Selective Insurance Group, Inc. (NASDAQ:SIGI) Q4 2022 Earnings Conference Call February 3, 2023 10:00 AM ET

Company Participants

Rohan Pai - Sr. VP of Investor Relations & Treasurer

John Marchioni - CEO, Pres & Chairman

Mark Wilcox - Exec. VP & CFO

Conference Call Participants

Mark Dwelle - RBC

Meyer Shields - KBW

Grace Carter - Bank of America

Operator

Good day, everyone. Welcome to Selective Insurance Groups Fourth Quarter 2021 Earnings Call. At this time, for opening remarks and introductions, I would like to turn the call over to Senior Vice President, Investor Relations, and Treasurer, Rohan Pai. Sir, you may begin.

Rohan Pai

Thank you and good morning, everyone. We are broadcasting this call on our website, selective.com. The replay is available until March 5. We use three measures to discuss our results and business operations. First, we use GAAP financial measures reported in our annual, quarterly, and current reports filed with the SEC. Second, we use non-GAAP operating measure which we believe make it easier for investors to evaluate our insurance business. Non-GAAP operating income is net income available to common stockholders, excluding the after-tax impact of net realized gains or losses on investments and unrealized gains or losses on equity securities. Non-GAAP operating return on common equity is non-GAAP operating income divided by average common stockholders’ equity. Adjusted book value per common share defers from book value from common share by the exclusions of total after-tax unrealized gains and losses on investments included and accumulated other comprehensive income. GAAP reconciliations to any reference non-GAAP financial measures are in our supplemental investor package found in the investors page of our website.

Third, we make statements and projections about our forward performance. These are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They are not guarantees of future performance and are subject to risks and uncertainties. We discuss these risks and uncertainties details in our annual, quarterly and current reports filed with the SEC, and we undertake no obligation to update or revise any forward-looking statements.

Now, I’ll turn the call over to John Marchioni, our Chairman of the Board, President and Chief Executive Officer, who will be followed by Mark Wilcox, our Executive Vice President and Chief Financial Officer. John?

John Marchioni

Thank you, Rohan and good morning. We're pleased to report strong fourth quarter results capping off another excellent year for Selective, with an operating ROE of 15.6% in the quarter and 12.4% for the full year. 2022 marks our ninth consecutive year of double-digit non-GAAP operating returns on equity. Over that timeframe, our operating ROE average approximately 12%, exceeding our weighted average cost of capital by about 400 basis points. We deliver these results along alongside discipline, net premiums written growth that average 8% annually, nearly doubling the size of the company over that timeframe. Tangible book value per share plus change and accumulated dividends which we view as the best longer-term indicator of value creation in our industry increased 10% annually over the past nine years. And our annualized total shareholder return over that period was 15.9%. Few in our industry can match that track record of consistent growth and profitability. Although, we face several industry wide headwinds, as we look out to 2023, we expect to continue to maintain our performance level well into the future. I'll come back to this point shortly. But first I'll review a few highlights of our performance for the quarter and year.