Third Quarter 2026
Filed Oct 22, 2026Selective Reports Third Quarter 2026 Results Net Income per Diluted Common Share of $2.11 and Non-GAAP Operating Income per Diluted Common Share of $2.37; Return on Common Equity ("ROE") of 15.1% and Non-GAAP Operating ROE of 16.9%
Underwriting profitability improved, net investment income increased 16%, and non-GAAP operating income per diluted common share increased 35%, while net premiums written declined 7% and the Excess and Surplus Lines combined ratio increased to 86.5% from 76.2%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net premiums written, Quarter Ended September 30other | $1.12B | – | (7)% |
| Net premiums earned, Quarter Ended September 30other | $1.18B | – | (2)% |
| Net investment income earned, Quarter Ended September 30GAAP | $160.5M | – | 16% |
| Net realized and unrealized gains (losses), pre-tax, Quarter Ended September 30GAAP | −$19.4M | – | (341)% |
| Total revenues, Quarter Ended September 30GAAP | $1.33B | – | (2)% |
| Net underwriting income (loss), after-tax, Quarter Ended September 30GAAP | $29.5M | – | 124% |
| Net investment income, after-tax, Quarter Ended September 30GAAP | $127.3M | – | 16% |
| Net income (loss) available to common stockholders, Quarter Ended September 30GAAP | $126.4M | – | 12% |
| Non-GAAP operating income (loss), Quarter Ended September 30non-GAAP | $141.7M | – | 33% |
| Combined ratio, Quarter Ended September 30GAAP | 96.8% | – | (1.8) pts |
| Loss and loss expense ratio, Quarter Ended September 30GAAP | 64.6 | – | (3.3) |
| Underwriting expense ratio, Quarter Ended September 30GAAP | 32.1 | – | 1.5 |
| Dividends to policyholders ratio, Quarter Ended September 30GAAP | 0.1 | – | — |
| Net catastrophe losses, Quarter Ended September 30GAAP | 5.4 pts | – | 3.3 |
| Non-catastrophe property losses and loss expenses, Quarter Ended September 30GAAP | 13.1 | – | (1.0) |
| (Favorable) unfavorable prior year reserve development on casualty lines, Quarter Ended September 30GAAP | — | – | (3.3) |
| Current year casualty loss costs, Quarter Ended September 30GAAP | 46.1 | – | (2.3) |
| Net income (loss) available to common stockholders per diluted common share, Quarter Ended September 30GAAP | $2.11 | – | 14% |
| Non-GAAP operating income (loss) per diluted common share, Quarter Ended September 30non-GAAP | $2.37 | – | 35% |
| Weighted average diluted common shares, Quarter Ended September 30GAAP | 59.9M | – | (2)% |
| Return on Common Equity, Quarter Ended September 30GAAP | 15.1% | – | – |
| Non-GAAP Operating Return on Common Equity, Quarter Ended September 30non-GAAP | 16.9% | – | – |
| Book value per common share, September 30, 2026GAAP | $55.02 | – | 1 |
| Adjusted book value per common share, September 30, 2026non-GAAP | $62.00 | – | 11 |
| Net premiums written, Year-to-Date September 30other | $3.57B | – | (4)% |
| Total revenues, Year-to-Date September 30GAAP | $4.07B | – | 3% |
| Net income (loss) available to common stockholders, Year-to-Date September 30GAAP | $348.8M | – | 15% |
| Non-GAAP operating income (loss), Year-to-Date September 30non-GAAP | $361.3M | – | 23% |
| Combined ratio, Year-to-Date September 30GAAP | 97.7% | – | (0.6) pts |
| Net income (loss) available to common stockholders per diluted common share, Year-to-Date September 30GAAP | $5.80 | – | 17% |
| Non-GAAP operating income (loss) per diluted common share, Year-to-Date September 30non-GAAP | $6.01 | – | 25% |
| Total assets, September 30, 2026GAAP | $15.71B | – | – |
| Total investments, September 30, 2026GAAP | $11.49B | – | – |
| Long-term debt, September 30, 2026GAAP | $901.5M | – | – |
| Stockholders’ equity, September 30, 2026GAAP | $3.45B | – | – |
| Common stockholders' equity, September 30, 2026GAAP | $3.25B | – | – |
| Debt to total capitalization, September 30, 2026GAAP | 20.7% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Standard Commercial Lines SegmentPremiums decreased driven by targeted retention actions and lower new business. Average renewal pure price increases were 5.7% and retention was 82%. The combined ratio was 97.9%, 3.2 points better than a year ago. | Net premiums written of $867.5 million | – | (8)% |
| Standard Personal Lines SegmentRenewal pure price was 8.1% and retention was 80%. The combined ratio decreased 6.9 points from a year ago, to 103.2%, with higher catastrophe losses offset by lower non-catastrophe property losses. | Net premiums written of $96.0 million | – | (8)% |
| Excess and Surplus Lines SegmentAverage renewal pure price increases were 1.5%. The combined ratio was 86.5%, compared to 76.2% in the prior-year period, reflecting normal period-to-period variability associated with property losses. | Net premiums written of $159.3 million | – | (2)% |
2026 full-year outlook
- Tax rateAn overall effective tax rate of 21.5%
- NoteA GAAP combined ratio of 96.5% to 97.5%, including net catastrophe losses of 5.5 points.
- NoteAfter-tax net investment income of $490 million, up from prior guidance of $480 million.
- NoteWeighted average shares of 59.9 million on a fully diluted basis, reflecting the shares repurchased in the first nine months of 2026 and assuming no additional repurchases under our share repurchase authorization.
- NoteThe combined ratio estimate assumes no prior year casualty reserve development.
Capital returns
- During the quarter, the Company returned 63% of after-tax net income through its regular dividend and $55 million of opportunistic share repurchases.
- In the third quarter of 2026, the Company repurchased $55 million, or 587,229 shares, of common stock at an average price of $93.66.
- Quarterly cash dividend on common stock increased 12% to $0.48 per common share, payable on December 1, 2026, to holders of record as of November 16, 2026.
- Board approved a new $200 million share repurchase authorization, adding to the $53 million remaining on the existing authorization as of September 30, 2026.
- Quarterly cash dividend of $287.50 per share on 4.60% Non-Cumulative Preferred Stock, Series B, equivalent to $0.28750 per depositary share, payable on December 15, 2026, to holders of record as of November 30, 2026.
What drove it
- The GAAP combined ratio improved to 96.8% from 98.6%, primarily due to a lower loss and loss expense ratio, partially offset by a higher underwriting expense ratio.
- There was no prior year casualty reserve development at the segment or line of business level, compared with 3.3 points of unfavorable prior year reserve development a year ago.
- Net premiums written decreased 7%, driven by an 8% decrease in Standard Commercial Lines.
- Average renewal pure price increased 5.6%.
- After-tax net investment income increased 16% to $127 million; the after-tax income yield was 4.4% for both the fixed income securities portfolio and the overall portfolio.
- Net investment income generated 15.2 points of annualized ROE in the quarter.
Concerns
- Net premiums written decreased 7% from the third quarter of 2025.
- The underwriting expense ratio increased to 32.1 from 30.6.
- Net catastrophe losses were 5.4 points, compared to 2.1 in the third quarter of 2025.
- Standard Personal Lines remained above a 100% combined ratio at 103.2%.
- The Excess and Surplus Lines combined ratio increased to 86.5% from 76.2%, with the loss and loss expense ratio increasing to 56.4 from 46.1.
- Book value per common share was $55.02, down 5% from last quarter, primarily due to higher interest rates.
What to watch
- Execution of targeted pricing and retention actions, which affected near-term premium growth.
- The 2026 GAAP combined-ratio expectation of 96.5% to 97.5%, including 5.5 points of net catastrophe losses.
- Progress toward after-tax net investment income of $490 million for 2026.
- Catastrophe losses, prior year casualty reserve development, and current year casualty loss costs.
- The balance between additional repurchases under the new $200 million authorization and the assumption of no additional repurchases in full-year weighted-average-share guidance.
Balance sheet and cash flow
- Total assets were $15,711.1 million as of September 30, 2026, compared to $15,155.7 million as of December 31, 2025.
- Total investments were $11,486.7 million as of September 30, 2026, compared to $11,302.4 million as of December 31, 2025.
- Long-term debt was $901.5 million as of September 30, 2026, compared to $901.9 million as of December 31, 2025.
- Common stockholders' equity was $3,245.7 million as of September 30, 2026, compared to $3,409.0 million as of December 31, 2025.
- Debt to total capitalization was 20.7% as of September 30, 2026, compared to 20.0% as of December 31, 2025.
- During the first nine months of 2026, book value per common share decreased by $1.72, or 3%, primarily due to a $5.80 increase in after-tax net unrealized losses on the fixed income securities portfolio and $1.29 in common stockholder dividends, partially offset by $5.80 of net income per diluted common share.
Analysis
Selective reported improved third-quarter underwriting and investment results despite a contraction in written premium. Total revenues were $1,326.3 million, down 2%, while net income available to common stockholders increased 12% to $126.4 million and non-GAAP operating income increased 33% to $141.7 million. GAAP diluted earnings per share were $2.11, up 14%, and non-GAAP operating income per diluted common share was $2.37, up 35%.
The consolidated GAAP combined ratio improved 1.8 points to 96.8%. The loss and loss expense ratio declined 3.3 points to 64.6, while the underwriting expense ratio increased 1.5 points to 32.1. The current quarter had no prior year casualty reserve development, compared with 3.3 points of unfavorable development a year earlier. Catastrophe losses rose to 5.4 points from 2.1. Standard Commercial Lines drove the premium decline, with net premiums written down 8%, but its combined ratio improved 3.2 points to 97.9%. Standard Personal Lines improved 6.9 points but remained at a 103.2% combined ratio. Excess and Surplus Lines maintained an 86.5% combined ratio, although that was 10.3 points higher than the prior-year period.
Investment income was a significant earnings contributor. After-tax net investment income increased 16% to $127.3 million, and net investment income generated 15.2 points of annualized ROE. The after-tax income yield averaged 4.4% for both the fixed income securities portfolio and the overall portfolio. The company reported GAAP ROE of 15.1% and non-GAAP operating ROE of 16.9%, compared with 14.0 and 13.2, respectively, in the prior-year quarter.
Capital actions included $55 million of repurchases, representing 587,229 shares at an average price of $93.66, and a 12% increase in the quarterly common dividend to $0.48 per share. The Board authorized a new $200 million repurchase program, in addition to $53 million remaining under the prior authorization. Equity declined from year-end, and book value per common share decreased by $1.72 during the first nine months of 2026, primarily due to higher after-tax net unrealized losses on the fixed income securities portfolio and dividends.
For 2026, management guided to a GAAP combined ratio of 96.5% to 97.5%, including 5.5 points of net catastrophe losses, and raised after-tax net investment income guidance to $490 million from $480 million. The company expects an overall effective tax rate of 21.5% and weighted average shares of 59.9 million on a fully diluted basis. The outlook assumes no prior year casualty reserve development and no additional repurchases under the share repurchase authorization.
Management, verbatim
Operating ROE was 16.9% in the quarter, with excellent investment income and improved underwriting performance, led by a lower loss ratio. These results reflect our disciplined underwriting approach and continued progress to improve profitability.
John J. Marchioni, Chairman, President and Chief Executive Officer
We remain focused on maintaining underwriting and pricing rigor in a competitive marketplace. This includes executing targeted pricing actions, improving the quality and mix of our portfolio, and remaining disciplined in our approach to new business growth.
John J. Marchioni, Chairman, President and Chief Executive Officer
During the quarter, we returned 63% of after-tax net income through our regular dividend and $55 million of opportunistic share repurchases.
John J. Marchioni, Chairman, President and Chief Executive Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Cash and cash equivalents were not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Revenue guidance was not reported.
- Gross-margin guidance was not reported.
- Operating-expense guidance was not reported.
- Prior-quarter values for most operating metrics were not reported.
- A dollar segment revenue measure was not reported; segment presentation provided net premiums written and net premiums earned.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.