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sigi:subsidiary
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________________________to_____________________________
Commission File Number: 001-33067
SELECTIVE INSURANCE GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)

New Jersey |  | 22-2168890
(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

40 Wantage Avenue, Branchville, New Jersey 07890
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 948-3000
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol (s) |  | Name of each exchange on which registered
Common Stock, par value $2 per share |  | SIGI |  | The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 4.60% Non-Cumulative Preferred Stock, Series B, without par value |  | SIGIP |  | The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ | Accelerated filer | ☐ | Emerging growth company | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2024, there were 60,792,024 shares of common stock, par value $2.00 per share, outstanding.

Table of Contents

| SELECTIVE INSURANCE GROUP, INC. |
| Table of Contents |
|  | Page No.
PART I. FINANCIAL INFORMATION | 1
Item 1. | Financial Statements | 1
| Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023 | 1
| Unaudited Consolidated Statements of Income for the Quarter Ended March 31, 2024 and 2023 | 2
| Unaudited Consolidated Statements of Comprehensive Income for the Quarter Ended March 31, 2024 and 2023 | 3
| Unaudited Consolidated Statements of Stockholders' Equity for the Quarter Ended March 31, 2024 and 2023 | 4
| Unaudited Consolidated Statements of Cash Flows for the Quarter Ended March 31, 2024 and 2023 | 5
| Notes to Unaudited Interim Consolidated Financial Statements | 6
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
| Forward-Looking Statements | 21
| Introduction | 21
| Critical Accounting Policies and Estimates | 22
| Financial Highlights of Results for First Quarter 2024 and 2023 | 22
| Results of Operations and Related Information by Segment | 25
| Federal Income Taxes | 34
| Liquidity and Capital Resources | 34
| Ratings | 38
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 38
Item 4. | Controls and Procedures | 38
PART II. OTHER INFORMATION | 38
Item 1. | Legal Proceedings | 38
Item 1A. | Risk Factors | 38
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 39
Item 3. | Defaults Upon Senior Securities | 39
Item 4. | Mine Safety Disclosures | 39
Item 5. | Other Information | 39
Item 6. | Exhibits | 40
Signatures | 41

Table of Contents

PART I. FINANCIAL INFORMATION |

ITEM 1. FINANCIAL STATEMENTS. |

SELECTIVE INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS |  | Unaudited |  |
($ in thousands, except share amounts) |  | March 31, 2024 |  | December 31, 2023
ASSETS |  |  |  |
Investments: |  |  |  |
Fixed income securities, held-to-maturity – at carrying value (fair value: $19,183 – 2024; $21,923 – 2023) |  | $ | 20,295 |  |  | 22,700 |
Less: allowance for credit losses |  | — |  |  | — |
Fixed income securities, held-to-maturity, net of allowance for credit losses |  | 20,295 |  |  | 22,700 |
Fixed income securities, available-for-sale – at fair value (allowance for credit losses: $30,381 – 2024 and $28,212 – 2023; amortized cost: $7,983,271 – 2024 and $7,880,697 – 2023) |  | 7,583,504 |  |  | 7,499,197 |
Commercial mortgage loans – at carrying value (fair value: $197,807 – 2024 and $178,913 – 2023) |  | 208,152 |  |  | 188,708 |
Less: allowance for credit losses |  | (122) |  |  | (291) |
Commercial mortgage loans, net of allowance for credit losses |  | 208,030 |  |  | 188,417 |
Equity securities – at fair value (cost: $189,549 – 2024; $183,076 – 2023) |  | 194,320 |  |  | 187,155 |
Short-term investments |  | 247,883 |  |  | 309,317 |
Alternative investments |  | 402,689 |  |  | 395,779 |
Other investments |  | 88,960 |  |  | 91,164 |
Total investments (Note 4 and 5) |  | $ | 8,745,681 |  |  | 8,693,729 |
Cash |  | 124 |  |  | 180 |
Restricted cash |  | 11,720 |  |  | 13,092 |
Accrued investment income |  | 68,034 |  |  | 66,339 |
Premiums receivable |  | 1,459,112 |  |  | 1,331,979 |
Less: allowance for credit losses (Note 6) |  | (20,000) |  |  | (18,900) |
Premiums receivable, net of allowance for credit losses |  | 1,439,112 |  |  | 1,313,079 |
Reinsurance recoverable |  | 653,085 |  |  | 658,525 |
Less: allowance for credit losses (Note 7) |  | (1,700) |  |  | (1,700) |
Reinsurance recoverable, net of allowance for credit losses |  | 651,385 |  |  | 656,825 |
Prepaid reinsurance premiums |  | 207,979 |  |  | 203,320 |
Deferred federal income tax |  | 144,719 |  |  | 140,237 |
Property and equipment – at cost, net of accumulated depreciation and amortization of: $277,945 – 2024; $271,409 – 2023 |  | 82,703 |  |  | 83,272 |
Deferred policy acquisition costs |  | 448,340 |  |  | 424,864 |
Goodwill |  | 7,849 |  |  | 7,849 |
Other assets |  | 248,469 |  |  | 199,760 |
Total assets |  | $ | 12,056,115 |  |  | 11,802,546 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |
Liabilities: |  |  |  |
Reserve for loss and loss expense (Note 8) |  | $ | 5,501,750 |  |  | 5,336,911 |
Unearned premiums |  | 2,440,992 |  |  | 2,330,656 |
Long-term debt |  | 503,305 |  |  | 503,946 |
Current federal income tax |  | 26,530 |  |  | 6,251 |
Accrued salaries and benefits |  | 97,918 |  |  | 122,003 |
Other liabilities |  | 479,126 |  |  | 548,398 |
Total liabilities |  | $ | 9,049,621 |  |  | 8,848,165 |
Stockholders’ Equity: |  |  |  |
Preferred stock of $0 par value per share: |  | $ | 200,000 |  |  | 200,000 |
Authorized shares: 5,000,000; Issued shares: 8,000 with $25,000 liquidation preference per share – 2024 and 2023 |  |  |  |
Common stock of $2 par value per share: |  |  |  |
Authorized shares 360,000,000 |  |  |  |
Issued: 105,447,377 – 2024; 105,223,307 – 2023 |  | 210,895 |  |  | 210,447 |
Additional paid-in capital |  | 534,327 |  |  | 522,748 |
Retained earnings |  | 3,088,150 |  |  | 3,029,396 |
Accumulated other comprehensive income (loss) (Note 11) |  | (384,972) |  |  | (373,001) |
Treasury stock – at cost (shares: 44,655,938 – 2024; 44,586,870 – 2023) |  | (641,906) |  |  | (635,209) |
Total stockholders’ equity |  | $ | 3,006,494 |  |  | 2,954,381 |
Commitments and contingencies |  |  |  |
Total liabilities and stockholders’ equity |  | $ | 12,056,115 |  |  | 11,802,546 |

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME |  | Quarter ended March 31, |  |
($ in thousands, except per share amounts) |  | 2024 |  | 2023 |  |  |  |
Revenues: |  |  |  |  |  |  |  |
Net premiums earned |  | $ | 1,050,944 |  |  | 902,336 |  |  |  |  |
Net investment income earned |  | 107,849 |  |  | 91,506 |  |  |  |  |
Net realized and unrealized investment gains (losses) |  | (1,635) |  |  | 3,344 |  |  |  |  |
Other income |  | 7,801 |  |  | 2,634 |  |  |  |  |
Total revenues |  | 1,164,959 |  |  | 999,820 |  |  |  |  |
Expenses: |  |  |  |  |  |  |  |
Loss and loss expense incurred |  | 704,292 |  |  | 567,438 |  |  |  |  |
Amortization of deferred policy acquisition costs |  | 219,435 |  |  | 189,761 |  |  |  |  |
Other insurance expenses |  | 115,987 |  |  | 108,588 |  |  |  |  |
Interest expense |  | 7,181 |  |  | 7,166 |  |  |  |  |
Corporate expenses |  | 15,498 |  |  | 12,108 |  |  |  |  |
Total expenses |  | 1,062,393 |  |  | 885,061 |  |  |  |  |
Income before federal income tax |  | 102,566 |  |  | 114,759 |  |  |  |  |
Federal income tax expense: |  |  |  |  |  |  |  |
Current |  | 21,413 |  |  | 25,505 |  |  |  |  |
Deferred |  | (1,365) |  |  | (3,320) |  |  |  |  |
Total federal income tax expense |  | 20,048 |  |  | 22,185 |  |  |  |  |
Net income |  | $ | 82,518 |  |  | 92,574 |  |  |  |  |
Preferred stock dividends |  | 2,300 |  |  | 2,300 |  |  |  |  |
Net income available to common stockholders |  | $ | 80,218 |  |  | 90,274 |  |  |  |  |
Earnings per common share: |  |  |  |  |  |  |  |
Net income available to common stockholders - Basic |  | $ | 1.32 |  |  | 1.49 |  |  |  |  |
Net income available to common stockholders - Diluted |  | $ | 1.31 |  |  | 1.48 |  |  |  |  |

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Net income |  | $ | 82,518 |  |  | 92,574 |  |  |  |  |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |
Unrealized gains (losses) on investment securities: |  |  |  |  |  |  |  |
Unrealized holding gains (losses) arising during period |  | (12,293) |  |  | 52,079 |  |  |  |  |
Unrealized gains (losses) on securities with credit loss recognized in earnings |  | (2,474) |  |  | 17,721 |  |  |  |  |
Amounts reclassified into net income: |  |  |  |  |  |  |  |
Net realized (gains) losses on disposals and losses on intent-to-sell available-for-sale securities |  | (61) |  |  | 4,822 |  |  |  |  |
Credit loss (benefit) expense |  | 2,093 |  |  | (7,527) |  |  |  |  |
Total unrealized gains (losses) on investment securities |  | (12,735) |  |  | 67,095 |  |  |  |  |
Defined benefit pension and post-retirement plans: |  |  |  |  |  |  |  |
Amounts reclassified into net income: |  |  |  |  |  |  |  |
Net actuarial loss |  | 764 |  |  | 598 |  |  |  |  |
Total defined benefit pension and post-retirement plans |  | 764 |  |  | 598 |  |  |  |  |
Other comprehensive income (loss) |  | (11,971) |  |  | 67,693 |  |  |  |  |
Comprehensive income (loss) |  | $ | 70,547 |  |  | 160,267 |  |  |  |  |

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |  | Quarter ended March 31, |  |
($ in thousands, except share and per share amounts) |  | 2024 |  | 2023 |  |  |  |
Preferred stock: |  |  |  |  |  |  |  |
Beginning of period |  | $ | 200,000 |  |  | 200,000 |  |  |  |  |
Issuance of preferred stock |  | — |  |  | — |  |  |  |  |
End of period |  | 200,000 |  |  | 200,000 |  |  |  |  |
Common stock: |  |  |  |  |  |  |  |
Beginning of period |  | 210,447 |  |  | 209,694 |  |  |  |  |
Dividend reinvestment plan |  | 10 |  |  | 9 |  |  |  |  |
Stock purchase and compensation plans |  | 438 |  |  | 446 |  |  |  |  |
End of period |  | 210,895 |  |  | 210,149 |  |  |  |  |
Additional paid-in capital: |  |  |  |  |  |  |  |
Beginning of period |  | 522,748 |  |  | 493,488 |  |  |  |  |
Dividend reinvestment plan |  | 488 |  |  | 459 |  |  |  |  |
Stock purchase and compensation plans |  | 11,091 |  |  | 8,766 |  |  |  |  |
End of period |  | 534,327 |  |  | 502,713 |  |  |  |  |
Retained earnings: |  |  |  |  |  |  |  |
Beginning of period |  | 3,029,396 |  |  | 2,749,703 |  |  |  |  |
Net income |  | 82,518 |  |  | 92,574 |  |  |  |  |
Dividends to preferred stockholders |  | (2,300) |  |  | (2,300) |  |  |  |  |
Dividends to common stockholders |  | (21,464) |  |  | (18,364) |  |  |  |  |
End of period |  | 3,088,150 |  |  | 2,821,613 |  |  |  |  |
Accumulated other comprehensive income (loss): |  |  |  |  |  |  |  |
Beginning of period |  | (373,001) |  |  | (498,042) |  |  |  |  |
Other comprehensive income (loss) |  | (11,971) |  |  | 67,693 |  |  |  |  |
End of period |  | (384,972) |  |  | (430,349) |  |  |  |  |
Treasury stock: |  |  |  |  |  |  |  |
Beginning of period |  | (635,209) |  |  | (627,279) |  |  |  |  |
Acquisition of treasury stock - shares acquired related to employee share-based compensation plans |  | (6,697) |  |  | (7,443) |  |  |  |  |
End of period |  | (641,906) |  |  | (634,722) |  |  |  |  |
Total stockholders’ equity |  | $ | 3,006,494 |  |  | 2,669,404 |  |  |  |  |
Dividends declared per preferred share |  | $ | 287.50 |  |  | 287.50 |  |  |  |  |
Dividends declared per common share |  | $ | 0.35 |  |  | 0.30 |  |  |  |  |
Preferred stock, shares outstanding: |  |  |  |  |  |  |  |
Beginning of period |  | 8,000 |  |  | 8,000 |  |  |  |  |
Issuance of preferred stock |  | — |  |  | — |  |  |  |  |
End of period |  | 8,000 |  |  | 8,000 |  |  |  |  |
Common stock, shares outstanding: |  |  |  |  |  |  |  |
Beginning of period |  | 60,636,437 |  |  | 60,338,900 |  |  |  |  |
Dividend reinvestment plan |  | 4,806 |  |  | 4,650 |  |  |  |  |
Stock purchase and compensation plan |  | 219,264 |  |  | 222,816 |  |  |  |  |
Acquisition of treasury stock - shares acquired related to employee share-based compensation plans |  | (69,068) |  |  | (73,780) |  |  |  |  |
End of period |  | 60,791,439 |  |  | 60,492,586 |  |  |  |  |

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |  | Quarter ended March 31,
($ in thousands) |  | 2024 |  | 2023
Operating Activities |  |  |  |
Net income |  | $ | 82,518 |  |  | 92,574 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |
Depreciation and amortization |  | 9,084 |  |  | 8,957 |
Stock-based compensation expense |  | 10,115 |  |  | 7,719 |
Undistributed gains of equity method investments |  | (5,873) |  |  | (6,693) |
Distributions in excess of current year income of equity method investments |  | 5,148 |  |  | 1,876 |
Net realized and unrealized (gains) losses |  | 1,635 |  |  | (3,344) |
Changes in assets and liabilities: |  |  |  |
Increase in reserve for loss and loss expense, net of reinsurance recoverable |  | 170,279 |  |  | 70,397 |
Increase in unearned premiums, net of prepaid reinsurance |  | 105,677 |  |  | 97,432 |
Decrease in net federal income taxes |  | 18,979 |  |  | 20,522 |
Increase in premiums receivable |  | (126,033) |  |  | (68,478) |
Increase in deferred policy acquisition costs |  | (23,476) |  |  | (19,320) |
(Increase) decrease in accrued investment income |  | (2,091) |  |  | 1,456 |
Decrease in accrued salaries and benefits |  | (24,085) |  |  | (26,406) |
Increase in other assets |  | (6,226) |  |  | (4,083) |
Decrease in other liabilities |  | (101,445) |  |  | (36,840) |
Net cash provided by (used in) operating activities |  | 114,206 |  |  | 135,769 |
Investing Activities |  |  |  |
Purchases of fixed income securities, available-for-sale |  | (521,745) |  |  | (1,003,617) |
Purchases of commercial mortgage loans |  | (22,256) |  |  | (8,447) |
Purchases of equity securities |  | (6,473) |  |  | (3,229) |
Purchases of alternative investments and other investments |  | (12,738) |  |  | (7,736) |
Purchases of short-term investments |  | (1,232,780) |  |  | (1,361,774) |
Sales of fixed income securities, available-for-sale |  | 219,889 |  |  | 639,365 |
Proceeds from commercial mortgage loans |  | 2,812 |  |  | 469 |
Sales of short-term investments |  | 1,294,522 |  |  | 1,499,963 |
Redemption and maturities of fixed income securities, held-to-maturity |  | 2,404 |  |  | 6,507 |
Redemption and maturities of fixed income securities, available-for-sale |  | 193,109 |  |  | 109,999 |
Sales of equity securities |  | — |  |  | 32,918 |
Distributions from alternative investments and other investments |  | 3,448 |  |  | 2,854 |
Purchases of property and equipment |  | (6,199) |  |  | (5,510) |
Net cash provided by (used in) investing activities |  | (86,007) |  |  | (98,238) |
Financing Activities |  |  |  |
Dividends to preferred stockholders |  | (2,300) |  |  | (2,300) |
Dividends to common stockholders |  | (20,784) |  |  | (17,690) |
Acquisition of treasury stock |  | (6,697) |  |  | (7,443) |
Net proceeds from stock purchase and compensation plans |  | 885 |  |  | 973 |
Repayments of finance lease obligations |  | (731) |  |  | (615) |
Net cash provided by (used in) financing activities |  | (29,627) |  |  | (27,075) |
Net increase (decrease) in cash and restricted cash |  | (1,428) |  |  | 10,456 |
Cash and restricted cash, beginning of period |  | 13,272 |  |  | 25,209 |
Cash and restricted cash, end of period |  | $ | 11,844 |  |  | 35,665 |

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Basis of Presentation
The words "Company,” “we,” “us,” or “our” refer to Selective Insurance Group, Inc. (the "Parent") and its subsidiaries, except as expressly indicated or the context requires otherwise. We have prepared our interim unaudited consolidated financial statements (“Financial Statements”) in conformity with (i) United States ("U.S.") generally accepted accounting principles (“GAAP”), and (ii) the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. These require management to make estimates and assumptions that affect the reported financial statement balances and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. All significant intercompany accounts and transactions are eliminated in consolidation.
Our Financial Statements reflect all adjustments that, in our opinion, are normal, recurring, and necessary for a fair presentation of our results of operations and financial condition. Our Financial Statements cover the first quarters ended March 31, 2024 (“First Quarter 2024”) and March 31, 2023 (“First Quarter 2023”). Our Financial Statements do not include all information and disclosures required by GAAP and the SEC for audited annual financial statements. Because interim period results of operations are not necessarily indicative of full-year results, our Financial Statements should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Annual Report”) filed with the SEC.
NOTE 2. Adoption of Accounting Pronouncements
In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual sales restriction on an equity security is not considered when determining the security's fair value. This ASU was issued to eliminate diversity in practice by clarifying that contractual arrangements restricting an entity's ability to sell the security for a certain period of time is a characteristic of the reporting entity and should not be contemplated when determining the security's fair value. ASU 2022-03 requires new disclosures that provide investors with information about the restriction, including the nature and remaining duration of the restriction. The ASU is effective for annual periods beginning after December 15, 2023, including interim periods within those annual periods. We adopted this guidance on January 1, 2024 and it did not have a material impact to our financial condition, results of operations, or disclosures.
In March 2023, the FASB issued ASU 2023-02, Investments — Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method ("ASU 2023-02"). This ASU allows companies to elect to account for qualifying tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Companies were previously permitted to apply the proportional amortization method only to qualifying tax equity investments in low income housing tax credit structures. ASU 2023-02 extends the application of the proportional amortization method to qualifying tax equity investments that generate tax credits through other programs. It also requires new disclosures that provide a better understanding of the nature of the tax equity investments and the effect the tax equity investments and related income tax credits and other income tax benefits have on a company's financial position and results of operations. The ASU is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. We adopted ASU 2023-02 on January 1, 2024 and it did not have a material impact to our financial condition, results of operations, or disclosures.
Pronouncements to be effective in the future
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 amends disclosure requirements for segment reporting by modifying and adding disclosure requirements. The additional disclosure requirements include the following on both an interim and annual basis: (i) significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"); (ii) amounts for "other segment items" by reportable segment and a description of its composition; and (iii) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. In addition, ASU 2023-07 requires all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280, Segment Reporting, to now be disclosed in interim periods. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. As it only requires additional disclosure, ASU 2023-07 will not have an impact on our financial condition or results of operations.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 amends disclosure requirements to provide greater transparency on income taxes. The following additional disclosures are required annually: (i) specific required categories in the rate reconciliation, (ii) additional information for reconciling items
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that meet a quantitative threshold, (iii) the amount of income taxes paid disaggregated by jurisdiction, and (iv) income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Amendments can be applied on a prospective basis; however, retrospective application is permitted. Early adoption is permitted. As it only requires additional disclosure, ASU 2023-09 will not have an impact on our financial condition or results of operations.
NOTE 3. Statements of Cash Flows
Supplemental cash flow information was as follows:

|  | Quarter ended March 31,
($ in thousands) |  | 2024 |  | 2023
Cash paid (received) during the period for: |  |  |  |
Interest |  | $ | 8,544 |  |  | 8,528 |
Federal income tax |  | — |  |  | — |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | 1,777 |  |  | 2,235 |
Operating cash flows from financing leases |  | 22 |  |  | 11 |
Financing cash flows from finance leases |  | 731 |  |  | 615 |
Non-cash items: |  |  |  |
Corporate actions related to fixed income securities, available-for-sale ("AFS")1 |  | 2,298 |  |  | 4,629 |
Assets acquired under finance lease arrangements |  | 3 |  |  | — |
Assets acquired under operating lease arrangements |  | 674 |  |  | 4,237 |
Non-cash purchase of property and equipment |  | 8 |  |  | 23 |

1 Examples of corporate actions include like-kind exchanges, non-cash acquisitions, and stock splits.
The following table provides a reconciliation of cash and restricted cash reported within the Consolidated Balance Sheets that equate to the amount reported in the Consolidated Statements of Cash Flows:

($ in thousands) |  | March 31, 2024 |  | December 31, 2023
Cash |  | $ | 124 |  |  | 180 |
Restricted cash |  | 11,720 |  |  | 13,092 |
Total cash and restricted cash shown in the Consolidated Statements of Cash Flows |  | $ | 11,844 |  |  | 13,272 |

Amounts in restricted cash represent cash received from the National Flood Insurance Program ("NFIP") that can only be used to pay flood claims under the Write Your Own program.
NOTE 4. Investments
(a) Information regarding our AFS securities as of March 31, 2024 and December 31, 2023, were as follows:

March 31, 2024 |  | Cost/ Amortized Cost |  | Allowance for Credit Losses |  | Unrealized Gains |  | Unrealized Losses |  | Fair Value
($ in thousands) |  |  |  |  |
AFS fixed income securities: |  |  |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 161,335 |  |  | — |  |  | 70 |  |  | (19,579) |  |  | 141,826 |
Foreign government |  | 10,703 |  |  | (29) |  |  | — |  |  | (1,445) |  |  | 9,229 |
Obligations of states and political subdivisions |  | 570,438 |  |  | (695) |  |  | 1,101 |  |  | (31,858) |  |  | 538,986 |
Corporate securities |  | 2,930,310 |  |  | (15,442) |  |  | 20,367 |  |  | (140,185) |  |  | 2,795,050 |
Collateralized loan obligations ("CLO") and other asset-backed securities ("ABS") |  | 1,958,551 |  |  | (2,627) |  |  | 15,158 |  |  | (73,997) |  |  | 1,897,085 |
Residential mortgage-backed securities ("RMBS") |  | 1,623,948 |  |  | (11,580) |  |  | 3,828 |  |  | (104,237) |  |  | 1,511,959 |
Commercial mortgage-backed securities ("CMBS") |  | 727,986 |  |  | (8) |  |  | 1,103 |  |  | (39,712) |  |  | 689,369 |
Total AFS fixed income securities |  | $ | 7,983,271 |  |  | (30,381) |  |  | 41,627 |  |  | (411,013) |  |  | 7,583,504 |

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December 31, 2023 |  | Cost/ Amortized Cost |  | Allowance for Credit Losses |  | Unrealized Gains |  | Unrealized Losses |  | Fair Value
($ in thousands) |  |  |  |  |
AFS fixed income securities: |  |  |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 223,157 |  |  | — |  |  | 139 |  |  | (18,261) |  |  | 205,035 |
Foreign government |  | 11,140 |  |  | (35) |  |  | — |  |  | (1,302) |  |  | 9,803 |
Obligations of states and political subdivisions |  | 612,938 |  |  | (669) |  |  | 2,623 |  |  | (28,927) |  |  | 585,965 |
Corporate securities |  | 2,834,048 |  |  | (12,999) |  |  | 28,078 |  |  | (137,888) |  |  | 2,711,239 |
CLO and other ABS |  | 1,911,831 |  |  | (2,854) |  |  | 11,855 |  |  | (86,005) |  |  | 1,834,827 |
RMBS |  | 1,568,960 |  |  | (11,649) |  |  | 6,023 |  |  | (85,851) |  |  | 1,477,483 |
CMBS |  | 718,623 |  |  | (6) |  |  | 1,358 |  |  | (45,130) |  |  | 674,845 |
Total AFS fixed income securities |  | $ | 7,880,697 |  |  | (28,212) |  |  | 50,076 |  |  | (403,364) |  |  | 7,499,197 |

The following tables provide a roll forward of the allowance for credit losses on our AFS fixed income securities for the indicated periods:

Quarter ended March 31, 2024 |  | Beginning Balance |  | Current Provision for Securities without Prior Allowance |  | Initial Allowance for Purchased Credit Deteriorated Assets with Credit Deterioration |  | Increase (Decrease) on Securities with Prior Allowance, excluding intent (or Requirement) to Sell Securities |  | Reductions for Securities Sold |  | Reductions for Securities Identified as Intent (or Requirement) to Sell during the Period |  | Ending Balance
($ in thousands) |  |  |  |  |  |  |
Foreign government |  | $ | 35 |  |  | — |  |  | — |  |  | — |  |  | (6) |  |  | — |  |  | 29 |
Obligations of states and political subdivisions |  | 669 |  |  | 9 |  |  | — |  |  | 25 |  |  | (8) |  |  | — |  |  | 695 |
Corporate securities |  | 12,999 |  |  | 1,015 |  |  | — |  |  | 1,792 |  |  | (355) |  |  | (9) |  |  | 15,442 |
CLO and other ABS |  | 2,854 |  |  | 90 |  |  | — |  |  | (314) |  |  | (3) |  |  | — |  |  | 2,627 |
RMBS |  | 11,649 |  |  | — |  |  | — |  |  | 31 |  |  | (100) |  |  | — |  |  | 11,580 |
CMBS |  | 6 |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8 |
Total AFS fixed income securities |  | $ | 28,212 |  |  | 1,116 |  |  | — |  |  | 1,534 |  |  | (472) |  |  | (9) |  |  | 30,381 |

Quarter ended March 31, 2023 |  | Beginning Balance |  | Current Provision for Securities without Prior Allowance |  | Initial Allowance for Purchased Credit Deteriorated Assets with Credit Deterioration |  | Increase (Decrease) on Securities with Prior Allowance, excluding intent (or Requirement) to Sell Securities |  | Reductions for Securities Sold |  | Reductions for Securities Identified as Intent (or Requirement) to Sell during the Period |  | Ending Balance
($ in thousands) |  |  |  |  |  |  |
Foreign government |  | $ | 284 |  |  | — |  |  | — |  |  | (248) |  |  | — |  |  | — |  |  | 36 |
Obligations of states and political subdivisions |  | 1,024 |  |  | 50 |  |  | — |  |  | (254) |  |  | (83) |  |  | — |  |  | 737 |
Corporate securities |  | 30,330 |  |  | 2,854 |  |  | — |  |  | (13,964) |  |  | (2,453) |  |  | (11) |  |  | 16,756 |
CLO and other ABS |  | 2,375 |  |  | 787 |  |  | — |  |  | 736 |  |  | (3) |  |  | — |  |  | 3,895 |
RMBS |  | 11,597 |  |  | 12 |  |  | — |  |  | 219 |  |  | (88) |  |  | — |  |  | 11,740 |
CMBS |  | 111 |  |  | 27 |  |  | — |  |  | 252 |  |  | — |  |  | — |  |  | 390 |
Total AFS fixed income securities |  | $ | 45,721 |  |  | 3,730 |  |  | — |  |  | (13,259) |  |  | (2,627) |  |  | (11) |  |  | 33,554 |

During First Quarter 2024 and First Quarter 2023, we had no write-offs or recoveries of our AFS fixed income securities.
For information on our methodology and significant inputs used to measure expected credit losses, our accounting policy for recognizing write-offs of uncollectible amounts, and our treatment of accrued interest, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report. Accrued interest on AFS securities was $66.3 million as of March 31, 2024, and $64.6 million as of December 31, 2023. We did not record any write-offs of accrued interest in First Quarter 2024 and First Quarter 2023.
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(b) Quantitative information about unrealized losses on our AFS portfolio follows:

March 31, 2024 |  | Less than 12 months |  | 12 months or longer |  | Total
($ in thousands) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
AFS fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 8,149 |  |  | (49) |  |  | 107,151 |  |  | (19,530) |  |  | 115,300 |  |  | (19,579) |
Foreign government |  | — |  |  | — |  |  | 9,229 |  |  | (1,445) |  |  | 9,229 |  |  | (1,445) |
Obligations of states and political subdivisions |  | 161,084 |  |  | (1,289) |  |  | 303,259 |  |  | (30,569) |  |  | 464,343 |  |  | (31,858) |
Corporate securities |  | 316,330 |  |  | (4,043) |  |  | 1,446,157 |  |  | (136,142) |  |  | 1,762,487 |  |  | (140,185) |
CLO and other ABS |  | 385,471 |  |  | (7,527) |  |  | 824,843 |  |  | (66,470) |  |  | 1,210,314 |  |  | (73,997) |
RMBS |  | 511,009 |  |  | (8,770) |  |  | 761,356 |  |  | (95,467) |  |  | 1,272,365 |  |  | (104,237) |
CMBS |  | 133,266 |  |  | (2,033) |  |  | 494,395 |  |  | (37,679) |  |  | 627,661 |  |  | (39,712) |
Total AFS fixed income securities |  | $ | 1,515,309 |  |  | (23,711) |  |  | 3,946,390 |  |  | (387,302) |  |  | 5,461,699 |  |  | (411,013) |

December 31, 2023 |  | Less than 12 months |  | 12 months or longer |  | Total
($ in thousands) |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
AFS fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 77,698 |  |  | (188) |  |  | 108,578 |  |  | (18,073) |  |  | 186,276 |  |  | (18,261) |
Foreign government |  | 1,552 |  |  | (87) |  |  | 8,251 |  |  | (1,215) |  |  | 9,803 |  |  | (1,302) |
Obligations of states and political subdivisions |  | 137,031 |  |  | (962) |  |  | 290,964 |  |  | (27,965) |  |  | 427,995 |  |  | (28,927) |
Corporate securities |  | 263,423 |  |  | (6,369) |  |  | 1,439,422 |  |  | (131,519) |  |  | 1,702,845 |  |  | (137,888) |
CLO and other ABS |  | 278,940 |  |  | (7,120) |  |  | 984,175 |  |  | (78,885) |  |  | 1,263,115 |  |  | (86,005) |
RMBS |  | 351,976 |  |  | (4,765) |  |  | 757,914 |  |  | (81,086) |  |  | 1,109,890 |  |  | (85,851) |
CMBS |  | 130,189 |  |  | (2,995) |  |  | 471,256 |  |  | (42,135) |  |  | 601,445 |  |  | (45,130) |
Total AFS fixed income securities |  | $ | 1,240,809 |  |  | (22,486) |  |  | 4,060,560 |  |  | (380,878) |  |  | 5,301,369 |  |  | (403,364) |

We currently do not intend to sell any of the securities summarized in the tables above, nor do we believe we will be required to sell any of them. Considering these factors and our review of these securities under our credit loss policy as described in Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report, we have concluded that no additional allowance for credit loss is required on these balances beyond the allowance for credit loss recorded as of March 31, 2024. This conclusion reflects our current judgment about the financial position and future prospects of the entities that issued the investment security and underlying collateral.
(c) AFS and held-to-maturity ("HTM") fixed income securities at March 31, 2024, by contractual maturity are shown below. The maturities of RMBS, CMBS, CLO and other ABS securities were calculated using each security's estimated average life. 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.

|  | AFS |  | HTM
($ in thousands) |  | Fair Value |  | Carrying Value |  | Fair Value
Due in one year or less |  | $ | 582,163 |  |  | — |  |  | — |
Due after one year through five years |  | 3,435,983 |  |  | 15,716 |  |  | 14,898 |
Due after five years through 10 years |  | 2,833,659 |  |  | 4,579 |  |  | 4,285 |
Due after 10 years |  | 731,699 |  |  | — |  |  | — |
Total fixed income securities |  | $ | 7,583,504 |  |  | 20,295 |  |  | 19,183 |

(d) The following table summarizes our alternative investment portfolio by strategy:

|  | March 31, 2024 |  | December 31, 2023
($ in thousands) |  | Carrying Value |  | Remaining Commitment |  | Maximum Exposure to Loss |  | Carrying Value |  | Remaining Commitment |  | Maximum Exposure to Loss
Alternative Investments |  |  |  |  |  |  |  |  |  |  |  |
Private equity |  | $ | 306,444 |  |  | 137,986 |  |  | 444,430 |  |  | 301,759 |  |  | 131,885 |  |  | 433,644 |
Private credit |  | 53,392 |  |  | 90,569 |  |  | 143,961 |  |  | 54,500 |  |  | 89,401 |  |  | 143,901 |
Real assets |  | 42,853 |  |  | 31,100 |  |  | 73,953 |  |  | 39,520 |  |  | 33,040 |  |  | 72,560 |
Total alternative investments |  | $ | 402,689 |  |  | 259,655 |  |  | 662,344 |  |  | 395,779 |  |  | 254,326 |  |  | 650,105 |

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We are contractually committed to make additional investments up to the remaining commitments stated above. We did not provide any non-contractual financial support during 2024 or 2023.
The following table shows gross summarized financial information for our alternative investments portfolio, including the portion we do not own. As the majority of these investments report results to us on a one quarter lag, the summarized financial statement information is for the three-month period ended December 31:

Income Statement Information |  | Quarter ended March 31, |  |
($ in millions) |  | 2024 |  | 2023 |  |  |  |
Net investment income (loss) |  | $ | (346.0) |  |  | (70.7) |  |  |  |  |
Realized gains |  | 1,830.8 |  |  | 1,722.3 |  |  |  |  |
Net change in unrealized appreciation (depreciation) |  | 3,819.0 |  |  | 1,443.7 |  |  |  |  |
Net income |  | $ | 5,303.8 |  |  | 3,095.3 |  |  |  |  |
Alternative investment income included in "Net investment income earned" on our Consolidated Statements of Income |  | $ | 6.9 |  |  | 7.8 |  |  |  |  |

(e) We have pledged certain AFS fixed income securities as collateral related to our borrowing relationships with the Federal Home Loan Bank of Indianapolis ("FHLBI") and the Federal Home Loan Bank of New York ("FHLBNY"). In addition, we had certain securities on deposit with various state and regulatory agencies at March 31, 2024 to comply with insurance laws. We retain all rights regarding all securities pledged as collateral.
The following table summarizes the market value of these securities at March 31, 2024:

($ in millions) |  | FHLBI Collateral |  | FHLBNY Collateral |  |  |  | State and Regulatory Deposits |  | Total
U.S. government and government agencies |  | $ | — |  |  | — |  |  |  |  | 20.0 |  |  | 20.0 |
Obligations of states and political subdivisions |  | — |  |  | — |  |  |  |  | 4.2 |  |  | 4.2 |
RMBS |  | 66.2 |  |  | 24.1 |  |  |  |  | — |  |  | 90.3 |
CMBS |  | 2.3 |  |  | 8.5 |  |  |  |  | — |  |  | 10.8 |
Total pledged as collateral |  | $ | 68.5 |  |  | 32.6 |  |  |  |  | 24.2 |  |  | 125.3 |

(f) We did not have exposure to any credit concentration risk of a single issuer greater than 10% of our stockholders' equity, other than to certain U.S. government agencies, as of March 31, 2024, or December 31, 2023.
(g) The components of pre-tax net investment income earned were as follows:

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Fixed income securities |  | $ | 94,102 |  |  | 80,087 |  |  |  |  |
Commercial mortgage loans ("CMLs") |  | 2,794 |  |  | 1,965 |  |  |  |  |
Equity securities |  | 4,908 |  |  | 1,205 |  |  |  |  |
Short-term investments |  | 3,519 |  |  | 4,650 |  |  |  |  |
Alternative investments |  | 6,881 |  |  | 7,768 |  |  |  |  |
Other investments |  | 263 |  |  | 43 |  |  |  |  |
Investment expenses |  | (4,618) |  |  | (4,212) |  |  |  |  |
Net investment income earned |  | $ | 107,849 |  |  | 91,506 |  |  |  |  |

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(h) The following table summarizes net realized and unrealized investment gains and losses for the periods indicated:

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Gross gains on sales |  | $ | 2,135 |  |  | 3,784 |  |  |  |  |
Gross losses on sales |  | (1,965) |  |  | (12,930) |  |  |  |  |
Net realized gains (losses) on disposals |  | 170 |  |  | (9,146) |  |  |  |  |
Net unrealized gains (losses) on equity securities |  | 692 |  |  | 3,248 |  |  |  |  |
Net credit loss benefit (expense) on fixed income securities, AFS |  | (2,650) |  |  | 9,529 |  |  |  |  |
Net credit loss benefit (expense) on CMLs |  | 168 |  |  | 17 |  |  |  |  |
Losses on securities for which we have the intent to sell |  | (15) |  |  | (304) |  |  |  |  |
Net realized and unrealized investment gains (losses) |  | $ | (1,635) |  |  | 3,344 |  |  |  |  |

Net unrealized gains and losses recognized in income on equity securities, as reflected in the table above, included the following:

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Unrealized gains (losses) recognized in income on equity securities: |  |  |  |  |  |  |  |
On securities remaining in our portfolio at end of period |  | $ | 692 |  |  | (142) |  |  |  |  |
On securities sold in period |  | — |  |  | 3,390 |  |  |  |  |
Total unrealized gains (losses) recognized in income on equity securities |  | $ | 692 |  |  | 3,248 |  |  |  |  |

NOTE 5. Fair Value Measurements
The financial assets in our investment portfolio are primarily measured at fair value as disclosed on the Consolidated Balance Sheets. The following table presents the carrying amounts and fair values of our financial liabilities as of March 31, 2024, and December 31, 2023:

|  | March 31, 2024 |  | December 31, 2023
($ in thousands) |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Financial Liabilities |  |  |  |  |  |  |  |
Long-term debt: |  |  |  |  |  |  |  |
7.25% Senior Notes |  | $ | 49,927 |  |  | 51,137 |  |  | 49,926 |  |  | 53,047 |
6.70% Senior Notes |  | 99,571 |  |  | 101,666 |  |  | 99,565 |  |  | 104,039 |
5.375% Senior Notes |  | 294,548 |  |  | 286,927 |  |  | 294,523 |  |  | 288,787 |
3.03% borrowings from FHLBI |  | 60,000 |  |  | 57,568 |  |  | 60,000 |  |  | 57,932 |
Subtotal long-term debt |  | 504,046 |  |  | 497,298 |  |  | 504,014 |  |  | 503,805 |
Unamortized debt issuance costs |  | (2,650) |  |  |  |  | (2,704) |  |  |
Finance lease obligations |  | 1,909 |  |  |  |  | 2,636 |  |  |
Total long-term debt |  | $ | 503,305 |  |  |  |  | 503,946 |  |  |

For discussion regarding the fair value techniques of our financial instruments, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.
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The following tables provide quantitative disclosures of our financial assets that were measured and recorded at fair value at March 31, 2024, and December 31, 2023:

March 31, 2024 |  |  |  | Fair Value Measurements Using
($ in thousands) |  | Assets Measured at Fair Value |  | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Description |  |  |  |  |  |  |  |
Measured on a recurring basis: |  |  |  |  |  |  |  |
AFS fixed income securities: |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 141,826 |  |  | 33,530 |  |  | 108,296 |  |  | — |
Foreign government |  | 9,229 |  |  | — |  |  | 9,229 |  |  | — |
Obligations of states and political subdivisions |  | 538,986 |  |  | — |  |  | 531,239 |  |  | 7,747 |
Corporate securities |  | 2,795,050 |  |  | — |  |  | 2,507,554 |  |  | 287,496 |
CLO and other ABS |  | 1,897,085 |  |  | — |  |  | 1,636,988 |  |  | 260,097 |
RMBS |  | 1,511,959 |  |  | — |  |  | 1,511,959 |  |  | — |
CMBS |  | 689,369 |  |  | — |  |  | 689,014 |  |  | 355 |
Total AFS fixed income securities |  | 7,583,504 |  |  | 33,530 |  |  | 6,994,279 |  |  | 555,695 |
Equity securities: |  |  |  |  |  |  |  |
Common stock 1 |  | 192,510 |  |  | 36,333 |  |  | — |  |  | 1,067 |
Preferred stock |  | 1,810 |  |  | 1,810 |  |  | — |  |  | — |
Total equity securities |  | 194,320 |  |  | 38,143 |  |  | — |  |  | 1,067 |
Short-term investments |  | 247,883 |  |  | 246,904 |  |  | 979 |  |  | — |
Total assets measured at fair value |  | $ | 8,025,707 |  |  | 318,577 |  |  | 6,995,258 |  |  | 556,762 |

December 31, 2023 |  |  |  | Fair Value Measurements Using
($ in thousands) |  | Assets Measured at Fair Value |  | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Description |  |  |  |  |  |  |  |
Measured on a recurring basis: |  |  |  |  |  |  |  |
AFS fixed income securities: |  |  |  |  |  |  |  |
U.S. government and government agencies |  | $ | 205,035 |  |  | 34,056 |  |  | 170,979 |  |  | — |
Foreign government |  | 9,803 |  |  | — |  |  | 9,803 |  |  | — |
Obligations of states and political subdivisions |  | 585,965 |  |  | — |  |  | 578,131 |  |  | 7,834 |
Corporate securities |  | 2,711,239 |  |  | — |  |  | 2,413,907 |  |  | 297,332 |
CLO and other ABS |  | 1,834,827 |  |  | — |  |  | 1,589,514 |  |  | 245,313 |
RMBS |  | 1,477,483 |  |  | — |  |  | 1,477,483 |  |  | — |
CMBS |  | 674,845 |  |  | — |  |  | 674,489 |  |  | 356 |
Total AFS fixed income securities |  | 7,499,197 |  |  | 34,056 |  |  | 6,914,306 |  |  | 550,835 |
Equity securities: |  |  |  |  |  |  |  |
Common stock 1 |  | 185,339 |  |  | 20,582 |  |  | — |  |  | 854 |
Preferred stock |  | 1,816 |  |  | 1,816 |  |  | — |  |  | — |
Total equity securities |  | 187,155 |  |  | 22,398 |  |  | — |  |  | 854 |
Short-term investments |  | 309,317 |  |  | 308,512 |  |  | 805 |  |  | — |
Total assets measured at fair value |  | $ | 7,995,669 |  |  | 364,966 |  |  | 6,915,111 |  |  | 551,689 |

1 Investments amounting to $155.1 million at March 31, 2024, and $163.9 million at December 31, 2023, were measured at fair value using the net asset value per share (or its practical expedient) and have not been classified in the fair value hierarchy. These investments are not redeemable and the timing of liquidations of the underlying assets is unknown at each reporting period. The fair value amounts in this table are intended to permit reconciliation of the fair value hierarchy to total assets measured at fair value.
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The following tables provide a summary of Level 3 changes in First Quarter 2024 and First Quarter 2023:

March 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) |  |  | Obligations of States and Political Subdivisions |  | Corporate Securities |  | CLO and Other ABS |  |  |  | CMBS |  | Common Stock |  | Total
Fair value, December 31, 2023 |  |  | $ | 7,834 |  |  | 297,332 |  |  | 245,313 |  |  |  |  | 356 |  |  | 854 |  |  | 551,689 |
Total net gains (losses) for the period included in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other comprehensive income (loss) ("OCI") |  |  | (86) |  |  | (376) |  |  | 399 |  |  |  |  | 3 |  |  | — |  |  | (60) |
Net realized and unrealized gains (losses) |  |  | (1) |  |  | 140 |  |  | 57 |  |  |  |  | — |  |  | 213 |  |  | 409 |
Net investment income earned |  |  | — |  |  | 280 |  |  | (1) |  |  |  |  | (1) |  |  | — |  |  | 278 |
Purchases |  |  | — |  |  | 1,152 |  |  | 14,658 |  |  |  |  | — |  |  | — |  |  | 15,810 |
Sales |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |
Issuances |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |
Settlements |  |  | — |  |  | (2,870) |  |  | (1,173) |  |  |  |  | (3) |  |  | — |  |  | (4,046) |
Transfers into Level 3 |  |  | — |  |  | 20,065 |  |  | 19,537 |  |  |  |  | — |  |  | — |  |  | 39,602 |
Transfers out of Level 3 |  |  | — |  |  | (28,227) |  |  | (18,693) |  |  |  |  | — |  |  | — |  |  | (46,920) |
Fair value, March 31, 2024 |  |  | $ | 7,747 |  |  | 287,496 |  |  | 260,097 |  |  |  |  | 355 |  |  | 1,067 |  |  | 556,762 |
Change in unrealized gains (losses) for the period included in earnings for assets held at period end |  |  | (1) |  |  | 140 |  |  | 57 |  |  |  |  | — |  |  | 213 |  |  | 409 |
Change in unrealized gains (losses) for the period included in OCI for assets held at period end |  |  | (86) |  |  | (376) |  |  | 399 |  |  |  |  | 3 |  |  | — |  |  | (60) |

March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) | Obligation of state and Political Subdivisions |  | Corporate Securities |  | CLO and Other ABS |  |  |  | CMBS |  | Common Stock |  | Total
Fair value, December 31, 2022 | $ | 6,661 |  |  | 187,980 |  |  | 153,342 |  |  |  |  | 375 |  |  | 897 |  |  | 349,255 |
Total net gains (losses) for the period included in: |  |  |  |  |  |  |  |  |  |  |  |  |
OCI | 152 |  |  | 2,405 |  |  | 696 |  |  |  |  | 17 |  |  | — |  |  | 3,270 |
Net realized and unrealized gains (losses) | 61 |  |  | 72 |  |  | (73) |  |  |  |  | — |  |  | (269) |  |  | (209) |
Net investment income earned | — |  |  | 12 |  |  | (32) |  |  |  |  | (1) |  |  | — |  |  | (21) |
Purchases | — |  |  | 24,799 |  |  | 13,403 |  |  |  |  | — |  |  | — |  |  | 38,202 |
Sales | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |
Issuances | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |
Settlements | — |  |  | (4,044) |  |  | (1,192) |  |  |  |  | (3) |  |  | — |  |  | (5,239) |
Transfers into Level 3 | — |  |  | 361 |  |  | 14,148 |  |  |  |  | 2,848 |  |  | — |  |  | 17,357 |
Transfers out of Level 3 | — |  |  | — |  |  | (534) |  |  |  |  | — |  |  | — |  |  | (534) |
Fair value, March 31, 2023 | $ | 6,874 |  |  | 211,585 |  |  | 179,758 |  |  |  |  | 3,236 |  |  | 628 |  |  | 402,081 |
Change in unrealized gains (losses) for the period included in earnings for assets held at period end | 61 |  |  | 72 |  |  | (73) |  |  |  |  | — |  |  | (269) |  |  | (209) |
Change in unrealized gains (losses) for the period included in OCI for assets held at period end | 152 |  |  | 2,405 |  |  | 696 |  |  |  |  | 17 |  |  | — |  |  | 3,270 |

The following tables present quantitative information about the significant unobservable inputs used in the fair value measurements of Level 3 assets at March 31, 2024, and December 31, 2023:

March 31, 2024 |  |  |  |  |  |  |  |  |  |
($ in thousands) |  | Assets Measured at Fair Value |  | Valuation Techniques |  | Unobservable Inputs |  | Range |  | Weighted Average
Internal valuations: |  |  |  |  |  |  |  |  |  |
Corporate securities |  | $ | 155,633 |  |  | Discounted Cash Flow |  | Illiquidity Spread |  | (4.4)% - 5.3% |  | 1.8%
CLO and other ABS |  | 155,287 |  |  | Discounted Cash Flow |  | Illiquidity Spread |  | 0.01% - 19.6% |  | 2.4%
Total internal valuations |  | 310,920 |  |  |  |  |  |  |  |  |
Other 1 |  | 245,842 |  |  |  |  |  |  |  |  |
Total Level 3 securities |  | $ | 556,762 |  |  |  |  |  |  |  |  |

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December 31, 2023 |  |  |  |  |  |  |  |  |  |
($ in thousands) |  | Assets Measured at Fair Value |  | Valuation Techniques |  | Unobservable Inputs |  | Range |  | Weighted Average
Internal valuations: |  |  |  |  |  |  |  |  |  |
Corporate securities |  | $ | 135,524 |  |  | Discounted Cash Flow |  | Illiquidity Spread |  | (4.4)% - 5.3% |  | 1.9%
CLO and other ABS |  | 127,210 |  |  | Discounted Cash Flow |  | Illiquidity Spread |  | 0.01% - 19.6% |  | 2.4%
Total internal valuations |  | 262,734 |  |  |  |  |  |  |  |  |
Other 1 |  | 288,955 |  |  |  |  |  |  |  |  |
Total Level 3 securities |  | $ | 551,689 |  |  |  |  |  |  |  |  |

1 Other is comprised of broker quotes or other third-party pricing for which there is a lack of transparency into the inputs used to develop the valuations. The quantitative details of these unobservable inputs are neither provided to us, nor reasonably available to us, and therefore are not included in the tables above.
For the securities in the tables above valued using a discounted cash flow analysis, we apply an illiquidity spread in our determination of fair value. An increase in this assumption would result in a lower fair value measurement.
The following tables provide quantitative information about our financial assets and liabilities that were not measured at fair value, but were disclosed as such at March 31, 2024, and December 31, 2023:

March 31, 2024 |  |  |  | Fair Value Measurements Using
($ in thousands) |  | Assets/ Liabilities Disclosed at Fair Value |  | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets |  |  |  |  |  |  |  |
HTM: |  |  |  |  |  |  |  |
Corporate securities |  | $ | 19,183 |  |  | — |  |  | 19,183 |  |  | — |
Total HTM fixed income securities |  | 19,183 |  |  | — |  |  | 19,183 |  |  | — |
CMLs |  | $ | 197,807 |  |  | — |  |  | — |  |  | 197,807 |
Financial Liabilities |  |  |  |  |  |  |  |
Long-term debt: |  |  |  |  |  |  |  |
7.25% Senior Notes |  | $ | 51,137 |  |  | — |  |  | 51,137 |  |  | — |
6.70% Senior Notes |  | 101,666 |  |  | — |  |  | 101,666 |  |  | — |
5.375% Senior Notes |  | 286,927 |  |  | — |  |  | 286,927 |  |  | — |
3.03% borrowings from FHLBI |  | 57,568 |  |  | — |  |  | 57,568 |  |  | — |
Total long-term debt |  | $ | 497,298 |  |  | — |  |  | 497,298 |  |  | — |

December 31, 2023 |  |  |  | Fair Value Measurements Using
($ in thousands) |  | Assets/ Liabilities Disclosed at Fair Value |  | Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets |  |  |  |  |  |  |  |
HTM: |  |  |  |  |  |  |  |
Corporate securities |  | 21,923 |  |  | — |  |  | 21,923 |  |  | — |
Total HTM fixed income securities |  | $ | 21,923 |  |  | — |  |  | 21,923 |  |  | — |
CMLs |  | $ | 178,913 |  |  | — |  |  | — |  |  | 178,913 |
Financial Liabilities |  |  |  |  |  |  |  |
Long-term debt: |  |  |  |  |  |  |  |
7.25% Senior Notes |  | $ | 53,047 |  |  | — |  |  | 53,047 |  |  | — |
6.70% Senior Notes |  | 104,039 |  |  | — |  |  | 104,039 |  |  | — |
5.375% Senior Notes |  | 288,787 |  |  | — |  |  | 288,787 |  |  | — |
3.03% borrowings from FHLBI |  | 57,932 |  |  | — |  |  | 57,932 |  |  | — |
Total long-term debt |  | $ | 503,805 |  |  | — |  |  | 503,805 |  |  | — |

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NOTE 6. Allowance for Credit Losses on Premiums Receivable
The following table provides a roll forward of the allowance for credit losses on our premiums receivable balance for the indicated periods:

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Balance at beginning of period |  | $ | 18,900 |  |  | 16,100 |  |  |  |  |
Current period change for expected credit losses |  | 1,784 |  |  | 1,910 |  |  |  |  |
Write-offs charged against the allowance for credit losses |  | (1,056) |  |  | (1,164) |  |  |  |  |
Recoveries |  | 372 |  |  | 254 |  |  |  |  |
Allowance for credit losses, end of period |  | $ | 20,000 |  |  | 17,100 |  |  |  |  |

For a discussion of the methodology used to evaluate our estimate of expected credit losses on premiums receivable, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.
NOTE 7. Reinsurance
We evaluate and monitor the financial condition of our reinsurers under voluntary reinsurance arrangements to minimize our exposure to significant losses from reinsurer insolvencies. The following tables provide (i) a disaggregation of our reinsurance recoverable balance by financial strength rating, and (ii) an aging analysis of our past due reinsurance recoverable balances as of March 31, 2024, and December 31, 2023:

|  | March 31, 2024
($ in thousands) |  | Current |  | Past Due |  | Total Reinsurance Recoverables
Financial strength rating of rated reinsurers |  |  |  |  |  |
A++ |  | $ | 83,372 |  |  | 53 |  |  | 83,425 |
A+ |  | 366,428 |  |  | 1,172 |  |  | 367,600 |
A |  | 115,086 |  |  | 582 |  |  | 115,668 |
A- |  | 3,865 |  |  | 89 |  |  | 3,954 |
Total rated reinsurers |  | 568,751 |  |  | 1,896 |  |  | 570,647 |
Non-rated reinsurers |  |  |  |  |  |
Federal and state pools |  | 77,799 |  |  | — |  |  | 77,799 |
Other than federal and state pools |  | 4,135 |  |  | 504 |  |  | 4,639 |
Total non-rated reinsurers |  | 81,934 |  |  | 504 |  |  | 82,438 |
Total reinsurance recoverable, gross |  | $ | 650,685 |  |  | 2,400 |  |  | 653,085 |
Less: allowance for credit losses |  |  |  |  |  | (1,700) |
Total reinsurance recoverable, net |  |  |  |  |  | 651,385 |

|  | December 31, 2023
($ in thousands) |  | Current |  | Past Due |  | Total Reinsurance Recoverables
Financial strength rating of rated reinsurers |  |  |  |  |  |
A++ |  | $ | 82,466 |  |  | 21 |  |  | 82,487 |
A+ |  | 371,132 |  |  | 2,887 |  |  | 374,019 |
A |  | 111,883 |  |  | 1,380 |  |  | 113,263 |
A- |  | 3,596 |  |  | 89 |  |  | 3,685 |
Total rated reinsurers |  | 569,077 |  |  | 4,377 |  |  | 573,454 |
Non-rated reinsurers |  |  |  |  |  |
Federal and state pools |  | 80,506 |  |  | — |  |  | 80,506 |
Other than federal and state pools |  | 4,488 |  |  | 77 |  |  | 4,565 |
Total non-rated reinsurers |  | 84,994 |  |  | 77 |  |  | 85,071 |
Total reinsurance recoverable, gross |  | $ | 654,071 |  |  | 4,454 |  |  | 658,525 |
Less: allowance for credit losses |  |  |  |  |  | (1,700) |
Total reinsurance recoverable, net |  |  |  |  |  | 656,825 |

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The following table provides a roll forward of the allowance for credit losses on our reinsurance recoverable balance for the periods indicated:

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Balance at beginning of period |  | $ | 1,700 |  |  | 1,600 |  |  |  |  |
Current period change for expected credit losses |  | — |  |  | 700 |  |  |  |  |
Write-offs charged against the allowance for credit losses |  | — |  |  | — |  |  |  |  |
Recoveries |  | — |  |  | — |  |  |  |  |
Allowance for credit losses, end of period |  | $ | 1,700 |  |  | 2,300 |  |  |  |  |

For a discussion of the methodology used to evaluate our estimate of expected credit losses on our reinsurance recoverable balance, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.
The following table lists direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and loss and loss expense incurred for the indicated periods. For more information about reinsurance, refer to Note 9. “Reinsurance” in Item 8. “Financial Statements and Supplementary Data.” of our 2023 Annual Report.

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Premiums written: |  |  |  |  |  |  |  |
Direct |  | $ | 1,315,911 |  |  | 1,132,760 |  |  |  |  |
Assumed |  | 5,985 |  |  | 5,394 |  |  |  |  |
Ceded |  | (165,275) |  |  | (138,386) |  |  |  |  |
Net |  | 1,156,621 |  |  | 999,768 |  |  |  |  |
Premiums earned: |  |  |  |  |  |  |  |
Direct |  | 1,205,368 |  |  | 1,032,228 |  |  |  |  |
Assumed |  | 6,191 |  |  | 6,290 |  |  |  |  |
Ceded |  | (160,615) |  |  | (136,182) |  |  |  |  |
Net |  | 1,050,944 |  |  | 902,336 |  |  |  |  |
Loss and loss expense incurred: |  |  |  |  |  |  |  |
Direct |  | 753,567 |  |  | 613,229 |  |  |  |  |
Assumed |  | 5,981 |  |  | 5,255 |  |  |  |  |
Ceded |  | (55,256) |  |  | (51,046) |  |  |  |  |
Net |  | $ | 704,292 |  |  | 567,438 |  |  |  |  |

NOTE 8. Reserve for Loss and Loss Expense
The table below provides a roll forward of the reserve for loss and loss expense for beginning and ending reserve balances:

|  | Quarter ended March 31,
($ in thousands) |  | 2024 |  | 2023
Gross reserve for loss and loss expense, at beginning of period |  | $ | 5,336,911 |  |  | 5,144,821 |
Less: reinsurance recoverable on unpaid loss and loss expense, at beginning of period |  | 618,601 |  |  | 757,513 |
Net reserve for loss and loss expense, at beginning of period |  | 4,718,310 |  |  | 4,387,308 |
Incurred loss and loss expense for claims occurring in the: |  |  |  |
Current year |  | 688,519 |  |  | 580,408 |
Prior years |  | 15,773 |  |  | (12,970) |
Total incurred loss and loss expense |  | 704,292 |  |  | 567,438 |
Paid loss and loss expense for claims occurring in the: |  |  |  |
Current year |  | 107,719 |  |  | 91,011 |
Prior years |  | 435,489 |  |  | 418,194 |
Total paid loss and loss expense |  | 543,208 |  |  | 509,205 |
Net reserve for loss and loss expense, at end of period |  | 4,879,394 |  |  | 4,445,541 |
Add: Reinsurance recoverable on unpaid loss and loss expense, at end of period |  | 622,356 |  |  | 653,909 |
Gross reserve for loss and loss expense, at end of period |  | $ | 5,501,750 |  |  | 5,099,450 |

Prior year reserve development in First Quarter 2024 was unfavorable by $15.8 million, consisting of $35.0 million of unfavorable casualty reserve development, partially offset by $19.2 million of favorable property reserve development. The unfavorable casualty reserve development was driven by our Standard Commercial Lines segment, which included (i) $50.0
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million in our general liability line of business, primarily driven by increased severities in accident years 2020 through 2023, partially offset by (ii) $15.0 million of favorable casualty reserve development in our workers compensation line of business.
Additionally, in our Standard Personal Lines segment, we had unfavorable casualty reserve development of $5.0 million in our personal automobile line of business, offset by favorable development of $5.0 million in our homeowners line of business.
Prior year reserve development in First Quarter 2023 was favorable by $13.0 million, consisting of favorable casualty reserve development of $10.0 million in our workers compensation line of business and $5.0 million in our Excess and Surplus ("E&S") casualty lines of business, partially offset by $2.0 million of unfavorable casualty reserve development in our personal automobile line of business.
NOTE 9. Segment Information
We evaluate the results of our four reportable segments as follows:
•Our Standard Commercial Lines, Standard Personal Lines, and E&S Lines are evaluated on (i) before and after-tax underwriting results (net premiums earned, incurred loss and loss expense, policyholder dividends, policy acquisition costs, and other underwriting expenses), (ii) their return on equity ("ROE") contribution, and (iii) their combined ratios.
•Our Investments segment is primarily evaluated on after-tax net investment income and its ROE contribution. After-tax net realized and unrealized gains and losses are also included in our Investments segment results.
In computing each segment's results, we do not make adjustments for interest expense or corporate expenses. No segment has a separate investment portfolio or allocated assets.
The following summaries present revenues (net investment income and net realized and unrealized gains and losses on investments in the case of the Investments segment) and pre-tax income for the individual segments:

Revenue by Segment |  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Standard Commercial Lines: |  |  |  |  |  |  |  |
Net premiums earned: |  |  |  |  |  |  |  |
General liability |  | $ | 273,415 |  |  | 243,349 |  |  |  |  |
Commercial automobile |  | 251,720 |  |  | 217,371 |  |  |  |  |
Commercial property |  | 161,553 |  |  | 135,292 |  |  |  |  |
Workers compensation |  | 87,777 |  |  | 84,184 |  |  |  |  |
Businessowners' policies |  | 39,921 |  |  | 33,171 |  |  |  |  |
Bonds |  | 12,088 |  |  | 11,397 |  |  |  |  |
Other |  | 7,636 |  |  | 6,851 |  |  |  |  |
Miscellaneous income |  | 7,134 |  |  | 2,181 |  |  |  |  |
Total Standard Commercial Lines revenue |  | 841,244 |  |  | 733,796 |  |  |  |  |
Standard Personal Lines: |  |  |  |  |  |  |  |
Net premiums earned: |  |  |  |  |  |  |  |
Personal automobile |  | 56,960 |  |  | 44,914 |  |  |  |  |
Homeowners |  | 44,113 |  |  | 35,013 |  |  |  |  |
Other |  | 2,773 |  |  | 1,943 |  |  |  |  |
Miscellaneous income |  | 640 |  |  | 453 |  |  |  |  |
Total Standard Personal Lines revenue |  | 104,486 |  |  | 82,323 |  |  |  |  |
E&S Lines: |  |  |  |  |  |  |  |
Net premiums earned: |  |  |  |  |  |  |  |
Casualty lines |  | 71,638 |  |  | 60,817 |  |  |  |  |
Property lines |  | 41,350 |  |  | 28,034 |  |  |  |  |
Miscellaneous income |  | 27 |  |  | — |  |  |  |  |
Total E&S Lines revenue |  | 113,015 |  |  | 88,851 |  |  |  |  |
Investments: |  |  |  |  |  |  |  |
Net investment income earned |  | 107,849 |  |  | 91,506 |  |  |  |  |
Net realized and unrealized investment gains (losses) |  | (1,635) |  |  | 3,344 |  |  |  |  |
Total Investments revenue |  | 106,214 |  |  | 94,850 |  |  |  |  |
Total revenues |  | $ | 1,164,959 |  |  | 999,820 |  |  |  |  |

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Income Before and After Federal Income Tax |  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Standard Commercial Lines: |  |  |  |  |  |  |  |
Underwriting income (loss), before federal income tax |  | $ | 10,381 |  |  | 38,921 |  |  |  |  |
Underwriting income (loss), after federal income tax |  | 8,201 |  |  | 30,748 |  |  |  |  |
Combined ratio |  | 98.8 | % |  | 94.7 |  |  |  |  |
ROE contribution |  | 1.2 |  |  | 5.1 |  |  |  |  |
Standard Personal Lines: |  |  |  |  |  |  |  |
Underwriting income (loss), before federal income tax |  | $ | (5,335) |  |  | (13,073) |  |  |  |  |
Underwriting income (loss), after federal income tax |  | (4,215) |  |  | (10,328) |  |  |  |  |
Combined ratio |  | 105.1 | % |  | 116.0 |  |  |  |  |
ROE contribution |  | (0.6) |  |  | (1.7) |  |  |  |  |
E&S Lines: |  |  |  |  |  |  |  |
Underwriting income (loss), before federal income tax |  | $ | 13,985 |  |  | 13,335 |  |  |  |  |
Underwriting income (loss), after federal income tax |  | 11,048 |  |  | 10,535 |  |  |  |  |
Combined ratio |  | 87.6 | % |  | 85.0 |  |  |  |  |
ROE contribution |  | 1.6 |  |  | 1.8 |  |  |  |  |
Investments: |  |  |  |  |  |  |  |
Net investment income earned |  | $ | 107,849 |  |  | 91,506 |  |  |  |  |
Net realized and unrealized investment gains (losses) |  | (1,635) |  |  | 3,344 |  |  |  |  |
Total investments segment income, before federal income tax |  | 106,214 |  |  | 94,850 |  |  |  |  |
Tax on investments segment income |  | 21,866 |  |  | 19,156 |  |  |  |  |
Total investments segment income, after federal income tax |  | $ | 84,348 |  |  | 75,694 |  |  |  |  |
ROE contribution of after-tax net investment income earned |  | 12.3 |  |  | 12.2 |  |  |  |  |

Reconciliation of Segment Results to Income Before Federal Income Tax |  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Underwriting income (loss) |  |  |  |  |  |  |  |
Standard Commercial Lines |  | $ | 10,381 |  |  | 38,921 |  |  |  |  |
Standard Personal Lines |  | (5,335) |  |  | (13,073) |  |  |  |  |
E&S Lines |  | 13,985 |  |  | 13,335 |  |  |  |  |
Investment income |  | 106,214 |  |  | 94,850 |  |  |  |  |
Total all segments |  | 125,245 |  |  | 134,033 |  |  |  |  |
Interest expense |  | (7,181) |  |  | (7,166) |  |  |  |  |
Corporate expenses |  | (15,498) |  |  | (12,108) |  |  |  |  |
Income, before federal income tax |  | $ | 102,566 |  |  | 114,759 |  |  |  |  |
Preferred stock dividends |  | (2,300) |  |  | (2,300) |  |  |  |  |
Income available to common stockholders, before federal income tax |  | $ | 100,266 |  |  | 112,459 |  |  |  |  |

NOTE 10. Retirement Plans
The primary pension plan for our employees is the Retirement Income Plan for Selective Insurance Company of America (the “Pension Plan”). The plan is closed to new entrants, and benefits ceased accruing under the Pension Plan after March 31, 2016. For more information about Selective Insurance Company of America's ("SICA") retirement plans, see Note 15. “Retirement Plans” in Item 8. “Financial Statements and Supplementary Data.” of our 2023 Annual Report.
The following tables provide information about the Pension Plan:

|  | Pension Plan
|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Net Periodic Pension Cost (Benefit): |  |  |  |  |  |  |  |
Interest cost |  | $ | 3,888 |  |  | 3,866 |  |  |  |  |
Expected return on plan assets |  | (5,382) |  |  | (5,773) |  |  |  |  |
Amortization of unrecognized net actuarial loss |  | 955 |  |  | 751 |  |  |  |  |
Total net periodic pension cost (benefit)1 |  | $ | (539) |  |  | (1,156) |  |  |  |  |

1 The components of net periodic pension cost (benefit) are included within "Loss and loss expense incurred" and "Other insurance expenses" on the Consolidated Statements of Income.
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|  | Pension Plan
|  | Quarter ended March 31,
|  | 2024 |  | 2023
Weighted-Average Expense Assumptions: |  |  |  |
Discount rate |  | 5.02 | % |  | 5.21 | %
Effective interest rate for calculation of interest cost |  | 4.91 |  |  | 5.09 |
Expected return on plan assets |  | 6.40 |  |  | 6.90 |

NOTE 11. Comprehensive Income
The components of comprehensive income, both gross and net of tax, for First Quarter 2024 and First Quarter 2023 were as follows:

First Quarter 2024 |  |  |  |  |  |
($ in thousands) |  | Gross |  | Tax |  | Net
Net income |  | $ | 102,566 |  |  | 20,048 |  |  | 82,518 |
Components of OCI: |  |  |  |  |  |
Unrealized gains (losses) on investment securities: |  |  |  |  |  |
Unrealized holding gains (losses) during the period |  | (15,560) |  |  | (3,267) |  |  | (12,293) |
Unrealized gains (losses) on securities with credit loss recognized in earnings |  | (3,132) |  |  | (658) |  |  | (2,474) |
Amounts reclassified into net income: |  |  |  |  |  |
Net realized (gains) losses on disposals and intent-to-sell AFS securities |  | (78) |  |  | (17) |  |  | (61) |
Credit loss (benefit) expense |  | 2,650 |  |  | 557 |  |  | 2,093 |
Total unrealized gains (losses) on investment securities |  | (16,120) |  |  | (3,385) |  |  | (12,735) |
Defined benefit pension and post-retirement plans: |  |  |  |  |  |
Amounts reclassified into net income: |  |  |  |  |  |
Net actuarial (gain) loss |  | 967 |  |  | 203 |  |  | 764 |
Total defined benefit pension and post-retirement plans |  | 967 |  |  | 203 |  |  | 764 |
Other comprehensive income (loss) |  | (15,153) |  |  | (3,182) |  |  | (11,971) |
Comprehensive income (loss) |  | $ | 87,413 |  |  | 16,866 |  |  | 70,547 |
First Quarter 2023 |  |  |  |  |  |
($ in thousands) |  | Gross |  | Tax |  | Net
Net income |  | $ | 114,759 |  |  | 22,185 |  |  | 92,574 |
Components of OCI: |  |  |  |  |  |
Unrealized gains (losses) on investment securities: |  |  |  |  |  |
Unrealized holding gains (losses) during the period |  | 65,925 |  |  | 13,846 |  |  | 52,079 |
Unrealized gains (losses) on securities with credit loss recognized in earnings |  | 22,431 |  |  | 4,710 |  |  | 17,721 |
Amounts reclassified into net income: |  |  |  |  |  |
Net realized (gains) losses on disposals and intent-to-sell AFS securities |  | 6,104 |  |  | 1,282 |  |  | 4,822 |
Credit loss (benefit) expense |  | (9,529) |  |  | (2,002) |  |  | (7,527) |
Total unrealized gains (losses) on investment securities |  | 84,931 |  |  | 17,836 |  |  | 67,095 |
Defined benefit pension and post-retirement plans: |  |  |  |  |  |
Amounts reclassified into net income: |  |  |  |  |  |
Net actuarial (gain) loss |  | 757 |  |  | 159 |  |  | 598 |
Total defined benefit pension and post-retirement plans |  | 757 |  |  | 159 |  |  | 598 |
Other comprehensive income (loss) |  | 85,688 |  |  | 17,995 |  |  | 67,693 |
Comprehensive income (loss) |  | $ | 200,447 |  |  | 40,180 |  |  | 160,267 |

The balances of, and changes in, each component of accumulated other comprehensive income (loss) ("AOCI") (net of taxes) as of March 31, 2024, were as follows:

March 31, 2024 |  | Net Unrealized Gains (Losses) on Investment Securities |  | Defined Benefit Pension and Post-Retirement Plans |  | Total AOCI
($ in thousands) |  | Credit Loss Related 1 |  | All Other |  | Investments Subtotal |  |
Balance, December 31, 2023 |  | $ | (84,442) |  |  | (194,628) |  |  | (279,070) |  |  | (93,931) |  |  | (373,001) |
OCI before reclassifications |  | (2,474) |  |  | (12,293) |  |  | (14,767) |  |  | — |  |  | (14,767) |
Amounts reclassified from AOCI |  | 2,093 |  |  | (61) |  |  | 2,032 |  |  | 764 |  |  | 2,796 |
Net current period OCI |  | (381) |  |  | (12,354) |  |  | (12,735) |  |  | 764 |  |  | (11,971) |
Balance, March 31, 2024 |  | $ | (84,823) |  |  | (206,982) |  |  | (291,805) |  |  | (93,167) |  |  | (384,972) |

1 Represents change in unrealized gains (losses) on securities with credit loss recognized in earnings.
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The reclassifications out of AOCI were as follows:

|  | Quarter ended March 31, |  |  |  | Affected Line Item in the Unaudited Consolidated Statements of Income
($ in thousands) |  | 2024 |  | 2023 |  |  |  |  |
Net realized (gains) losses on disposals and intent-to-sell AFS securities |  |  |  |  |  |  |  |  |  |
Net realized (gains) losses |  | $ | (78) |  |  | 6,104 |  |  |  |  |  |  | Net realized and unrealized investment gains (losses)
Tax (benefit) expense |  | 17 |  |  | (1,282) |  |  |  |  |  |  | Total federal income tax expense
Net of taxes |  | (61) |  |  | 4,822 |  |  |  |  |  |  | Net income
Credit loss related |  |  |  |  |  |  |  |  |  |
Credit loss (benefit) expense |  | 2,650 |  |  | (9,529) |  |  |  |  |  |  | Net realized and unrealized investment gains (losses)
Tax (benefit) expense |  | (557) |  |  | 2,002 |  |  |  |  |  |  | Total federal income tax expense
Net of taxes |  | 2,093 |  |  | (7,527) |  |  |  |  |  |  | Net income
Defined benefit pension and post-retirement life plans |  |  |  |  |  |  |  |  |  |
Net actuarial loss |  | 222 |  |  | 175 |  |  |  |  |  |  | Loss and loss expense incurred
Net actuarial loss |  | 745 |  |  | 582 |  |  |  |  |  |  | Other insurance expenses
Total |  | 967 |  |  | 757 |  |  |  |  |  |  | Income before federal income tax
Tax (benefit) expense |  | (203) |  |  | (159) |  |  |  |  |  |  | Total federal income tax expense
Net of taxes |  | 764 |  |  | 598 |  |  |  |  |  |  | Net income
Total reclassifications for the period |  | $ | 2,796 |  |  | (2,107) |  |  |  |  |  |  | Net income

NOTE 12. Earnings per Common Share
The following table presents the calculations of earnings per common share ("EPS") on a basic and diluted basis:

|  | Quarter ended March 31, |  |
(in thousands, except per share amounts) |  | 2024 |  | 2023 |  |  |  |
Net income available to common stockholders: |  | $ | 80,218 |  |  | 90,274 |  |  |  |  |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |
Weighted average common shares outstanding - basic |  | 60,827 |  | 60,536 |  |  |  |
Effect of dilutive securities - stock compensation plans |  | 386 |  | 372 |  |  |  |
Weighted average common shares outstanding - diluted |  | 61,213 |  | 60,908 |  |  |  |
EPS: |  |  |  |  |  |  |  |
Basic |  | $ | 1.32 |  |  | 1.49 |  |  |  |  |
Diluted |  | 1.31 |  |  | 1.48 |  |  |  |  |

NOTE 13. Litigation
As of March 31, 2024, we do not believe we are involved in any legal action that could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.
In the ordinary course of conducting business, we are parties in various legal actions. Most are claims litigation involving our ten insurance subsidiaries (collectively referred to as "Insurance Subsidiaries") as (i) liability insurers defending or providing indemnity for third-party claims brought against our customers, (ii) insurers defending first-party coverage claims brought against them, or (iii) liability insurers seeking declaratory judgment on our insurance coverage obligations. We account for such activity by establishing unpaid loss and loss expense reserves. Considering potential losses and defense costs reserves, we expect that any potential ultimate liability for ordinary course claims litigation will not be material to our consolidated financial condition, results of operations, or cash flows.
All our commercial property and businessowners' policies require direct physical loss of or damage to property by a covered cause of loss. All our standard lines commercial property and businessowners' policies also include or attach an exclusion that states all loss or property damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease is not a covered cause of loss ("Virus Exclusion"). Whether COVID-19-related contamination, the existence of the COVID-19 pandemic, and the resulting COVID-19-related government shutdown orders cause physical loss of or damage to property is the subject of much public debate and first-party coverage litigation against some insurers, including us. The Virus Exclusion is also the subject of first-party coverage litigation against some insurers, including us. To date, insurers (including us) have prevailed in the majority of these suits, with most decisions holding that COVID-19 does not cause physical loss of or damage to property and the Virus Exclusion is valid. Nonetheless, these two matters continue to be litigated in trial courts, are subject to review by state and federal appellate courts, and their ultimate outcome cannot be assured.
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From time to time, our Insurance Subsidiaries also are named as defendants in other legal actions, some asserting claims for substantial amounts. Plaintiffs may style these actions as class actions and seek judicial certification of a state or national class for allegations involving our business practices, such as improper medical provider reimbursement under workers compensation and personal and commercial automobile insurance policies or improper reimbursement for automobile parts. Similarly, our Insurance Subsidiaries can be named defendants in individual actions seeking extra-contractual damages, punitive damages, or penalties, often alleging bad faith in handling insurance claims. We believe that we have valid defenses to these allegations and account for such activity by establishing unpaid loss and loss expense reserves. Considering estimated losses and defense costs reserves, we expect that any potential ultimate liability for these other legal actions will not be material to our consolidated financial condition. As litigation outcomes are inherently unpredictable and the amounts sought in certain actions are large or indeterminate, adverse outcomes could potentially have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent"), and its subsidiaries, except as expressly indicated or the context otherwise requires. Certain statements in this Quarterly Report on Form 10-Q, including information incorporated by reference, are “forward-looking statements” defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a forward-looking statement safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements discuss our intentions, beliefs, projections, estimations, or forecasts of future events and financial performance. They involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, activity levels, or performance to materially differ from those in or implied by the forward-looking statements. In some cases, forward-looking statements include the words “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” “continue,” or comparable terms. Our forward-looking statements are only predictions; we cannot guarantee or assure that such expectations will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements for any reason except as may be required by law.
We discuss the factors that could cause our actual results to differ materially from our projects, forecasts, or estimates in forward-looking statements in Item 1A. “Risk Factors.” in Part II. “Other Information” of this Form 10-Q. These risk factors may not be exhaustive. We operate in a constantly changing business environment, and new risk factors may emerge at any time. We can neither predict these new risk factors nor assess their impact, if any, on our businesses or the extent to which any factor or combination of factors may cause actual results to differ materially from any forward-looking statements. Given these risks, uncertainties, and assumptions, the forward-looking events we discuss in this report might not occur.
Introduction
We classify our business into four reportable segments:
•Standard Commercial Lines;
•Standard Personal Lines;
•Excess and Surplus Lines ("E&S Lines"); and
•Investments.
For more details about these segments, refer to Note 9. "Segment Information" in Item 1. "Financial Statements." of this Form 10-Q and Note 12. "Segment Information" in Item 8. "Financial Statements and Supplementary Data." of our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report").
We write our Standard Commercial and Standard Personal Lines products and services through nine of our insurance subsidiaries, some of which participate in the federal government's National Flood Insurance Program's ("NFIP") Write Your Own Program. We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance Company, a nationally-authorized non-admitted platform for customers who generally cannot obtain coverage in the standard marketplace. Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries."
The following is Management’s Discussion and Analysis (“MD&A”) of our financial condition and consolidated results of operations, including an evaluation of the amounts and certainty of cash flows from operations and outside sources, trends, and uncertainties that may have a material impact in future periods. Investors should read the MD&A in conjunction with Item 1. "Financial Statements." of this Form 10-Q and the consolidated financial statements in our 2023 Annual Report filed with the United States ("U.S.") Securities and Exchange Commission.
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In the MD&A, we will discuss and analyze the following:
•Critical Accounting Policies and Estimates;
•Financial Highlights of Results for the first quarters ended March 31, 2024 (“First Quarter 2024”) and March 31, 2023 (“First Quarter 2023”);
•Results of Operations and Related Information by Segment;
•Federal Income Taxes;
•Liquidity and Capital Resources; and
•Ratings.
Critical Accounting Policies and Estimates
Our unaudited interim consolidated financial statements include amounts for which we have made informed estimates and judgments for transactions not yet completed. Such estimates and judgments affect the reported amounts in the consolidated financial statements. As outlined in our 2023 Annual Report, those estimates and judgments most critical to the preparation of the consolidated financial statements involved the following: (i) reserve for loss and loss expense; (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities; and (iii) reinsurance. These estimates and judgments require our use of assumptions about highly uncertain matters, making them subject to change as facts and circumstances develop. If different estimates and judgments had been applied, materially different amounts might have been reported in the financial statements. For additional information regarding our critical accounting policies and estimates, refer to pages 39 through 47 of our 2023 Annual Report.
Financial Highlights of Results for First Quarter 2024 and First Quarter 2023 1

($ and shares in thousands, except per share amounts) |  | Quarter ended March 31, |  | Change % or Points |  |  |  |  |  |
| 2024 |  |  |  | 2023 |  |  |  |  |  |  |  |  |  |
Financial Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | $ | 1,164,959 |  |  |  |  | 999,820 |  |  | 17 |  | % |  |  |  |  |  |  |  |  |
After-tax net investment income |  | 85,640 |  |  |  |  | 73,052 |  |  | 17 |  |  |  |  |  |  |  |  |  |  |
After-tax underwriting income |  | 15,034 |  |  |  |  | 30,955 |  |  | (51) |  |  |  |  |  |  |  |  |  |  |
Net income before federal income tax |  | 102,566 |  |  |  |  | 114,759 |  |  | (11) |  |  |  |  |  |  |  |  |  |  |
Net income |  | 82,518 |  |  |  |  | 92,574 |  |  | (11) |  |  |  |  |  |  |  |  |  |  |
Net income available to common stockholders |  | 80,218 |  |  |  |  | 90,274 |  |  | (11) |  |  |  |  |  |  |  |  |  |  |
Key Metrics: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 98.2 |  | % |  |  | 95.7 |  |  | 2.5 |  | pts |  |  |  |  |  |  |  |  |
Invested assets per dollar of common stockholders' equity |  | $ | 3.12 |  |  |  |  | 3.25 |  |  | (4) |  | % |  |  |  |  |  |  |  |  |
Annualized after-tax yield on investment portfolio |  | 3.9 |  | % |  |  | 3.7 |  |  | 0.2 |  | pts |  |  |  |  |  |  |  |  |
Return on common equity ("ROE") |  | 11.5 |  |  |  |  | 15.1 |  |  | (3.6) |  |  |  |  |  |  |  |  |  |  |
Net premiums written ("NPW") to statutory surplus |  | $ | 1.55 |  |  |  |  | 1.46 |  |  | 6 |  | % |  |  |  |  |  |  |  |  |
Per Common Share Amounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diluted net income per share |  | $ | 1.31 |  |  |  |  | 1.48 |  |  | (11) |  | % |  |  |  |  |  |  |  |  |
Book value per share |  | 46.17 |  |  |  |  | 40.82 |  |  | 13 |  |  |  |  |  |  |  |  |  |  |
Dividends declared per share to common stockholders |  | 0.35 |  |  |  |  | 0.30 |  |  | 17 |  |  |  |  |  |  |  |  |  |  |
Non-GAAP Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-GAAP operating income 2 |  | $ | 81,510 |  |  |  |  | 87,632 |  |  | (7) |  | % |  |  |  |  |  |  |  |  |
Non-GAAP operating income per diluted common share 2 |  | 1.33 |  |  |  |  | 1.44 |  |  | (8) |  |  |  |  |  |  |  |  |  |  |
Non-GAAP operating ROE 2 |  | 11.7 |  | % |  |  | 14.6 |  |  | (2.9) |  | pts |  |  |  |  |  |  |  |  |
Adjusted book value per common share 2 |  | $ | 50.97 |  |  |  |  | 46.61 |  |  | 9 |  | % |  |  |  |  |  |  |  |  |

1 Refer to the Glossary of Terms attached to our 2023 Annual Report as Exhibit 99.1 for definitions of terms used in this Form 10-Q.
2 Non-GAAP operating income, non-GAAP operating income per diluted common share, and non-GAAP operating ROE are measures comparable to net income available to common stockholders, net income available to common stockholders per diluted common share, and ROE, respectively, but exclude after-tax net realized and unrealized gains and losses on investments included in net income. Adjusted book value per common share is a measure comparable to book value per common share, but excludes total after-tax unrealized gains and losses on investments included in accumulated other comprehensive (loss) income. These non-GAAP measures are important financial measures used by us, analysts, and investors because the timing of realized and unrealized investment gains and losses on securities in any given period is largely discretionary. In addition, net realized and unrealized investment gains and losses on investments could distort the analysis of trends.
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Reconciliations of our GAAP to non-GAAP measures are provided in the tables below:

Reconciliation of net income available to common stockholders to non-GAAP operating income |  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Net income available to common stockholders |  | $ | 80,218 |  |  | 90,274 |  |  |  |  |
Net realized and unrealized investment (gains) losses included in net income, before tax |  | 1,635 |  |  | (3,344) |  |  |  |  |
Tax on reconciling items |  | (343) |  |  | 702 |  |  |  |  |
Non-GAAP operating income |  | $ | 81,510 |  |  | 87,632 |  |  |  |  |

Reconciliation of net income available to common stockholders per diluted common share to non-GAAP operating income per diluted common share |  | Quarter ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Net income available to common stockholders per diluted common share |  | $ | 1.31 |  |  | 1.48 |  |  |  |  |
Net realized and unrealized investment (gains) losses included in net income, before tax |  | 0.03 |  |  | (0.05) |  |  |  |  |
Tax on reconciling items |  | (0.01) |  |  | 0.01 |  |  |  |  |
Non-GAAP operating income per diluted common share |  | $ | 1.33 |  |  | 1.44 |  |  |  |  |

Reconciliation of ROE to non-GAAP operating ROE |  | Quarter ended March 31, |  |
|  | 2024 |  | 2023 |  |  |  |
ROE |  | 11.5 | % |  | 15.1 |  |  |  |  |
Net realized and unrealized investment (gains) losses included in net income, before tax |  | 0.2 |  |  | (0.6) |  |  |  |  |
Tax on reconciling items |  | — |  |  | 0.1 |  |  |  |  |
Non-GAAP operating ROE |  | 11.7 | % |  | 14.6 |  |  |  |  |

Reconciliation of book value per common share to adjusted book value per common share |  | Quarter ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
Book value per common share |  | $ | 46.17 |  |  | 40.82 |  |  |  |  |
Total unrealized investment (gains) losses included in accumulated other comprehensive income (loss), before tax |  | 6.08 |  |  | 7.32 |  |  |  |  |
Tax on reconciling items |  | (1.28) |  |  | (1.53) |  |  |  |  |
Adjusted book value per common share |  | $ | 50.97 |  |  | 46.61 |  |  |  |  |

The components of our ROE and non-GAAP operating ROE are as follows:

ROE and non-GAAP operating ROE Components |  | Quarter ended March 31, |  | Change Points |  |  |  |
|  | 2024 |  | 2023 |  |  |  |  |  |
Standard Commercial Lines Segment |  | 1.2 |  | % |  | 5.1 |  |  | (3.9) |  |  |  |  |  |  |  |
Standard Personal Lines Segment |  | (0.6) |  |  |  | (1.7) |  |  | 1.1 |  |  |  |  |  |  |  |
E&S Lines Segment |  | 1.6 |  |  |  | 1.8 |  |  | (0.2) |  |  |  |  |  |  |  |
Total insurance operations |  | 2.2 |  |  |  | 5.2 |  |  | (3.0) |  |  |  |  |  |  |  |
Investment income |  | 12.3 |  |  |  | 12.2 |  |  | 0.1 |  |  |  |  |  |  |  |
Net realized and unrealized investment gains (losses) |  | (0.2) |  |  |  | 0.5 |  |  | (0.7) |  |  |  |  |  |  |  |
Total investments segment |  | 12.1 |  |  |  | 12.7 |  |  | (0.6) |  |  |  |  |  |  |  |
Other |  | (2.8) |  |  |  | (2.8) |  |  | — |  |  |  |  |  |  |  |
ROE |  | 11.5 |  |  |  | 15.1 |  |  | (3.6) |  |  |  |  |  |  |  |
Net realized and unrealized investment (gains) losses, after tax |  | 0.2 |  |  |  | (0.5) |  |  | 0.7 |  |  |  |  |  |  |  |
Non-GAAP operating ROE |  | 11.7 |  |  |  | 14.6 |  |  | (2.9) |  |  |  |  |  |  |  |

In First Quarter 2024, we generated an ROE of 11.5%, compared to 15.1% in First Quarter 2023. Our non-GAAP operating ROE of 11.7% was below our First Quarter 2023 non-GAAP operating ROE of 14.6% and slightly below our target of 12%. The non-GAAP operating ROE decrease in First Quarter 2024 compared to First Quarter 2023 was driven by a $15.9 million, or 3.0-point, reduction in after-tax underwriting income, primarily attributable to unfavorable prior year casualty reserve development, partially offset by an improved expense ratio and lower net catastrophe losses in First Quarter 2024. Unfavorable prior year casualty reserve development was $35.0 million in First Quarter 2024, compared to favorable prior year casualty reserve development of $13.0 million in First Quarter 2023. During First Quarter 2024, we recorded unfavorable prior year casualty reserve development of $50.0 million in our general liability line of business, primarily in accident years 2020 through 2023, resulting from elevated and uncertain loss trends driven primarily by social inflation. Despite planning for higher expected loss trends, claim emergence in First Quarter 2024 exceeded our expectations. Partially offsetting the $50.0 million
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unfavorable prior year casualty reserve development was $15.0 million of favorable prior year casualty reserve development in our workers compensation line of business. For additional qualitative discussion on prior year casualty reserve development, refer to the insurance segment sections below.
Outlook
We entered 2024 with a strong capital position and solid operational results, well-positioned to navigate the ongoing challenges of elevated economic and social inflation and financial market volatility. We continue to focus on delivering on our strategy for disciplined and profitable growth within our insurance operation segments by:
•Standard Commercial Lines
◦Achieving overall Standard Commercial Lines renewal pure price increases that reflect our current profitability and forward loss trend expectations;
◦Continuing to expand our Standard Commercial Lines market share by (i) increasing our share towards our 12% target of our agents' premiums, (ii) strategically appointing new agents, and (iii) maximizing new business growth in the small business market through the use of our enhanced small business platform; and
◦Expanding our geographic footprint. In April 2024, we added West Virginia and Maine to our footprint, now covering 32 states. Subject to regulatory approvals, we expect to add Nevada, Washington, and Oregon later this year, and Kansas, Montana, and Wyoming in 2025. Over time, we plan to expand our Standard Commercial Lines footprint into most of the contiguous U.S.
•E&S Lines
◦Achieving E&S Lines renewal pure price increases that reflect our current profitability and forward loss trend expectations; and
◦Continuing to invest in product expansion, risk evaluation, and operational efficiency for small and middle market E&S accounts.
•Standard Personal Lines
◦Taking aggressive actions to improve the profitability of our Standard Personal Lines segment by:
▪Prioritizing additional rate filings on a state-by-state basis and further refining our pricing factors. These filed rate increases began to take effect early in 2023, increasing in number and magnitude throughout the year, have continued into 2024, and are expected to continue throughout the year. We project our overall written renewal rate increase to be in excess of 20% for the full year.
▪Seeking to improve our homeowners line of business profitability through the introduction of new policy terms and conditions, including (i) coverage for older roofs based on depreciation schedules rather than replacement cost, and (ii) implementing mandatory wind/hail deductibles in states exposed to severe convective storms, where allowed by law; and
▪Continuing the migration of our Standard Personal Lines products and services towards customers in the mass affluent market, where we believe we can be more competitive with our strong coverage and servicing capabilities.
For 2024, we increased our expectation for the GAAP combined ratio reflecting unfavorable prior year casualty reserve development and current year loss cost increases in the first quarter, while maintaining other full-year expectations as follows:
•A GAAP combined ratio of 96.5%, up from prior guidance of 95.5%, including net catastrophe losses of 5.0 points. Our combined ratio estimate assumes no additional prior year casualty reserve development;
•After-tax net investment income of $360 million that includes $32 million of after-tax net investment income from our alternative investments;
•An overall effective tax rate of approximately 21.0%, which assumes an effective tax rate of 20.5% for net investment income and 21% for all other items; and
•Weighted average shares of 61.5 million on a fully diluted basis, which assumes no share repurchases we may make under our authorization.
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Results of Operations and Related Information by Segment
Insurance Operations
The following table provides quantitative information for analyzing the combined ratio:

All Lines |  | Quarter ended March 31, |  | Change % or Points |  |  |  |  |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |  |  |  |  |  |
Insurance Operations Results: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
NPW |  | $ | 1,156,621 |  |  | 999,768 |  |  | 16 |  | % |  |  |  |  |  |  |  |
Net premiums earned (“NPE”) |  | 1,050,944 |  |  | 902,336 |  |  | 16 |  |  |  |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense incurred |  | 704,292 |  |  | 567,438 |  |  | 24 |  |  |  |  |  |  |  |  |  |
Net underwriting expenses incurred |  | 324,367 |  |  | 293,943 |  |  | 10 |  |  |  |  |  |  |  |  |  |
Dividends to policyholders |  | 3,254 |  |  | 1,772 |  |  | 84 |  |  |  |  |  |  |  |  |  |
Underwriting income |  | $ | 19,031 |  |  | 39,183 |  |  | (51) |  | % |  |  |  |  |  |  |  |
Combined Ratios: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense ratio |  | 67.0 |  | % | 62.9 |  |  | 4.1 |  | pts |  |  |  |  |  |  |  |
Underwriting expense ratio |  | 30.9 |  |  | 32.6 |  |  | (1.7) |  |  |  |  |  |  |  |  |  |
Dividends to policyholders ratio |  | 0.3 |  |  | 0.2 |  |  | 0.1 |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 98.2 |  |  | 95.7 |  |  | 2.5 |  |  |  |  |  |  |  |  |  |

The NPW growth of 16% in First Quarter 2024 compared to First Quarter 2023 reflected (i) overall renewal pure price increases, and (ii) higher direct new business, as shown in the following table:

|  | Quarter ended March 31, |  |
($ in millions) |  | 2024 |  | 2023 |  |  |  |
Direct new business premiums |  | $ | 260.8 |  |  | 216.9 |  |  |  |  |
Renewal pure price increases |  | 8.1 | % |  | 6.6 |  |  |  |  |

Our NPW growth in First Quarter 2024 also benefited from stable retention and exposure growth on renewal policies.
The increase in NPE in First Quarter 2024 compared to First Quarter 2023 resulted from the same impacts to NPW described above.
Loss and Loss Expenses
The loss and loss expense ratio increased 4.1 points in First Quarter 2024 compared to First Quarter 2023, primarily due to the following:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  |  | Change in Ratio |
Net catastrophe losses |  | $ | 55.2 |  |  | 5.3 |  | pts |  | $ | 55.3 |  |  | 6.1 |  | pts |  | (0.8) |  | pts
(Favorable) unfavorable prior year casualty reserve development |  | 35.0 |  |  | 3.3 |  |  |  | (13.0) |  |  | (1.4) |  |  |  | 4.7 |  |
Non-catastrophe property loss and loss expenses |  | 171.2 |  |  | 16.3 |  |  |  | 148.2 |  |  | 16.4 |  |  |  | (0.1) |  |
Total |  | $ | 261.4 |  |  | 24.9 |  |  |  | $ | 190.5 |  |  | 21.1 |  |  |  | 3.8 |  |

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

(Favorable)/Unfavorable Prior Year Casualty Reserve Development |  | Quarter ended March 31, |  |  |
($ in millions) |  | 2024 |  | 2023 |  |  |  |  |
General liability |  | $ | 50.0 |  |  |  | — |  |  |  |  |  |  |
Workers compensation |  | (15.0) |  |  |  | (10.0) |  |  |  |  |  |  |
Total Standard Commercial Lines |  | 35.0 |  |  |  | (10.0) |  |  |  |  |  |  |
Homeowners |  | (5.0) |  |  |  | — |  |  |  |  |  |  |
Personal automobile |  | 5.0 |  |  |  | 2.0 |  |  |  |  |  |  |
Total Standard Personal Lines |  | — |  |  |  | 2.0 |  |  |  |  |  |  |
E&S |  | — |  |  |  | (5.0) |  |  |  |  |  |  |
Total (favorable) unfavorable prior year casualty reserve development |  | $ | 35.0 |  |  |  | (13.0) |  |  |  |  |  |  |
(Favorable) unfavorable impact on loss ratio |  | 3.3 |  | pts |  | (1.4) |  |  |  |  |  |  |

Prior year casualty reserve development in First Quarter 2024 was an unfavorable $35.0 million, or 3.3 points, compared to $13.0 million, or 1.4 points, of favorable development in First Quarter 2023. This quarter's unfavorable development of $50.0 million in our general liability line of business was driven by increased severities in accident years 2020 through 2023, and was partially offset by favorable workers compensation development of $15.0 million. For additional qualitative discussion on prior year casualty reserve development, refer to the insurance segment sections below.
Net catastrophe losses were lower in First Quarter 2024 compared to First Quarter 2023, despite experiencing slightly more Property Claim Services named events in First Quarter 2024 that impacted our footprint. Net catastrophe losses in both periods primarily impacted our commercial property and homeowners lines of businesses, resulting from winter storms and wind and thunderstorm events.
Underwriting Expenses
The underwriting expense ratio decreased 1.7 points in First Quarter 2024 compared to First Quarter 2023, primarily due to premium growth outpacing the growth in underwriting expenses.
Standard Commercial Lines Segment

|  | Quarter ended March 31, |  | Change % or Points |  |  |  |  |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |  |  |  |  |
Insurance Segments Results: |  |  |  |  |  |  |  |  |  |  |  |  |  |
NPW |  | $ | 931,677 |  |  | 813,316 |  |  | 15 |  | % |  |  |  |  |  |  |
NPE |  | 834,110 |  |  | 731,615 |  |  | 14 |  |  |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense incurred |  | 555,833 |  |  | 447,326 |  |  | 24 |  |  |  |  |  |  |  |  |
Net underwriting expenses incurred |  | 264,642 |  |  | 243,596 |  |  | 9 |  |  |  |  |  |  |  |  |
Dividends to policyholders |  | 3,254 |  |  | 1,772 |  |  | 84 |  |  |  |  |  |  |  |  |
Underwriting income |  | 10,381 |  |  | 38,921 |  |  | (73) |  |  |  |  |  |  |  |  |
Combined Ratios: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense ratio |  | 66.7 |  | % | 61.2 |  |  | 5.5 |  | pts |  |  |  |  |  |  |
Underwriting expense ratio |  | 31.7 |  |  | 33.3 |  |  | (1.6) |  |  |  |  |  |  |  |  |
Dividends to policyholders ratio |  | 0.4 |  |  | 0.2 |  |  | 0.2 |  |  |  |  |  |  |  |  |
Combined ratio |  | 98.8 |  |  | 94.7 |  |  | 4.1 |  |  |  |  |  |  |  |  |

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NPW growth of 15% in First Quarter 2024 compared to First Quarter 2023 reflected (i) renewal pure price increases, (ii) higher direct new business, and (iii) strong retention as shown in the table below. In addition, NPW growth benefited from strong exposure growth on renewal policies.

|  | Quarter ended March 31, |  |  |  |  |  |  |
($ in millions) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |
Direct new business premiums |  | $ | 172.1 |  |  |  | 147.7 |  |  |  |  |  |  |  |  |  |  |
Retention |  | 86 |  |  |  | 86 |  |  |  |  |  |  |  |  |  |  |
Renewal pure price increases |  | 7.6 |  |  |  | 7.0 |  |  |  |  |  |  |  |  |  |  |

The increase in NPE in First Quarter 2024 compared to the First Quarter 2023 resulted from the same impacts to NPW described above.
The loss and loss expense ratio increased 5.5 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by the following:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  | Change in Ratio |
Net catastrophe losses |  | $ | 38.5 |  |  | 4.6 |  | pts |  | $ | 35.1 |  |  | 4.8 |  |  | (0.2) |  | pts
Non-catastrophe property loss and loss expenses |  | 115.0 |  |  | 13.8 |  |  |  | 105.5 |  |  | 14.4 |  |  | (0.6) |  |
(Favorable) unfavorable prior year casualty reserve development |  | 35.0 |  |  | 4.2 |  |  |  | (10.0) |  |  | (1.4) |  |  | 5.6 |  |
Total |  | $ | 188.5 |  |  | 22.6 |  |  |  | $ | 130.6 |  |  | 17.8 |  |  | 4.8 |  |

Prior year casualty reserve development in First Quarter 2024 was unfavorable by $35.0 million, or 4.2 points, compared to $10.0 million, or 1.4 points, of favorable development in First Quarter 2023. Despite increasing our overall expected loss trend in recent years, paid loss severities emerged more significantly than expected in First Quarter 2024. As a result, we recorded $50.0 million unfavorable prior year casualty reserve development in our general liability line of business, primarily driven by increased severities in accident years 2020 through 2023. This unfavorable development was partially offset by favorable workers compensation development of $15.0 million.
In addition, the loss and loss expense ratio was impacted by an increase in current year casualty loss costs of 0.7 points in First Quarter 2024 compared to First Quarter 2023, primarily due to increased loss trend expectations in response to social inflationary impacts. Refer to the line of business sections below for qualitative discussion on the significant drivers of unfavorable prior year casualty reserve development and current year loss costs.
The underwriting expense ratio decreased 1.6 points in First Quarter 2024 compared to First Quarter 2023, primarily due to premium growth outpacing the growth in underwriting expenses in First Quarter 2024 compared to First Quarter 2023.
The following is a discussion of our most significant Standard Commercial Lines of business:

General Liability |  |  |  |  |  |  |  |
|  | Quarter ended March 31, |  | Change % or Points 1 |  |  |  |  |  |
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
NPW |  | $ | 307,444 |  |  |  | 272,126 |  |  | 13 |  | % |  |  |  |  |  |  |  |
Direct new business |  | 50,229 |  |  |  | 44,731 |  |  | n/a |  |  |  |  |  |  |  |  |
Retention |  | 87 |  | % |  | 86 |  |  | n/a |  |  |  |  |  |  |  |  |
Renewal pure price increases |  | 6.5 |  |  |  | 5.5 |  |  | n/a |  |  |  |  |  |  |  |  |
NPE |  | $ | 273,415 |  |  |  | 243,349 |  |  | 12 |  | % |  |  |  |  |  |  |  |
Underwriting income |  | (29,441) |  |  |  | 27,126 |  |  | (209) |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 110.8 |  | % |  | 88.9 |  |  | 21.9 |  | pts |  |  |  |  |  |  |  |
% of total Standard Commercial Lines NPW |  | 33 |  |  |  | 33 |  |  |  |  |  |  |  |  |  |  |  |

1 n/a: not applicable.
NPW grew 13% in First Quarter 2024 compared to First Quarter 2023, benefiting from exposure growth on renewal policies, strong retention, renewal pure price increases, and higher direct new business.
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The combined ratio increased 21.9 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by unfavorable prior year casualty reserve development as follows:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  | Change in Ratio |
Unfavorable prior year casualty reserve development |  | $ | 50.0 |  |  | 18.3 |  | pts |  | $ | — |  |  | — |  |  | 18.3 |  | pts

This line of business has experienced a long-term historical trend of meaningful severity increases, which have been partially offset by decreases in claim frequencies. The trend of lower frequencies has continued, while prior year severities have developed adversely, previously impacting the pre-pandemic period but now extending into the more recent accident years. We attribute the increased severities to elevated social inflation, which we see as an industry dynamic characterized by higher propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Certain jurisdictions with expanded liability theories and higher damage awards pose heightened challenges. We are closely monitoring these jurisdictions and the broader trends across our business.
The unfavorable prior year casualty reserve development in First Quarter 2024 was primarily due to these social inflationary impacts. In response to social inflationary impacts, we have been embedding higher severity assumptions in our initial loss ratio estimates in recent years, which more recently are materializing in actual paid results. Despite planning for higher expected loss trends, claim emergence on paid losses in First Quarter 2024 exceeded our expectations and drove the unfavorable prior year development of $50.0 million, primarily in accident years 2020 through 2023. There was no prior year casualty reserve development in First Quarter 2023.
Additionally, the combined ratio was impacted by an increase in current year casualty loss costs of 4.5 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by an increase to our loss trend expectations in response to increases in social inflationary impacts.
We believe that social inflation and elevated loss trends are an industry dynamic, and may lead to an acceleration of rate increases in this line of business. During First Quarter 2024, our renewal pure price increase in this line of business was 6.5%, up from 5.7% last quarter, and 5.4% for full-year 2023. We expect increases in our general liability pricing to accelerate in the coming months.

Commercial Automobile |  |  |  |  |  |  |  |
|  | Quarter ended March 31, |  | Change % or Points 1 |  |  |  |  |  |
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
NPW |  | $ | 285,601 |  |  |  | 240,183 |  |  | 19 |  | % |  |  |  |  |  |  |  |
Direct new business |  | 47,795 |  |  |  | 36,976 |  |  | n/a |  |  |  |  |  |  |  |  |
Retention |  | 86 |  | % |  | 86 |  |  | n/a |  |  |  |  |  |  |  |  |
Renewal pure price increases |  | 10.4 |  |  |  | 10.0 |  |  | n/a |  |  |  |  |  |  |  |  |
NPE |  | $ | 251,720 |  |  |  | 217,371 |  |  | 16 |  | % |  |  |  |  |  |  |  |
Underwriting (loss) income |  | 262 |  |  |  | (11,741) |  |  | 102 |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 99.9 |  | % |  | 105.4 |  |  | (5.5) |  | pts |  |  |  |  |  |  |  |
% of total Standard Commercial Lines NPW |  | 31 |  |  |  | 30 |  |  |  |  |  |  |  |  |  |  |  |

1 n/a: not applicable.
NPW grew 19% in First Quarter 2024 compared to First Quarter 2023, benefiting from renewal pure price increases, higher direct new business, and strong retention. This higher new business and strong retention contributed to an 8% growth of in-force vehicle counts as of March 31, 2024 compared to March 31, 2023.
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The combined ratio decreased 5.5 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by the following:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  | Change in Ratio |
Net catastrophe losses |  | $ | 1.4 |  |  | 0.6 |  | pts |  | $ | 0.3 |  |  | 0.1 |  |  | 0.5 |  | pts
Non-catastrophe property loss and loss expenses |  | 44.3 |  |  | 17.6 |  |  |  | 46.7 |  |  | 21.5 |  |  | (3.9) |  |
Total |  | $ | 45.7 |  |  | 18.2 |  |  |  | $ | 47.0 |  |  | 21.6 |  |  | (3.4) |  |

First Quarter 2024 experienced lower non-catastrophe property loss and loss expenses than First Quarter 2023, primarily due to lower claim frequencies.
The combined ratio decrease in First Quarter 2024 also reflected a decrease in current year casualty loss costs of 1.3 points, primarily driven by the earned impact of higher renewal pure price increases highlighted above.
In addition, the combined ratio benefited from a 1.1-point decrease in the underwriting expense ratio in First Quarter 2024 compared to First Quarter 2023, primarily due to premium growth outpacing the growth in underwriting expenses.

Commercial Property 1 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Quarter ended March 31, |  | Change % or Points 2 |  |  |  |  |  |
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
NPW |  | $ | 174,512 |  |  |  | 151,604 |  |  | 15 |  | % |  |  |  |  |  |  |  |
Direct new business |  | 38,540 |  |  |  | 34,757 |  |  | n/a |  |  |  |  |  |  |  |  |
Retention |  | 85 |  | % |  | 85 |  |  | n/a |  |  |  |  |  |  |  |  |
Renewal pure price increases |  | 10.9 |  |  |  | 9.5 |  |  | n/a |  |  |  |  |  |  |  |  |
NPE |  | $ | 161,553 |  |  |  | 135,292 |  |  | 19 |  | % |  |  |  |  |  |  |  |
Underwriting income |  | 9,567 |  |  |  | 10,078 |  |  | 5 |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 94.1 |  | % |  | 92.6 |  |  | 1.5 |  | pts |  |  |  |  |  |  |  |
% of total Standard Commercial Lines NPW |  | 19 |  |  |  | 19 |  |  |  |  |  |  |  |  |  |  |  |

1 includes Inland Marine.
2 n/a: not applicable.
NPW grew 15% in First Quarter 2024 compared to First Quarter 2023, benefiting from renewal pure price increases, strong retention, exposure growth on renewal policies, and higher direct new business.
The combined ratio increased 1.5 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by the following:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  | Change in Ratio |
Net catastrophe losses |  | $ | 32.9 |  |  | 20.3 |  | pts |  | 27.7 |  |  | 20.5 |  |  | (0.2) |  | pts
Non-catastrophe property loss and loss expenses |  | 62.4 |  |  | 38.6 |  |  |  | 46.5 |  |  | 34.4 |  |  | 4.2 |  |
Total |  | $ | 95.3 |  |  | 58.9 |  |  |  | 74.2 |  |  | 54.9 |  |  | 4.0 |  |

We experienced higher non-catastrophe property loss and loss expense ratios in First Quarter 2024 compared to First Quarter 2023. This change continues to reflect the variability from period to period that is normally associated with the commercial property line of business. We continue to manage our long-term profitability through (i) price increases, and (ii) targeted underwriting actions, including an ongoing focus on appropriate policy terms and conditions and achieving accurate insurance to value ratios.
The combined ratio was also impacted by a decrease in the underwriting expense ratio of 2.7 points in First Quarter 2024 compared to First Quarter 2023, primarily due to premium growth outpacing the growth in underwriting expenses.
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Workers Compensation |  |  |  |  |  |  |  |
|  | Quarter ended March 31, |  | Change % or Points 1 |  |  |  |  |  |
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
NPW |  | $ | 98,783 |  |  |  | 93,432 |  |  | 6 |  | % |  |  |  |  |  |  |  |
Direct new business |  | 18,483 |  |  |  | 17,620 |  |  | n/a |  |  |  |  |  |  |  |  |
Retention |  | 85 |  | % |  | 84 |  |  | n/a |  |  |  |  |  |  |  |  |
Renewal pure price increases (decreases) |  | (2.6) |  |  |  | (1.1) |  |  | n/a |  |  |  |  |  |  |  |  |
NPE |  | $ | 87,777 |  |  |  | 84,184 |  |  | 4 |  | % |  |  |  |  |  |  |  |
Underwriting income |  | 18,193 |  |  |  | 14,586 |  |  | 25 |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 79.3 |  | % |  | 82.7 |  |  | (3.4) |  | pts |  |  |  |  |  |  |  |
% of total Standard Commercial Lines NPW |  | 11 |  |  |  | 11 |  |  |  |  |  |  |  |  |  |  |  |

1 n/a: not applicable.
NPW increased 6% in First Quarter 2024 compared to First Quarter 2023, primarily due to higher direct new business, strong retention, and exposure growth on renewal policies.
The combined ratio decreased 3.4 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by favorable prior year casualty reserve development as follows:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Combined Ratio |  | Change in Ratio |
(Favorable) prior year casualty reserve development |  | $ | (15.0) |  |  | (17.1) |  | pts |  | $ | (10.0) |  |  | (11.9) |  |  | (5.2) |  | pts

The favorable prior year casualty reserve development in First Quarter 2024 was primarily due to lower loss severities in accident years 2021 and prior. The favorable prior year casualty reserve development in First Quarter 2023 was primarily due to improved loss severities in accident years 2020 and prior.
In addition, the combined ratio benefited from a decrease in the underwriting expense ratio of 1.2 points in First Quarter 2024, compared to First Quarter 2023, primarily due to premium growth outpacing the growth in underwriting expenses.
Offsetting the combined ratio decreases mentioned above, the First Quarter 2024 combined ratio was adversely impacted by an increase in current year casualty loss costs of 3.5 points, primarily driven by the negative rate environment that has been impacting this line for several years.
Standard Personal Lines Segment

|  | Quarter ended March 31, |  | Change % or Points |  |  |  |  |  |
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
Insurance Segments Results: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
NPW |  | $ | 99,904 |  |  |  | 85,278 |  |  | 17 |  | % |  |  |  |  |  |  |  |
NPE |  | 103,846 |  |  |  | 81,870 |  |  | 27 |  |  |  |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense incurred |  | 84,344 |  |  |  | 73,168 |  |  | 15 |  |  |  |  |  |  |  |  |  |
Net underwriting expenses incurred |  | 24,837 |  |  |  | 21,775 |  |  | 14 |  |  |  |  |  |  |  |  |  |
Underwriting income (loss) |  | $ | (5,335) |  |  |  | (13,073) |  |  | 59 |  |  |  |  |  |  |  |  |  |
Combined Ratios: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense ratio |  | 81.2 |  | % |  | 89.4 |  |  | (8.2) |  | pts |  |  |  |  |  |  |  |
Underwriting expense ratio |  | 23.9 |  |  |  | 26.6 |  |  | (2.7) |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 105.1 |  |  |  | 116.0 |  |  | (10.9) |  |  |  |  |  |  |  |  |  |

NPW increased 17% in First Quarter 2024 compared to First Quarter 2023, due to renewal pure price increases, exposure growth on renewal policies, and higher average policy sizes from our mass affluent market strategy, partially offset by reductions in direct new business and retention. New policy counts were down 37% in First Quarter 2024 compared to First Quarter 2023 These reductions were anticipated given the level of rate increases we are implementing as part of our overall profit improvement plan.
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|  | Quarter ended March 31, |  |  |  |  |  |  |  |
($ in millions) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
Direct new business premiums 1 |  | $ | 21.3 |  |  |  | 26.3 |  |  |  |  |  |  |  |  |  |  |  |
Retention |  | 83 |  | % |  | 87 |  |  |  |  |  |  |  |  |  |  |  |
Renewal pure price increases |  | 14.3 |  |  |  | 1.8 |  |  |  |  |  |  |  |  |  |  |  |

1 Excludes our Flood direct premiums written, which is 100% ceded to the NFIP and therefore, has no impact on our NPW.
We are taking aggressive actions to improve the profitability of this business by continuing to prioritize additional rate filings on a state-by-state basis to mitigate inflationary impacts, and refining our pricing factors. These filed rate increases began to take effect early in 2023, increasing in number and magnitude throughout the year, have continued into 2024, and are expected to continue throughout the year. Our 14.3% renewal pure price increase achieved in First Quarter 2024 met our expectations, and keeps us on track to achieve an increase in excess of 20% for the full year. In addition, we are seeking to improve profitability within our homeowners' line of business by introducing new policy terms and conditions, including (i) coverage for older roofs based on a schedule of factors rather than replacement cost, and (ii) implementing mandatory wind/hail deductibles in states exposed to severe convective storms, where allowed by law.
The increase in NPE in First Quarter 2024 compared to First Quarter 2023 resulted from the same impacts to NPW described above.
The loss and loss expense ratio decreased 8.2 points in First Quarter 2024 compared to First Quarter 2023, driven by the following:

|  | First Quarter 2024 |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  | Change in Ratio |
Net catastrophe losses |  | $ | 11.8 |  |  | 11.4 |  | pts |  | 14.6 |  |  | 17.9 |  |  | (6.5) |  | pts
Non-catastrophe property loss and loss expenses |  | 41.9 |  |  | 40.3 |  |  |  | 33.8 |  |  | 41.3 |  |  | (1.0) |  |
Unfavorable prior year casualty reserve development |  | — |  |  | — |  |  |  | 2.0 |  |  | 2.4 |  |  | (2.4) |  |
Total |  | $ | 53.7 |  |  | 51.7 |  |  |  | 50.4 |  |  | 61.6 |  |  | (9.9) |  |

The decrease in net catastrophe losses in First Quarter 2024 compared to First Quarter 2023, was primarily due to two large wind and thunderstorm events in First Quarter 2023 that primarily impacted our homeowners line of business.
We experienced $5.0 million of favorable prior year casualty reserve development on our homeowners line of business in First Quarter 2024, primarily due to lower loss severities in accident years 2021 and prior. This favorable development was offset by $5.0 million of unfavorable prior year casualty reserve development on our personal automobile line of business in First Quarter 2024, primarily driven by increased loss severities in accident years 2021 through 2023. The unfavorable prior year casualty reserve development in First Quarter 2023 was primarily due to increased loss severities in accident year 2022 on our personal automobile line of business.
In addition, the loss and loss expense ratio was adversely impacted by an increase in current year casualty loss costs of 1.8 points in First Quarter 2024 compared to First Quarter 2023, primarily due to an expected increase in claim frequencies in the current year.
The underwriting expense ratio decreased 2.7 points in First Quarter 2024 compared to First Quarter 2023, primarily due to premium growth outpacing the growth in underwriting expenses.
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E&S Lines Segment

|  | Quarter ended March 31, |  | Change % or Points |  |  |  |  |  |
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
Insurance Segments Results: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
NPW |  | $ | 125,040 |  |  |  | 101,174 |  |  | 24 |  | % |  |  |  |  |  |  |  |
NPE |  | 112,988 |  |  |  | 88,851 |  |  | 27 |  |  |  |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense incurred |  | 64,115 |  |  |  | 46,944 |  |  | 37 |  |  |  |  |  |  |  |  |  |
Net underwriting expenses incurred |  | 34,888 |  |  |  | 28,572 |  |  | 22 |  |  |  |  |  |  |  |  |  |
Underwriting income (loss) |  | 13,985 |  |  |  | 13,335 |  |  | 5 |  |  |  |  |  |  |  |  |  |
Combined Ratios: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss and loss expense ratio |  | 56.7 |  | % |  | 52.8 |  |  | 3.9 |  | pts |  |  |  |  |  |  |  |
Underwriting expense ratio |  | 30.9 |  |  |  | 32.2 |  |  | (1.3) |  |  |  |  |  |  |  |  |  |
Combined ratio |  | 87.6 |  |  |  | 85.0 |  |  | 2.6 |  |  |  |  |  |  |  |  |  |

NPW grew 24% in First Quarter 2024 compared to First Quarter 2023, reflecting renewal pure price increases and higher direct new business as shown in the table below. In addition, NPW growth in First Quarter 2024 benefited from both property and casualty exposure growth on renewal policies, driven by increased property values, as well as higher rate per exposure.

|  | Quarter ended March 31, |  |  |  |  |  |  |  |
($ in millions) |  | 2024 |  |  | 2023 |  |  |  |  |  |  |  |  |
Direct new business premiums |  | $ | 67.4 |  |  |  | 42.9 |  |  |  |  |  |  |  |  |  |  |  |
Renewal pure price increases |  | 5.2 |  | % |  | 7.4 |  |  |  |  |  |  |  |  |  |  |  |

The increase in NPE in First Quarter 2024 compared to First Quarter 2023 resulted from the same impacts to NPW described above.
The loss and loss expense ratio increased 3.9 points in First Quarter 2024 compared to First Quarter 2023, primarily driven by the following:

|  | First Quarter 2024 |  |  | First Quarter 2023 |  |  |
($ in millions) |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  |  | Loss and Loss Expense Incurred |  | Impact on Loss and Loss Expense Ratio |  | Change in Ratio |
Net catastrophe losses |  | $ | 4.9 |  |  | 4.3 |  | pts |  | $ | 5.6 |  |  | 6.3 |  |  | (2.0) |  | pts
Non-catastrophe property loss and loss expenses |  | 14.3 |  |  | 12.6 |  |  |  | 8.9 |  |  | 10.1 |  |  | 2.5 |  |
(Favorable) prior year casualty reserve development |  | — |  |  | — |  |  |  | (5.0) |  |  | (5.6) |  |  | 5.6 |  |
Total |  | $ | 19.2 |  |  | 16.9 |  |  |  | $ | 9.5 |  |  | 10.8 |  |  | 6.1 |  |

While the frequency of wind and thunderstorm events remained largely consistent, the severity of these events was lower in First Quarter 2024 compared to First Quarter 2023, resulting in a decrease in net catastrophe losses.
We experienced higher non-catastrophe property loss and loss expenses in First Quarter 2024 compared to First Quarter 2023, primarily due to several large fires, reflecting the continued variability from period to period that is normally associated with our E&S property line of business.
There was no prior year casualty reserve development in First Quarter 2024. The favorable prior year casualty reserve development in First Quarter 2023 was primarily due to lower severities in accident years 2021 and prior.
In addition, the loss and loss expense ratio was favorably impacted by a decrease in current year casualty loss costs of 2.3 points in First Quarter 2024 compared to First Quarter 2023, primarily due to the mix of business between our property and casualty lines of business. Our E&S property line of business, which has a lower loss ratio compared to our E&S casualty line of business, represented a larger portion of this segment in First Quarter 2024 compared to First Quarter 2023, resulting in a lower blended current year loss cost in First Quarter 2024.
The 1.3-point decrease in the underwriting expense ratio in First Quarter 2024 compared to First Quarter 2023, was primarily due to premium growth outpacing the growth in underwriting expenses.
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Investments
Our investment portfolio's objectives are to maximize after-tax net investment income and generate long-term growth in book value per share by maximizing the overall total return of the portfolio by investing the premiums we receive from our insurance operations and the amounts generated through our capital management strategies, which may include debt and equity security issuances. We balance those objectives against prevailing market conditions, capital preservation considerations, and our enterprise risk-taking appetite. We maintain (i) a well-diversified portfolio across issuers, sectors, and asset classes and (ii) a high credit quality fixed income securities portfolio with a duration and maturity profile at an acceptable risk level that provides ample liquidity.
The effective duration of our fixed income and short-term investments was 4.0 years as of March 31, 2024. The effective duration is monitored and managed to maximize yield while managing interest rate risk at an acceptable level. Purchases and sales are made with the intent of maximizing investment returns in the current market environment, while balancing capital preservation.
Our fixed income and short-term investments represented 92% of our invested assets and had investment grade holdings representing 96% of the total debt portfolio as of March 31, 2024 and December 31, 2023. Our fixed income and short-term investments portfolio had a weighted average credit rating of "A+" as of March 31, 2024 and "AA-" as of December 31, 2023.
For further details on the composition, credit quality, and various risks to which our portfolio is subject, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.” of our 2023 Annual Report.

Total Invested Assets |  |  |  |  |  |  |
($ in thousands) |  | March 31, 2024 |  | December 31, 2023 |  | Change |
Total invested assets |  | $ | 8,745,681 |  |  | 8,693,729 |  |  | 1 |  | %
Invested assets per dollar of common stockholders' equity |  | 3.12 |  |  | 3.16 |  |  | (1) |  |
Components of unrealized gains (losses) – before tax: |  |  |  |  |  |  |
Fixed income securities |  | (369,373) |  |  | (353,253) |  |  | 5 | % |
Equity securities |  | 4,771 |  |  | 4,079 |  |  | 17 | % |
Net unrealized gains (losses) – before tax |  | (364,602) |  |  | (349,174) |  |  | 4 | % |
Components of unrealized gains (losses) – after tax: |  |  |  |  |  |  |
Fixed income securities |  | (291,805) |  |  | (279,070) |  |  | 5 | % |
Equity securities |  | 3,769 |  |  | 3,223 |  |  | 17 | % |
Net unrealized gains (losses) – after tax |  | (288,036) |  |  | (275,847) |  |  | 4 | % |

Invested assets increased $52.0 million at March 31, 2024, compared to December 31, 2023, reflecting our active investment of operating and investing cash flows. Operating cash flows during First Quarter 2024 were 10% of NPW.
Net Investment Income
The components of net investment income earned were as follows:

|  | Quarter ended March 31, |  | Change % or Points |  |  |  |  |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |  |  |
Fixed income securities |  | $ | 94,102 |  |  | 80,087 |  |  | 17 |  | % |  |  |  |  |  |  |
Commercial mortgage loans ("CMLs") |  | 2,794 |  |  | 1,965 |  |  | 42 |  |  |  |  |  |  |  |  |
Equity securities |  | 4,908 |  |  | 1,205 |  |  | 307 |  |  |  |  |  |  |  |  |
Short-term investments |  | 3,519 |  |  | 4,650 |  |  | (24) |  |  |  |  |  |  |  |  |
Alternative investments |  | 6,881 |  |  | 7,768 |  |  | (11) |  |  |  |  |  |  |  |  |
Other investments |  | 263 |  |  | 43 |  |  | 512 |  |  |  |  |  |  |  |  |
Investment expenses |  | (4,618) |  |  | (4,212) |  |  | 10 |  |  |  |  |  |  |  |  |
Net investment income earned – before tax |  | 107,849 |  |  | 91,506 |  |  | 18 |  |  |  |  |  |  |  |  |
Net investment income tax expense |  | (22,209) |  |  | (18,454) |  |  | 20 |  |  |  |  |  |  |  |  |
Net investment income earned – after tax |  | $ | 85,640 |  |  | 73,052 |  |  | 17 |  |  |  |  |  |  |  |  |
Effective tax rate |  | 20.6 | % |  | 20.2 |  |  | 0.4 |  | pts |  |  |  |  |  |  |
Annualized after-tax yield on fixed income investments |  | 4.0 |  |  | 3.8 |  |  | 0.2 |  |  |  |  |  |  |  |  |
Annualized after-tax yield on investment portfolio |  | 3.9 |  |  | 3.7 |  |  | 0.2 |  |  |  |  |  |  |  |  |

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After-tax net investment income earned increased 17% in First Quarter 2024 compared to First Quarter 2023, primarily driven by active portfolio management and the reinvestment of cash flows in a higher interest rate environment, which provided the opportunity to increase the embedded pre-tax book yield by 60 basis points over the course of 2023. During First Quarter 2024, our pre-tax book yield improved an additional six basis points, bringing our pre-tax book yield to 4.8% as of March 31, 2024.
Realized and Unrealized Gains and Losses
When evaluating securities for sale, our general philosophy is to reduce our exposure to securities and sectors based on economic evaluations of whether (i) the fundamentals for that security or sector have deteriorated or (ii) the timing is appropriate to opportunistically trade for other securities with better economic-return characteristics. Net realized and unrealized gains and losses for the indicated periods were as follows:

|  | Quarter ended March 31, |  | Change % |  |  |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Net realized gains (losses) on disposals |  | $ | 170 |  |  | (9,146) |  |  | (102) |  | % |  |  |  |  |  |
Net unrealized gains (losses) on equity securities |  | 692 |  |  | 3,248 |  |  | (79) |  |  |  |  |  |  |  |
Net credit loss benefit (expense) on fixed income securities, AFS |  | (2,650) |  |  | 9,529 |  |  | (128) |  |  |  |  |  |  |  |
Net credit loss benefit (expense) on CMLs |  | 168 |  |  | 17 |  |  | 888 |  |  |  |  |  |  |  |
Losses on securities for which we have the intent to sell |  | (15) |  |  | (304) |  |  | (95) |  |  |  |  |  |  |  |
Total net realized and unrealized investment gains (losses) |  | $ | (1,635) |  |  | 3,344 |  |  | (149) |  |  |  |  |  |  |  |

Federal Income Taxes
The following table provides information regarding federal income taxes and reconciles federal income tax at the corporate rate to the effective tax rate:

|  | Quarter ended March 31, |  |
($ in thousands) |  | 2024 |  | 2023 |  |  |  |
Tax at statutory rate |  | $ | 21,539 |  |  | 24,099 |  |  |  |  |
Tax-advantaged interest |  | (402) |  |  | (720) |  |  |  |  |
Dividends received deduction |  | (38) |  |  | (68) |  |  |  |  |
Executive compensation |  | 1,323 |  |  | 740 |  |  |  |  |
Stock-based compensation |  | (1,439) |  |  | (1,613) |  |  |  |  |
Other |  | (935) |  |  | (253) |  |  |  |  |
Federal income tax expense |  | $ | 20,048 |  |  | 22,185 |  |  |  |  |
Income before federal income tax, less preferred stock dividends |  | $ | 100,266 |  |  | 112,459 |  |  |  |  |
Effective tax rate |  | 20.0 | % |  | 19.7 |  |  |  |  |

Liquidity and Capital Resources
Capital resources and liquidity reflect our ability to generate cash flows from business operations, borrow funds at competitive rates, and raise new capital to meet our operating and growth needs.
Liquidity
We manage liquidity by generating sufficient cash flows to meet our business operations' short-term and long-term cash requirements. As discussed further below, we adjust our liquidity requirements based on economic conditions, market conditions, and future cash flow commitments.
Sources of Liquidity
Sources of cash for the Parent historically have consisted of dividends from the Insurance Subsidiaries, the investment portfolio held at the Parent, borrowings under third-party lines of credit, intercompany revolving demand loan agreements with certain Insurance Subsidiaries, and the issuance of equity (common or preferred) and debt securities. We continue to monitor these sources, considering our short-term and long-term liquidity and capital preservation strategies.
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The Parent's cash and components of its investment portfolio were as follows:

($ in thousands) |  | March 31, 2024 |  | December 31, 2023
Fixed income securities |  | $ | 328,821 |  |  | 421,089 |
Equity securities |  | 53,123 |  |  | 50,920 |
Short-term investments |  | 77,670 |  |  | 17,671 |
Alternative investments |  | 16,648 |  |  | 18,134 |
Cash |  | 124 |  |  | 180 |
Total investments and cash |  | $ | 476,386 |  |  | 507,994 |

Short-term investments have historically been maintained in “AAA” rated money market funds and fixed income securities are comprised of high-quality, liquid government and corporate securities.
The amount and composition of the Parent's investment portfolio may change over time based on various factors, including the amount and availability of dividends from our Insurance Subsidiaries, investment income, expenses, other Parent cash needs, such as dividends payable to stockholders, asset allocation investment decisions, inorganic growth opportunities, debt retirement, and share repurchases. Our target is for the Parent to maintain liquid investments of at least twice its expected annual net cash outflow needs, or $210 million.
Insurance Subsidiary Dividends
The Insurance Subsidiaries generate liquidity through insurance float, created by collecting premiums and earning investment income before paying claims. The period of float can extend over many years. Our investment portfolio consists of securities with maturity dates that continually provide a source of cash flow for claims payments in the ordinary course of business. To protect our Insurance Subsidiaries' capital, we purchase reinsurance coverage for significantly large claims or catastrophes that may occur.
The Insurance Subsidiaries paid $44 million in total dividends to the Parent in First Quarter 2024. As of December 31, 2023, our allowable ordinary maximum dividend is $316 million for 2024. All Insurance Subsidiary dividends to the Parent are (i) subject to the approval and/or review of its domiciliary state insurance regulator, and (ii) generally payable only from earned statutory surplus reported in its annual statements as of the preceding December 31. Although domiciliary state insurance regulators have historically approved dividends, there is no assurance they will approve future Insurance Subsidiary dividends.
New Jersey corporate law also limits the maximum amount of dividends the Parent can pay our stockholders if either (i) the Parent would be unable to pay its debts as they become due in the usual course of business, or (ii) the Parent’s total assets would be less than its total liabilities. The Parent’s ability to pay dividends to stockholders is also impacted by (i) covenants in its credit agreement that obligate it, among other things, to maintain a minimum consolidated net worth and a maximum ratio of consolidated debt to total capitalization, and (ii) the terms of our preferred stock that prohibit dividends from being declared or paid on our common stock if dividends are not declared and paid, or made payable, on all outstanding preferred stock for the latest completed dividend period.
For additional information regarding dividend restrictions and financial covenants, where applicable, see Note 11. "Indebtedness," Note 17. "Equity," and Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.
Line of Credit
On November 7, 2022, the Parent entered into a Credit Agreement with the lenders named therein (the “Lenders”) and Wells Fargo Bank, National Association, as Administrative Agent ("Line of Credit"). Under the Line of Credit, the Lenders have agreed to provide the Parent with a $50 million revolving credit facility that can be increased to $125 million with the Lenders' consent. No borrowings were made under the Line of Credit in First Quarter 2024. The Line of Credit will mature on November 7, 2025, and has a variable interest rate based on the Parent’s debt ratings. We expect to continue to maintain a credit facility for liquidity purposes. For additional information regarding the Line of Credit and corresponding representations, warranties, and covenants, refer to Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report. We met all covenants under our Line of Credit as of March 31, 2024.
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Four Insurance Subsidiaries are members of Federal Home Loan Bank ("FHLB") branches, as shown in the following table. Membership requires the ownership of branch stock and includes the right to access liquidity. All Federal Home Loan Bank of Indianapolis ("FHLBI") and Federal Home Loan Bank of New York ("FHLBNY") borrowings are required to be secured by investments pledged as collateral. For additional information regarding collateral outstanding, refer to Note 4. "Investments" in Item 1. "Financial Statements." of this Form 10-Q.

Branch | Insurance Subsidiary Member
FHLBI | Selective Insurance Company of South Carolina 1 Selective Insurance Company of the Southeast 1
FHLBNY | Selective Insurance Company of America Selective Insurance Company of New York ("SICNY")

1 These subsidiaries are jointly referred to as the "Indiana Subsidiaries" because they are domiciled in Indiana.
The Line of Credit permits aggregate borrowings from the FHLBI and the FHLBNY up to 10% of the respective member company’s admitted assets for the previous year. SICNY is domiciled in New York, which limits its FHLBNY borrowings to the lesser of 5% of admitted assets for the most recently completed fiscal quarter or 10% of the previous year-end's admitted assets. As of March 31, 2024, we had remaining capacity of $528.3 million for FHLB borrowings, with a $21.3 million additional stock purchase requirement to allow the member companies to borrow their remaining capacity amounts.
Short-term Borrowings
We did not make any short-term borrowings from FHLB branches during First Quarter 2024.
Intercompany Loan Agreements
The Parent has lending agreements with the Indiana Subsidiaries, approved by the Indiana Department of Insurance, that provide the Parent with additional intercompany liquidity. Like the Line of Credit, these lending agreements limit the Parent’s borrowings from the Indiana Subsidiaries to 10% of the admitted assets of the respective Indiana Subsidiary. The outstanding balance on these intercompany loans was $62.0 million as of March 31, 2024, and $67.0 million as of December 31, 2023. The remaining capacity under these intercompany loan agreements was $119.5 million as of March 31, 2024, and $114.5 million as of December 31, 2023. Additionally, we have other insurance regulator-approved intercompany agreements in place that facilitate liquidity management between the Parent and the Insurance Subsidiaries to enhance flexibility.
Capital Market Activities
The Parent had no private or public stock issuances during First Quarter 2024. In addition, we had no common stock share repurchases during First Quarter 2024 under our existing share repurchase program. We had $84.2 million of remaining capacity under our share repurchase program as of March 31, 2024. For additional information on the share repurchase program, refer to Note 17. “Equity” in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.
Uses of Liquidity
The Parent uses the liquidity generated from the sources discussed above to pay dividends to our stockholders, among other things. Dividends on shares of the Parent's common and preferred stock are declared and paid at the discretion of the Board based on our operating results, financial condition, capital requirements, contractual restrictions, and other relevant factors. On May 1, 2024, our Board declared:
•A quarterly cash dividend on common stock of $0.35 per common share that is payable June 3, 2024, to holders of record on May 15, 2024; and
•A quarterly cash dividend of $287.50 per share on our 4.60% Non-Cumulative Preferred Stock, Series B (equivalent to $0.28750 per depository share) payable on June 17, 2024, to holders of record as of June 3, 2024.
Our ability to meet our interest and principal repayment obligations on our debt and our ability to continue to pay dividends to our stockholders is dependent on (i) liquidity at the Parent, (ii) the ability of the Insurance Subsidiaries to pay dividends, if necessary, and/or (iii) the availability of other sources of liquidity to the Parent. Our next borrowing principal repayment is $60 million to FHLBI due on December 16, 2026.
Restrictions on the ability of the Insurance Subsidiaries to declare and pay dividends, without alternative liquidity options, could materially affect our ability to service debt and pay dividends on common and preferred stock.
Capital Resources
Capital resources ensure we can pay policyholder claims, furnish the financial strength to support the business of underwriting insurance risks, and facilitate continued business growth. At March 31, 2024, we had GAAP stockholders' equity of $3.0
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billion and statutory surplus of $2.8 billion. With total debt of $503.3 million at March 31, 2024, our debt-to-capital ratio was 14.3%. For additional information on our statutory surplus, see Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.
The following table summarizes certain contractual obligations we had at March 31, 2024, that may require us to invest additional amounts into our investment portfolio, which we would fund primarily with operating cash flows.

($ in millions) |  | Amount of Obligation
Alternative and other investments |  | $ | 259.7 |
Non-publicly traded collateralized loan obligations in our fixed income securities portfolio |  | 96.8 |
Non-publicly traded common stock within our equity portfolio |  | 32.6 |
CMLs |  | 1.6 |
Privately-placed corporate securities |  | 33.8 |
Total |  | $ | 424.5 |

There is no certainty (i) that any such additional investments will be required, and (ii) about the timing of funding. We expect to have the capacity to fund these commitments through our normal operating and investing activities as they come due.
Our current and long-term material cash requirements associated with (i) loss and loss expense reserves, (ii) contractual obligations under operating and financing leases for office space and equipment, and (iii) notes payable, funded primarily with operating cash flows, have not materially changed since December 31, 2023. The Insurance Subsidiaries' net loss and loss expense reserves duration was 3.1 years at December 31, 2023.
Our other cash requirements include, without limitation, dividends to stockholders, capital expenditures, and other operating expenses, including commissions to our distribution partners, labor costs, premium taxes, general and administrative expenses, and income taxes.
As of March 31, 2024, and December 31, 2023, we had no (i) material guarantees on behalf of others and trading activities involving non-exchange traded contracts accounted for at fair value, (ii) material transactions with related parties other than those disclosed in Note 18. “Related Party Transactions” in Item 8. “Financial Statements and Supplementary Data.” of our 2023 Annual Report, and (iii) material relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Consequently, we are not exposed to any material financing, liquidity, market, or credit risk related to off-balance sheet arrangements.
We continually monitor our cash requirements and the capital resources we maintain at the holding company and Insurance Subsidiary levels. As part of our long-term capital strategy, we strive to maintain capital metrics that support our targeted financial strength relative to the macroeconomic environment. Based on our analysis and market conditions, we may take a variety of actions, including, without limitation, contributing capital to the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing existing debt, repurchasing shares of the Parent’s common stock, and adjusting common stockholders’ dividends.
Our capital management strategy is intended to protect the interests of the policyholders of the Insurance Subsidiaries and our stockholders and enhance our financial strength and underwriting capacity. We have a profitable underwriting portfolio and solid capital base, positioning us well to take advantage of potential market opportunities.
Book value per common share increased 2% to $46.17 as of March 31, 2024, from $45.42 as of December 31, 2023, driven by $1.31 in net income available to common stockholders per diluted common share, partially offset by a $0.22 increase in unrealized losses on our fixed income securities portfolio and $0.35 in dividends to our common stockholders. The increase in net unrealized losses on our fixed income securities was primarily driven by an increase in benchmark U.S. Treasury rates. Our adjusted book value per share, which is book value per share excluding total after-tax unrealized gains or losses on investments included in accumulated other comprehensive income (loss), increased to $50.97 as of March 31, 2024, from 50.03 as of December 31, 2023.
Cash Flows
Net cash provided by operating activities decreased to $114.2 million in First Quarter 2024, compared to $135.8 million in First Quarter 2023, primarily driven by reduced underwriting results in our insurance operations. For more information on our underwriting results, refer to "Insurance Operations" above in this MD&A.
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Net cash used in investing activities decreased to $86.0 million in First Quarter 2024, compared to $98.2 million in First Quarter 2023, as a result of investing less cash from operating activities. Operating cash flows were 10% of NPW in First Quarter 2024 compared to 14% of NPW in First Quarter 2023.
Net cash used in financing activities remained relatively flat at $29.6 million in First Quarter 2024, compared to $27.1 million in First Quarter 2023.
Ratings
Our ratings are as follows:

Nationally Recognized Statistical Rating Organizations |  | Financial Strength Rating |  | Outlook
AM Best Company |  | A+ |  | Stable
Moody's Investors Services |  | A2 |  | Positive
Fitch Ratings |  | A+ |  | Stable
Standard & Poor's Global Ratings ("S&P") |  | A |  | Stable

On February 28, 2024, S&P reaffirmed our “A” rating with a “stable” outlook. In taking this rating action, S&P cited our (i) strong financial and business risk profiles, (ii) sound underwriting process that produces profitable operating performance, and (iii) very strong capital adequacy.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in the information about market risk set forth in our 2023 Annual Report.
ITEM 4. CONTROLS AND PROCEDURES.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. In performing this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework ("COSO Framework") in 2013. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of such period are (i) effective in recording, processing, summarizing, and reporting information on a timely basis that we are required to disclose in the reports that we file or submit under the Exchange Act, and (ii) effective in ensuring that information that we are required to disclose in the reports that we file or submit under the Exchange Act is appropriately accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions about required disclosure. No changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during First Quarter 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Incidental to our insurance operations, we are routinely engaged in legal proceedings with inherently unpredictable outcomes that could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods. For additional information regarding our legal risks, refer to Note 13. "Litigation" in Item 1. "Financial Statements." of this Form 10-Q and Item 1A. “Risk Factors.” below in Part II. “Other Information.” As of March 31, 2024, we have no material pending legal proceedings that could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.
ITEM 1A. RISK FACTORS.
Certain risk factors can significantly impact our business, liquidity, capital resources, results of operations, financial condition, and debt ratings. These risk factors might affect, alter, or change our actions in executing our long-term capital strategy. Examples include, without limitation, contributing capital to any or all of the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing our existing debt and/or equity securities, or increasing or decreasing common stockholders' dividends. We operate in a continually changing business environment, and new risk factors that we cannot
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predict or assess may emerge at anytime. Consequently, we can neither predict such new risk factors nor assess the potential future impact on our business. There have been no material changes from the risk factors disclosed in Item 1A. “Risk Factors.” in our 2023 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
The following table provides information regarding our purchases of our common stock in First Quarter 2024:

Period |  | Total Number of Shares Purchased 1 |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Programs 2 |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Announced Programs (in millions)2
January 1 – 31, 2024 |  | 158 |  |  | $ | 100.66 |  |  | — |  |  | $ | 84.2 |
February 1 – 29, 2024 |  | 68,021 |  |  | 96.85 |  |  | — |  |  | 84.2 |
March 1 – 31, 2024 |  | 889 |  |  | 104.00 |  |  | — |  |  | 84.2 |
Total |  | 69,068 |  |  | $ | 96.95 |  |  | — |  |  | $ | 84.2 |

1 We purchased these shares from employees to satisfy tax withholding obligations associated with the vesting of their restricted stock units.
2 On December 2, 2020, we announced our Board of Directors authorized a $100 million share repurchase program with no set expiration or termination date. Our repurchase program does not obligate us to acquire any particular amount of our common stock. Management will determine the timing and amount of any share repurchases under the authorization at its discretion based on market conditions and other considerations.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
During the three months ended March 31, 2024, no director or officer of the Company adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (a “Rule 10b5-1 trading arrangement") or any "non-Rule 10b5-1 trading arrangement" (as defined in Item 408(c) of Regulation S-K).
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ITEM 6. EXHIBITS.

Exhibit No. |  |
*10.1+ |  | Selective Insurance Group, Inc. 2024 Omnibus Stock Plan Service-Based Restricted Stock Unit Agreement.
*10.2+ |  | Selective Insurance Group, Inc. 2024 Omnibus Stock Plan Performance-Based Restricted Stock Unit Agreement.
*10.3+ |  | Selective Insurance Group, Inc. 2024 Omnibus Stock Plan Non-Employee Director Restricted Stock Unit Agreement.
*31.1 |  | Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2 |  | Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
**32.1 |  | Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
**32.2 |  | Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
**101 |  | The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.
**104 |  | The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in iXBRL.

* Filed herewith.
** Furnished and not filed herewith.
+ Management compensation plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SELECTIVE INSURANCE GROUP, INC.
Registrant

Date: | May 2, 2024 |  | By: /s/ John J. Marchioni |
|  |  | John J. Marchioni |
|  |  | Chairman of the Board, President and Chief Executive Officer |
|  |  | (principal executive officer) |
Date: | May 2, 2024 |  | By: /s/ Anthony D. Harnett |
|  |  | Anthony D. Harnett |
|  |  | Senior Vice President, Chief Accounting Officer and Interim Chief Financial Officer
|  |  | (principal financial officer and principal accounting officer) |

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