Selective Insurance Group Inc.

02/09/2026 | Press release | Distributed by Public on 02/09/2026 16:17

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent") and its subsidiaries, except as expressly indicated or the context otherwise requires. Certain statements in this Annual Report on Form 10-K, including information incorporated by reference, are "forward-looking statements" defined in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a forward-looking statement safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements discuss our intentions, beliefs, projections, estimations, or forecasts of future events and financial performance. They involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, activity levels, or performance to materially differ from those in or implied by the forward-looking statements. In some cases, forward-looking statements include the words "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "attribute," "confident," "strong," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro forma," "seek," "likely," "continue," or comparable terms. Our forward-looking statements are only predictions; we cannot guarantee or assure that such expectations will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements for any reason except as required by law.
We discuss the factors that could cause our actual results to differ materially from our projections, forecasts, or estimates in forward-looking statements in Item 1A. "Risk Factors." of this Form 10-K. These risk factors may not be exhaustive. We operate in a constantly changing business environment, and new risk factors may emerge at any time. We cannot predict these new risk factors, their impact on our businesses, or the extent to which one or any combination of factors may cause actual results to differ materially from any forward-looking statements. Given these risks, uncertainties, and assumptions, the forward-looking events we discuss might not occur.
Introduction
We classify our business into four reportable segments:
•Standard Commercial Lines;
•Standard Personal Lines;
•Excess and Surplus Lines ("E&S Lines"); and
•Investments.
For more details about these segments, refer to Note 1. "Organization" and Note 12. "Segment Information" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
We write our Standard Commercial and Standard Personal Lines products and services through nine of our insurance subsidiaries, some of which participate in the federal government's National Flood Insurance Program's ("NFIP") Write Your Own Program ("WYO"). We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance
Company ("MUSIC"), a nationally-authorized non-admitted platform for customers who generally cannot obtain coverage in the standard marketplace. Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries."
The following is Management's Discussion and Analysis ("MD&A") of our financial condition and consolidated results of operations, including an evaluation of the amounts and certainty of cash flows from operations and outside sources, trends, and uncertainties that may have a material impact in future periods. The MD&A discusses and analyzes our 2025 results compared to 2024. Investors should read the MD&A in conjunction with Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. For discussion and analysis of our 2024 results compared to 2023, refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
In the MD&A, we will discuss and analyze the following:
•Critical Accounting Policies and Estimates;
•Financial Highlights of Results for Years Ended December 31, 2025, 2024, and 2023;
•Results of Operations and Related Information by Segment;
•Federal Income Taxes; and
•Liquidity and Capital Resources.
Critical Accounting Policies and Estimates
We have identified the policies and estimates critical to our business operations and understanding of our results of operations. We consider the policies and estimates most critical to the preparation of the Financial Statements to be (i) reserve for loss and loss expense, (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities, and (iii) reinsurance.
Reserve for Loss and Loss Expense
Significant time can elapse between the occurrence of an insured loss, the reporting of a claim to us, and the final claim settlement and payment. Insurers establish reserves as balance sheet liabilities to recognize liabilities for unpaid loss and loss expenses. The following tables provide case and incurred but not reported ("IBNR") reserves for loss and loss expenses and reinsurance recoverable on unpaid loss and loss expense as of December 31, 2025 and 2024:
December 31, 2025 Loss and Loss Expense Reserves
($ in thousands) Case
Reserves 		IBNR
Reserves 		Total Reinsurance Recoverable on Unpaid Loss and Loss Expense Net Reserves
General liability $ 618,665 2,783,596 3,402,261 469,609 2,932,652
Workers compensation 340,853 667,339 1,008,192 266,962 741,230
Commercial automobile 418,910 948,077 1,366,987 17,691 1,349,296
Businessowners' policies 43,463 87,261 130,724 1,736 128,988
Commercial property 103,545 61,365 164,910 24,448 140,462
Other 6,554 10,169 16,723 2,255 14,468
Total Standard Commercial Lines 1,531,990 4,557,807 6,089,797 782,701 5,307,096
Personal automobile 77,557 131,980 209,537 32,766 176,771
Homeowners 20,387 39,795 60,182 490 59,692
Other1
12,596 41,546 54,142 38,719 15,423
Total Standard Personal Lines 110,540 213,321 323,861 71,975 251,886
E&S casualty lines2
132,171 645,966 778,137 23,015 755,122
E&S property lines3
14,944 18,659 33,603 152 33,451
Total E&S Lines 147,115 664,625 811,740 23,167 788,573
Total $ 1,789,645 5,435,753 7,225,398 877,843 6,347,555
1Includes our flood loss exposure related to our participation in the NFIP's WYO program, to which we cede 100% of our WYO flood losses.
2Includes general liability (97% of net reserves) and commercial auto liability coverages 3% of net reserves).
3Includes commercial property (94% of net reserves) and commercial auto property coverages 6% of net reserves).
December 31, 2024 Loss and Loss Expense Reserves
($ in thousands) Case
Reserves 		IBNR
Reserves 		Total Reinsurance Recoverable on Unpaid Loss and Loss Expense Net Reserves
General liability $ 515,057 2,391,162 2,906,219 396,702 2,509,517
Workers compensation 347,555 688,323 1,035,878 238,995 796,883
Commercial automobile 343,969 764,709 1,108,678 14,774 1,093,904
Businessowners' policies 46,076 78,048 124,124 2,604 121,520
Commercial property 119,858 71,223 191,081 36,313 154,768
Other 6,497 15,729 22,226 2,612 19,614
Total Standard Commercial Lines 1,379,012 4,009,194 5,388,206 692,000 4,696,206
Personal automobile 75,461 118,355 193,816 35,386 158,430
Homeowners 19,593 37,851 57,444 1,962 55,482
Other1
240,704 49,484 290,188 273,013 17,175
Total Standard Personal Lines 335,758 205,690 541,448 310,361 231,087
E&S casualty lines2
106,178 530,099 636,277 18,903 617,374
E&S property lines3
12,030 11,840 23,870 981 22,889
E&S Lines 118,208 541,939 660,147 19,884 640,263
Total $ 1,832,978 4,756,823 6,589,801 1,022,245 5,567,556
1Includes our flood loss exposure relates to our participation in the NFIP's WYO program, to which we cede 100% of our flood losses.
2Includes general liability (97% of net reserves) and commercial auto liability coverages (3% of net reserves).
3Includes commercial property (93% of net reserves) and commercial auto property coverages (7% of net reserves).
The Insurance Subsidiaries' net loss and loss expense reserves duration was approximately 3.0 years at both December 31, 2025 and December 31, 2024.
How the reserve is established
Reserve for loss and loss expense includes case reserves on reported claims and IBNR reserves. Case reserves are estimated for each individual claim based on facts and circumstances known at the time. Case reserves may be adjusted up or down as the claim's specific facts and circumstances change. IBNR reserves are established at more aggregated levels and include provisions for (i) claims not yet reported, (ii) future development on reported claims, (iii) closed claims that could reopen in the future, and (iv) anticipated salvage and subrogation recoveries.
We conduct quarterly internal reserve reviews using our own loss experience, considering various internal and external factors. Changes in claim dynamics can inherently alter paid and reported development patterns. Although our reserve analysis selections aim to account for these impacts, estimated reserves involve greater risk of variability.
In addition to our internal reserve reviews, an external consulting actuary performs an independent semiannual reserve review. We do not rely on the external consulting actuary's report to determine our recorded reserves, but we review and discuss our observations on trends, key assumptions, and actuarial methodologies with our consulting actuary. Our independent consulting actuary issues the annual statutory Statements of Actuarial Opinion for our Insurance Subsidiaries.
For additional information on our accounting policy for reserve for loss and loss expense, refer to Note. 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Range of Reasonable Reserve Estimates
We have estimated a range of reasonable reserve estimates for net loss and loss expense of $5,694 million to $6,960 million at December 31, 2025. This range reflects low and high reasonable reserve estimates determined after using judgment to adjust the methods, factors, and assumptions selected within the internal reserve review. This approach produces a range of reasonable reserve estimates but does not represent a distribution of all possible outcomes. Consequently, final outcomes may be greater or less than the estimates.
The range of reasonable reserve estimates increased as of December 31, 2025, relative to December 31, 2024. This increase was primarily related to reserve growth commensurate with our net premiums earned ("NPE") growth.
Changes in Reserve Estimates (Loss Development)
Our quarterly reserving process may lead to changes in the recorded reserves for prior accident years, referred to as favorable or unfavorable prior year loss and loss expense development. In 2025, we experienced net unfavorable prior year loss development of $77.5 million, compared to net unfavorable development of $285.3 million in 2024 and net unfavorable development of $10.0 million in 2023. The following table summarizes prior year development by line of business:
(Favorable)/Unfavorable Prior Year Loss and Loss Expense Development
($ in millions) 2025 2024 2023
General liability $ 40.0 316.0 55.0
Commercial automobile 120.4 19.5 8.0
Workers compensation (90.0) (45.0) (74.5)
Businessowners' policies (2.1) (1.7) 7.6
Commercial property (11.8) (23.4) 0.7
Bonds (7.5) (5.0) -
Homeowners 5.0 (1.4) 4.6
Personal automobile 13.0 11.1 15.3
E&S casualty lines 10.0 20.0 (5.0)
E&S property lines 0.5 (4.9) (1.6)
Other - 0.1 (0.1)
Total $ 77.5 285.3 10.0
A detailed discussion of recent reserve development by line of business follows.
Standard Market General Liability Line of Business
At December 31, 2025, our general liability line of business had recorded reserves, net of reinsurance, of $2.9 billion, representing 46% of our total net reserves. In 2025, this line experienced unfavorable reserve development of $40.0 million, primarily due to the impact of social inflation that increased loss severities in accident years 2022 and 2023. We attribute the increased severities to elevated social inflation, which we view as an industry dynamic characterized by higher claimant propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Similarly, this line experienced unfavorable development in 2024 of $316.0 million, attributable to the impact of social inflation driving increased loss severities in accident years 2020 through 2023.
The general liability line of business presents a diverse set of exposures. Various factors influence losses and loss trends, including legislative enactments, judicial decisions, and economic and social inflation. Economic inflation directly impacts our claims severities by increasing the costs of raw materials, medical procedures, and labor. Social inflation may impact both claim frequency and severity by affecting (i) claimant propensity to file a claim, (ii) the percentage of claimants who engage lawyers, and (iii) broader liability interpretations and the nature and amounts of judicial verdicts and associated awards, all influencing future settlement values. We monitor claim litigation rates regularly. We have observed the percentage of general liability claims with plaintiff attorney involvement increasing in recent periods. Other social inflationary factors, including the increased prevalence of third-party litigation funding, claimants' willingness to undergo surgery, evolving plaintiff attorney strategies and tactics, and broadening liability definitions and interpretations, are also impacting claims severities.
We have exposure to abuse or molestation claims, mainly through policies that we (i) underwrite through our Community and Public Services ("CAPS") strategic business unit and (ii) issue to schools, religious institutions, child-care facilities, and other social services. These CAPS business unit customers represented approximately 10% of our total Standard Commercial Lines net premiums written ("NPW") in 2025 and 2024. We continue to actively manage policy limits and monitor each jurisdiction's statute of limitations to ensure our rate level reflects increased exposure wherever regulations allow. We also engage our risk management specialists, many of whom are Certified Praesidium Guardians, to understand our insureds' screening, training, and monitoring policies and collaborate with them to improve their risk prevention in these areas. These underwriting and pricing actions have positioned the portfolio for future profitability but limited our CAPS growth in recent years.
Certain states have enacted state laws that extend the statute of limitations or permit windows for abuse or molestation claims and lawsuits that statutes of limitations previously barred. Consequently, we have received claims decades after the alleged acts involving complex claims coverage determinations, potential litigation, higher defense costs, and the need to collect from reinsurers under older reinsurance agreements. Our claims and actuarial departments actively monitor these claims to identify changes in frequency or severity and any emerging or shifting trends.
Our active monitoring of claim patterns and emerging or shifting trends helps us better understand this rapidly evolving exposure. However, the ultimate impact of social, political, and legal trends remains highly uncertain and could substantially impact the ultimate settlement values for these claims.
In addition, we have continued to implement underwriting changes in this line of business that we believe will lead to improved profitability. These changes may impact portfolio composition and may affect paid and reported development patterns. While our reserve analyses incorporate methods that adjust for these changes, our estimated reserves have a greater risk of fluctuation.
Standard Market Commercial Automobile Line of Business
At December 31, 2025, our commercial automobile line of business had recorded reserves, net of reinsurance, of $1.3 billion, representing 21% of our total net reserves. In 2025, this line experienced unfavorable prior year reserve development of $120.4 million, driven by increased severities for accident years 2022 through 2024, with 2024 being the primary driver. In 2024, this line experienced unfavorable prior year reserve development of $19.5 million, driven by increased loss expenses in accident year 2023.
The commercial automobile line has experienced unfavorable trends in recent years that have negatively affected the industry's results and ours. These unfavorable trends are a result of risky driving behaviors, such as speeding, distracted driving, and driving under the influence, which have reduced in frequency but resulted in significant severity increases. Risky driving behaviors and the impacts of social inflation continue to pressure this line's claim severities. As of year-end 2025, frequencies remained somewhat below pre-pandemic levels due to changes in commuting patterns.
Over the last several years, we have implemented underwriting changes in this line of business that we believe will lead to improved profitability. These changes may impact portfolio composition and may affect paid and reported development patterns. While our reserve analyses incorporate methods that adjust for these changes, our estimated reserves have a greater risk of fluctuation.
Standard Market Workers Compensation Line of Business
At December 31, 2025, our workers compensation line of business had recorded reserves, net of reinsurance, of $741 million, representing 12% of our total net reserves. During 2025, this line experienced favorable reserve development of $90.0 million, primarily due to improved loss severities in accident years 2022 and prior. Similarly, this line experienced favorable reserve development during 2024 of $45.0 million, primarily due to improved loss severities in accident years 2022 and prior. During both 2025 and 2024, the lower-than-expected loss emergence was partly due to (i) lower than initially anticipated medical inflation and (ii) our various implemented claims initiatives. Because injured workers can receive related medical treatment for an extended time, decreases in medical inflation can cause favorable loss development over an extended number of accident years.
A variety of issues can impact the workers compensation line of business, including:
•Unexpected changes in medical cost inflation - The industry has experienced an extended period of lower medical claim cost inflation. Changes to our historical workers compensation medical costs and potential changes in future medical inflation could increase reserve variability;
•Changes in statutory workers compensation benefits- Statutory benefit changes may affect all outstanding claims, including past and not-yet-settled claims. Depending on the social and political climate, these changes may either increase or decrease associated claim costs; and
•Changes in utilization of the workers compensation system - These changes may be driven by economic, legislative, or other changes, like increased use of prescriptions for pharmaceuticals, more complex medical procedures, changes in permanently injured workers' life expectancy, and health insurance availability. Industry analysis has indicated recent increases in workers compensation system utilization.
Standard Market Personal Automobile Line of Business
At December 31, 2025, our personal automobile line of business had recorded reserves, net of reinsurance, of $177 million, representing 3% of our total net reserves. This line experienced unfavorable prior year reserve development of $13.0 million in 2025, primarily due to increased loss severities in accident year 2024 concentrated in New Jersey. This line experienced unfavorable prior year reserve development of $11.1 million in 2024, primarily due to increased loss severities in accident years 2022 through 2023.
We view increased vehicle repair cost trends as the likely causes of rising severities, exacerbated by riskier driving behaviors, including distracted driving. We continuously recalibrate our predictive models and refining our underwriting and pricing approaches. This includes prioritizing additional rate filings by state and further refining our pricing factors.
The rate increases we filed began to take effect early in 2023, and their volume and magnitude increased throughout 2024, remaining strong in 2025, though slightly lower than 2024. We expect these rates to continue outpacing loss trends in 2026, but at lower levels than those seen in 2024 and 2025. While we believe these underwriting and pricing changes will ultimately lead to improved profitability and greater stability, they may also alter our exposure profile. This could impact the patterns of paid and reported claims development, leading to increased reserve uncertainty in the near term.
E&S Casualty Lines of Business
At December 31, 2025, our E&S casualty lines of business had recorded reserves, net of reinsurance, of $755 million, representing 12% of our total net reserves. In 2025, this line experienced unfavorable prior year reserve development of $10.0 million, primarily due to increased loss severities in accident years 2020 through 2023. In 2024, this line experienced unfavorable prior-year reserve development of $20.0 million, primarily due to increased loss severities in accident years 2023 and prior.
Some of the risk factors for the general liability line also affect the E&S casualty lines. These include (i) economic inflation, such as materials and labor costs and (ii) social inflationary trends, such as increased attorney involvement, broader liability findings, and more generous settlement awards. In response to these social inflationary trends, we have been embedding higher severity assumptions in our initial loss ratio estimates.
The E&S marketplace naturally leads to shifts in portfolio mix over time. These changes in business mix may affect paid and reported development patterns. Our reserve analyses incorporate methods that adjust for these changes, but our estimated reserves have a greater risk of fluctuation.
Other impacts that create additional loss and loss expense reserve uncertainty
Claims Initiative Impacts
Our Claims Department continually identifies areas for improvement and efficiency to increase our policyholder value proposition. These improvements may lead to changes in claims practice that affect average case reserve levels and claims settlement rates, which directly impact the data we use to project ultimate loss and loss expense. While these changes may increase uncertainty in our estimates in the short term, we expect refined claims process management to create longer-term benefits.
Our internal reserve analyses incorporate actuarial projection methods that make adjustments for changes in case reserve adequacy and claims settlement rates. These methods adjust our historical loss experience to the current case adequacy or settlement rate level, providing a more consistent basis for projecting future development patterns. Because these projection methods have their own assumptions and judgments, no single method can be considered definitive.
Unanticipated Changes in Economic Inflation
United States ("U.S.") fiscal and monetary policy and global economic conditions bring additional inflationary trend uncertainty. Changes in inflation affect the ultimate settlement costs for many of our lines of business, with the most significant reserve impact on the longer-tailed lines, such as general liability and workers compensation. Uncertainty about future inflation or deflation creates the potential for additional reserve variability in these lines of business.
Sensitivity analysis: Potential impact on reserve estimates due to changes in key assumptions
Our process to establish reserves includes a variety of key assumptions, such as:
•The selection of loss and loss expense development factors;
•The weight applied to each individual actuarial projection method;
•Projected future loss trends; and
•Expected claim frequencies, severities, and ultimate loss and loss expense ratios for the current accident year.
The importance of any single assumption depends on several considerations, such as line of business and accident year. If the actual experience emerges differently than the assumptions underlying the reserve process, possible changes in our reserve estimates could be material to the results of operations in future periods. We conduct sensitivity tests that highlight potential impacts to loss and loss expense reserves for the major casualty lines of business under different scenarios. These tests consider each assumption and line of business individually, without considering the correlation between lines of business and accident years. The results (i) do not constitute an actuarial range, (ii) show possible impacts from variations in certain key assumptions,
and (iii) offer no assurance that future loss and loss expense emergence will be consistent with our current or alternative assumptions.
Changes in internal and external trends and operational changes may manifest as changes in loss and loss expense development patterns. These patterns are a key assumption in the reserving process, as are the current accident year expected loss and loss expense ratios. These ratios are developed through a rigorous process of projecting recent accident years' experience to an ultimate settlement basis. They are then adjusted to the current accident year's pricing and loss cost levels. The impact of changes to underwriting portfolio and claims handling practices is estimated and reflected where appropriate. Nonetheless, the ultimate loss and loss expense ratios may differ from current estimates.
The two tables below illustrate the sensitivities of loss and loss expense reserves to these key assumptions for the major casualty lines. The first table displays estimated impacts from changes in expected reported loss and loss expense development patterns for our major casualty lines of business. It shows line of business reserve impacts if the actual calendar year incurred amounts are greater or less than current expectations by the selected percentages. While judgmental, the selected percentages by line are based on the reserve range analysis and the actual historical reserve development for the line of business. The second table displays the estimated impacts of changes to the expected loss and loss expense ratios for the current accident year. It shows reserve impacts by line of business if the expected loss and loss expense ratios for the current accident year are greater or less than current expectations by the selected percentages.
Reserve Impacts of Changes to Expected Loss and Loss Expense Reporting Patterns
($ in millions) Percentage Decrease/Increase (Decrease) to Future Calendar Year Reported Increase to Future Calendar Year Reported
General liability 15 % $ (500) $ 500
Workers compensation 20 (100) 100
Commercial automobile liability 10 (135) 135
Personal automobile liability 15 (20) 20
E&S casualty lines 10 (85) 85
Reserve Impacts of Changes to Current Accident Year Expected Ultimate Loss and Loss Expense Ratios
($ in millions) Percentage Decrease/Increase
(Decrease) to Current Accident Year Expected Loss and Loss Expense
Increase to Current Accident Year Expected Loss and Loss Expense
General liability 10 pts $ (125) $ 125
Workers compensation 10 (30) 30
Commercial automobile liability 15 (120) 120
Personal automobile liability 15 (20) 20
E&S casualty lines 15 (55) 55
There is some overlap between the impacts shown in the tables. For example, increases in the calendar year development would ultimately impact our view of the current accident year's loss and loss expense ratios. However, these tables provide perspective on the sensitivity of each key assumption. While the changes represent outcomes based on reasonably likely changes to our underlying reserving assumptions, they do not represent a range of possible outcomes and our reserves could increase or decrease significantly differently.
Asbestos and Environmental Reserves
Our general liability, businessowners' policies, and homeowners reserves include exposure to asbestos and environmental claims. The emergence of these claims occurs over an extended period and can be unpredictable. The total recorded net loss and loss expense reserves for these claims were $27.6 million as of December 31, 2025, and $27.4 million as of December 31, 2024, with asbestos claims constituting approximately 41% of these reserves in 2025 and 44% in 2024.
Environmental claims have arisen from Standard Commercial Lines policies issued to municipal governments and small non-manufacturing commercial customers for landfill exposures, and Standard Personal Lines homeowners policies related to leaking underground storage tanks. Asbestos claims have generally arisen from Standard Commercial Lines policies issued to (i) various distributors of asbestos-containing products, such as electrical and plumbing materials and (ii) contractors exposed to or handling asbestos-containing products, such as heating, ventilation, and air conditioning contractors. These claims are handled by a centralized and specialized asbestos and environmental claim unit that establishes case reserves based on each claim's then-known facts and circumstances, which IBNR reserves supplement.
Estimating IBNR reserves for asbestos and environmental claims is difficult because these claims have delayed and inconsistent reporting patterns. Significant uncertainties are associated with estimating critical reserve assumptions, such as average clean-
up costs, third-party costs, potentially responsible party shares, allocation of damages, litigation and coverage costs, and potential state and federal legislative changes.
Other Latent Exposures
We have other latent and continuous trigger exposures in our ongoing portfolio. Examples include claims for construction defect and abuse or molestation, including in states that have increased and expanded the statute of limitations. We manage our exposure to these liabilities through our underwriting and claims practices, which include dedicated claim units, like we do for asbestos and environmental claims. The impact of social, political, and legal trends on these claims remains highly uncertain, so the development and adequacy of our related loss and loss expense reserves remain highly uncertain. Some of these exposures remain in our ongoing portfolio and are reserved in aggregate, with other exposures within the line of business reserves. We remove other unusual and highly uncertain exposures, like toxic product claims involving diacetyl, lead paint, and silica, from our traditional reserve analysis and undertake a separate review for them.
Investment Valuation and the Allowance for Credit Losses on AFS Fixed Income Securities
Investment Valuation
Accounting guidance defines the fair value of our investment portfolio as the exit price or amount that would be (i) received to sell an asset or (ii) paid to transfer a liability in an orderly transaction between market participants. When determining an exit price, we must rely on observable market data, if available. Most securities in our equity portfolio have readily determinable fair values and are recorded at fair value with changes in unrealized gains or losses recognized through income. Our AFS fixed income securities portfolio is recorded at fair value, and the related unrealized gains or losses are reflected in stockholders' equity, net of tax. For our AFS fixed income securities portfolios, fair value is a key factor in the measurement of (i) losses on securities for which we have the intent to sell and (ii) changes in the allowance for credit losses.
Approximately 88% of our investments measured at fair value are classified as either Level 1 or Level 2 in the fair value hierarchy and are priced using observable inputs for identical or similar assets. About 12% are classified as either (i) Level 3 and are based on unobservable market inputs because the related securities are not traded on a public market or (ii) not leveled because the related securities are measured at fair value using net asset value per share (or its practical expedient). For additional information, refer to the following sections within Item 8. "Financial Statements and Supplementary Data." of this Form 10-K: (i) item (d) of Note 2. "Summary of Significant Accounting Policies" for descriptions of the levels within the fair value hierarchy and the valuation techniques used for our Level 3 securities and (ii) Note 7. "Fair Value Measurements" for quantitative information on the unobservable inputs in our securities measured using Level 3 inputs.
Allowance for Credit Losses on AFS Fixed Income Securities
When we do not intend to sell fixed income securities in an unrealized loss position, we record an allowance for credit losses for the portion of the unrealized loss related to an expected credit loss. We estimate expected credit losses on these securities by performing a risk-adjusted discounted cash flow ("DCF"). The allowance for credit losses is the excess of amortized cost over the greater of (i) our estimate of the present value of expected future cash flows or (ii) fair value. The allowance for credit losses cannot exceed the unrealized loss, and therefore it may fluctuate with changes in the security's fair value. We also consider the need to record losses on securities in an unrealized loss position for which we have the intent to sell. If we determine that we have the intent or likely requirement to sell the security, we write down its amortized cost to its fair value.
We analyze unrealized losses for credit loss in accordance with our existing accounting policy, which includes performing DCF analyses at the lot level and analyzing the resulting DCFs using various economic scenarios. In performing these DCF analyses, we calculate the present value of future cash flows using various models specific to the major security types in our portfolio. These models use security-specific information and forecasted macroeconomic data to determine possible expected credit loss scenarios based on projected economic changes. The forecasted economic data incorporated into the models is based on the Federal Reserve Board's annual supervisory stress test review of certain large banks and financial institutions.
We also can incorporate internally-developed forecast information into the models as we deem appropriate. In developing our best estimate of the allowance for credit losses, we consider our outlook for the probability of the various scenarios.
Based on these analyses, we recorded an allowance for credit losses on our AFS fixed income securities portfolio of $31.3 million at December 31, 2025, and $31.9 million at December 31, 2024. If the security-specific and macroeconomic assumptions in our DCF analyses or our outlook on the occurrence probability of our DCF model scenarios were to change, our allowance for credit losses and the resulting credit loss expense or benefit would negatively or positively impact our results of operations. Factors considered in determining the allowance for credit losses require significant judgment, including our evaluation of the security's projected cash flow stream.
For additional information regarding our allowance for credit losses on AFS fixed income securities, see item (c) of Note 2. "Summary of Significant Accounting Policies" and item (i) of Note 5. "Investments" within Item 8. "Financial Statements and Supplementary Data." of this Form 10-K, respectively.
Reinsurance
Reinsurance recoverables on paid and unpaid loss and loss expense represent our estimates of the amounts we will recover from reinsurers. Each reinsurance contract is analyzed to ensure sufficient risk is transferred to record the transactions appropriately as reinsurance in the Financial Statements. Amounts recovered from reinsurers are recognized as assets contemporaneously and in a manner consistent with the paid and unpaid losses associated with the underlying policies. An allowance for credit losses on our reinsurance recoverable balance is recorded based on an evaluation of balances due from reinsurers and other available information, including collateral we hold under the terms and conditions of the underlying agreements. Reinsurers often purchase and rely on their retrocessional reinsurance programs to manage their capital positions and improve their financial strength ratings. Details about retrocessional reinsurance programs are not always transparent, making it difficult to assess our reinsurers' exposure to counterparty credit risk. Other factors impact our reinsurer's credit quality, such as their reserve adequacy, investment portfolio, regulatory capital position, catastrophe aggregations, and risk management practices. In addition, contractual language interpretations and willingness to pay valid claims can impact our allowance for estimated uncollectible reinsurance. Our allowance for estimated uncollectible reinsurance was $2.0 million at both December 31, 2025 and December 31, 2024. We continually monitor developments that may impact recoverability from our reinsurers, for which we have contractual remedies, if necessary. For further information regarding reinsurance, see the "Reinsurance" section below in "Results of Operations and Related Information by Segment" and Note 9. "Reinsurance" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Financial Highlights of Results for Years Ended December 31, 2025, 2024, and 20231
2025 2024
($ in thousands, except per share amounts) 2025 2024 vs. 2024 2023 vs. 2023
Financial Data:
Revenues $ 5,336,928 4,861,664 10 % $ 4,232,106 15 %
After-tax net investment income 421,164 362,616 16 309,535 17
After-tax underwriting income (loss)
107,352 (104,745) (202) 104,911 (200)
Net income (loss) before income tax
589,597 258,034 128 458,412 (44)
Net income (loss)
466,411 207,012 125 365,238 (43)
Net income (loss) available to common stockholders
457,211 197,812 131 356,038 (44)
Key Metrics:
Combined ratio 97.2 % 103.0 (5.8) pts 96.5 % 6.5 pts
Invested assets per dollar of common stockholders' equity $ 3.32 3.31 - % $ 3.16 5 %
Annualized after-tax yield on investment portfolio
4.0 % 4.0 - pts 3.7 % 0.3 pts
Return on common equity ("ROE")
14.4 7.0 7.4 14.3 (7.3)
Net premiums written to statutory surplus ratio $ 1.36 1.60 (15) % $ 1.51 6 %
Per Common Share Amounts:
Diluted net income (loss) per share
$ 7.49 3.23 132 % $ 5.84 (45) %
Book value per share 56.74 47.99 18 45.42 6
Dividends declared per share to common stockholders 1.57 1.43 10 1.25 14
Non-GAAP Information2:
Non-GAAP operating income (loss)
$ 450,631 200,141 125 % $ 358,844 (44) %
Non-GAAP operating income (loss) per diluted common share
7.38 3.27 126 5.89 (44)
Non-GAAP operating ROE
14.2 % 7.1 7.1 pts 14.4 % (7.3) pts
Adjusted book value per common share
$ 57.91 52.10 11 % $ 50.03 4 %
1Refer to the Glossary of Terms attached to this Form 10-K as Exhibit 99.1 for definitions of terms used in this financial review.
2Non-GAAP operating income (loss), non-GAAP operating income (loss) per diluted common share, and non-GAAP operating ROE are comparable to net income (loss) available to common stockholders, net income (loss) available to common stockholders per diluted common share, and ROE, respectively, but exclude after tax net realized and unrealized gains and losses on investments included in net income (loss). Adjusted book value per common share is comparable to book value per common share, but excludes total after-tax unrealized gains and losses on investments included in accumulated other comprehensive income (loss). These non-GAAP measures are important financial measures used by us, analysts, and investors because the timing of realized investment gains and losses on securities in any given period is largely discretionary. In addition, net realized and unrealized investment gains and losses on investments could distort the analysis of trends.
Reconciliations of our GAAP to non-GAAP measures are provided in the tables below:
Reconciliation of net income (loss) available to common stockholders to non-GAAP operating income (loss)
($ in thousands) 2025 2024 2023
Net income (loss) available to common stockholders
$ 457,211 197,812 356,038
Net realized and unrealized investment (gains) losses included in net income, before tax
(8,330) 2,949 3,552
Tax on reconciling items 1,750 (620) (746)
Non-GAAP operating income (loss)
$ 450,631 200,141 358,844
Reconciliation of net income (loss) available to common stockholders per diluted common share to non-GAAP operating income (loss) per diluted common share
2025 2024 2023
Net income (loss) available to common stockholders per diluted common share
$ 7.49 3.23 5.84
Net realized and unrealized investment (gains) losses included in net income (loss), before tax
(0.14) 0.05 0.06
Tax on reconciling items 0.03 (0.01) (0.01)
Non-GAAP operating income (loss) per diluted common share
$ 7.38 3.27 5.89
Reconciliation of ROE to non-GAAP operating ROE 2025 2024 2023
ROE 14.4 % 7.0 14.3
Net realized and unrealized investment (gains) losses included in net income (loss), before tax
(0.3) 0.1 0.1
Tax on reconciling items 0.1 - -
Non-GAAP operating ROE 14.2 % 7.1 14.4
Reconciliation of book value per common share to adjusted book value per common share
2025
2024
2023
Book value per common share $ 56.74 47.99 45.42
Total unrealized investment (gains) losses included in accumulated other comprehensive income (loss), before tax
1.47 5.21 5.83
Tax on reconciling items (0.30) (1.10) (1.22)
Adjusted book value per common share $ 57.91 52.10 50.03
The components of our ROE and non-GAAP operating ROE are as follows:
ROE Components 2025 2024
2025 2024 vs. 2024 2023 vs. 2023
Standard Commercial Lines segment 1.7 % (4.0) 5.7 pts 5.0 (9.0) pts
Standard Personal Lines segment (0.1) (1.1) 1.0 (2.5) 1.4
E&S Lines segment 1.8 1.4 0.4 1.7 (0.3)
Total insurance operations 3.4 (3.7) 7.1 4.2 (7.9)
Net investment income earned
13.3 12.8 0.5 12.4 0.4
Net realized and unrealized investment gains (losses)
0.2 (0.1) 0.3 (0.1) -
Total investments segment 13.5 12.7 0.8 12.3 0.4
Other (2.5) (2.0) (0.5) (2.2) 0.2
ROE 14.4 7.0 7.4 14.3 (7.3)
Net realized and unrealized investment (gains) losses, after tax
(0.2) 0.1 (0.3) 0.1 -
Non-GAAP operating ROE 14.2
%
7.1 7.1 14.4 (7.3)

In 2025, we generated an ROE of 14.4% and a non-GAAP operating ROE of 14.2%, driven by strong investment income and improved underwriting performance. This year's results exceeded our target non-GAAP operating ROE of 12%. The improvement in net investment income earned in 2025 compared to 2024 was primarily driven by active portfolio management, operating cash flow deployment, and the proceeds from our 5.9% Senior Notes in the first quarter of 2025. All three insurance segments also contributed to the higher ROE this year compared to last. After-tax underwriting income of $107.4 million this year compared to an underwriting loss of $104.7 million last year was driven by lower catastrophe losses and lower prior year casualty reserve development, partially offset by higher current year loss costs. Underwriting results for 2025 included $90 million of unfavorable prior year casualty reserve development, down from $311 million in 2024.
For additional qualitative discussion on prior year casualty reserve development, refer to the insurance segment sections below.
Outlook
In 2025, we delivered a double-digit operating ROE of 14.2%, exceeding our ten-year average operating ROE of 12.1%. Our performance drove an 18% increase in book value per share in 2025, and we returned $182 million to common stockholders through regular dividends and opportunistic share repurchases. Selective celebrates its 100th anniversary in 2026, and we are proud of our history, the work our employees do, and the value we deliver our policyholders, distribution partners, and shareholders. To ensure our continued success, we remain focused on a set of key priorities across the company to drive future success, including:
•Relentlessly improving on the fundamentals across risk selection, individual policy pricing, and claims outcomes. Risk selection, granular and accurate risk pricing, and prompt, fair claims adjudication are foundational capabilities we have built over many decades and remain focused on today.
•Diversifying revenue and income within and across our three insurance segments. Growth levers include achieving greater market share and segment diversification in Standard Commercial Lines, potential geographic expansion in Standard Personal Lines, and increasing our product and distribution capabilities in E&S Lines and other specialty lines.
•Further leveraging the use of data analytics and technology, including general-purpose, industry-trained, and agentic artificial intelligence solutions, to drive operational efficiency and improved underwriting and claim outcomes. Technology investments are critical to ensure efficiency and scale. To enhance underwriting scalability, risk management, and claims handling, we are actively developing and executing artificial intelligence use cases. We have also made considerable progress in modernizing our policy acquisition and claims systems. For example, system
enhancements in our E&S Lines segment have created significant operational efficiency, with the segment's premium production increasing significantly despite limited headcount growth.
We remain committed to making strategic investments that fuel continued growth, innovation, and performance excellence. As we position ourselves for the future, we have several strategies to grow market share profitably:
•In our existing footprint, we are focused on growing with existing partners and strategically appointing new agency locations. During 2025, we had a net increase of approximately 100 agency locations, and we had a net increase of 200 agency locations in 2024.
•Careful and deliberate geographic expansion. Since 2017, we have added fourteen states to our Standard Commercial Lines footprint, including Kansas in 2025. In 2025, these expansion states produced $430 million in premium, representing approximately 9% of total NPW and approximately 1% marginal total premium growth. We expect to write new business in Montana and Wyoming by the end of 2026.
For 2026, our full-year expectations are as follows:
•A GAAP combined ratio of 96.5% to 97.5%, including net catastrophe losses of 6 points. Our combined ratio estimate assumes no prior year casualty reserve development, as we record our best estimate each quarter. We do not make assumptions about future reserve development;
•After-tax net investment income of $465 million;
•An overall effective tax rate of 21.5%; and
•Weighted average shares of 61 million on a fully diluted basis. We do not make assumptions about future share repurchases under our existing authorization.
Results of Operations and Related Information by Segment
Insurance Operations
The following table provides quantitative information for analyzing the combined ratio:
All Lines 2025 vs. 2024 2024 vs. 2023
($ in thousands) 2025 2024 2023
Insurance Operations Results:
NPW
$ 4,866,495 4,630,001 5 % $ 4,134,532 12 %
NPE 4,768,196 4,376,447 9 3,827,606 14
Less:
Loss and loss expense incurred 3,157,726 3,164,484 - 2,484,285 27
Net underwriting expenses incurred 1,470,940 1,338,047 10 1,203,767 11
Dividends to policyholders 3,642 6,504 (44) 6,755 (4)
Underwriting income (loss)
$ 135,888 (132,588) (202) % $ 132,799 (200) %
Combined Ratios:
Loss and loss expense ratio 66.3 % 72.3 (6.0) pts 64.9 % 7.4 pts
Underwriting expense ratio 30.8 30.6 0.2 31.4 (0.8)
Dividends to policyholders ratio 0.1 0.1 - 0.2 (0.1)
Combined ratio 97.2 103.0 (5.8) 96.5 6.5
The NPW growth of 5% in 2025 compared to 2024 included:
($ in millions) 2025 2024
Direct new business premiums
$ 956.0 994.3
Renewal pure price increases
9.5 % 9.5
Our NPW growth in 2025 also benefited from exposure growth on renewal policies. The impacts of exposure growth and renewal pure price increases were partially offset by a modest decrease in policy count and lower new business.
The increase in NPE in 2025 compared to 2024 resulted from the same impacts to NPW described above.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
2025 vs. 2024
($ in thousands) 2025 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ 90,000 311,000 (71) %
Current year casualty loss costs 2,217,339 1,887,374 17
Net catastrophe losses 169,196 284,503 (41)
Non-catastrophe property loss and loss expenses 681,191 681,607 -
Total loss and loss expense incurred $ 3,157,726 3,164,484 -
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development 1.9
%
7.1 (5.2)
pts
Current year casualty loss costs 46.6 43.1 3.5
Net catastrophe losses 3.5 6.5 (3.0)
Non-catastrophe property loss and loss expenses 14.3 15.6 (1.3)
Total loss and loss expense incurred 66.3 72.3 (6.0)
Prior Year Casualty Reserve Development and Current Year Casualty Loss Costs
Details of the prior year casualty reserve development by reportable segment and line of business were as follows:
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
($ in millions) 2025 2024
General liability $ 40.0 316.0
Commercial automobile 125.0 20.0
Workers compensation (90.0) (45.0)
Businessowners' policies (2.5) -
Bonds (7.5) (5.0)
Total Standard Commercial Lines 65.0 286.0
Homeowners - (5.0)
Personal automobile 15.0 10.0
Total Standard Personal Lines 15.0 5.0
E&S 10.0 20.0
Total (favorable) unfavorable prior year casualty reserve development
$ 90.0 311.0
The loss and loss expense ratio improved 6.0 points in 2025 compared to 2024, including a 5.2-point improvement in net unfavorable prior year casualty reserve development, driven by improved severities in our workers compensation line of business in accident year 2022 and prior, combined with a stabilization of loss trends in our general liability and E&S casualty lines of business. Even with the year-over-year improvement in the development, these two lines reflected increased severity in recent prior accident years due to the impact of ongoing, broad-based social inflation. However, this improvement was partially offset by a higher amount of prior year development in commercial and personal automobile, as we experienced a re-acceleration of severity growth. For commercial automobile, the unfavorable prior year development was related to accident years 2022 through 2024, with 2024 being the primary driver. For personal automobile, accident year 2024 was the primary driver of the unfavorable prior year development.
In 2024, unfavorable prior year casualty reserve development was $311 million, or 7.1 combined ratio points. This included $316 million in the general liability line of business in our Standard Commercial Lines segment for accident years 2020 and subsequent, with most of the actions for accident years 2022 and 2023. Social inflation drove this development.
Current year loss costs were 3.5-points higher in 2025 compared to 2024, driven by elevated severity trend assumptions attributable to social inflation on our general liability and E&S casualty lines of business, and responding to prior year development in our commercial and personal automobile line of business.
For additional qualitative discussion on prior-year casualty reserve development and current-year casualty loss costs, refer to the insurance segment sections below.
Property Losses
Net catastrophe and non-catastrophe property losses were 4.3 points lower in the aggregate in 2025 compared to 2024. Lower net catastrophe losses were due to a lower frequency and severity of storms that impacted our footprint. Lower non-catastrophe property loss and loss expenses reflected (i) the earned impact of higher renewal pure price increases in 2025, (ii) lower claim frequencies, and (iii) variability from period to period of non-catastrophe losses.
For additional qualitative discussion on non-catastrophe property loss and loss expenses, refer to the insurance segment sections below.
Standard Commercial Lines Segment
2025 vs. 2024 2024 vs. 2023
($ in thousands) 2025 2024 2023
Insurance Segments Results:
NPW $ 3,837,656 3,632,113 6 % $ 3,281,319 11 %
NPE 3,753,908 3,447,556 9 3,071,784 12
Less:
Loss and loss expense incurred 2,493,321 2,501,615 - 1,919,204 30
Net underwriting expenses incurred 1,192,359 1,084,420 10 988,519 10
Dividends to policyholders 3,642 6,504 (44) 6,755 (4)
Underwriting income (loss)
$ 64,586 (144,983) (145) % $ 157,306 (192) %
Combined Ratios:
Loss and loss expense ratio 66.4 % 72.5 (6.1) pts 62.5 % 10.0 pts
Underwriting expense ratio 31.8 31.5 0.3 32.2 (0.7)
Dividends to policyholders ratio 0.1 0.2 (0.1) 0.2 -
Combined ratio 98.3 104.2 (5.9) 94.9 9.3
NPW and NPE growth in 2025 compared to 2024 included renewal pure price increases and exposure growth on renewal policies, partially offset by lower retention as a result of underwriting actions.
For the Year Ended December 31,
($ in millions) 2025 2024
Direct new business premiums $ 614.0 $ 619.1
Retention 82 % 85
Renewal pure price increases on NPW 8.6 8.3
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
($ in thousands) 2025 2024
2025 vs 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ 65,000 286,000 (77) %
Current year casualty loss costs 1,839,988 1,574,532 17
Net catastrophe losses 98,522 181,546 (46)
Non-catastrophe property loss and loss expenses 489,811 459,537 7
Total loss and loss expense incurred $ 2,493,321 2,501,615 -
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development 1.7
%
8.3 (6.6)
pts
Current year casualty loss costs 49.1 45.6 3.5
Net catastrophe losses 2.6 5.3 (2.7)
Non-catastrophe property loss and loss expenses 13.0 13.3 (0.3)
Total loss and loss expense incurred 66.4 72.5 (6.1)
Prior Year Casualty Reserve Development and Current Year Casualty Loss Costs
Details of the prior year casualty reserve development by line of business were as follows:
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
($ in millions)
2025
2024
General liability $ 40.0 316.0
Commercial automobile 125.0 20.0
Workers compensation (90.0) (45.0)
Businessowners' policies (2.5) -
Bonds (7.5) (5.0)
Total Standard Commercial Lines
$ 65.0 286.0
The loss and loss expense ratio decreased 6.1 points in 2025 compared to 2024, including a 6.6-point improvement in net unfavorable prior year casualty reserve development. The increase in current year loss costs compared to 2024 was primarily driven by elevated severity trend assumptions attributable to social inflation on our general liability line of business, and responding to prior year development in our commercial automobile line of business.
Refer to the line of business sections below for qualitative discussion of the significant drivers of unfavorable prior year casualty reserve development and current-year casualty loss costs.
Property Losses
Net catastrophe and non-catastrophe property losses were 3.0 points lower in the aggregate in 2025 compared to 2024. This was primarily driven bynet catastrophe losses, which were 2.7points lower than last year, driven by a lower frequency of wind, winter storm, and hurricane events.
Refer to the line of business sections below for qualitative discussion of the significant drivers of non-catastrophe property loss and loss expenses.
The following is a discussion of our most significant Standard Commercial Lines of business:
General Liability
($ in thousands) 2025 2024
2025 vs. 20241
2023
2024 vs. 20231
NPW $ 1,269,846 1,183,194 7 % $ 1,087,079 9 %
Direct new business 179,383 179,921
n/a
179,047 n/a
Retention 82 % 86
n/a
85 % n/a
Renewal pure price increases 11.3 8.6
n/a
5.4 n/a
NPE $ 1,231,380 1,125,491 9 % $ 1,020,362 10 %
Underwriting income (loss)
(104,490) (295,876) (65) 70,806 (518)
Combined ratio 108.5 % 126.3 (17.8) pts 93.1 % 33.2 pts
% of total Standard Commercial Lines NPW 33 33 33
1n/a: not applicable.
NPW grew 7% in 2025 compared to 2024, benefiting from renewal pure price increases and renewal exposure growth.
The combined ratio was 17.8 points lower in 2025 compared to 2024, primarily driven by the following:
($ in thousands) 2025 2024
2025 vs 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ 40,000 316,000 (87) %
Current year casualty loss costs 909,136 754,676 20
Total loss and loss expense incurred $ 949,136 $ 1,070,676 (11)
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development 3.2
%
28.1 (24.9)
pts
Current year casualty loss costs 73.9 67.0 6.9
Total loss and loss expense incurred 77.1 95.1 (18.0)
We recorded unfavorable prior-year casualty reserve development of $40 million in 2025, compared to $316 million in 2024. We attribute the unfavorable development in both periods to the ongoing, broad-based social inflationary factors impacting this line of business. Development in 2025 was driven by increased severities in accident years 2022 and 2023. Development in 2024 was driven by increased severities in accident years 2020 through 2023.
The general liability line of business has experienced a long-term trend of meaningful severity increases, partially offset by claim frequency decreases. Prior-year severities developed adversely, impacting our view of more recent accident years in 2024 and 2025. We attribute the increased severities to elevated social inflation, which we view as an industry dynamic characterized by higher claimant propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Certain jurisdictions with expanded liability theories and higher damage awards pose increased challenges. We are closely monitoring these jurisdictions and the broader trends across our business.
We experienced a 6.9-point increasein current-year casualty loss costs in 2025 compared to 2024, primarily driven by increased loss trend expectations and higher prior-year severity assumptions related to the impacts of social inflation.
We believe that social inflation and elevated loss trends continue to support an elevated near-term pricing environment. In response, we have a heightened focus on prudent underwriting and appropriate pricing. Our renewal pure price increase in this line of business was 11.3% in 2025, up from 8.6% in 2024. In sectors and jurisdictions where market pricing does not align with our view of rate need, we are taking targeted underwriting actions, including (i) revising underwriting guidelines, (ii) tightening coverage offerings, and (iii) reducing writings.
Commercial Automobile
2025 vs. 20241
2024 vs. 20231
($ in thousands) 2025 2024 2023
NPW $ 1,184,848 1,121,488 6 % $ 976,888 15 %
Direct new business 158,809 164,329 n/a 147,242 n/a
Retention 83 % 86 n/a 86 % n/a
Renewal pure price increases 9.9 10.7 n/a 9.8 n/a
NPE $ 1,162,500 1,058,228 10 % $ 916,140 16 %
Underwriting income (loss)
(122,696) 2,474 (5,059) (33,724) 107
Combined ratio 110.6 % 99.8 10.8 pts 103.7 % (3.9) pts
% of total Standard Commercial Lines NPW 31 31 30
1n/a: not applicable.
NPW grew 6% in 2025 compared to 2024, benefiting from renewal pure price increases, partially offset by lower retention.
The combined ratio was 10.8 points higher in 2025 compared to 2024, primarily driven by the following:
($ in thousands) 2025 2024
2025 vs 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ 125,000 20,000 525 %
Current year casualty loss costs 637,368 544,691 17
Net catastrophe losses 7,712 8,646 (11)
Non-catastrophe property loss and loss expenses 168,582 172,094 (2)
Total loss and loss expense incurred 938,662 745,431 26
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development 10.8
%
1.9 8.9
pts
Current year casualty loss costs 54.8 51.5 3.3
Net catastrophe losses 0.7 0.8 (0.1)
Non-catastrophe property loss and loss expenses 14.5 16.3 (1.8)
Total loss and loss expense incurred 80.8 70.5 10.3
We recorded $125 million of unfavorable prior year casualty reserve development in 2025, driven by increased severities in accident years 2022 through 2024, with 2024 being the primary driver. Current year casualty loss costs were higher in 2025 compared to the same prior-year periods, in reaction to the unfavorable prior-year casualty reserve development.
Partially offsetting the unfavorable combined ratio drivers mentioned above, non-catastrophe property loss and loss expenses in 2025 were lower compared to 2024, primarily due to (i) the earned impact of higher renewal pure price increases in 2025, and (ii) lower claim frequencies.
Commercial Property1
2025 vs. 20242
2024 vs. 20232
($ in thousands) 2025 2024 2023
NPW $ 793,115 739,500 7 % $ 648,753 14 %
Direct new business 167,181 152,248 n/a 147,358 n/a
Retention 81 % 84 n/a 84 % n/a
Renewal pure price increases 7.9 10.0 n/a 9.8 n/a
NPE $ 767,734 685,568 12 % $ 586,267 17 %
Underwriting income (loss) 151,448 53,331 184 10,765 395
Combined ratio 80.3 pts 92.2 (11.9) 98.2 pts (6.0)
% of total Standard Commercial Lines NPW 21 20 20
1includes Inland Marine.
2n/a: not applicable.
NPW grew 7% in 2025 compared to 2024, benefiting from renewal pure price increases and exposure growth on renewal policies.
The combined ratio was 11.9 points lower in 2025 compared to 2024, primarily driven by the following:
($ in thousands) 2025 2024
2025 vs 2024
Loss and Loss Expense Incurred:
Net catastrophe losses $ 74,170 $ 146,350 (49) %
Non-catastrophe property loss and loss expenses 275,610 244,990 12
Total loss and loss expense incurred $ 349,780 391,340 (11)
Impact on Loss and Loss Expense Ratio:
Net catastrophe losses 9.7 % 21.3 (11.6) pts
Non-catastrophe property loss and loss expenses 35.9 35.7 0.2
Total loss and loss expense incurred 45.6 57.0 (11.4)
Net catastrophe losses were meaningfully lower in 2025 compared to 2024, driven by a lower frequency of wind, winter storm, and hurricane events.
Workers Compensation
2025 vs. 20241
2024 vs. 20231
($ in thousands) 2025 2024 2023
NPW $ 295,892 320,608 (8) % $ 338,123 (5) %
Direct new business 45,809 54,520 n/a 63,703 n/a
Retention 83 % 84 n/a 84 % n/a
Renewal pure price increases (decreases) (3.6) (2.8) n/a (1.5) n/a
NPE $ 310,021 327,725 (5) % $ 333,669 (2) %
Underwriting income (loss)
75,794 57,724 31 95,397 (39)
Combined ratio 75.6 % 82.4 (6.8) pts 71.4 % 11.0 pts
% of total Standard Commercial Lines NPW 8 9 12
1n/a: not applicable.
NPW decreased 8% in 2025 compared to 2024, primarily due to renewal pure pricedecreases and a reduction in direct new business.
The combined ratio was 6.8 points lower in 2025 compared to 2024, primarily due to the following:
($ in thousands) 2025 2024
2025 vs 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ (90,000) $ (45,000) 100 %
Current year casualty loss costs 239,792 227,535 5
Total loss and loss expense incurred 149,792 182,535 (18)
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development (29.0) % (13.7) (15.3)
pts
Current year casualty loss costs 77.4 69.4 8.0
Total loss and loss expense incurred 48.4 55.7 (7.3)
The favorable prior year casualty reserve development in 2025 and 2024 was primarily due to improved loss severities driven by continued lower medical cost trends. The favorable development in 2025 and 2024 was related to improved loss severities in accident years 2022 and prior.
In addition, the combined ratio was adversely impacted by an increase in current year casualty loss costs of 8.0 points in 2025, primarily driven by negative rate changes and increased loss trends. These rate level reductions are driven by continued decreases in workers compensation rating bureau loss costs, which form the basis for our filed rating plans, and heavily influence marketplace pricing for this line of business.
Standard Personal Lines Segment
2025 vs. 2024 2024 vs. 2023
($ in thousands) 2025 2024 2023
Insurance Segments Results:
NPW $ 397,677 430,725 (8) % $ 414,585 4 %
NPE 408,190 424,917 (4) 365,213 16
Less:
Loss and loss expense incurred 315,652 364,601 (13) 353,185 3
Net underwriting expenses incurred 95,167 99,801 (5) 91,291 9
Underwriting income (loss)
$ (2,629) (39,485) (93) % $ (79,263) 50 %
Combined Ratios:
Loss and loss expense ratio 77.3 % 85.8 (8.5) pts 96.7 % (10.9) pts
Underwriting expense ratio 23.3 23.5 (0.2) 25.0 (1.5)
Combined ratio 100.6 109.3 (8.7) 121.7 (12.4)
NPW decreased 8% in 2025 compared to 2024, primarily due to lower direct new business. New business decreased 37% in 2025 compared to 2024. The reduction in direct new business premiums was primarily due to a 50% decline in new policy counts in 2025 compared to 2024. The reduction in new policy counts and new business premiums was driven by (i) market conditions, including a challenging rate environment in New Jersey and South Carolina, (ii) competition in other states due to our recent rate activity, and (iii) focusing on our target mass affluent market. We have received regulatory approvals for increased rate levels in most of our footprint states and are focused on growth where we believe our rates are adequate.
The following table depicts our reductions in direct new business and retention for 2025 and 2024:
($ in millions) 2025 2024
Direct new business premiums1
$ 45.4 $ 72.6
Retention 78 % 77
Renewal pure price increases on NPW 18.6 20.6
1Excludes our flood direct premiums written, which is 100% ceded to the NFIP and therefore, has no impact on our NPW.
The change in NPE in 2025 compared to 2024 was driven by the same impacts on NPW described above.
Underwriting results for this segment improved in 2025 compared to 2024 as we are obtaining positive results from the actions we took to refine our pricing factors and prioritize rate filings to mitigate inflationary impacts. Our more significant rate increases began to take effect early in 2023, increased in number and magnitude throughout 2024, and remained strong in 2025, albeit moderately lower than in 2024. We expect these rates to continue outpacing loss trends in 2026, but at lower levels than those seen in 2024 and 2025. Through our actions, we achieved renewal pure prices increases of 18.6% in 2025. Additionally,
we have continued to focus our efforts on our target mass affluent market. In 2025, target business grew 10%, with nearly all new business being in our target market.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
($ in thousands) 2025 2024
2025 vs 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ 15,000 5,000 200 %
Current year casualty loss costs 121,510 115,591 5
Net catastrophe losses 41,139 79,965 (49)
Non-catastrophe property loss and loss expenses 138,003 164,045 (16)
Total loss and loss expense incurred 315,652 364,601 (13)
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development 3.7
%
1.2 2.5
pts
Current year casualty loss costs 29.7 27.2 2.5
Net catastrophe losses 10.1 18.8 (8.7)
Non-catastrophe property loss and loss expenses 33.8 38.6 (4.8)
Total loss and loss expense incurred 77.3 85.8 (8.5)
Property Losses
The loss and loss expense ratio decreased 8.5 points in 2025 compared to 2024, primarily driven by net catastrophe and non-catastrophe property losses, which reduced the loss and loss expense ratio by 13.5 points in the aggregate in 2025 compared to 2024. Net catastrophe losses reflected lower frequency and severity of weather-related catastrophe events this year compared to last year. Non-catastrophe property losses were lower in 2025 compared to 2024 due to (i) the earned impact of renewal pure price increases in 2025, (ii) lower claim frequencies, and (iii) variability from period to period of non-catastrophe losses.
Prior Year Casualty Reserve Development and Current Year Casualty Loss Costs
Details of the prior year casualty reserve development by line of business were as follows:
(Favorable)/Unfavorable Prior Year Casualty Reserve Development
($ in millions) 2025 2024
Homeowners $ - (5.0)
Personal automobile 15.0 10.0
Total Standard Personal Lines $ 15.0 5.0
Prior year casualty reserve development in 2025 included $15.0 million of unfavorable development in personal automobile, primarily driven by increased loss severities in the 2024 accident year related to the New Jersey portfolio. Prior year casualty reserve development in 2024 included $10.0 million of unfavorable development in personal automobile, primarily driven by increased loss severities in accident years 2022 and 2023. This was partially offset by $5.0 million of favorable development in homeowners, primarily due to lower loss severities in accident years 2021 and prior.
Current year casualty loss costs increased 2.5 points in 2025 compared to 2024. Prior-year severities developed adversely over the course of 2024 and 2025, impacting our view of the current year loss costs for 2025. This resulted in higher current-year casualty loss costs this year compared to last.
E&S Lines Segment
($ in thousands) 2025 2024 2025 vs. 2024 2023 2024 vs. 2023
Insurance Segments Results:
NPW $ 631,162 567,163 11 % $ 438,628 29 %
NPE 606,098 503,974 20 390,609 29
Less:
Loss and loss expense incurred 348,753 298,268 17 211,896 41
Net underwriting expenses incurred 183,414 153,826 19 123,957 24
Underwriting income (loss) $ 73,931 51,880 43 % $ 54,756 (5) %
Combined Ratios:
Loss and loss expense ratio 57.5 % 59.2 (1.7) pts 54.3 % 4.9 pts
Underwriting expense ratio 30.3 30.5 (0.2) 31.7 (1.2)
Combined ratio 87.8 89.7 (1.9) 86.0 3.7
NPW grew 11% in 2025 compared to 2024 and included:
($ in millions) 2025 2024
Direct new business premiums $ 296.6 302.6
Renewal pure price increases on NPW 8.5 % 7.2
NPW and NPE growth in 2025 benefited from (i) both property and casualty exposure growth on renewal policies, (ii) higher rates per exposure, and (iii) an increase in renewal policy count. Increased competition in the marketplace has lowered our NPW growth rate this year compared to last, primarily due to more capacity entering the E&S marketplace and the admitted markets' appetite for insureds previously written by E&S companies.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
($ in thousands) 2025 2024
2025 vs. 2024
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ 10,000 $ 20,000 (50) %
Current year casualty loss costs 255,841 197,251 30
Net catastrophe losses 29,535 22,992 28
Non-catastrophe property loss and loss expenses 53,377 58,025 (8)
Total loss and loss expense incurred $ 348,753 $ 298,268 17
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development 1.6
%
4.0 (2.4)
pts
Current year casualty loss costs 42.2 39.1 3.1
Net catastrophe losses 4.9 4.6 0.3
Non-catastrophe property loss and loss expenses 8.8 11.5 (2.7)
Total loss and loss expense incurred 57.5 59.2 (1.7)
The loss and loss expense ratio decreased1.7 points in 2025 compared to 2024. The loss and loss expense ratio was reduced by a $10 million, or 2.4-point decrease in unfavorable prior year casualty reserve development. In 2025, the unfavorable prior-year casualty reserve development was primarily due to loss severities in accident years 2020 through 2023, driven by the broad-reaching impacts of social inflation. Additionally, non-catastrophe property losses decreased 2.7 points in 2025 compared to 2024. This decrease was primarily driven by (i) normal period-to-period variability associated with property losses and (ii) the impact of earned rates per exposure in excess of loss trend.
Partially offsetting the lower prior year casualty reserve development and non-catastrophe property losses was higher current year casualty loss costs of 3.1 points, primarily due to increased severities related to social inflation.
Reinsurance
We use reinsurance to protect our capital resources and insure against losses on property and casualty risks we underwrite above the amount of losses we are willing to accept. We use two main reinsurance vehicles: (i) a reinsurance pooling agreement among our Insurance Subsidiaries through which each company agrees to share in premiums and losses based on certain specified percentages; and (ii) reinsurance treaties and arrangements with third parties that cover various policies that we issue to our customers.
Reinsurance Pooling Agreement
The primary purposes of the Insurance Subsidiaries' reinsurance pooling agreement are to:
•Pool or proportionately share the underwriting profit and loss results of property and casualty insurance underwriting operations through reinsurance;
•Reduce administration expenses; and
•Permit all the Insurance Subsidiaries to obtain a uniform rating from AM Best Company ("AM Best").
The following table shows the Insurance Subsidiary pooling percentages as of December 31, 2025:
Insurance Subsidiary Pooling Percentage
Selective Insurance Company of America ("SICA") 32.0%
Selective Way Insurance Company ("SWIC") 21.0%
Selective Insurance Company of South Carolina ("SICSC") 9.0%
Selective Insurance Company of the Southeast ("SICSE") 7.0%
Selective Insurance Company of New York ("SICNY") 7.0%
Selective Casualty Insurance Company ("SCIC") 7.0%
Selective Auto Insurance Company of New Jersey ("SAICNJ") 6.0%
Mesa Underwriters Specialty Insurance Company ("MUSIC") 5.0%
Selective Insurance Company of New England ("SICNE") 3.0%
Selective Fire and Casualty Insurance Company ("SFCIC") 3.0%
Reinsurance Treaties and Arrangements
By entering into reinsurance treaties and arrangements, we can increase our underwriting capacity, accepting larger individual risks and risk aggregations without directly increasing our capital or statutory surplus. Under our reinsurance treaties, we cede our reinsurers a portion of our incurred losses from an individual policy or group of policies in exchange for a portion of the premium on those policies. Amounts not reinsured below a specified dollar threshold are known as retention. Reinsurance does not legally discharge us from liability under the terms and limits of our policies, but it does make our reinsurers liable to us for the amount of liability we cede to them. Our reinsurers often rely on their own reinsurance programs, or retrocessions, to manage their large loss exposures. The global reinsurance community is relatively small. If our reinsurers cannot collect on their retrocessional programs, it may impair their ability to pay us for the amounts we cede to them.
Consequently, our reinsurers present us with direct, indirect, and contingent counterparty credit risk. We attempt to mitigate this credit risk by (i) pursuing relationships with reinsurers rated "A-" or higher by AM Best and/or (ii) obtaining collateral to secure reinsurance obligations. Some of our reinsurance treaties permit us to terminate or commute them - or require the reinsurer to post collateral if the reinsurer's financial condition or rating deteriorates. We monitor our reinsurers' financial condition and review the quality of reinsurance recoverables and reserves for uncollectible reinsurance. For additional information regarding our reinsurance counterparty credit risk, see Note 9. "Reinsurance" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Our reinsurance program has contracts that separately cover our property and casualty insurance business and can be categorized as follows:
•Property Reinsurance, which includes our (i) property per risk excess of loss treaties purchased for protection against large individual property losses and (ii) property catastrophe treaties and a property catastrophe bond transaction to provide protection for the overall property portfolio against severe catastrophic events. We also purchase a limited amount of facultative reinsurance, primarily for large individual property risks exceeding our property per-risk excess-of-loss treaty capacity.
•Casualty Reinsurance, which provides protection for both individual large casualty losses and catastrophic casualty losses involving multiple claimants or insureds. We also may use (i) facultative reinsurance, primarily for large individual casualty risks in excess of our treaty capacity and (ii) quota share capacity for certain new or higher severity casualty lines of business.
•Terrorism Reinsurance, which provides a federal reinsurance backstop behind the protection of our property and casualty reinsurance treaties, for terrorism losses covered under the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA"). For further information about TRIPRA, see Item 1A. "Risk Factors." of this Form 10-K.
•Flood Reinsurance, for which all of the premiums and losses related to our participation in the WYO (for which we also receive a servicing fee) are 100% ceded to the federal government.
Property Reinsurance
The following table summarizes our property reinsurance program:
PROPERTY REINSURANCE ON INSURANCE PRODUCTS
Treaty Name Reinsurance Coverage Terrorism Coverage
Property Catastrophe Excess of Loss
(covers all insurance operations) 		$1.4 billion above $100 million retention treaty that responds on per occurrence basis in four layers: All nuclear, biological, chemical, and radioactive ("NBCR") losses are excluded regardless of whether or not they are certified under TRIPRA. Please see Item 1A. "Risk Factors." of this Form 10-K for discussion regarding TRIPRA.
- 100% of losses in excess of $100 million up to
$200 million;
- 100% of losses in excess of $200 million up to
$400 million;
- 100% of losses in excess of $400 million up to
$800 million; and
- 46% of losses in excess of $800 million up
to $1.5 billion.

The treaty provides one reinstatement in each of the first three layers and no reinstatement in the fourth layer.
Personal Lines-only treaty with $20 million of limit excess of $20 million retention and coverage of 100% of losses. This has an annual aggregate limit of $20 million.
The per occurrence limit is $1.045 billion, which includes $20 million for the Personal Lines-only treaty. The annual aggregate limit is $1.745 billion.
Property Catastrophe Bond (covers all insurance operations, excluding Florida, California, Louisiana, and Texas) 46% of losses in excess of $800 million up to $1.5 billion that responds on a per occurrence basis.

The catastrophe bond provides a single $325 million limit with no reinstatements. 		None.
Property Per Risk Excess of Loss
(covers all insurance operations) 		There are three layers covering 100% of $95 million in excess of $5 million. Losses other than TRIPRA certified losses are subject to the following reinstatements and annual aggregate
limits: 		All NBCR losses are excluded regardless of whether or not they are certified under the TRIPRA. For non-NBCR losses, the treaty distinguishes between acts committed on behalf of foreign persons or foreign interests ("Foreign Terrorism") and those that are not. The treaty provides annual aggregate limits for Foreign Terrorism (other than NBCR) acts of $15 million for the first layer, $60 million for the second layer, and $70 million for the third layer. Non-Foreign Terrorism losses (other than NBCR) are covered to the same extent as non-terrorism losses.
- $5 million in excess of $5 million layer
provides 15 reinstatements; $80 million in aggregate limits;
- $20 million in excess of $10 million layer
provides four reinstatements, $100 million in
aggregate limits; and
- $70 million in excess of $30 million layer
provides one reinstatement, $140 million in aggregate
limits.
Flood 100% reinsurance by the federal government's WYO. None.
Property Catastrophe Reinsurance Program
Our property catastrophe reinsurance program includes a primary excess of loss treaty and an indemnity reinsurance agreement with a special purpose insurer that issued a catastrophe bond. This program covers our standard market and E&S business. In addition, we renewed the Personal Lines-only treaty of $20 million in excess of a $20 million retention to mitigate Personal Lines-specific catastrophe losses. Effective January 1, 2026, we renewed our main property catastrophe treaty, with additional limit, stable retention, and improved terms. The property catastrophe treaty excludes coverage for communicable disease but
retains (i) coverage for strike, riot, civil unrest, severe convective storms, and other traditionally-covered property perils, (ii) coverage for conventional terrorism losses, and (iii) limited coverage for cybersecurity risks. Our program now provides coverage of $1.4 billion in excess of a $100 million retention, compared to $1.3 billion in 2025, thereby extending the exhaustion point by $100 million to respond to our growing property portfolio. The highest layer of the treaty provides coverage for 46% of losses in the $700 million in excess of $800 million layer.
To provide additional, fully collateralized coverage at the top end of our property catastrophe reinsurance program, we secured property catastrophe protection through a per-occurrence excess of loss indemnity reinsurance agreement effective December 9, 2023, with High Point Re Ltd. ("High Point Re"), an independent Bermuda special purpose insurer. The reinsurance agreement meets the accounting guidance requirements to be accounted for as reinsurance. In connection with the reinsurance agreement, High Point Re issued Series 2023-1, Class A Principal-at-Risk Variable Rates Notes to unrelated investors totaling $325 million, consistent with the coverage provided under the reinsurance agreement. The proceeds were deposited in a reinsurance trust account. The reinsurance agreement provides us with coverage of up to $325 million for the three-year period from December 9, 2023, through December 31, 2026, for property catastrophe losses from named storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impacts, and volcanic eruptions in all states except California, Florida, Texas, and Louisiana. The reinsurance agreement's attachment point and exhaustion limit may be reset annually to adjust the expected loss of the layer within a predetermined range. For the 2026 treaty year, this reinsurance agreement provides us with coverage for 46% of losses in the $700 million in excess of $800 million layer, bringing our co-participation in this layer to 8%. The reinsurance agreement is collateralized, which is provided by High Point Re using proceeds from the issuance of the Series 2023-1 Notes.
Reinsurance agreements carry credit risk associated with amounts due from reinsurers. With High Point Re, that risk is reduced because the collateralized reinsurance trust account is funded with money market funds domiciled in the U.S. The money market funds invest solely in cash or high-quality direct obligations of the U.S. government, such as U.S. Treasury bills and other short-term securities backed by the U.S. government.
In addition to the fully collateralized catastrophe bond, we seek to minimize reinsurance credit risk by transacting with highly-rated reinsurance partners and purchasing collateralized reinsurance products, particularly for high-severity, low-probability events, if feasible. Our current reinsurance program includes $498 million in collateralized limit of the total $650 million limit in place for the highest layer of the catastrophe program, including the $325 million secured through High Point Re, compared to $450 million in collateralized limit under the 2025 reinsurance program.
Overall, ceded premium for our property catastrophe reinsurance program will decrease in 2026 due to (i) risk-adjusted price decreases driven by favorable reinsurance market conditions and (ii) modest overall growth in underlying property exposures, marked by exposure reductions in higher catastrophe-risk regions. These reductions will be partially offset by the addition of $80.0 million of net limit coverage, which improved our net risk profile.
Catastrophe Models
We model various catastrophic perils, and hurricane risk remains our portfolio's most significant natural catastrophe peril because of the geographic location of the risks we insure. The table below illustrates the impact of the five largest hurricane losses we have experienced in the last 36 years:
($ in millions)
Gross Loss1
Net Loss2
Accident
Year 		Gross Loss Ratio Net Loss Ratio
Hurricane Name
Superstorm Sandy $125.5 45.6 2012 7.9% 2.9
Hurricane Helene
73.9 73.9 2024 1.7 1.7
Hurricane Ida 49.9 39.7 2021 1.7 1.3
Hurricane Irene 44.8 40.2 2011 3.1 2.8
Hurricane Hugo 26.4 3.0 1989 5.9 0.7
1This amount represents reported and unreported gross losses estimated as of December 31, 2025.
2Net loss does not include reinstatement premiums, taxes, or flood claims handling fees.
We assess our exposure to hurricane risk by examining third-party vendor models and conducting a proprietary analysis. The third-party vendor models provide both long-term and near-term views, with the near-term view conditioned to adjust for elevated sea surface temperatures. We adjust these models to reflect certain non-modeled cost assumptions, such as the impact of loss expenses, residual market assessments, and automobile-related losses. We believe that modeled estimates provide a range of potential outcomes, and we review multiple estimates to understand our catastrophic risk.
Our established catastrophic risk tolerance requires that no more than 10% of stockholders' equity be exposed to a loss from a hurricane event at a 99.6% confidence level (1-in-250-year event or 0.4% probability), on a net-of-reinsurance and after-tax basis. Our property catastrophe reinsurance program limits our net after-tax impact of a 1-in-250-year event to about 5% of our GAAP equity, within our established tolerance for catastrophic risk. In addition to the 1-in-250-year modeled event, we evaluate the impact of several other scenarios on stockholders' equity.
The table below shows the gross and net losses modeled results for (i) hurricane peril in our underwriting property portfolio and (ii) the gross and net of reinsurance hurricane losses from the following scenarios:
•Recasts of two large hurricanes that impacted our geographic footprint:
◦1938 New England Hurricane, one of the largest hurricanes to impact the Northeast U.S.; and
◦Hurricane Hazel, a Category 4 storm that made landfall near the border between North Carolina and South Carolina in 1954; and
•Realistic disaster scenarios ("RDS") for significant potential storms in the Northeast and the Carolinas based on Lloyds of London ("Lloyds") methodology.
Occurrence Exceedance Probability Hurricane
($ in thousands)
Gross
Losses1
Net
Losses2
Net Losses % of Equity3
4.0% (1 in 25 year event) $344,765 86,852 2 %
2.0% (1 in 50 year event) 574,308 94,679 3
1.0% (1 in 100 year event) 959,215 109,035 3
0.67% (1 in 150 year event) 1,263,479 126,629 4
0.5% (1 in 200 year event) 1,451,583 136,576 4
0.4% (1 in 250 year event) 1,611,249 184,208 5
0.2% (1 in 500 year event) 2,280,688 711,136 20
Historical recast - 1938 New England Hurricane 717,122 99,390 3
Lloyd's RDS North-East (Category 4 hurricane) 1,283,361 128,269 4
Historical recast - 1954 Hurricane Hazel 438,523 90,394 3
Lloyd's RDS Carolinas (Category 5 hurricane) 672,676 104,896 3
1Gross losses include uncertainty associated with damage/loss estimation, demand and storm surge, and assumptions for certain un-modeled costs, such as the impact of loss expenses, residual market assessments, and automobile-related losses, which collectively increase our gross losses by approximately 13%.
2Net losses are after-tax losses net of catastrophe reinsurance, including reinstatement premiums and applicable property per risk and facultative reinsurance based on our reinsurance structure effective January 1, 2026.
3GAAP stockholders' equity as of December 31, 2025.
As the table above reflects, we are within our established tolerance for catastrophic risk. Based on a multi-model view of hurricane risk, our current catastrophe reinsurance program exhausts at a return period of approximately 1-in-211-years, or events with a 0.5% probability. Our modeled losses incorporate expected reinsurance recoveries from our per-risk reinsurance treaty and facultative reinsurance in addition to the recoveries from our property catastrophe treaties. Our actual gross and net losses incurred from hurricanes making U.S. landfall will vary, perhaps materially, from our estimated modeled losses.
In addition to hurricane peril, the table below shows gross and net losses modeled by other wind and earthquake perils in our underwriting property portfolio. Other wind perils include the sub-perils of hail, straight-line wind, and tornadoes.
Occurrence Exceedance Probability Other Wind Earthquake
($ in thousands)
Gross
Losses1
Net
Losses2
Net Losses % of Equity3
Gross
Losses1
Net
Losses2
Net Losses % of Equity3
4.0% (1 in 25 year event) $149,504 $79,972 2 % $14,657 $10,803 - %
2.0% (1 in 50 year event) $200,924 $80,866 2 $41,836 $29,913 1
1.0% (1 in 100 year event) $271,813 $80,880 2 $117,179 $79,589 2
0.67% (1 in 150 year event) $315,507 $80,313 2 $208,664 $90,592 3
0.5% (1 in 200 year event) $364,358 $82,818 2 $266,879 $95,272 3
0.4% (1 in 250 year event) $400,463 $84,885 2 $321,703 $99,252 3
0.2% (1 in 500 year event) $494,805 $88,770 2 $509,656 $100,236 3
1Gross losses include uncertainty associated with damage/loss estimation, demand and storm surge, and assumptions for certain un-modeled costs, such as the impact of loss expenses, residual market assessments, and automobile-related losses, which collectively increase our gross losses by approximately 13%.
2Net losses are after-tax losses net of catastrophe reinsurance, including reinstatement premiums as well as applicable property per risk and facultative reinsurance based on the reinsurance structure effective January 1, 2026.
3GAAP stockholders' equity as of December 31, 2025.
We do not write crop insurance, have minimal exposure to private flood, and have a small geographic footprint in the Western U.S., all limiting our exposures to certain weather-related perils, such as droughts, wildfires, and flooding. However, as our
geographic expansion progresses and we continue to evaluate our business appetite, physical risks from these perils and others will be considered in our strategic decision making.
While we regularly experience property losses from winter storms and use third-party vendor models to help us model and manage our exposure to this peril, we also evaluate our winter storm exposure based on our own historical experience, as winter storm third-party vendor models are currently less mature than models for other perils, such as hurricane wind or severe convective storms.
Property Per Risk Excess of Loss Treaty
Effective July 1, 2025, we renewed the Property Excess of Loss Treaty ("Property Treaty") with the same retention as the expiring treaty, but with a $30 million increase in limit. The treaty now provides coverage for $95 million in excess of a $5 million retention for losses on a per risk basis. The treaty year deposit premium increased modestly, reflecting higher projected subject earned premium due to growth in our book of business and the increased treaty limit.
Casualty Reinsurance
The following table summarizes our casualty reinsurance program:
CASUALTY REINSURANCE ON INSURANCE PRODUCTS
Treaty Name Reinsurance Coverage Terrorism Coverage
Casualty Excess of Loss
(covers all insurance operations) 		There are six layers covering $87 million in excess of $3 million on a per occurrence basis. Losses other than terrorism losses are subject to the following: All NBCR losses are excluded. All other losses stemming from the acts of terrorism are subject to the following:
- 80% of $3 million in excess of $3 million layer provides 65 reinstatements, $198 million annual aggregate limit; - 80% of $3 million in excess of $3 million layer with $15 million net annual terrorism aggregate limit;
- 100% of $6 million in excess of $6 million layer provides 14 reinstatements, $90 million annual aggregate limit; - 100% of $6 million in excess of $6 million layer with $30 million net annual terrorism aggregate limit;
- 100% of $9 million in excess of $12 million layer provides three reinstatements, $36 million annual aggregate limit;
 		- 100% of $9 million in excess of $12 million layer with $27 million net annual terrorism aggregate limit;
- 100% of $9 million in excess of $21 million layer provides one reinstatement, $18 million annual aggregate limit;
 		- 100% of $9 million in excess of $21 million layer with $18 million net annual terrorism aggregate limit;
- 100% of $20 million in excess of $30 million layer provides one reinstatement, $40 million annual aggregate limit; and
 		- 100% of $20 million in excess of $30 million layer with $40 million net annual terrorism aggregate limit; and
- 100% of $40 million in excess of $50 million layer provides one reinstatement, $80 million annual aggregate limit.
 		- 100% of $40 million in excess of $50 million layer with $80 million net annual terrorism aggregate limit.
We renewed the casualty excess of loss treaty ("Casualty Treaty"), which covers our Standard Lines and E&S Lines, on July 1, 2025, with coverage of $87 million in excess of a $3 million retention per loss occurrence. The first layer was modified with an increase in net retention to $3 million, from $2 million, and we continue to retain a portion of the first layer through a 20% co-participation. The 2025 treaty year deposit premium decreased, primarily due to increased retention and co-participation, partially offset by higher projected subject-earned premium due to growth of our book of business.
To complement our key reinsurance programs and provide reinsurance protection on specific coverages or programs, we have other reinsurance treaties, such as our (i) Surety and Fidelity Excess of Loss Reinsurance Treaty, (ii) National Workers Compensation Reinsurance Pool Quota Share, which covers business assumed from the involuntary workers compensation pool, (iii) Equipment Breakdown Coverage Reinsurance Treaty, (iv) Multi-line Quota Share, which covers additional personal lines coverages, such as personal cyber and home systems protection, (v) Cyber Liability Quota Share, (vi) Endurance Specialty Quota share and Loss Development Cover, which protects against losses on policies written before the acquisition and any development on reserves established by MUSIC as of the date of acquisition, and (vii) Excess Liability Quota Share, which covers MUSIC's excess liability business.
We continually evaluate our overall reinsurance program to effectively manage the transfer of risk. We base our analysis on a comprehensive process that includes periodic analysis of modeling results, our own loss experience, aggregation of exposures, exposure growth, diversification of risks, limits written, projected reinsurance costs, reinsurer financial strength, and projected impact on earnings, equity, and statutory surplus. We strive to balance reinsurer credit quality, price, terms, and our appetite to retain a certain level of risk.
Investments Segment
Our Investments Segment's objectives are to maximize the economic value of our investment portfolio by achieving stable, risk-adjusted after-tax net investment income and generating long-term growth in book value per share. Our strategies consider prevailing market conditions, our enterprise risk tolerances, and other risk implications by:
•Maximizing the portfolio's overall total return by investing (i) the premiums from our insurance operations, (ii) amounts generated through our capital management strategies, including debt and equity security issuances, and (iii) profits of our business, and
•Maintaining (i) a well-diversified portfolio across issuers, sectors, and asset classes and (ii) a fixed income securities portfolio with high credit quality and acceptable duration and maturity profiles to provide ample liquidity.
The effective duration of our fixed income and short-term investments was 4.1 years as of December 31, 2025. We monitor and manage the effective duration to maximize yield while managing interest rate risk at an acceptable level. We buy and sell investments with the intent of maximizing investment returns in the current market environment, while balancing capital preservation and ensuring adequate liquidity to support our insurance business.
At both December 31, 2025, and December 31, 2024, our fixed income and short-term investments (i) represented 92% of our invested assets, (ii) had a weighted average credit rating of "A+," and (iii) had investment grade holdings representing 97% of the total fixed income and short-term investment portfolio.
For further details on the composition, credit quality, and various risks to which our portfolio is subject, see Item 7A. "Quantitative and Qualitative Disclosures About Market Risk." of this Form 10-K.
Total Invested Assets
($ in thousands) 2025 2024 Change
Total invested assets $ 11,302,440 9,651,297 17 %
Invested assets per dollar of common stockholders' equity 3.32 3.31 -
Components of unrealized gains (losses) - before tax:
Fixed income securities (88,415) (316,796) (72)
Equity securities 14,311 2,116 576
Net unrealized gains (losses) - before tax
(74,104) (314,680) (76)
Components of unrealized gains (losses) - after tax:
Fixed income securities (69,848) (250,269) (72)
Equity securities 11,306 1,671 577
Net unrealized gains (losses) - after tax
$ (58,542) (248,598) (76)
Invested assets increased by $1.7 billion at December 31, 2025, compared to December 31, 2024, primarily reflecting (i) net proceeds from the issuance of our 5.9% Senior Notes in the first quarter of 2025, (ii) our active investment of operating cash flows, which were 25% of NPW in 2025, and (iii) a $240.6 million reduction in pre-tax net unrealized losses in our fixed income and equity securities portfolios, primarily due to lower interest rates and strong performance of U.S. equities during 2025. For additional information about our 5.9% Senior Notes, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this form 10-K.
Net Investment Income
The components of net investment income earned were as follows:
($ in thousands) 2025 2024 2025 vs. 2024 2023 2024 vs. 2023
Fixed income securities $ 459,330 389,198 18 % 345,886 13 %
Commercial mortgage loans ("CMLs") 15,491 12,448 24 9,336 33
Equity securities 23,794 18,295 30 9,395 95
Short-term investments 22,309 20,274 10 14,818 37
Alternative investments 32,388 37,053 (13) 26,777 38
Other investments 750 864 (13) 650 33
Investment expenses (22,912) (21,081) 9 (18,212) (16)
Net investment income earned - before tax 531,150 457,051 16 388,650 18
Net investment income tax expense 109,986 94,435 16 79,115 19
Net investment income earned - after tax $ 421,164 362,616 16 309,535 17
Effective tax rate 20.7
%
20.7 - pts 20.4 0.3 pts
Annual after-tax yield on fixed income investments 4.2 4.0 0.2 3.9 0.1
Annual after-tax yield on investment portfolio 4.0 4.0 - 3.7 0.3
After-tax net investment income earned increased 16% in 2025 compared to 2024, primarily driven by active portfolio management, operating cash flow deployment, and net proceeds from the issuance of our 5.9% Senior Notes in the first quarter of 2025. For additional information about our 5.9% Senior Notes, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this form 10-K.
Realized and Unrealized Investment Gains and Losses
When evaluating securities for sale, our general philosophy is to reduce our exposure to securities and sectors based on economic evaluations of whether (i) the fundamentals for that security or sector have deteriorated or (ii) the timing is appropriate to trade opportunistically for other securities with better economic-return characteristics. Net realized and unrealized gains and losses for the indicated periods were as follows:
($ in thousands) 2025 2024 2025 vs. 2024 2023 2024 vs. 2023
Net realized gains (losses) on disposals
$ (1,217) 6,276 (119)
%
(24,864) (125)
%
Net unrealized gains (losses) on equity securities
12,196 (1,964) (721) 9,510 (121)
Net credit loss benefit (expense) on fixed income securities, AFS
(1,044) (5,628) (81) 12,898 (144)
Net credit loss benefit (expense) on CMLs
(160) 217 (174) (175) (224)
Losses on securities for which we have the intent to sell (1,445) (1,248) 16 (921) 36
Other realized gains (losses)
- (602) (100) - -
Total net realized and unrealized investment gains (losses)
$ 8,330 (2,949) (382) (3,552) (17)
For additional information regarding our methodologies for recognizing losses on securities we intend to sell and estimating the allowance for credit losses, see Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Income Taxes
The following table provides information regarding income taxes.
($ in millions) 2025 2024 2023
Income tax expense
$ 123.2 51.0 93.2
Effective tax rate1
21.2 % 20.5 20.7
1The effective tax rate is calculated by taking "Total income tax expense" divided by "Income before income tax" less "Preferred stock dividends" on our Consolidated Statements of Income.
Income tax expense increased $72.2 million in 2025 compared to 2024, primarily due to (i) an underwriting profit from our Insurance Operations this year compared to an underwriting loss last year and (ii) higher net investment income. Refer to "Insurance Operations" and "Investments Segment" above for more information.
On July 4, 2025, the One Big Beautiful Bill Act (the "Act") became law. The legislation extends and modifies multiple tax provisions, some affecting current and future years. The tax law changes are reflected in the enactment period, which is the year ending December 31, 2025. Accordingly, we have analyzed the Act's major impacts, which include provisions that allow
100% bonus depreciation for certain qualified assets and full deduction of domestic research and development expenditures. Both are temporary differences and do not have an impact on the total tax expense, but provide a cash tax benefit that is estimated at $7.1 million for the year.
See Note 14. " Income Taxes" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K for (i) reconciliations of our effective tax rate to the statutory rate of 21% and (ii) details regarding our net deferred tax asset and liability.
Liquidity and Capital Resources
Capital resources and liquidity reflect our ability to generate cash flows from business operations, borrow funds at competitive rates, and raise new capital to meet our operating and growth needs.
Liquidity
We manage liquidity by generating sufficient cash flows to meet our business operations' short-term and long-term cash requirements. As discussed further below, we adjust our liquidity requirements based on economic conditions, market conditions, and future cash flow commitments.
Sources of Liquidity
The Parent's sources of cash historically have consisted of dividends from the Insurance Subsidiaries, the Parent's investment portfolio, borrowings under third-party lines of credit, intercompany revolving demand loan agreements with certain Insurance Subsidiaries, and the issuance of equity (common or preferred) and debt securities. We continue to monitor these sources, considering our short-term and long-term liquidity and capital management strategies.
The Parent's cash and investment portfolio components were as follows:
($ in thousands)
December 31, 2025 December 31, 2024
Fixed income securities $ 254,851 268,486
Equity securities 49,978 53,248
Short-term investments 78,973 62,223
Alternative investments 21,603 18,443
Cash 248 91
Total investments and cash $ 405,653 402,491
Short-term investments have historically been maintained in "AAA" rated money market funds, and fixed income securities are comprised of high-quality, liquid government and corporate securities.
The amount and composition of the Parent's investment portfolio may change over time based on various factors, including the amount and availability of dividends from our Insurance Subsidiaries, investment income, expenses, other Parent cash needs, such as dividends payable to stockholders, asset allocation investment decisions, inorganic growth opportunities, debt retirement, and share repurchases. We have an established target for the Parent to maintain liquid investments of at least twice its expected annual net cash outflow needs.
Insurance Subsidiary Dividends
The Insurance Subsidiaries generate liquidity through insurance float, created by collecting premiums and earning investment income before paying claims. The float period can extend over many years. Our investment portfolio consists of securities with maturity dates that continually provide a source of cash flow for claims payments in the ordinary course of business. To protect our Insurance Subsidiaries' capital, we purchase reinsurance coverage for significantly large claims or catastrophes that may occur.
The Insurance Subsidiaries did not pay cash dividends to the Parent in 2025. As of December 31, 2025, our allowable ordinary maximum dividend is $466 million for 2026. All Insurance Subsidiary dividends to the Parent are (i) subject to the approval and/or review of its domiciliary state insurance regulator and (ii) generally payable only from earned statutory surplus reported in its annual statements as of the preceding December 31. Although domiciliary state insurance regulators have historically approved Insurance Subsidiary dividends, there is no assurance they will approve future dividends.
New Jersey corporate law also limits the maximum amount of dividends the Parent can pay its stockholders if either (i) the Parent would be unable to pay its debts as they become due in the usual course of business, or (ii) the Parent's total assets would be less than its total liabilities. The Parent's ability to pay dividends to stockholders is also impacted by (i) covenants in
its credit agreement that obligate it, among other things, to maintain a minimum consolidated net worth and a maximum ratio of consolidated debt to total capitalization, and (ii) the terms of our preferred stock that prohibit dividends from being declared or paid on our common stock if dividends are not declared and paid, or made payable, on all outstanding preferred stock for the latest completed dividend period.
For additional information regarding dividend restrictions and financial covenants, where applicable, see Note 11. "Indebtedness," Note 17. "Equity," and Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Line of Credit
On June 30, 2025, the Parent entered into a Credit Agreement (the "Line of Credit") with the lenders named therein (the "Lenders") and Wells Fargo Bank, National Association, as administrative agent. Under the Line of Credit, the Lenders have agreed to provide the Parent with a $100 million revolving credit facility that can be increased to $200 million with the Lenders' consent. The Line of Credit will mature on June 30, 2028, and has a variable interest rate based on the Parent's debt ratings. This agreement replaced a prior credit agreement that the Parent terminated in conjunction with entering into the Line of Credit. No borrowings were made under either credit facility in 2025.
For additional information regarding the Line of Credit and corresponding representations, warranties, and covenants, refer to Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Four Insurance Subsidiaries are members of Federal Home Loan Bank ("FHLB") branches, as shown in the following table. Membership requires the ownership of branch stock and includes the right to access liquidity. All Federal Home Loan Bank of Indianapolis ("FHLBI") and Federal Home Loan Bank of New York ("FHLBNY") borrowings are required to be secured by investments pledged as collateral. For additional information regarding collateral outstanding, refer to Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Branch Insurance Subsidiary Member
FHLBI
SICSC1
SICSE1
FHLBNY SICA
SICNY
1These subsidiaries are jointly referred to as the "Indiana Subsidiaries" because they are domiciled in Indiana.
The Line of Credit permits aggregate borrowings from the FHLBI and the FHLBNY up to 10% of the respective member company's admitted assets for the previous year. SICNY is domiciled in New York, which limits its FHLBNY borrowings to the lesser of 5% of admitted assets for the most recently completed fiscal quarter or 10% of the previous year-end's admitted assets.
The following table provides information on the remaining capacity for FHLB borrowings based on these restrictions, as well as the additional FHLB stock purchase requirement to allow these member companies to borrow their remaining capacity amounts:
($ in millions) Admitted Assets Borrowing Limitation Amount Borrowed Remaining Capacity Additional FHLB Stock Requirements
December 31, 2025
SICSC $ 1,284.5 $ 128.4 32.0 96.4 2.9
SICSE 1,045.8 104.6 28.0 76.6 2.4
SICA 4,709.7 471.0 - 471.0 21.2
SICNY 892.5 44.6 - 44.6 2.0
Total $ 748.6 60.0 688.6 28.5
Short-term Borrowings
We made no material short-term borrowings from FHLB branches during 2025.
Intercompany Loan Agreements
The Parent has lending agreements with the Indiana Subsidiaries, approved by the Indiana Department of Insurance, that provide the Parent with additional intercompany liquidity. Like the Line of Credit, these lending agreements limit the Parent's borrowings from the Indiana Subsidiaries to 10% of the admitted assets of the respective Indiana Subsidiary. The following table provides information on the Parent's borrowings and remaining borrowing capacity from the two Indiana Subsidiaries:
($ in millions) Admitted Assets as of December 31, 2025 Borrowing Limitation Amount Borrowed Remaining Capacity
December 31, 2025
SICSC $ 1,284.5 $ 128.4 21.0 107.4
SICSE 1,045.8 104.6 14.0 90.6
Total $ 233.0 35.0 198.0
Additionally, we have other insurance regulator-approved intercompany agreements that facilitate liquidity management between the Parent and the Insurance Subsidiaries, thereby enhancing flexibility.
Capital Market Activities
In 2025, the Parent issued $400 million of 5.90% Senior Notes due 2035, resulting in net proceeds of $395.9 million after a $0.1 million discount and debt issuance costs of approximately $4.1 million. The proceeds from this debt issuance were used for general corporate purposes, including supporting organic growth with a $200 million capital contribution to the Insurance Subsidiaries in March 2025. The Parent had no private or public stock issuances during 2025.
On October 22, 2025, the Company announced that its Board of Directors authorized a new share repurchase program under which the Company may repurchase issued and outstanding shares of common stock up to $200 million, exclusive of any excise tax impact. The program became effective on October 27, 2025, and has no expiration date. The previously existing $100 million share repurchase program remained effective through October 24, 2025. Repurchases under both programs in 2025 were as follows:
2025
Total Number of Shares Purchased
Average Price Paid Per Share
Remaining Authorization
as of 12/31/25
(in millions)
Prior Share Repurchase Program
698,312 $ 79.60 $ -
Current Share Repurchase Program
395,073 75.94 170.0
Total 1,093,385 $ 78.28 $ 170.0
For additional information on the share repurchase program, refer to Note 17. "Equity" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Uses of Liquidity
The Parent uses the liquidity generated from the sources discussed above to pay dividends to our stockholders, among other things. Dividends on shares of the Parent's common and preferred stock are declared and paid at the discretion of the Board based on our operating results, financial condition, capital requirements, contractual restrictions, and other relevant factors. In October 2025, our Board approved a 13% increase in the quarterly cash dividend on common stock, to $0.43, from $0.38 per share. On January 29, 2026, our Board declared:
•A quarterly cash dividend on common stock of $0.43 per common share, that is payable on March 2, 2026, to holders of record as of February 13, 2026; and
•A quarterly cash dividend of $287.50 per share on our 4.60% Non-Cumulative Preferred Stock, Series B (equivalent to $0.28750 per depositary share) payable on March 16, 2026, to holders of record as of February 27, 2026.
Our ability to meet our interest and principal repayment obligations on our debt and continue to pay dividends to our stockholders depends on (i) liquidity at the Parent, (ii) the ability of the Insurance Subsidiaries to pay dividends, if necessary, and/or (iii) the availability of other sources of liquidity to the Parent. Our next borrowing principal repayment is $60 million to FHLBI due on December 16, 2026.
Restrictions on the Insurance Subsidiaries' ability to declare and pay dividends, without alternative liquidity options, could materially affect our ability to service debt and pay dividends on common and preferred stock.
Capital Resources
Capital resources ensure we can pay policyholder claims, furnish the financial strength to support underwriting insurance risks, and facilitate continued business growth. At December 31, 2025, we had GAAP stockholders' equity of $3.6 billion and statutory surplus of $3.6 billion. With total debt of $902 million at December 31, 2025, our debt-to-capital ratio was 20.0%. For additional information on our statutory surplus, see Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
The following table summarizes current and long-term material cash requirements as of December 31, 2025, which we expect to fund primarily with operating cash flows.
Payment Due by Period
Less than
1 year 		1-3
years 		3-5
years 		More than
5 years
($ in millions) Total
Notes payable $ 910.0 60.0 - - 850.0
Interest on debt obligation 704.5 51.8 100.1 100.1 452.5
Subtotal 1,614.5 111.8 100.1 100.1 1,302.5
Gross loss and loss expense payments 7,225.4 1,915.9 2,406.9 1,286.0 1,616.6
Ceded loss and loss expense payments 877.8 219.9 236.6 136.6 284.7
Net loss and loss expense payments 6,347.6 1,696.0 2,170.3 1,149.4 1,331.9
Total $ 7,962.1 1,807.8 2,270.4 1,249.5 2,634.4
The loss and loss expense payments in the table above represent estimated paid amounts by period on our loss and loss expense reserves. These estimates are based on past experience, adjusted for current developments and anticipated trends, and involve considerable judgment. There is no precise method for evaluating the impact of any specific factor on the projected timing of loss and loss expense reserve payments, so the timing and amounts of the actual payments will be affected by many factors. Therefore, the projected settlement of the reserves for net loss and loss expense may differ, perhaps significantly, from actual future payments. The Insurance Subsidiaries' net loss and loss expense reserves duration was 3.0 years at December 31, 2025.
For more information on our case reserves and estimates of reserve for loss and loss expense IBNR, refer to the "Reserve for Loss and Loss Expense" section in the "Critical Accounting Policies and Estimates" section of this MD&A and Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
For additional information regarding cross-default provisions associated with our notes payable in the table above or our Line of Credit, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." in this Form 10-K.
In addition to the above, the following table summarizes certain contractual obligations we had at December 31, 2025, that may require us to invest additional amounts in our investment portfolio, which we would fund primarily with operating cash flows.
($ in millions) Amount of Obligation
Fixed income securities
$ 508.8
Alternative investments
376.3
CMLs
19.4
Equity securities
18.8
Total $ 923.3
There is no certainty (i) that any such additional investments will be required and (ii) about the timing of funding. We expect to have the capacity to fund these commitments through our normal operating and investing activities as they come due.
Our other cash requirements include, without limitation, dividends to stockholders, capital expenditures, and other operating expenses, including commissions to our distribution partners, labor costs, premium taxes, general and administrative expenses, and income taxes.
As of December 31, 2025 and 2024, we had no (i) material guarantees on behalf of others and trading activities involving non-exchange traded contracts accounted for at fair value, (ii) material transactions with related parties other than those disclosed in Note 18. "Related Party Transactions" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K, and (iii) material relationships with unconsolidated entities or financial partnerships, such as structured finance or special
purpose entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Consequently, we are not exposed to any material financing, liquidity, market, or credit risk related to off-balance sheet arrangements.
We continually monitor our cash requirements and the capital resources we maintain at the holding company and Insurance Subsidiary levels. As part of our long-term capital strategy, we strive to maintain capital metrics that support our targeted financial strength relative to the macroeconomic environment. Based on our analysis and market conditions, we may take a variety of actions, including, without limitation, contributing capital to the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing existing debt, repurchasing shares of the Parent's common stock, and adjusting common stockholders' dividends.
Our capital management strategy is intended to protect the interests of the Insurance Subsidiaries' policyholders and our stockholders, and to enhance our financial strength and underwriting capacity. We have a strong capital base and a high-quality underwriting portfolio, positioning us well to capitalize on potential market opportunities.
Book value per common share increased 18% to $56.74 as of December 31, 2025, from $47.99 as of December 31, 2024, driven by $7.49 in net income available to common stockholders per diluted common share and a $3.01 reduction in after-tax net unrealized losses on our fixed income securities portfolio, partially offset by $1.57 in dividends to our common stockholders. The decrease in net unrealized losses on our fixed income securities was primarily driven by a decline in benchmark U.S. Treasury rates. Our adjusted book value per share, which is book value per share excluding total after-tax unrealized gains or losses on investments included in accumulated other comprehensive income (loss), increased to $57.91 as of December 31, 2025, from $52.10 as of December 31, 2024.
Cash Flows
Net cash provided by operating activities increased to $1.2 billion in 2025, compared to $1.1 billion in 2024, primarily driven by higher cash premium receipts in 2025 compared to 2024. Operating cash flows were 25% of NPW in 2025 compared to 24% in 2024. For more information on our underwriting results, refer to "Insurance Operations" above in this MD&A.
Net cash used in investing activities increased to $1.5 billion in 2025, compared to $947 million in 2024, primarily due to the investment of proceeds from our 5.9% Senior Note issuance in 2025. These proceeds also drove the $207 million net cash provided by financing activities in 2025 compared to $103 million in net cash used in financing activities in 2024. Partially offsetting cash proceeds from the 5.9% Senior Note issuance was cash used for share repurchases and common stock dividends.
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