Selective Posts 3Q Net Income Of $9 Million

Selective Insurance Group, Inc. reported third quarter net income of $9 million, or 17 cents per diluted share, a 76 percent decrease from the $37.1 million net income, or 66 cents per diluted share, reported a year ago.

Gregory E. Murphy, Selective chairman, president, and chief executive officer, said although catastrophe losses were higher than expected, and despite "the extraordinary volatility of the financial markets," he was pleased with overall operating performance and the company's strong investment portfolio.

Net premiums written fell in the quarter to $400.5 million compared to $409.5 million in 2007. Net premiums earned fell to $372.5 million from $378.3 million in last year's third quarter.

The company said it had catastrophe losses of $8.3 million, after tax, compared to $1.2 million a year ago.

The 2008 third quarter GAAP combined ratio was 101.5 compared to 98.6 last year. Statutory combined ratio was reported at 97.6 compared to 96.2 in 2007. Statutory combined ratio "reflects the immediate impact of cost containment initiatives," while with GAAP, "expense improvements will be amortized in future periods," according to Selective.

Net investment income fell to $36.1 million in the quarter, from $43.7 million in 2007. The company said the fall in investment income was due to "reduced returns on alternative investments compared to a very strong period one year ago," and "a decline in the fair market value of the company's externally managed trading portfolio."

Selective reported $14.7 million in realized losses on investments, compared to a gain of $1.8 million in last year's third quarter.

For the nine months ended Sept. 30, Selective's net income was $58.1 million, or $1.09 per diluted share, compared to $110.3 million, or $1.92 per diluted share for the same period last year.

Mr. Murphy said in a statement, "Our conservative investment philosophy and continued focus on long-term strategies, including expense management, enabled us to maintain profitability during an extremely challenging time for our industry and the economy."

He added, "We are closely monitoring the pricing environment and already beginning to selectively use our advanced business analytics to drive pricing for targeted accounts."