Oct 23, 2026 earnings call — Underwriting focus and capital returns
Selective increased its quarterly dividend 12%.
Revenue $1.3B (est $1.2B) · EPS $2.37 (est $1.91)
Key quotes
"We remain focused on generating profitable growth by applying greater pricing and underwriting granularity, improving retention on our best-performing business, and increasing new business production in areas that meet our profitability objectives."
"In E&S, our retail access initiative has moved from build-out to execution. The structural investments are largely complete."
"Given the increased level of share repurchases so far this year, our board authorized a new $200 million share repurchase program."
Analyst Q&A 5
remediation progress and expense pressure
Q (Michael Phillips · Oppenheimer): He asked how much of the loss-ratio improvement came from remediation versus normal variation and how far along the remediation is. He also asked about expense-ratio investments and any flexibility on timing.
A: They said about 5 of the 8-point decline in net premiums written came from lower retention in underperforming cohorts that represent about 10% of the portfolio. They said they are effectively three-quarters through a full renewal cycle. They will keep investing but will maintain cost discipline; an operational premium-audit enhancement caused higher premium write-offs, and they still expect the full year to come in at a 31.5 or thereabout.
"We're effectively three-quarters through a full renewal cycle." — John Marchioni (CEO·CHAIR)
cohort profit gap and buyback reason
Q (Rowland Mayor · RBC): He asked for the profitability difference between best and worst cohorts in GL or commercial auto. He also asked whether buybacks were opportunistic because of stock price or excess capital, and whether GAAP combined ratio will be near the midpoint.
A: They said they will not disclose that level of cohort profitability detail but that differences are meaningful and the mix shift impact is meaningful. On buybacks, they said the decision balances their go-forward growth view and buying stock at valuations they find attractive, and the board added a $200 million authorization for flexibility. They said, putting the pieces together, they expect to be closer to the middle of the GAAP combined-ratio range.
"We are not going to go into that level of specificity." — John Marchioni (CEO·CHAIR)
buyback decisions and near-term growth capital
Q (Michael Zaremski · BMO): He asked whether the past buybacks reveal a valuation range and whether buybacks will continue in 4Q. He also asked if there is less near-term need for growth capital after corrective actions.
A: They said every quarter they reevaluate buybacks based on facts and new information from the prior 90 days and will not forecast actions; they buy when valuations are attractive relative to long-term prospects. On growth, they said targeted renewal actions have pressured near-term growth and conversion rates, but they are adding distribution and pursuing adequately priced new-business opportunities. Long term, they want each line at or approaching its risk-adjusted combined-ratio target.
"Every quarter we are reevaluating that based on the facts and circumstances and the new information that we have acquired over the prior 90 days." — Patrick Brennan (CFO)
E&S strategy in soft market
Q (Paul Newsome · Piper Sandler): He asked how they plan to 'bob and weave' in the competitive excess & surplus (E&S) market and find good underwriting opportunities inside a soft market.
A: They said the focus is finding accounts they can write at target profitability by pricing and underwriting discipline. They plan to increase submission activity — for example, expanding retail partnerships and offering inland marine to wholesale partners on a non-admitted basis — so lower conversion rates can be offset by more submissions. This approach should let them manage through a competitive E&S market.
"While conversion rates will remain pressured relative to recent history because of overall pricing dynamics, it is about opening up new opportunities to create more submission activity so that your lower conversion rates can be offset by higher submissions." — John Marchioni (CEO·CHAIR)
retention, premiums and corporate expenses
Q (Meyer Shields · Keefe, Bruyette & Woods): He asked if the bigger underwriting headwind in Q3 vs Q2 was just a full-quarter effect or accelerating. He asked if exposures fell ~20% and were concentrated in New Jersey. He also asked why general corporate expenses were low and whether there is a run-rate guide.
A: They said there was a small acceleration driven by lower retention in the low and very low buckets. They said renewal premium change in commercial auto is just under 11%, and that quarter premiums in commercial auto were down about 11%, year-to-date down about 7%; they also noted exposure is continuing to be up alongside rate. On general corporate expenses, they said the low quarter result was driven by changes in long-term incentive compensation tied to stock-price-driven award tranches.
"But there's no question we're seeing a decline in the auto line in the quarter premiums in commercial auto were down about 11%, year-to-date down about 7%." — John Marchioni (CEO·CHAIR)