Selective Insurance Group Inc (SIGI) Transcription de l'appel des résultats du quatrième trimestre 2019

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Selective Insurance Group Inc (NASDAQ: SIGI) Appel des résultats du 4e trimestre 2019Jan 31, 2020, 10:00 am ET

contenu:

  • Remarques préparées
  • Questions et réponses
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    opérateur

    Bonjour à tous. Bienvenue à l'appel des résultats du quatrième trimestre 2019 de Selective Insurance Group. À ce stade, tous les participants ne sont en mode écoute que jusqu'à la partie Q&R de l'appel. [Operator Instructions]

    À ce stade, je voudrais ouvrir des remarques et des introductions à l'invitation du vice-président principal, Relations avec les investisseurs et trésorier, Rohan Pai.

    Rohan Pai – Vice-président principal, relations avec les investisseurs et trésorier

    Bonjour à tous et bienvenue. Nous simulons cet appel sur notre site selective.com, et le rendu sera disponible jusqu'au 2 mars 2020. Notre package supplémentaire pour les investisseurs, qui comprend le rapprochement GAAP de toutes les mesures financières non-GAAP mentionnées aujourd'hui, est également disponible sur La page Investisseurs de notre site Internet. Aujourd'hui, nous discutons de nos résultats et de nos activités commerciales en utilisant des mesures financières PCGR, qui sont également incluses dans nos documents avec nos rapports annuels, trimestriels et actuels déposés auprès de la Securities and Exchange Commission des États-Unis. Le bénéfice d'exploitation non conforme aux PCGR, que nous utilisons pour analyser les tendances des opérations et que nous croyons, permet aux investisseurs d'évaluer plus facilement nos activités d'assurance. Le résultat d'exploitation non-GAAP est le résultat net excl. L'incidence après impôt des gains ou des pertes nets réalisés sur les placements, des gains ou des pertes non réalisés sur les capitaux propres et les charges de retraite liées à notre remboursement anticipé de titres de créance au premier trimestre et aux états et projections de notre rendement futur. Ces déclarations prospectives en vertu de la Private Securities Reform Act de 1995 ne sont pas des garanties de développement futur et sont soumises à des risques et incertitudes. Pour une discussion détaillée de ces risques et incertitudes, veuillez vous reporter à nos rapports annuels et trimestriels déposés auprès de la Securities and Exchange Commission des États-Unis. Veuillez noter que Selective Companies ne s'engage pas à mettre à jour ou à réviser les déclarations prospectives.

    À l'appel d'aujourd'hui, les membres suivants sont membres de l'équipe de direction de Selective. Greg Murphy, PDG; John Marchioni, président et chef de la direction; et Mark Wilcox, directeur financier.

    Et maintenant, je veux passer l'appel à Greg.

    Gregory E. Murphy – Président-directeur général

    Merci, Rohan, et bonjour. Je fais quelques remarques liminaires et je me concentre sur certains thèmes et initiatives de haut niveau qui améliorent notre stratégie et nous positionnent bien pour continuer à générer des performances supérieures. Mark discutera ensuite de nos résultats financiers et John passera en revue nos activités d'assurance plus en détail, en fournissant des informations supplémentaires sur les principales pressions et initiatives stratégiques. Nous sommes extrêmement fiers de nos résultats exceptionnels du quatrième trimestre et de l'exercice, reflétant la solide performance continue de nos fonctions d'assurance et d'investissement. Pour le trimestre, nous avons généré un bénéfice d'exploitation par action dilué record non conforme aux PCGR. Actions de 1,37 $, ce qui correspond à un rendement d'exploitation annuel de 15,2%.

    Notre ratio global était exceptionnel de 91,8% et l'investissement net après impôts a augmenté de 6% pour atteindre 47 millions de dollars. Le quatrième trimestre a clôturé une année globalement exceptionnelle pour la société, où nous avons généré une forte croissance des primes de 7% et un solide ratio combiné de 93,7%, la compagnie d'assurance contribuant pour 6,5 points au ROE. Notre performance d'investissement a été excellente, avec un résultat net en hausse de 13%, contribuant à 9,1 points de ROE. Pour 2019, notre ROE opérationnel total non-GAAP était de 13,3%, dépassant notre objectif financier de 12%. De plus, la variation des gains non réalisés après impôts sur nos titres à vendre a diminué de 169 millions de dollars ou 2,83 $ par action. Partagez nos coûts d'exploitation de 60 points de base. D'ici 2020, ces gains non réalisés réduiront le ROE opérationnel d'env. 100 points de base et il reviendra à mesure que ces titres vieillissent.

    2019 a été une année distincte pour nous à bien des égards, avec certains des faits saillants opérationnels, notamment: une croissance nette des primes émises de 7% contre 6% attendue pour la moyenne du secteur; réaliser notre sixième année consécutive de ROE à deux chiffres, ce qui nous place parmi un groupe d'élite de pairs qui ont généré des résultats similaires; l'émission de 300 millions de dollars de billets de premier rang sur 30 ans dans notre premier placement de titres de créance institutionnels, ce qui augmente considérablement notre flexibilité et donne accès à des marchés financiers à long terme attrayants; d'être reconnu pour notre performance opérationnelle et financière supérieure par l'agence de notation AMBest, qui place les forces A sur des attentes positives en octobre; continue de progresser avec des initiatives stratégiques telles que la géo-expansion et offre une expérience client omnicanal supérieure; pour rendre notre communauté plus sûre grâce à la fourniture d'avis de rappel et d'alarmes, combinée à nos efforts pour réduire la distraction au volant avec notre produit Selective Drive offert gratuitement à nos clients commerciaux; d'être reconnu comme l'un des meilleurs employeurs américains de taille moyenne par Forbes; et la construction d'une ferme solaire à notre siège social, qui générera env. 4 millions de kilowatts d'énergie, ce qui souligne notre engagement envers notre communauté et la société dans son ensemble.

    À partir de 2020, il y a quelques sujets spécifiques que je voudrais commenter. Premièrement, nous sommes satisfaits de l'orientation des prix standard industriels pour les lignes commerciales, qui poursuivront leur trajectoire ascendante et n'augmenteront qu'en 2020. Pour Selective, le prix total du quatrième trimestre a atteint 3,8%, ce qui, nous l'espérons, établira clairement un prix plancher pour 2020. Nos outils sophistiqués de modélisation et d'assurance nous permettent de gérer les augmentations de prix à un niveau extrêmement granulaire tout en équilibrant les taux de rétention et de croissance. Nous avons été fermes dans notre engagement à maintenir la discipline de souscription en mettant en œuvre de manière cohérente le renouvellement des lignes commerciales de hausses de prix pures qui ont égalé ou dépassé les tendances de perte. Le pur renouvellement du prix par rapport à la perte attendue est le principal indicateur du résultat futur de l'assurance. Au cours des cinq dernières années, notre prix composite pour la rénovation de lignes commerciales était d'environ. 16,5%, soit plus du double des prix CLIPS Towers Watson de 8%. Alors que nous attendons avec impatience l'année à venir, nous sommes bien positionnés avec le renouvellement net attendu du prix, en ligne avec la tendance aux pertes et l'excellent livre des affaires et les outils sophistiqués, la technologie et les gens de la classe pour exécuter nos plans stratégiques.

    Deuxièmement, l’industrie a mis l’accent sur le potentiel d’augmentation des pertes. Nous gardons certainement un œil sur les tendances globales des pertes, en particulier en ce qui concerne les litiges et les règlements. Les coûts de prime ou de perte purs estimés sont divisés en deux paramètres principaux: un, le nombre de dommages ultimes estimé; et deux cotes de gravité moyennes attendues. Au cours des deux dernières années, notre attente de la tendance globale des pertes intégrée dans nos choix de pertes est passée d'environ. 3% à 4%. De plus, nous maintenons une méthodologie de réserve hautement disciplinée en place avec un processus qui comprend des examens actuariels internes de base détaillés trimestriels ainsi que des examens semestriels par un cabinet comptable indépendant Big 4. Nous sommes moins sensibles aux affectations de type titre, car notre portefeuille d'activités est axé sur les petits comptes et les classes à faible risque. La taille moyenne de notre compte de ligne commerciale est de 12 000, et 87% de notre police contre les accidents, excl. L'indemnisation du travail, a des limites de 1 million de dollars ou moins.

    Nous avons également acheté une protection de réassurance qui limite l'exposition par mois. Incident politique incident à 2 millions de dollars, réduisant notre exposition à l'inflation médicale à long terme. L'inflation, même l'inflation sociale, n'est pas un concept nouveau. La meilleure façon de protéger les performances de votre livre est d'obtenir un renouvellement constant du coût pur au fil du temps. Selective a toujours fait cela pendant de nombreuses années.

    Troisièmement, bien que les pertes dues aux catastrophes aient été relativement modérées au quatrième trimestre de l'année, le risque de pertes imprévues majeures demeure prononcé. Les risques liés au climat conduisent généralement à l'imprévisibilité des catastrophes telles que les ouragans, les tempêtes convectives, les inondations et les incendies de forêt. Pour l'année, notre taux total de pertes dues aux catastrophes était de 3,1 points, ce qui était inférieur à notre attente de 3,5 points. Afin de limiter notre exposition, notre programme de réassurance en cas de catastrophe nous protège d'une probabilité d'événement de 0,4% à seulement 5% sur les capitaux propres. Les pertes non liées aux catastrophes ont également augmenté régulièrement au cours des dernières années. En tant qu'industrie, nous devons faire plus pour gérer correctement les risques immobiliers, notamment par des initiatives d'atténuation, le partage des risques, une assurance plus méticuleuse et une tarification cohérente basée sur les risques.

    Enfin, l'environnement à faible taux d'intérêt à long terme continuera d'exercer une pression à la baisse sur le rendement global de l'industrie sur le portefeuille de placements et, par conséquent, sur les ROE au cours de la prochaine année. Cela devrait se traduire par une plus grande volonté de l'industrie d'améliorer la performance des compagnies d'assurance afin de générer des rendements suffisants. Grâce à nos spécifications de tarification et à nos capacités d'exécution agiles, nous sommes bien placés pour tirer parti des vents des prix des lignes commerciales et nous sommes très confiants dans notre capacité à maintenir des ROE attractifs.

    En termes d'anticipations pour 2020, nos prévisions pour l'année sont basées sur notre vision actuelle du marché et intègrent les éléments suivants. Un, un ratio combiné GAAP excl. Disaster loss of 30 – approx. 91,5%. Cela ne nécessite pas le développement des années précédentes. Deux pertes en cas de catastrophe de 3,5 points. Trois revenus de placement de 185 millions de dollars après impôt, qui comprennent 14 millions de dollars de revenu de placement après impôt provenant de nos placements alternatifs. Quatrièmement, un taux d'imposition effectif total d'env. 19,5%, ce qui comprend un taux d'imposition effectif de 18,5% pour les revenus de placements, reflétant un taux d'imposition de 5,25% sur les impôts fonciers municipaux et un taux d'imposition de 21% pour tous les autres éléments. Cinq actions moyennes pondérées de 60,5 millions sur une base diluée.

    Maintenant, je veux retourner l'appel à Mark pour revoir les résultats du trimestre.

    Mark A. Wilcox – Vice-président exécutif et directeur financier

    Merci, Greg, et bonjour.

    Pour le trimestre, nous avons déclaré 1,36 $ pour le bénéfice par action entièrement dilué. Par action et 1,37 $ de bénéfice d'exploitation par action. Actions non conformes aux PCGR, qui sont toutes deux des registres de sociétés. Nous avons généré un très bon ROE annuel de 15,1% pour un ROE opérationnel non-GAAP de 15,2%. Pour 2019, notre ROE opérationnel annuel non-GAAP était de 13,3% supérieur à notre objectif de 12%. Le rendement annuel du capital d'exploitation a été réduit d'env. 60 points de base [Phonetic] en raison des gains nets latents importants sur le portefeuille de titres à revenu fixe, qui ont augmenté les capitaux propres selon les PCGR de 169 millions de dollars ou 2,83 $ par action. Ces gains reflètent l'environnement de taux d'intérêt bas. Chaque année, nous fixons un objectif de ROE opérationnel basé sur au moins 300 points de base divisés par notre coût moyen pondéré du capital, nos attentes en matière de taux d'intérêt et les conditions générales du marché pour l'assurance IARD. Pour 2020, nous avons établi un objectif de ROE opérationnel non-GAAP de 11%. La cible inférieure est principalement fonction de notre coût moyen pondéré du capital estimatif plus faible et de la baisse des taux d'intérêt, ce qui a réduit le rendement des placements et également augmenté les capitaux propres conformes aux PCGR.

    Les primes nettes consolidées ont augmenté de 8% au cours du trimestre, avec une excellente croissance de 11% dans notre segment Standard Commercial Lines, tirée par la forte croissance et la rétention de nouvelles affaires et l'accélération des hausses de prix propres lors du renouvellement. Cela a été partiellement compensé par la baisse des primes dans les lignes personnelles et E&S. Les bénéfices des activités d'assurance sont restés solides, avec un ratio combiné de 91,8% au quatrième trimestre, tiré par la faible sinistralité de notre empreinte et le développement favorable de la réserve de dommages. Sur une base sous-jacente ou excl. Développement du déficit en cas de catastrophe et de la réserve d'accidents pour l'année précédente, notre ratio global est passé à 93,8% en raison d'une augmentation du ratio des coûts au quatrième trimestre et de légères augmentations par rapport à l'année d'accident 2019, que j'aborderai plus en détail.

    Pour 2019, les primes nettes souscrites ont augmenté de 7% grâce à de fortes contributions de nos lignes commerciales standard et segments E&S. Notre ratio combiné déclaré était très rentable à 93,7% et notre ratio combiné sous-jacent était excellent à 92,9%, reflétant 20 points de base pour l'amélioration de la marge sous-jacente en 2019. Malgré un ratio combiné très rentable en 2019 à 93,7%, soit près de 2 points pleins d'avance sur notre ratio combiné prévu de 95,5% pour l'année, le ratio combiné sous-jacent a terminé l'année à 90 points de base au-dessus des attentes. Cela s'explique en partie par l'excellent taux de sinistralité de l'année civile, qui a fait grimper le pourcentage des coûts de 30 points de base au-dessus des attentes en raison de la rémunération basée sur les bénéfices, tandis que le reste a été largement stimulé par quelques ajustements modestes au quatrième trimestre pour choisir les pertes par accident en 2019. l'impact de ces ajouts à la sélection des pertes par rapport à 2019 était de 14,5 millions de dollars ou 60 points de base [Phonetic] et pour le trimestre, l'incidence a été de 11,9 millions de dollars, ou 1,8%.

    Les pertes en cas de catastrophe, qui sont une baisse liée au rappel uniquement liée spécifiquement aux catastrophes PCS, ont été modestes au quatrième trimestre et ont affecté le ratio combiné de 1 point, ce qui est meilleur que prévu, tandis que la perte de propriétés autres que des chats a entraîné un impact de 15,1 points et était également légèrement inférieur aux prévisions. Pour l'année, les pertes liées aux catastrophes ont totalisé 3,1 points sur le ratio global, ce qui était supérieur à nos attentes annuelles de 3,5 points, tandis que les pertes immobilières de 15,8 points étaient d'environ. 10 points de base de plus que prévu pour l'année. Nos prévisions de pertes dues aux catastrophes restent inchangées pour 2020 à 3,5 points. Au quatrième trimestre, nous avons constaté un développement favorable net de 20 millions de dollars au sein de la réserve pour accidents précédente, stimulé par un développement favorable de 35 millions de dollars dans la ligne d'indemnisation des accidents du travail et partiellement compensé par un développement de la responsabilité civile générale de 5 millions de dollars, 4 millions de dollars en automobile commerciale, 4 millions de dollars en responsabilité civile automobile et 2 millions de dollars dans le secteur E&S. L'effet de l'évolution favorable nette au sein de la réserve d'accidents de l'année précédente a été de 3 points sur le ratio total du trimestre et de 2,3 points sur l'année.

    La variation des charges est survenue à notre ratio de charges de 34,1% pour le trimestre et de 33,8% pour l'année. L'augmentation de 60 points de base pour l'exercice est principalement attribuable à une rémunération fondée sur les bénéfices plus élevée pour nos partenaires de distribution et nos employés, tirée par notre excellente performance en matière d'assurance. Nous prévoyons de payer un niveau record de commissions supplémentaires d'agence pour l'année 2019. Nous prévoyons une légère amélioration du ratio des coûts en 2020, ce qui se reflète dans nos prévisions sous-jacentes de 91,5%. Au cours des deux prochaines années, nous pensons que nous pouvons continuer à améliorer notre efficacité opérationnelle et à réduire notre pourcentage de coûts tout en continuant à investir de manière significative dans le développement de nos employés, l'amélioration de nos capacités d'assurance, l'amélioration de l'expérience client, le développement continu des produits et l'expansion géographique. et d'autres investissements que nous jugeons importants pour gérer l'entreprise à long terme.

    Les charges de la société, qui consistent principalement en des frais de société de portefeuille et une rémunération à long terme en actions, ont totalisé 2,6 millions de dollars. Au cours du trimestre, comparativement à 3,4 millions de dollars. Au cours du trimestre de comparaison, la baisse était principalement attribuable à une baisse de notre prix doux. Pour l'exercice, les dépenses d'entreprise ont totalisé 31 millions de dollars, comparativement à 25 millions de dollars en 2018 et comprenaient des éléments non récurrents de 3 millions de dollars, principalement liés aux indemnités de départ.

    En ce qui concerne les investissements, l'investissement net après impôts de 47 millions de dollars du trimestre a augmenté de 6% au cours du trimestre. Pour l'année, le revenu de placement après impôt a augmenté – à 181 millions de dollars, en hausse de 13%. Les améliorations au cours des deux périodes sont attribuables à une gestion active du portefeuille et à d'excellents flux de trésorerie, qui, combinés au produit net de notre offre de billets de premier rang en mars, ont contribué à accroître notre base d'actifs investis. Cela a été partiellement compensé par la baisse des taux d'intérêt et une contraction des écarts de crédit qui ont exercé une pression sur les rendements de l'argent neuf. Le rendement total après impôt du portefeuille de titres à revenu fixe, y compris les obligations à rendement élevé, s'est établi en moyenne à 2,9% pour l'année. Le rendement moyen des nouveaux dividendes sur le portefeuille de titres à revenu fixe au cours de l'année a été de 2,7% après impôts, bien que nous ayons maintenant enregistré cinq baisses trimestrielles séquentielles avec un bénéfice du quatrième trimestre de 2,4% après impôts. De plus, nous avons géré nos titres à taux variable, qui représentent désormais environ 12% de notre portefeuille à taux fixe, en baisse par rapport à une allocation maximale de 18%. Malgré la baisse du LIBOR au cours de la dernière année, nous trouvons toujours le rendement global de ces titres très attrayant sur une base comparative avec des titres à revenu fixe similaires. Dans l'ensemble, le rendement avant impôt affiché sur notre noyau de titres à revenu fixe a diminué de 5 points de base au cours du trimestre et a diminué de 14 points de base pour l'année.

    À l'avenir, nous prévoyons une pression continue sur nos rendements comptables, compte tenu de l'environnement de taux d'intérêt bas. Compte tenu de nos solides flux de trésorerie projetés, notre investissement net de 185 millions de dollars en 2020 reflète la croissance modeste de 2019, bien qu'une contribution au ROE inférieure, compte tenu de la croissance des capitaux propres. Notre cote de crédit à taux fixe moyenne est demeurée solide à AA moins et la durée effective de notre portefeuille de titres à revenu fixe et de placements à court terme se situe au bas de la fourchette de 3,6 ans. Dans l'ensemble, nous continuons de placer le portefeuille de façon conservatrice. Les actifs à risque, qui comprennent principalement des titres à haut rendement et des portefeuilles d'investissement alternatif, représentaient 8% du total des actifs investis à la fin de l'exercice et restent conformes à nos objectifs à long terme. Notre portefeuille d'investissements alternatifs, qui comprend des sociétés en commandite en capital-investissement, des crédits privés et des investissements en actifs réels et des rapports d'un trimestre de retard, a généré un bénéfice avant impôts de 18 millions de dollars pour l'année, ce qui était conforme à 2018.

    Après vote du capital, notre bilan est resté très solide avec 2,2 milliards de dollars. Fonds propres GAAP, en hausse de 22% sur l'année. Le ratio de fonds propres ajusté était de 20,1% en fin d'année, ce qui est bien en deçà de notre objectif et nous donne une flexibilité financière. Nous continuons à opérer dans le bas de notre fourchette cible de prime de 1,4 fois à 1,6 fois. Cette flexibilité au niveau opérationnel combinée à notre liquidité de la société de portefeuille de 278 millions de dollars nous donne une capacité significative de croissance si les opportunités de marché se présentent. Avec un levier opérationnel 1,4 fois supérieur, chaque point de ratio combiné équivaut à un peu moins de 1 point de ROE. De plus, notre utilisation de l'investissement de 3,05 fois signifie que chaque élément de dividende avant impôts affiché sur notre portefeuille de placements génère environ 2,5 points de ROE.

    Concernant notre programme de réassurance, nous avons bénéficié d'un renouvellement réussi de notre programme catastrophe le 1er janvier. Nous avons maintenu notre structure actuelle en détenant 1 sur 100 ou 1% de perte maximale probable nette de P&L d'un risque de catastrophe majeur, l'ouragan américain, à 2% des capitaux propres PCGR très gérables et 1 sur 250 montants nets de 0 , Probabilité de 4% à 5% des capitaux propres GAAP. Nous avons également renouvelé notre programme en cas de catastrophe sans empreinte écologique, ce qui réduit notre rétention de 40 millions de dollars à 5 millions de dollars pour nos cinq nouveaux États de l'élargissement, ainsi que nos États E&S en dehors de nos 22 empreintes d'État d'origine, qui incluent les États comme la Floride, le Texas et la Californie. La tarification du programme Cat reflète le statut sans perte dans notre compte et nos efforts continus pour générer des prix de renouvellement solides dans notre portefeuille immobilier et nos efforts continus pour diversifier notre exposition. Pour rappel, notre programme de réassurance comprend également l'accès à des accords sur les pertes qui limitent l'impact des pertes sur prêts individuels à 2 millions de dollars pour les biens et les pertes. Occurrences individuelles d'env. 2 millions de dollars sont dépréciés sous l'effet des accords de perte.

    Sur ce, je cède la parole à John pour discuter de nos opérations d'assurance.

    John J. Marchioni – Président, chef de l'exploitation et administrateur

    Merci, Mark et bonjour.

    Permettez-moi de commencer par une discussion des résultats annuels de nos activités par segment, puis de vous donner un aperçu de certaines de nos initiatives stratégiques. Notre segment de ligne commerciale standard, qui représente environ 80% des primes, a généré 8% de primes nettes dans la croissance écrite de cette année, se poursuivant avec un historique constant de croissance forte et rentable. Le segment a généré une nouvelle croissance de 8%, une rétention stable de 83%, une augmentation pure des prix de 3,4% et un excellent ratio combiné de 92,9% ou 93,7% sur une base sous-jacente. Augmentation des lignes commerciales pour une augmentation pure des prix – augmentation de 3,8% au quatrième trimestre, contre 3,5% au troisième trimestre. Nous sommes satisfaits de l'orientation générale des prix du marché, mais il convient de noter que les augmentations ont jusqu'à présent été plus importantes pour les comptes plus importants et les risques spéciaux que pour les comptes de ligne standard de petit et moyen marché qui constituent la majeure partie de notre livre. Nous sommes fiers de gérer notre stratégie de tarification du renouvellement de manière très granulaire, en surveillant de près le taux et en maintenant la cohorte de rentabilité attendue. Notre analyse utilise un point de restriction du renouvellement qui supprime les polices qui sont annulées avant l'expiration, car nous pensons que c'est le meilleur indicateur de l'efficacité de notre stratégie de tarification.

    Dans nos comptes de ligne commerciale standard de la plus haute qualité, représentant 49% de nos primes de ligne commerciale, nous avons atteint un taux de renouvellement de 2,1% et un point de renouvellement de 91%. Dans les comptes de moindre qualité, qui représentaient 11% des primes, nous avons réalisé un pur renouvellement de 7,8%, tout en conservant 80% au point de renouvellement. Notre capacité à analyser les caractéristiques de risque et de rendement de chaque politique de renouvellement à un niveau extrêmement granulaire nous permet d'améliorer encore le taux de perte en mélangeant les changements commerciaux tout en maximisant la rétention globale.

    Lorsque nous avons exploré les résultats de cette année avec les activités commerciales, notre plus grande ligne de responsabilité générale a atteint un ratio combiné de 89,6%, qui comprenait une évolution favorable des réserves l'an dernier totalisant 5 millions de dollars ou 0,7 point. Nous continuerons de surveiller de près cette ligne pour déceler les tendances de fréquence et de gravité, y compris les litiges qui sont demeurés relativement stables au cours des derniers trimestres. Pour l'année, nous avons réalisé le renouvellement des hausses de prix pures de 2,2% pour cette ligne excl. Parapluie et s'attendant à un resserrement de l'environnement des prix vers 2020. La complicité de nos travailleurs a généré un ratio combiné de 74,1%, aidé par une évolution favorable des réserves de 68 millions de dollars totalisant 21,8 points sur le ratio global. Cette évolution favorable était principalement liée à des niveaux de gravité inférieurs aux prévisions pour les années d'accident 2017 et antérieures. Le prix du renouvellement a baissé de 2,8% et nous continuons à adopter une approche prudente pour tirer cette ligne, les prix du marché restant agressifs. L'automobile commerciale continue de produire des résultats décevants pour nous et l'industrie dans son ensemble, car les tendances à la hausse des pertes consomment une augmentation du taux gagné. Notre ratio global pour cette ligne était de 107,9%. Alors que nous avons ajouté 4 millions de dollars. Réserves de l'année en cours et de l'année précédente, les tendances en matière de pertes sont généralement conformes aux attentes. Les augmentations de prix ont atteint en moyenne 7,5% en 2019, en plus des augmentations de prix similaires pour chacune des deux années précédentes.

    Nous avons activement géré des portefeuilles nouveaux et renouvelés dans des secteurs d'activité cibles et amélioré la notation et la classification au niveau des comptes individuels. Notre portefeuille immobilier commercial a généré un ratio combiné de 93,9%, soit une amélioration de 7,1 points par rapport à 2018. La baisse des niveaux de perte en cas de catastrophe massive et de non-catastrophe a conduit à l'amélioration. Bien que les prix du marché se soient améliorés, les tendances en matière de pertes restent élevées, indiquant la nécessité de niveaux de taux supplémentaires. Notre renouvellement des prix propres était en moyenne exclusif à 4% dans l'océan, et nous prenons des mesures pour répondre aux facteurs de l'expérience d'une plus grande perte par le biais de changements dans la composition de l'entreprise et des efforts de gestion de la sécurité.

    Notre segment de la ligne personnelle, qui représentait 11% des primes de 2019, a déclaré une baisse de 2% des primes nettes souscrites, reflétant principalement les conditions plus concurrentielles du marché des voitures particulières. Le renouvellement des hausses de prix pures a été en moyenne de 5% et la rétention est restée solide à 83%. Cependant, les affaires nouvelles ont baissé de 21% sur l'année. La concurrence sur le marché des particuliers, en particulier pour les voitures particulières, est devenue beaucoup plus importante cette année. Le segment a produit un ratio global de 97,3% ou 88,6% sur une base sous-jacente. Bien que le maintien d'une rentabilité suffisante reste un objectif clé, nous ferons plus dans la personnalisation des produits, la modélisation des améliorations et la distribution pour nous assurer d'optimiser notre position dans ce segment.

    En automobile personnelle, les primes nettes souscrites ont diminué de 1% pour l'année et le ratio global était de 106,4%. Les résultats comprenaient 6 millions de dollars pour renforcer la réserve d'accidents précédente, ce qui a ajouté 3,5 points au ratio global. L'augmentation pure des prix au renouvellement était en moyenne de 8,9% pour la responsabilité civile automobile et de 3,8% pour les blessures corporelles. Bien que l'avantage d'une meilleure rentabilité de ces augmentations de prix exerce clairement une pression sur les nouvelles affaires, avec les prix du marché sous pression et l'impact favorable de la tendance à la baisse, nous nous attendons à des résultats dégradés pour l'industrie dans cette ligne et à une baisse des prix à nouveau.

    La ligne des propriétaires a enregistré une baisse des primes de 2% par rapport à il y a un an et un ratio global de 96,5%, qui comprenait 15,5 points de sinistres. Comme la plupart de nos primes sont souscrites sur la base d'un compte, notre positionnement concurrentiel dans la gamme automobile a nui à la croissance de notre propriétaire. Le renouvellement des hausses de prix pures a été en moyenne de 3% pour l'année.

    Notre segment E&S, qui représentait 9% du total des primes, a généré une croissance des primes nettes de 4% en 2019. La baisse des primes du quatrième trimestre était principalement liée à notre décision de mettre fin à l'industrie du déneigement, dont nous avons discuté lors de l'appel du dernier trimestre. Le segment a généré un ratio global de 95,9% sur l'année, contre 100,3% en 2018. La hausse globale des prix sur renouvellement propre s'est élevée en moyenne à 4%. Au cours des dernières années, des hausses de prix ciblées, des changements dans la composition des activités et le fait de laisser des catégories d'entreprises sous-performantes spécifiques ont contribué à l'amélioration de la performance du ratio combiné dans ce segment. Notre portefeuille E&S se compose principalement d'une petite entreprise avec un profil de risque similaire à nos lignes standard. Alors que les prix du marché augmentent, ils sont plus modérés pour le risque plus faible d'une entreprise que nous écrivons que pour les classes plus risquées que nous ne faisons pas, par ex. Crash de compte majeur pour les propriétés côtières.

    Permettez-moi maintenant de passer à certaines de nos initiatives stratégiques qui continuent de stimuler nos solides résultats opérationnels et financiers. Nous sommes très fiers de nos résultats en 2019 et nous nous concentrons sur les quatre objectifs suivants à mesure que nous progressons jusqu'en 2020. L'un utilise nos outils de tarification sophistiqués pour réaliser le renouvellement des lignes commerciales standard de hausses de prix pures conformes à la tendance des pertes attendues. Deuxièmement, l'augmentation de la part du portefeuille avec nos partenaires de distribution existants et la nomination stratégique de nouveaux partenaires. Trois qui bénéficient des investissements que nous avons faits pour offrir une expérience client omnicanal supérieure. Et quatre: identifier et saisir les opportunités d'améliorer l'efficacité opérationnelle et de réduire notre pourcentage de coûts au fil du temps grâce à la refonte des processus et des améliorations technologiques. Nous restons convaincus de la suffisance globale des prix et de la rentabilité intégrée de notre portefeuille d'activités. Nous continuons à réaliser des augmentations de prix lorsque cela est pertinent et ciblons des comptes sur une base granulaire qui ne sont pas à la hauteur de notre rentabilité attendue. Le niveau de renouvellement des lignes commerciales d'augmentations de prix pures, que nous voyons augmenter en 2019 et 3,8% atteint au quatrième trimestre, est conforme à notre attente d'une tendance à la perte. Si les prix de l'industrie continuent de progresser plus haut que prévu, nous sommes bien placés pour améliorer encore les marges de déficit.

    Deuxièmement, nos relations de distribution supérieures et nos outils d'assurance sophistiqués sont des avantages concurrentiels évidents. Nous essaierons d'en tirer parti dans la mise en œuvre de notre stratégie de création d'une croissance rentable dans les années à venir. Notre objectif à long terme déclaré est d'atteindre une part de marché de 3% des lignes commerciales. Cet objectif est basé sur l'identification des relations avec les partenaires qui contrôlent env. 25% de leurs marchés et atteindre une part moyenne du portefeuille de 12% sur l'ensemble de ces ratios. Nous avons une opportunité supplémentaire de primes de lignes commerciales au fil du temps de plus de 2,7 milliards de dollars si nous atteignons nos plans à long terme et pouvons le faire sans avoir à étirer notre appétit pour l'assurance ou à changer notre profil de risque. I løbet af 2019 udnævnte vi 98 nye distributionspartnere, hvilket bringer det samlede beløb til ca. 1.350 eller 2.300 butiksfronter.

    For det tredje har vi taget store fremskridt i de senere år for at forbedre kundeoplevelsen. I løbet af 2019 foretog vi en række forbedringer af vores selvbetjening og digitale tilbud, herunder en strømlinet aktiveringsproces og mulighed for live chat. Vi har nu et 360-graders syn på vores kunder, der giver os mulighed for at fortsætte med at forbedre vores proaktive kommunikationsprogram, når vi søger at skabe mere kundeværdi. I 2019 udrullede vi vores nye marketingtagelinje "Forsikrer du lovligt?", Der taler til vores differentierede værdiproposition for distributionspartnere og kunder. Investering i og opbygning af teknologier, der forbedrer vores kunders oplevelse, forbliver et centralt fokus for os.

    Endelig, mens vi anerkender, at det er vigtigt at fortsætte med at investere i initiativerne relateret til vores teknologiplatforme, sofistikerede underwriting-værktøjer og kundeoplevelse, er vi også forpligtet til at afbalancere disse mål med en effektiv driftsstruktur. Vi vil se på en række områder for at forbedre effektiviteten, herunder workflow og procesforbedringer ved bedre at udnytte automatisering og robotik. Vi forventer, at vores omkostningsprocent i 2020 vil være lidt lavere end 2019, da vi afbalancerer vores investerings- og udgiftsstyringsinitiativer. Vi er målrettet mod en udgiftsgrad på nærmere 32% ved udgangen af ​​næste år, og vi vil søge yderligere forbedringer i de efterfølgende år.

    Ser vi til 2020 og fremover, er vi i ekstrem stærk finansiel og strategisk position og er godt positioneret til at fortsætte med at generere overlegne resultater, som vi har gjort i de senere år. Vi har en attraktiv bog med in-force-forretning og har oprettet en differentieret franchise med vores distributionspartnere og kunder. I'd like to close by sincerely thanking Greg for his 40 years of service and 20 years of outstanding stewardship as CEO of Selective. He transformed the Company into a truly unique franchise in the industry. Greg and I have worked in close partnership for much of the past decade. We've put in place a strategy that we believe keeps Selective on a path to be a consistent industry leader and generate sustained outperformance. In Greg's new role as Executive Chairman, I will continue to benefit from his guidance and wisdom as I transition into my new responsibilities.

    Now, I'll turn the call back over to Greg.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Thanks, John.

    To wrap up, another excellent year by delivering our sixth consecutive year of double-digit ROEs, which places us among a very elite group of peers that have generated similar results. We have the best teams of employees and distribution partners in the industry. At Selective, we're very proud about what we do as a Company by: one, helping our customers put their lives back together by responding promptly and with empathy after experiencing a loss; two, making our communities safer by providing tools and technologies to our insurers such as weather preparation guides as well as vehicle, food and product recall notifications. We are seeking to mitigate the risk of distracted and reckless driving with the offering of Selective Drive, free of charge to our commercial lines customers; and three, providing financial stability to our customers.

    We are the best positioned in this marketplace with an excellent book of business and the tools, technology and best-in-class people in the industry to execute our plans. I could not be happier to pass on the reigns of the Company to John who will assume the role of Chief Executive Officer effective tomorrow. I have full and complete confidence that he will continue to transform Selective into a truly unique company in the marketplace and an industry leader. As we mentioned on our last conference call, I will stay in the role of Executive Chairman for one-year period.

    With that operator, we'll open up to questions. Thank you, operator.

    Questions and Answers:

    Operator

    Tak skal du have. We will now begin the question-and-answer session. [Operator Instructions] First question is coming from Mike Zaremski from Credit Suisse. Your line is now open.

    Mike Zaremski — Credit Suisse — Analyst

    Hey, good morning.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Good morning, Mike.

    Mike Zaremski — Credit Suisse — Analyst

    First question, maybe some just clarification on the combined ratio guidance. I've got a couple of questions. So, the 91.5% is excluding any reserve changes and catastrophes, and if that's correct, that compares to the — for the 2019 number being 92.9%. So, which would imply a good deal of improvements or am I incorrect and there's — you are baking in some potential for reserve releases in '20?

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Yeah, Mike, let me start with that. So now, there is no reserve releases there. That number has — the 2021, the 91.5% is a number with no development in it. And one of the things you have to remember, there's a certain amount of expense ratio improvement in '20 over '19. The favorable development in '19, generated a lot of profit-based compensation to employees and to agents. So, you get a little bit of a mismatch. You see some of the favorable developments rolling through in a line item that you exclude, but the incremental expenses incurred in '19 were in the underwriting expense ratio. So, I just want to make sure you've got that point and that's about 40 basis points approximately between employee and agents overall. And so, you have some of that element. Then, when you look at the improvement rolling to '20, the rest of it comes from, as I mentioned, and John mentioned, the renewal price in line with trend and then there's underwriting and claim improvements outside of that that also add to some of the improvement.

    John J. Marchioni — President, Chief Operating Officer & Director

    And, Mike, this is John. Let me just add one additional point to the final point that Greg made relative to that, underwriting mix improvement in particular. We cite routinely every quarter the difference by cohort between our best business, based on future profitability and what we believe to be the 10% or 11% of our portfolio that we think has a higher expected combined ratio going forward. By having a lower retention on that business and a higher retention on that business, we expect to produce higher combined — or lower combined ratios, excuse me. That is where we generate mix improvement that will give you loss ratio benefit in addition to the difference between rating trends. So, just wanted to tie that together with the point Greg was making.

    Mike Zaremski — Credit Suisse — Analyst

    Okay. Yeah, that's helpful. And next, I'll — you might have said this in the prepared remarks, Mark, but the general liability reserve deficiency sounded kind of minimal. Do you have the kind of the full-year 2019 GL reserve development kind of versus '18 and if you don't have it, I can take it offline. And also, remind me, Mark, was there a — was GL part of the true-up in the current accident year as well in terms of the basis points you mentioned?

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    Yeah, Mike. So, let me walk you through that. We did make some modest adjustments in the fourth quarter related to general liability on the prior accident year. It was an increase in the prior year reserves of $5 million, but we had reflected some favorable development earlier in the year. So, for the full year 2019, there's actually $5 million of favorable reserve development on the TL liability line in 2019 and that compares to just under $10 million, $9.5 million for the full year 2018. So, relatively consistent when you're thinking about prior-year reserves. In the current accident year, specifically related to 2019, we did increase the loss pick for general liability by 2.9 points in the quarter, which was $5 million impact. We had a very modest benefit earlier in the year. So net-net, when you put it all together for 2019, it was a $3 million increase relatively stable, lawsuit was flat. So, I'd just consider that a little bit of fine-tuning into new accident year.

    Mike Zaremski — Credit Suisse — Analyst

    Okay, that's perfect. And I — lastly, John, in your prepared remarks, I believe you said litigation rates relatively stable past few quarters, is that — are you referring to the — what some other firms have called the attorney representation rates and along those lines, when we think about increasing loss cost for the industry and — I mean, you guys think about it, especially in the GL or commercial auto line, is the attorney rep rate, is that one of the, kind of, biggest unknowns or risk factors or is it predominantly the severity of the lawsuits or both?

    John J. Marchioni — President, Chief Operating Officer & Director

    So, Mike, this is John. I'll start and I'll try to hit both parts of that question. So, there is a difference between litigation rates and attorney rep rates and what we referred to in our prepared comments was the relative stability over the last several quarters in our litigation rates and that's for all of our liability lines. So, litigated file is one that is, as the name indicates, in litigation. Those are easy to track and measure and see a change over time. Our attorney rep rates are going to also include files that are not yet in litigation, but they are — just are beliefs that there is an attorney representing a client.

    Those, I will tell you, are not as easy for us or anybody else to measure because it's a little bit more of knowledge on the part of the claims adjusted to understand whether or not there is any — been any attorney communication. Those numbers will bounce around a little bit more. They're going to be higher than litigation rates, obviously, many of those will not ultimately result in litigation and I think that leads to an important point that we have stressed on this topic in the past. I would say, really two fronts on this. Number one, we do some modeling work and provide our adjusters very early in the claim lifecycle on files that have attributes that are more likely to result in litigation down the road. What that does is, make sure that, hey, we have the right adjuster on that file, but can you make sure that there are early communication with that claimant is going to put them more at ease about how that claim is ultimately going to be resolved and that will, in many cases, help us avoid a litigated file.

    Now, that sort of ties into your second point, which is, litigated files, generally speaking, and part of it's going to be because of the severity of the injuries claim by the claimant, but litigated files are generally going to carry a higher severity than unlitigated files. Some of that is because of the cost of attorney involvement including your own attorney involvement as the Company, but part of it is also going to be because you're generally going to have higher damage levels on both the property side and the bodily injury side when there's lawyers involved.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Yeah, so, Mike, let me just — this is Greg. So, obviously, to what you think about loss cost, it's frequency times severity. We closely monitor frequency activity and generally find that that is the leading indicator in terms of the composite of our breakdown, your pure premium claims are coming in. So, we closely monitor that and between that and the severity that John went over is really what drives the overall loss ratio and the amount of loss [Indecipherable].

    Mike Zaremski — Credit Suisse — Analyst

    Okay, and just lastly, to be clear on that, by the way your color is always extremely helpful. Are you seeing a little bit, clearly, given the — I guess, the texts were changed a little bit, are you seeing a little bit of uplift in loss trend?

    John J. Marchioni — President, Chief Operating Officer & Director

    Mike, this is John. As Greg commented during his prepared comments, we have adjusted our view over the last couple of years of future trend expectations, which had been running around 3%, are now pushing up closer to 4%, just under 4%. So, that is reflective of what we've seen in our own experience. Yeah, I think this is probably an important point to just stress what we think is also are critical consideration when you think about changing loss trends in the industry, which is — you really want to start by understanding how you feel about the initial loss picks that company has established for their causality lines and we've been very transparent about this and very consistent about this.

    In all of our prior accident years in recent memory, you will note that we talk about having an embedded assumption for future claims trends and that has always been embedded in our loss pick. We've also stressed the importance of achieving pure rate increases or pure price increases that meet or exceed that expected loss trend, which is a great way to think about the strength of the loss picks that sit on every one of those older accident years. And I just think that's an important consideration when you think about that changing environment to the extent it does happen and it happens industrywide, it will hit the current and also hit the prior accident years, but we have had that embedded assumption for claims inflation in our loss picks, very consistently.

    Mike Zaremski — Credit Suisse — Analyst

    Okay, understood. And Greg, all the best in your new role as Executive Chairman of the Board. Tak skal du have.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Mike, thanks. Operator?

    Operator

    Tak skal du have. The next question is coming from Paul Newsome from Piper Sandler. Your line is open.

    Paul Newsome — Piper Sandler — Analyst

    Hi, good morning and again congratulations to John and Greg. So, a little bit of a follow-up. Can we talk about rate versus the claims inflation. I think if I read it right, your true rate increase levels are a little bit below the 4% and does that mean that you'll be essentially pushing for more rate, all things being equal, next year to keep us up to — the next year your at rate inflation?

    Gregory E. Murphy — Chairman & Chief Executive Officer

    So, Paul. This is Greg. Yeah, so that's why when we said that the 3.8% will establish the floor, that's what the — the fourth quarter, we got 3.8% in rate and we view that as the floor going into 2020. So, yes.

    Paul Newsome — Piper Sandler — Analyst

    Okay. And then, I'd love to hear your thoughts, generally speaking on the commercial auto business, which obviously has struggled for you and everybody else, pretty much. It doesn't seem like reunderwriting or at least pure rate is helping that much. What are we missing there that you think could be the reason why the industry keeps falling behind?

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Yeah, I think that's a great question and I'll tell you what I think also in the industry, principally was led by way higher frequency counts over expected, that's what started it and then I think it also — so, I think, that got misstating in '16 and rolled through various accident years was just underestimation and I think that in part reflected some of the societal issues regarding distracted driving, regarding core driving habits, regarding a lot of issues with a lot of congestion on the roads, unemployment dropping, people — higher driving, less experienced people on the road. All of that added and just the general road deterioration. I mean, I'm avoiding puddles all over the place now it seems like, but it's just the general deterioration of the infrastructure, I think, that's added to that.

    And I would tell you that one of the products that we offer, the Selective Drive product specifically earmarked at that. We offer that to our customers free of charge. It allows them to manage their fleet, their maintenance records, but not only that, it's the most important that it gives the driver a score at the end of the week in terms of how well they're driving which includes when they're on the phone, what — hard braking, hard turning, anything. So that's a big — when you look at the Hawthorne effect, that's a big additive factor that we can offer to our commercial fleets.

    And then, I would say the other part then is this whole issue around severity that worked its way in. And so, it was two areas that probably took a line that normally ran at about maybe 3.5% to 4% in that neck of the woods from a trend standpoint and pushed it to like 7%. And then — so everybody was getting rate in the 6%, 7% rate, and that's where everybody was getting more of their commercial lines, but that only started recently. So, all of this build up kind of caught everybody by — I think a little bit behind the 8-ball, but I would tell you that there is a big improvement. Combined ratios in commercial auto dropped from like 115% — in the 115% area. We're looking at 106%, pretty much on an accident year basis, at a current year basis. So, we actually feel pretty good about our improvement and when you look at where we're getting rate, that's obviously our lead line from our rate and it's just under 8% in terms of renewal and that's pure rate. So, we feel that we can get ahead of it and we also feel, maybe that the frequency counts relative to vehicles has kind of apexed right now.

    Paul Newsome — Piper Sandler — Analyst

    Yeah, I appreciate the color on the [Indecipherable]. Thanks for the answers and good luck in next year.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Tak skal du have.

    Operator

    Tak skal du have. And the next question is coming from Amit Kumar from Buckingham Research. Your line is open.

    Amit Kumar — Buckingham Research — Analyst

    Thanks and good morning. I had a few follow-ups on the same discussion as well. Just going back to, I guess, Paul's question on pricing versus loss cost and the margin, I think, I'm oversimplifying this a bit, but I would have thought that now would be the time to press on pricing and maybe you can just help me understand that a bit better. Is it a function of the loss trends in your book, the launching of your accounts. But I would have thought that maybe the trajectory of pricing over 2020, the slope of the line would have been a tad different?

    John J. Marchioni — President, Chief Operating Officer & Director

    Ja. So, Amit. This is, John. I'll start. So, I guess, first for us, based on the fact that we are achieving our target margins and our focus on commercial lines here, for us, the conversation is more about price adequacy than it is about price maximization. I mean, that's what we believe in and that price adequacy is in terms of the overall portfolio and it's also on account-by-account basis. You have seen with that in mind though some sequential improvement and it might appear slight, but when you look at where our margins are, that slight sequential improvement is a positive indication. We don't include in our numbers any exposure, any exposure change. And I think when you look at what's happening in the industry, you are seeing a lot more exposure included in the pricing numbers that are being put out there and while there might be some portion of that price number or exposure change that those act like rate, much of it does not. So, we give you what's probably the most conservative view and insight into pricing.

    Let's also remember, we don't exclude workers' comp from our number. And in our view, if we were to exclude workers' comp, we probably should exclude it from our combined ratios as well to make the analysis complete. So, that's — it's still a bit of a drag. Now that said, we do think that and we reacted to it by raising our loss — our future loss trend expectation up closer to 4% and that has caused us to view the rate need in our portfolio as a little bit higher and therefore, we expect to push that as the year goes on.

    Now, we are going to still do it on a very targeted basis though. This is in our portfolio that doesn't justify a meaningful rate increase won't get one because our view is, we're going to do what we can to protect that portfolio. The flip side to that is the 10% to 15% of the portfolio that we view as having worse than desired combined ratio — future combined ratios is going to be the focus of our effort and we're going to achieve higher rate levels there. So, I guess, that's how I'd respond overall in terms of how we think about the pricing environment and the other point I would also reinforce is, if you look at the Willis Towers Watson CLIPS Survey, which we do cite frequently and Greg cited earlier and look at it for the small account sub segment, you're going to see a much lower number in there and a lot of the price headline is coming out of the specialty and E&S areas, is coming out of the coastal property and very large property accounts. We haven't seen it as much in our core small and middle market, lower medium hazard risk space that we're predominantly focused on.

    Amit Kumar — Buckingham Research — Analyst

    That's a fair comment. So, is it possible and I completely agree and appreciate your comment on exposures. So, it's simply not apples-to-apples, looking at your numbers versus others, but do you have the number excluding workers' comp for the quarter or maybe could you even like talk about it, sort of, in generalities how much the delta would be, if we exclude workers' comp from the pricing?

    John J. Marchioni — President, Chief Operating Officer & Director

    Yeah, so — and we gave you some of the pieces. And I can't calculate on the slide for you what it would be ex-comp, we'd have to wait it out, but — so GL excluding umbrella was 3.3% for the quarter. Commercial auto was 7.8%, commercial property was 4.1% and BOP for us, which is a smaller line, was 5.3%. And then, you've got workers' comp at a minus 2.7%. So, you're probably looking at something — probably closer to 5% roughly, if you were to look at an ex-comp number, maybe a little bit above 5% on an ex-comp basis.

    Amit Kumar — Buckingham Research — Analyst

    Got it. And that's what I thought. Okay, that's good. The other question is also a follow-up on the litigation trends and we've talked about this on several conference calls and we expect to talk about this. I know in the past we've talked about Reviver. This question is not on Reviver. Can you — when you sort of look at your trend line on the litigation trends and then you look at all the reports out there, we should look at litigation trends, etc., when you look at your own book, do you think the reason why we haven't seen that level of increased activity versus some of the larger companies? Is it more because of the account size, is it the geographical mix, or maybe it's a combination of all of it, but maybe just talk about that a little more so that we can get some confidence that these trends will remain stable versus some of the other larger companies? Tak.

    John J. Marchioni — President, Chief Operating Officer & Director

    Ja. So, I think there clearly are differences and you would expect differences in terms of where the plaintiffs bar is going to target in terms of individual companies and the type of company we do right is going to be less of a target, but I think we do look at inflationary trends or claims inflation as not just entirely focused on the headline litigation or headline settlements amount that you see. To the extent it's happening, it will ultimately start to make its way up and down the marketplace. I don't think there is a geographic difference when you look at our footprint. Our footprint is concentrated in the Eastern half of the US with some of the Southwest expansion, but for us, you also want to look at the hazard levels and we do still right a predominantly low and medium hazard class of business with a low limits profile.

    And I know a lot of companies cite their limits profile and ours is certainly on the lower end for most and that will provide some protection, if in fact, we do see an acceleration of claims. I'll also say that while our own litigation rates haven't really moved as we've mentioned and we focus in terms of our view of our reserves on our own experience, we certainly pay attention to what's being stated and what others are saying in the broader industry and have a keen eye on that relative to what might potentially emerge, but to sit here and say with clarity that frequency or severity trends are going to be X or Y in future years is just tough to get comfortable with.

    Amit Kumar — Buckingham Research — Analyst

    Got it. The last question I have is on the GL development. I think you were responding to Mike and I'll go back and look at the transcript, but my understanding was, there was adverse of $5 million, and did you — was that from AY 2018, '17. I didn't get the details in terms of the moving parts of that $5 million? Tak.

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    Ja. Amit, it's Mark. It was $5 million of adverse development in the quarter, but I think it's best to look at the full year, which was $5 million of favorable development in the general liability lines. So, there's obviously always some quarterly volatility. It's a relatively small number on a big book of business. This reflected a little bit of fine-tuning in some respects is going into the new year and then as it related to the current accident year and I mentioned this earlier, but just for the sake of clarification, it was also $5 million on the 2019 accident year, so we had a modest benefit earlier in the year. So, for the full year, it was $3 million. So, if you net the $3 million in the $5 million, it's a bit of a wash against the current and the prior related to GL line, it reflects a line of business that we've had reasonably stable trends.

    Amit Kumar — Buckingham Research — Analyst

    Got it. And then then, was that related to like an account or is that just more fine-tuning across the book?

    John J. Marchioni — President, Chief Operating Officer & Director

    It's more across the book. And when you think about that small dollar number across multiple of prior accident years, there's not even going to be an individual year you would look at, but I would say, it would definitely have been more — in the more recent accident year '17, '18.

    Amit Kumar — Buckingham Research — Analyst

    Got it. That's all I have. Thanks for the answers and good luck in your new roles, Greg and John. Tak.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Tak skal du have.

    John J. Marchioni — President, Chief Operating Officer & Director

    Tak skal du have.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Operator, next question?

    Operator

    Tak skal du have. The next question is coming from Mark Dwelle from RBC Capital Markets. Your line is now open.

    Mark Dwelle — RBC Capital Markets — Analyst

    Yeah, good morning. Let me just start by giving my well-wishes to Greg. I've very much appreciated you valuable insights and you will always be among the Ivy League of CEOs in my book. So, good luck to you going forward.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Tak skal du have. Thank you, Mark.

    Mark Dwelle — RBC Capital Markets — Analyst

    The first question just something fairly simple. The corporate expense line item is much lower than the other quarters. I think this was the same as a year ago. Just — is there something — is there a credit or some seasonality or something — I would have thought the comp expense alone would have been more than $2.6 million in a quarter.

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    Ja. Mark, it's Mark Wilcox and let me jump in and Greg and John can follow on as well. The corporate expense line item, it does have an element of volatility and a little bit of seasonality to it. So, it was running in the $35 million range a few years back, it was $25 million, now it's again $31 this year. It mainly include — it's not all, but mainly includes stock-based compensation and a portion of that, call it, 25% is what we call liability based. And so, the recent volatility, it is driven really by a couple of factors. One, there's a peer group factor and two, there's also a total shareholder return back. And the reason it was down in the quarter was [Indecipherable] as you're all well aware in Q4 and that drove a benefit or credit in that line item in the quarter. Just as a reminder, as you look ahead to 2020, there is some seasonality, typically see a heavier front-end load in Q1 of the new year related to the corporate expense line item, given the retirement eligibility and the full expensing of stock-based compensation for those individuals that are retirement-eligible and receive an award.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    And I would say, just the changes that we made to the plan overall, now that you have all the years that are now eligible to be expensed in theory, that three year period under the new plan, it will reduce the overall amount of volatility in the line.

    Mark Dwelle — RBC Capital Markets — Analyst

    Okay. That's, that's helpful, thanks. Second question, John, you had provided some pretty good pricing segmentation information with respect to the commercial lines book. Do you have similar information you can share related to the E&S book?

    John J. Marchioni — President, Chief Operating Officer & Director

    Well, we haven't traditionally, I can tell you that we do a similar segmentation, but it's more based on industry classification and our targets, our target pricing levels to achieve our target ROE, we do certainly manage it that way internally. It's just not something we've reported about externally, but it's the same very granular approach that we take in managing both new and renewal business in the E&S segment.

    Mark Dwelle — RBC Capital Markets — Analyst

    Okay. Staying on the E&S book, any additional insight you can share related to the reserve addition in that business? I mean, I know it's kind of gone back and forth over the years, but is there anything different about loss trend or litigation or anything there?

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Mark, it's so small. It's not even that large. So, I would say it's just minor year-end adjustments that come through, based on slight modifications. It's not material. Really, its not significant overall.

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    Yeah, it was $2 million in the current quarter on the prior accident year and $2 million in the current quarter on the current accident year, but it's relatively modest. Again, a little bit of fine-tuning going as we roll over into new accident year, they can show. We feel confident in our reserve inventory, but nothing, I think, we'd point to trends. I think, the good news, obviously with the E&S segment, as John highlighted is a strong level of profitability, it's best year yet from a profitability perspective in the E&S, still some work to be done to drive toward the target level of risk-adjusted debt profitability in E&S, but the reserve, last year, we had a $12 million addition. So, trending in the right direction and to some fourth quarter minor adjustments.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Yeah, I would just add to that, Mark. I mean, we've come a long way US about target surcharges that John, I think, [Indecipherable]. We track that. I mean, it could tell you exactly where the new renewal is and we are been — in this market we've — for the past several years, I have never been totally satisfied with what we have been getting or the amount of increases that we're getting on the renewal side. We have seen change in that. We have done a lot of work on our renewal inventory to get them closer and closer to where our target surcharges need to be and we have been very happy relative to the new business that we put on the books and where that is relative to target surcharge.

    So, that's come a long way and again, you know us, we put in a lot of discipline in it and we want to make sure that that business is profitable. We've always told you that it will — the top line will go up or down, more based on market conditions and that I think will happen overtime.

    Mark Dwelle — RBC Capital Markets — Analyst

    Okay, that's helpful. And then one last question, and this is — I suppose it's more of, almost a thought question as anything else, but I'm trying to gauge the — kind of the sense of where the market tone is or the — from the customers' perspective. As you go to customers with renewal rate increase requests, whatever level they happen to be, 5%, 2%, 8% whatever, I mean, what kind of push back are you getting? I mean, are people understanding of the need for rate? Is it more than unusually adversarial? How does that conversation go at this stage?

    John J. Marchioni — President, Chief Operating Officer & Director

    Yes, Mark. It's John. So obviously, the answer is going to be, it depends. It depends on the size of the rate increase and it depends on the individual producer who owns that relationship at our independent agency and their approach to managing that process. I will say for us, we have really prided ourselves on maintaining that routine balance between price and trend over a long period of time. So, we're not in a situation where you've got a 10% or 15% rate [Phonetic] under overall portfolio. So, that minimizes the impact overall, when you think about what we're asking of our agents in terms of selling increases. Now that said, we do have very specific discussions and expect our agency partners to be able to have that specific discussion with that smaller percentage of the inventory that is going to get a higher than average increase based on risk characteristics or experience of that account.

    And I will say that based on our overall retention and our retention by cohorts, the customers understand that and our distribution partners do a good job of explaining that. So, I don't necessarily feel like that's a huge impediment at this point executing on our pricing strategy, but I will say, if we just took an across the board approach and we're trying to fix a loss ratio problem, which we're not, it would be a lot harder to execute in this kind of an environment, because there are enough companies like we are that are well positioned with their pricing sophistication to go out and take those opportunities that look attractive when a company is taking an across the board rate increase.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    And Mark, this is Greg. So, the other side to that too, it really comes down to more than the general economic conditions. So, with GDP growing, businesses growing, top line revenue growing, price increases are a little bit easier to take in as a customer versus years ago when GDP was not growing and you're trying to raise rate and everybody's looking through their balance sheet — looking through their P&L to figure out what expense lines they can cut, does make it a little bit easier relative to that.

    And the other point that John made earlier, relative to what we're doing in customer experience, relative to everything that we're doing to build more customer connectivity, whether it's our security mentor product that we recently rolled out or drive product, the product recalls that we're offering, all of the additional work that we do to build more and more contactability to the end customer, we want to make sure that, when we do need to sell a larger price increase, someone would sit there and say, OK, this is all the value that I'm getting from Selective and it's not just the insurance policy, it's way more than that. And we believe that over time, that should help our retention, help our net promoter scores, help all of our OSAT scores and everything else that we track internally that will make it — make a different long-term.

    Mark Dwelle — RBC Capital Markets — Analyst

    Well, thanks very much for that. I appreciate the additional insight. Tak.

    Operator

    Tak skal du have. And the next question is coming from Matt Carletti from JMP. Your line is now open.

    Matt Carletti — JMP — Analyst

    All right, thanks. Just have a quick one. I wanted to ask a question on workers' comp. Growth was up 5% in the quarter, that's the strongest number we've seen in a while, actually first positive we've seen in a while. Just wanted to ask, what's going on there. I mean, I think you gave us the rates, so we know it's not that. Is it good new business production, underlying, kind of, economic work activity, was there some audit premium to catch-up, just what kind of gave us that growth in the quarter?

    John J. Marchioni — President, Chief Operating Officer & Director

    Yeah, Matt. This is John. I would say, and again, remember we write predominantly account business and very little monoline workers' comp. So, you want to think about workers' comp growth in the overall context of the very strong quarter we had in commercial lines. Commercial lines growth was at 11% and that was driven by both strong retention and a solid new business quarter and I would say when you look at the growth in comp relative to the other lines, it's still the lowest growth line at that percent, but stronger in the quarter certainly. I wouldn't necessarily, as you said, pricing wasn't that materially different than what we saw in the first three quarters. I just think we had a stronger growth quarter overall and that helped a little bit the growth in the workers' comp segment.

    We have not seen meaningful change in the competitive landscape in comp. I will tell you that continues to be, especially, for small lower hazard workers' comp, probably the most aggressive market in any segment that we play in. You've seen a lot of companies continue to be very aggressive and we love our results, we love our book of business. We feel good about the book of business we have, but we also recognize that loss trends in that line can continue the downward trajectory they've been on for both frequency and severity, and we're just being cautious about growing that relative to the overall growth of the commercial lines operation.

    Matt Carletti — JMP — Analyst

    Got you. Just to kind of tie in that last comment there together, I mean, am I right to infer that as you go through the component pieces of — obviously you gave us guidance that implies kind of accident year margin improvement '20 versus '19 for the overall book that this might be a component where it might tweak the other way a little bit that rates down a few percent, and I mean, unless trend continues in that direction in which it sounds like, it's not an assumption that you'd make off the bat that that might be a component that goes a little bit the other way as we go forward.

    John J. Marchioni — President, Chief Operating Officer & Director

    We give you overall combined ratio guidance, and we will give it to you by line, but based on how we talk about rate and trends, I think the way you described our view of comp would be a fairly accurate description.

    Matt Carletti — JMP — Analyst

    Store. Well, Greg and John congrats and best of luck going forward.

    John J. Marchioni — President, Chief Operating Officer & Director

    Thanks, Matt.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Tak skal du have.

    Operator

    Tak skal du have. And the next question is coming from Ron Bobman from Capital Returns. Your line is open.

    Ron Bobman — Capital Returns — Analyst

    Hi, thanks a lot. And Greg you've been awesome. I sure have learned a lot and you've always pointed us in the smart direction. So thanks a ton.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Tak skal du have.

    Ron Bobman — Capital Returns — Analyst

    Greg, a little while ago in the call, you mentioned the commercial auto combined was at 115% and now it's at 106%. But I'm wondering what sort of date or what window or what quarter, or what year you were sort of referencing that if I have those numbers right, the movement occurred over?

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Yeah, so let me just pull that out in a second, hold on a second. Let me just spread the lines here. So, all right. So, year-to-date commercial auto in '18, the cap — the combined ratio, call, 116% [Phonetic] was the calendar year trend and the accident year was 1.08% [Phonetic] pretty close to that in the underlying combined ratio for that year. And now we're running, call it — for this 2019 year, commercial auto, the combined ratio was a 1.08% and the underlying combined ratio was like a 107%, in that neck of the wood. So, that gives you a little bit of idea as to the movement and what was happening and that's what I was referring to earlier.

    Ron Bobman — Capital Returns — Analyst

    Got you. And, given how rates have been, should I think that Q4 '19 numbers are marginally better than the 108% and 107% that was booked for the whole year or the rate increase has been pretty consistent?

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Yeah, Ron, I think, the way we build our plan is — let's put it this way, the way our planning process works, the base year is a four-year average and then we're projecting that forward. So, we look at any liability line, we're estimating — break it down ultimately through a frequency severity number amount and then that ratio is pretty — is consistent in liability throughout the year. We're not market weighting or price adjusting quarter to quarter. So, generally speaking on any liability line, you'll see unless we're making modifications to it, it would be the same ratio every quarter. What you do see as volatility in commercial auto though, could be the property side and that could be weather specific. So that could come from property whether, it comes from property damage frequency on the liability side, but it also could come through physical damage on that side. And that's what could create a little bit more up and down on that number versus a straight liability line like GL or workers' compensation, where you'd see virtually the same kind of ratio throughout the quarters.

    Ron Bobman — Capital Returns — Analyst

    Okay, thanks. You've mentioned, I think, just qualitatively but I could have missed it, retention, I'm curious to know how commercial lines retention was in Q4, as compared to Q3 sequentially, please.

    John J. Marchioni — President, Chief Operating Officer & Director

    Ja. So, retention for our commercial lines was 84% in the quarter, and I'd give you the full-year number, which was 83%. I don't have the individual first three quarters, but that would suggest that it was relatively…

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Relatively stable. A year ago in Q4 '18, it was a little bit lower at 83% and then throughout the year, it was 84%, 83%, 84%, 84% and the full year at 83%. So, relatively stable retention throughout the year.

    Ron Bobman — Capital Returns — Analyst

    Got you. That's great elasticity as far as that supporting you to push more rate I guess, or like you said a baseline. I think is what Greg said going into 2020.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Thank you for picking up on that.

    Ron Bobman — Capital Returns — Analyst

    Last question. Putting aside Selective's — and you highlighted really small E&S book as compared to your admitted book. From a more general perspective, this challenge of increased loss cost, a portion of which is driven by attorney representation and the distinction between that and litigated claims, do you think that an E&S book would be more resilient to that challenge than an admitted book or it's — both are going to sort of face the same delta from loss cost inflation being driven by litigation or attorney representation in one form or another.

    John J. Marchioni — President, Chief Operating Officer & Director

    Ja. Ron, this is John. I would say generally speaking, I don't think it's going to be that different. But it also depends on the segment of the E&S market we're talking about. I do think if you're writing in the space of the E&S market that is really high exposure products, higher hazard classes of business, you might see a little bit more of an acceleration in terms of claims trends, but I would say for us, our book is predominantly small contractors, small habitational, small restaurants and mercantile and service businesses, small limits profile, not high profile exposures. It would be more akin to what we would expect to see in our standard lines book.

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    Ja. And I think Greg quoted a number earlier on that limits profile, casualty within stated commercial lines, $1 million or less, 87% of the book and an E&S for casualty for the $1 million and below is 98%. So, a very similar limits profile even perhaps a little bit more conservative.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    And again [Speech Overlap] everybody focuses on the issues that could raise loss cost, we do as well. And I just want to make sure we get out. There is a tremendous amount of effort internally in the organization. John touched on the litigation propensity models, the escalation models that we have, what we're doing in the area of complex claims, some of the other work that I know we're starting on relative to robotics in certain areas.

    What we're also doing to find out when we look at losses and sit there and say what is it that we can do to help mitigate some of the losses, whether it's notification, whether it's education and we've got a lot of efforts on that and those are things that will pay off on the longer term and normally would not — we're not going to see any credit come through in the near term, relative to the loss ratios, but they are a part of analyzing the loss costs, analyzing how you get back to strength, analyzing how and some of the things you can do in ensure tech to help mitigate that, are all things that we need to be focused on to reduce loss costs. So, those efforts are under way, but will pay off over time.

    Ron Bobman — Capital Returns — Analyst

    Tak. And Greg, thanks for time, again. You've been great and you're leaving us I think well protected and well led with John. Take care.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    I hear you, Ron.

    Operator

    Tak skal du have. And we show no further questions in queue at this time.

    Gregory E. Murphy — Chairman & Chief Executive Officer

    All right, everybody, and I appreciate the comments from everyone. Tak skal du have. If you have any follow-up, Rohan and Mark are available. Thank you very much for all your questions today, very interactive call. Tak skal du have.

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    Tak skal du have.

    Operator

    [Operator Closing Remarks]

    Duration: 81 minutes

    Call participants:

    Rohan Pai — Senior Vice President, Investor Relations and Treasurer

    Gregory E. Murphy — Chairman & Chief Executive Officer

    Mark A. Wilcox — Executive Vice President & Chief Financial Officer

    John J. Marchioni — President, Chief Operating Officer & Director

    Mike Zaremski — Credit Suisse — Analyst

    Paul Newsome — Piper Sandler — Analyst

    Amit Kumar — Buckingham Research — Analyst

    Mark Dwelle — RBC Capital Markets — Analyst

    Matt Carletti — JMP — Analyst

    Ron Bobman — Capital Returns — Analyst

    More SIGI analysis

    All earnings call transcripts

    Selective Insurance Group Inc (SIGI) Transcription de l'appel des résultats du quatrième trimestre 2019
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