Can Selective keep earning more while its insurance sales shrink?

Selective insures mainly US businesses and invests premiums until claims are paid. In the third quarter of 2026 its sales shrank while profit rose, so the question is whether underwriting stays profitable on a smaller base.

What the company does

A bakery, a local charity and a town hall share one worry: a fire, a storm or a lawsuit could cost them more than they can pay. Selective Insurance Group sells these customers protection against such losses in the United States. It also covers risks that are harder to place with ordinary insurers, along with some households. Customers pay a premium up front, and Selective pays covered claims later. In the meantime it invests the money, so it earns twice: on the policies and on the portfolio.

How it earns

Most premiums come from commercial policies. Underwriting means choosing which risks to insure and at what price. What it keeps depends first on claims, by far the largest cost, then on selling and servicing policies. The combined ratio adds up claims and those costs for every $100 of premiums; below 100, underwriting makes money. The money waiting to cover claims pays for the investments, which are the second engine. At September 30, 2026, Selective expected to pay about $8 billion on claims not yet settled. Its investments totalled $11.5 billion, mostly bonds. Cash came to $1 million, plus $392 million of short-term investments. The bonds are valued at market prices, so rising interest rates shrink reported book value (what belongs to the owners) even when nothing is sold. Book value that leaves out those swings is the better guide to progress.

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Producer and publisher: Francesco Monterosso · ReasyPort
Financial information reference: 2025-12-31
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Selective Insurance Group Inc (SIGI) - Stock report

Research information

Selective Insurance Group Inc