Selective Raises 2026 Investment Income Outlook

The Tip Desk · November 5, 2026 · 3 min read

After-tax net investment income reached $127.3 million in the third quarter, and the company lifted its full-year target to $490 million from $480 million.

Selective Insurance Group (SIGI) raised its 2026 after-tax net investment income outlook to $490 million from $480 million after a third quarter in which that line reached $127.3 million, up 16% from a year earlier, and contributed 15.2 points of annualized return on common equity.

The property-and-casualty holding company also restated its full-year GAAP combined ratio target of 96.5% to 97.5%, including 5.5 points of catastrophe losses, and said the estimate assumes no prior-year casualty reserve development.

The quarter’s combined ratio was 96.8%, 1.8 points better than 98.6% a year earlier, after 98.0% in the second quarter. Catastrophe losses were 5.4 points. There was no prior-year casualty reserve development at the segment or line level, versus 3.3 points of unfavorable development a year ago. The loss and loss expense ratio was 64.6%.

Net income available to common stockholders was $126.4 million, or $2.11 a share, matching the second-quarter per-share result. Non-GAAP operating income was $2.37 a share, and non-GAAP operating ROE was 16.9%. Chairman, President and Chief Executive Officer John J. Marchioni said the operating return reflected “excellent investment income and improved underwriting performance, led by a lower loss ratio.”

Net premiums written fell 7% from a year earlier to $1,122.8 million, a steeper decline than the 5% year-over-year drop in the second quarter. Average renewal pure price increases were 5.6%. The company said it continued to implement rate and non-rate actions to enhance underwriting profitability.

Standard Commercial Lines, 77% of total net premiums written, declined 8% year over year to $867.5 million. Renewal pure price in that segment was 5.7% and retention was 82%. The segment combined ratio was 97.9%. The company attributed the premium decline to targeted retention actions and lower new business, and said it was driving higher retention on best-performing business and lower retention on poorer-performing business.

Standard Personal Lines, 9% of total net premiums written, declined 8% year over year to $96.0 million. Renewal pure price was 8.1% and retention was 80%. The segment combined ratio was 103.2%. Catastrophe losses in that segment were 19.2 points.

Excess and Surplus Lines, 14% of total net premiums written, declined 2% year over year to $159.3 million. Renewal pure price was 1.5%. The segment combined ratio was 86.5%, which the company said reflected normal period-to-period variability associated with property losses.

The after-tax income yield averaged 4.4% for both the fixed-income securities portfolio and the overall portfolio. Invested assets were $3.54 per dollar of common stockholders’ equity as of September 30, 2026.

Book value per common share was $55.02, down 5% from the second quarter, primarily due to higher interest rates. Adjusted book value was $62.00. In the third quarter the company repurchased $55 million, or 587,229 shares, at an average price of $93.66. It returned 63% of after-tax net income through the regular dividend and those repurchases.

The board increased the quarterly common dividend 12% to $0.48 a share, the thirteenth consecutive annual increase, payable December 1, 2026. It also authorized a new $200 million share-repurchase program, adding to $53 million remaining on the existing authorization as of September 30.

For 2026 the company also expects an overall effective tax rate of 21.5% and weighted average shares of 59.9 million on a fully diluted basis, reflecting shares repurchased in the first nine months and assuming no additional repurchases under the authorization.