- Selective highlighted ongoing industry-wide reserve increases, with nearly $10.5 billion added in 2024, nearly half for pre-pandemic years.
- Selective's reserve actions are driven by recent, immature accident years, especially in longer-tail lines, indicating a focus on recent paid emergence patterns.
- Management emphasized that their reserve development reflects the quality of initial loss picks and that they respond quickly to loss emergence, contrasting with industry trends.
- The company believes the pressure on casualty reserves is industry-wide, driven by social inflation, particularly affecting bodily injury claims.
- Selective's portfolio has a higher exposure to construction and longer-tail lines, which may influence their reserve development and social inflation sensitivity.
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- Management highlighted a 10% decline in Property gross premiums due to increased competition and rate pressure, especially on catastrophe-exposed business.
- Casualty and Surety segments experienced growth, but Property's decline reflects a strategic shift away from less profitable lines amid market softening.
- The company is emphasizing disciplined underwriting and selective growth, particularly in challenging segments like E&S Property and auto.
- Despite headwinds, RLI remains optimistic about long-term opportunities, focusing on profitable niches rather than market share.
- Management noted that rate decreases are primarily in specific lines like E&S Property and auto, with some segments still seeing rate increases to maintain profitability.
- The company is actively managing exposure to natural catastrophe risks, including hurricane season, with a cautious approach to new business.
- The lender-placed property insurance business is approximately $700 million in gross premiums and has grown notably during recent market disruptions.
- Growth in this segment is primarily driven by economic weakness, leading to more unpaid mortgages and insurance lapses.
- The company has gained market share due to competitors faltering during market stress, especially in the last 1-2 years.
- Shift from unpaid mortgage value to replacement cost valuation has enhanced profitability and supported premium growth.
- Pricing in the lender-placed segment has increased modestly by about 1% over six months, with loss ratios remaining low.
- The business remains highly profitable, with loss ratios in the low single digits, and benefits from market share gains during economic downturns.
- The second quarter saw a $12 million increase in health claims, representing a 60 basis point impact on the title margin.
- Management expects these elevated health claims to remain for the rest of 2025 before normalizing in 2026.
- Despite higher expenses, the core Title and Agency Title businesses performed well, maintaining healthy margins.
- The increase was driven by high-cost claimants, with some claims exceeding $100,000, affecting the overall claims reserve.
- Management indicated that these claims are a temporary blip and actions will be taken to mitigate future costs, such as plan design adjustments.
- The elevated claims impacted personnel costs indirectly through health-related expenses but did not affect operational margins.
- Book value per share increased to $156.63, representing a compounded annual growth rate of 9.7% since 2021.
- Consolidated net premiums increased 14% year-over-year, with traditional business premiums up 11% on a constant currency basis, driven by strong growth in the U.S., EMEA, and Asia.
- Excess capital increased to $3.8 billion at the end of Q2, or $2.3 billion pro forma for the Equitable transaction; deployable capital rose to $3.4 billion.
- Investment income was strong, with a nonspread portfolio yield of 4.98% (up 8 basis points from Q1) and total variable investment income of $105 million, driven by realizations in limited partnerships and real estate joint ventures.
- RGA reported operating EPS of $4.72 per share for Q2 2025, with an adjusted operating return on equity (ROE) of 14.3% for the trailing 12 months, in line with intermediate-term targets.
- The effective tax rate was 25.2% for the quarter, above the expected 23%-24%, due to valuation allowances on foreign tax credits, but full-year tax rate guidance remains unchanged.
- The quarter's results were below expectations due to large claims volatility in U.S. individual life and unfavorable claims in the healthcare excess business within U.S. Group.
- Adjusted net income was $11.5 million, a 58.8% decrease compared to prior year's adjusted net income of $27.9 million.
- Commission expense ratio decreased to 13.2% from 13.9% a year ago.
- Current accident year loss and LAE ratio on voluntary business was 69%, up from 66% in the first quarter of 2025.
- Gross written premium decreased by 2.2% compared to 2024 due to a decrease in new business written premium within the middle market.
- Net investment income was $27.1 million, slightly higher than the second quarter of 2024.
- Net premiums earned increased 5.6%, primarily due to strong increases in net written premium in 2024.
- Repurchased $23 million of common stock at an average price of $48.08 per share during the quarter.
- Total investment return was $57.5 million compared to $26.5 million for the prior year.
- Underwriting expense ratio decreased to 21.7% from 22.4% a year ago.
- Management highlighted macroeconomic uncertainties such as tariffs, labor market conditions, and deficits, which influence underwriting and investment strategies.
- The company is actively analyzing the potential impact of tariffs and inflation on future claims and investment returns.
- Leadership expressed confidence in managing through sensitivities related to currency fluctuations and inflationary pressures.
- The call emphasized the importance of macroeconomic factors in shaping risk selection, pricing, and portfolio duration decisions.
- California's 8.7% increase in workers' compensation loss costs, a significant outlier, raises concerns about a potential shift in the market cycle.
- NCCI's 6% increase in medical severity for 2024 further signals possible market hardening.
- AMERISAFE's ancillary exposure in California means it cannot ignore these developments, which could impact future pricing and risk management strategies.
- Accident year combined ratio as adjusted was 88.4%, calendar year combined ratio improved by 320 basis points to 89.3%, and core operating ROE was 11.7%.
- Adjusted pretax income increased 37% to $1.4 billion, with General Insurance gross premiums written up 4% to $10.1 billion.
- AIG delivered adjusted after-tax income per diluted share of $1.81, a 56% increase year-over-year, with adjusted after-tax income of $1 billion, up 35%.
- Capital returned to shareholders totaled $2 billion in the quarter, $4.5 billion year-to-date, with plans to repurchase $5-6 billion in 2025.
- Catastrophe charges were $170 million (2.9 loss ratio points), with favorable prior year development of $128 million.
- Financial strength ratings were upgraded by S&P Global to AA- and Moody's to A1, marking significant milestones.
- General Insurance expense ratio improved by 50 basis points to 31%, with ongoing investments in cybersecurity and Gen AI absorbed within the business.
- General Insurance underwriting income rose 46% year-over-year to $626 million, with net investment income increasing 9% to $955 million on an adjusted pretax basis.
- Net premiums written increased 1% to $6.9 billion, driven by growth in Global Commercial and North America Commercial segments, offset by declines in Retail Property and Lexington Property.
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