SELECTIVE INSURANCE GROUP INC

The following table provides quantitative information for analyzing the combined ratio:

The NPW growth of 5% in 2025 compared to 2024 included:

Our NPW growth in 2025 also benefited from exposure growth on renewal policies. The impacts of exposure growth and renewal pure price increases were partially offset by a modest decrease in policy count and lower new business.

The increase in NPE in 2025 compared to 2024 resulted from the same impacts to NPW described above.

Details of the prior year casualty reserve development by reportable segment and line of business were as follows:

The loss and loss expense ratio improved 6.0 points in 2025 compared to 2024, including a 5.2-point improvement in net unfavorable prior year casualty reserve development, driven by improved severities in our workers compensation line of business in accident year 2022 and prior, combined with a stabilization of loss trends in our general liability and E&S casualty lines of business. Even with the year-over-year improvement in the development, these two lines reflected increased severity in recent prior accident years due to the impact of ongoing, broad-based social inflation. However, this improvement was partially offset by a higher amount of prior year development in commercial and personal automobile, as we experienced a re-acceleration of severity growth. For commercial automobile, the unfavorable prior year development was related to accident years 2022 through 2024, with 2024 being the primary driver. For personal automobile, accident year 2024 was the primary driver of the unfavorable prior year development.

In 2024, unfavorable prior year casualty reserve development was $311 million, or 7.1 combined ratio points. This included $316 million in the general liability line of business in our Standard Commercial Lines segment for accident years 2020 and subsequent, with most of the actions for accident years 2022 and 2023. Social inflation drove this development.

Current year loss costs were 3.5-points higher in 2025 compared to 2024, driven by elevated severity trend assumptions attributable to social inflation on our general liability and E&S casualty lines of business, and responding to prior year development in our commercial and personal automobile line of business.

For additional qualitative discussion on prior-year casualty reserve development and current-year casualty loss costs, refer to the insurance segment sections below.

Net catastrophe and non-catastrophe property losses were 4.3 points lower in the aggregate in 2025 compared to 2024. Lower net catastrophe losses were due to a lower frequency and severity of storms that impacted our footprint. Lower non-catastrophe property loss and loss expenses reflected (i) the earned impact of higher renewal pure price increases in 2025, (ii) lower claim frequencies, and (iii) variability from period to period of non-catastrophe losses.

For additional qualitative discussion on non-catastrophe property loss and loss expenses, refer to the insurance segment sections below.

Standard Commercial Lines Segment

NPW and NPE growth in 2025 compared to 2024 included renewal pure price increases and exposure growth on renewal policies, partially offset by lower retention as a result of underwriting actions.

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

The loss and loss expense ratio decreased 6.1 points in 2025 compared to 2024, including a 6.6-point improvement in net unfavorable prior year casualty reserve development. The increase in current year loss costs compared to 2024 was primarily driven by elevated severity trend assumptions attributable to social inflation on our general liability line of business, and responding to prior year development in our commercial automobile line of business.

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

Net catastrophe and non-catastrophe property losses were 3.0 points lower in the aggregate in 2025 compared to 2024. This was primarily driven by net catastrophe losses, which were 2.7 points lower than last year, driven by a lower frequency of wind, winter storm, and hurricane events.

Refer to the line of business sections below for qualitative discussion of the significant drivers of non-catastrophe property loss and loss expenses.

The following is a discussion of our most significant Standard Commercial Lines of business:

NPW grew 7% in 2025 compared to 2024, benefiting from renewal pure price increases and renewal exposure growth.

The combined ratio was 17.8 points lower in 2025 compared to 2024, primarily driven by the following:

We recorded unfavorable prior-year casualty reserve development of $40 million in 2025, compared to $316 million in 2024. We attribute the unfavorable development in both periods to the ongoing, broad-based social inflationary factors impacting this line of business. Development in 2025 was driven by increased severities in accident years 2022 and 2023. Development in 2024 was driven by increased severities in accident years 2020 through 2023.

The general liability line of business has experienced a long-term trend of meaningful severity increases, partially offset by claim frequency decreases. Prior-year severities developed adversely, impacting our view of more recent accident years in 2024 and 2025. We attribute the increased severities to elevated social inflation, which we view as an industry dynamic characterized by higher claimant propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Certain jurisdictions with expanded liability theories and higher damage awards pose increased challenges. We are closely monitoring these jurisdictions and the broader trends across our business.

We experienced a 6.9-point increase in current-year casualty loss costs in 2025 compared to 2024, primarily driven by increased loss trend expectations and higher prior-year severity assumptions related to the impacts of social inflation.

We believe that social inflation and elevated loss trends continue to support an elevated near-term pricing environment. In response, we have a heightened focus on prudent underwriting and appropriate pricing. Our renewal pure price increase in this line of business was 11.3% in 2025, up from 8.6% in 2024. In sectors and jurisdictions where market pricing does not align with our view of rate need, we are taking targeted underwriting actions, including (i) revising underwriting guidelines, (ii) tightening coverage offerings, and (iii) reducing writings.

NPW grew 6% in 2025 compared to 2024, benefiting from renewal pure price increases, partially offset by lower retention.

The combined ratio was 10.8 points higher in 2025 compared to 2024, primarily driven by the following:

We recorded $125 million of unfavorable prior year casualty reserve development in 2025, driven by increased severities in accident years 2022 through 2024, with 2024 being the primary driver. Current year casualty loss costs were higher in 2025 compared to the same prior-year periods, in reaction to the unfavorable prior-year casualty reserve development.

Partially offsetting the unfavorable combined ratio drivers mentioned above, non-catastrophe property loss and loss expenses in 2025 were lower compared to 2024, primarily due to (i) the earned impact of higher renewal pure price increases in 2025, and (ii) lower claim frequencies.

1 includes Inland Marine.

2 n/a: not applicable.

NPW grew 7% in 2025 compared to 2024, benefiting from renewal pure price increases and exposure growth on renewal policies.

The combined ratio was 11.9 points lower in 2025 compared to 2024, primarily driven by the following:

Net catastrophe losses were meaningfully lower in 2025 compared to 2024, driven by a lower frequency of wind, winter storm, and hurricane events.

NPW decreased 8% in 2025 compared to 2024, primarily due to renewal pure price decreases and a reduction in direct new business.

The combined ratio was 6.8 points lower in 2025 compared to 2024, primarily due to the following:

The favorable prior year casualty reserve development in 2025 and 2024 was primarily due to improved loss severities driven by continued lower medical cost trends. The favorable development in 2025 and 2024 was related to improved loss severities in accident years 2022 and prior.

In addition, the combined ratio was adversely impacted by an increase in current year casualty loss costs of 8.0 points in 2025, primarily driven by negative rate changes and increased loss trends. These rate level reductions are driven by continued decreases in workers compensation rating bureau loss costs, which form the basis for our filed rating plans, and heavily influence marketplace pricing for this line of business.

Standard Personal Lines Segment

NPW decreased 8% in 2025 compared to 2024, primarily due to lower direct new business. New business decreased 37% in 2025 compared to 2024. The reduction in direct new business premiums was primarily due to a 50% decline in new policy counts in 2025 compared to 2024. The reduction in new policy counts and new business premiums was driven by (i) market conditions, including a challenging rate environment in New Jersey and South Carolina, (ii) competition in other states due to our recent rate activity, and (iii) focusing on our target mass affluent market. We have received regulatory approvals for increased rate levels in most of our footprint states and are focused on growth where we believe our rates are adequate.

The following table depicts our reductions in direct new business and retention for 2025 and 2024:

1 Excludes our flood direct premiums written, which is 100% ceded to the NFIP and therefore, has no impact on our NPW.

The change in NPE in 2025 compared to 2024 was driven by the same impacts on NPW described above.

Underwriting results for this segment improved in 2025 compared to 2024 as we are obtaining positive results from the actions we took to refine our pricing factors and prioritize rate filings to mitigate inflationary impacts. Our more significant rate increases began to take effect early in 2023, increased in number and magnitude throughout 2024, and remained strong in 2025, albeit moderately lower than in 2024. We expect these rates to continue outpacing loss trends in 2026, but at lower levels than those seen in 2024 and 2025. Through our actions, we achieved renewal pure prices increases of 18.6% in 2025. Additionally, we have continued to focus our efforts on our target mass affluent market. In 2025, target business grew 10%, with nearly all new business being in our target market.

The loss and loss expense ratio decreased 8.5 points in 2025 compared to 2024, primarily driven by net catastrophe and non-catastrophe property losses, which reducedthe loss and loss expense ratio by 13.5 points in the aggregate in 2025 compared to 2024. Net catastrophe losses reflected lower frequency and severity of weather-related catastrophe events this year compared to last year. Non-catastrophe property losses were lower in 2025 compared to 2024 due to (i) the earned impact of renewal pure price increases in 2025, (ii) lower claim frequencies, and (iii) variability from period to period of non-catastrophe losses.

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

Prior year casualty reserve development in 2025 included $15.0 million ofunfavorable development in personal automobile, primarily driven by increased loss severities in the 2024 accident year related to the New Jersey portfolio. Prior year casualty reserve development in 2024 included $10.0 million of unfavorable development in personal automobile, primarily driven by increased loss severities in accident years 2022 and 2023. This was partially offset by $5.0 million of favorable development in homeowners, primarily due to lower loss severities in accident years 2021 and prior.

Current year casualty loss costs increased 2.5 points in 2025 compared to 2024. Prior-year severities developed adversely over the course of 2024 and 2025, impacting our view of the current year loss costs for 2025. This resulted in higher current-year casualty loss costs this year compared to last.

E&S Lines Segment

NPW grew 11% in 2025 compared to 2024 and included:

NPW and NPE growth in 2025 benefited from (i) both property and casualty exposure growth on renewal policies, (ii) higher rates per exposure, and (iii) an increase in renewal policy count. Increased competition in the marketplace has lowered our NPW growth rate this year compared to last, primarily due to more capacity entering the E&S marketplace and the admitted markets' appetite for insureds previously written by E&S companies.

The loss and loss expense ratio decreased 1.7 points in 2025 compared to 2024. The loss and loss expense ratio was reduced by a $10 million, or 2.4-point decrease in unfavorable prior year casualty reserve development. In 2025, the unfavorable prior-year casualty reserve development was primarily due to loss severities in accident years 2020 through 2023, driven by the broad-reaching impacts of social inflation. Additionally, non-catastrophe property losses decreased 2.7 points in 2025 compared to 2024. This decrease was primarily driven by (i) normal period-to-period variability associated with property losses and (ii) the impact of earned rates per exposure in excess of loss trend.

Partially offsetting the lower prior year casualty reserve development and non-catastrophe property losses was higher current year casualty loss costs of 3.1 points, primarily due to increased severities related to social inflation.

Reinsurance

We use reinsurance to protect our capital resources and insure against losses on property and casualty risks we underwrite above the amount of losses we are willing to accept. We use two main reinsurance vehicles: (i) a reinsurance pooling agreement among our Insurance Subsidiaries through which each company agrees to share in premiums and losses based on certain specified percentages; and (ii) reinsurance treaties and arrangements with third parties that cover various policies that we issue to our customers.

Reinsurance Pooling Agreement

The primary purposes of the Insurance Subsidiaries' reinsurance pooling agreement are to:

•Pool or proportionately share the underwriting profit and loss results of property and casualty insurance underwriting operations through reinsurance;

•Reduce administration expenses; and

•Permit all the Insurance Subsidiaries to obtain a uniform rating from AM Best Company ("AM Best").

The following table shows the Insurance Subsidiary pooling percentages as of December 31, 2025:

Reinsurance Treaties and Arrangements

By entering into reinsurance treaties and arrangements, we can increase our underwriting capacity, accepting larger individual risks and risk aggregations without directly increasing our capital or statutory surplus. Under our reinsurance treaties, we cede our reinsurers a portion of our incurred losses from an individual policy or group of policies in exchange for a portion of the premium on those policies. Amounts not reinsured below a specified dollar threshold are known as retention. Reinsurance does not legally discharge us from liability under the terms and limits of our policies, but it does make our reinsurers liable to us for the amount of liability we cede to them. Our reinsurers often rely on their own reinsurance programs, or retrocessions, to manage their large loss exposures. The global reinsurance community is relatively small. If our reinsurers cannot collect on their retrocessional programs, it may impair their ability to pay us for the amounts we cede to them.

Consequently, our reinsurers present us with direct, indirect, and contingent counterparty credit risk. We attempt to mitigate this credit risk by (i) pursuing relationships with reinsurers rated "A-" or higher by AM Best and/or (ii) obtaining collateral to secure reinsurance obligations. Some of our reinsurance treaties permit us to terminate or commute them – or require the reinsurer to post collateral if the reinsurer's financial condition or rating deteriorates. We monitor our reinsurers' financial condition and review the quality of reinsurance recoverables and reserves for uncollectible reinsurance. For additional information regarding our reinsurance counterparty credit risk, see Note 9. "Reinsurance" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Our reinsurance program has contracts that separately cover our property and casualty insurance business and can be categorized as follows:

•Property Reinsurance, which includes our (i) property per risk excess of loss treaties purchased for protection against large individual property losses and (ii) property catastrophe treaties and a property catastrophe bond transaction to provide protection for the overall property portfolio against severe catastrophic events. We also purchase a limited amount of facultative reinsurance, primarily for large individual property risks exceeding our property per-risk excess-of-loss treaty capacity.

•Casualty Reinsurance, which provides protection for both individual large casualty losses and catastrophic casualty losses involving multiple claimants or insureds. We also may use (i) facultative reinsurance, primarily for large individual casualty risks in excess of our treaty capacity and (ii) quota share capacity for certain new or higher severity casualty lines of business.

•Terrorism Reinsurance, which provides a federal reinsurance backstop behind the protection of our property and casualty reinsurance treaties, for terrorism losses covered under the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA"). For further information about TRIPRA, see Item 1A. “Risk Factors.” of this Form 10-K.

•Flood Reinsurance, for which all of the premiums and losses related to our participation in the WYO (for which we also receive a servicing fee) are 100% ceded to the federal government.

Property Reinsurance

The following table summarizes our property reinsurance program:

Property Catastrophe Reinsurance Program

Our property catastrophe reinsurance program includes a primary excess of loss treaty and an indemnity reinsurance agreement with a special purpose insurer that issued a catastrophe bond. This program covers our standard market and E&S business. In addition, we renewed the Personal Lines-only treaty of $20 million in excess of a $20 million retention to mitigate Personal Lines-specific catastrophe losses. Effective January 1, 2026, we renewed our main property catastrophe treaty, with additional limit, stable retention, and improved terms. The property catastrophe treaty excludes coverage for communicable disease but retains (i) coverage for strike, riot, civil unrest, severe convective storms, and other traditionally-covered property perils, (ii) coverage for conventional terrorism losses, and (iii) limited coverage for cybersecurity risks. Our program now provides coverage of $1.4 billion in excess of a $100 million retention, compared to $1.3 billion in 2025, thereby extending the exhaustion point by $100 million to respond to our growing property portfolio. The highest layer of the treaty provides coverage for 46% of losses in the $700 million in excess of $800 million layer.

To provide additional, fully collateralized coverage at the top end of our property catastrophe reinsurance program, we secured property catastrophe protection through a per-occurrence excess of loss indemnity reinsurance agreement effective December 9, 2023, with High Point Re Ltd. ("High Point Re"), an independent Bermuda special purpose insurer. The reinsurance agreement meets the accounting guidance requirements to be accounted for as reinsurance. In connection with the reinsurance agreement, High Point Re issued Series 2023-1, Class A Principal-at-Risk Variable Rates Notes to unrelated investors totaling $325 million, consistent with the coverage provided under the reinsurance agreement. The proceeds were deposited in a reinsurance trust account. The reinsurance agreement provides us with coverage of up to $325 million for the three-year period from December 9, 2023, through December 31, 2026, for property catastrophe losses from named storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impacts, and volcanic eruptions in all states except California, Florida, Texas, and Louisiana. The reinsurance agreement's attachment point and exhaustion limit may be reset annually to adjust the expected loss of the layer within a predetermined range. For the 2026 treaty year, this reinsurance agreement provides us with coverage for 46% of losses in the $700 million in excess of $800 million layer, bringing our co-participation in this layer to 8%. The reinsurance agreement is collateralized, which is provided by High Point Re using proceeds from the issuance of the Series 2023-1 Notes.

Reinsurance agreements carry credit risk associated with amounts due from reinsurers. With High Point Re, that risk is reduced because the collateralized reinsurance trust account is funded with money market funds domiciled in the U.S. The money market funds invest solely in cash or high-quality direct obligations of the U.S. government, such as U.S. Treasury bills and other short-term securities backed by the U.S. government.

In addition to the fully collateralized catastrophe bond, we seek to minimize reinsurance credit risk by transacting with highly-rated reinsurance partners and purchasing collateralized reinsurance products, particularly for high-severity, low-probability events, if feasible. Our current reinsurance program includes $498 million in collateralized limit of the total $650 million limit in place for the highest layer of the catastrophe program, including the $325 million secured through High Point Re, compared to $450 million in collateralized limit under the 2025 reinsurance program.

Overall, ceded premium for our property catastrophe reinsurance program will decrease in 2026 due to (i) risk-adjusted price decreases driven by favorable reinsurance market conditions and (ii) modest overall growth in underlying property exposures, marked by exposure reductions in higher catastrophe-risk regions. These reductions will be partially offset by the addition of $80.0 million of net limit coverage, which improved our net risk profile.

Catastrophe Models

We model various catastrophic perils, and hurricane risk remains our portfolio's most significant natural catastrophe peril because of the geographic location of the risks we insure. The table below illustrates the impact of the five largest hurricane losses we have experienced in the last 36 years:

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.

We assess our exposure to hurricane risk by examining third-party vendor models and conducting a proprietary analysis. The third-party vendor models provide both long-term and near-term views, with the near-term view conditioned to adjust for elevated sea surface temperatures. We adjust these models to reflect certain non-modeled cost assumptions, such as the impact of loss expenses, residual market assessments, and automobile-related losses. We believe that modeled estimates provide a range of potential outcomes, and we review multiple estimates to understand our catastrophic risk.

Our established catastrophic risk tolerance requires that no more than 10% of stockholders’ equity be exposed to a loss from a hurricane event at a 99.6% confidence level (1-in-250-year event or 0.4% probability), on a net-of-reinsurance and after-tax basis. Our property catastrophe reinsurance program limits our net after-tax impact of a 1-in-250-year event to about 5% of our GAAP equity, within our established tolerance for catastrophic risk. In addition to the 1-in-250-year modeled event, we evaluate the impact of several other scenarios on stockholders’ equity.

The table below shows the gross and net losses modeled results for (i) hurricane peril in our underwriting property portfolio and (ii) the gross and net of reinsurance hurricane losses from the following scenarios:

•Recasts of two large hurricanes that impacted our geographic footprint:

◦1938 New England Hurricane, one of the largest hurricanes to impact the Northeast U.S.; and

◦Hurricane Hazel, a Category 4 storm that made landfall near the border between North Carolina and South Carolina in 1954; and

•Realistic disaster scenarios ("RDS") for significant potential storms in the Northeast and the Carolinas based on Lloyds of London ("Lloyds") methodology.

1 Gross losses include uncertainty associated with damage/loss estimation, demand and storm surge, and assumptions for certain un-modeled costs, such as the impact of loss expenses, residual market assessments, and automobile-related losses, which collectively increase our gross losses by approximately 13%.

2 Net losses are after-tax losses net of catastrophe reinsurance, including reinstatement premiums and applicable property per risk and facultative reinsurance based on our reinsurance structure effective January 1, 2026.

3 GAAP stockholders' equity as of December 31, 2025.

As the table above reflects, we are within our established tolerance for catastrophic risk. Based on a multi-model view of hurricane risk, our current catastrophe reinsurance program exhausts at a return period of approxim ately 1-in-211-years, or events with a 0.5% probability. Our modeled losses incorporate expected reinsurance recoveries from our per-risk reinsurance treaty and facultative reinsurance in addition to the recoveries from our property catastrophe treaties. Our actual gross and net losses incurred from hurricanes making U.S. landfall will vary, perhaps materially, from our estimated modeled losses.

In addition to hurricane peril, the table below shows gross and net losses modeled by other wind and earthquake perils in our underwriting property portfolio. Other wind perils include the sub-perils of hail, straight-line wind, and tornadoes.

1 Gross losses include uncertainty associated with damage/loss estimation, demand and storm surge, and assumptions for certain un-modeled costs, such as the impact of loss expenses, residual market assessments, and automobile-related losses, which collectively increase our gross losses by approximately 13%.

2 Net losses are after-tax losses net of catastrophe reinsurance, including reinstatement premiums as well as applicable property per risk and facultative reinsurance based on the reinsurance structure effective January 1, 2026.

3 GAAP stockholders' equity as of December 31, 2025.

We do not write crop insurance, have minimal exposure to private flood, and have a small geographic footprint in the Western U.S., all limiting our exposures to certain weather-related perils, such as droughts, wildfires, and flooding. However, as our geographic expansion progresses and we continue to evaluate our business appetite, physical risks from these perils and others will be considered in our strategic decision making.

While we regularly experience property losses from winter storms and use third-party vendor models to help us model and manage our exposure to this peril, we also evaluate our winter storm exposure based on our own historical experience, as winter storm third-party vendor models are currently less mature than models for other perils, such as hurricane wind or severe convective storms.

Property Per Risk Excess of Loss Treaty

Effective July 1, 2025, we renewed the Property Excess of Loss Treaty ("Property Treaty") with the same retention as the expiring treaty, but with a $30 million increase in limit. The treaty now provides coverage for $95 million in excess of a $5 million retention for losses on a per risk basis. The treaty year deposit premium increased modestly, reflecting higher projected subject earned premium due to growth in our book of business and the increased treaty limit.

Casualty Reinsurance

The following table summarizes our casualty reinsurance program:

We renewed the casualty excess of loss treaty ("Casualty Treaty"), which covers our Standard Lines and E&S Lines, on July 1, 2025, with coverage of $87 million in excess of a $3 million retention per loss occurrence. The first layer was modified with an increase in net retention to $3 million, from $2 million, and we continue to retain a portion of the first layer through a 20% co-participation. The 2025 treaty year deposit premium decreased, primarily due to increased retention and co-participation, partially offset by higher projected subject-earned premium due to growth of our book of business.

To complement our key reinsurance programs and provide reinsurance protection on specific coverages or programs, we have other reinsurance treaties, such as our (i) Surety and Fidelity Excess of Loss Reinsurance Treaty, (ii) National Workers Compensation Reinsurance Pool Quota Share, which covers business assumed from the involuntary workers compensation pool, (iii) Equipment Breakdown Coverage Reinsurance Treaty, (iv) Multi-line Quota Share, which covers additional personal lines coverages, such as personal cyber and home systems protection, (v) Cyber Liability Quota Share, (vi) Endurance Specialty Quota share and Loss Development Cover, which protects against losses on policies written before the acquisition and any development on reserves established by MUSIC as of the date of acquisition, and (vii) Excess Liability Quota Share, which covers MUSIC's excess liability business.

We continually evaluate our overall reinsurance program to effectively manage the transfer of risk. We base our analysis on a comprehensive process that includes periodic analysis of modeling results, our own loss experience, aggregation of exposures, exposure growth, diversification of risks, limits written, projected reinsurance costs, reinsurer financial strength, and projected impact on earnings, equity, and statutory surplus. We strive to balance reinsurer credit quality, price, terms, and our appetite to retain a certain level of risk.

Investments Segment

Our Investments Segment's objectives are to maximize the economic value of our investment portfolio by achieving stable, risk-adjusted after-tax net investment income and generating long-term growth in book value per share. Our strategies consider prevailing market conditions, our enterprise risk tolerances, and other risk implications by:

•Maximizing the portfolio's overall total return by investing (i) the premiums from our insurance operations, (ii) amounts generated through our capital management strategies, including debt and equity security issuances, and (iii) profits of our business, and

•Maintaining (i) a well-diversified portfolio across issuers, sectors, and asset classes and (ii) a fixed income securities portfolio with high credit quality and acceptable duration and maturity profiles to provide ample liquidity.

The effective duration of our fixed income and short-term investments was 4.1 years as of December 31, 2025. We monitor and manage the effective duration to maximize yield while managing interest rate risk at an acceptable level. We buy and sell investments with the intent of maximizing investment returns in the current market environment, while balancing capital preservation and ensuring adequate liquidity to support our insurance business.

At both December 31, 2025, and December 31, 2024, our fixed income and short-term investments (i) represented 92% of our invested assets, (ii) had a weighted average credit rating of "A+," and (iii) had investment grade holdings representing 97% of the total fixed income and short-term investment portfolio.

For further details on the composition, credit quality, and various risks to which our portfolio is subject, see Item 7A. "Quantitative and Qualitative Disclosures About Market Risk." of this Form 10-K.

Total Invested Assets

Invested assets increased by $1.7 billion at December 31, 2025, compared to December 31, 2024, primarily reflecting (i) net proceeds from the issuance of our 5.9% Senior Notes in the first quarter of 2025, (ii) our active investment of operating cash flows, which were 25% of NPW in 2025, and (iii) a $240.6 million reduction in pre-tax net unrealized losses in our fixed income and equity securities portfolios, primarily due to lower interest rates and strong performance of U.S. equities during 2025. For additional information about our 5.9% Senior Notes, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this form 10-K.

Net Investment Income

The components of net investment income earned were as follows:

After-tax net investment income earned increased 16% in 2025 compared to 2024, primarily driven by active portfolio management, operating cash flow deployment, and net proceeds from the issuance of our 5.9% Senior Notes in the first quarter of 2025. For additional information about our 5.9% Senior Notes, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this form 10-K.

Realized and Unrealized Investment Gains and Losses

When evaluating securities for sale, our general philosophy is to reduce our exposure to securities and sectors based on economic evaluations of whether (i) the fundamentals for that security or sector have deteriorated or (ii) the timing is appropriate to trade opportunistically for other securities with better economic-return characteristics. Net realized and unrealized gains and losses for the indicated periods were as follows:

For additional information regarding our methodologies for recognizing losses on securities we intend to sell and estimating the allowance for credit losses, see Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.