Selective lifts operating income per share to $2.37 despite revenue decline
Key Facts
Selective Insurance Group's non-GAAP operating income rose to $2.37 per diluted common share in the third quarter of 2026 from $1.75 in the same period last year, according to the company's financial supplement. The improvement in this profitability measure coincided with a decline in quarterly revenue, as the group reported better underwriting results and higher investment income. Total revenue was $1,326.3 million for the quarter, compared with $1,360.1 million in the third quarter of 2025. Net premiums earned, included in the insurance business results presented in the financial supplement, were $1,180.2 million for the same period. On a GAAP basis, net income per diluted common share was $2.11. That compares with $1.85 per share in the third quarter last year, according to the quarterly figures reported by the company.
In underwriting, Selective said in its earnings release that net premiums written fell 7% year on year in the third quarter of 2026. It attributed the decline in standard commercial lines to what it described as "selective retention actions and lower new business." The group's combined ratio, meanwhile, improved to 96.8% for the quarter from 98.6% in the same period last year. The company attributed the improvement to a lower loss ratio, a development that accompanied the contraction in written premiums during the period. However, a higher underwriting expense ratio partly offset the effect of the lower loss ratio, according to the company's explanation of the change in the combined ratio between the periods.
The contraction in third-quarter written premiums extended declines earlier in the year, with the first-quarter 2026 earnings announcement showing a 1% drop from the corresponding period. The year-on-year decline then widened to 5% in the second quarter, according to that period's earnings release, before the latest decline in the third quarter. The combined ratio was about 98.3% in the first quarter of 2026, compared with 96.1% a year earlier, marking an increase from the corresponding period. In the second quarter, the ratio improved to about 98.0% from 100.2% in the second quarter of 2025, according to the company's earnings announcement for that quarter. The group's companies distribute their products through independent agents, and their operations include standard commercial and personal lines insurance, as well as specialty commercial lines insurance, according to its earnings call announcement.
On investments, Selective reported net after-tax income of about $127 million in the third quarter of 2026, according to the company's statement. That income rose 16% from the same period last year, alongside the year-on-year improvement in underwriting profitability. On shareholder returns, the group raised its quarterly cash dividend per common share to $0.48 as part of its third-quarter earnings announcement. The board also approved a new $200 million share buyback authorization. For 2026, the company raised its forecast for after-tax net investment income to $490 million. The previous forecast for this item was $480 million, according to the comparison Selective provided in its statement. The company is scheduled to hold a call to discuss the results on October 23, 2026, at 8 a.m. Eastern Time, according to its call announcement.