XML 65 R14.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Investments | 3 Months Ended
--- | ---
Mar. 31, 2013
Investments [Abstract] |
Investments | Investments (a) The amortized cost, net unrealized gain and losses, carrying value, unrecognized holding gains and losses, and fair values of held-to-maturity (“HTM”) fixed maturity securities were as follows:
March 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  | Amortized Cost |  | Net Unrealized Gains (Losses) |  | Carrying Value |  | Unrecognized Holding Gains |  | Unrecognized Holding Losses |  | Fair Value
Foreign government |  | $ | 5,292 |  |  | 192 |  |  | 5,484 |  |  | 190 |  |  | — |  |  | 5,674 |
Obligations of state and political subdivisions |  | 448,591 |  |  | 5,664 |  |  | 454,255 |  |  | 26,909 |  |  | (27 | ) |  | 481,137 |
Corporate securities |  | 35,986 |  |  | (726 | ) |  | 35,260 |  |  | 4,374 |  |  | — |  |  | 39,634 |
Asset-backed securities (“ABS”) |  | 6,819 |  |  | (964 | ) |  | 5,855 |  |  | 1,065 |  |  | — |  |  | 6,920 |
Commercial mortgage-backed securities (“CMBS”) |  | 8,031 |  |  | (1,114 | ) |  | 6,917 |  |  | 3,271 |  |  | — |  |  | 10,188 |
Total HTM fixed maturity securities |  | $ | 504,719 |  |  | 3,052 |  |  | 507,771 |  |  | 35,809 |  |  | (27 | ) |  | 543,553 |
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  | Amortized Cost |  | Net Unrealized Gains (Losses) |  | Carrying Value |  | Unrecognized Holding Gains |  | Unrecognized Holding Losses |  | Fair Value
Foreign government |  | $ | 5,292 |  |  | 212 |  |  | 5,504 |  |  | 367 |  |  | — |  |  | 5,871 |
Obligations of state and political subdivisions |  | 491,180 |  |  | 6,769 |  |  | 497,949 |  |  | 28,996 |  |  | (23 | ) |  | 526,922 |
Corporate securities |  | 38,285 |  |  | (812 | ) |  | 37,473 |  |  | 4,648 |  |  | — |  |  | 42,121 |
ABS |  | 6,980 |  |  | (1,052 | ) |  | 5,928 |  |  | 1,170 |  |  | — |  |  | 7,098 |
CMBS |  | 8,406 |  |  | (1,191 | ) |  | 7,215 |  |  | 5,434 |  |  | — |  |  | 12,649 |
Total HTM fixed maturity securities |  | $ | 550,143 |  |  | 3,926 |  |  | 554,069 |  |  | 40,615 |  |  | (23 | ) |  | 594,661 |
Unrecognized holding gains and losses of HTM securities are not reflected in the Financial Statements, as they represent fair value fluctuations from the later of: (i) the date a security is designated as HTM; or (ii) the date that an other-than-temporary impairment (“OTTI”) charge is recognized on an HTM security, through the date of the balance sheet. Our HTM securities had an average duration of 2.4 years as of March 31, 2013. During First Quarter 2013, seven securities with a carrying value of $15.8 million and a net unrecognized gain position of $0.9 million were reclassified from an HTM designation to an available-for-sale (“AFS”) designation due to credit rating downgrades by Moody’s Investors Services ("Moody's"). These unexpected rating downgrades raised significant concerns about the issuers’ credit worthiness, which changed our intention to hold these securities to maturity. (b) The cost/amortized cost, unrealized gains and losses, and fair value of AFS securities were as follows:
March 31, 2013 |  |  |  |  |  |  |  |
($ in thousands) |  | Cost/ Amortized Cost |  | Unrealized Gains |  | Unrealized Losses |  | Fair Value
U.S. government and government agencies |  | $ | 229,718 |  |  | 15,950 |  |  | (4 | ) |  | 245,664 |
Foreign government |  | 28,808 |  |  | 1,472 |  |  | (116 | ) |  | 30,164 |
Obligations of states and political subdivisions |  | 810,375 |  |  | 40,630 |  |  | (1,059 | ) |  | 849,946 |
Corporate securities |  | 1,456,347 |  |  | 77,266 |  |  | (860 | ) |  | 1,532,753 |
ABS |  | 170,026 |  |  | 1,971 |  |  | (55 | ) |  | 171,942 |
CMBS 1 |  | 144,120 |  |  | 3,523 |  |  | (1,103 | ) |  | 146,540 |
Residential mortgage-backed securities (“RMBS”)2 |  | 475,595 |  |  | 13,832 |  |  | (455 | ) |  | 488,972 |
AFS fixed maturity securities |  | 3,314,989 |  |  | 154,644 |  |  | (3,652 | ) |  | 3,465,981 |
AFS equity securities |  | 143,564 |  |  | 31,622 |  |  | (441 | ) |  | 174,745 |
Total AFS securities |  | $ | 3,458,553 |  |  | 186,266 |  |  | (4,093 | ) |  | 3,640,726 |
December 31, 2012 |  |  |  |  |  |  |  |
($ in thousands) |  | Cost/ Amortized Cost |  | Unrealized Gains |  | Unrealized Losses |  | Fair Value
U.S. government and government agencies |  | $ | 241,874 |  |  | 17,219 |  |  | (1 | ) |  | 259,092 |
Foreign government |  | 28,813 |  |  | 1,540 |  |  | (124 | ) |  | 30,229 |
Obligations of states and political subdivisions |  | 773,953 |  |  | 44,398 |  |  | (327 | ) |  | 818,024 |
Corporate securities |  | 1,368,954 |  |  | 81,696 |  |  | (402 | ) |  | 1,450,248 |
ABS |  | 126,330 |  |  | 2,319 |  |  | (9 | ) |  | 128,640 |
CMBS 1 |  | 133,763 |  |  | 4,572 |  |  | (1,216 | ) |  | 137,119 |
RMBS 2 |  | 456,996 |  |  | 15,961 |  |  | (296 | ) |  | 472,661 |
AFS fixed maturity securities |  | 3,130,683 |  |  | 167,705 |  |  | (2,375 | ) |  | 3,296,013 |
AFS equity securities |  | 132,441 |  |  | 19,400 |  |  | (459 | ) |  | 151,382 |
Total AFS securities |  | $ | 3,263,124 |  |  | 187,105 |  |  | (2,834 | ) |  | 3,447,395 |
1 CMBS includes government guaranteed agency securities with a fair value of $42.3 million at March 31, 2013 and $48.9 million at December 31, 2012. 2 RMBS includes government guaranteed agency securities with a fair value of $85.0 million at March 31, 2013 and $91.0 million at December 31, 2012. Unrealized gains and losses of AFS securities represent fair value fluctuations from the later of: (i) the date a security is designated as AFS; or (ii) the date that an OTTI charge is recognized on an AFS security, through the date of the balance sheet. These unrealized gains and losses are recorded in AOCI on the Consolidated Balance Sheets. (c) The following tables summarize, for all securities in a net unrealized/unrecognized loss position at March 31, 2013 and December 31, 2012, the fair value and gross pre-tax net unrealized/unrecognized loss by asset class and by length of time those securities have been in a net loss position:
March 31, 2013 |  | Less than 12 months |  | 12 months or longer
($ in thousands) |  | Fair Value |  | Unrealized Losses 1 |  | Fair Value |  | Unrealized Losses 1
AFS securities |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 3,502 |  |  | (4 | ) |  | — |  |  | — |
Foreign government |  | — |  |  | — |  |  | 2,880 |  |  | (116 | )
Obligations of states and political subdivisions |  | 133,593 |  |  | (1,059 | ) |  | — |  |  | — |
Corporate securities |  | 73,175 |  |  | (812 | ) |  | 3,059 |  |  | (48 | )
ABS |  | 46,519 |  |  | (55 | ) |  | — |  |  | — |
CMBS |  | 45,901 |  |  | (395 | ) |  | 11,269 |  |  | (708 | )
RMBS |  | 49,313 |  |  | (267 | ) |  | 2,982 |  |  | (188 | )
Total fixed maturity securities |  | 352,003 |  |  | (2,592 | ) |  | 20,190 |  |  | (1,060 | )
Equity securities |  | 24,871 |  |  | (441 | ) |  | — |  |  | — |
Subtotal |  | $ | 376,874 |  |  | (3,033 | ) |  | 20,190 |  |  | (1,060 | )
|  | Less than 12 months |  | 12 months or longer
($ in thousands) |  | Fair Value |  | Unrealized Losses 1 |  | Unrecognized Gains 2 |  | Fair Value |  | Unrealized Losses 1 |  | Unrecognized Gains 2
HTM securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Obligations of states and political subdivisions |  | $ | 358 |  |  | (32 | ) |  | 30 |  |  | 896 |  |  | (35 | ) |  | 27 |
ABS |  | — |  |  | — |  |  | — |  |  | 2,855 |  |  | (798 | ) |  | 739 |
Subtotal |  | $ | 358 |  |  | (32 | ) |  | 30 |  |  | 3,751 |  |  | (833 | ) |  | 766 |
Total AFS and HTM |  | $ | 377,232 |  |  | (3,065 | ) |  | 30 |  |  | 23,941 |  |  | (1,893 | ) |  | 766 |
December 31, 2012 |  | Less than 12 months |  | 12 months or longer
($ in thousands) |  | Fair Value |  | Unrealized Losses 1 |  | Fair Value |  | Unrealized Losses 1
AFS securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 518 |  |  | (1 | ) |  | — |  |  | — |
Foreign government |  | — |  |  | — |  |  | 2,871 |  |  | (124 | )
Obligations of states and political subdivisions |  | 32,383 |  |  | (327 | ) |  | — |  |  | — |
Corporate securities |  | 50,880 |  |  | (402 | ) |  | — |  |  | — |
ABS |  | 9,137 |  |  | (9 | ) |  | — |  |  | — |
CMBS |  | 7,637 |  |  | (19 | ) |  | 11,830 |  |  | (1,197 | )
RMBS |  | 8,710 |  |  | (59 | ) |  | 5,035 |  |  | (237 | )
Total fixed maturity securities |  | 109,265 |  |  | (817 | ) |  | 19,736 |  |  | (1,558 | )
Equity securities |  | 15,901 |  |  | (459 | ) |  | — |  |  | — |
Subtotal |  | $ | 125,166 |  |  | (1,276 | ) |  | 19,736 |  |  | (1,558 | )
|  | Less than 12 months |  | 12 months or longer
($ in thousands) |  | Fair Value |  | Unrealized Losses 1 |  | Unrecognized Gains 2 |  | Fair Value |  | Unrealized Losses 1 |  | Unrecognized Gains 2
HTM securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Obligations of states and political subdivisions |  | $ | 1,218 |  |  | (33 | ) |  | 29 |  |  | 1,108 |  |  | (47 | ) |  | 38 |
ABS |  | — |  |  | — |  |  | — |  |  | 2,860 |  |  | (840 | ) |  | 753 |
Subtotal |  | $ | 1,218 |  |  | (33 | ) |  | 29 |  |  | 3,968 |  |  | (887 | ) |  | 791 |
Total AFS and HTM |  | $ | 126,384 |  |  | (1,309 | ) |  | 29 |  |  | 23,704 |  |  | (2,445 | ) |  | 791 |
1 Gross unrealized losses include non-OTTI unrealized amounts and OTTI losses recognized in AOCI. In addition, this column includes remaining unrealized gain or loss amounts on securities that were transferred to an HTM designation in the first quarter of 2009 for those securities that are in a net unrealized/unrecognized loss position. 2 Unrecognized gains represent fair value fluctuations from the later of: (i) the date a security is designated as HTM; or (ii) the date that an OTTI charge is recognized on an HTM security. As evidenced by the table below, our net unrealized/unrecognized loss positions increased by $1.2 million as of March 31, 2013 compared to December 31, 2012 as follows:
($ in thousands) |  |
March 31, 2013 |  | December 31, 2012
Number of Issues | % of Market/Book | Unrealized Unrecognized Loss |  | Number of Issues | % of Market/Book | Unrealized Unrecognized Loss
174 |  | 80% - 99% | $ | 3,918 |  |  | 100 |  | 80% - 99% | $ | 2,701 |
1 |  | 60% - 79% | 244 |  |  | 1 |  | 60% - 79% | 233 |
— |  | 40% - 59% | — |  |  | — |  | 40% - 59% | — |
— |  | 20% - 39% | — |  |  | — |  | 20% - 39% | — |
— |  | 0% - 19% | — |  |  | — |  | 0% - 19% | — |
|  |  | $ | 4,162 |  |  |  |  |  | $ | 2,934 |
We have reviewed the securities in the tables above in accordance with our OTTI policy, as described in Note 2. “Summary of Significant Accounting Policies” in Item 8. “Financial Statements and Supplementary Data.” of our 2012 Annual Report. At March 31, 2013, we had 175 securities in an aggregate unrealized/unrecognized loss position of $4.2 million, $1.1 million of which have been in a loss position for more than 12 months. Securities that have had non-credit OTTI impairments comprised $0.6 million of the $1.1 million balance. The remainder of the $1.1 million balance is related to securities that were, on average, 3% impaired compared to their amortized cost. At December 31, 2012, we had 101 securities in an aggregate unrealized/unrecognized loss position of $2.9 million, $1.7 million of which had been in a loss position for more than 12 months. Securities that have had non-credit OTTI impairments comprised $0.9 million of the $1.7 million balance. The remainder of the $1.7 million balance is related to securities that were, on average, 5% impaired compared to their amortized cost. We do not have the intent to sell any securities in an unrealized/unrecognized loss position, nor do we believe we will be required to sell these securities, and therefore we have concluded that they are temporarily impaired as of March 31, 2013. This conclusion reflects our current judgment as to the financial position and future prospects of the entity that issued the investment security and underlying collateral. If our judgment about an individual security changes in the future, we may ultimately record a credit loss after having originally concluded that one did not exist, which could have a material impact on our net income and financial position in future periods. (d) Fixed maturity securities at March 31, 2013, by contractual maturity, are shown below. Mortgage-backed securities ("MBS") are included in the maturity tables using the estimated average life of each security. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without call or prepayment penalties. Listed below are HTM fixed maturity securities at March 31, 2013:
($ in thousands) |  | Carrying Value |  | Fair Value
Due in one year or less |  | $ | 100,082 |  |  | 103,261 |
Due after one year through five years |  | 363,382 |  |  | 389,774 |
Due after five years through 10 years |  | 41,427 |  |  | 46,831 |
Due after 10 years |  | 2,880 |  |  | 3,687 |
Total HTM fixed maturity securities |  | $ | 507,771 |  |  | 543,553 |
Listed below are AFS fixed maturity securities at March 31, 2013:
($ in thousands) |  | Fair Value
Due in one year or less |  | $ | 348,176 |
Due after one year through five years |  | 2,041,329 |
Due after five years through 10 years |  | 1,046,526 |
Due after 10 years |  | 29,950 |
Total AFS fixed maturity securities |  | $ | 3,465,981 |
(e) The following table outlines a summary of our other investment portfolio by strategy and the remaining commitment amount associated with each strategy:
Other Investments |  | Carrying Value |  | March 31, 2013
($ in thousands) |  | March 31, 2013 |  | December 31, 2012 |  | Remaining Commitment
Alternative Investments |  |  |  |  |  |  |  |  |
Secondary private equity |  | $ | 27,780 |  |  | 28,032 |  |  | 7,466 |
Energy/power generation |  | 18,218 |  |  | 18,640 |  |  | 7,825 |
Private equity |  | 17,732 |  |  | 18,344 |  |  | 4,697 |
Distressed debt |  | 12,406 |  |  | 12,728 |  |  | 2,922 |
Real Estate |  | 12,214 |  |  | 11,751 |  |  | 10,292 |
Mezzanine financing |  | 12,179 |  |  | 12,692 |  |  | 21,337 |
Venture capital |  | 7,370 |  |  | 7,477 |  |  | 400 |
Total alternative investments |  | 107,899 |  |  | 109,664 |  |  | 54,939 |
Other securities |  | 1,956 |  |  | 4,412 |  |  | 1,412 |
Total other investments |  | $ | 109,855 |  |  | 114,076 |  |  | 56,351 |
For a description of our seven alternative investment strategies, as well as information regarding redemption, restrictions, and fund liquidations, refer to Note 5. “Investments” in Item 8. “Financial Statements and Supplementary Data.” of our 2012 Annual Report. The following table sets forth aggregated summarized financial information for the partnerships in our alternative and other investments carried under the equity method of accounting. The last line of the table below reflects our share of the aggregate income, which is the portion included in our Financial Statements. As the majority of these investments report results to us on a quarter lag, the summarized financial statement information for the three-month periods ended December 31 is as follows:
Income Statement Information |  |  |  |
Quarter ended December 31, |  |
($ in millions) |  | 2012 |  | 2011
Net investment income |  | $ | 204.8 |  |  | 36.1 |
Realized gains |  | 593.4 |  |  | 750.7 |
Net change in unrealized depreciation |  | (417.5 | ) |  | (487.4 | )
Net income |  | $ | 380.7 |  |  | 299.4 |
Selective’s insurance subsidiaries’ other investments income |  | $ | 3.6 |  |  | 2.0 |
(f) At March 31, 2013, we had 31 fixed maturity securities, with a carrying value of $62.1 million, that were pledged as collateral for our outstanding borrowing of $58.0 million with the Federal Home Loan Bank of Indianapolis (“FHLBI”). This outstanding borrowing is included in “Notes payable” on the Consolidated Balance Sheets. In accordance with the terms of our agreement with the FHLBI, we retain all rights regarding these securities, which are included in the “U.S. government and government agencies,” “RMBS,” and “CMBS” classifications of our AFS fixed maturity securities portfolio. In addition, certain bonds with a carrying value of $27.2 million were on deposit with various state and regulatory agencies to comply with insurance laws. We retain all rights regarding these securities, which are primarily included in the "U.S. government and government agencies" classification of our AFS fixed maturity securities portfolio. (g) The components of net investment income earned were as follows:
|  | Quarter ended March 31,
($ in thousands) |  | 2013 |  | 2012
Fixed maturity securities |  | $ | 30,089 |  |  | 31,350 |
Equity securities |  | 1,207 |  |  | 1,237 |
Short-term investments |  | 52 |  |  | 38 |
Other investments |  | 3,602 |  |  | 2,000 |
Miscellaneous income |  | — |  |  | 39 |
Investment expenses |  | (2,080 | ) |  | (2,036 | )
Net investment income earned |  | $ | 32,870 |  |  | 32,628 |
(h) The following tables summarize OTTI by asset type for the periods indicated:
First Quarter 2013 |  |  |  |  |  |
($ in thousands) |  | Gross |  | Included in Other Comprehensive Income (“OCI”) |  | Recognized in Earnings
AFS fixed maturity securities |  |  |  |  |  |  |  |  |
RMBS |  | $ | (22 | ) |  | (30 | ) |  | 8 |
Total AFS fixed maturity securities |  | (22 | ) |  | (30 | ) |  | 8 |
Equity securities |  | 217 |  |  | — |  |  | 217 |
Other investments |  | 1,724 |  |  | — |  |  | 1,724 |
OTTI losses |  | $ | 1,919 |  |  | (30 | ) |  | 1,949 |
First Quarter 2012 |  |  |  |  |  |
($ in thousands) |  | Gross |  | Included in OCI |  | Recognized in Earnings
AFS fixed maturity securities |  |  |  |  |  |  |  |  |
ABS |  | $ | 32 |  |  | — |  |  | 32 |
CMBS |  | 108 |  |  | — |  |  | 108 |
RMBS |  | (54 | ) |  | (164 | ) |  | 110 |
Total AFS fixed maturities |  | 86 |  |  | (164 | ) |  | 250 |
Equity securities |  | 171 |  |  | — |  |  | 171 |
OTTI losses |  | $ | 257 |  |  | (164 | ) |  | 421 |
The majority of the OTTI charges in First Quarter 2013 relate to an investment in a limited liability company within our other investments portfolio that has sustained significant losses for which we do not anticipate recovery. For a discussion of our evaluation for OTTI of fixed maturity securities, short-term investments, equity securities and other investments, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data" of our 2012 Annual Report. The following tables set forth, for the periods indicated, credit loss impairments on fixed maturity securities for which a portion of the OTTI charge was recognized in OCI, and the corresponding changes in such amounts:
|  | Quarter ended March 31,
($ in thousands) |  | 2013 |  | 2012
Balance, beginning of period |  | $ | 7,477 |  |  | 6,602 |
Addition for the amount related to credit loss for which an OTTI was not previously recognized |  | — |  |  | — |
Reductions for securities sold during the period |  | — |  |  | — |
Reductions for securities for which the amount previously recognized in OCI was recognized in earnings because of intention or potential requirement to sell before recovery of amortized cost |  | — |  |  | — |
Reductions for securities for which the entire amount previously recognized in OCI was recognized in earnings due to a decrease in cash flows expected |  | — |  |  | — |
Additional increases to the amount related to credit loss for which an OTTI was previously recognized |  | 9 |  |  | 109 |
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected |  | — |  |  | — |
Balance, end of period |  | $ | 7,486 |  |  | 6,711 |
(i) The components of net realized gains, excluding OTTI charges, were as follows:
|  | Quarter ended March 31,
($ in thousands) |  | 2013 |  | 2012
HTM fixed maturity securities |  |  |  |
Gains |  | $ | — |  |  | 153 |
Losses |  | (37 | ) |  | (81 | )
AFS fixed maturity securities |  |  |  |  |
Gains |  | 951 |  |  | 405 |
Losses |  | (253 | ) |  | (43 | )
AFS equity securities |  |  |  |  |
Gains |  | 5,671 |  |  | 4,775 |
Losses |  | (168 | ) |  | (428 | )
Short-term investments |  |  |  |  |
Losses |  | — |  |  | (2 | )
Other Investments |  |  |  |
Losses |  | (860 | ) |  | — |
Total other net realized investment gains |  | 5,304 |  |  | 4,779 |
Total OTTI charges recognized in earnings |  | (1,949 | ) |  | (421 | )
Total net realized gains |  | $ | 3,355 |  |  | 4,358 |
Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold. Of the $5.3 million in net realized gains in First Quarter 2013, $5.5 million were related to the sale of AFS equity securities due to a rebalancing of our equity portfolio. Net realized investment gains in First Quarter 2012 of $4.8 million reflected the impact of rebalancing securities within the equity securities portfolio, which resulted in net realized gains of $4.3 million. Proceeds from the sale of AFS securities were $6.9 million in First Quarter 2013 as $35.6 million in proceeds remained unsettled at March 31, 2013 for the rebalancing of the equity portfolio. Proceeds from the sale of AFS securities were $71.8 million in First Quarter 2012.

X
- Definition Includes disclosures relating to the balance sheet and income statement components of all investment balances, including fixed maturity securities, equity securities, short-term investments, and other investments. + References No definition available. + Details
Name: | sigi_InvestmentsTextBlock
Namespace Prefix: | sigi_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_InvestmentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration