Selective Insurance Totals Cat And Investment Losses

Selective Insurance Group said today that catastrophe losses will amount to more than $8 million and that it suffered investment related losses totaling more than $20 million in the third quarter.

The Branchville, N.J.-based insurer said catastrophe losses, primarily from Hurricane Ike in the Midwest were about $8.3 million. The impact from catastrophe losses will translate into a loss of 16-cents a share and the company's combined ratio will deteriorate by 3.4 points for the quarter.

For the six months ending June 30, the company reported a combined ratio of 98.5.

On the investment side, the company reported two separate investment results that will impact earnings. The total earnings results and impact from all investments have yet to be reported, according to a company representative.

From the financial market impact on investment income, the company said lower alternative investment income and a decline in the fair value of its equity trading portfolio would total $5 million, after-tax, or 10-cents a share.

This impact results from lower alternative investment income of $2 million, or 4-cents a share, and losses in its equity trading portfolio of $3 million, or 6-cents a share, both after-tax.

The company also had to write-down $23 million on investments in the third quarter. The write-down, or other-than-temporary impairment, consisted of $17 million of fixed income investments related to both structured securities and the financial services sector and $6 billion of equity securities and alternative investments, both after-tax.

The company said the result of this action would result in approximately $15 million net realized loss on its investment portfolio.

Selective said the write-downs represent about 1 percent of the company's total investment portfolio on a pre-tax basis. The company warned that in the face of the "unprecedented market disruptions" there may be additional write-downs.

The company had a favorable reserve development for the third quarter of approximately $4 million, or 8-cents a share, primarily from the workers' compensation line of business.

"We believe our conservative investment strategy has served us well during this unprecedented period in economic history," said Gregory E. Murphy, chairman, president and chief executive officer of Selective in a statement.

Mr. Murphy said Selective, "While not immune from the extraordinary volatility of the markets, our focus on high credit quality has helped us maintain a strong portfolio with an overall average rating of 'AA-plus' as of Sept. 30.

"Importantly, we remain focused on delivering long-term value to our shareholders by leveraging our strong field model and enhanced business analytics to take full advantage of a turn in the commercial lines marketplace."

The company plans to report third quarter results on Oct.30.