Selective Insurance Group Inc. said it has lowered its earnings estimate due to unexpectedly heavy losses during the second quarter of this year.
The Branchville, N.J.-based insurer said it would reduce its earnings per share estimate by nine cents. The company said large property loss activity accounted for six cents and catastrophe losses were two cents higher than expected.
The remaining one cent was due to a one-time after-tax charge of $900,000 for the reorganization of the company's personal lines operation that reduced staff by 31.
In a statement, Gregory E. Murphy, Selective's chairman, president and chief executive officer, said while new business was up 12 percent, or $92 million, compared with the same period last year, the "highly volatile and increasingly undisciplined" commercial lines environment held net premium written growth to 3 percent.
Due to this volatility, the company said it was withdrawing its net premium written growth guidance for 2007 and changing its earning's guidance from a range of $2.25-$2.40 to $2-$2.15 per share.
The company said the new guidance is based on Selective achieving a statutory combined ratio of 97.5; catastrophe losses of $16 million, or 28 cents a share; after-tax investment income growth of 10 percent; return on revenue of 10 percent; and diversified insurance services revenue growth of 12 percent.
Selective said its second-quarter earnings report is scheduled for release July 26.
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