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What changed in SELECTIVE INSURANCE GROUP INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SELECTIVE INSURANCE GROUP INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+607 added−620 removedSource: 10-K (2026-02-09) vs 10-K (2025-02-10)

Top changes in SELECTIVE INSURANCE GROUP INC's 2025 10-K

607 paragraphs added · 620 removed · 518 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

163 edited+18 added−17 removed52 unchanged
Biggest changeAfter that, our pace of geographic expansion should moderate as we move closer to our goal of operating our Standard Commercial Lines business with a near national footprint. 8 Table of Contents We manage and support our business from offices in (i) Branchville, New Jersey, our corporate headquarters; (ii) Farmington, Connecticut, the principal office for investment operations; (iii) Hartford, Connecticut, used by our information technology ("IT") department and several other corporate functions; (iv) Richmond, Virginia, the location of our underwriting and claims service center; and (v) six regional branches, with the locations listed in the following table: Region Office Location Heartland Indianapolis, Indiana New Jersey Hamilton, New Jersey Northeast Branchville, New Jersey Mid-Atlantic Allentown, Pennsylvania, and Hunt Valley, Maryland Southern Charlotte, North Carolina West Scottsdale, Arizona Our E&S Lines have offices in Scottsdale, Arizona, and Dresher, Pennsylvania.
Biggest changeWhile we expect to continue to grow our presence in states where we have recently expanded, our pace of geographic expansion is moderating as we move closer to our goal of operating our Standard Commercial Lines business with a near-national footprint. 8 Table of Contents We manage and support our business from several offices, including; (i) Branchville, New Jersey, for corporate functions; (ii) Farmington, Connecticut, the principal office for investment operations; (iii) Hartford, Connecticut, used by our information technology ("IT") department and several other corporate functions; (iv) Richmond, Virginia, where our underwriting and claims service center is located; and (v) six regional branches, listed in the following table: Region Office Location Heartland Indianapolis, Indiana New Jersey Hamilton, New Jersey Northeast Branchville, New Jersey Mid-Atlantic Allentown, Pennsylvania, and Hunt Valley, Maryland Southern Charlotte, North Carolina West Scottsdale, Arizona We have leased a new facility in Short Hills, New Jersey, where many Branchville operations, including our Executive Leadership Team, will be relocating beginning in mid-2026 and continuing through 2029.
Property and casualty insurance activities regulated by the states include the following: • Protection of claimants: Oversight of financial matters to ensure claims-paying ability, including minimum capital; statutory surplus; solvency standards; accounting methods; form and content of statutory financial statements and other reports; loss and loss expense reserves; investments; reinsurance; dividend payments and other distributions to shareholders; security deposits; and periodic financial examinations. • Protection of policyholders: Oversight of matters including certificates of authority and other insurance company licenses; licensing and compensation of distribution partners; underwriting criteria; premium rates (required not to be excessive, inadequate, or unfairly discriminatory); policy forms; policy terminations; claims handling and related practices; cybersecurity; data protection and customer privacy; reporting of premium and loss statistical information; periodic market conduct examinations; unfair trade practices; mandatory participation in shared market mechanisms, such as assigned risk pools and reinsurance pools; mandatory participation in state guaranty funds; and mandated continuing workers compensation coverage post-termination of employment. 14 Table of Contents • Protection of policyholders, claimants, and shareholders: Oversight of matters related to our ownership of the Insurance Subsidiaries, including registration of insurance holding company systems in states where we have domiciled insurance subsidiaries, reporting about intra-holding company system developments, self-assessment of current and future risks, including cybersecurity and climate change, and required pre-approval of certain transactions that may materially affect the operations, management, or financial condition of the insurers, including dividends and change in control.
Property and casualty insurance activities regulated by the states include the following: • Protection of claimants: Oversight of financial matters to ensure claims-paying ability, including minimum capital; statutory surplus; solvency standards; accounting methods; form and content of statutory financial statements and other reports; loss and loss expense reserves; investments; reinsurance; dividend payments and other distributions to shareholders; security deposits; and periodic financial examinations. 14 Table of Contents • Protection of policyholders: Oversight of matters including certificates of authority and other insurance company licenses; licensing and compensation of distribution partners; underwriting criteria; premium rates (required not to be excessive, inadequate, or unfairly discriminatory); policy forms; policy terminations; claims handling and related practices; cybersecurity; data protection and customer privacy; reporting of premium and loss statistical information; periodic market conduct examinations; unfair trade practices; mandatory participation in shared market mechanisms, such as assigned risk pools and reinsurance pools; mandatory participation in state guaranty funds; and mandated continuing workers compensation coverage post-termination of employment. • Protection of policyholders, claimants, and shareholders: Oversight of matters related to our ownership of the Insurance Subsidiaries, including registration of insurance holding company systems in states where we have domiciled insurance subsidiaries, reporting about intra-holding company system developments, self-assessment of current and future risks, including cybersecurity and climate change, and required pre-approval of certain transactions that may materially affect the operations, management, or financial condition of the insurers, including dividends and change in control.
NAIC Financial Monitoring Tools Our various state insurance regulators are members of the National Association of Insurance Commissioners ("NAIC"), which has established statutory accounting principles ("SAP") and other accounting reporting formats and model insurance laws and regulations governing insurance companies.
NAIC Financial Monitoring Tools Our various state insurance regulators are members of the National Association of Insurance Commissioners ("NAIC"), which has established statutory accounting principles ("SAP"), other accounting reporting formats, and model insurance laws and regulations governing insurance companies.
Insurance Operations In managing our insurance operations' physical climate-related risks, we model our property portfolio for (i) hurricanes, winter storms, wildfires, and other wind events semiannually in July and January and (ii) earthquakes, a significantly lower exposure for our portfolio than hurricanes and other wind events, annually in July.
Insurance Operations In managing our insurance operations' physical climate-related risks, we model our property portfolio for (i) hurricanes, winter storms, wildfires, and other wind events semiannually in January and July and (ii) earthquakes, a significantly lower exposure for our portfolio than hurricanes and other wind events, annually in July.
The following table shows the principal types of property and casualty insurance policies we underwrite and issue: Types of Policies Category of Insurance Standard Commercial Lines Standard Personal Lines E&S Lines Commercial Property (including Inland Marine) Property X X Commercial Automobile Property/Casualty X X General Liability (including Excess Liability/Umbrella) Casualty X X Workers Compensation Casualty X Businessowners' Policies Property/Casualty X Bonds (Fidelity and Surety) Casualty X Homeowners Property/Casualty X Personal Automobile Property/Casualty X Personal Umbrella Casualty X Flood 1 Property X X 1 Most of our flood loss exposure relates to our participation in the NFIP's WYO program, to which we cede 100% of our WYO flood insurance premiums and losses.
The following table shows the principal types of property and casualty insurance policies we underwrite and issue: Types of Policies Category of Insurance Standard Commercial Lines Standard Personal Lines E&S Lines Commercial Property (including Inland Marine) Property X X Commercial Package Policies Property/Casualty X X Commercial Automobile Property/Casualty X X General Liability (including Excess Liability/Umbrella) Casualty X X Workers Compensation Casualty X Businessowners' Policies Property/Casualty X Bonds (Fidelity and Surety) Casualty X Homeowners Property/Casualty X Personal Automobile Property/Casualty X Personal Umbrella Casualty X Flood 1 Property X X 1 Most of our flood loss exposure relates to our participation in the NFIP's WYO program, to which we cede 100% of our WYO flood insurance premiums and losses.
Item 1. Business. Overview Selective Insurance Group, Inc. ("Parent") is a New Jersey insurance holding company incorporated in 1977 that owns ten property and casualty insurance subsidiaries ("Insurance Subsidiaries"). The Insurance Subsidiaries sell products and services only in the United States ("U.S.") and exclusively through independent insurance agents and wholesale brokers.
Item 1. Business. Overview Selective Insurance Group, Inc. ("Parent") is a New Jersey insurance holding company incorporated in 1977. It owns ten property and casualty insurance subsidiaries ("Insurance Subsidiaries") that sell products and services only in the United States ("U.S.") and exclusively through independent insurance agents and wholesale brokers.
A description of each Management committee and our ERM function follows: • Management Investment Committee - Responsible for (i) setting and implementing the investment objectives and asset allocation, (ii) approving and overseeing compliance with investment policies, (iii) selecting qualified external investment managers and advisors, and (iv) monitoring performance, transactions, and specific risk metrics.
A description of each Management committee and our ERM function follows: • Management Investment Committee ("MIC") - Responsible for (i) setting and implementing the investment objectives and asset allocation, (ii) approving and overseeing compliance with investment policies, (iii) selecting qualified external investment managers and advisors, and (iv) monitoring performance, transactions, and specific risk metrics.
It meets semiannually, before each major treaty renewal and as needed, and updates the Board's Risk Committee at least semiannually on reinsurance purchases, market trends, and changes in treaty structure and terms and conditions. For any reinsurance-related catastrophe bond issuance, the Board’s Finance and Investments Committee reviews and approves any related security offerings.
It meets semiannually, before each major treaty renewal and as needed. The MSC updates the Board's Risk Committee at least semiannually on reinsurance purchases, market trends, and changes in treaty structure, terms, and conditions. For any reinsurance-related catastrophe bond issuance, the Board’s Finance and Investments Committee reviews and approves any related security offerings.
We aim to mitigate climate change impact by (i) prudently overseeing and managing catastrophe risk exposure, (ii) providing our customers responsive claims handling, risk management services, and proactive weather alerts, (iii) preparing for the continuing transition to clean energy, and (iv) reducing our carbon footprint.
We aim to mitigate climate change impact by (i) prudently overseeing and managing catastrophe risk exposure, (ii) providing our customers with responsive claims handling, risk management services, and proactive weather alerts, (iii) preparing for the continuing transition to clean energy, and (iv) reducing our carbon footprint.
They work with our regional underwriters to deliver appropriate claims service, communicate trends, and discuss results and client services; • Cost-effective delivery of claims services and control of loss and loss expense.
They work with our regional underwriters to deliver appropriate claims service, communicate trends, and discuss client services; • Cost-effective delivery of claims services and loss and loss expense control.
We categorize our major risks into five broad categories: • Asset risk, stemming primarily from our investment portfolio, reinsurance recoverables, and other receivables including credit and market risk; • Underwriting risk, which is the risk our insured losses exceed our expectations, including: ◦ Losses from inadequate loss reserves; ◦ Larger than expected non-catastrophe current accident year losses; and ◦ Catastrophe losses that exceed our expectations or our reinsurance treaty limits. • Liquidity risk, which is the risk we will be unable to meet our contractual obligations as they become due because we cannot liquidate assets or obtain adequate funding without incurring unacceptable investment losses or borrowing expenses; 18 Table of Contents • Other risks, which include a broad range of operational risks, many difficult to quantify, like talent/human capital; market conditions; economic, legal, regulatory, reputational, and strategic risks; and the risks of fraud, human failure, modeling, inadequate business continuity plans, and failure of controls or systems, including over cybersecurity risk; and • Emerging risks, which include risks in any category that are new, known, but evolving rapidly, or increasing substantially compared to historical levels.
We categorize our major risks into five broad categories: • Asset risk, arising primarily from our investment portfolio, reinsurance recoverables, and other receivables including credit and market risk; • Underwriting risk, which is the risk our insured losses exceed our expectations, and includes: ◦ Losses from inadequate loss reserves; ◦ Larger than expected non-catastrophe current accident year losses; and ◦ Catastrophe losses that exceed our expectations or our reinsurance treaty limits. 18 Table of Contents • Liquidity risk, which is the risk we will be unable to meet our contractual obligations as they become due because we cannot liquidate assets or obtain adequate funding without incurring unacceptable investment losses or borrowing costs; • Other risks, which include a broad range of risks, many difficult to quantify, like talent/human capital; market conditions; operational, economic, legal, regulatory, reputational, and strategic risks; and the risks of fraud, human failure, modeling, inadequate business continuity plans, and failure of controls or systems, including over cybersecurity risk; and • Emerging risks, which include risks in any category that are new, known, but evolving rapidly, or increasing substantially compared to historical levels.
For some time, we have not underwritten specific environmentally-hazardous risks related to production from coal mines, thermal coal plants, or oil sands extraction because they are outside our underwriting appetite. Our underwriting controls employ authority levels for large individual property risks and large property accounts that could create or exacerbate a property aggregation issue.
For some time, we have not underwritten specific environmentally-hazardous risks related to production from coal mines, thermal coal plants, or oil sands extraction because they fall outside our underwriting appetite. Our underwriting controls employ authority levels for large individual property risks and large property accounts that could create or exacerbate a property aggregation issue.
We develop our coverages by (i) adopting policy forms created or filed by statistical rating agencies or other third parties, including Verisk Analytic's Insurance Services Office, Inc. ("ISO"), American Association of Insurance Services, Inc. ("AAIS"), and the National Council on Compensation Insurance, Inc. ("NCCI"), (ii) independently creating our policy forms, or (iii) modifying third-party policy forms.
We develop our coverages by (i) adopting policy forms created or filed by statistical rating agencies or other third parties, including Verisk Analytics' Insurance Services Office, Inc. ("ISO"), American Association of Insurance Services, Inc. ("AAIS"), and the National Council on Compensation Insurance, Inc. ("NCCI"), (ii) independently creating our policy forms, or (iii) modifying third-party policy forms.
Insurance operations-related expenses fall into three categories on our Consolidated Statements of Income: (i) "Loss and loss expense incurred," which includes losses associated with claims and loss expenses for adjusting claims incurred during a policy's term, net of losses and loss expenses ceded to reinsurers; (ii) "Amortization of deferred policy acquisition costs," which includes expenses related to the successful acquisition of insurance policies, such as commissions to our distribution partners and premium taxes, recognized ratably over a policy's term; and (iii) "Other insurance expenses," which includes acquisition and other insurance-related expenses not otherwise classified as 5 Table of Contents "Loss and loss expense incurred" or "Amortization of deferred policy acquisition costs" incurred in maintaining policies.
Insurance operations-related expenses fall into three categories on our Consolidated Statements of Income: (i) "Loss and loss expense incurred," which includes losses associated with claims and loss expenses for adjusting claims incurred during a policy's term, net of losses and loss expenses ceded to reinsurers; (ii) "Amortization of deferred policy acquisition costs," which includes expenses related to the successful acquisition of insurance policies, such as commissions to our distribution partners and premium taxes, recognized ratably over a policy's term; and (iii) "Other insurance expenses," which includes acquisition and other insurance-related expenses not otherwise classified as "Loss and loss expense incurred" or "Amortization of deferred policy acquisition costs" incurred in maintaining policies.
Insurance Operations Competition We face substantial competition in the insurance marketplace from public, private, and mutual insurance companies with varying levels of brand recognition, scale and operational efficiency, capital bases, book of business diversification, and cost of capital. Like us, many competitors rely on independent partners to distribute their products and services.
Insurance Operations Competition We face substantial competition in the insurance marketplace from public, private, and mutual insurance companies with varying levels of brand recognition, scale and operational efficiency, capital bases, book of business diversification, and cost of capital. Many competitors rely on independent partners to distribute their products and services.
Our established catastrophic risk tolerance requires that no more than 10% of stockholders’ equity is 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 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.
The GCC expands the existing RBC calculation to include (i) capital requirements for other regulated entities in the group and (ii) defined capital calculations for other group entities that are unregulated. The calculation provides state insurance regulators with additional analytical information for assessing group risks and capital adequacy, complementing the existing holding company disclosures and analyses.
The GCC expands the existing RBC calculation to include (i) capital requirements for other regulated entities in the group and (ii) defined capital calculations for other group entities that are unregulated. The calculation provides state insurance regulators with additional analytical information to assess group risks and capital adequacy, complementing the existing holding company disclosures and analyses.
We regularly analyze our overall reserve position through internal and external actuarial reserve reviews. For a discussion of our loss reserving process, see "Critical Accounting Policies and Estimates" in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." and Note 2. "Summary of Significant Accounting Policies" in Item 8.
We regularly assess our overall reserve position through internal and external actuarial reserve reviews. For a discussion of our loss reserving process, see "Critical Accounting Policies and Estimates" in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." and Note 2. "Summary of Significant Accounting Policies" in Item 8.
Major Risk Category MIC Underwriting Committee EPMO Large Claims Committee Reserve Committee ERC Disclosure Committee MSC Asset Risk X X X Underwriting Risk X X X X X Liquidity Risk X X X Other Risks X X X X Emerging Risks X Our risk governance structure facilitates effective risk conversations across all levels and disciplines of the organization and promotes strong risk management practices.
Major Risk Category MIC Underwriting Committee EPMO Large Claims Committee Reserve Committee ERC Disclosure Committee MSC Asset Risk X X X Underwriting Risk X X X X X Liquidity Risk X X X Other Risks X X X X Emerging Risks X Our risk governance structure facilitates effective risk conversations across all levels and disciplines of the organization, promoting strong risk management practices.
Our fixed income securities primarily include corporate, asset-backed and mortgage-backed securities, and state and local municipal obligations. We also invest in public equity securities, commercial mortgage loans, short-term investments, alternative investments, and other investments. Alternative investments primarily include limited partnership investments in private equity, private credit, and real estate strategies.
Our fixed income securities primarily include corporate securities, collateralized loan obligations and other asset-backed securities, mortgage-backed securities, and state and local municipal obligations. We also invest in public equity securities, commercial mortgage loans, short-term investments, alternative investments, and other investments. Alternative investments primarily include limited partnership investments in private equity, private credit, and real estate strategies.
The predictive capabilities of our models depend on the quantity and quality of available statistical data, which we may supplement with other market information, third-party data, and underwriting judgment to refine statistical rating agencies' rating plans or independently develop proprietary rating plans.
The predictive capabilities of these models depend on the quantity and quality of available statistical data, which we may supplement with other market information, third-party data, and underwriting judgment to refine statistical rating agencies' rating plans or independently develop proprietary rating plans.
The Dodd-Frank Act, enacted in 2010 in response to the 2008 and 2009 financial markets crises, provided for some public company corporate governance reforms and some oversight of the business of insurance, including: • Establishing the Federal Insurance Office ("FIO") under the U.S.
The Dodd-Frank Act, enacted in 2010 in response to the 2008 and 2009 financial market crises, provided for some public company corporate governance reforms and some oversight of the business of insurance, including: • Establishing the Federal Insurance Office ("FIO") under the U.S.
We have business continuity plans for our key data processing facility (Disaster Recovery Plan), the leadership team (Executive Crisis Management Plan), and significant operational areas. We review, update, and test these plans at least annually.
We have business continuity plans in place for our key data processing facility (Disaster Recovery Plan), the leadership team (Executive Crisis Management Plan), and significant operational areas. We review, update, and test these plans at least annually.
The ERM unit, the ERC, and Management stay informed on key climate change risk developments through industry publications, webinars, conferences, and regular engagement with outside sources, such as our reinsurance brokers, investment managers, trade associations, lawyers, and consultants. Our ERM function is responsible for measuring, assessing, and monitoring the mitigation of climate change physical and transition risks.
The ERM unit, the ERC, and Management stay informed about key climate change risk developments through industry publications, webinars, conferences, and regular engagement with outside sources, such as our reinsurance brokers, investment managers, trade associations, lawyers, and consultants. Our ERM function is responsible for measuring, assessing, and monitoring the mitigation of climate change-related physical and transition risks.
Customers and Customer Markets We categorize our Standard Commercial Lines customers into five strategic business units ("SBUs"): Percentage of Standard Commercial Lines DPW Description Contractors 44% General contractors and trade contractors Mercantile and Services 26% Retail, office, lessors risk/property owners, automobile services, and golf courses Community and Public Services 15% Public entities, social services, religious institutions, and schools Manufacturing and Wholesale 14% Manufacturers, wholesalers, and distributors Bonds 1% Fidelity and surety Total Standard Commercial Lines 100% We do not categorize Standard Personal Lines or E&S Lines customers into SBUs.
Customers and Customer Markets We categorize our Standard Commercial Lines customers into five strategic business units ("SBUs"): Percentage of Standard Commercial Lines DPW Description Contractors 43% General contractors and trade contractors Mercantile and Services 26% Retail, office, lessors risk/property owners, automobile services, and golf courses Community and Public Services 16% Public entities, social services, religious institutions, and schools Manufacturing and Wholesale 14% Manufacturers, wholesalers, and distributors Bonds 1% Fidelity and surety Total Standard Commercial Lines 100% We do not categorize Standard Personal Lines or E&S Lines customers into SBUs.
Geographic Markets We sell our insurance products and services by segment in the following geographic markets: • Standard Commercial Lines products and services, primarily in 35 states and the District of Columbia. • Standard Personal Lines products and services, primarily in 15 states in the Eastern, Midwestern, and Southwestern regions of the U.S.
Geographic Markets We sell our insurance products and services by segment in the following geographic markets: • Standard Commercial Lines products and services, primarily in 36 states and the District of Columbia. • Standard Personal Lines products and services, primarily in 15 states in the Eastern, Midwestern, and Southwestern regions of the U.S.
Based on our 2024 statutory financial statements prepared in accordance with SAP, all our Insurance Subsidiaries had total adjusted capital substantially exceeding the regulatory action levels defined by the NAIC. • Group Capital Calculation ("GCC").
Based on our 2025 statutory financial statements prepared in accordance with SAP, all our Insurance Subsidiaries had total adjusted capital substantially exceeding the regulatory action levels defined by the NAIC. • Group Capital Calculation ("GCC").
Management and Operating Committees Our Chief Executive Officer (“CEO”) directs the implementation of our business strategy. Management regularly reports to the Board on significant events, issues, and risks that may materially affect our business or financial performance.
Management and Operating Committees Our Chief Executive Officer ("CEO") directs the implementation of our business strategy. Management regularly reports to the Board on significant events, issues, and risks that may materially affect our business or financial performance.
We have also implemented several initiatives at our corporate headquarters to lower our environmental impact, including: • Enhanced waste management and recycling; • Reducing the use of paper within our business; • Conversion of all corporate headquarters light bulbs to LED; • Hybrid work schedule; • Repurposing commingled recyclables; • Installed electric vehicle charging stations for employee use; • Elimination of Styrofoam products in our cafeteria; • Recycling and more efficient energy use of electronic equipment; and • Reducing our water usage through automatic plumbing features.
We have also implemented several initiatives at our Branchville office to lower our environmental impact, including: • Enhanced waste management and recycling; • Reducing the use of paper within our business; • Conversion of all Branchville office light bulbs to LED; • Hybrid work schedule; • Repurposing commingled recyclables; • Installed electric vehicle charging stations for employee use; • Elimination of Styrofoam products in our cafeteria; • Recycling and more efficient energy use of electronic equipment; and • Reducing our water usage through automatic plumbing features.
We sell our Standard Commercial Lines property and casualty insurance products and services to commercial enterprises, typically businesses, non-profit organizations, and local government agencies, primarily in 35 states and the District of Columbia.
We sell our Standard Commercial Lines property and casualty insurance products and services to commercial enterprises, typically businesses, non-profit organizations, and local government agencies, primarily in 36 states and the District of Columbia.
Board Oversight Oversight and guidance are our Board's primary functions. The Board and its committees ("Board Committees") oversee our business performance and the management team ("Management"). The Board reviews and discusses Management reports about our performance, strategy, risks, and significant issues. Twelve of thirteen Board members are independent.
Board Oversight Oversight and guidance are our Board's primary functions. The Board and its committees ("Board Committees") oversee our business performance and the management team ("Management"). The Board reviews and discusses Management reports about our performance, strategy, risks, and significant issues. Eleven of twelve Board members are independent.
To measure financial performance, we use (i) net income (or loss) available to common stockholders and (ii) a calculation of operating income that does not conform to U.S. generally accepted accounting principles ("non-GAAP"). Non-GAAP operating income differs from net income available to common stockholders by excluding after-tax net realized and unrealized gains and losses on investments.
To measure financial performance, we use (i) net income (or loss) available to common stockholders and (ii) an operating income calculation that does not conform to U.S. generally accepted accounting principles ("non-GAAP"). Non-GAAP operating income differs from net income available to common stockholders by excluding after-tax net realized and unrealized gains and losses on investments.
Our investment philosophy includes setting specific risk and return objectives for the fixed income, equity, and alternative investment portfolios and comparing each to a weighted-average benchmark of comparable indices. Other important measures of our overall financial performance that we consider include return on common equity ("ROE") and non-GAAP operating return on common equity ("non-GAAP operating ROE").
Our investment philosophy is predicated on setting specific risk and return objectives for the fixed income, equity, and alternative investment portfolios and comparing each to a weighted-average benchmark of comparable indices. Other important measures of our overall financial performance that we consider include return on common equity ("ROE") and non-GAAP operating return on common equity ("non-GAAP operating ROE").
Based on our 2024 statutory financial statements prepared in accordance with SAP, our GCC ratio exceeded the regulatory action minimum threshold. • Annual Financial Reporting Regulation (referred to as the "Model Audit Rule").
Based on our 2025 statutory financial statements prepared in accordance with SAP, our GCC ratio exceeded the regulatory action minimum threshold. • Annual Financial Reporting Regulation (referred to as the "Model Audit Rule").
We monitor our investment exposure to carbon-intensive industries to measure our vulnerability to climate-related risks involved with the transition to a low-carbon economy. The ERM unit evaluates our catastrophe risk exposure relative to our established tolerances.
We monitor our investment exposure to carbon-intensive industries to measure our vulnerability to climate-related risks involved with the transition to a low-carbon economy. The ERM unit assesses our catastrophe risk exposure relative to our established tolerances.
We believe that as the world transitions to a low-carbon economy, the value of these 21 Table of Contents assets could be at greater risk. Other In addition to mitigating insurance operations and investment risk, we: • Have robust plans to ensure operational continuity if we suffer unforeseen or catastrophic events.
We believe that as the world transitions to a low-carbon economy, the value of these assets could be at greater risk. Other In addition to mitigating insurance operations and investment risk, we: • Have robust plans to ensure operational continuity if we suffer unforeseen or catastrophic events.
When considering large property accounts, the Underwriting Committee typically (i) reviews an evaluation of property aggregations in the particular county and state and projections of marginal impact on our aggregate modeled losses, assuming we wrote the risk and (ii) discusses our catastrophe risk aggregation appetite and the appropriate pricing for taking the increased risk aggregation.
When considering large property accounts, the Underwriting Committee typically (i) reviews an evaluation of property aggregations by county and state and projections of marginal impact on our aggregate modeled losses, assuming we wrote the risk and (ii) discusses our catastrophe risk aggregation appetite and the appropriate pricing for taking the increased risk aggregation.
We derive nearly all of our income/loss in three ways: • Underwriting income/loss from our insurance operations . DPW, gross premiums, NPW, and net premiums earned ("NPE") are used to evaluate underwriting income/loss. DPW are the amounts billed to policyholders for insurance coverage and services. Gross premiums are DPW plus premiums assumed from other insurers and mandatory pools and associations.
We derive nearly all our income/loss in three ways: • Underwriting income/loss from our insurance operations . We use DPW, gross premiums, NPW, and net premiums earned ("NPE") to evaluate underwriting income/loss. DPW are the amounts billed to policyholders for insurance coverage and services. Gross premiums are DPW plus premiums assumed from other insurers and mandatory pools and associations.
To support our employees' social and emotional well-being, we encourage connections with their colleagues and communities through various programs, such as paid time off for volunteering, matching charitable donations, employee engagement events, employee resource and affinity groups, and unique programming to meet employee needs.
To support our employees' social and emotional well-being, we encourage connections with their colleagues and communities through various programs, including paid time off for volunteering, matching charitable donations, employee engagement events, employee resource and affinity groups, and unique programming to meet employee needs.
Understanding and helping mitigate climate change perils for our business and customers is core to our operations and strategy. We believe these efforts (i) demonstrate responsible corporate action to mitigate climate change impact and (ii) will contribute to sustained superior financial and operating performance over time that will reward our shareholders.
Understanding and helping mitigate climate change risks to our business and customers is core to our operations and strategy. We believe these efforts (i) demonstrate responsible corporate action to mitigate climate change impact and (ii) will contribute to sustained superior financial and operating performance over time that will reward our shareholders.
Physical risks arise from the changing frequency, severity, and characteristics of acute events, like severe convective storms, hurricanes, floods, and wildfires. These risks can directly affect our underwriting results, the long-term viability of specific business lines we write, and our investment portfolio.
Physical risks arise from the changing frequency, severity, and characteristics of acute events, like severe 20 Table of Contents convective storms, hurricanes, floods, and wildfires. These risks can directly affect our underwriting results, the long-term viability of specific business lines we write, and our investment portfolio.
The Large Claims Committee meets as needed. • Reserve Committee - Responsible for monitoring loss and loss expense reserve levels and taking management actions on financial recording of reserves. The Reserve Committee reports reserve indications and actions to the Board and its Audit Committee. In addition, key reserve metrics are reported to the ERC and the Board's Risk Committee.
The Large Claims Committee meets as needed. • Reserve Committee - Responsible for monitoring loss and loss expense reserve levels and taking management actions on financial recording of reserves. The Reserve Committee reports reserve indications and actions to the Board, and its Audit Committee. Key reserve metrics are also reported to the ERC and the Board's Risk Committee.
These expenses include, but are not limited to, certain labor expenses, depreciation expense, and policyholder dividends. Total underwriting expenses are the sum of "Amortization of deferred policy acquisition costs" and "Other insurance expenses", offset by "Other income" on our Consolidated Statements of Income.
These expenses include, but are not limited to, certain labor expenses, depreciation expense, and 5 Table of Contents policyholder dividends. Total underwriting expenses are the sum of "Amortization of deferred policy acquisition costs" and "Other insurance expenses", offset by "Other income" on our Consolidated Statements of Income.
Examples include: • Vehicle recall notifications to our policyholders and distribution partners; 11 Table of Contents • Advance notices to prepare for severe weather conditions, including guides on structural improvements, roof and drainage maintenance, and measures to prevent clogged or frozen plumbing and sprinkler systems; • Food and product recall notifications to policyholders in food manufacturing, distribution, and preparation; and • Digital customer self-assessments of workplace hazards, with best practice recommendations tailored to the customer's specific risks.
Examples of our initiatives include: • Vehicle recall notifications to our policyholders and distribution partners; • Advance notices to help prepare for severe weather conditions, including guides on structural improvements, roof and drainage maintenance, and measures to prevent clogged or frozen plumbing and sprinkler systems; • Food and product recall notifications to policyholders in food manufacturing, distribution, and preparation; and • Digital customer self-assessments of workplace hazards, with best practice recommendations tailored to the customer's specific risks.
Loss and loss expense reserves are one of our critical accounting estimates and represent the ultimate amounts we will need to pay for incurred covered claims and related expenses in the future for policies we have sold. Estimating reserves as of any given date is inherently uncertain, requiring estimation techniques and a considerable degree of judgment.
Loss and loss expense reserves are one of our critical accounting estimates and represent the ultimate amounts we will need to pay in the future for incurred covered claims and related expenses for policies we have sold. Estimating reserves as of any given date is inherently uncertain, and requires estimation techniques and considerable judgment.
Standard Personal Lines : Our Standard Personal Lines underwriting operations are centralized and highly automated. Most new and renewal business is underwritten and priced through an automated system using our filed rates and rules. Exceptions to our internal underwriting guidelines are approved under the direction of our Standard Personal Lines CUO.
Most new and renewal business is underwritten and priced through an automated system using our filed rates and rules. Exceptions to our internal underwriting guidelines are approved under the direction of our Standard Personal Lines CUO.
These filings are also available at www.Selective.com shortly after filing such material with the SEC. Our website and the information contained or linked in it are not part of this Annual Report.
These filings are also available at www.Selective.com shortly after filing such material with the SEC. Our website and the information contained or linked in it are not part of this Annual Report. 22 Table of Contents
An investor should carefully consider the risks and all other information in Item 1A. "Risk Factors.," Item 7A. "Quantitative and Qualitative Disclosures About Market Risk.," and Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Investors should carefully consider the risks and all other information in Item 1A. "Risk Factors.," Item 7A. "Quantitative and Qualitative Disclosures About Market Risk.," and Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
Focus areas include (i) developing our human capital to create a highly engaged and diverse team of employees and leaders who will guide us into the future, (ii) understanding and attempting to mitigate the environmental impact climate change has or could have on our business and operations, and (iii) providing customers with empathetic claims service and risk mitigation solutions.
Focus areas include (i) developing our human capital to create a highly engaged and inclusive team of employees and leaders who will guide us into the future, (ii) understanding and addressing the environmental impact climate change has or could have on our business and operations, and (iii) providing customers with empathetic claims service and risk mitigation solutions.
Independent Retail Agents and Standard Lines A 2024 Independent Insurance Agents & Brokers of America study estimated there are 39,000 independent property/casualty insurance agents and brokers in the U.S., down 3% from its 2022 study.
Independent Retail Agents and Standard Lines A 2024 Independent Insurance Agents & Brokers of America study estimated there are 39,000 independent property/casualty insurance agents and brokers in the U.S., reflecting a 3% decrease from its 2022 study.
We use this non-GAAP measure for the same reason we use non-GAAP operating income, which is to avoid trend analysis distortion from the timing of investment gains and losses, which are largely discretionary. ROE is calculated by dividing net income available to common stockholders by average common stockholders' equity.
We use non-GAAP operating ROE for the same reason we use non-GAAP operating income: to avoid trend analysis distortion from the largely discretionary timing of investment gains and losses. ROE is calculated by dividing net income available to common stockholders by average common stockholders' equity.
IRIS identifies thirteen (13) industry financial ratios and specifies "usual values" for each. Departure from the usual values on four or more financial ratios can lead to inquiries from individual state insurance departments about certain aspects of an insurer's business. Our Insurance Subsidiaries have consistently met most IRIS ratio tests. • Risk-Based Capital ("RBC").
IRIS identifies thirteen (13) industry financial ratios and specifies "usual values" for each. Departures from the usual values on four or more financial ratios can prompt inquiries from individual state insurance departments about certain aspects of an insurer's business. Our Insurance Subsidiaries have consistently met most IRIS ratio tests. • Risk-Based Capital ("RBC").
We have agreements with multiple consulting, IT, and supplemental staffing service providers to augment our internal resources. These providers supply approximately 56% of our skilled technology capacity, with 76% of their resources located overseas. We retain management oversight of all projects and ongoing IT production operations.
We have agreements with multiple consulting, IT, and supplemental staffing service providers to augment our internal resources. These providers supply approximately 56% of our skilled technology capacity, with 75% of their resources based overseas. We retain management oversight of all projects and ongoing IT production operations.
ERM Function The ERM unit identifies, measures, monitors, and reports key and aggregated enterprise-wide risks to the ERC and the Board and its Risk Committee. The ERM unit works with other functional areas to develop appropriate responses to identified risks and support the successful execution of our business strategy.
ERM Function The ERM unit identifies, measures, monitors, and reports key and aggregated enterprise-wide risks to the ERC, the Board and its Risk Committee. The ERM unit collaborates with other functional areas to develop appropriate responses to identified risks and support the successful execution of our business strategies.
Due to our business risk profile and geographic concentration in the Northeast and Mid-Atlantic states, hurricane peril is our most significant natural catastrophe exposure, driving the "tail" of our modeled catastrophe loss distribution. This risk has influenced our decision to diversify our underwriting portfolio geographically and set rigorous coastal property exposure 20 Table of Contents guidelines.
Due to our business risk profile and geographic concentration in the Northeast and Mid-Atlantic states, hurricane peril is our most significant natural catastrophe exposure, driving the "tail" of our modeled catastrophe loss distribution. This risk has influenced our decision to diversify our underwriting portfolio geographically and establish rigorous coastal property exposure guidelines.
Our risk management initiatives include proactively providing policyholders with notifications and alerts, identifying risks, mitigating potential loss occurrences, and providing tools and technologies that improve safety and reduce losses.
Our risk management initiatives include proactively providing policyholders with notifications and alerts, identifying risks, mitigating potential losses, and offering tools and technologies that enhance safety and reduce loss occurrences.
In 2024, we were (i) designated as a Great Place to Work Certified TM organization for the fifth consecutive year and (ii) recognized by Forbes as one of "America's Best Mid-Size Employers" for the fourth time.
In 2025, we were (i) designated as a Great Place to Work Certified TM organization for the sixth consecutive year and (ii) recognized by Forbes as one of "America's Best Mid-Size Employers" for the fifth time.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations." and Note 5. "Investments" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. Regulation Primary Oversight by the States in Which We Operate State law primarily regulates insurance and insurer taxation because of the U.S. Congress's delegation in the McCarran-Ferguson Act.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations." and Note 5. "Investments" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. Regulation Primary Oversight by the States in Which We Operate State law primarily regulates insurance and insurer taxation, as delegated by the U.S. Congress in the McCarran-Ferguson Act.
The Reserve Committee meets quarterly and as needed. • Executive Risk Committee - Responsible for the holistic evaluation and supervision of our risk profile and determining future risk management actions supporting our overall risk profile. The ERC provides management oversight of our ERM function. To analyze and manage specific major risks, the ERC relies on several management committees.
The Reserve Committee meets quarterly and as needed. • Executive Risk Committee - Responsible for evaluating and supervising our risk profile and determining future risk management actions supporting our overall risk profile. The ERC provides management oversight of our ERM function and relies on several management committees to analyze and manage specific major risks.
ORSA requires an insurer to maintain a framework for identifying, assessing, monitoring, managing, and reporting "material and relevant risks" associated with the insurers' (or insurance groups') current and future business plans.
ORSA requires an insurer to maintain a framework for identifying, assessing, monitoring, managing, and reporting "material and relevant risks" associated with the insurer's (or insurance group's) current and future business plans.
Claims that (i) have or are likely to exceed a reinsurance policy coverage limit, (ii) have bad faith exposure of $15 million or more, (iii) are likely to generate significant news interest or negative publicity, or (iv) potentially create a significant legal precedent on an insurance coverage issue are reported to the Board's Audit Committee.
Claims that (i) have or are likely to exceed a reinsurance policy coverage limit, (ii) have bad faith exposure of $15 million or more, (iii) are likely to generate significant press interest or have a reputational impact, or (iv) potentially create a significant legal precedent on an insurance coverage issue are reported to the Board's Audit Committee.
We expect that independent retail insurance agents – representing most of our distribution partners – will remain a significant force in overall insurance industry premium production. Their business model, representing multiple insurance carriers, gives customers a broader choice of insurance products, more competitive pricing, and individualized risk-based consultation.
We expect that independent retail insurance agents – representing most of our distribution partners – will remain a significant force in overall insurance industry premium production. Their business model, which involves representing multiple insurance carriers, provides customers a wider choice of insurance products, more competitive pricing, and individualized risk-based consultation.
Our Standard Personal Lines segment results include our WYO policies issued to Standard Personal Lines and Standard Commercial Lines customers. Product Development and Pricing Our insurance policies are contracts with our policyholders that specify the losses we cover and the amounts we will pay on a covered claim.
Our Standard Personal Lines segment results include our WYO policies issued to Standard Personal Lines and Standard Commercial Lines customers. Product Development and Pricing Our insurance policies are contracts with our policyholders that specify the losses we cover and the amounts we will pay for covered claims.
ORSA includes an internal prospective solvency assessment developed by the Chief Risk Officer ("CRO"), in coordination with the ERC, that our Board reviews.
ORSA includes an internal prospective solvency assessment developed by the CRO, in coordination with the ERC, that our Board reviews.
Consequently, we consider many variables when determining policy pricing. Like most property and casualty insurers, our loss data is not sufficiently credible to independently establish the complex loss cost and rating variable structures our products require. We often adopt loss costs and rating structures that statistical rating agencies, such as ISO and NCCI, file with state insurance regulators.
Consequently, we consider many risk characteristics when pricing policies. Like most property and casualty insurers, our loss data is not sufficiently credible to independently establish the complex loss costs and rating variable structures our products require. We often adopt loss costs and rating structures that statistical rating agencies, such as ISO and NCCI, file with state insurance regulators.
Key inputs in our loss and loss expense ratio include catastrophe and non-catastrophe property loss and loss expenses incurred, current year casualty loss and loss expenses, and prior year casualty reserve development. We use after-tax net investment income earned to measure our investments segment's financial performance.
Key inputs in our loss and loss expense ratio include catastrophe and non-catastrophe property loss and loss expenses incurred, current year casualty loss and loss expenses, and prior year casualty reserve development. We evaluate our investments segment's financial performance using after-tax net investment income earned.
Similarly, many customers consider ratings when purchasing insurance because their loan, mortgage, and other real and personal property security agreements generally require minimum carrier financial strength rating requirements. 4 Table of Contents These NRSROs also rate our long-term debt creditworthiness and ability to meet our obligations when due.
Similarly, many customers consider ratings when purchasing insurance because their loan, mortgage, and other real and personal property security agreements typically require minimum carrier financial strength rating requirements. 4 Table of Contents These NRSROs also evaluate and rate our long-term debt creditworthiness and capacity to meet obligations when they come due.
The ERC meets quarterly, and as needed, to review and discuss various topics and the interrelation of our significant risks, including capital modeling results, capital adequacy, risk metrics, emerging risks, and sensitivity analysis.
The ERC meets quarterly and as needed, reviewing various topics and the interrelation of our significant risks, including capital modeling results, capital adequacy, risk metrics, emerging risks, and sensitivity analysis.
This non-GAAP measure is used as an important financial measure by management, analysts, and investors because the timing of realized and unrealized investment gains and losses on securities in any given period is largely discretionary and including them could distort the analysis of trends.
This non-GAAP measure is used as an important financial measure 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 could distort the analysis of trends.
We are the fourth-largest WYO carrier based on 2023 direct premiums written ("DPW") reported in the S&P Market Intelligence platform. • E&S Lines, which represented 10% of our 2024 "Total revenues" on our Consolidated Statements of Income and 12% of our 2024 total NPW.
We are the fourth-largest WYO carrier based on 2024 direct premiums written ("DPW") reported in the S&P Market Intelligence platform. • E&S Lines, which represented 11% of our 2025 "Total revenues" on our Consolidated Statements of Income and 13% of our 2025 total NPW.
Our average 2024 Standard Personal Lines premium per policyholder, excluding flood premium, was approximately $3,700. Standard Personal Lines includes flood insurance coverage sold in all 50 states and the District of Columbia through the Write Your Own ("WYO") program of the National Flood Insurance Program ("NFIP").
Our average 2025 Standard Personal Lines premium per policyholder, excluding flood premium, was approximately $4,100. Standard Personal Lines includes flood insurance coverage sold in all 50 states and the District of Columbia through the Write Your Own ("WYO") program of the National Flood Insurance Program ("NFIP").
We are committed to understanding and mitigating risk, serving customers and distribution partners responsibly, enabling our employees’ professional development and work/life balance, and helping the communities where we live, work, and serve while being environmentally responsible. Corporate Governance Strong governance, oversight, and transparency are the foundation of our financial and operating success.
Our focus includes understanding and mitigating risk, serving customers and distribution partners responsibly, enabling our employees’ professional development and work/life balance, being environmentally responsible, and helping the communities where we live, work, and serve. Corporate Governance Strong governance, oversight, and transparency form the foundation of our financial and operating success.
We have five key sustainable competitive advantages: • A unique operating model that places empowered decision-makers alongside our customers and distribution partners. • A franchise-value distribution model, defined by our meaningful and close business relationships with a group of high-quality distribution partners. • An ability to develop and integrate sophisticated technology tools that our front-line employees use to inform risk selection, pricing, and claims decisions. • A commitment to delivering a superior omnichannel customer experience enhanced by people and technology. • A highly engaged and aligned team of extremely talented employees.
We believe our five key sustainable competitive advantages are: • A unique operating model that places empowered decision-makers alongside our customers and distribution partners. • A franchise-value distribution model, characterized by close and meaningful business relationships with a select group of high-quality distribution partners. • An ability to develop and integrate sophisticated technology tools that support our front-line employees in making informed risk selection, pricing, and claims decisions. • A commitment to delivering a superior omnichannel customer experience, enhanced by people and technology. • A highly engaged and aligned team of extremely talented employees.
Segments We have four reportable segments: • Standard Commercial Lines, which represented 72% of our 2024 "Total revenues" on our Consolidated Statements of Income and 79% of our 2024 total NPW.
Segments We have four reportable segments: • Standard Commercial Lines, which represented 71% of our 2025 "Total revenues" on our Consolidated Statements of Income and 79% of our 2025 total NPW.
In addition, we work with our third-party investment managers to ensure they incorporate sustainability guidelines and protocols into their investment process for our mandates.
In addition, we collaborate with our third-party investment managers to ensure they incorporate sustainability guidelines and protocols into their investment processes for our mandates.
Throughout this document, we refer to the Parent and the Insurance Subsidiaries collectively as "we," "us," or "our." We use "Parent" when appropriate to distinguish it from the Insurance Subsidiaries. We also use specific property and casualty industry-related terms defined in a glossary attached as Exhibit 99.1 to this Form 10-K. Our main office is in Branchville, New Jersey.
Throughout this document, we refer to the Parent and the Insurance Subsidiaries collectively as "we," "us," or "our." We use "Parent" when appropriate to distinguish it from the Insurance Subsidiaries. Specific terms related to the property and casualty industry are defined in a glossary attached as Exhibit 99.1 to this Form 10-K.
Other income primarily includes installment fees charged to customers paying their premiums in installments. • Net investment income earned from our investment segment . We generate income from investing insurance premiums and amounts generated through our capital management strategies.
Other income primarily consists of installment fees charged to customers who pay their premiums in installments. • Net investment income earned from our investment segment . We generate income from investing insurance premiums and amounts generated through our capital management strategies.
This program permits state insurance departments to recognize and rely on the financial examinations and other reviews their counterparts conduct, creating efficiencies and limiting overlapping examinations of the same insurance companies.
This program allows state insurance departments to recognize and rely on the financial examinations and other reviews conducted by their counterparts, creating efficiencies and limiting overlapping examinations of the same insurance companies.
Internal Audit also coordinates risk-based audits, compliance reviews, and other specific initiatives to evaluate and address risk within targeted areas of our business.
Internal Audit also coordinates risk-based audits, compliance reviews, and other targeted initiatives to evaluate and address risk in specific business areas.
The Underwriting Committee oversees the underwriting authority distribution process across our insurance operations. This committee meets as appropriate and evaluates various information related to specific accounts presented, including underwriting, risk management, claims, and market considerations, as well as projected catastrophe modeling metrics when considering a large property account.
The Underwriting Committee oversees the distribution of underwriting authority across our insurance operations. This committee meets as needed and evaluates various information related to specific accounts, including underwriting, risk management, claims, and market considerations, as well as projected catastrophe modeling metrics when considering a 17 Table of Contents large property account.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNoncompliance could result in significant reputational harm, penalties, and legal liability. General Data Protection Regulation ("GDPR") regulates data protection and privacy in the EU and personal data transfers outside the EU. GDPR’s main tenet is to give individuals primary control over their personal data. Because we do not write coverages in the EU, GDPR does not directly impact us.
Biggest changeGDPR’s central tenet is to give individuals primary control over their personal data. Because we do not write coverages in the EU, GDPR does not directly impact us. Some U.S. states have subsequently incorporated individual-control mechanisms into state privacy laws. Future EU data privacy actions likely will influence U.S. regulators over time.
Secretary of the Treasury does not certify specific terrorist events, we could be required to pay terrorism-related covered losses without TRIPRA's risk-sharing benefits. We also could be required to pay terrorism-related losses for customers who declined terrorism coverage. Our primary workers compensation policies are required to cover terrorism risk, so TRIPRA applies to those policies.
Secretary of the Treasury does not certify specific terrorist events, we could be required to pay terrorism-related covered losses without TRIPRA's risk-sharing benefits. We could also be required to pay terrorism-related losses for customers who declined terrorism coverage. Our primary workers compensation policies are required to cover terrorism risk, so TRIPRA applies to those policies.
Our allowance for credit losses is subject to significant judgments and assumptions about changes in economic conditions, estimated future cash flows, and the 29 Table of Contents accuracy of third-party information used in internal assessments. We revise our evaluations and assessments as conditions change and new information becomes available.
Our allowance for credit losses is subject to significant judgments and assumptions about changes in economic conditions, estimated future cash flows, 29 Table of Contents and the accuracy of third-party information used in internal assessments. We revise our evaluations and assessments as conditions change and new information becomes available.
Our systems also house proprietary and confidential information about our operations, employees, agents, and customers and their employees and property, including PII.
Our systems also house proprietary and confidential information, including PII, about our operations, employees, agents, and customers and their employees and property.
While our customers find advantages in using independent distribution partners, our reliance on independent distribution partners presents risks and challenges, including: • Competition in our distribution channel, as we must market our products and services to independent distribution partners who can access multiple carriers and markets. • Brand recognition challenges because we closely coordinate marketing with our distribution partners and some customers do not differentiate their insurance agent from their insurer. • Our market share growth is tied to our distribution partners' market share.
While our customers find advantages in using independent distribution partners, our reliance on independent distribution partners presents risks and challenges, including: • Competition within our distribution channel, as we must market our products and services to independent distribution partners who can access multiple carriers and markets. • Brand recognition challenges because we closely coordinate marketing with our distribution partners and some customers do not differentiate their insurance agent from their insurer. • Our market share growth is tied to our distribution partners' market share.
We use sophisticated catastrophe modeling techniques to manage our exposure, but actual exposure and loss experience can materially differ from catastrophe model estimates. For example, catastrophe models did not fully estimate the potential for some recent catastrophe loss activity (such as Winter Storm Elliott freeze losses in December 2022) and the concurrent economic inflation on construction costs.
We use sophisticated catastrophe modeling techniques to manage our exposure, but actual exposure and loss experience can materially differ from catastrophe model estimates. For example, catastrophe models did not fully estimate the potential for some recent catastrophe losses (such as Winter Storm Elliott freeze losses in December 2022) and the concurrent economic inflation on construction costs.
Risks Related to Our General Operations We and our distribution partners and vendors are subject to attempted cyber-attacks and other cybersecurity and system availability risks. Our business heavily relies on IT and application systems connected to or accessed through a connection to the Internet. Consequently, a malicious cyber-attack could affect us.
Risks Related to Our General Operations We, our distribution partners, and vendors are subject to attempted cyber-attacks and other cybersecurity and system availability risks. Our business heavily relies on IT and application systems connected to or accessed through the Internet. Consequently, a malicious cyber-attack could affect us.
Some publicly traded and private equity-backed independent distribution partners have deployed consolidation strategies to acquire other independent distribution partners and increase their market share ("Aggregators") over the last decade. If more of our independent distribution partners become Aggregators or Aggregators acquire them, Aggregator demands and influence on our business could increase.
Some publicly traded and private equity-backed independent distribution partners have deployed consolidation strategies to acquire other independent distribution partners and increase their market share ("Aggregators") over the last decade. If more of our independent distribution partners become Aggregators or Aggregators acquire them, the demands and influence of Aggregators on our business could increase.
We track our severe weather and catastrophe losses using definitions and information we obtain from Insurance Services Office, Inc.'s ("ISO") Property Claim Services unit, an internationally recognized authority on insured property losses from catastrophes in the U.S., Puerto Rico, and the U.S. Virgin Islands.
We track our severe weather and catastrophe losses using definitions and information from Insurance Services Office, Inc.'s ("ISO") Property Claim Services unit, an internationally recognized authority on insured property losses from catastrophes in the U.S., Puerto Rico, and the U.S. Virgin Islands.
The closer a catastrophe occurs to the end of a reporting period, the more likely we have limited information to estimate loss and loss expense reserves, increasing the uncertainty of our estimates. More comprehensive claims information available after a reporting period may result in reserve changes in subsequent periods.
The closer a catastrophe occurs to the end of a reporting period, the more likely we are to have limited information to estimate loss and loss expense reserves, increasing the uncertainty of our estimates. More comprehensive claims information available after a reporting period may result in reserve changes in subsequent periods.
Consequently, growth in our Standard Personal Lines could be more limited than in our Standard Commercial Lines. Competitors have focused on lower-cost "direct-to-customer" distribution models emphasizing digital ease and efficiencies to grow standard personal lines business market share.
Consequently, growth in our Standard Personal Lines could be more limited than in our Standard Commercial Lines. Competitors have focused on lower-cost "direct-to-customer" distribution models emphasizing digital ease and efficiencies to grow market share in standard personal lines.
Carbon-intensive sectors within our fixed income securities portfolio represented about 5% and 4% of our total invested assets as of December 31, 2024 and December 31, 2023, respectively. • Physical investment risks include the risk of investment losses on our commercial and residential mortgage-backed securities exposed to climate-related catastrophic losses that can cause business disruption, destroy capital, increase costs to recover from disasters, reduce revenue, and cause population displacement and migration.
Carbon-intensive sectors within our fixed income securities portfolio represented about 4% and 5% of our total invested assets as of December 31, 2025 and December 31, 2024, respectively. • Physical investment risks include the risk of investment losses on our commercial and residential mortgage-backed securities exposed to climate-related catastrophic losses that can cause business disruption, destroy capital, increase costs to recover from disasters, reduce revenue, and cause population displacement and migration.
We define operating leverage as the ratio of NPW to our statutory surplus. We balance and mitigate our operational leverage risk with several risk management strategies within our insurance operations to achieve a balance of growth and profit, including an underwriting risk appetite focused on small-to-medium-sized accounts. We employ significant reinsurance, a disciplined reserving approach, and a conservative investment philosophy.
We define operating leverage as the ratio of NPW to our statutory surplus. We balance and mitigate our operational leverage risk through several risk management strategies within our insurance operations to achieve a balance of growth and profit, including an underwriting risk appetite focused on small-to-medium-sized accounts. We employ significant reinsurance, a disciplined reserving approach, and a conservative investment philosophy.
These solutions allow us to meet our customers' needs for cyber insurance while mitigating our underwriting risk as we develop our expertise in the cyber insurance market.
These solutions allow us to meet our customers' cyber insurance needs while mitigating our underwriting risk as we develop our expertise in the cyber insurance market.
Reinsurance expense increases that are not considered or approved in our filed rates and rating plans will reduce our earnings. If we cannot negotiate desired reinsurance amounts or terms, we may experience increased reinsurance expense and increased risk retention on individual or aggregate claim losses that could limit our ability to write future business.
Reinsurance expense increases that are not considered or approved in our filed rates and rating plans will reduce our earnings. If we cannot negotiate desired reinsurance amounts or terms, we may experience increased reinsurance expenses and increased risk retention on individual or aggregate claim losses, which could limit our ability to write future business.
Insufficient reinsurance could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. Reinsurance availability; retentions; coverage limits, terms, conditions, and exclusions; and cost depend on market conditions influenced by traditional direct- and broker-placed reinsurance, retrocessional reinsurance, and catastrophe bond market capacity.
Insufficient reinsurance could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. Reinsurance availability, retentions, coverage limits, terms, conditions, exclusions, and cost depend on market conditions, which are influenced by traditional direct- and broker-placed reinsurance, retrocessional reinsurance, and catastrophe bond market capacity.
However, we cannot provide assurance that our employees, contractors, or independent distribution partners will not violate such laws and regulations or our policies and procedures. To some degree, we have multiple regulators whose authority may overlap and may have different interpretations and/or regulations related to the same legal issues.
However, we cannot provide assurance that our employees, contractors, or independent distribution partners will not violate such laws, regulations, or our policies and procedures. To some degree, we have multiple regulators whose authority may overlap and whose interpretations and/or regulations related to the same legal issues may differ.
A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and have a material adverse effect on our financial condition and results of operations. A significant financial strength rating downgrade, particularly from AM Best Company ("AM Best"), would affect our ability to write new or renewal business.
A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and have a material adverse effect on our financial condition and results of operations. A significant downgrade in our financial strength rating, particularly from AM Best Company ("AM Best"), would impact our ability to write new or renewal business.
Our short-tail property lines of business are also susceptible to inflation because of their exposure to increased labor and material costs. • Social inflation refers to the phenomenon where societal factors, such as attitudes, perceptions, and cultural changes, contribute to increased insurance claims costs and litigation.
Our short-tail property lines of business are also susceptible to inflation due to their exposure to increased labor and material costs. • Social inflation refers to the phenomenon where societal factors, such as attitudes, perceptions, and cultural changes, contribute to increased insurance claims costs and litigation.
Our loss and loss expense reserves may not adequately cover actual losses and expenses . We maintain reserves for our estimated liability for loss and loss expense associated with reported and unreported insurance claims. Estimating loss and loss expense reserves is inherently uncertain, and there is no method for precisely estimating the ultimate liability for the settlement of claims.
Our loss and loss expense reserves may not adequately cover actual losses and expenses . We maintain reserves for our estimated liability for loss and loss expense associated with reported and unreported insurance claims. Estimating loss and loss expense reserves is inherently uncertain, and there is no method for precisely determining the ultimate liability for claims settlement.
For those we determine implicate one of our or a predecessor's policy, we (i) have investigated or are investigating facts, (ii) have evaluated policy terms, (iii) believe we have appropriate coverage defenses to most of these claims and/or sufficient reinsurance protections, and (iv) have considered these factors in establishing our reserves, which we believe provide a reasonable estimate of the aggregate ultimate net exposure for these claims.
For those we determine implicate one of our or a predecessor's policy, we (i) have investigated or are investigating facts, (ii) have evaluated policy terms, (iii) believe we have appropriate coverage defenses to most of these claims and/or sufficient reinsurance protections, and (iv) have considered these factors in establishing our reserves, which we believe provide a reasonable estimate of the aggregate ultimate net exposure for 25 Table of Contents these claims.
These potential impacts from a malicious cyber-attack could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. Through encryption and authentication technologies, we have implemented system- and process-based risk mitigations intended to secure our IT systems and prevent unauthorized access to or loss of sensitive data.
These potential impacts from a malicious cyber-attack could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. 32 Table of Contents Through encryption and authentication technologies, we have implemented system- and process-based risk mitigations intended to secure our IT systems and prevent unauthorized access to or loss of sensitive data.
Some of our legal proceedings may receive media attention because of their perceived newsworthiness and/or relationship to various broad economic, political, social, and legal developments or trends. Such media stories could negatively impact our reputation.
Some of our legal proceedings may receive media attention due to their perceived newsworthiness and/or their relationship to various broad economic, political, social, and legal developments or trends. Such media stories could negatively impact our reputation.
Secretary of the Treasury certifies an event as a terrorist act under TRIPRA. Natural catastrophes Temperature changes can impact weather patterns and the frequency and/or severity of catastrophes, including hurricanes, severe convective storms, wildfires, and flooding – all of which could cause our catastrophe losses to increase relative to historical levels.
Secretary of the Treasury certifies an event as a terrorist act under TRIPRA. Natural catastrophes Temperature changes can affect weather patterns and the frequency and/or severity of catastrophes, including hurricanes, severe convective storms, wildfires, and flooding – all of which could increase our catastrophe losses relative to historical levels.
Cyber-attack sophistication evolves daily, so our security measures may not sufficiently address all eventualities. We may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management, or other irregularities. We implement new technologies, including artificial intelligence, to increase operational efficiencies. These new technologies may increase the risk of cyber-attacks.
Cyber-attack sophistication evolves daily, so our security measures may not sufficiently address all eventualities. We may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management, or other irregularities. We implement new technologies, including AI, to increase operational efficiencies. These new technologies may increase the risk of cyber attacks.
Without prior experience, we cannot estimate how many "reviver" claims notices we may receive. Most notices (i) are blanket notices sent by attorneys representing claimants unsure of the alleged assailant or supervising entity's insurer or policy (if any) and (ii) may not implicate any of our or a predecessor's insurance policies.
Without prior experience, we cannot estimate the number of "reviver" claims notices we may receive. Most notices (i) are blanket notices sent by attorneys representing claimants unsure of the alleged assailant or supervising entity's insurer or policy (if any) and (ii) may not implicate any of our or a predecessor's insurance policies.
Reinsurers generally manage their significant loss exposure through their own reinsurance programs, or retrocessions, and we do not have complete details about them. If our reinsurers experience difficulty collecting on their retrocession programs or reinstating retrocession coverage after a large loss, we may not receive timely or full payment of our reinsurance claims.
Reinsurers generally manage their significant loss exposure through their own reinsurance programs, or retrocessions, and we do not have complete details about them. If our reinsurers have trouble collecting on their retrocession programs or reinstating retrocession coverage after a large loss, we may not receive timely or full payment of our reinsurance claims.
The cost of complying with various laws and regulations, potentially conflicting laws and regulations, and changes in those laws and regulations, could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. Insurers are subject to regulatory, political, and media scrutiny.
The cost of complying with various laws and regulations, potentially conflicting laws and regulations, and changes in those laws and 30 Table of Contents regulations, could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. Insurers are subject to regulatory, political, and media scrutiny.
We base our loss and loss expense reserve estimates on our internal in-depth reserve review, which uses our loss experience, claims payment and reporting patterns, and our view of underlying claims frequency and severity trends.
We base our loss and loss expense reserve estimates on our internal in-depth reserve review, which uses our loss experience, claims payment and reporting patterns, and our assessment of underlying claims frequency and severity trends.
We are subject to the risk that the issuers or guarantors of our fixed income securities may default on principal and interest payment obligations. Additionally, we are exposed to interest rate risk, primarily related to the market price and cash flow variability associated with changes in interest rates.
We are also subject to the risk that the issuers or guarantors of our fixed income securities may default on principal and interest payment obligations. Additionally, we are exposed to interest rate risk, primarily related to the market price and cash flow variability associated with interest rate changes.
The determination of the amount of credit losses taken on our investments is based on our quarterly evaluation and assessment of our investments and known and inherent risks associated with the various asset classes.
The determination of the amount of credit losses taken on our investments is based on our quarterly evaluation and assessment of our investments, as well as the known and inherent risks associated with the various asset classes.
Historically, commercial property and homeowners losses have accounted for most of our catastrophe-related reinsurance claims. We determine the amount of reinsurance we purchase by analyzing historical losses and using various modeling software programs that analyze our Insurance Subsidiaries' risks, particularly for catastrophes.
Historically, commercial property and homeowners losses have accounted for most of our catastrophe-related reinsurance claims. We determine the amount of reinsurance we purchase by analyzing historical losses and outputs from various modeling software programs that analyze our Insurance Subsidiaries' risks, particularly for catastrophes.
Insurers depend on access to reliable data about their policyholders and loss experience to build complex analytics and predictive models that assess risk profitability, reserve adequacy, adverse claim development potential, recovery opportunities, fraudulent activities, and customer buying habits.
Insurers depend on access to reliable data about their policyholders and loss experience to build complex analytics and predictive models that assess loss costs, expected profitability, reserve adequacy, adverse claim development potential, recovery opportunities, fraudulent activities, and customer buying habits.
Under TRIPRA, each participating insurer must pay a significant deductible of specified losses before federal assistance is available. Our $619 million deductible is based on a percentage of our prior year’s applicable Standard Commercial Lines and E&S Lines premiums. In 2025, the federal government will pay 80% of losses above the deductible, with the insurer retaining 20%.
Under TRIPRA, each participating insurer must pay a significant deductible of specified losses before federal assistance is available. Our $684 million deductible is based on a percentage of our prior year’s applicable Standard Commercial Lines and E&S Lines premiums. In 2026, the federal government will pay 80% of losses above the deductible, with the insurer retaining 20%.
Such events could interrupt our ability to conduct business and negatively impact our results of operations, despite our business continuity plans. Operational leverage necessitates the success of our risk management strategies, and their failure could have a material adverse effect on our financial condition or results of operations. As an insurer, we assume risk from our policyholders.
Such events could disrupt our ability to conduct business and negatively impact our results of operations, despite our business continuity plans. Operational leverage relies on the success of our risk management strategies, and their failure could have a material adverse effect on our financial condition or results of operations. As an insurer, we assume risk from our policyholders.
An economic downturn in which our policyholders have declining revenue or employee count could adversely affect our total written premium, including audit and endorsement premium. We write business domestically in the United States, and our insurance operations do not have direct exposure to businesses or individuals in Russia, Ukraine, and the Middle East.
An economic downturn in which our policyholders have declining revenue or employee count could adversely affect our total written premium, including audit and endorsement premiums. We write business domestically in the United States, and our insurance operations do not have direct exposure to insureds in Russia, Ukraine, or the Middle East.
We do not have material exposure to investments subject to embargoes or Russian reinsurance counterparties. However, ongoing wars and conflicts continue to impact global economic, banking, commodity, and financial markets by exacerbating ongoing economic challenges, including inflation and supply chain disruption, which influence insurance loss costs, premiums, and investment valuation.
We do not have material exposure to investments subject to embargoes or Russian reinsurance counterparties. However, ongoing wars and conflicts continue to impact global economic, banking, commodity, and financial markets by exacerbating economic challenges, including inflation and supply chain disruptions, which influence insurance loss costs, premiums, and investment valuations.
Independent distribution partners have – and we expect they will continue to have – a significant role in overall insurance industry premium production.
Independent distribution partners have – and we expect they will continue to have – a significant role in the overall production of insurance industry premium.
Our financial condition and results of operations are impacted by our independent distribution partners' success in marketing and selling our products and services. National and global economic conditions could adversely and materially affect our business, results of operations, financial condition, and growth.
Our financial condition and results of operations are impacted by the success of our independent distribution partners in marketing and selling our products and services. National and global economic conditions could adversely and materially affect our business, results of operations, financial condition, and growth.
These, in turn, can lower residential and commercial property values, household wealth, and corporate profitability, potentially creating financial and credit market losses impacting insurer asset values. As of December 31, 2024, about 69% of our residential mortgage-backed securities were backed by government agencies.
These, in turn, can lower residential and commercial property values, household wealth, and corporate profitability, potentially creating financial and credit market losses impacting insurer asset values. As of December 31, 2025, about 76% of our residential mortgage-backed securities were backed by government agencies.
Insureds with non-workers compensation commercial policies can accept or decline our terrorism coverage or negotiate with us for other terms. In 2024, 84% of our Standard Commercial Lines non-workers compensation policyholders purchased terrorism coverage that included nuclear, biological, chemical, and radioactive ("NBCR") events.
Insureds with non-workers compensation commercial policies can accept or decline our terrorism coverage or negotiate with us for other terms. In 2025, 83% of our Standard Commercial Lines non-workers compensation policyholders purchased terrorism coverage that included nuclear, biological, chemical, and radioactive ("NBCR") events.
For example, 2022 inflation rates reflected in the overall consumer price index ("CPI"), the Core CPI, and the Producer Price Index, were higher than in 2021. While inflation moderated in 2023 and 2024, it remains elevated relative to the Federal Reserve’s long-term 2% target.
For example, 2022 inflation rates reflected in the overall consumer price index ("CPI"), the Core CPI, and the Producer Price Index, were higher than in 2021. While inflation moderated in subsequent years, it remains elevated relative to the Federal Reserve’s long-term 2% target.
These potential events and other economic factors could adversely and materially affect our business, results of operations, financial condition, and growth. During 2024, 25% of DPW in our Standard Commercial Lines business was based on payroll or sales of our underlying policyholders.
These potential events and other economic factors could adversely and materially affect our business, results of operations, financial condition, and growth. During 2025, 24% of DPW in our Standard Commercial Lines business was based on payroll or sales of our underlying policyholders.
Losses from natural and human-made catastrophes can negatively impact our financial results. Examples include hurricanes, tornadoes, windstorms, earthquakes, hail, thunderstorms, severe winter weather, derechos, floods, and fires, some related to climate change, and criminal and terrorist acts, including cyber-attacks, civil unrest, and explosions.
Losses from natural and human-made catastrophes can negatively impact our financial results. Examples include hurricanes, tornadoes, windstorms, earthquakes, hail, thunderstorms, severe winter weather, derechos, floods, and fires, some of which are related to climate change, as well as criminal and terrorist acts, including cyber-attacks, civil unrest, and explosions.
We rely on these financial and other statistical models to analyze historical loss costs and pricing, claims severity and frequency trends, catastrophe losses, reinsurance attachment and exhaustion points, investment performance, portfolio risk, and our economic capital position. Flaws or limitations in financial and statistical models and their embedded assumptions could increase losses.
We rely on these financial and other statistical models to analyze historical loss costs and pricing, claims severity and frequency trends, catastrophe losses, reinsurance attachment and exhaustion points, investment performance, portfolio risk, and our economic capital position. Flaws or limitations in financial and statistical models, as well as their embedded assumptions could understate estimated losses.
Consequently, we have direct and indirect counterparty credit risk to our reinsurers and the reinsurance industry, which is a global but concentrated market. • Certain life insurance companies, if they fail to fulfill their contractual obligations to our policyholders or claimants under annuities we purchased as part of structured claims settlements. • Some of our independent distribution partners, who collect premiums for us from policyholders. • Some policyholders, who are directly obligated to us for premium and/or deductible payments, the timing of which may be impacted by mandated payment moratoriums.
Consequently, we have direct and indirect counterparty credit risk to our reinsurers and the reinsurance industry, which is a global yet concentrated market. • Certain life insurance companies, if they fail to fulfill their contractual obligations to our policyholders or claimants under annuities we purchased as part of structured claims settlements. • Some of our independent distribution partners who collect our premiums from policyholders. • Some policyholders, who are directly obligated to us for premium and/or deductible payments, may have their payment timing altered by regulator-granted payment moratoriums.
For additional information on our 27 Table of Contents current financial strength and credit ratings, refer to "Overview" in Item 1. "Business." of this Form 10-K. Markets for insurance products and services are highly competitive and subject to rapid technological change, and we may be unable to compete effectively.
For additional information 27 Table of Contents on our current financial strength and credit ratings, refer to "Overview" in Item 1. "Business." of this Form 10-K. Markets for insurance products and services are highly competitive and subject to rapid technological advancement, and we may struggle to compete effectively.
We generally invest in the top tranches of commercial mortgage-backed securities, which limit potential losses from property value declines. As of December 31, 2024, about 68% of our commercial mortgage-backed securities had "AAA" credit ratings. Significant future investment value declines could require further losses recorded on securities we sell and credit losses.
We generally invest in the top tranches of commercial mortgage-backed securities, which limit potential losses from declines in property value. As of December 31, 2025, about 71% of our commercial mortgage-backed securities had "AAA" credit ratings. Significant future declines in investment values could require further losses recorded on securities we sell and credit losses.
We supplement the estimates with other subjective considerations, including projected impacts 24 Table of Contents from economic, political, social, and legal developments or trends, such as inflation, judicial trends and tort decisions, and various state legislative initiatives.
We supplement the estimates with other subjective considerations, including projected impacts from economic, political, social, and legal developments or trends, such as inflation, judicial trends and tort decisions, and various state legislative initiatives.
An economic downturn could also lead to increased credit and premium receivable risk, failure of reinsurance counterparties and other financial institutions, limits on our ability to issue new debt, reduced liquidity, and declines in our investments' fair value and financial strength ratings.
An economic downturn could also lead to increased credit and premium receivable risk, failure of reinsurance counterparties and other financial institutions, limitations on our ability to issue new debt, reduced liquidity, and declines in the fair value and financial strength ratings of our investments.
These market factors can cause fluctuations in reinsurance costs that do not necessarily correlate to our loss experience. State insurance regulators generally permit us to consider catastrophe reinsurance expense in our filed rates and rating plans. However, the conditions and timing of regulatory approval may not align with the actual reinsurance expense.
These market factors can cause reinsurance costs to fluctuate, which may not correlate with our loss experience. State insurance regulators generally permit us to consider catastrophe reinsurance expense in our filed rates and rating plans. However, the conditions and timing of regulatory approval may not align with the actual reinsurance expense.
Increased underwriting risk from these and other risks could increase our net loss and loss expense and the volatility of our underwriting results. Decreased reinsurance availability would also increase our underwriting risk if we cannot fully place our targeted reinsurance treaty coverage on renewal.
Increased underwriting risk from these and other risks could lead to higher net loss and loss expense and underwriting results volatility. Decreased reinsurance availability would also increase our underwriting risk if we cannot fully place our targeted reinsurance treaty coverage on renewal.
An increase in reserves (i) reduces net income and stockholders' equity, and (ii) could have a material adverse effect on our liquidity, financial strength, and debt ratings. As we underwrite new business and renew existing business, we estimate future loss cost trends in pricing our products to generate an adequate risk-adjusted return.
An increase in reserves (i) reduces net income and stockholders' equity, and (ii) could have a material adverse effect on our liquidity, financial strength, and debt ratings. As we underwrite new business and renew existing business, we estimate future loss cost trends to inform our product pricing, aimed at generating an adequate risk-adjusted return.
We transfer a significant portion of our underwriting risk to third parties through reinsurance, which are primarily annual contracts that reimburse us for losses exceeding specified thresholds on a per-loss or an aggregate basis. Typically, our 25 Table of Contents reinsurance coverages align with the coverages in our primary insurance policies, including coverages for catastrophes.
We transfer a significant portion of our underwriting risk to third parties through reinsurance, primarily in the form of annual contracts that reimburse us for losses exceeding specified thresholds on a per-loss or aggregate basis. Typically, our reinsurance coverages align with the coverages in our primary insurance policies, including coverages for catastrophes.
Generally, the longer a case is in litigation, the more expensive it can become. Because the amounts sought in specific actions are large or indeterminate, any adverse outcomes could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods. We have no material litigation risks related to climate change.
Generally, the longer a case is in litigation, the more expensive it can become. Because the amounts sought in specific actions are large or indeterminate, any adverse outcomes could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.
We also rely on third-party technology providers whose cyber-attack risks may be higher or lower than ours depending on their 32 Table of Contents profile and security program's maturity. To the extent possible and practical, we review third-party control environments, aligning the risk exposure with our business requirements and risk tolerances.
We also rely on third-party technology providers whose cyber-attack risks may be higher or lower than ours, depending on their profile and the maturity of their security programs. To the extent possible and practical, we review third-party control environments and align their risk exposure with our business requirements and risk tolerances.
Our most significant natural and/or human-made catastrophe exposures are (i) hurricanes impacting the Eastern U.S., (ii) severe convective storms, including hailstorms and tornadoes, (iii) winter storms, (iv) earthquakes, and (v) terrorism events. Single storms could adversely impact our financial results, but it is also possible that we experience more than one severe catastrophic event in any given calendar year.
Our most significant natural and/or human-made catastrophe exposures are (i) hurricanes impacting the Eastern U.S., (ii) severe convective storms, including hailstorms and tornadoes, (iii) winter storms, (iv) wildfires, (v) earthquakes, and (vi) terrorism events. Single storms could adversely impact our financial results; however, we could experience more than one severe catastrophic event in any given calendar year.
There is general recognition that a wide-scale cyber-attack that simultaneously impacts multiple victims is more likely, and insurance industry systemic risk has increased.
There is general recognition that a wide-scale cyber-attack simultaneously impacting multiple victims is more likely, and systemic risk in the insurance industry has increased.
This exposure may exist if courts, regardless of intent, interpret policy forms without specific related coverage exclusions to provide coverage for a cyber-related incident. 23 Table of Contents We provide cyber-specific policies to our commercial lines and personal lines customers through 100% reinsured solutions with highly-rated specialty cyber markets.
This exposure may exist if courts, regardless of intent, interpret policy forms without specific related coverage exclusions to provide coverage for a cyber-related incident. Our cyber-specific policies for commercial lines and personal lines customers are 100% reinsured with highly-rated specialty cyber markets.
Item 1A. Risk Factors. Certain risk factors can significantly impact our business, liquidity, capital resources, results of operations, financial condition, and debt ratings. These risk factors might affect, alter, or change actions in executing our long-term capital strategy.
Item 1A. Risk Factors. Certain risk factors can significantly impact our business, liquidity, capital resources, results of operations, financial condition, and debt ratings. These risk factors might affect, alter, or change actions we take to execute our long-term capital strategy.
Our investments can be negatively affected by (i) liquidity, (ii) credit deterioration, (iii) financial results, (iv) public equity and/or debt market changes, (v) economic conditions, including heightened levels of economic inflation, (vi) political risk, (vii) sovereign risk, (viii) interest rate fluctuations, or (ix) other factors, including civil unrest and other catastrophic events, some of which may be impacted by climate change risk.
Our investments can be negatively affected by (i) liquidity, (ii) credit deterioration, (iii) financial results, (iv) public and private market volatility, (v) economic conditions, including heightened levels of economic inflation, (vi) political risk, (vii) sovereign risk, (viii) interest rate fluctuations, (ix) international trade policies and tariffs, or (x) other factors, including civil unrest and other catastrophic events, some of which may be impacted by climate change risk.
Consequently, some competitors may be able to price their products more competitively. The Internet has emerged as a significant competitive digital marketplace for existing and new competitors. Established insurance competitors are beginning to explore broader digital Internet offerings and implement artificial intelligence ("AI"). New competitors with variations on traditional business models have emerged.
Consequently, some competitors may be able to price their products more competitively. The Internet is a significant competitive digital marketplace for existing and new competitors. Established insurance competitors are exploring broader digital Internet offerings and artificial intelligence ("AI") tools. New competitors with variations on traditional business models have emerged.
The frequency and severity of these catastrophes are inherently unpredictable, and the frequency and severity of catastrophe losses have increased globally in recent years. In many cases, the increase in catastrophe losses relate to small- to- medium-sized events that primary insurers retain and do not cede to reinsurers.
The frequency and severity of these catastrophes are inherently unpredictable, and both have increased globally in recent years. In many cases, the increase in catastrophe losses relates to small- to- medium-sized events that primary insurers retain rather than cede to reinsurers.
Unfavorable economic developments, such as a decline in economic growth or increased inflation levels, could adversely affect our earnings if our policyholders need less insurance coverage, cancel existing insurance policies, modify coverage, or choose not to renew with us. Inflation could significantly impact our claims severity across multiple lines of business and could result in adverse reserve development.
Unfavorable economic developments, such as a decline in economic growth or an increase in inflation levels, could adversely affect our earnings if our policyholders require less insurance coverage, cancel existing insurance policies, modify coverage, or choose not to renew with us. Inflation could significantly affect our claims severity across multiple lines of business potentially leading to adverse reserve development.
We offer our insurance products and services in a highly competitive market characterized by (i) consumer and business price sensitivity and (ii) aggressive price competition and improvements based on performance characteristics and large data sets. These factors can compact underwriting margins, new products and services, evolving industry standards, and rapid adoption of technological advancements.
We offer our insurance products and services in a highly competitive market characterized by (i) consumer and business price sensitivity and (ii) aggressive price competition based on performance characteristics, insights gained through larger data sets, and rapid adoption of technological advancements. These factors can compress underwriting margins, impact new products and services, and evolve industry standards.
We operate in a continually changing business environment, and new risk factors that we cannot predict or assess may emerge at any time. Consequently, we can neither predict such new risk factors nor assess the potential future impact on our business. 22 Table of Contents Risks Related to our Insurance Operations We are subject to losses from catastrophic events.
We operate in a continually changing business environment, and new risk factors that we cannot predict or assess may emerge at any time. Consequently, we cannot predict these new risk factors or assess their potential future impact on our business. Risks Related to our Insurance Operations We are subject to losses from catastrophic events.
By retroactively permitting previously time-barred claims, these "reviver" laws may result in insurance claims that could significantly increase loss costs and require re-evaluating previously established reserves or creating new reserves. Since reviver statutes have been enacted, we have received some notices of claims or potential claims for acts alleged to have occurred, some dating as far back as the 1950s.
By retroactively permitting previously time-barred claims, these "reviver" laws may result in insurance claims that could significantly increase loss costs and require new reserves or re-evaluation of previously established reserves. Since reviver statutes have been enacted, we have received some notices of claims or potential claims for alleged acts, some that may have occurred several decades ago.
Risks Related to Our Corporate Structure and Governance We are a holding company, and our ability to declare dividends to our shareholders, pay indebtedness, and enter into affiliate transactions may be limited because our Insurance Subsidiaries are regulated.
We have no material litigation risks related to climate change. 31 Table of Contents Risks Related to Our Corporate Structure and Governance We are a holding company, and our ability to declare dividends to our shareholders, pay indebtedness, and enter into affiliate transactions may be limited because our Insurance Subsidiaries are regulated.
It often leads to higher payouts in legal settlements and jury awards, and impacts insurance premiums for businesses and individuals. This inflation is driven by various factors, including changing jury attitudes, increased litigation funding, larger awards in court cases, increased willingness to undergo surgery, and novel interpretations of liability. Social inflation can affect all lines of business.
It often results in higher payouts in legal settlements and jury awards, and affects insurance premiums for businesses and individuals. This inflation is driven by various factors, including changing jury attitudes, increased litigation funding, larger awards in court cases, legal system abuse, insurance coverage gaps, increased willingness to undergo surgery, and novel interpretations of liability.
Our investment portfolio's value is subject to credit risk from our held securities' issuers, guarantors, financial guarantee insurers, and other counterparties in certain transactions. Defaults on any of our investments by any of these parties could reduce our net investment income and increase net realized investment losses.
Our investment portfolio's value is subject to credit risk from the issuers, guarantors, financial guarantee insurers, and other counterparties to the securities we hold or transactions we enter. Defaults by any of these parties could reduce our net investment income and increase net realized investment losses.
We cannot predict the timing or impact of these developments or trends with certainty, and we cannot be sure the reserves we establish are adequate or will be so in the future. We review our reserve position quarterly and adjust the reserve position accordingly.
We cannot predict the timing or impact of these developments or trends with certainty; nor can we be certain that the reserves we establish are adequate or will remain so in the future. We review our reserve position quarterly and adjust it as determined appropriate.
Because we use and depend on the aggregated industry loss data assembled by rating bureaus under the antitrust exemptions of the McCarran-Ferguson Act, we likely would be at a competitive disadvantage to larger insurers if Congress repealed the McCarran-Ferguson Act.
Because we use and depend on the aggregated industry loss data assembled by rating bureaus under the antitrust exemptions of the McCarran-Ferguson Act, we likely would be at a competitive disadvantage to larger insurers if Congress repealed the McCarran-Ferguson Act. We are subject to various modeling risks that could have a material adverse impact on our business results.
Because the Internet makes it easier and less expensive to bundle products and services, it is also possible that non-insurance companies conducting business on the Internet could enter the insurance business or form strategic alliances with insurers.
Because the Internet makes it easier and less expensive to bundle products and services, it is also possible that non-insurance companies conducting business online could enter the insurance business or form strategic alliances with insurers. Changes in competitors and the competitive landscape, particularly on the Internet, could shift the supply or demand for insurance and adversely affect our business.
The Parent’s ability to pay dividends to its stockholders is also impacted by covenants in its credit agreement (the "Line of Credit") among the Parent, the named lenders (the "Lenders"), and Wells Fargo Bank, National Association, as Administrative Agent.
The Parent’s ability to pay dividends to its stockholders is also impacted by covenants in its credit agreement (the "Line of Credit") among the Parent, the named lenders (the "Lenders"), and Wells Fargo Bank, National Association, as Administrative Agent. These covenants obligate the Parent to, among other things, maintain a minimum consolidated net worth and a maximum debt-to-capitalization ratio.
Over 90% of our policies with virus/harmful code coverage on commercial property, businessowners', commercial output policy, or inland marine forms have sub-limits of $25,000 or lower.
Our base property and businessowners' forms typically include a $2,500 or $10,000 cyber coverage grant that includes "virus and harmful code." Over 90% of our policies with virus/harmful code coverage on commercial property, businessowners', commercial output policy, or inland marine forms have sub-limits of $25,000 or lower.
The workers compensation line of business is particularly susceptible to inflation because of its extended payment pattern and exposure to medical care services and commodities. While medical inflation has been low for several years, our workers compensation medical severity trend has risen recently.
The workers compensation line of business is particularly susceptible to inflation due to its extended payment pattern and exposure to medical care services and commodities. While medical inflation has been low for several years, it has risen recently and, in combination with rising utilization, is driving increases in workers compensation medical severities.
We face credit risk in several areas of our insurance operations, including from third parties: • Our reinsurers, which are obligated to make us payments under our reinsurance agreements. Reinsurance credit risk can fluctuate over time, increasing during periods of high industry catastrophe and liability losses.
We encounter credit risk in various areas of our insurance operations, particularly from third parties: • Our reinsurers, which have payment obligations under our reinsurance agreements. Reinsurance credit risk can fluctuate over time, increasing during periods of high industry catastrophe and liability losses.
We are subject to government market conduct reviews and investigations, legal actions, and penalties. There can be no assurance that our business will not be materially adversely 30 Table of Contents affected by the outcomes of such activity in the future.
We are subject to government market conduct reviews and investigations, legal actions, and penalties. There can be no assurance that our business will not be materially adversely affected by the outcomes of such activity in the future. If we are found to have violated laws and regulations, it could materially adversely affect our reputation, financial condition, and operating results.
An increase in natural or man-made catastrophe losses, including a systemic cyber-attack that produces an aggregation of property and/or casualty cyber losses, will reduce our net income and stockholders’ equity and could have a material adverse effect on our liquidity, financial strength, and debt ratings.
Our current reinsurance programs cover some losses from conventional foreign and domestic terrorism acts but not NBCR events. 24 Table of Contents An increase in natural or man-made catastrophe losses, including a systemic cyber-attack that results in an aggregation of property and/or casualty cyber losses, will reduce our net income and stockholders’ equity and could have a material adverse effect on our liquidity, financial strength, and debt ratings.
However, the automobile liability, general liability, and corresponding umbrella lines of business involving third-party claimants tend to be more susceptible to social inflationary impacts. Our reserve for loss and loss expense could be insufficient if impacts from social inflation exceed our assumptions. • Various states have expanded or could expand the statute of limitations for civil actions alleging sexual abuse.
Our reserve for loss and loss expense could be insufficient if impacts from social inflation exceed our assumptions. • Various states have expanded or could expand the statute of limitations for civil actions alleging sexual abuse.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeHe has a master’s degree in business administration, a Certificate in Project Management, and is a Certified Insurance Counselor. • Christopher Cunniff, SVP and CRO, reports to our Chief Financial Officer, leads our Reinsurance and ERM teams, and chairs the ERC and the Market Security Committee.
Biggest changeHe has a master’s degree in business administration, a Certificate in Project Management, and is a Certified Insurance Counselor. • Ari Moskowitz SVP, Chief Risk and Reinsurance Officer, reports to our CFO and leads our Reinsurance and ERM teams, and chairs the ERC and the Market Security Committee.
The Board's Risk Committee oversees our ERM framework and practices and assists the Board in overseeing our operational activities, including the Company's information technology security program, and identifying and reviewing related risks.
The Board's Risk Committee oversees our ERM framework and practices. It assists the Board in overseeing our operational activities, including the Company's information technology security program, and identifying and reviewing related risks.
This program focuses on the following six key areas to monitor various IT performance and security metrics: • Proactive cybersecurity processes, including vulnerability scanning, penetration testing, and periodic program assessments by outside security consultants and assessors; 33 Table of Contents • Reactive cybersecurity processes that we regularly evaluate using incident response and disaster recovery exercises based on realistic scenarios; • Endpoint technology that includes encryption, threat management, monitoring, investigation support, and backups; • Identity and access management controls that often include multi-factor authentication and additional safeguards for staff granted elevated privileges; • Employee cyber risk awareness, training, and testing that covers cybersecurity threats and actions to prevent or report attacks; and • Third-party risk management and security standards, including due diligence, continuous monitoring, cyber risk scoring, and contractual obligations.
This program focuses on the following six key areas to monitor various IT performance and security metrics: • Proactive cybersecurity processes, including vulnerability scanning, penetration testing, and periodic program assessments by outside security consultants and assessors; • Reactive cybersecurity processes that we regularly evaluate using incident response and disaster recovery exercises based on realistic scenarios; • Endpoint technology that includes encryption, threat management, monitoring, investigation support, and backups; • Identity and access management controls that often include multi-factor authentication and additional safeguards for staff granted elevated privileges; • Employee cyber risk awareness, training, and testing that covers cybersecurity threats and actions to prevent or report attacks; and • Third-party risk management and security standards, including due diligence, continuous monitoring, cyber risk scoring, and contractual obligations.
We work with industry-leading security consulting and technology partners and employ a "defense-in-depth" approach that uses multiple security measures to protect the integrity of our proprietary and confidential information. This approach aligns with the National Institute of Standards and Technology Cyber Security Framework and provides preventative, detective, and responsive measures to identify and manage risks.
We work with industry-leading security consulting and technology partners, employing a "defense-in-depth" approach that uses multiple security measures to protect the integrity of our proprietary and confidential information. This approach aligns with the National Institute of Standards and Technology Cyber Security Framework and provides preventative, detective, and responsive measures to identify and manage risks.
We have documented information security policies, procedures, and guidelines, known as our "Written Information Security Program." Our program (i) balances responsiveness to rapidly changing threats with ensuring our IT security environment's sustainability and overall effectiveness and (ii) is reasonably likely to defend against risks of cybersecurity threats that would have a material impact on our business strategy, results of operations, or financial condition.
We have documented information security policies, procedures, and guidelines, known as our "Written Information Security Program." Our program (i) balances responsiveness to rapidly changing threats with ensuring our IT security environment's sustainability and overall 33 Table of Contents effectiveness, and (ii) is reasonably likely to defend against risks of cybersecurity threats that would have a material impact on our business strategy, results of operations, or financial condition.
He also oversees cybersecurity incidents under our Security Incident Response Plan ("IRP"). He has worked for us for approximately 22 years in related positions of increasing responsibility and has over 28 years of technology and information security experience.
He also oversees cybersecurity incidents under our Security Incident Response Plan ("IRP"). He has worked for us for approximately 23 years in related positions of increasing responsibility and has over 28 years of technology and information security experience.
Board Governance and Management The Executive Vice President ("EVP") & Chief Information Officer ("CIO") and the SVP of Enterprise Strategy and Execution provide quarterly written and in-person updates on the strength of our cyber risk control environment, emerging cyber threat issues, and the results of external assessments by outside security consultants and assessors to the Board’s Risk Committee.
Board Governance and Management The Executive Vice President ("EVP") & Chief Information Officer ("CIO") and the SVP of Enterprise Strategy and Execution provide quarterly updates on the strength of our cyber risk control environment, emerging cyber threat issues, and the results of external assessments by outside security consultants and assessors to the Board’s Risk Committee.
The IRP also provides guidance on how to evaluate potential cyber events and suspicious cyber occurrences. We engage outside legal counsel and technical experts to regularly review the IRP and use internal teams and outside advisors with specialized skills to support the response and recovery efforts of proprietary and confidential information.
The IRP also provides guidance on evaluating potential cyber events and suspicious cyber occurrences. We engage outside legal counsel and technical experts to regularly review the IRP and use internal teams and outside advisors with specialized skills to support the response and recovery efforts of proprietary and confidential information.
He has worked for us for approximately 31 years, holding various technology and information security roles of increasing responsibility.
He has worked for us for approximately 32 years, holding various technology and information security roles of increasing responsibility.
It describes the (i) involvement of the SVP of Enterprise Strategy and Execution, (ii) escalation process of such incidents to senior management, 34 Table of Contents including the General Counsel, CIO, Chief Financial Officer, CRO, and Chief Executive Officer, (iii) reporting process to the Risk Committee and Board, and (iv) the notification and disclosure process to customers, distribution partners, regulators, and the SEC.
It describes the (i) involvement of the SVP of Enterprise Strategy and Execution, (ii) escalation process of such incidents to senior management, including the General Counsel, CIO, Chief Financial Officer, CRO, and CEO, (iii) reporting process to the Risk Committee and Board, and (iv) the notification and disclosure process to customers, distribution partners, regulators, and the SEC.
We review third-party control environments when possible and practical, aligning the risk exposure with our business requirements and risk tolerances.
We review third-party control environments when practical and align the risk exposure with our business requirements and risk tolerances.
Removed
He has worked for us for approximately seven years, and he previously was our SVP of Actuarial Reserving. He has over 33 years of insurance industry experience, serving in various key leadership positions. He has a bachelor’s degree in mathematics, is a fellow of the Casualty Actuarial Society, and is a member of the American Academy of Actuaries.
Added
He has a bachelor's degree in mathematics from Touro College in New York, is an Associate of the Casualty Actuarial Society, and is a member of the American Academy of Actuaries. Before joining Selective in mid-2025, he spent seven years at Everest Group, leading risk and 34 Table of Contents actuarial functions in various executive leadership roles.
Added
His predecessor was Christopher Cunniff, who worked for us for approximately eight years.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our headquarters is a 315,000-square-foot building on an owned 56-acre site zoned for office and professional use in Branchville, New Jersey. We lease all our other operating facilities from unrelated parties. The principal office locations of our insurance operations are listed in the "Geographic Markets" section of Item 1. "Business." of this Form 10-K.
Biggest changeItem 2. Properties. We own a 315,000-square-foot building on 56-acres zoned for office and professional use in Branchville, New Jersey. We lease all of our other operating facilities from unrelated parties, including a new facility in Short Hills, New Jersey. Many of our Branchville operations will relocate to Short Hills beginning in mid-2026 and continuing through 2029.
Our Investments operations are principally located in leased space in Farmington, Connecticut. Our facilities provide adequate space for our present needs. Additional space should be available on reasonable terms if needed.
The principal office locations of our insurance and investment operations are listed in the "Geographic Markets" section of Item 1. "Business." of this Form 10-K. Our facilities provide adequate space for our present needs. Additional space should be available on reasonable terms if needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest change"Litigation" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. As of December 31, 2024, we have no material pending legal proceedings that could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Item 4. Mine Safety Disclosures. Not applicable. PART II
Biggest change"Litigation" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. As of December 31, 2025, we have no material pending legal proceedings that could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Item 4. Mine Safety Disclosures. Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Board declared a $0.38 per share quarterly cash dividend on common stock payable March 3, 2025, to stockholders of record as of February 14, 2025. 35 Table of Contents (d) Securities Authorized for Issuance under Equity Compensation Plans The following table provides information about our common stock authorized for issuance under equity compensation plans as of December 31, 2024: (a) (b) (c) Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) 1 Equity compensation plans approved by security holders — $ — 4,411,194 1 Includes 975,358 shares available for issuance under our Employee Stock Purchase Plan (2021); 1,466,600 shares available for issuance under the Stock Purchase Plan for Independent Insurance Agencies; and 1,969,236 shares for issuance under the Selective Insurance Group, Inc. 2024 Omnibus Stock Plan ("Stock Plan").
Biggest change(d) Securities Authorized for Issuance under Equity Compensation Plans The following table provides information about our common stock authorized for issuance under equity compensation plans as of December 31, 2025: (a) (b) (c) Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) 1 Equity compensation plans approved by security holders — $ — 3,998,937 1 Includes 890,237 shares available for issuance under our Employee Stock Purchase Plan (2021); 1,428,481 shares available for issuance under the Stock Purchase Plan for Independent Insurance Agencies; and 1,680,219 shares for issuance under the Selective Insurance Group, Inc. 2024 Omnibus Stock Plan ("Stock Plan").
(e) Performance Graph The following chart, produced by Research Data Group, Inc., depicts our performance for the period beginning December 31, 2019, and ending December 31, 2024, comparing total stockholder return on our common stock to the total return of (i) the NASDAQ Composite Index and (ii) a select group of peer companies comprised of NASDAQ-listed companies in SIC Code 6330-6339, Fire, Marine, and Casualty Insurance.
(e) Performance Graph The following chart, produced by Research Data Group, Inc., depicts our performance for the period beginning December 31, 2020, and ending December 31, 2025, comparing total stockholder return on our common stock to the total return of (i) the NASDAQ Composite Index and (ii) a select group of peer companies comprised of NASDAQ-listed companies in SIC Code 6330-6339, Fire, Marine, and Casualty Insurance.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol "SIGI." (b) Holders Our transfer agent’s records reflect that we had 2,720 common stockholders of record as of January 31, 2025.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol "SIGI." (b) Holders Our transfer agent’s records reflect that we had 2,616 common stockholders of record as of January 30, 2026.
Our repurchase program does not obligate us to acquire any particular amount of our common stock. Management will determine the timing and amount of any share repurchases under the authorization at its discretion based on market conditions and other considerations. Item 6. Reserved. Not applicable.
The Company’s existing share repurchase program remained effective through October 24, 2025. Our repurchase program does not obligate us to acquire any particular amount of our common stock. Management will determine the timing and amount of any share repurchases under the authorization at its discretion based on market conditions and other considerations. Item 6. Reserved. Not applicable.
This performance graph shall not be deemed "soliciting material" or be "filed" with the SEC unless we specifically request so or incorporate it by reference in any SEC filings we make. 36 Table of Contents (f) Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information about our purchases of our common stock in the fourth quarter of 2024: Period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs 2 Approximate Dollar Value of Shares that May Yet Be Purchased Under the Announced Programs 2 October 1 – 31, 2024 491 $ 94.81 — $ 75.5 November 1 – 30, 2024 28 101.99 — 75.5 December 1 – 31, 2024 329 94.63 — 75.5 Total 848 $ 94.98 — $ 75.5 1 We purchased these shares from employees to satisfy tax withholding obligations associated with the vesting of their restricted stock units. 2 On December 2, 2020, we announced our Board authorized a $100 million share repurchase program with no set expiration or termination date.
This performance graph shall not be deemed "soliciting material" or be "filed" with the SEC unless we specifically request so or incorporate it by reference in any SEC filings we make. 36 Table of Contents (f) Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information about our purchases of our common stock in the fourth quarter of 2025: Period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs 2 Approximate Dollar Value of Shares that May Yet Be Purchased Under the Announced Programs 2 October 1 – 31, 2025 397,378 $ 75.96 395,073 $ 170.0 November 1 – 30, 2025 20 78.24 — 170.0 December 1 – 31, 2025 203 78.96 — 170.0 Total 397,601 $ 75.96 395,073 $ 170.0 1 We purchased these shares from employees to satisfy tax withholding obligations associated with the vesting of their restricted stock units. 2 On December 2, 2020, we announced our Board authorized a $100 million share repurchase program with no set expiration or termination date.
(c) Dividends Dividends on shares of our common stock are declared and paid at the discretion of the Board of Directors (the "Board") based on our results of operations, financial condition, capital requirements, contractual restrictions, and other relevant factors. We expect to continue to pay quarterly cash dividends on shares of our common stock.
(c) Dividends Dividends on shares of our common stock are declared and paid at the discretion of the Board of Directors (the "Board") based on our results of operations, financial condition, capital requirements, contractual restrictions, and other relevant factors.
In the fourth quarter of 2024, the Board approved a 9% increase in our common stock dividend to $0.38 per share.
We expect to continue to pay quarterly cash dividends on shares of our common stock. 35 Table of Contents In the fourth quarter of 2025, the Board approved a 13% increase in our common stock dividend to $0.43 per share.
Added
The Board declared a $0.43 per share quarterly cash dividend on common stock payable on March 2, 2026, to stockholders of record as of February 13, 2026.
Added
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. This program was effective on October 27, 2025, and has no expiration date.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 75 Consolidated Balance Sheets as of December 31, 202 4 and 202 3 77 Consolidated Statements of Income for the Years Ended December 31, 202 4 , 202 3 , and 202 2 78 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 202 4 , 202 3 , and 202 2 79 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024, 2023, and 2022 80 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 4 , 202 3 , and 202 2 81 Notes to Consolidated Financial Statements 82
Biggest changeFinancial Statements and Supplementary Data 75 Consolidated Balance Sheets as of December 31, 2025 and 2024 77 Consolidated Statements of Income for the Years Ended December 31, 2025, 2024, and 2023 78 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 202 5 , 202 4 , and 202 3 79 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 202 5 , 202 4 , and 202 3 80 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023 81 Notes to Consolidated Financial Statements 82
Management’s Discussion and Analysis of Financial Condition and Results of Operations 37 Forward-looking Statements 37 Introduction 37 Critical Accounting Policies and Estimates 38 Financial Highlights of Results for Years Ended December 31, 202 4 , 2023, and 2022 46 Results of Operations and Related Information by Segment 48 Federal Income Taxes 64 Liquidity and Capital Resources 65 Item 7A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations 37 Forward-looking Statements 37 Introduction 37 Critical Accounting Policies and Estimates 38 Financial Highlights of Results for Years Ended December 31, 2025, 2024, and 2023 46 Results of Operations and Related Information by Segment 48 Income Taxes 63 Liquidity and Capital Resources 64 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 69 Item 8.
Quantitative and Qualitative Disclosures About Market Risk 68 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur 2024 calendar year actions were predominantly in the general liability line for accident years 2020 and subsequent, with most of the actions for accident years 2022 and 2023; and • An increase of 1.4 points in current year casualty loss costs in 2024 compared to 2023, primarily due to increased loss trend expectations and higher prior-year severity assumptions related to the impacts of social inflation on our general liability and E&S casualty lines of business. 49 Table of Contents 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) 2024 2023 2022 General liability $ 316.0 55.0 (5.0) Commercial automobile 20.0 4.0 15.0 Workers compensation (45.0) (74.5) (70.0) Businessowners' policies — — (11.0) Bonds (5.0) — (10.0) Total Standard Commercial Lines 286.0 (15.5) (81.0) Homeowners (5.0) — — Personal automobile 10.0 14.0 — Total Standard Personal Lines 5.0 14.0 — E&S 20.0 (5.0) (5.0) Total (favorable) unfavorable prior year casualty reserve development $ 311.0 (6.5) (86.0) The 2024 unfavorable prior year casualty reserve development by line of business was driven by the following: • General liability - increased severities in accident years 2020 and subsequent, with most of the actions for accident years 2022 and 2023, due to impacts from social inflation; • Commercial automobile - increased severities in accident year 2023; • Personal automobile - increased severities in accident years 2022 through 2023; and • E&S casualty - increased severities in accident years 2023 and prior.
Biggest changeThe increase in NPE in 2025 compared to 2024 resulted from the same impacts to NPW described above. 48 Table of Contents 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.
These non-GAAP measures are important financial measures used by us, analysts, and investors because the timing of realized and unrealized 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.
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.
Reinsurance Pooling Agreement The primary purposes of the Insurance Subsidiaries' reinsurance pooling agreement are to: • Pool or share proportionately 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").
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").
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) 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, (iv) Equipment Breakdown Coverage Reinsurance Treaty, (v) Multi-line Quota Share, which covers additional personal lines coverages, such as personal cyber and home systems protection, (vi) Cyber Liability Quota Share, and (vii) Excess Liability Quota Share, which covers MUSIC's excess liability 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.
Although domiciliary state insurance regulators have historically approved dividends, there is no assurance they will approve future Insurance Subsidiary dividends.
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 our 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.
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.
Under our reinsurance treaties, we cede to 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.
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.
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) $1.3 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.
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.
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 built into our property and casualty reinsurance treaties, for terrorism losses covered under the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA").
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").
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 position and improve their financial strength ratings.
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.
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, claimant willingness to undergo surgery, evolving plaintiff attorney strategies and tactics, and broadening liability definitions and interpretations are also impacting claims severities.
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.
As of December 31, 2024 and 2023, 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.
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.
These claims are handled in 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.
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.
About 9% 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).
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).
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, 2024, 2023, and 2022; • Results of Operations and Related Information by Segment; • Federal Income Taxes; and • Liquidity and Capital Resources.
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.
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 will negatively or positively impact our results of operations.
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.
The MD&A discusses and analyzes our 2024 results compared to 2023. 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 2023 results compared to 2022, refer to Item 7.
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.
Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries." 37 Table of Contents 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.
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.
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, 2024.
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.
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.
Significant uncertainties are associated with estimating critical reserve assumptions, such as average clean- 43 Table of Contents 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.
The fair value of approximately 91% 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.
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.
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 have credit risk associated with collecting 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 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.
We operate in a constantly changing business environment, and new risk factors may emerge anytime. 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.
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.
The following illustrates the pooling percentages by Insurance Subsidiary as of December 31, 2024: 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 aggregations of risks without directly increasing our capital or statutory surplus.
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.
"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, 2023.
"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.
Our claims and actuarial departments actively monitor these claims to identify changes in frequency or severity and any emerging or shifting trends. 40 Table of Contents Our active monitoring of claim patterns and emerging or shifting trends should help us better understand this rapidly evolving exposure.
Our claims and actuarial departments actively monitor these claims to identify changes in frequency or severity and any emerging or shifting trends. 40 Table of Contents Our active monitoring of claim patterns and emerging or shifting trends helps us better understand this rapidly evolving exposure.
In addition to the above, the following table summarizes certain contractual obligations we had at December 31, 2024 that may require us to invest additional amounts into our investment portfolio, which we would fund primarily with operating cash flows.
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.
We conduct sensitivity tests highlighting 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 correlation between lines of business and accident years.
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.
"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.
"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.
Our ability to meet our interest and principal repayment obligations on our debt and our ability to continue to pay dividends to our stockholders is dependent 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 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.
The table below illustrates the impact of the five largest hurricane losses we have experienced in the last 35 years: ($ in millions) Gross Loss 1 Net Loss 2 Accident Year Gross Loss Ratio Net Loss Ratio Hurricane Name Superstorm Sandy $125.5 45.6 2012 7.9% 2.9 Hurricane Helene 85.0 85.0 2024 1.9 1.9 Hurricane Ida 53.4 39.7 2021 1.8 1.3 Hurricane Irene 44.8 40.2 2011 3.1 2.8 Hurricane Hugo 26.4 3.0 1989 5.9 0.7 1 This amount represents reported and unreported gross losses estimated as of December 31, 2024. 2 Net loss does not include reinstatement premiums, taxes, or flood claims handling fees.
The table below illustrates the impact of the five largest hurricane losses we have experienced in the last 36 years: ($ in millions) Gross Loss 1 Net Loss 2 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 1 This amount represents reported and unreported gross losses estimated as of December 31, 2025. 2 Net loss does not include reinstatement premiums, taxes, or flood claims handling fees.
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, 2024, relative to December 31, 2023.
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 rang e of reasonable reserve estimates increased as of December 31, 2025, relative to December 31, 2024.
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 December 31, 2024, and $1.7 million at December 31, 2023. We continually monitor developments that may impact recoverability from our reinsurers, for which we have contractual remedies, if necessary.
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.
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.
We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance 37 Table of Contents Company ("MUSIC"), a nationally-authorized non-admitted platform for customers who generally cannot obtain coverage in the standard marketplace.
Asbestos claims have arisen primarily 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.
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-contain ing products, such as heating, ventilation, and air conditioning contractors.
In addition, we purchased a Personal Lines-only treaty of $20 million in excess of $20 million retention to mitigate Personal Lines-specific catastrophe losses. Effective January 1, 2025, we renewed our main property catastrophe treaty, with additional limit, stable retention and improved terms.
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.
The property catastrophe treaty excludes coverage for communicable disease but 58 Table of Contents 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.
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 $88 million in excess of $2 million on a per occurrence basis.
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.
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.
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.
Because of the length of time injured workers can receive related medical treatment, decreases in medical inflation can cause favorable loss development over an extended number of accident years.
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.
We continue to monitor these sources, considering our short-term and long-term liquidity and capital preservation strategies.
We continue to monitor these sources, considering our short-term and long-term liquidity and capital management strategies.
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 includes a dedicated claims unit, like we do for asbestos and environmental claims.
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.
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 2024, our Board approved a 9% increase in the quarterly cash dividend on common stock, to $0.38 from $0.35 per share.
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 $0.38 per share.
Consequently, we may receive claims decades after the alleged acts involving complex claims coverage determinations, potential litigation, higher defense costs, and the need to collect from reinsurers under older reinsurance agreements.
Consequently, we have received claims decades after the alleged acts involving complex claims coverage determinations, potential litigation, higher defense costs, and the need to collect from reinsurers under older reinsurance agreements.
Environmental claims have arisen primarily from Standard Commercial Lines policies issued to municipal governments and small non-manufacturing commercial customers for landfill exposures, and Standard Personal Lines homeowners policies related to leaking underground storage tanks.
Enviro nmental claims have arisen from Standard Commercial Lines policies issued to municipal governments and small non-manufacturing commercial customers for landfill exposures, and Standard Personal Lines homeowners policies related to leaking underground storage tanks.
Factors considered in determining the allowance for credit losses require significant judgment, including our evaluation of the security's projected cash flow stream. For additional information regarding our allowance for credit losses on AFS fixed income securities, see item (c) of Note 2. "Summary of Significant Accounting Policies" and item (i) of Note 5. "Investments" within Item 8.
Factors considered in determining the allowance for credit losses require significant judgment, including our evaluation of the security's projected cash flow stream. 44 Table of Contents For additional information regarding our allowance for credit losses on AFS fixed income securities, see item (c) of Note 2. "Summary of Significant Accounting Policies" and item (i) of Note 5.
The following table summarizes prior year development by line of business: (Favorable)/Unfavorable Prior Year Loss and Loss Expense Development ($ in millions) 2024 2023 2022 General liability $ 316.0 55.0 (5.0) Commercial automobile 19.5 8.0 22.5 Workers compensation (45.0) (74.5) (70.0) Businessowners' policies (1.7) 7.6 (7.3) Commercial property (23.4) 0.7 (1.6) Bonds (5.0) — (10.0) Homeowners (1.4) 4.6 (0.6) Personal automobile 11.1 15.3 0.5 E&S casualty lines 20.0 (5.0) (5.0) E&S property lines (4.9) (1.6) (2.5) Other 0.1 (0.1) 0.1 Total $ 285.3 10.0 (78.9) A detailed discussion of recent reserve development by line of business follows.
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.
Range of Reasonable Reserve Estimates We have estimated a range of reasonable reserve estimates for net loss and loss expense of $5,003 million to $6,114 million at December 31, 2024. 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.
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.
“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 - 41% of losses in excess of $800 million up to $1.4 billion.
“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.
"Summary of Significant Accounting Policies" and Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. Federal Income Taxes The following table provides information regarding federal income taxes.
"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.
Flood 100% reinsurance by the federal government’s WYO. None. 59 Table of Contents Property Catastrophe Reinsurance Program Our 2025 property catastrophe reinsurance program includes a main 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.
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.
We also purchase a limited amount of facultative reinsurance, primarily for large individual property risks greater than 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 purchase a limited amount of facultative reinsurance, primarily for large individual property risks exceeding our property per-risk excess-of-loss treaty capacity. 57 Table of Contents • Casualty Reinsurance , which provides protection for both individual large casualty losses and catastrophic casualty losses involving multiple claimants or insureds.
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 $52.10 as of December 31, 2024, from $50.03 as of December 31, 2023.
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.
Our capital management strategy is intended to protect the interests of the policyholders of the Insurance Subsidiaries and our stockholders and enhance our financial strength and underwriting capacity. We have a strong capital base and high-quality underwriting portfolio, positioning us well to take advantage of potential market opportunities.
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.
We review 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 60 Table of Contents elevated sea surface temperatures.
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.
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. 65 Table of Contents For additional information regarding dividend restrictions and financial covenants, where applicable, see Note 11.
The Parent’s ability to pay dividends to stockholders is also impacted by (i) covenants in 64 Table of Contents 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.
Similarly, this line experienced favorable reserve development during 2023 of $74.5 million, primarily due to improved loss severities in accident years 2021 and prior. During both 2024 and 2023, the lower-than-expected loss emergence was partly due to (i) lower than initially anticipated medical inflation and (ii) our various implemented claims initiatives.
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.
Standard Market Workers Compensation Line of Business At December 31, 2024, our workers compensation line of business had recorded reserves, net of reinsurance, of $797 million, representing 14% of our total net reserves. During 2024, this line experienced favorable reserve development of $45.0 million, primarily due to improved loss severities in accident years 2022 and prior.
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.
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 - $40 million in excess of $30 million layer provides two reinstatements, $120 million in aggregate limits.
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, $140 million in aggregate limits.
It shows reserve impacts by line of business if the expected loss and loss expense ratios for the current accident year are greater or less than current expectations by the selected percentages.
The second table displays the estimated impacts of changes to the expected loss and loss expense ratios for the current accident year. It shows reserve impacts by line of business if the expected loss and loss expense ratios for the current accident year are greater or less than current expectations by the selected percentages.
The treaty year deposit premium increased, reflecting higher projected subject earned premium due to growth of our book of business.
The treaty year deposit premium increased modestly, reflecting higher projected subject earned premium due to growth in our book of business and the increased treaty limit.
"Financial Statements and Supplementary Data." of this Form 10-K. 58 Table of Contents Our reinsurance program has contracts that separately cover our property and casualty insurance business and can be categorized as follows: • Property Reinsurance, which includes our (i) property per risk excess of loss treaties purchased for protection against large individual property losses and (ii) property catastrophe treaties and a property catastrophe bond transaction to provide protection for the overall property portfolio against severe catastrophic events.
Our reinsurance program has contracts that separately cover our property and casualty insurance business and can be categorized as follows: • Property Reinsurance, which includes our (i) property per risk excess of loss treaties purchased for protection against large individual property losses and (ii) property catastrophe treaties and a property catastrophe bond transaction to provide protection for the overall property portfolio against severe catastrophic events.
($ in millions) 2024 2023 2022 Federal income tax expense $ 51.0 93.2 55.3 Effective tax rate 1 20.5 % 20.7 20.4 1 The effective tax rate is calculated by taking "Total federal income tax expense" divided by "Income before federal income tax" less "Preferred stock dividends" on our Consolidated Statements of Income.
($ in millions) 2025 2024 2023 Income tax expense $ 123.2 51.0 93.2 Effective tax rate 1 21.2 % 20.5 20.7 1 The 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.
Our program now provides coverage of $1.3 billion in excess of a $100 million retention, compared to $1.1 billion in 2024, thereby, extending the exhaustion point by $200 million to respond to our growing property portfolio. The highest layer of the treaty provides coverage for 41% of losses in the $600 million in excess of $800 million layer.
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.
The size of 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.
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 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.
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 current reinsurance program includes $450 million in collateralized limit of the total $570 million limit in place for the highest layer of the catastrophe program, including the $325 million secured through High Point Re, compared to $417.5 million in collateralized limit under the 2024 reinsurance program.
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.
We do not write crop insurance, have minimal exposure to private flood, and have a limited percentage of our insured properties in the Western U.S., all limiting our exposures to certain weather-related perils, such as droughts, wildfires, and flooding.
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.
Line of Credit On November 7, 2022, the Parent entered into a Credit Agreement with the lenders named therein (the "Lenders") and Wells Fargo Bank, National Association, as Administrative Agent ("Line of Credit").
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.
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 97% of losses.
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.
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 an approximately 1-in-230-year return period, or events with 0.4% probability.
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 approxim ately 1-in-211-years, or events with a 0.5% probability.
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 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.
Uncertainty about future inflation or deflation creates the potential for additional reserve variability in these lines of business. 42 Table of Contents 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.
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.
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) 2024 2023 2022 Net income (loss) available to common stockholders $ 197,812 356,038 215,686 Net realized and unrealized investment (gains) losses included in net income, before tax 2,949 3,552 114,808 Tax on reconciling items (620) (746) (24,110) Non-GAAP operating income (loss) $ 200,141 358,844 306,384 Reconciliation of net income (loss) available to common stockholders per diluted common share to non-GAAP operating income (loss) per diluted common share 2024 2023 2022 Net income (loss) available to common stockholders per diluted common share $ 3.23 5.84 3.54 Net realized and unrealized investment (gains) losses included in net income (loss), before tax 0.05 0.06 1.89 Tax on reconciling items (0.01) (0.01) (0.40) Non-GAAP operating income (loss) per diluted common share $ 3.27 5.89 5.03 Reconciliation of ROE to non-GAAP operating ROE 2024 2023 2022 ROE 7.0 % 14.3 8.8 Net realized and unrealized investment (gains) losses included in net income (loss), before tax 0.1 0.1 4.7 Tax on reconciling items — — (1.1) Non-GAAP operating ROE 7.1 % 14.4 12.4 46 Table of Contents Reconciliation of book value per common share to adjusted book value per common share 2024 2023 2022 Book value per common share $ 47.99 45.42 38.57 Total unrealized investment (gains) losses included in accumulated other comprehensive income (loss), before tax 5.21 5.83 8.75 Tax on reconciling items (1.10) (1.22) (1.83) Adjusted book value per common share $ 52.10 50.03 45.49 The components of our ROE and non-GAAP operating ROE are as follows: ROE Components 2024 2023 2024 2023 vs. 2023 2022 vs. 2022 Standard Commercial Lines segment (4.0) % 5.0 (9.0) pts 4.6 0.4 pts Standard Personal Lines segment (1.1) (2.5) 1.4 (0.2) (2.3) E&S Lines segment 1.4 1.7 (0.3) 1.0 0.7 Total insurance operations (3.7) 4.2 (7.9) 5.4 (1.2) Net investment income earned 12.8 12.4 0.4 9.4 3.0 Net realized and unrealized investment gains (losses) (0.1) (0.1) — (3.6) 3.5 Total investments segment 12.7 12.3 0.4 5.8 6.5 Other (2.0) (2.2) 0.2 (2.4) 0.2 ROE 7.0 14.3 (7.3) 8.8 5.5 Net realized and unrealized investment (gains) losses, after tax 0.1 0.1 — 3.6 (3.5) Non-GAAP operating ROE 7.1 % 14.4 (7.3) 12.4 2.0 In 2024, we generated an ROE of 7.0% compared to 14.3% in 2023.
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 46 Table of Contents 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.
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 % $ (425) $ 425 Workers compensation 15 (85) 85 Commercial automobile liability 10 (110) 110 Personal automobile liability 15 (20) 20 E&S casualty lines 10 (70) 70 Reserve Impacts of Changes to Current 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 15 pts $ (170) $ 170 Workers compensation 10 (35) 35 Commercial automobile liability 10 (75) 75 Personal automobile liability 15 (20) 20 E&S casualty lines 15 (45) 45 There is some overlap between the impacts shown in the tables.
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.
Under the Line of Credit, the Lenders have agreed to provide the Parent with a $50 million revolving credit facility that can be increased to $125 million with the Lenders' consent. The Line of Credit will mature on November 7, 2025, and has a variable interest rate based on the Parent’s debt ratings.
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.
Standard Market General Liability Line of Business At December 31, 2024, our general liability line of business had recorded reserves, net of reinsurance, of $2.5 billion, representing 45% of our total net reserves.
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.
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. The unfavorable prior year casualty reserve development in 2023 was primarily attributable to increased loss severities in accident year 2022 on our personal automobile line of business.
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.
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 2025 treaty year, this reinsurance agreement provides us with coverage for 54% of losses in the $600 million in excess of $800 million layer.
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%.
All other losses stemming from the acts of terrorism are subject to the following: - 82.5% of $3 million in excess of $2 million layer provides 71 reinstatements, $216 million annual aggregate limit; - 82.5% of $3 million in excess of $2 million layer with $15 million net annual terrorism aggregate limit; - 100% of $7 million in excess of $5 million layer provides 12 reinstatements, $91 million annual aggregate limit; - 100% of $7 million in excess of $5 million layer with $28 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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDetails on the credit quality of our invested assets at December 31, 2024 are provided below: December 31, 2024 Credit Rating ($ in millions) Amortized Cost Fair Value % of Invested Assets Yield to Worst Effective Duration in Years Average Life in Years AAA AA A BBB Non-Investment Grade Not Rated Fixed income securities: U.S. government obligations $ 140 $ 120 1.2 % 5.0 % 6.4 9.9 $ — $ 120 $ — $ — $ — $ — Foreign government obligations 11 9 0.1 5.4 5.1 6.1 1 2 4 3 — — State and municipal obligations 484 451 4.7 4.5 5.9 8.6 69 209 156 17 — — Corporate securities 3,206 3,093 32.1 5.5 4.4 5.7 39 338 1,353 1,174 187 1 MBS: Residential mortgage-backed securities ("RMBS"): Agency RMBS 1,247 1,155 12.0 5.4 5.7 8.3 — 1,155 — — — — Non-agency RMBS 566 538 5.6 5.8 4.1 5.7 465 45 26 2 — — Total RMBS 1,813 1,692 17.6 5.5 5.2 7.5 465 1,199 26 2 — — Commercial mortgage-backed securities ("CMBS") 783 753 7.8 5.8 3.3 4.2 514 202 31 — 5 — Total MBS 2,595 2,445 25.4 5.6 4.6 6.5 980 1,402 57 2 5 — CLO and other ABS: CLOs 864 851 8.8 6.3 2.8 5.0 432 267 50 38 33 31 Commercial ABS 524 512 5.3 6.1 2.6 3.1 102 68 278 61 4 — Consumer ABS 403 396 4.1 6.4 0.9 1.5 264 76 50 6 1 — Other ABS 275 274 2.8 7.6 7.2 10.5 10 1 140 80 16 27 Total CLOs and Other ABS 2,066 2,033 21.1 6.5 3.6 5.3 807 412 517 184 54 59 Total securitized assets 4,661 4,478 46.4 6.0 4.1 5.9 1,787 1,814 574 186 59 59 CMLs 234 225 2.3 7.6 2.7 3.6 — 12 87 124 2 — Total fixed income investments 8,735 8,377 87 5.8 4.3 6 1,895 2,495 2,175 1,504 248 60 Short-term investments 509 509 5.3 4.3 — — 508 — 1 — 1 — Total fixed income and short-term investments 9,245 8,886 92.2 5.7 4.0 5.6 2,403 2,495 2,175 1,504 249 60 Total fixed income and short-term investments by credit rating percentage Equity securities: Common stock 1 210 212 2.2 — — — — — — — — 212 Preferred stock 2 2 — — — — — — — 2 — — Total equity securities 211 214 2.2 — — — — — — 2 — 212 Alternative investments: Private equity 346 346 3.6 — — — — — — — — 346 Private credit 52 52 0.5 — — — — — — — — 52 Real assets 43 43 0.4 — — — — — — — — 43 Total alternative investments 441 441 4.6 — — — — — — — — 441 Other investments 101 101 1 — — — — — — — — 101 Total invested assets $ 9,998 $ 9,642 100 % — % — — $ 2,403 $ 2,495 $ 2,175 $ 1,506 $ 249 $ 814 1 Includes investments in exchange traded funds, mutual funds, business development corporations, and real estate investment trusts.
Biggest changeNon-investment grade exposure represented approximately 3% of the total fixed income and short-term investments at both December 31, 2025 and December 31, 2024. 69 Table of Contents Details on the credit quality of our invested assets at December 31, 2025, are provided below: December 31, 2025 Credit Rating ($ in millions) Amortized Cost Fair Value % of Invested Assets Yield to Worst Effective Duration in Years Average Life in Years AAA AA A BBB Non-Investment Grade Not Rated Fixed income securities: U.S. government obligations $ 178 $ 163 1.4 % 4.6 % 5.3 9.1 $ — $ 163 $ — $ — $ — $ — Foreign government obligations 11 10 0.1 4.5 4.6 5.3 1 2 4 4 — — State and municipal obligations 568 550 4.9 4.5 7.0 8.4 77 277 180 16 — — Corporate securities 3,434 3,428 30.3 5.0 4.7 6.2 12 312 1,565 1,353 186 — MBS: Residential mortgage-backed securities ("RMBS"): Agency RMBS 1,608 1,574 13.9 4.8 5.4 6.9 — 1,574 — — — — Non-agency RMBS 519 502 4.4 5.4 3.4 4.6 413 54 33 1 1 — Total RMBS 2,127 2,076 18.4 5.0 5.0 6.4 413 1,629 33 1 1 — Commercial mortgage-backed securities ("CMBS") 713 704 6.2 5.1 3.0 3.9 499 180 18 — 6 — Total MBS 2,840 2,780 24.6 5.0 4.5 5.7 912 1,809 50 1 7 — CLO and other ABS: CLOs 962 947 8.4 6.3 1.5 3.1 572 198 65 48 26 37 Commercial ABS 496 489 4.3 3.2 2.5 3.2 85 70 273 60 2 — Consumer ABS 428 428 3.8 2.0 1.0 1.5 283 95 43 7 — — Other ABS 685 687 6.1 7.2 5.4 8.0 36 112 345 117 25 52 Total CLOs and Other ABS 2,570 2,550 22.6 6.2 3.2 4.8 976 475 726 231 53 89 Total securitized assets 5,411 5,330 47.2 5.6 3.9 5.3 1,888 2,284 776 233 60 89 CMLs 278 275 2.4 6.2 2.6 3.5 — 21 112 120 22 — Total fixed income investments 9,879 9,756 86.3 5.3 4.3 5.8 1,977 3,059 2,637 1,726 268 89 Short-term investments 649 649 5.7 3.6 — — 648 — — — 1 — Total fixed income and short-term investments 10,527 10,405 92.1 5.2 4.1 5.4 2,625 3,059 2,637 1,726 268 89 Total fixed income and short-term investments by credit rating percentage 25.2 % 29.4 % 25.3 % 16.6 % 2.6 % 0.9 % Equity securities: Common stock 1 368 383 3.4 — — — — — — — — 383 Preferred stock 2 2 — — — — — — — 2 — — Total equity securities 370 384 3.4 — — — — — — 2 — 383 Alternative investments: Private equity 336 336 3.0 — — — — — — — — 336 Private credit 37 37 0.3 — — — — — — — — 37 Real assets 46 46 0.4 — — — — — — — — 46 Total alternative investments 419 419 3.7 — — — — — — — — 419 Other investments 92 92 0.8 — — — — — — — — 92 Total invested assets $ 11,408 $ 11,300 100 % — % — — $ 2,625 $ 3,059 $ 2,637 $ 1,728 $ 268 $ 982 1 Includes investments in exchange traded funds, mutual funds, business development corporations, and real estate investment trusts.
Our fixed income securities portfolio is comprised of primarily investment grade (investments receiving Standard & Poor's Global Ratings or an equivalent rating of BBB- or above) corporate securities, U.S. government and agency securities, municipal obligations, collateralized loan obligations ("CLO") and other asset-backed securities ("ABS"), and mortgage-backed securities ("MBS").
Our fixed income securities portfolio is comprised primarily of investment grade (investments receiving Standard & Poor's Global Ratings or an equivalent rating of BBB- or above) corporate securities, U.S. government and agency securities, municipal obligations, collateralized loan obligations ("CLO") and other asset-backed securities ("ABS"), and mortgage-backed securities ("MBS").
Liquidity Risk As a property and casualty insurer, we meet our liquidity needs generally through the cash flow provided by our ongoing operations, as premium collections and investment income generated from our portfolio provide a significant flow of cash to support policyholder claims and other payment obligations.
Liquidity Risk As a property and casualty insurer, we generally meet our liquidity needs through the cash flow provided by our ongoing operations, as premium collections and investment income generated from our portfolio provide a significant flow of cash to support policyholder claims and other payment obligations.
As these partnerships' underlying investments consist primarily of assets or liabilities for which there are no quoted prices in active markets for the same or similar assets, the valuation of interests in these partnerships are subject to a higher level of subjectivity and unobservable inputs than substantially all of our other invested assets.
As these partnerships' underlying investments consist primarily of assets or liabilities for which there are no quoted prices in active markets for the same or similar assets, the valuation of interests in these partnerships is subject to a higher level of subjectivity and unobservable inputs than substantially all of our other invested assets.
We seek to manage our interest rate risk associated with holding fixed income investments by maintaining an effective duration of our portfolio that balances maximizing yield and total return with our overall enterprise risk tolerance for potential interest rate changes.
We seek to manage our interest rate risk associated with holding fixed income investments by maintaining an effective portfolio duration that balances maximizing yield and total return with our overall enterprise risk tolerance for potential interest rate changes.
The sensitivity analysis hypothetically assumes an instant parallel 200 basis point shift in interest rates up and down, in 100 basis point increments from the date of the Financial Statements. We use fair values to measure the potential loss.
The sensitivity analysis hypothetically assumes an instant parallel shift of 200 basis points in interest rates up and down, in 100 basis point increments from the date of the Financial Statements. We use fair values to measure the potential loss.
We also purchase substantial reinsurance to mitigate exposure to significant loss events and we have access to various borrowing facilities if the need to raise capital arises. See the "Liquidity and Capital Resources" section in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for additional information on our available borrowing capacity.
We also purchase substantial reinsurance to mitigate exposure to significant loss events and we have access to various borrowing facilities if we need to raise capital quickly. See the "Liquidity and Capital Resources" section in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for additional information on our available borrowing capacity.
We manage this risk by evaluating several factors, including the deal's structure, the credit quality of underlying loans or assets, the composition of the underlying portfolio, and the portfolio manager's track record and capabilities. We monitor key performance metrics, including over-collateralization, interest coverage, and cash flows, on an on-going basis.
We manage this risk by evaluating several factors, including the deal's structure, the credit quality of underlying loans or assets, the composition of the underlying portfolio, and the portfolio manager's track record and capabilities. We monitor key performance metrics, including over-collateralization, interest coverage, and cash flows, on an ongoing basis.
In addition to these liquidity sources, we monitor our investment portfolio's liquidity profile to ensure it meets our operational liquidity needs. 73 Table of Contents The liquidity characteristics of our portfolio are illustrated below: Asset Category Percentage of Invested Assets Highly-liquid assets 57 % Generally liquid assets, may become less liquid with market stress 1 23 Generally illiquid assets 2 20 Total 100 % 1 These exposures are concentrated within CMBS and CLO and other ABS. 2 These exposures include our alternative investments and other non-publicly traded securities.
In addition to these liquidity sources, we monitor our investment portfolio's liquidity profile to ensure it meets our operational liquidity needs. 73 Table of Contents The liquidity characteristics of our portfolio are illustrated below: Asset Category Percentage of Invested Assets Highly-liquid assets 59 % Generally liquid assets, may become less liquid with market stress 1 21 Generally illiquid assets 2 20 Total 100 % 1 These exposures are concentrated within CMBS and CLO and other ABS. 2 These exposures include our alternative investments and other non-publicly traded securities.
To manage and mitigate exposure on our RMBS and CMBS portfolios, we perform analyses at the time of purchase and as part of the ongoing portfolio evaluation.
To manage and mitigate exposure across our RMBS and CMBS portfolios, we perform analyses at the time of purchase and as part of the ongoing portfolio evaluation.
These holdings represented 14% of our total investment portfolio. The corporate securities portfolio allocation to financials is well-diversified by issuer and has a weighted average credit rating of "A-." No individual issuer comprised more than 1% of our fixed income securities portfolio at December 31, 2024.
These holdings represented 15% of our total investment portfolio. The corporate securities portfolio allocation to financials is well-diversified by issuer and has a weighted average credit rating of "A-." No individual issuer comprised more than 1% of our fixed income securities portfolio at December 31, 2025.
No individual CLO comprised more than 1% of our fixed income securities portfolio at December 31, 2024, and this portfolio had an average credit quality of "A+." Equity Price Risk Our equity securities portfolio is exposed to risk from potential volatility in equity market prices.
No individual CLO comprised more than 1% of our fixed income securities portfolio at December 31, 2025, and this portfolio had an average credit quality of "AA." Equity Price Risk Our equity securities portfolio is exposed to risk from potential volatility in equity market prices.
This analysis is not intended to provide a precise forecast or range of the effect of changes in market interest rates and equity prices on our income or stockholders’ equity. However, it provides insight into the portfolio's sensitivity.
This analysis does not provide a precise forecast or range of the effect of changes in market interest rates and equity prices on our income or stockholders’ equity. However, it provides insight into the portfolio's sensitivity.
The effective duration of the fixed income securities portfolio, including short-term investments, at December 31, 2024, was 4.0 years, which is within our historical range. We use an interest rate sensitivity analysis to measure the potential loss or gain in future earnings, fair values, or cash flows of market-sensitive fixed income securities.
The effective duration of the fixed income securities portfolio, including short-term investments, at December 31, 2025, was 4.1 years, within our historical range. We use an interest rate sensitivity analysis to measure the potential loss or gain in future earnings, fair values, or cash flows of market-sensitive fixed income securities.
MBS (RMBS and CMBS Portfolios) Our MBS portfolios represented 25% of our invested assets at December 31, 2024. MBS represent our most significant exposure to real estate. Further breakdown of this exposure is provided in the table above that shows details on the credit quality of our invested assets.
MBS (RMBS and CMBS Portfolios) Our MBS portfolios represented 25% of our invested assets at December 31, 2025. MBS represent our most significant exposure to real estate. A further breakdown of this exposure is provided in the table above, which shows details on the credit quality of our invested assets.
These analyses include reviews of loan-to-value ratios, geographic spread of the assets securing the bond, delinquencies in payments on the underlying mortgages, gains/losses on sales, evaluations of projected cash flows, as well as other information that aids in determination of the health of the underlying 71 Table of Contents assets.
These analyses include reviews of loan-to-value ratios, geographic spread of the assets securing the bond, delinquencies in payments on the underlying mortgages, gains/losses on sales, evaluations of projected cash flows, as well as other information that aids in determining the health of the underlying assets.
Our debt is not exposed to material changes in interest rates because the interest rates are fixed. (b) Short-Term Debt On November 7, 2022, the Parent entered into a Credit Agreement with the lenders named therein (the "Lenders") and Wells Fargo Bank, National Association, as Administrative Agent ("Line of Credit").
Our debt is not exposed to material changes in interest rates because the interest rates are fixed. (b) Short-Term Debt On June 30, 2025, the Parent entered into a Credit Agreement with the lenders named therein (the "Lenders") and Wells Fargo Bank, National Association, as Administrative Agent ("Line of Credit").
These are investments in private limited partnerships that invest in various strategies such as private equity, private credit, and real assets. As of December 31, 2024, alternative investments represented 5% of our total invested assets and 14% of our stockholders’ equity. These investments are subject to risks arising from their valuation being inherently subjective.
These are investments in private limited partnerships that invest in various strategies, such as private equity, private credit, and real assets. As of December 31, 2025, alternative investments represented 4% of our total invested assets and 12% of our stockholders’ equity. These investments are subject to risks arising from their valuation being inherently subjective.
Our portfolio allocation was 85% fixed income securities, 2% commercial mortgage loans ("CML"), 2% equity securities, 5% short-term investments, 5% alternative investments, and 1% other investments as of December 31, 2024. Alternative investments are limited partnership investments in private equity, private credit, and real estate strategies. We do not directly hold derivatives, commodities, or other investments denominated in foreign currency.
Our portfolio allocation was 84% fixed income securities, 2% commercial mortgage loans ("CML"), 3% equity securities, 6% short-term investments, 4% alternative investments, and 1% other investments as of December 31, 2025. Alternative investments are limited partnership investments in private equity, private credit, and real estate strategies. We do not directly hold derivatives, commodities, or other investments denominated in foreign currency.
CLO and Other ABS Portfolio Our CLO and Other ABS portfolio represented 21% of our invested assets at December 31, 2024. The primary risk associated with these holdings is credit risk.
CLO and Other ABS Portfolio Our CLO and Other ABS portfolio represented 23% of our invested assets at December 31, 2025. The primary risk associated with these holdings is credit risk.
We attempt to minimize equity price risk exposure by maintaining a diversified portfolio and limiting concentrations in any one company or industry.
We aim to manage equity price risk exposure by maintaining a diversified portfolio and limiting concentrations in any one company or industry.
The remaining 78% was high-quality non-agency backed securities, with 84% rated "AAA" and an aggregate net unrealized loss of $20.6 million. Our CML portfolio represented 2% of invested assets as of December 31, 2024, and is focused on multi-family and industrial property types, representing more than half of the exposure.
The remaining 81% was high-quality non-agency backed securities, with 86% rated "AAA" and an aggregate net unrealized loss of $3.8 million. Our CML portfolio represented 2% of invested assets as of December 31, 2025, and is focused on multi-family and industrial property types, representing more than half of the exposure.
Each of these general partners is required to determine the partnerships' value by the price obtainable for the sale of the interest at the time of determination.
Each of these general partners is required to determine the partnerships' value by the price that could be obtained for the sale of the interest at the time of determination.
We consider the overall credit environment, economic conditions, the investment's total projected return, and overall portfolio asset allocation in deciding to purchase or sell these securities. Agency RMBS represented approximately 68% of our RMBS allocation and 12% of our total invested assets as of December 31, 2024.
We consider the overall credit environment, economic conditions, the investment's total projected return, and overall portfolio asset allocation when deciding whether to purchase or sell these securities. Agency RMBS represented approximately 76% of our RMBS allocation and 14% of our total invested assets as of December 31, 2025.
Under the Line of Credit, the Lenders have agreed to provide the Parent with a $50 million revolving credit facility that can be increased to $125 million with the Lenders' consent. The Line of Credit will mature on November 7, 2025, and has a variable interest rate based on the Parent’s debt ratings.
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 $200 million with the Lenders' consent. The Line of Credit will mature on June 30, 2028, and has a variable interest rate based on the Parent’s debt ratings.
The tables below provide details on our CLO and other ABS holdings at December 31, 2024, and December 31, 2023: December 31, 2024 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade: CLO $ 786.3 786.3 (9.1) AA+ Other ABS 1,134.4 1,134.4 (20.9) A+ Total investment grade 1,920.7 1,920.7 (30.0) AA- Non-investment grade: CLO 64.7 64.7 0.7 CCC+ Other ABS 47.7 47.7 1.7 CCC- Total non-investment grade 112.4 112.4 2.4 CCC Total CLO and other ABS $ 2,033.1 2,033.1 (27.6) A+ 72 Table of Contents December 31, 2023 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade: CLO $ 754.6 754.6 (33.1) AA+ Other ABS 978.9 978.9 (36.8) AA- Total investment grade 1,733.5 1,733.5 (69.9) AA Non-investment grade: CLO 70.0 70.0 (3.4) B Other ABS 31.3 31.3 (0.9) CCC Total non-investment grade 101.3 101.3 (4.3) B Total CLO and other ABS $ 1,834.8 1,834.8 (74.2) A- CLOs represented 8% of our total invested assets as of December 31, 2024.
The tables below provide details on our CLO and other ABS holdings at December 31, 2025, and December 31, 2024: December 31, 2025 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade: CLO $ 883.1 883.1 (1.9) AA+ Other ABS 1,524.9 1,524.9 (6.6) A+ Total investment grade 2,408.0 2,408.0 (8.5) AA- Non-investment grade: CLO 63.5 63.5 (2.4) CCC- Other ABS 78.8 78.8 2.6 CCC- Total non-investment grade 142.3 142.3 0.2 CCC- Total CLO and other ABS $ 2,550.3 2,550.3 (8.3) A+ 72 Table of Contents December 31, 2024 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade: CLO $ 786.3 786.3 (9.1) AA+ Other ABS 1,134.4 1,134.4 (20.9) A+ Total investment grade 1,920.7 1,920.7 (30.0) AA- Non-investment grade: CLO 64.7 64.7 0.7 CCC+ Other ABS 47.7 47.7 1.7 CCC- Total non-investment grade 112.4 112.4 2.4 CCC Total CLO and other ABS $ 2,033.1 2,033.1 (27.6) A+ CLOs represented 8% of our total invested assets as of December 31, 2025.
For additional information regarding the Line of Credit agreement and corresponding representations, warranties, and covenants, refer to Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. 74 Table of Contents
This agreement replaced a prior credit agreement that the Parent terminated in conjunction with entering into the Line of Credit. For additional information regarding the Line of Credit agreement and corresponding representations, warranties, and covenants, refer to Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. 74 Table of Contents
The following table shows our total exposure to CRE: December 31, 2024 December 31, 2023 ($ in millions) Fair Value Weighted Average Credit Rating % of Invested Assets Fair Value Weighted Average Credit Rating % of Invested Assets CMBS: Agency $ 164.0 AA+ 2 % $ 169.4 AA+ 2 % Non-agency 589.0 AA+ 6 % 505.4 AAA 6 % CMLs 224.8 BBB+ 2 % 178.9 A- 2 % Real Estate Investment Trusts: Corporate securities 120.8 BBB+ 1 % 109.9 BBB+ 1 % Equity securities 34.1 — 0.4 % 33.6 — 0.4 % Alternative investments 32.4 — 0.3 % 28.9 — 0.3 % Total CRE exposure $ 1,165.1 12 % $ 1,026.1 12 % Agency-backed securities represented 22% of our CMBS portfolio as of December 31, 2024.
The following table shows our total exposure to CRE: December 31, 2025 December 31, 2024 ($ in millions) Fair Value Weighted Average Credit Rating % of Invested Assets Fair Value Weighted Average Credit Rating % of Invested Assets CMBS: Agency $ 130.2 AA+ 1 % $ 164.0 AA+ 2 % Non-agency 573.4 AA+ 5 % 589.0 AA+ 6 % CMLs 274.9 BBB+ 2 % 224.8 BBB+ 2 % Real Estate Investment Trusts: Corporate securities 153.3 BBB+ 1 % 120.8 BBB+ 1 % Equity securities 33.6 — 0.3 % 34.1 — 0.4 % Alternative investments 38.3 — 0.3 % 32.4 — 0.3 % Total CRE exposure $ 1,203.7 10 % $ 1,165.1 12 % Agency-backed securities represented 19% of our CMBS portfolio as of December 31, 2025.
Amounts may not foot due to rounding. 70 Table of Contents Every quarter, we review our invested assets for concentrations of credit risk. The reporting categories representing 10% or more of our invested assets at December 31, 2024 were (i) corporate securities (32%) (ii) MBS (25%), and (ii) CLO's and Other ABS (21%).
Amounts may not foot due to rounding. Every quarter, we review our invested assets for concentrations of credit risk. The reporting categories representing 10% or more of our invested assets at December 31, 2025 were (i) corporate securities (30%), (ii) MBS (25%), and (ii) CLO's and Other ABS (23%). We discuss each of these categories in more detail below.
A weak financial profile can lead to credit rating downgrades, which can put further downward pressure on bond prices. Valuations on these bonds are related more directly to underlying operating performance than to general interest rates.
A weak financial profile can lead to credit rating downgrades, further pressuring bond prices. Valuations of these bonds are more closely tied to underlying operating performance than to general interest rates.
The tables below provide details on our corporate bond holdings at December 31, 2024 and 2023: December 31, 2024 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade $ 2,905.0 2,905.6 (100.5) A- Non-investment grade 187.9 187.9 1.9 B+ Total corporate securities $ 3,092.9 3,093.5 (98.6) A- December 31, 2023 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade $ 2,549.8 2,550.5 (112.6) A- Non-investment grade 183.4 183.4 2.0 B+ Total corporate securities $ 2,733.2 2,733.9 (110.6) A- The following tables provide the sector composition of this portfolio at December 31, 2024 and 2023: December 31, 2024 December 31, 2023 ($ in millions) Fair Value Weighted Average Credit Rating % of Fixed Income Securities Fair Value Weighted Average Credit Rating % of Fixed Income Securities Financials $ 1,365.8 A- 16 % $ 1,284.4 A- 17 % Consumer non-cyclicals 265.4 BBB+ 3 221.7 A- 3 Utilities 221.4 A- 2 142.3 A- 2 Energy 142.1 BBB 2 96.9 BBB 1 Consumer cyclicals 119.5 BBB 1 115.5 BBB 2 Communications 118.5 BBB+ 1 130.7 BBB+ 1 Technology 87.7 BBB 1 88.1 BBB 1 Basic materials 34.5 BBB 1 23.4 BBB 1 Bank loans 15.0 B 1 19.6 B+ 1 Other 426.1 A- 5 342.6 A- 4 Other industrials 296.9 BBB+ 4 268.0 BBB 3 Total corporate securities $ 3,092.9 A- 37 $ 2,733.2 A- 36 As illustrated in the table above, within our allocation to corporate securities, financials is our most significant industry concentration at 16% of our fixed income securities portfolio at December 31, 2024.
Our holdings of non-investment-grade corporate bonds, which typically exhibit weaker credit profiles and are subject to more risk of credit loss, represent 2% of our overall investment portfolio. 70 Table of Contents The tables below provide details on our corporate bond holdings at December 31, 2025 and 2024: December 31, 2025 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade $ 3,241.9 3,241.9 (1.1) A- Non-investment grade 186.2 186.2 3.1 BB- Total corporate securities $ 3,428.1 3,428.1 2.0 A- December 31, 2024 Fair Value Carry Value Net Unrealized/ Unrecognized Gain (Loss) Weighted Average Credit Quality ($ in millions) Investment grade $ 2,905.0 2,905.6 (100.5) A- Non-investment grade 187.9 187.9 1.9 B+ Total corporate securities $ 3,092.9 3,093.5 (98.6) A- The following tables provide the sector composition of this portfolio at December 31, 2025 and 2024: December 31, 2025 December 31, 2024 ($ in millions) Fair Value Weighted Average Credit Rating % of Fixed Income Securities Fair Value Weighted Average Credit Rating % of Fixed Income Securities Financials $ 1,691.2 A- 17 % $ 1,365.8 A- 16 % Consumer non-cyclicals 307.5 BBB+ 3 265.4 BBB+ 3 Utilities 282.7 A- 3 221.4 A- 2 Energy 180.4 BBB 2 142.1 BBB 2 Consumer cyclicals 119.7 BBB- 1 119.5 BBB 1 Communications 127.5 BBB+ 1 118.5 BBB+ 1 Technology 131.5 BBB 1 87.7 BBB 1 Basic materials 41.8 BBB 1 34.5 BBB 1 Bank loans 5.6 B — 15.0 B 1 Other 173.6 A- 2 426.1 A- 5 Other industrials 366.6 BBB+ 4 296.9 BBB+ 4 Total corporate securities $ 3,428.1 A- 35 $ 3,092.9 A- 37 As illustrated in the table above, financials is the most significant industry concentration at 17% of our fixed income securities portfolio at December 31, 2025.
We discuss each of these categories in more detail below. Corporate Securities Our corporate securities represented 32% of our invested assets at December 31, 2024. For investment-grade corporate bonds, we address the risk of an individual issuer's default by maintaining a diverse portfolio by sector and issuer. The primary risk related to non-investment grade corporate bonds is credit risk.
Corporate Securities Our corporate securities represented 30% of our invested assets at December 31, 2025. For investment-grade corporate bonds, we address the risk of an individual issuer's default by maintaining a diverse portfolio across sectors and issuers. The primary risk related to non-investment grade corporate bonds is credit risk.
Indebtedness (a) Long-Term Debt As of December 31, 2024, we had outstanding long-term debt of $507.9 million that matures as shown in the following table: 2024 ($ in thousands) Year of Maturity Carrying Amount Fair Value Financial liabilities Long-term debt 3.03% Borrowings from FHLBI 2026 60,000 58,516 7.25% Senior Notes 2034 49,931 54,657 6.70% Senior Notes 2035 99,590 103,057 5.375% Senior Notes 2049 294,627 273,464 Subtotal 504,148 489,694 Unamortized debt issuance costs (2,492) Finance lease obligations 6,282 Total notes payable $ 507,938 The weighted average effective interest rate for our outstanding long-term debt was 5.5% at December 31, 2024.
Indebtedness (a) Long-Term Debt As of December 31, 2025, we had outstanding long-term debt of $901.9 million that matures as shown in the following table: 2025 ($ in thousands) Year of Maturity Carrying Amount Fair Value Financial liabilities Long-term debt 3.03% Borrowings from FHLBI 2026 60,000 59,625 7.25% Senior Notes 2034 49,936 56,973 5.90% Senior Notes 2035 399,917 419,869 6.70% Senior Notes 2035 99,617 110,244 5.375% Senior Notes 2049 294,737 277,541 Subtotal 904,207 924,252 Unamortized debt issuance costs (5,904) Finance lease obligations 3,570 Total notes payable $ 901,873 The weighted average effective interest rate for our outstanding long-term debt was 5.7% at December 31, 2025.
We record our investments in these various partnerships under the equity method of accounting, so any decreases in these investments' valuations would negatively impact our results of operations. For additional information regarding these alternative investment strategies, see Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
For additional information regarding these alternative investment strategies, see Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.
These securities are rated "AA+" and had an aggregate unrealized loss of approximately $92.4 million, primarily due to an increase in benchmark U.S. Treasury rates as of December 31, 2024. Our CMBS portfolio comprises most of our commercial real estate ("CRE") exposure.
These securities were rated "AA+" and had an aggregate unrealized loss of approximately $33.5 million as of December 31, 2025. 71 Table of Contents Our CMBS portfolio comprises most of our commercial real estate ("CRE") exposure.
Valuations based on unobservable inputs are subject to greater scrutiny and reconsideration from one reporting period to the next, and therefore, may be subject to significant fluctuations, which could lead to significant decreases from one reporting period to the next.
Valuations based on unobservable inputs are subject to greater scrutiny and reconsideration from one reporting period to the next and may therefore be subject to significant fluctuations, potentially leading to significant decreases. We record our investments in these partnerships under the equity method of accounting, so any decreases in their valuations would negatively impact our results of operations.
The following table presents the hypothetical increases and decreases in 10% increments in the market value of the equity portfolio as of December 31, 2024: Change in Equity Values in Percent ($ in thousands) (30)% (20)% (10)% 0% 10% 20% 30% Fair value of equity securities portfolio $ 149,521 170,881 192,241 213,601 234,961 256,321 277,681 Fair value change (64,080) (42,720) (21,360) 21,360 42,720 64,080 In addition to our equity securities, we invest in alternative investments that are subject to price risk.
The following table presents the hypothetical increases and decreases in 10% increments in the market value of the equity portfolio as of December 31, 2025: Change in Equity Values in Percent ($ in thousands) (30)% (20)% (10)% 0% 10% 20% 30% Fair value of equity securities portfolio $ 269,091 307,533 345,974 384,416 422,858 461,299 499,741 Fair value change (115,325) (76,883) (38,442) 38,442 76,883 115,325 In addition to our equity securities, we invest in alternative investments that are subject to price risk.
As of December 31, 2024, approximately 7% of our fixed income securities portfolio was floating rate securities, primarily tied to the 90-day U.S. dollar-denominated Secured Overnight Financing Rate. Our strategy to manage interest rate risk is to purchase intermediate-term fixed income investments that are priced attractively in relation to perceived credit risks.
As of December 31, 2025, approximately 8% of our fixed income securities portfolio was floating rate securities, primarily tied to the 90-day U.S. dollar-denominated Secured Overnight Financing Rate. 68 Table of Contents Our exposure to interest rate risk relates primarily to the market price and cash flow variability associated with changes in interest rates.
These calculations do not consider (i) any actions we may take in response to market fluctuations and (ii) changes to credit spreads, liquidity spreads, and other risk factors that may also impact the value of the fixed income securities portfolio. 69 Table of Contents The following table presents the sensitivity analysis of interest rate risk as of December 31, 2024: 2024 Interest Rate Shift in Basis Points ($ in thousands) -200 -100 — 100 200 Fixed income securities Fair value of fixed income securities portfolio $ 8,791,854 8,471,983 8,152,069 7,832,188 7,512,433 Fair value change 639,785 319,914 (319,881) (639,636) Fair value change from base (%) 7.8 % 3.9 % (3.9) % (7.8) % Credit Risk Our most significant credit risk is within our fixed income securities portfolio, which had an overall credit quality of "A+" as of December 31, 2024 and "AA-" as of December 31, 2023.
The following table presents the sensitivity analysis of interest rate risk as of December 31, 2025: 2025 Interest Rate Shift in Basis Points ($ in thousands) -200 -100 — 100 200 Fixed income securities Fair value of fixed income securities portfolio $ 10,253,307 9,871,204 9,481,114 9,081,632 8,674,333 Fair value change 772,193 390,090 (399,482) (806,781) Fair value change from base (%) 8.1 % 4.1 % (4.2) % (8.5) % Credit Risk Our most significant credit risk is within our fixed income securities portfolio, which had an overall credit quality of "A+" as of both December 31, 2025 and December 31, 2024.
Removed
Our exposure to interest rate risk relates primarily to the market price and cash flow variability associated with changes in interest rates.
Added
These calculations do not consider (i) any actions we may take in response to market fluctuations and (ii) changes to credit spreads, liquidity spreads, and other risk factors that may also impact the value of the fixed income securities portfolio.
Removed
Non-investment grade exposure represented approximately 3% of the total fixed income and short-term investments at December 31, 2024 and 4% at December 31, 2023.
Removed
Our holdings of non-investment grade corporate bonds, which typically exhibit weaker credit profiles and are subject to more risk of credit loss, represent 2% of our overall investment portfolio.

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