SELECTIVE INSURANCE GROUP INC

Previous wording

The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent"), and its subsidiaries, except as expressly indicated or the context otherwise requires. Certain statements in this Quarterly Report on Form 10-Q, including information incorporated by reference, are “forward-looking statements” defined in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a forward-looking statement safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements discuss our intentions, beliefs, projections, estimations, or forecasts of future events and financial performance. They involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, activity levels, or performance to materially differ from those in or implied by the forward-looking statements. In some cases, forward-looking statements include the words "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "attribute," "confident," "strong," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro forma," "seek," "likely," "continue," or comparable terms. Our forward-looking statements are only predictions; we cannot guarantee or assure that such expectations will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements for any reason except as may be required by law.

Current wording

The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent") and its subsidiaries, except as expressly indicated or the context otherwise requires. Certain statements in this Quarterly Report on Form 10-Q, including information incorporated by reference, are “forward-looking statements” defined in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a forward-looking statement safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements discuss our intentions, beliefs, projections, estimations, or forecasts of future events and financial performance. They involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, activity levels, or performance to materially differ from those in or implied by the forward-looking statements. In some cases, forward-looking statements include the words "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "attribute," "confident," "strong," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro forma," "seek," "likely," "continue," or comparable terms. Our forward-looking statements are only predictions; we cannot guarantee or assure that such expectations will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements for any reason except as required by law.

Previous wording

We write our Standard Commercial and Standard Personal Lines products and services through nine of our insurance subsidiaries, some of which participate in the federal government's National Flood Insurance Program's ("NFIP") Write Your Own Program. We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance Company, a nationally-authorized non-admitted platform for customers who generally cannot obtain coverage in the standard marketplace. Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries."

Current wording

We write our Standard Commercial and Standard Personal Lines products and services through nine insurance subsidiaries, some of which participate in the federal government's National Flood Insurance Program's ("NFIP") Write Your Own Program. We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance Company, a nationally-authorized non-admitted platform for customers who generally cannot obtain coverage in the standard marketplace. Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries."

Previous wording

•Financial Highlights of Results for the second quarters ended June 30, 2024 (“Second Quarter 2024”) and June 30, 2023 (“Second Quarter 2023”); and the six-month periods ended June 30, 2024 ("Six Months 2024") and June 30, 2023 ("Six Months 2023");

Current wording

•Financial Highlights of Results for the third quarters ended September 30, 2024 ("Third Quarter 2024") and September 30, 2023 ("Third Quarter 2023"); and the nine-month periods ended September 30, 2024 ("Nine Months 2024") and September 30, 2023 ("Nine Months 2023");

Previous wording

Our unaudited interim consolidated financial statements include amounts for which we have made informed estimates and judgments for transactions not yet completed. Such estimates and judgments affect the reported amounts in the consolidated financial statements. As outlined in our 2023 Annual Report, those estimates and judgments most critical to the preparation of the consolidated financial statements involved the following: (i) reserve for loss and loss expense; (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities; and (iii) reinsurance. These estimates and judgments require our use of assumptions about highly uncertain matters, making them subject to change as facts and circumstances develop. If different estimates and judgments had been applied, materially different amounts might have been reported in the financial statements. For additional information regarding our critical accounting policies and estimates, refer to pages 39 through 47 of our 2023 Annual Report.

Current wording

Our unaudited interim consolidated financial statements include amounts for which we have made informed estimates and judgments for transactions not yet completed. Such estimates and judgments affect the reported amounts in the consolidated financial statements. As outlined in our 2023 Annual Report, those estimates and judgments most critical to the preparation of the consolidated financial statements involved the following: (i) reserve for loss and loss expense; (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities; and (iii) reinsurance. These estimates and judgments require our use of assumptions about highly uncertain matters that make them subject to change as facts and circumstances develop. If we applied different estimates and judgments, the financial statements might have reported materially different amounts. For additional information regarding our critical accounting policies and estimates, refer to pages 39 through 47 of our 2023 Annual Report.

Previous wording

Financial Highlights of Results for Second Quarter and Six Months 2024 and Second Quarter and Six Months 20231

Current wording

Financial Highlights of Results for Third Quarter and Nine Months 2024 and Third Quarter and Nine Months 20231

Previous wording

2 Non-GAAP operating income (loss), non-GAAP operating income (loss) per diluted common share, and non-GAAP operating ROE are measures comparable to net income (loss) available to common stockholders, net income (loss) available to common stockholders per diluted common share, and ROE, respectively, but exclude after-tax net realized and unrealized gains and losses on investments included in net income (loss). Adjusted book value per common share is a measure comparable to book value per common share, but excludes total after-tax unrealized gains and losses on investments included in accumulated other comprehensive income (loss). These non-GAAP measures are important financial measures used by us, analysts, and investors because the timing of realized 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.

Current wording

2 Non-GAAP operating income (loss), non-GAAP operating income (loss) per diluted common share, and non-GAAP operating ROE are comparable to net income (loss) available to common stockholders, net income (loss) available to common stockholders per diluted common share, and ROE, respectively, but exclude after-tax net realized and unrealized gains and losses on investments included in net income (loss). Adjusted book value per common share is comparable to book value per common share, but excludes total after-tax unrealized gains and losses on investments included in accumulated other comprehensive income (loss). These non-GAAP measures are important financial measures used by us, analysts, and investors because the timing of realized 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.

Previous wording

Our Second Quarter 2024 and Six Months 2024 operating and non-GAAP operating ROEs in both current-year periods were below our 12% target. The decrease in our non-GAAP operating ROE in Second Quarter 2024 and Six Months 2024 compared to the same prior-year periods was driven by a reduction in after-tax underwriting income. We recorded an after-tax underwriting loss of $137.2 million in Second Quarter 2024 compared to a loss of $1.2 million in Second Quarter 2023, resulting in a reduction to non-GAAP operating ROE of 19.7 points. In Six Months 2024, we recorded an after-tax underwriting loss of $122.2 million, compared to after-tax underwriting income of $29.7 million in Six Months 2023, resulting in a reduction to non-GAAP operating ROE of 11.3 points.

Current wording

Our non-GAAP operating ROE in Third Quarter 2024 slightly exceeded our 12% target, while our Nine Months 2024 non-GAAP operating ROE was below our 12% target. The decrease in our non-GAAP operating ROE in Third Quarter 2024 and Nine Months 2024 compared to the same prior-year periods was driven by reduced after-tax underwriting income. We recorded after-tax underwriting income of $4.1 million in Third Quarter 2024 compared to $25.0 million in Third Quarter 2023, resulting in a reduction to ROE of 3.5 points. In Nine Months 2024, we recorded an after-tax underwriting loss of $118.0 million, compared to after-tax underwriting income of $54.7 million in Nine Months 2023, resulting in a reduction to ROE of 8.6 points.

Previous wording

The underwriting income decrease in Second Quarter 2024 and Six Months 2024 compared to the same prior-year periods was primarily attributable to unfavorable prior year casualty reserve development, and to a lesser extent, an increase in current year loss costs. We believe that current market conditions and environmental factors, most notably social inflation, are impacting us and the industry more than they have historically. As a commercial-lines focused underwriter with a higher mix of casualty business, we recognize this social inflationary environment has increased loss severities. In response to these external trends and the data we observed in our in-depth quarterly reserve review process, we recorded $176.0 million of unfavorable prior year casualty reserve development in Second Quarter 2024 and $211.0 million in Six Months 2024, compared to favorable prior year casualty reserve development of $3.5 million in Second Quarter 2023 and $16.5 million in Six Months 2023.

Current wording

The after-tax underwriting income decrease in Nine Months 2024 compared to Nine Months 2023 was primarily attributable to unfavorable prior year casualty reserve development in Nine Months 2024. We recorded $211.0 million of unfavorable prior year casualty reserve development in Nine Months 2024 compared to $16.5 million of favorable prior year casualty reserve development in Nine Months 2023. There was no net prior year casualty reserve development in Third Quarter 2024 and Third Quarter 2023. Development in Nine Months 2024 primarily impacted the general liability line of business in our Standard Commercial Lines segment. We believe that current market conditions and environmental factors, most notably social inflation, are impacting us and the industry more than historically. As a commercial lines-focused underwriter with a higher mix of casualty business, we recognize this social inflationary environment has increased loss severities. In response to these external trends and the data we observed in our in-depth quarterly reserve review process during Nine Months 2024, we recorded unfavorable prior year casualty reserve development in our general liability line of business, primarily related to accident years 2020 through 2023.

Previous wording

The unfavorable prior year casualty reserve development in Second Quarter 2024 impacted our Standard Commercial Lines segment, with $166.0 million recorded in our general liability line of business and $10.0 million in our commercial automobile line of business. Six Months 2024 development was further impacted by $15.0 million of favorable development in our workers compensation line of business. The $166.0 million primarily relates to accident years 2020 through 2023, similar to the unfavorable prior year casualty reserve development we recorded last quarter. Unfavorable prior year casualty reserve development we recorded at the end of 2023 was primarily associated with accident years 2020 and prior. As older years continue to mature, we gain greater confidence in our estimates, and further development on accident years 2019 and prior has been modest. This increases our confidence in the adjustments we are now making to accident years 2020 and subsequent, which puts us in a stronger overall reserve position. For additional qualitative discussion on prior year casualty reserve development, refer to the insurance segment sections below.

Current wording

For additional qualitative discussion on prior year casualty reserve development, refer to the insurance segment sections below.

Previous wording

Although our Six Months 2024 financial results were challenging, our capital position and the quality of our underwriting portfolio remain strong. Given the consistency in our underwriting appetite and risk profile over time, our corrective actions are primarily focused on achieving higher price levels, with a continued emphasis on prudent underwriting. Our pricing discipline, strong relationships with our distribution partners, and sophisticated analytical tools have enabled us to effectively balance our pricing and retention objectives over the long term, which we seek to continue achieving going forward.

Current wording

Although our Nine Months 2024 financial results were below our target, our capital position and the quality of our underwriting portfolio remain strong. Given the consistency in our underwriting appetite and risk profile over time, we have focused our corrective actions primarily on achieving higher price levels to reflect elevated and uncertain loss trends. Our prudent underwriting, pricing discipline, strong relationships with our distribution partners, and sophisticated analytical tools have enabled us to effectively balance our pricing and retention objectives over the long term.

Previous wording

◦Achieving overall Standard Commercial Lines renewal pure price increases that reflect forward loss trend expectations. Our overall Standard Commercial Lines renewal pure price increase was 7.9% in Second Quarter 2024, up from 7.6% last quarter. In addition, our general liability renewal pure price increase was 7.6% in Second Quarter 2024, up from 6.5% last quarter, and 5.7% in the fourth quarter of 2023. We expect that our general liability pricing will further increase in the second half of 2024;

Current wording

◦Achieving overall Standard Commercial Lines renewal pure price increases that reflect forward loss trend expectations. Our overall Standard Commercial Lines renewal pure price increase was 9.1% in Third Quarter 2024, up from 7.9% last quarter. Excluding workers compensation, our Standard Commercial Lines renewal pure price increase was 10.2% in Third Quarter 2024, up from 9.2% last quarter. In addition, our general liability renewal pure price increase was 10.2% in Third Quarter 2024, up from 7.6% last quarter. We expect that our general liability pricing will remain strong through the end of the year;

Previous wording

◦Expanding our geographic footprint. In April 2024, we added West Virginia and Maine to our footprint, now covering 32 states. Subject to regulatory approvals, we expect to add Nevada, Washington, and Oregon later this year, with Kansas, Montana, and Wyoming to follow. Over time, we plan to expand our Standard Commercial Lines footprint to be near national.

Current wording

◦Expanding our geographic footprint. In April 2024, we entered West Virginia and Maine, and in October 2024, we entered Washington, Nevada, and Oregon, now covering 35 states and the District of Columbia. Kansas, Montana, and Wyoming are the next three states we expect to enter over the next two years. Over time, we plan to expand our Standard Commercial Lines footprint to be near national.

Previous wording

▪Prioritizing additional rate filings on a state-by-state basis and further refining our pricing factors. These filed rate increases began to take effect early in 2023, increasing in number and magnitude throughout 2023, have continued into 2024, and are expected to continue throughout the year. Our Standard Personal Lines renewal pure price increase was 20.7% in Second Quarter 2024, up from 14.3% in the first quarter of 2024, and 8.9% in the fourth quarter of 2023;

Current wording

▪Prioritizing additional rate filings state-by-state and further refining our pricing factors. These filed rate increases began to take effect early in 2023 and increased in number and magnitude throughout 2023 and 2024, and we expect them to continue into 2025. Our Standard Personal Lines renewal pure price increase was 22.8% in Third Quarter 2024 and 18.5% in Nine Months 2024, up from 17.7% in six-months ended 2024;

Previous wording

▪Seeking to improve our homeowners line of business profitability through the introduction of new policy terms and conditions, including (i) coverage for older roofs based on depreciation schedules rather than replacement cost, and (ii) implementing mandatory wind/hail deductibles in states exposed to severe convective storms, where allowed by law; and

Current wording

▪Seeking to improve our homeowners line of business profitability through the introduction of new policy terms and conditions, including (i) coverage for older roofs based on depreciation schedules rather than replacement cost and (ii) implementing mandatory wind/hail deductibles in states exposed to severe convective storms, where law permits; and

Previous wording

▪Continuing the migration of our Standard Personal Lines products and services towards customers in the mass affluent market, where we believe we can be more competitive with our strong coverage and servicing capabilities.

Current wording

▪Continuing the migration of our Standard Personal Lines products and services towards customers in the mass affluent market, where we believe our strong coverage and servicing capabilities can be more competitive, while also limiting the migration in states where, due to regulatory constraints, we cannot charge risk-adequate premiums.

Previous wording

◦Achieving E&S Lines renewal pure price increases in both our casualty and property lines of business that reflect forward loss trend expectations. Our E&S Lines renewal pure price increase was 6.4% in Second Quarter 2024, up from 5.2% in the first quarter of 2024; and

Current wording

◦Achieving E&S Lines renewal pure price increases that reflect forward loss trend expectations. Our E&S Lines renewal pure price increase was 8.0% in Third Quarter 2024, up from 6.4% last quarter; and

Previous wording

◦Continuing to invest in product expansion, risk evaluation, and operational efficiency for small and middle market E&S accounts.

Current wording

◦Continuing to invest in product expansion, risk evaluation, and operational efficiency for small and middle market E&S lines accounts.

Previous wording

For 2024, we increased our expected GAAP combined ratio to 101.5%. The change reflects unfavorable prior year casualty reserve development, elevated catastrophe losses in the first half of the year, and increased current year loss costs. Full-year expectations are as follows:

Current wording

For 2024, we increased our expected GAAP combined ratio to 102.5%. The change reflects elevated catastrophe losses in Third Quarter 2024, partially offset by better-than-expected non-catastrophe property loss and loss expenses. Full-year expectations are as follows:

Previous wording

•A GAAP combined ratio of 101.5%, up five points from our prior guidance of 96.5%. Our combined ratio estimate includes net catastrophe losses of 5.5 points, up from prior guidance of 5.0 points. Our combined ratio estimate assumes no additional prior year casualty reserve development;

Current wording

•A GAAP combined ratio of 102.5%, up 1 point from our prior guidance of 101.5%. Our combined ratio estimate includes net catastrophe losses of 7.5 points, up from prior guidance of 5.5 points. Although too early to provide a specific estimate, we expect losses from Hurricane Milton, which made landfall on October 9, 2024, to be immaterial. Our combined ratio estimate assumes no additional prior year casualty reserve development;

Previous wording

•After-tax net investment income of $360 million that includes $32 million from alternative investments;

Current wording

•After-tax net investment income of $360 million, including $32 million from alternative investments;

Previous wording

•Weighted average shares of 61.5 million on a fully diluted basis, which assumes no share repurchases we may make under our authorization.

Current wording

•Weighted average shares on a fully diluted basis of 61.5 million, which assumes no share repurchases we may make under our authorization.

Previous wording

The NPW growth of 13% in Second Quarter 2024 and 14% in Six Months 2024 compared to the same prior-year periods reflected (i) overall renewal pure price increases, and (ii) higher direct new business, as shown in the following table:

Current wording

The NPW growth of 9% in Third Quarter 2024 and 13% in Nine Months 2024 compared to the same prior-year periods reflected (i) overall renewal pure price increases, and (ii) higher direct new business, as shown in the following table:

Previous wording

Our NPW growth in Second Quarter 2024 and Six Months 2024 also benefited from stable retention and exposure growth on renewal policies.

Current wording

Our NPW growth in Third Quarter 2024 and Nine Months 2024 also benefited from stable retention in our Standard Commercial Lines and E&S Lines and exposure growth on renewal policies.

Previous wording

Details of the prior year casualty reserve development were as follows:

Current wording

Details of the prior year casualty reserve development follow:

Previous wording

The unfavorable prior year casualty reserve development of (i) $166.0 million in Second Quarter 2024 and $216.0 million in Six Months 2024 in our general liability line of business was driven by severities in accident years 2020 through 2023 that continued to show higher emergence than expected, and (ii) $10.0 million in Second Quarter 2024 in our commercial automobile line of business was driven by increased severities in accident year 2023. The unfavorable development in Six Months 2024 was partially offset by favorable workers compensation development of $15.0 million. For additional qualitative discussion on prior year casualty reserve development, refer to the insurance segment sections below.

Current wording

There was no net prior year casualty reserve development in Third Quarter 2024 and Third Quarter 2023. The unfavorable prior year casualty reserve development in Nine Months 2024 of (i) $216.0 million in our general liability line of business was driven by severities in accident years 2020 through 2023 that continued to show higher than expected emergence and (ii) $20.0 million in our commercial automobile line of business was driven by increased severities in accident year 2023. The unfavorable development in these lines of business in Nine Months 2024 was partially offset by favorable workers compensation development of $20.0 million and favorable bonds development of $5.0 million.

Previous wording

NPW growth of 11% in Second Quarter 2024 and 13% in Six Months 2024 compared to the same prior-year periods reflected (i) renewal pure price increases, (ii) higher direct new business, and (iii) strong retention as shown in the table below. In addition, NPW growth benefited from strong exposure growth on renewal policies.

Current wording

NPW growth of 8% in Third Quarter 2024 and 11% in Nine Months 2024 compared to the same prior-year periods primarily reflected (i) renewal pure price increases and (ii) strong retention as shown in the table below. In addition, NPW growth benefited from strong exposure growth on renewal policies.

Previous wording

Prior year casualty reserve development was unfavorable by $176.0 million, or 20.6 points, in Second Quarter 2024, compared to $7.5 million, or 1.0 point, of favorable development in Second Quarter 2023. Prior year casualty reserve development was unfavorable by $211.0 million, or 12.5 points, in Six Months 2024, compared to $17.5 million, or 1.2 points, of favorable development in Six Months 2023.

Current wording

There was no net prior year casualty reserve development in Third Quarter 2024, compared to $3.0 million, or 0.4 points, of favorable development in Third Quarter 2023. Prior year casualty reserve development was unfavorable by $211.0 million, or 8.2 points, in Nine Months 2024 compared to $20.5 million, or 0.9 points, of favorable development in Nine Months 2023.

Previous wording

Despite increasing our expected loss trend in recent years, loss severities continued to show higher emergence than expected in Second Quarter 2024 and Six Months 2024 in the general liability line of business. In response to these unfavorable trends, we recorded unfavorable prior year casualty reserve development in our general liability line of business of $166.0 million in Second Quarter 2024 and $216.0 million in Six Months 2024, primarily driven by increased severities in accident years 2020 through 2023. In addition, we recorded $10.0 million of unfavorable prior year casualty reserve development in our commercial automobile line of business in Second Quarter 2024 and Six Months 2024, primarily driven by increased severities in accident year 2023. The unfavorable development in Six Months 2024 was partially offset by $15.0 million of favorable workers compensation development.

Current wording

Despite increasing our expected loss trend in recent years, loss severities continued to show higher-than-expected emergence in Nine Months 2024 in the general liability line of business. In response to these unfavorable trends, we recorded unfavorable prior year casualty reserve development in our general liability line of business of $216.0 million in Nine Months 2024, primarily driven by increased severities in accident years 2020 through 2023. In addition, we recorded $20.0 million of unfavorable prior year casualty reserve development in our commercial automobile line of business in Nine Months 2024, primarily driven by increased severities in accident year 2023. The unfavorable development in Nine Months 2024 was partially offset by (i) $20.0 million of favorable workers compensation development, primarily due to lower loss severities in accident years 2021 and prior, and (ii) $5.0 million of favorable bonds development.

Previous wording

In addition, the loss and loss expense ratio was adversely impacted by an increase in current year casualty loss costs of 3.4 points in Second Quarter 2024 and 2.1 points in Six Months 2024 compared to the same prior-year periods, primarily due to increased loss trend expectations and higher prior-year severity assumptions attributable to impacts from social inflation in the general liability line of business.

Current wording

In addition, the loss and loss expense ratio was adversely impacted by an increase in current year casualty loss costs of 2.2 points in Third Quarter 2024 and 2.1 points in Nine Months 2024 compared to the same prior-year periods, primarily due to increased loss trend expectations and higher prior-year severity assumptions attributable to impacts from social inflation in the general liability line of business.

Previous wording

Refer to the line of business sections below for qualitative discussion on the significant drivers of unfavorable prior year casualty reserve development and current year loss costs.

Current wording

Refer to the line of business sections below for a qualitative discussion on the significant drivers of unfavorable prior year casualty reserve development and current year loss costs.

Previous wording

NPW grew 9% in Second Quarter 2024 and 11% in Six Months 2024 compared to the same prior-year periods, benefiting from renewal pure price increases, exposure growth on renewal policies, strong retention, and higher direct new business.

Current wording

NPW grew 6% in Third Quarter 2024 and 9% in Nine Months 2024 compared to the same prior-year periods, benefiting from renewal pure price increases, exposure growth on renewal policies, and strong retention.

Previous wording

This line of business has experienced a long-term historical trend of meaningful severity increases, which have been partially offset by decreases in claim frequencies. Prior-year severities have developed adversely, previously impacting the pre-pandemic period but now extending into the more recent accident years. We attribute the increased severities to elevated social inflation, which we see as an industry dynamic characterized by higher propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Certain jurisdictions with expanded liability theories and higher damage awards pose heightened challenges. We are closely monitoring these jurisdictions and the broader trends across our business.

Current wording

The general liability line of business has experienced a long-term historical trend of meaningful severity increases that have been partially offset by claim frequency decreases. Prior-year severities have developed adversely, previously impacting the pre-pandemic period, but in 2024 they have extended into the more recent accident years. We attribute the increased severities to elevated social inflation, which we view as an industry dynamic characterized by higher claimant propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Certain jurisdictions with expanded liability theories and higher damage awards pose increased challenges. We are closely monitoring these jurisdictions and the broader trends across our business.

Previous wording

The unfavorable prior year casualty reserve development in Second Quarter 2024 and Six Months 2024 was primarily due to the impact of social inflation, which resulted in higher severity assumptions embedded in our initial loss ratio estimates in recent years. Despite planning for higher expected loss trends, claim emergence in Second Quarter 2024 and Six Months 2024 continued to exceed our expectations. In response to these continued unfavorable trends, we recorded unfavorable prior year development of $166.0 million in Second Quarter 2024 and $216.0 million in Six Months 2024, primarily in accident years 2020 through 2023. There was no prior year casualty reserve development in Second Quarter 2023 and Six Months 2023.

Current wording

The unfavorable prior year casualty reserve development in Nine Months 2024 was primarily due to the impact of social inflation, which resulted in higher severity assumptions embedded in our initial loss ratio estimates for recent years. Although we planned for higher expected loss trends, claim emergence in Nine Months 2024 exceeded our expectations. In response to these unfavorable trends, we recorded unfavorable prior year development of $216.0 million in Nine Months 2024, primarily in accident years 2020 through 2023. There was no prior year casualty reserve development in Third Quarter 2024 and Third Quarter 2023.

Previous wording

We believe that social inflation and elevated loss trends are an industry dynamic, and may lead to an acceleration of rate increases in this line of business for the industry and us. Our renewal pure price increase in this line of business was 7.6% in Second Quarter 2024, up from 6.5% last quarter, and 5.7% for the fourth quarter of 2023. We expect increases in our general liability pricing to accelerate in the coming months.

Current wording

We believe that social inflation and elevated loss trends are an industry dynamic, which we expect to lead to a more favorable rate environment in the near term. Given the consistency in our underwriting appetite and risk profile over time, we have focused our actions primarily on prudent underwriting and achieving additional rate. Our renewal pure price increase in this line of business accelerated to 10.2% in Third Quarter 2024, up from 7.6% last quarter, and 6.5% for the first quarter of 2024.

Previous wording

NPW grew 16% in Second Quarter 2024 and 17% in Six Months 2024 compared to the same prior-year periods, benefiting from renewal pure price increases, higher direct new business, and strong retention. This higher new business and strong retention contributed to an 8% growth of in-force vehicle counts as of June 30, 2024 compared to June 30, 2023.

Current wording

NPW grew 11% in Third Quarter 2024 and 15% in Nine Months 2024 compared to the same prior-year periods, primarily benefiting from renewal pure price increases and strong retention. This strong retention and higher direct new business in Nine Months 2024 contributed to a 7% growth of in-force vehicle counts as of September 30, 2024, compared to September 30, 2023.

Previous wording

Non-catastrophe property loss and loss expenses in Second Quarter 2024 and Six Months 2024 were lower compared to the same prior-year periods, primarily due to lower claim frequencies.

Current wording

Non-catastrophe property loss and loss expenses in Third Quarter 2024 and Nine Months 2024 were lower compared to the same prior-year periods, primarily due to lower claim frequencies.

Previous wording

•Decreases in current year casualty loss costs of 1.3 points in Second Quarter 2024 and 1.2 points in Six Months 2024 compared to the same prior-year periods, primarily driven by the earned impact of higher renewal pure price increases in both periods as highlighted above; and

Current wording

•Despite increasing current year casualty loss costs by $5.0 million in Third Quarter 2024 and Nine Months 2024, current year casualty loss costs decreased 1.7 points in Third Quarter 2024 and 1.4 points in Nine Months 2024 compared to the same prior-year periods, primarily driven by the earned impact of higher renewal pure price increases in both periods as highlighted above; and

Previous wording

•Decreases in the underwriting expense ratio of 0.3 points in Second Quarter 2024 and 0.7 points in Six Months 2024 compared to the same prior-year periods, as discussed in the "Standard Commercial Lines Segment" section above.

Current wording

•Decreases in the underwriting expense ratio of 0.8 points in Third Quarter 2024 and 0.7 points in Nine Months 2024 compared to the same prior-year periods, as discussed in the "Standard Commercial Lines Segment" section above.

Previous wording

Offsetting the favorable combined ratio drivers mentioned above, was unfavorable prior year casualty reserve development in Second Quarter 2024 and Six Months 2024, primarily due to increased severities in accident year 2023. There was no prior year casualty reserve development in Second Quarter 2023 and Six Months 2023.

Current wording

Offsetting the favorable combined ratio drivers mentioned above, was unfavorable prior year casualty reserve development in Third Quarter 2024 and Nine Months 2024, primarily due to increased severities in accident year 2023. The unfavorable prior year casualty reserve development in Third Quarter 2023 and Nine Months 2023 was primarily due to increased loss expenses in accident years 2022 and prior.

Previous wording

NPW grew 17% in Second Quarter 2024 and 16% in Six Months 2024 compared to the same prior-year periods, benefiting from renewal pure price increases, strong retention, exposure growth on renewal policies, and higher direct new business.

Current wording

NPW grew 12% in Third Quarter 2024 and 14% in Nine Months 2024 compared to the same prior-year periods, primarily benefiting from renewal pure price increases, strong retention, and exposure growth on renewal policies.