Selective Insurance Closes $400 Million Senior Notes Offering

Rhea-AI Summary

Selective Insurance Group (NASDAQ: SIGI) has successfully closed a $400 million senior notes offering with a 5.900% interest rate, maturing in 2035. The net proceeds will be utilized for general corporate purposes and supporting organic growth opportunities.

The offering has increased Selective's debt-to-capital ratio from 14% to approximately 22%. The company's CFO, Patrick S. Brennan, emphasized that this offering demonstrates their confidence in earning attractive shareholder returns and reflects their strong financial position.

The offering was executed through joint book-running managers Goldman Sachs & Co. , BofA Securities, Inc., and Wells Fargo Securities, , and was conducted under an effective shelf registration statement on Form S-3 filed with the SEC.

Positive

• Secured $400M in additional capital for growth opportunities
• Maintained moderate debt-to-capital ratio at 22% post-offering
• Successfully executed offering under favorable market conditions

Negative

• Debt-to-capital ratio increased by 8 percentage points
• Additional interest expense from new debt obligations

Insights

Financial Analyst

Selective Insurance's $400 million senior notes offering represents a significant strategic shift in its capital structure, with the debt-to-capital ratio jumping from 14% to 22%. While this remains moderate by industry standards (many peers operate in the 20-30% range), it signals management's aggressive growth ambitions in the current hardening insurance market environment.

The 5.900% interest rate on these 11-year notes is particularly noteworthy. In today's interest rate environment, this pricing suggests strong investor confidence in SIGI's financial stability and growth trajectory. The company appears to be capitalizing on what it perceives as a favorable window in debt markets before potential rate volatility later this year.

For investors, this capital raise has several strategic implications:

• The substantial increase in leverage indicates management sees significant growth opportunities that exceed what could be funded through retained earnings alone
• The timing suggests possible deployment toward expanding underwriting capacity in hardening rate environments where premium growth can outpace loss inflation
• The long-term nature of the debt (maturing in 2035) provides stable capital that can support sustained expansion without near-term refinancing pressure

While management cited "organic growth" as the primary use, the size of this offering relative to SIGI's $4.8 billion market cap suggests they may also be positioning for potential strategic acquisitions in the fragmented regional insurance market.

This move comes as SIGI has demonstrated strong underwriting performance, with a combined ratio consistently outperforming the industry average. This operational strength likely gives management confidence they can generate returns exceeding their new cost of capital, making this an opportunistic leverage increase rather than a defensive capital raise.

BRANCHVILLE, N.J.--(BUSINESS WIRE)-- Selective Insurance Group, Inc. (Nasdaq: SIGI) (“Selective”) today announced that it closed an offering (the “offering”) of $400 million aggregate principal amount of its 5.900% Senior Notes due 2035 (the “Notes”).

Net proceeds from the offering are expected to be used for general corporate purposes, including to support organic growth opportunities. Upon completion of the offering, Selective’s debt-to-capital ratio is approximately 22%, up from 14% before the offering.

“This offering reflects our confidence in our ability to earn attractive returns for our shareholders, the strength of our financial position – as profitable growth has de-levered our balance sheet – and advantageous and opportunistic capital market conditions,” commented Patrick S. Brennan, Selective’s Executive Vice President & Chief Financial Officer.

Goldman Sachs & Co. LLC, BofA Securities, Inc., and Wells Fargo Securities, LLC acted as joint book-running managers for the offering.

The offering was made pursuant to an effective shelf registration statement on Form S-3 that has previously been filed with the U.S. Securities and Exchange Commission (the “SEC”). The Notes were offered only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained by contacting: Goldman Sachs & Co. LLC, Prospectus Department, 200 West Street, New York, NY 10282, telephone: 1-866-471-2526 or email: Prospectus-ny@ny.email.gs.com; BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attention: Prospectus Department, telephone: 1-800-294-1322, or email: dg.prospectus_requests@bofa.com; or Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 100, Minneapolis, MN 55402, Attention: WFS Customer Service, toll-free: 1-800-645-3751 or email: wfscustomerservice@wellsfargo.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall any offer or sale of these securities occur in any jurisdiction where such an offer, solicitation, or sale would be unlawful.

About Selective Insurance Group, Inc.

Selective Insurance Group, Inc. (Nasdaq: SIGI) is a holding company for 10 property and casualty insurance companies rated "A+" (Superior) by AM Best. Through independent agents, the insurance companies offer standard and specialty insurance for commercial and personal risks and flood insurance through the National Flood Insurance Program's Write Your Own Program. Selective's unique position as both a leading insurance group and an employer of choice is recognized in a wide variety of awards and honors, including listing in Forbes Best Midsize Employers in 2024 and certification as a Great Place to Work® in 2024 for the fifth consecutive year.

Forward-Looking Statements

Certain statements in this press release, 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 Selective’s 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 Selective’s or its 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. Selective’s forward-looking statements are only predictions; Selective cannot guarantee or assure that such expectations will prove correct. Selective undertakes no obligation to publicly update or revise any forward-looking statements for any reason, except as may be required by law.

Factors that could cause Selective’s actual results to differ materially from what it projects, forecasts, or estimates in forward-looking statements include, without limitation:

• challenging conditions in the economy, global capital markets, the banking sector, and commercial real estate, including prolonged higher inflation, could increase loss costs and negatively impact investment portfolios;
• deterioration in the public debt, public equity, or private investment markets could lead to investment losses and interest rate fluctuations;
• ratings downgrades on individual securities Selective owns could negatively affect investment values, impacting statutory surplus;
• the development and adequacy of Selective’s loss reserves and loss expense reserves;
• frequency and severity of catastrophic events, including natural events that climate change may impact, such as hurricanes, severe convective storms, tornadoes, windstorms, earthquakes, hail, severe winter weather, floods, and fires, and man-made events, such as criminal and terrorist acts, including cyber-attacks, explosions, and civil unrest;
• adverse market, governmental, regulatory, legal, political, or judicial rulings, conditions, or actions, including the impact of social inflation;
• the significant geographic concentration of Selective’s business in the eastern portion of the United States;
• the cost, terms and conditions, and availability of reinsurance;
• our ability to collect on reinsurance and the solvency of Selective’s reinsurers;
• the impact of changes in U.S. trade policies and imposition of tariffs on imports that may lead to higher than anticipated inflationary trends for Selective’s loss and loss expenses;
• ongoing wars and conflicts impacting global economic, banking, commodity, and financial markets, exacerbating ongoing economic challenges, including inflation and supply chain disruption, all of which can influence insurance loss costs, premiums, and investment valuations;
• uncertainties related to insurance premium rate increases and business retention;
• changes in insurance regulations that impact Selective’s ability to write and/or cease writing insurance policies in one or more states;
• the effects of data privacy or cyber security laws and regulations on our operations;
• major defect or failure in our internal controls or information technology and application systems that result in marketplace brand damage, increased senior executive focus on crisis and reputational management issues, and/or increased expenses, particularly if Selective experiences a significant privacy breach;
• potential tax or federal financial regulatory reform provisions that could pose certain risks to our operations;
• Selective’s ability to maintain favorable financial ratings, which may include sustainability considerations, from rating agencies, including AM Best, Standard & Poor’s, Moody’s, and Fitch;
• Selective’s entry into new markets and businesses; and
• other risks and uncertainties Selective identifies in filings with the SEC, including its Annual Report on Form 10-K and other periodic reports.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250225598528/en/

Investor Contact: Brad Wilson

973-948-1283

Brad.Wilson@Selective.com

Media Contact: Jamie M. Beal

973-948-1234

Jamie.Beal@Selective.com

Source: Selective Insurance Group, Inc.

FAQ

What is the interest rate and maturity of Selective Insurance's (SIGI) new senior notes offering?

The senior notes have a 5.900% interest rate and will mature in 2035.

How much did Selective Insurance's (SIGI) debt-to-capital ratio increase after the $400M offering?

The debt-to-capital ratio increased from 14% to approximately 22% following the offering.

What will Selective Insurance (SIGI) use the proceeds from the $400M senior notes for?

The net proceeds will be used for general corporate purposes and to support organic growth opportunities.

Which investment banks managed Selective Insurance's (SIGI) $400M senior notes offering?

Goldman Sachs & Co. , BofA Securities, Inc., and Wells Fargo Securities, acted as joint book-running managers.