|
|
—
|
|
|
Total cash and short-term investments
|
|
64,270
|
|
|
62,788
|
|
|
1,482
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total invested assets
|
|
$
|
331,834
|
|
|
300,725
|
|
|
1,482
|
|
|
—
|
|
($ in thousands)
|
|
Pension Plan
|
||
Benefits Expected to be Paid in Future
|
|
|
|
|
Fiscal Years:
|
|
|
|
|
2020
|
|
$
|
14,968
|
|
2021
|
|
14,947
|
|
|
2022
|
|
16,115
|
|
|
2023
|
|
17,144
|
|
|
2024
|
|
18,146
|
|
|
2025-2029
|
|
103,669
|
|
•
|
The 2014 Omnibus Stock Plan, As Amended and Restated Effective as of May 2, 2018 (the "Stock Plan");
|
•
|
The Cash Incentive Plan, As Amended and Restated as of May 1, 2014 (the "Cash Plan");
|
•
|
The Employee Stock Purchase Plan (2009) ("ESPP"); and
|
•
|
The Amended and Restated Stock Purchase Plan for Independent Insurance Agencies (2010), Amended and Restated as of February 1, 2017 (the "Agent Plan").
|
Plan
|
Approvals
|
Stock Plan
|
Approved effective as of May 1, 2014 by stockholders on April 23, 2014.
Most recently amended and restated plan was approved effective May 2, 2018 by stockholders on May 2, 2018.
|
Cash Plan
|
Approved effective April 1, 2005 by stockholders on April 27, 2005.
Most recently amended and restated plan was approved effective May 1, 2014 by stockholders on April 23, 2014. |
ESPP
|
Approved by stockholders on April 29, 2009 effective July 1, 2009.
|
Agent Plan
|
Approved by stockholders on April 26, 2006.
Most recently amended and restated plan was approved on December 13, 2016 by the Parent's Board of Directors' Salary and Employee Benefits Committee. The amendment was effective February 1, 2017. |
Plan
|
Types of Share-Based Payments Issued
|
Stock Plan
|
Qualified and nonqualified stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), stock grants, and other awards valued in whole or in part by reference to the Parent's common stock. The maximum exercise period for an option grant under this plan is 10 years from the date of the grant. Dividend equivalent units ("DEUs") are earned during the vesting period on RSU grants. The DEUs are reinvested in the Parent's common stock at fair value on each dividend payment date. The requisite service period for grants to employees under this plan is the lesser of: (i) the stated vested date, which is typically three years from issuance; or (ii) the date the employee becomes eligible to retire.
|
Cash Plan
|
Cash incentive units (“CIUs”). The initial dollar value of each CIU will be adjusted to reflect the percentage increase or decrease in the total shareholder return on the Parent's common stock over a specified performance period. In addition, for certain grants, the number of CIUs granted will be increased or decreased to reflect our performance on specified performance indicators compared to targeted peer companies. The requisite service period for grants under this plan is the lesser of: (i) the stated vested date, which is typically three years from issuance; or (ii) the date the employee becomes eligible to retire.
|
ESPP
|
Enables employees to purchase shares of the Parent’s common stock. The purchase price is the lower of: (i) 85% of the closing market price at the time the option is granted; or (ii) 85% of the closing price at the time the option is exercised. Shares are generally issued on June 30 and December 31 of each year.
|
Agent Plan
|
Quarterly offerings to purchase the Parent's common stock at a 10% discount with a one year restricted period during which the shares purchased cannot be sold or transferred. Only our independent retail insurance agencies and wholesale general agencies, and certain eligible persons associated with the agencies, are eligible to participate in this plan.
|
As of December 31, 2019
|
Authorized
|
Available for Issuance
|
Awards Outstanding
|
|||
Stock Plan
|
4,750,000
|
|
3,208,968
|
|
760,639
|
|
ESPP
|
1,500,000
|
|
356,229
|
|
—
|
|
Agent Plan
|
3,000,000
|
|
1,728,471
|
|
—
|
|
December 31, 2019
|
Types of Share-Based Payments Issued
|
Reserve Shares
|
Awards Outstanding1
|
||
Plan
|
|||||
2005 Omnibus Stock Plan ("2005 Stock Plan")
|
Qualified and nonqualified stock options, SARs, restricted stock, RSUs, phantom stock, stock bonuses, and other awards in such amounts and with such terms and conditions as it determined, subject to the provisions of the 2005 Stock Plan. The maximum exercise period for an option grant under this plan is 10 years from the date of the grant. DEUs are earned during the vesting period on RSU grants. The DEUs are reinvested in the Parent's common stock at fair value on each dividend payment date.
|
1,985,129
|
|
59,729
|
|
Parent's Stock Compensation Plan for Non-employee Directors ("Directors Stock Compensation Plan")
|
Directors could elect to receive a portion of their annual compensation in shares of the Parent's common stock.
|
44,468
|
|
44,468
|
|
|
|
Number
of Shares |
|
Weighted
Average Grant Date Fair Value |
|||
Unvested RSU awards at December 31, 2018
|
|
846,305
|
|
|
$
|
44.00
|
|
Granted in 2019
|
|
265,680
|
|
|
63.60
|
|
|
Vested in 2019
|
|
(337,525
|
)
|
|
36.08
|
|
|
Forfeited in 2019
|
|
(27,735
|
)
|
|
51.89
|
|
|
Unvested RSU awards at December 31, 2019
|
|
746,725
|
|
|
$
|
53.48
|
|
|
|
Number
of Shares |
|
Weighted
Average Exercise Price |
|
Weighted
Average Remaining Contractual Life in Years |
|
Aggregate
Intrinsic Value ($ in thousands) |
|||||
Outstanding at December 31, 2018
|
|
126,735
|
|
|
$
|
14.37
|
|
|
|
|
|
|
|
Granted in 2019
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Exercised in 2019
|
|
(99,912
|
)
|
|
13.74
|
|
|
|
|
|
|
||
Forfeited or expired in 2019
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
|
26,823
|
|
|
$
|
16.71
|
|
|
0.33
|
|
$
|
1,300
|
|
Exercisable at December 31, 2019
|
|
26,823
|
|
|
$
|
16.71
|
|
|
0.33
|
|
$
|
1,300
|
|
|
2019
|
2018
|
2017
|
|||
ESPP Issuances
|
72,952
|
|
70,448
|
|
75,093
|
|
Agent Plan Issuances
|
47,888
|
|
41,134
|
|
49,794
|
|
|
|
ESPP
|
|||||
|
|
2019
|
|
2018
|
|
2017
|
|
Risk-free interest rate
|
|
2.33
|
%
|
|
1.88
|
|
1.07
|
Expected term
|
|
6 months
|
|
|
6 months
|
|
6 months
|
Dividend yield
|
|
1.2
|
%
|
|
1.3
|
|
1.3
|
Expected volatility
|
|
26
|
%
|
|
18
|
|
24
|
|
|
2019
|
|
2018
|
|
2017
|
||||
RSUs
|
|
$
|
63.60
|
|
|
55.96
|
|
|
42.66
|
|
ESPP:
|
|
|
|
|
|
|
|
|
||
Six month option
|
|
4.32
|
|
|
2.67
|
|
|
2.73
|
|
|
Discount of grant date market value
|
|
9.99
|
|
|
8.50
|
|
|
7.06
|
|
|
Total ESPP
|
|
14.31
|
|
|
11.17
|
|
|
9.79
|
|
|
Agent Plan:
|
|
|
|
|
|
|
|
|
|
|
Discount of grant date market value
|
|
7.00
|
|
|
5.99
|
|
|
5.04
|
|
($ in millions)
|
2019
|
|
2018
|
|
2017
|
||||
Share-based compensation expense, pre-tax
|
$
|
24.5
|
|
|
19.3
|
|
|
31.2
|
|
Income tax benefit, including the benefit related to stock grants that vested during the year
|
(8.2
|
)
|
|
(7.0
|
)
|
|
(15.0
|
)
|
|
Share-based compensation expense, after-tax
|
$
|
16.3
|
|
|
12.3
|
|
|
16.2
|
|
($ in thousands)
|
|
2019
|
||
Operating lease cost, included in Other insurance expenses on the Consolidated Statements of Income
|
|
$
|
8,808
|
|
Finance lease cost:
|
|
|
||
Amortization of assets, included in Other insurance expenses on the Consolidated Statements of Income
|
|
984
|
|
|
Interest on lease liabilities, included in Interest expense on the Consolidated Statements of Income
|
|
16
|
|
|
Total finance lease cost
|
|
1,000
|
|
|
|
|
|
||
Variable lease cost, included in Other insurance expenses on the Consolidated Statements of Income
|
|
48
|
|
|
|
|
|
||
Short-term lease cost, included in Other insurance expenses on the Consolidated Statements of Income
|
|
$
|
2,165
|
|
|
|
December 31, 2019
|
|
Weighted-average remaining lease term
|
|
|
|
Operating leases
|
|
6
|
years
|
Finance leases
|
|
2
|
|
Weighted-average discount rate
|
|
|
|
Operating leases
|
|
3.4
|
%
|
Finance leases1
|
|
2.1
|
|
($ in thousands)
|
December 31, 2019
|
||
Operating leases
|
|
||
Other assets
|
$
|
26,535
|
|
Other liabilities
|
27,506
|
|
|
Finance leases
|
|
||
Property and equipment - at cost, net of accumulated depreciation and amortization
|
731
|
|
|
Long-term debt
|
$
|
737
|
|
($ in thousands)
|
|
Finance Leases
|
Operating Leases
|
Total
|
||||
Year ended December 31,
|
|
|
|
|
||||
2020
|
|
$
|
451
|
|
8,244
|
|
8,695
|
|
2021
|
|
248
|
|
6,168
|
|
6,416
|
|
|
2022
|
|
54
|
|
4,590
|
|
4,644
|
|
|
2023
|
|
—
|
|
3,329
|
|
3,329
|
|
|
2024
|
|
—
|
|
2,920
|
|
2,920
|
|
|
Thereafter
|
|
—
|
|
8,638
|
|
8,638
|
|
|
Total lease payments
|
|
753
|
|
33,889
|
|
34,642
|
|
|
Less: imputed interest
|
|
16
|
|
2,995
|
|
3,011
|
|
|
Less: leases that have not yet commenced
|
|
—
|
|
3,388
|
|
3,388
|
|
|
Total lease liabilities
|
|
$
|
737
|
|
27,506
|
|
28,243
|
|
($ in thousands)
|
|
Capital Leases
|
Operating Leases
|
Total
|
||||
2019
|
|
$
|
728
|
|
7,762
|
|
8,490
|
|
2020
|
|
141
|
|
7,355
|
|
7,496
|
|
|
2021
|
|
22
|
|
5,083
|
|
5,105
|
|
|
2022
|
|
—
|
|
3,641
|
|
3,641
|
|
|
2023
|
|
—
|
|
2,900
|
|
2,900
|
|
|
Thereafter
|
|
—
|
|
9,698
|
|
9,698
|
|
|
Total minimum payment required
|
|
$
|
891
|
|
36,439
|
|
37,330
|
|
($ in millions)
|
|
Amount of Obligation
|
|
Year of Expiration of Obligation
|
||
Alternative and other investments
|
|
$
|
219.2
|
|
|
2036
|
Non-publicly traded collateralized loan obligations in our fixed income securities portfolio
|
|
35.4
|
|
|
2030
|
|
Non-publicly traded common stock within our equity portfolio
|
|
3.9
|
|
|
2023
|
|
Commercial mortgage loans
|
|
10.0
|
|
|
Less than 1 year
|
|
Privately-placed corporate securities
|
|
15.0
|
|
|
Less than 1 year
|
|
Total
|
|
$
|
283.5
|
|
|
|
|
|
State of Domicile
|
|
Unassigned Surplus
|
|
Statutory Surplus
|
|
Statutory Net Income
|
||||||||||||||||
($ in millions)
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2017
|
||||||||
SICA
|
|
New Jersey
|
|
$
|
525.9
|
|
|
478.6
|
|
|
680.1
|
|
|
632.8
|
|
|
113.9
|
|
|
78.0
|
|
|
84.6
|
|
Selective Way Insurance Company ("SWIC")
|
|
New Jersey
|
|
339.2
|
|
|
300.2
|
|
|
388.2
|
|
|
349.3
|
|
|
59.2
|
|
|
47.5
|
|
|
43.6
|
|
|
SICSC
|
|
Indiana
|
|
132.6
|
|
|
119.4
|
|
|
163.8
|
|
|
150.7
|
|
|
23.9
|
|
|
16.5
|
|
|
17.9
|
|
|
SICSE
|
|
Indiana
|
|
103.1
|
|
|
92.2
|
|
|
128.7
|
|
|
117.7
|
|
|
18.5
|
|
|
12.9
|
|
|
14.7
|
|
|
SICNY
|
|
New York
|
|
99.4
|
|
|
86.5
|
|
|
127.1
|
|
|
114.2
|
|
|
17.0
|
|
|
12.0
|
|
|
13.4
|
|
|
Selective Insurance Company of New England ("SICNE")
|
|
New Jersey
|
|
25.3
|
|
|
19.9
|
|
|
55.4
|
|
|
50.0
|
|
|
7.8
|
|
|
5.6
|
|
|
6.3
|
|
|
Selective Auto Insurance Company of New Jersey ("SAICNJ")
|
|
New Jersey
|
|
62.5
|
|
|
50.3
|
|
|
105.4
|
|
|
93.2
|
|
|
14.9
|
|
|
9.9
|
|
|
11.4
|
|
|
MUSIC
|
|
New Jersey
|
|
27.1
|
|
|
23.0
|
|
|
95.6
|
|
|
91.5
|
|
|
13.2
|
|
|
9.4
|
|
|
10.3
|
|
|
Selective Casualty Insurance Company ("SCIC")
|
|
New Jersey
|
|
58.2
|
|
|
44.9
|
|
|
132.7
|
|
|
119.3
|
|
|
16.8
|
|
|
13.3
|
|
|
13.4
|
|
|
Selective Fire and Casualty Insurance Company ("SFCIC")
|
|
New Jersey
|
|
23.5
|
|
|
17.8
|
|
|
55.4
|
|
|
49.7
|
|
|
7.5
|
|
|
5.5
|
|
|
5.6
|
|
|
Total
|
|
|
|
$
|
1,396.8
|
|
|
1,232.8
|
|
|
1,932.4
|
|
|
1,768.4
|
|
|
292.7
|
|
|
210.6
|
|
|
221.2
|
|
Dividends
|
|
|
|
Twelve Months ended December 31, 2019
|
|
2020
|
||||
($ in millions)
|
|
State of Domicile
|
|
Ordinary Dividends Paid
|
|
Maximum Ordinary Dividends
|
||||
SICA
|
|
New Jersey
|
|
$
|
55.5
|
|
|
$
|
98.4
|
|
SWIC
|
|
New Jersey
|
|
19.0
|
|
|
53.7
|
|
||
SICSC
|
|
Indiana
|
|
9.5
|
|
|
23.9
|
|
||
SICSE
|
|
Indiana
|
|
6.7
|
|
|
18.6
|
|
||
SICNY
|
|
New York
|
|
3.3
|
|
|
12.7
|
|
||
SICNE
|
|
New Jersey
|
|
2.0
|
|
|
7.6
|
|
||
SAICNJ
|
|
New Jersey
|
|
1.5
|
|
|
14.7
|
|
||
MUSIC
|
|
New Jersey
|
|
8.0
|
|
|
12.9
|
|
||
SCIC
|
|
New Jersey
|
|
3.0
|
|
|
16.8
|
|
||
SFCIC
|
|
New Jersey
|
|
1.5
|
|
|
7.4
|
|
||
Total
|
|
|
|
$
|
110.0
|
|
|
$
|
266.7
|
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|||||||||||||||||
(unaudited, $ in thousands, except per share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Net premiums earned
|
|
$
|
632,573
|
|
|
591,828
|
|
|
642,619
|
|
|
604,836
|
|
|
653,620
|
|
|
614,277
|
|
|
668,359
|
|
|
625,288
|
|
Net investment income earned
|
|
50,618
|
|
|
43,231
|
|
|
58,505
|
|
|
45,553
|
|
|
55,826
|
|
|
52,443
|
|
|
57,594
|
|
|
54,109
|
|
|
Net realized and unrealized gains (losses)
|
|
13,451
|
|
|
(10,549
|
)
|
|
4,027
|
|
|
(1,652
|
)
|
|
(2,183
|
)
|
|
(4,787
|
)
|
|
(873
|
)
|
|
(37,935
|
)
|
|
Other income
|
|
2,320
|
|
|
2,179
|
|
|
3,053
|
|
|
3,179
|
|
|
3,162
|
|
|
2,538
|
|
|
3,820
|
|
|
1,542
|
|
|
Total revenues
|
|
698,962
|
|
|
626,689
|
|
|
708,204
|
|
|
651,916
|
|
|
710,425
|
|
|
664,471
|
|
|
728,900
|
|
|
643,004
|
|
|
Income before federal income taxes
|
|
73,694
|
|
|
19,931
|
|
|
90,225
|
|
|
72,525
|
|
|
71,178
|
|
|
67,130
|
|
|
101,293
|
|
|
52,135
|
|
|
Net income
|
|
61,348
|
|
|
18,925
|
|
|
72,266
|
|
|
58,819
|
|
|
56,150
|
|
|
55,435
|
|
|
81,859
|
|
|
45,760
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
1.04
|
|
|
0.32
|
|
|
1.22
|
|
|
1.00
|
|
|
0.94
|
|
|
0.94
|
|
|
1.38
|
|
|
0.77
|
|
|
Diluted
|
|
1.02
|
|
|
0.32
|
|
|
1.21
|
|
|
0.99
|
|
|
0.93
|
|
|
0.93
|
|
|
1.36
|
|
|
0.76
|
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
|
Term
|
Initial three year term ends on February 1, 2023, automatically renewed for additional one year periods unless terminated by either party with written notice.
|
Compensation
|
Base salary of $925,000 as of February 1, 2020.
|
Benefits
|
Eligible to participate in incentive compensation plan, stock plan, 401(k) plan, defined benefit pension plan and any other stock option, stock appreciation right, stock bonus, pension, group insurance, retirement, profit sharing, medical, disability, life insurance, relocation plan or policy, or any other plan, program, policy or arrangement of the Parent or SICA intended to benefit SICA’s employees generally.
|
Vacation and Reimbursements
|
Vacation time and reimbursements for ordinary travel and entertainment expenses in accordance with SICA’s policies.
|
Perquisites
|
Suitable offices, secretarial and other services, and other perquisites to which other executives of SICA are generally entitled.
|
Severance and
Benefits on Termination without Change in Control
|
• For Cause or Resignation by Executive other than for Good Reason: Salary and benefits accrued through termination date.
• Death or Disability: Two times: (i) Executive’s salary; plus (ii) average of three most recent annual cash incentive payments; provided that any such severance payments be reduced by life or disability insurance payments under policies with respect to which SICA paid premiums, paid in 12 equal installments.
• Without Cause by SICA, Relocation of Office over 50 Miles (without Executive’s consent), Resignation for Good Reason by Executive:
- Two times: (i) Executive’s salary; plus (ii) average of three most recent annual cash incentive payments, paid in 12 equal installments.
- Medical, dental, vision, disability, and life insurance coverage in effect for Executive and dependents until the earlier of 24 months following termination or commencement of equivalent benefits from a new employer.
• Stock Awards: Except for termination for Cause or resignation by the Executive other than Good Reason, immediate vesting and possible extended exercise period, as applicable, for any previously granted stock options, stock appreciation rights, cash incentive units, restricted stock, restricted stock units, and stock bonuses.
|
Severance and Benefits on Termination after Change in Control
|
For termination without Cause or resignation for Good Reason by Executive within two years following a Change in Control, Executive is entitled to:
• Severance payment equal to the product of 2.99 and the greater of: (i) Executive’s salary plus target annual cash incentive payment; or (ii) Executive’s salary plus the average of Executive’s annual cash incentive payments for the three calendar years prior to the calendar year in which the termination occurs, paid in lump sum.
• Medical, dental, vision, disability, and life insurance coverage in effect for Executive and dependents until the earlier of period of 36 months following termination or commencement of equivalent benefits from a new employer.
• Stock awards, same as above, except that the initial number of cash incentive units is increased by 150%.
|
Release; Confidentiality and Non-Solicitation
|
• Receipt of severance payments and benefits conditioned upon:
- Entry into release of claims; and
- No disclosure of confidential or proprietary information or solicitation of employees to leave the Parent or its subsidiaries for a period of two years following the termination of the Employment Agreement.
|
|
Form 10-K
|
|
Page
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
|
|
Consolidated Statements of Income for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
Notes to Consolidated Financial Statements, December 31, 2019, 2018, and 2017
|
|
|
Form 10-K
|
|
|
Page
|
Schedule I
|
Summary of Investments – Other than Investments in Related Parties at December 31, 2019
|
|
|
|
|
Schedule II
|
Condensed Financial Information of Registrant at December 31, 2019, 2018, and 2017 and for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
|
Schedule III
|
Supplementary Insurance Information for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
|
Schedule IV
|
Reinsurance for the Years Ended December 31, 2019, 2018, and 2017
|
|
|
|
|
Schedule V
|
Allowance for Uncollectible Premiums and Other Receivables for the Years Ended December 31, 2019, 2018, and 2017
|
Types of investment
|
|
|
|
|
|
|
||||
($ in thousands)
|
|
Amortized Cost or Cost
|
|
Fair Value
|
|
Carrying Amount
|
||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
$
|
4,573
|
|
|
4,921
|
|
|
4,580
|
|
Public utilities
|
|
3,608
|
|
|
3,967
|
|
|
3,673
|
|
|
All other corporate securities
|
|
12,588
|
|
|
13,087
|
|
|
12,547
|
|
|
Total fixed income securities, held-to-maturity
|
|
20,769
|
|
|
21,975
|
|
|
20,800
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government agencies
|
|
112,680
|
|
|
116,186
|
|
|
116,186
|
|
|
Foreign government
|
|
18,011
|
|
|
18,542
|
|
|
18,542
|
|
|
Obligations of states and political subdivisions
|
|
1,168,185
|
|
|
1,230,090
|
|
|
1,230,090
|
|
|
Public utilities
|
|
35,679
|
|
|
37,084
|
|
|
37,084
|
|
|
All other corporate securities
|
|
1,831,202
|
|
|
1,910,393
|
|
|
1,910,393
|
|
|
Collateralized loan obligation securities and other asset-backed securities
|
|
790,517
|
|
|
793,012
|
|
|
793,012
|
|
|
Commercial mortgage-backed securities
|
|
514,709
|
|
|
538,344
|
|
|
538,344
|
|
|
Residential mortgage-backed securities
|
|
1,409,003
|
|
|
1,451,969
|
|
|
1,451,969
|
|
|
Total fixed income securities, available-for-sale
|
|
5,879,986
|
|
|
6,095,620
|
|
|
6,095,620
|
|
|
|
|
|
|
|
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
Banks, trusts and insurance companies
|
|
17,357
|
|
|
17,368
|
|
|
17,368
|
|
|
Industrial, miscellaneous and all other
|
|
51,815
|
|
|
52,532
|
|
|
52,532
|
|
|
Nonredeemable preferred stock
|
|
2,889
|
|
|
3,037
|
|
|
3,037
|
|
|
Total equity securities
|
|
72,061
|
|
|
72,937
|
|
|
72,937
|
|
|
Short-term investments
|
|
282,490
|
|
|
282,490
|
|
|
282,490
|
|
|
Other investments
|
|
216,807
|
|
|
|
|
|
216,807
|
|
|
Total investments
|
|
$
|
6,472,113
|
|
|
|
|
|
6,688,654
|
|
|
|
December 31,
|
|||||
($ in thousands, except share amounts)
|
|
2019
|
|
2018
|
|||
Assets:
|
|
|
|
|
|
|
|
Fixed income securities, available-for-sale – at fair value (amortized cost: $233,753 – 2019; $111,208 – 2018)
|
|
$
|
241,526
|
|
|
110,098
|
|
Short-term investments
|
|
36,219
|
|
|
35,358
|
|
|
Cash
|
|
300
|
|
|
505
|
|
|
Investment in subsidiaries
|
|
2,416,209
|
|
|
2,057,218
|
|
|
Current federal income tax
|
|
16,116
|
|
|
14,161
|
|
|
Deferred federal income tax
|
|
4,875
|
|
|
10,346
|
|
|
Other assets
|
|
1,692
|
|
|
1,186
|
|
|
Total assets
|
|
$
|
2,716,937
|
|
|
2,228,872
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
439,860
|
|
|
329,540
|
|
Intercompany notes payable
|
|
61,163
|
|
|
77,517
|
|
|
Accrued long-term stock compensation
|
|
8,604
|
|
|
21,574
|
|
|
Other liabilities
|
|
12,374
|
|
|
8,439
|
|
|
Total liabilities
|
|
$
|
522,001
|
|
|
437,070
|
|
|
|
|
|
|
|||
Stockholders’ Equity:
|
|
|
|
|
|
|
|
Preferred stock at $0 par value per share:
|
|
|
|
|
|
|
|
Authorized shares 5,000,000; no shares issued or outstanding
|
|
$
|
—
|
|
|
—
|
|
Common stock of $2 par value per share:
|
|
|
|
|
|
|
|
Authorized shares: 360,000,000
|
|
|
|
|
|||
Issued: 103,484,159 – 2019; 102,848,394 – 2018
|
|
206,968
|
|
|
205,697
|
|
|
Additional paid-in capital
|
|
418,521
|
|
|
390,315
|
|
|
Retained earnings
|
|
2,080,529
|
|
|
1,858,414
|
|
|
Accumulated other comprehensive income (loss)
|
|
81,750
|
|
|
(77,956
|
)
|
|
Treasury stock – at cost (shares: 44,023,006 – 2019; 43,899,840 – 2018)
|
|
(592,832
|
)
|
|
(584,668
|
)
|
|
Total stockholders’ equity
|
|
2,194,936
|
|
|
1,791,802
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
2,716,937
|
|
|
2,228,872
|
|
|
|
Year ended December 31,
|
||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Dividends from subsidiaries
|
|
$
|
110,004
|
|
|
100,060
|
|
|
80,096
|
|
Net investment income earned
|
|
7,301
|
|
|
3,425
|
|
|
2,044
|
|
|
Net realized gains (losses)
|
|
207
|
|
|
(1,567
|
)
|
|
(15
|
)
|
|
Total revenues
|
|
117,512
|
|
|
101,918
|
|
|
82,125
|
|
|
|
|
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
33,426
|
|
|
24,652
|
|
|
24,721
|
|
|
Other expenses
|
|
30,900
|
|
|
25,446
|
|
|
36,251
|
|
|
Total expenses
|
|
64,326
|
|
|
50,098
|
|
|
60,972
|
|
|
|
|
|
|
|
|
|
||||
Income before federal income tax
|
|
53,186
|
|
|
51,820
|
|
|
21,153
|
|
|
|
|
|
|
|
|
|
||||
Federal income tax (benefit) expense:
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
(16,080
|
)
|
|
(14,173
|
)
|
|
(22,187
|
)
|
|
Deferred
|
|
3,606
|
|
|
3,141
|
|
|
6,311
|
|
|
Total federal income tax benefit
|
|
(12,474
|
)
|
|
(11,032
|
)
|
|
(15,876
|
)
|
|
|
|
|
|
|
|
|
||||
Net income before equity in undistributed income of subsidiaries
|
|
65,660
|
|
|
62,852
|
|
|
37,029
|
|
|
|
|
|
|
|
|
|
||||
Equity in undistributed income of subsidiaries, net of tax
|
|
205,963
|
|
|
116,087
|
|
|
131,797
|
|
|
|
|
|
|
|
|
|
||||
Net income
|
|
$
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
|
|
Year ended December 31,
|
||||||||
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
271,623
|
|
|
178,939
|
|
|
168,826
|
|
|
|
|
|
|
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Equity in undistributed income of subsidiaries, net of tax
|
|
(205,963
|
)
|
|
(116,087
|
)
|
|
(131,797
|
)
|
|
Stock-based compensation expense
|
|
19,077
|
|
|
14,507
|
|
|
12,089
|
|
|
Net realized (gains) losses
|
|
(207
|
)
|
|
1,567
|
|
|
15
|
|
|
Amortization – other
|
|
4,614
|
|
|
567
|
|
|
678
|
|
|
|
|
|
|
|
|
|
||||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in accrued long-term stock compensation
|
|
(12,970
|
)
|
|
(15,443
|
)
|
|
4,988
|
|
|
Decrease in net federal income taxes
|
|
1,651
|
|
|
11,246
|
|
|
3,811
|
|
|
Increase in other assets
|
|
(533
|
)
|
|
(343
|
)
|
|
(60
|
)
|
|
Increase in other liabilities
|
|
3,919
|
|
|
1,712
|
|
|
714
|
|
|
Net cash provided by operating activities
|
|
81,211
|
|
|
76,665
|
|
|
59,264
|
|
|
|
|
|
|
|
|
|
||||
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed income securities, available-for-sale
|
|
(153,482
|
)
|
|
(75,046
|
)
|
|
(58,832
|
)
|
|
Redemption and maturities of fixed income securities, available-for-sale
|
|
10,579
|
|
|
6,849
|
|
|
10,465
|
|
|
Sale of fixed income securities, available-for-sale
|
|
20,189
|
|
|
45,099
|
|
|
31,819
|
|
|
Purchase of equity securities
|
|
(10,824
|
)
|
|
—
|
|
|
—
|
|
|
Sale of equity securities
|
|
10,828
|
|
|
—
|
|
|
—
|
|
|
Purchase of short-term investments
|
|
(1,116,766
|
)
|
|
(207,115
|
)
|
|
(185,590
|
)
|
|
Sale of short-term investments
|
|
1,116,253
|
|
|
195,846
|
|
|
179,292
|
|
|
Net cash used in investing activities
|
|
(123,223
|
)
|
|
(34,367
|
)
|
|
(22,846
|
)
|
|
|
|
|
|
|
|
|
||||
Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
Dividends to stockholders
|
|
(47,675
|
)
|
|
(42,097
|
)
|
|
(37,045
|
)
|
|
Acquisition of treasury stock
|
|
(8,164
|
)
|
|
(6,556
|
)
|
|
(6,015
|
)
|
|
Proceeds from issuance of notes payable, net of debt issuance costs
|
|
290,757
|
|
|
—
|
|
|
—
|
|
|
Principal payment on notes payable
|
|
(185,000
|
)
|
|
—
|
|
|
—
|
|
|
Net proceeds from stock purchase and compensation plans
|
|
8,243
|
|
|
7,252
|
|
|
7,599
|
|
|
Principal payment on borrowings from subsidiaries
|
|
(16,354
|
)
|
|
(926
|
)
|
|
(881
|
)
|
|
Net cash provided by (used in) financing activities
|
|
41,807
|
|
|
(42,327
|
)
|
|
(36,342
|
)
|
|
|
|
|
|
|
|
|
||||
Net (decrease) increase in cash
|
|
(205
|
)
|
|
(29
|
)
|
|
76
|
|
|
Cash, beginning of year
|
|
505
|
|
|
534
|
|
|
458
|
|
|
Cash, end of year
|
|
$
|
300
|
|
|
505
|
|
|
534
|
|
($ in thousands)
|
|
Deferred
policy
acquisition costs
|
|
Reserve
for loss
and loss expense
|
|
Unearned premiums
|
|
Net
premiums earned
|
|
Net
investment income1
|
|
Loss
and loss
expense incurred
|
|
Amortization
of deferred
policy
acquisition costs
|
|
Other
operating expenses2
|
|
Net
premiums written
|
||||||||||
Standard Commercial Lines Segment
|
|
$
|
226,464
|
|
|
3,436,363
|
|
|
1,108,009
|
|
|
2,049,614
|
|
|
—
|
|
|
1,187,856
|
|
|
445,661
|
|
|
270,107
|
|
|
2,137,071
|
|
Standard Personal Lines Segment
|
|
16,848
|
|
|
224,200
|
|
|
309,125
|
|
|
307,739
|
|
|
—
|
|
|
211,300
|
|
|
34,477
|
|
|
53,702
|
|
|
304,592
|
|
|
E&S Lines Segment
|
|
27,874
|
|
|
406,600
|
|
|
106,033
|
|
|
239,818
|
|
|
—
|
|
|
152,335
|
|
|
55,835
|
|
|
21,905
|
|
|
237,761
|
|
|
Investments Segment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
236,965
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
271,186
|
|
|
4,067,163
|
|
|
1,523,167
|
|
|
2,597,171
|
|
|
236,965
|
|
|
1,551,491
|
|
|
535,973
|
|
|
345,714
|
|
|
2,679,424
|
|
Other insurance expenses
|
$
|
358,069
|
|
Other income
|
(12,355
|
)
|
|
Total
|
$
|
345,714
|
|
($ in thousands)
|
|
Deferred
policy
acquisition costs
|
|
Reserve
for loss
and loss expense
|
|
Unearned premiums
|
|
Net
premiums earned
|
|
Net
investment income1
|
|
Loss
and loss
expense incurred
|
|
Amortization
of deferred
policy
acquisition costs
|
|
Other
operating expenses2
|
|
Net
premiums written
|
||||||||||
Standard Commercial Lines Segment
|
|
$
|
206,391
|
|
|
3,283,531
|
|
|
1,020,054
|
|
|
1,912,222
|
|
|
—
|
|
|
1,141,038
|
|
|
412,420
|
|
|
249,660
|
|
|
1,975,683
|
|
Standard Personal Lines Segment
|
|
18,070
|
|
|
223,223
|
|
|
304,085
|
|
|
304,441
|
|
|
—
|
|
|
206,752
|
|
|
33,617
|
|
|
51,308
|
|
|
309,277
|
|
|
E&S Lines Segment
|
|
28,151
|
|
|
387,114
|
|
|
107,793
|
|
|
219,566
|
|
|
—
|
|
|
150,344
|
|
|
49,005
|
|
|
20,912
|
|
|
229,326
|
|
|
Investments Segment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140,413
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
252,612
|
|
|
3,893,868
|
|
|
1,431,932
|
|
|
2,436,229
|
|
|
140,413
|
|
|
1,498,134
|
|
|
495,042
|
|
|
321,880
|
|
|
2,514,286
|
|
Other insurance expenses
|
$
|
331,318
|
|
Other income
|
(9,438
|
)
|
|
Total
|
$
|
321,880
|
|
($ in thousands)
|
|
Deferred
policy
acquisition costs
|
|
Reserve
for loss and loss expense
|
|
Unearned premiums
|
|
Net
premiums earned
|
|
Net
investment income1
|
|
Loss
and loss
expense incurred
|
|
Amortization
of deferred
policy
acquisition costs
|
|
Other
operating expenses2
|
|
Net
premiums written
|
||||||||||
Standard Commercial Lines Segment
|
|
$
|
193,408
|
|
|
3,165,217
|
|
|
956,173
|
|
|
1,788,499
|
|
|
—
|
|
|
1,008,150
|
|
|
387,552
|
|
|
243,283
|
|
|
1,858,735
|
|
Standard Personal Lines Segment
|
|
16,952
|
|
|
263,166
|
|
|
295,435
|
|
|
289,701
|
|
|
—
|
|
|
189,294
|
|
|
32,542
|
|
|
56,761
|
|
|
296,775
|
|
|
E&S Lines Segment
|
|
24,695
|
|
|
342,857
|
|
|
98,036
|
|
|
212,827
|
|
|
—
|
|
|
147,630
|
|
|
49,142
|
|
|
22,337
|
|
|
215,131
|
|
|
Investments Segment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
168,241
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
235,055
|
|
|
3,771,240
|
|
|
1,349,644
|
|
|
2,291,027
|
|
|
168,241
|
|
|
1,345,074
|
|
|
469,236
|
|
|
322,381
|
|
|
2,370,641
|
|
Other insurance expenses
|
$
|
333,097
|
|
Other income
|
(10,716
|
)
|
|
Total
|
$
|
322,381
|
|
($ thousands)
|
|
Direct Amount
|
|
Assumed from Other Companies
|
|
Ceded to Other Companies
|
|
Net Amount
|
|
% of Amount Assumed to Net
|
||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accident and health insurance
|
|
$
|
17
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
Property and liability insurance
|
|
2,993,140
|
|
|
24,399
|
|
|
420,368
|
|
|
2,597,171
|
|
|
1
|
%
|
|
Total premiums earned
|
|
2,993,157
|
|
|
24,399
|
|
|
420,385
|
|
|
2,597,171
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accident and health insurance
|
|
$
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
Property and liability insurance
|
|
2,808,745
|
|
|
25,831
|
|
|
398,347
|
|
|
2,436,229
|
|
|
1
|
%
|
|
Total premiums earned
|
|
2,808,764
|
|
|
25,831
|
|
|
398,366
|
|
|
2,436,229
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accident and health insurance
|
|
$
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
Property and liability insurance
|
|
2,647,464
|
|
|
25,831
|
|
|
382,268
|
|
|
2,291,027
|
|
|
1
|
%
|
|
Total premiums earned
|
|
2,647,488
|
|
|
25,831
|
|
|
382,292
|
|
|
2,291,027
|
|
|
1
|
%
|
($ in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||
Balance, January 1
|
|
$
|
13,900
|
|
|
14,600
|
|
|
11,480
|
|
Additions
|
|
2,730
|
|
|
4,022
|
|
|
6,414
|
|
|
Deductions
|
|
(5,830
|
)
|
|
(4,722
|
)
|
|
(3,294
|
)
|
|
Balance, December 31
|
|
$
|
10,800
|
|
|
13,900
|
|
|
14,600
|
|
Exhibit
|
|
|
Number
|
|
|
|
Amended and Restated Certificate of Incorporation of Selective Insurance Group, Inc., filed May 4, 2010 (incorporated by reference herein to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 001-33067).
|
|
|
|
|
|
By-Laws of Selective Insurance Group, Inc., effective July 29, 2015 (incorporated by reference herein to Exhibit 3.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, File No. 001-33067).
|
|
|
|
|
|
Indenture, dated as of September 24, 2002, between Selective Insurance Group, Inc. and National City Bank, as Trustee, relating to the Company's 1.6155% Senior Convertible Notes due September 24, 2032 (incorporated by reference herein to Exhibit 4.1 of the Company's Registration Statement on Form S-3 filed November 26, 2002 File No. 333-101489).
|
|
|
|
|
|
Indenture, dated as of November 16, 2004, between Selective Insurance Group, Inc. and Wachovia Bank, National Association, as Trustee, relating to the Company's 7.25% Senior Notes due 2034 (incorporated by reference herein to Exhibit 4.1 of the Company's Current Report on Form 8-K filed November 18, 2004, File No. 000-08641).
|
|
|
|
|
|
Indenture, dated as of November 3, 2005, between Selective Insurance Group, Inc. and Wachovia Bank, National Association, as Trustee, relating to the Company’s 6.70% Senior Notes due 2035 (incorporated by reference herein to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed November 9, 2005, File No. 000-08641).
|
|
|
|
|
|
Registration Rights Agreement, dated as of November 16, 2004, between Selective Insurance Group, Inc. and Keefe, Bruyette & Woods, Inc. (incorporated by reference herein to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed November 18, 2004, File No. 000-08641).
|
|
|
|
|
|
Registration Rights Agreement, dated as of November 3, 2005, between Selective Insurance Group, Inc. and Keefe, Bruyette & Woods, Inc. (incorporated by reference herein to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed November 9, 2005, File No. 000-08641).
|
|
|
|
|
|
Indenture, dated as of February 8, 2013, between Selective Insurance Group, Inc. and U.S. Bank National Association, as Trustee (incorporated by reference herein to Exhibit 4.1 of the Company's Current Report on Form 8-K filed February 8, 2013, File No. 001-33067).
|
|
|
|
|
|
Second Supplemental Indenture, dated as of March 1, 2019 between Selective Insurance Group, Inc. and U.S. Bank National Association, as Trustee, relating to the Company’s 5.375% Senior Notes due 2049 (incorporated by reference herein to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed March 1, 2019 File No. 001-33067).
|
|
|
|
|
|
Description of the Company's Securities Registered Under Section 12 of the Securities Exchange Act of 1934.
|
|
|
|
|
|
Selective Insurance Supplemental Pension Plan, As Amended and Restated Effective January 1, 2005 (incorporated by reference herein to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, File No. 001-33067).
|
|
|
|
|
|
Amendment No. 1 to Selective Insurance Supplemental Pension Plan, As Amended and Restated Effective January 1, 2005 (incorporated by reference herein to Exhibit 10.1 of the Company's Current Report on Form 8-K filed March 25, 2013, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Company of America Deferred Compensation Plan (2005), As Amended and Restated Effective as of January 1, 2010 (incorporated by reference herein to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, File No. 001-33067).
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
|
|
Amendment No 1. to Selective Insurance Company of America Deferred Compensation Plan (2005) (incorporated by reference herein to Exhibit 10.2a of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, File No. 001-33067).
|
|
|
|
|
|
Amendment No. 2 to Selective Insurance Company of America Deferred Compensation Plan (2005), As Amended and Restated Effective as of January 1, 2010 (incorporated by reference herein to Exhibit 10.2 of the Company's Current Report on Form 8-K filed March 25, 2013, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan, effective May 1, 2014 (incorporated by reference herein to Appendix A-1 to the Company’s Definitive Proxy Statement for its 2014 Annual Meeting of Stockholders filed April 3, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Director Stock Option Agreement (incorporated by reference herein to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Stock Option Agreement (incorporated by reference herein to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Service-Based Restricted Stock Agreement (incorporated by reference herein to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Performance-Based Restricted Stock Agreement (incorporated by reference herein to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Service-Based Restricted Stock Unit Agreement (incorporated by reference herein to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Performance-Based Restricted Stock Unit Agreement (incorporated by reference herein to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan Director Restricted Stock Unit Agreement (incorporated by reference herein to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2005 Omnibus Stock Plan As Amended and Restated Effective as of May 1, 2010 (incorporated by reference herein to Appendix C of the Company’s Definitive Proxy Statement for its 2010 Annual Meeting of Stockholders filed March 25, 2010, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2014 Omnibus Stock Plan as Amended and Restated Effective as of May 2, 2018 (incorporated by reference herein to Appendix A of the Company’s Definitive Proxy Statement filed March 26, 2018 for its 2018 Annual Meeting of Stockholders, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2005 Omnibus Stock Plan Director Stock Option Agreement (incorporated by reference herein to Exhibit 10.9 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, File No. 000-08641).
|
|
|
|
|
|
Selective Insurance Group, Inc. 2005 Omnibus Stock Plan Automatic Director Stock Option Agreement (incorporated by reference herein to Exhibit 2 of the Company’s Definitive Proxy Statement for its 2005 Annual Meeting of Stockholders filed April 6, 2005, File No. 000-08641).
|
Exhibit
|
|
|
Number
|
|
|
|
Selective Insurance Group, Inc. Non-Employee Directors’ Compensation and Deferral Plan, As Amended and Restated Effective as of January 1, 2017 (incorporated by reference herein to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, File No. 001-33067).
|
|
|
|
|
10.16+
|
|
Deferred Compensation Plan for Directors (incorporated by reference herein to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1993, File No. 000-08641) (P).
|
|
|
|
|
Selective Insurance Group, Inc. Employee Stock Purchase Plan (2009), amended and restated effective July 1, 2009 (incorporated by reference herein to Appendix A to the Company’s Definitive Proxy Statement for its 2009 Annual Meeting of Stockholders filed March 26, 2009, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. Cash Incentive Plan As Amended and Restated as of May 1, 2014 (incorporated by reference herein to Appendix B to the Company’s Definitive Proxy Statement for its 2014 Annual Meeting of Stockholders filed March 24, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. Cash Incentive Plan Service-Based Cash Incentive Unit Award Agreement (incorporated by reference herein to Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. Cash Incentive Plan Performance-Based Cash Incentive Unit Award Agreement (incorporated by reference herein to Exhibit 10.9 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. Cash Incentive Plan Cash Incentive Unit Award Agreement (incorporated by reference herein to Exhibit 10.14c of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. Cash Incentive Plan Cash Incentive Unit Award Agreement (incorporated by reference herein to Exhibit 10.14d of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, File No. 001-33067).
|
|
|
|
|
|
Amended and Restated Selective Insurance Group, Inc. Stock Purchase Plan for Independent Insurance Agencies (2010), Amended and Restated as of February 1, 2017 (incorporated by reference herein to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, File No. 001-33067).
|
|
|
|
|
|
Selective Insurance Group, Inc. Stock Option Plan for Directors (incorporated by reference herein to Exhibit B of the Company’s Definitive Proxy Statement for its 2000 Annual Meeting of Stockholders filed March 31, 2000, File No. 000-08641).
|
|
|
|
|
|
Amendment to the Selective Insurance Group, Inc. Stock Option Plan for Directors, as amended, effective as of July 26, 2006, (incorporated by reference herein to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, File No. 000-08641).
|
|
|
|
|
|
Selective Insurance Group, Inc. Stock Compensation Plan for Nonemployee Directors, (incorporated by reference herein to Exhibit A of the Company’s Definitive Proxy Statement for its 2000 Annual Meeting of Stockholders filed March 31, 2000, File No. 000-08641).
|
|
|
|
|
|
Amendment to Selective Insurance Group, Inc. Stock Compensation Plan for Nonemployee Directors, as amended (incorporated by reference herein to Exhibit 10.22a of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, File No. 001-33067).
|
|
|
|
|
|
Employment Agreement between Selective Insurance Company of America and Gregory E. Murphy, dated as of December 23, 2008 (incorporated by reference herein to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed December 30, 2008, File No. 001-33067).
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
|
|
Employment Agreement between Selective Insurance Company of America and Gregory E. Murphy, effective as of February 1, 2020 (incorporated by reference herein to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed November 1, 2019, File No. 001-33067).
|
|
|
|
|
|
Employment Agreement between Selective Insurance Company of America and Michael H. Lanza, dated as of December 23, 2008 (incorporated by reference herein to Exhibit 10.23e of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, File No. 001-33067).
|
|
|
|
|
|
Employment Agreement between Selective Insurance Company of America and John J. Marchioni, dated as of September 10, 2013 (incorporated by reference herein to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed September 11, 2013, File No. 001-33067).
|
|
|
|
|
|
Employment Agreement between Selective Insurance Company of America and John J. Marchioni, dated as of February 10, 2020.
|
|
|
|
|
|
Employment Agreement between Selective Insurance Company of America and Mark A. Wilcox, dated as of October 28, 2016 (incorporated by reference herein to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed October 31, 2016, File No. 001-33067).
|
|
|
|
|
|
Credit Agreement among Selective Insurance Group, Inc., the Lenders Named Therein and Bank of Montreal, Chicago Branch, as Administrative Agent, dated as of December 20, 2019.
|
|
|
|
|
|
Form of Indemnification Agreement between Selective Insurance Group, Inc. and each of its directors and executive officers, as adopted on May 19, 2005 (incorporated by reference herein to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed May 20, 2005, File No. 000-08641).
|
|
|
|
|
|
Selective Insurance Group, Inc. Non-Employee Directors’ Deferred Compensation Plan (incorporated by reference herein to Exhibit 10.27 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, File No. 001-33067).
|
|
|
|
|
|
Amendment No. 1 to the Selective Insurance Group, Inc. Non-Employee Directors’ Deferred Compensation Plan (incorporated by reference herein to Exhibit 10.27a of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, File No. 001-33067).
|
Exhibit
|
|
|
Number
|
|
|
|
Subsidiaries of Selective Insurance Group, Inc.
|
|
|
|
|
|
Consent of KPMG LLP.
|
|
|
|
|
|
Power of Attorney of John C. Burville.
|
|
|
|
|
|
Power of Attorney of Terrence W. Cavanaugh.
|
|
|
|
|
|
Power of Attorney of Robert Kelly Doherty.
|
|
|
|
|
|
Power of Attorney of Thomas A. McCarthy.
|
|
|
|
|
|
Power of Attorney of H. Elizabeth Mitchell.
|
|
|
|
|
|
Power of Attorney of Michael J. Morrissey.
|
|
|
|
|
|
Power of Attorney of Gregory E. Murphy.
|
|
|
|
|
|
Power of Attorney of Cynthia S. Nicholson.
|
|
|
|
|
|
Power of Attorney of Ronald L. O'Kelley.
|
|
|
|
|
|
Power of Attorney of William M. Rue.
|
|
|
|
|
|
Power of Attorney of John S. Scheid.
|
|
|
|
|
|
Power of Attorney of J. Brian Thebault.
|
|
|
|
|
|
Power of Attorney of Philip H. Urban.
|
|
|
|
|
|
Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Glossary of Terms.
|
** 101.INS
|
|
XBRL Instance Document.
|
** 101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
** 101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
** 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
** 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
** 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
** 104
|
|
Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101
|
SELECTIVE INSURANCE GROUP, INC.
|
|
|
|
|
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By: /s/ John J. Marchioni
|
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February 12, 2020
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John J. Marchioni
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President and Chief Executive Officer
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(principal executive officer)
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|
|
|
|
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By: /s/ Mark A. Wilcox
|
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February 12, 2020
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Mark A. Wilcox
|
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Executive Vice President and Chief Financial Officer
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|
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(principal financial officer)
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|
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By: /s/ Anthony D. Harnett
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February 12, 2020
|
Anthony D. Harnett
|
|
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Senior Vice President and Chief Accounting Officer
|
|
|
(principal accounting officer)
|
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By: /s/ John J. Marchioni
|
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February 12, 2020
|
John J. Marchioni
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President and Chief Executive Officer
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*
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February 12, 2020
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John C. Burville
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Director
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*
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February 12, 2020
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Terrence W. Cavanaugh
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Director
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*
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February 12, 2020
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Robert Kelly Doherty
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Director
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*
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February 12, 2020
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Thomas A. McCarthy
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Director
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*
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February 12, 2020
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H. Elizabeth Mitchell
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Director
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*
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February 12, 2020
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Michael J. Morrissey
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Director
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*
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February 12, 2020
|
Gregory E. Murphy
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Executive Chairman of the Board
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*
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February 12, 2020
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Cynthia S. Nicholson
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|
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Director
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*
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|
February 12, 2020
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Ronald L. O'Kelley
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Director
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*
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|
February 12, 2020
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William M. Rue
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Director
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*
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|
February 12, 2020
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John S. Scheid
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Director
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*
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|
February 12, 2020
|
J. Brian Thebault
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|
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Director
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*
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February 12, 2020
|
Philip H. Urban
|
|
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Director
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|
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* By: /s/ Michael H. Lanza
|
|
February 12, 2020
|
Michael H. Lanza
|
|
|
Attorney-in-fact
|
|
Selective Insurance Company of America
40 Wantage Avenue
Branchville, New Jersey 07890
Attn: General Counsel
Fax: (973) 948-0282
|
John J. Marchioni
[Address Intentionally Omitted]
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Page
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|
ARTICLE 1
|
DEFINITIONS
|
1
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Section 1.1
|
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Defined Terms
|
1
|
|
Section 1.2
|
|
Accounting Terms
|
20
|
|
Section 1.3
|
|
Other Terms; Construction
|
20
|
|
Section 1.4
|
|
Times of Day
|
21
|
|
Section 1.5
|
|
Divisions
|
21
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|
|
|
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|
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ARTICLE II
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AMOUNT AND TERMS OF THE LOANS
|
21
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Section 2.1
|
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Commitment
|
21
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|
Section 2.2
|
|
Borrowings
|
21
|
|
Section 2.3
|
|
Disbursements; Funding Reliance; Domicile of Loans
|
22
|
|
Section 2.4
|
|
Evidence of Debt; Notes
|
23
|
|
Section 2.5
|
|
Termination of Commitment
|
24
|
|
Section 2.6
|
|
Mandatory Payments and Prepayments
|
24
|
|
Section 2.7
|
|
Voluntary Prepayments
|
24
|
|
Section 2.8
|
|
Interest
|
25
|
|
Section 2.9
|
|
Fees
|
27
|
|
Section 2.10
|
|
Interest Periods
|
27
|
|
Section 2.11
|
|
Conversions and Continuations
|
28
|
|
Section 2.12
|
|
Method of Payments; Computations
|
29
|
|
Section 2.13
|
|
Recovery of Payments
|
31
|
|
Section 2.14
|
|
Use of Proceeds
|
31
|
|
Section 2.15
|
|
Pro Rata Treatment
|
31
|
|
Section 2.16
|
|
Increased Costs; Change in Circumstances; Illegality; etc
|
32
|
|
Section 2.17
|
|
Taxes
|
38
|
|
Section 2.18
|
|
Compensation
|
43
|
|
Section 2.19
|
|
Replacement of Lenders; Mitigation of Costs
|
43
|
|
Section 2.20
|
|
Increase in Commitments
|
44
|
|
Section 2.21
|
|
Defaulting Lenders
|
46
|
|
|
|
|
|
|
ARTICLE III
|
CONDITIONS TO EFFECTIVENESS; CONDITIONS OF BORROWING
|
47
|
|
|
|
|
|
|
|
Section 3.1
|
|
Conditions to Effectiveness
|
47
|
|
Section 3.2
|
|
Conditions of All Borrowings
|
50
|
|
|
|
|
|
|
ARTICLE IV
|
REPRESENTATIONS AND WARRANTIES
|
50
|
|
|
|
|
|
|
|
Section 4.1
|
|
Corporate Organization and Power
|
50
|
|
Section 4.2
|
|
Authorization; Enforceability
|
50
|
|
Section 4.3
|
|
No Violation
|
51
|
|
Section 4.4
|
|
Governmental and Third-Party Authorization; Permits
|
51
|
|
Section 4.5
|
|
Litigation
|
51
|
|
Section 4.6
|
|
Taxes
|
51
|
|
Section 4.7
|
|
Subsidiaries
|
52
|
|
|
i
|
|
Section 4.8
|
|
Full Disclosure
|
52
|
|
Section 4.9
|
|
Margin Regulations
|
52
|
|
Section 4.10
|
|
No Material Adverse Change
|
52
|
|
Section 4.11
|
|
Financial Matters
|
52
|
|
Section 4.12
|
|
Ownership of Properties
|
53
|
|
Section 4.13
|
|
ERISA
|
53
|
|
Section 4.14
|
|
Environmental Matters
|
54
|
|
Section 4.15
|
|
Compliance with Laws
|
54
|
|
Section 4.16
|
|
Investment Company Act
|
55
|
|
Section 4.17
|
|
Insurance
|
55
|
|
Section 4.18
|
|
Material Contracts
|
55
|
|
Section 4.19
|
|
Reinsurance Agreements
|
55
|
|
Section 4.20
|
|
Anti-Corruption Laws and Sanctions
|
55
|
|
Section 4.21
|
|
Plan Asset Regulations
|
56
|
|
|
|
|
|
|
ARTICLE V
|
AFFIRMATIVE COVENANTS
|
56
|
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|
|
|
|
|
|
Section 5.1
|
|
Financial Statements
|
56
|
|
Section 5.2
|
|
Other Business and Financial Information
|
57
|
|
Section 5.3
|
|
Existence; Franchises; Maintenance of Properties
|
59
|
|
Section 5.4
|
|
Compliance with Laws
|
59
|
|
Section 5.5
|
|
Payment of Obligations
|
59
|
|
Section 5.6
|
|
Insurance
|
60
|
|
Section 5.7
|
|
Maintenance of Books and Records; Inspection
|
60
|
|
Section 5.8
|
|
Permitted Acquisitions
|
60
|
|
Section 5.9
|
|
Internal Control Event
|
61
|
|
Section 5.10
|
|
Further Assurances
|
61
|
|
Section 5.11
|
|
Compliance with Anti-Corruption Laws and Sanctions
|
61
|
|
|
|
|
|
|
ARTICLE VI
|
FINANCIAL COVENANTS
|
61
|
|
|
|
|
|
|
|
Section 6.1
|
|
Minimum Consolidated Net Worth
|
61
|
|
Section 6.2
|
|
Maximum Consolidated Debt to Total Capitalization
|
61
|
|
|
|
|
|
|
ARTICLE VII
|
NEGATIVE COVENANTS
|
61
|
|
|
|
|
|
|
|
Section 7.1
|
|
Merger; Consolidation; Dissolution
|
62
|
|
Section 7.2
|
|
Indebtedness
|
62
|
|
Section 7.3
|
|
Liens
|
63
|
|
Section 7.4
|
|
Disposition of Assets
|
64
|
|
Section 7.5
|
|
Investments and Acquisitions
|
65
|
|
Section 7.6
|
|
Restricted Payments
|
66
|
|
Section 7.7
|
|
Transactions with Affiliates
|
66
|
|
Section 7.8
|
|
Lines of Business
|
66
|
|
Section 7.9
|
|
Certain Amendments
|
67
|
|
Section 7.10
|
|
Burdensome Agreements
|
67
|
|
Section 7.11
|
|
Fiscal Year
|
67
|
|
Section 7.12
|
|
Accounting Changes
|
67
|
|
|
ii
|
|
ARTICLE VIII
|
EVENTS OF DEFAULT
|
67
|
|
|
|
|
|
|
|
Section 8.1
|
|
Events of Default
|
67
|
|
Section 8.2
|
|
Remedies: Termination of Commitment, Acceleration, etc
|
69
|
|
Section 8.3
|
|
Remedies: Set-Off
|
70
|
|
|
|
|
|
|
ARTICLE IX
|
THE ADMINISTRATIVE AGENT
|
70
|
|
|
|
|
|
|
|
Section 9.1
|
|
Appointment and Authority
|
70
|
|
Section 9.2
|
|
Rights as a Lender
|
71
|
|
Section 9.3
|
|
Exculpatory Provisions
|
71
|
|
Section 9.4
|
|
Reliance by Administrative Agent
|
72
|
|
Section 9.5
|
|
Delegation of Duties
|
72
|
|
Section 9.6
|
|
Resignation of Administrative Agent
|
73
|
|
Section 9.7
|
|
Non-Reliance on Administrative Agent and Other Lenders
|
73
|
|
Section 9.8
|
|
No Other Duties, etc
|
74
|
|
Section 9.9
|
|
Administrative Agent May File Proofs of Claim
|
74
|
|
Section 9.10
|
|
Certain ERISA Matters
|
74
|
|
|
|
|
|
|
ARTICLE X
|
MISCELLANEOUS
|
76
|
|
|
|
|
|
|
|
Section 10.1
|
|
Expenses; Indemnity; Damage Waiver
|
76
|
|
Section 10.2
|
|
Governing Law; Submission to Jurisdiction; Waiver of Venue; Service of Process
|
77
|
|
Section 10.3
|
|
Waiver of Jury Trial
|
78
|
|
Section 10.4
|
|
Notices; Effectiveness; Electronic Communication
|
78
|
|
Section 10.5
|
|
Amendments, Waivers, etc
|
79
|
|
Section 10.6
|
|
Successors and Assigns
|
80
|
|
Section 10.7
|
|
No Waiver
|
84
|
|
Section 10.8
|
|
Survival
|
84
|
|
Section 10.9
|
|
Severability
|
84
|
|
Section 10.10
|
|
Construction
|
85
|
|
Section 10.11
|
|
Confidentiality
|
85
|
|
Section 10.12
|
|
Counterparts; Integration; Effectiveness
|
86
|
|
Section 10.13
|
|
No Fiduciary Relationship Established By Credit Documents
|
86
|
|
Section 10.14
|
|
Disclosure of Information
|
86
|
|
Section 10.15
|
|
USA Patriot Act Notice
|
86
|
|
Section 10.16
|
|
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
|
86
|
|
|
iii
|
|
EXHIBITS
|
|||
|
|
|
|
Exhibit A
|
|
Form of Note
|
|
|
|
|
|
Exhibit B-1
|
|
Form of Notice of Borrowing
|
|
|
|
|
|
Exhibit B-2
|
|
Form of Notice of Conversion/Continuation
|
|
|
|
|
|
Exhibit C
|
|
Form of Compliance Certificate
|
|
|
|
|
|
Exhibit D
|
|
Form of Assignment and Assumption
|
|
|
|
|
|
Exhibit E
|
|
Form of Lender Joinder Agreement
|
|
|
|
|
|
Exhibit F-1
|
|
Form of U.S. Tax Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
|
|
|
|
|
|
Exhibit F-2
|
|
Form of U.S. Tax Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
|
|
|
|
|
|
Exhibit F-3
|
|
Form of U.S. Tax Certificate (For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
|
|
|
|
|
|
Exhibit F-4
|
|
Form of U.S. Tax Certificate (For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
|
|
|
|
|
|
SCHEDULES
|
|||
|
|
|
|
Schedule 1.1
|
|
Commitments and Notice Addresses
|
|
|
|
|
|
Schedule 4.7
|
|
Subsidiaries
|
|
|
|
|
|
Schedule 4.14(a)
|
|
Environmental Matters
|
|
|
|
|
|
Schedule 4.14(b)
|
|
Underground Storage Tanks
|
|
|
|
|
|
Schedule 4.18
|
|
Material Contracts
|
|
|
|
|
|
Schedule 7.2
|
|
Indebtedness
|
|
|
|
|
|
Schedule 7.3
|
|
Liens
|
|
|
|
|
|
Schedule 7.7
|
|
Transactions with Affiliates
|
|
|
iv
|
|
Pricing Level
|
Debt Rating
(Moody’s/S&P)
|
Applicable Margin for LIBOR Loans
|
Applicable Margin for Base Rate Loans
|
Commitment Fee
|
Level I
|
≥ A3/A-
|
1.000%
|
0.000%
|
0.125%
|
Level II
|
Baa1/BBB+
|
1.125%
|
0.125%
|
0.150%
|
Level III
|
Baa2/BBB
|
1.250%
|
0.250%
|
0.200%
|
Level IV
|
≤ Baa3/BBB-
|
1.500%
|
0.500%
|
0.250%
|
(a)
|
the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
|
(b)
|
the effects of any Bail-In Action on any such liability, including, if applicable:
|
(i)
|
a reduction in full or in part or cancellation of any such liability;
|
(ii)
|
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or
|
(iii)
|
the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.
|
To:
|
Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders party to the Credit Agreement dated as of December 20, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Selective Insurance Group, Inc., a New Jersey corporation (the “Borrower”), the Lenders party thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent.
|
To:
|
Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders party to the Credit Agreement dated as of December 20, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Selective Insurance Group, Inc., a New Jersey corporation (the “Borrower”), certain Lenders that are signatories thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent.
|
To:
|
Bank of Montreal, Chicago Branch., as Administrative Agent under, and the Lenders party to, the Credit Agreement described below
|
(1)
|
Base for calculating Consolidated Net Worth:
|
|
$1,325,318,500
|
(2)
|
(a) Consolidated Net Income for each fiscal quarter (if positive) beginning with the fiscal quarter ending after the Closing Date:
|
$____________
|
|
|
(b) Net income adjustment:
Multiply Line 2(a) by 50% |
|
$____________
|
(3)
|
(a) Aggregate increases in shareholders’ equity of the Borrower by reason of the issuance or sale of Capital Stock of the Borrower or any Subsidiary or other capital contributions realized or received after the Closing Date.
|
$____________
|
|
|
(b) Equity securities adjustment:
Multiply Line 3(a) by 50% |
|
$____________
|
(4)
|
Minimum Consolidated Net Worth as of the date of determination:
Add Lines 1, 2(b) and 3(b)
|
|
$____________
|
(5)
|
Consolidated Net Worth: Consolidated shareholders’ equity of the Borrower and its Subsidiaries as of the date of determination, determined in accordance with GAAP, excluding accumulated other comprehensive income and excluding any Disqualified Capital Stock (except to the extent deducted in determining such consolidated shareholders’ equity)
|
|
$____________
|
(1)
|
Indebtedness as of the date of determination, determined on a consolidated basis in accordance with GAAP:
|
|
|
|
(a) All indebtedness and obligations for borrowed money or in respect of loans or advances of any kind
|
$____________
|
|
|
(b) All obligations evidenced by notes, bonds, debentures or similar instruments
|
$____________
|
|
|
(c) All reimbursement obligations with respect to surety bonds, letters of credit and bankers’ acceptances (in each case, whether or not drawn or matured and in the stated amount thereof)
|
$____________
|
|
|
(d) All obligations to pay the deferred purchase price of property or services (other than obligations with respect to undrawn capital commitments with respect to Borrower’s or any of its Subsidiaries’ limited partnership interest funds organized primarily for the purpose of making equity or debt investments in one or more portfolio companies)
|
$____________
|
|
|
(e) All indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired
|
$____________
|
|
|
(f) All Capital Lease Obligations
|
$____________
|
|
|
(g) All Disqualified Capital Stock issued, with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any (for purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Credit Agreement, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the board of directors or other governing body of the issuer of such Disqualified Capital Stock)
|
$____________
|
|
|
(h) The net termination obligations under any Hedge Agreements, calculated as of any date as if such agreement or arrangement were terminated as of such date
|
$____________
|
|
|
(i) All Contingent Obligations
|
$____________
|
|
|
(j) All indebtedness referred to in clauses (a) through (i) above secured by any Lien on any property or asset owned or held regardless of whether the indebtedness secured thereby shall have been assumed by the Borrower or its Subsidiaries or is nonrecourse to the credit of the Borrower or its Subsidiaries
|
$____________
|
|
|
(k) Total Indebtedness as of the date of determination:
Add Lines 1(a) through 1(j) |
|
$____________
|
(2)
|
Exclusions from Consolidated Indebtedness:
|
|
|
(a) Reimbursement obligations in respect of any letters of credit issued for the benefit of any Insurance Subsidiary or the Borrower in the ordinary course of its business, but only in each case to the extent such letters of credit (A) are not drawn upon and (B) are collateralized by cash or Cash Equivalents
|
$____________
|
|
Aggregate Amount of Commitment /
Loans3 |
Amount of Commitment /
Loan Assigned3 |
Percentage Assigned
of Commitment / Loan4 |
$
|
$
|
%
|
$
|
$
|
%
|
$
|
$
|
%
|
Aggregate Amount of Commitment /
Loans for all Lenders under Agreement |
Amount of Commitment /
Loans Assigned |
Percentage Assigned of Commitment /
Loans1 |
$
|
$
|
%
|
Name
|
|
Jurisdiction in which organized
|
|
Parent
|
|
Percentage voting securities owned
|
|
Mesa Underwriters Specialty Insurance Company
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Auto Insurance Company of New Jersey
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Casualty Insurance Company
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Fire and Casualty Insurance Company
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Insurance Company of America
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Insurance Company of New England
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Insurance Company of New York
|
|
New York
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Insurance Company of South Carolina
|
|
Indiana
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Insurance Company of the Southeast
|
|
Indiana
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Selective Way Insurance Company
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
|
|
|
|
|
|
|
|
SRM Insurance Brokerage, LLC.
|
|
New Jersey
|
|
Selective Way Insurance Company
|
|
75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Selective Insurance Company of the Southeast
|
|
25
|
%
|
|
|
|
|
|
|
|
|
Wantage Avenue Holding Company, Inc.
|
|
New Jersey
|
|
Selective Insurance Group, Inc.
|
|
100
|
%
|
(a)
|
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 12, 2020
|
By: /s/ John J. Marchioni
|
|
|
John J. Marchioni
|
|
|
President and Chief Executive Officer
|
(a)
|
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 12, 2020
|
By: /s/ Mark A. Wilcox
|
|
|
Mark A. Wilcox
|
|
|
Executive Vice President and Chief Financial Officer
|
Date:
|
February 12, 2020
|
By: /s/ John J. Marchioni
|
|
|
John J. Marchioni
|
|
|
President and Chief Executive Officer
|
Date:
|
February 12, 2020
|
By: /s/ Mark A. Wilcox
|
|
|
Mark A. Wilcox
|
|
|
Executive Vice President and Chief Financial Officer
|
Glossary of Terms
|
|
Exhibit 99.1
|
Accident Year: accident year reporting focuses on the cost of the losses that occurred in a given year regardless of when reported. These losses are calculated by adding all payments that have been made for those losses occurring in a given calendar year (regardless of the year in which they were paid) to any current reserve that remains for losses that occurred in that given calendar year.
Agent (Independent Retail Insurance Agent): a distribution partner who recommends and markets insurance to individuals and businesses; usually represents several insurance companies. Insurance companies pay agents for business production.
Allocated loss expenses: defense, litigation, and medical cost containment expense, whether internal or external.
Audit Premium: premiums based on data from an insured’s records, such as payroll data. Insured’s records are subject to periodic audit for purposes of verifying premium amounts.
Book Value per Share: an expression of the value of an entity per outstanding share, which is calculated by dividing stockholders’ equity by the number of common shares outstanding as of a specified date. This metric is used by both investors and us in evaluating the financial strength of our company.
Catastrophe Loss: severe loss, as defined by the Insurance Services Office's Property Claims Service (PCS) unit, either natural or man-made, usually involving, but not limited to, many risks from one occurrence such as fire, hurricane, tornado, earthquake, windstorm, explosion, hail, severe winter weather, and terrorism.
Combined Ratio: measure of underwriting profitability determined by dividing the sum of all GAAP expenses (losses, loss expenses, underwriting expenses, and dividends to policyholders) by GAAP net premiums earned for the period. A ratio over 100% is indicative of an underwriting loss, and a ratio below 100% is indicative of an underwriting profit.
Contract Binding Authority: business that is written in accordance with a well-defined underwriting strategy that clearly delineates risk eligibility, rates, and coverages; generally distributed through wholesale general agents.
Credit Risk: risk that a financially-obligated party will default on any type of debt by failing to make payment obligations. Examples include: (i) a bond issuer does not make a payment on a coupon or principal payment when due; or (ii) a reinsurer does not pay policy obligations.
Credit Spread Risk: represents the risk premium required by market participants for a given credit quality and debt issuer. Spread is the difference between the yield on a particular debt instrument and the yield of a similar maturity U.S. Treasury debt security. Changes in credit spreads may arise from changes in economic conditions and perceived risk of default or downgrade of individual debt issuers.
Customers: another term for policyholders; individuals or entities that purchase our insurance products or services.
Diluted Weighted Average Shares Outstanding: represents weighted-average common shares outstanding adjusted for the impact of any dilutive common stock equivalents.
Direct New Business: premiums for all new policies sold directly by the insurance subsidiaries during a specific accounting period, without consideration given to reinsurance activities.
Distribution Partners: insurance consultants that we partner with in selling our insurance products and services. Independent retail insurance agents are our distribution partners for standard market business and wholesale general agents are our distribution partners for E&S market business.
Earned Premiums: portion of a premium that is recognized as income based on the expired portion of the policy period.
Effective Duration: expressed in years, provides an approximate measure of the portfolio's price sensitivity to a change in interest rates, taking into consideration how the change in interest rates may impact the timing of expected cash flows.
Frequency: likelihood that a loss will occur. Expressed as low frequency (meaning the loss event is possible but has rarely happened in the past and is not likely to occur in the future), moderate frequency (meaning the loss event has happened once in a while and can be expected to occur sometime in the future), or high frequency (meaning the loss event happens regularly and can be expected to occur regularly in the future).
Generally Accepted Accounting Principles (GAAP): accounting practices used in the United States of America determined by the Financial Accounting Standards Board. Public companies use GAAP when preparing financial statements to be filed with the United States Securities and Exchange Commission.
Incurred But Not Reported (IBNR) Reserves: reserves for estimated losses that have been incurred by insureds but not yet reported plus provisions for future emergence on known claims and reopened claims.
|
|
Interest Rate Risk: exposure to interest rate risk relates primarily to market price and cash flow variability associated with changes in interest rates. A rise in interest rates may decrease the fair value of our existing fixed income security investments and declines in interest rates may result in an increase in the fair value of our existing fixed income security investments.
Invested Assets per Dollar of Stockholders' Equity Ratio: measure of investment leverage calculated by dividing invested assets by stockholders' equity.
Liquidity Spread: represents the risk premium that flows to a market participant willing to provide liquidity to another market participant that is demanding it. The spread is the difference between the price a seller is willing to accept to sell the asset and the price the buyer is willing to pay for the asset.
Loss Expenses: expenses incurred in the process of evaluating, defending, and paying claims.
Loss and Loss Expense Reserves: amount of money an insurer expects to pay for claim obligations and related expenses resulting from losses that have occurred and are covered by insurance policies it has sold.
Non-Catastrophe Property Losses: Losses and loss expenses incurred that are attributable to property coverages that we have written throughout our lines of business, but exclude any such amounts that are related to catastrophe losses.
Non-GAAP Operating Income: non-GAAP measure that is comparable to net income with the exclusion of after-tax net realized and unrealized gains and losses on investments, the deferred tax write-off that was recognized in 2017 in relation to the tax reform, and after-tax debt retirement costs. Non-GAAP operating income is used as an important financial measure by us, analysts, and investors, because the realization of investment gains and losses on sales in any given period is largely discretionary as to timing. Realized and unrealized investment gains and losses, other-than-temporary impairment charges included in earnings, the deferred tax write-off, and the debt retirement costs could distort the analysis of trends.
Non-GAAP Operating Income per Diluted Share: non-GAAP measure that is comparable to net income per diluted share with the exclusion of after-tax net realized and unrealized gains and losses on investments, the deferred tax write-off that was recognized in 2017 in relation to the tax reform, and after-tax debt retirement costs.
Non-GAAP Operating Return on Equity: measurement of profitability that reveals the amount of non-GAAP operating income generated by dividing non-GAAP operating income by average stockholders’ equity during the period.
Reinsurance: insurance company assuming all or part of a risk undertaken by another insurance company. Reinsurance spreads the risk among insurance companies to reduce the impact of losses on individual companies. Types of reinsurance include proportional, excess of loss, treaty, and facultative.
Premiums Written: premiums for all policies sold during a specific accounting period.
Prior Year Casualty Reserve Development: Loss reserve development is the increase or decrease in incurred loss and loss expenses as a result of the re-estimation of these amounts at successive valuation dates. Prior year casualty reserve development is casualty loss reserve development related to prior accident years.
Renewal Pure Price: estimated average premium change on renewal policies (excludes all significant exposure changes).
Reported claim count: amount of reported claims, including those closed without payment.
Retention: measures how well an insurance company retains business. Retention is expressed as a ratio of renewed over expired business, based on aggregate line of business coverages provided to our customers.
Return on Equity: measure of profitability that is calculated by dividing net income by average stockholders' equity during the period.
Risk: two distinct and frequently used meanings in insurance: (i) the chance that a claim loss will occur; or (ii) an insured or the property covered by a policy.
Severity: amount of damage that is, or may be, inflicted by a loss or catastrophe.
Statutory Accounting Principles (SAP): accounting practices prescribed and required by the National Association of Insurance Commissioners (“NAIC”) and state insurance departments that stress evaluation of a company’s solvency.
Statutory Premiums to Surplus Ratio: statutory measure of solvency risk calculated by dividing net statutory premiums written for the year by the ending statutory surplus.
Statutory Surplus: amount left after an insurance company’s liabilities are subtracted from its assets. Statutory surplus is not based on GAAP, but SAP prescribed or permitted by state and foreign insurance regulators.
Unallocated loss adjustment expenses: loss adjustment expenses other than allocated loss adjustment expenses.
|
Glossary of Terms
|
|
Exhibit 99.1
|
|
Underwriting: insurer’s process of reviewing applications submitted for insurance coverage, deciding whether to provide all or part of the coverage requested, and determining applicable premiums and terms and conditions of coverage.
Underwriting Result: underwriting income or loss; represents premiums earned less insurance losses and loss expenses, underwriting expenses, and dividends to policyholders. This measure of performance is used by management and analysts to evaluate profitability of underwriting operations and is not intended to replace GAAP net income.
Unearned Premiums: portion of a premium that a company has written but has yet to earn because a portion of the policy is unexpired.
Wholesale General Agent: distribution partner authorized to underwrite on behalf of a surplus lines insurer through binding authority agreements. Insurance companies pay wholesale general agents for business production.
Yield on Investments: Yield is the income earned on an investment, expressed as an annual percentage rate that is calculated by dividing income earned by the average invested asset balance. Yield can be calculated based on either pre-tax or after-tax income and can be calculated on the entire investment portfolio, or on a portion thereof, such as the fixed income securities portfolio.
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|
|
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