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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 actions we might take 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 emerge

from time to time. Consequently, we can neither predict such new risk factors nor assess the potential future impact, if any, they might have on our business.

Risks Related to our Insurance Operations

We are subject to losses from catastrophic events.

Losses from natural and human-made catastrophes can negatively impact our financial results. Examples include, without limitation, hurricanes, tornadoes, windstorms, earthquakes, hail, severe convective storms, severe winter weather, derechos, floods, and fires, some related to climate change, and criminal and terrorist acts, including cyber-attacks, civil unrest, and explosions. The frequency and severity of these catastrophes are inherently unpredictable, and the frequency and severity of catastrophe losses have increased globally in recent years. Although we use sophisticated catastrophe modeling techniques to manage our catastrophe exposure, catastrophe models provide estimates, and actual exposure and loss experience may materially differ. For example, catastrophe models did not fully estimate the potential for some recent catastrophe loss activity (such as the Texas freeze in March of 2021 and Hurricane Ida-related severe flooding in the Mid-Atlantic and Northeast) and the concurrent recent economic inflation on construction costs. Unmodeled or under-modeled catastrophe risks could result in understated catastrophe exposure and our actual catastrophe losses could be higher.

Our insurance operations primarily write risks in the Eastern, Midwestern, and Southwestern regions of the U.S. Our most significant natural and/or human made catastrophe exposures are (i) hurricanes impacting the Eastern U.S., (ii) severe convective storms, including hailstorms and tornadoes, (iii) winter storms, and (iv) terrorism events. Single storms could adversely impact our financial results, but it is also possible that we could experience more than one severe catastrophic event in any given calendar year. We track our severe weather and catastrophe losses using definitions and information we obtain from ISO’s Property Claim Services unit, an internationally recognized authority on insured property losses from catastrophes in the United States, Puerto Rico, and the U.S. Virgin Islands.

Certain factors can impact our estimates of ultimate costs for natural and/or human-made catastrophes, including:

•Inability to access portions of the affected areas after a catastrophic event;

•Scarcity of necessary labor and materials that delay repairs and increase our loss costs;

•Regulatory uncertainties, including new or expanded interpretations of coverage;

•Residual market assessment-related increases in our catastrophe losses;

•Potential fraud and inflated repair costs, partly driven by (a) demand surge post-event, and (b) opportunistic service providers;

•Higher loss adjustment expenses due to shortages of claims adjusters available to appraise damage;

•Late claims reporting;

•Escalation of business interruption costs due to infrastructure disruption; and

•Whether the U.S. Secretary of the Treasury certifies an event as a terrorist act under TRIPRA.

Natural catastrophes

The United Nation’s Intergovernmental Panel on Climate Change (“IPCC”) is an international body responsible for assessing climate change science. In 2018, the IPCC estimated in its "Special Report on Global Warming of 1.5°C" that human activities (i) have caused approximately 1.8°F of global warming above pre-industrial levels and (ii) could cause an additional 0.9°F increase above pre-industrial levels between 2030 and 2052. Climate change models project robust differences in global regional climate characteristics between 1.8°F and 3.6°F. The IPCC's 2019 "Special Report on Climate Change and Land" reinforced these findings, as did the IPCC’s “2021: Summary for Policymakers. In: Climate Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change.”

These global regional differences, whether attributable to nature or human activities, include increases in (i) mean temperature in most land and ocean regions, (ii) hot extremes in most inhabited regions, (iii) heavy precipitation in several regions, and (iv) the probability of drought and precipitation deficits in some regions. These temperature changes can impact weather patterns and the frequency and severity of catastrophes, including hurricanes, severe convective storms, and wildfires — all of which could cause our catastrophe losses to increase.

Human-made catastrophes

The risk of a wide-scale criminal or terrorist cyber-attack has become more significant and has drawn increased attention from IT and national security experts, U.S. policymakers, the U.S. military, and the insurance industry. There is increased general recognition that a wide-scale cyber-attack that simultaneously impacts multiple victims is more likely and insurance industry systemic risk has increased. We have identified three primary sources of potential insured exposure to cyber losses: (i) cyber specific policies designed to cover both first-party and third-party losses; (ii) affirmative cyber coverage grants included in

other types of policies, such as commercial property or businessowners policies; and (iii) “silent cyber” exposures that may exist if courts, regardless of intent, interpret policy forms without specific related coverage exclusions to provide coverage for a cyber-related incident.

We provide cyber-specific policies to our commercial lines and personal lines customers through 100% reinsured solutions with highly-rated specialty cyber markets. These markets allow us to mitigate our underwriting risk, meet our customers’ needs for cyber insurance, and develop our expertise in the cyber insurance market. Our other insurance policies provide some first- and third-party cyber coverages:

•We offer limited first-party affirmative cyber coverage in our commercial property and businessowners policy forms. We believe we have limited our “silent cyber” exposure through an affirmative coverage grant subject to a sub-limit.

•Our base property forms typically include a coverage grant of $2,000 or $10,000 and most of our property policies also contain an affirmative endorsement providing “virus and harmful code” coverage subject to a sub-limit. Over 90% of our policies with virus/harmful code coverage on commercial property, businessowners, commercial output policy, or inland marine forms have sublimits of $25,000 or lower.

•Most of our general liability policies and businessowners policies specifically exclude cyber-related liability losses, except for "bodily injury." Our specific cyber-exclusion and our liability forms' lack of affirmative sub-limited cyber coverage, effectively limit most “silent cyber” exposure. Any related potential exposures, however, are subject to our Casualty Reinsurance Program, which has no cyber-related loss exclusion.

•By statute, workers compensation policies do not have cyber exclusions, and a cyber-attack-related workplace injury could trigger coverage.

An increase in natural or man-made catastrophe losses, including a systemic cyber-attack resulting in an aggregation of property and/or casualty cyber losses, will reduce our net income and stockholders’ equity and could have a material adverse effect on our liquidity, financial strength, and debt ratings. In addition, the closer a catastrophe occurs to the end of a reporting period, the more likely we have limited information to estimate loss and loss expense reserves, adding greater uncertainty to our estimates. More detailed claims information available after a reporting period may result in reserve changes in subsequent periods.

Our loss and loss expense reserves may not be adequate to cover actual losses and expenses.

We maintain reserves for our estimated liability for loss and loss expense associated with reported and unreported insurance claims. Estimating loss and loss expense reserves is inherently uncertain, and there is no method for precisely estimating the ultimate liability for the settlement of claims. We base our loss and loss expense reserve estimates on our internal comprehensive reserve review, which utilizes our own loss experience, including claims payment and reporting patterns, as well as our view of underlying trends in claims frequency and severity. The results are supplemented with other subjective considerations, such as projected impacts from various broad economic, political, social, and legal developments or trends, such as inflation, ongoing impacts of the COVID-19-related governmental actions, judicial tort decisions, and various state legislative initiatives. The timing or impact of these developments or trends cannot be predicted with certainty, and we cannot be sure the reserves we establish are adequate or will be so in the future.

We review our reserve position quarterly and adjust the reserve position accordingly. An increase in reserves (i) reduces net income and stockholders’ equity, and (ii) could have a material adverse effect on our liquidity, financial strength, and debt ratings. As we underwrite new business and renew existing business, we estimate future loss cost trends in pricing our products to generate an adequate risk-adjusted return. If our estimate of future loss cost trends proves to be understated, our pricing of future new and renewal business may be inadequate to cover actual loss costs, understating our future loss and loss expense reserves.

Three examples of how loss and loss expense reserves might be affected by economic, political, social, or legal developments or trends are:

•If inflation, including medical and social inflation, is higher than our assumptions, our loss and loss expense reserves associated with our longer tail lines of business may prove to be insufficient. For example, inflation rates in 2021 increased from 2020, as reflected in the overall consumer price index ("CPI"), the Core CPI, and the Producer Price Index. We, however, do not know how long elevated inflation will persist. Our workers compensation line of business is susceptible to inflation because of its extended payment pattern and the medical inflationary environment.

•Our loss and loss expense reserves may be impacted by the following COVID-19-related items:

◦All of our commercial property and businessowners' policies require direct physical loss of, or damage to, property by a covered cause of loss in order to trigger a business interruption claim. Whether COVID-19-

related contamination, the existence of a pandemic, and/or the continuing government actions cause physical loss of or damage to property continues to be the subject of much debate and litigation. While the insurance industry has won most of the cases at the trial level, many cases are now on appeal and we cannot predict the outcome of that litigation. Our practice is to include in, or attach to, all standard lines commercial property and businessowners' policies an exclusion that states that 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. We offer some limited coverages that could apply in COVID-19-related claims and circumstances, primarily tied to clean-up and food-contamination that are subject to sub-limits. Principally all of our commercial property and businessowners' policies now include the very specific and regulatory-approved virus exclusion.

◦Limited medical resources availability could result in medical inflation and complicate, delay and/or extend medical treatment that could impact exposure on workers compensation, general liability, and personal and commercial automobile claims.

◦We may have increased workers compensation loss and loss expenses if policyholders' employees in high-risk roles of essential businesses contracted COVID-19 in the workplace. We may experience higher frequency of workers compensation claims, particularly as state legislative or executive order proposals are enacted that create presumptions that the contraction of COVID-19 by an essential business employee who interacted with the public is work-related. We also may see an extension of workers compensation benefits if employees do not have jobs to which they can return.

◦We may experience an increase in liability claims against our policyholders related to business practices as remote-office work-from-home employees return to their pre-COVID-19 pandemic office and business locations. This may be exacerbated by an active plaintiffs’ attorney seeking to generate COVID-19-related claim activity.

◦Loss frequency and severity could increase related to our auto and property coverages due to, among other things, disruptions in supply chains and changes in business practices and individual behaviors resulting from the shelter-in-place and social distancing measures, such as arson and fraud.

◦We may experience delayed reporting of losses, settlement negotiations, and trial of disputed claims that may disrupt our normal claims resolution processes and trends.

•Various states have expanded or could expand the statute of limitations for civil actions alleging sexual abuse. By retroactively permitting previously time-barred claims, these “reviver” laws may result in insurance claims that could significantly increase loss costs and require re-evaluation of previously-established reserves or the creation of new reserves. Since reviver statutes have been enacted, we have received some notices of claims or potential claims for acts alleged to have occurred, some dating as far back as the 1950s. Without prior experience, we cannot estimate how many "reviver" claims notices we may receive. Most notices we have received (i) are blanket notices sent by attorneys representing claimants unsure of the alleged assailant or supervising entity's insurer or policy (if any) and (ii) may not implicate any insurance policies we or a predecessor issued. For those we determine implicate a policy we or a predecessor issued, we (i) have investigated or are investigating facts, (ii) have evaluated policy terms, (iii) believe we have appropriate coverage defenses to most of these claims and/or sufficient reinsurance protections, and (iv) have considered these factors in establishing our reserves, which we believe provide a reasonable estimate of the aggregate ultimate net exposure for these claims. As coverage positions may be challenged through litigation or otherwise, we face litigation risks further discussed below in the Risk Factor entitled, “We are engaged in ordinary routine legal proceedings incidental to our insurance operations that, because litigation outcomes are inherently unpredictable, could impact our reputation and/or have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.”

For further discussion on our loss and loss expense reserves, please see the “Critical Accounting Policies and Estimates” section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” and Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Our ability to reduce our risk exposure depends on the availability and cost of reinsurance.

We transfer a significant portion of our underwriting risk exposure – specifically a portion of our loss and loss expense – to reinsurance companies in exchange for a specified portion of premiums. Typically, our reinsurance coverages align with the coverages offered under our primary insurance policies.

The availability, amount, and cost of reinsurance depend on market conditions, including retrocessional reinsurance market capacity. Most of our reinsurance contracts have annual terms, so reinsurance costs may fluctuate significantly and not necessarily correlate to the loss experience of our specific book of business. State insurance regulators generally permit us to consider catastrophe reinsurance expense in our filed rates and rating plans. However, the degree and timing of regulatory

approval may not align with the actual expense impact from new reinsurance terms. Disproportionate increases in our reinsurance expense that we cannot include in our filed rates and rating plans will reduce our earnings. If we are unable to negotiate desired reinsurance amounts or terms, we may experience (i) increased reinsurance expense, (ii) increased risk assumption on individual or aggregate claim losses, and (iii) limitations on our ability to write future business.

Commercial property and homeowners coverages have historically accounted for most of our catastrophe-related claims. To limit our exposure to catastrophe losses, we purchase catastrophe reinsurance. Our reinsurance coverage may prove to be inadequate, particularly if:

•We do not purchase sufficient amounts of reinsurance because of defects or inaccuracies in the various modeling software programs we use to analyze our Insurance Subsidiaries' risk;

•A major catastrophe loss exceeds (i) the purchased reinsurance limit or (ii) the financial capacity of one or more of our reinsurers even if the loss is within the purchased limit;

•The frequency of catastrophe losses increases and our Insurance Subsidiaries' insured losses exceed the aggregate limits of the catastrophe reinsurance treaty or our Insurance Subsidiaries experience an aggregation of losses that fall below our per occurrence reinsurance retention; or

•Our reinsurance counterparties (i) are unable to access their reinsurance markets, or retrocessions, (ii) suffer significant financial losses, (iii) are sold, (iv) cease writing reinsurance business, or (v) are unable or unwilling to satisfy their contractual obligations to us.

In response to the COVID-19 pandemic and recent increased catastrophic loss activity, the reinsurance industry has sought to tighten contractual terms and conditions, reduce reinsurance capacity, and increase pricing. Tightened terms and conditions include introducing new coverage exclusions, such as excluding losses related to cyber risk and communicable diseases, particularly for business interruption losses in property treaties and, to a lesser extent, in casualty treaties. To the extent we are exposed to losses on our primary policies from risks, such as cyber and communicable disease, that are now principally excluded from coverage under our reinsurance treaties, we face increased underwriting risk. The increased underwriting risk could increase our net loss and loss expenses and increase the volatility in our underwriting results. Decreased reinsurance capacity also would increase our underwriting risk if we cannot fully place our existing reinsurance treaties upon renewal.

Even with the benefits of reinsurance, our exposure to catastrophe risks could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings.

We may be subject to potentially significant losses from acts of terrorism.

We are required to participate in TRIPRA, now extended to December 31, 2027, for our Standard Commercial Lines and E&S Lines business. TRIPRA rescinded all previously-approved coverage exclusions for terrorism and requires private insurers and the U.S. government to share the risk of loss on future acts of terrorism certified by the U.S. Secretary of the Treasury. Under TRIPRA, each participating insurer is responsible for paying a significant deductible of specified losses before federal assistance is available. Our deductible of $419 million is based on a percentage of our prior year’s applicable Standard Commercial Lines and E&S Lines premiums. In 2022, the federal government will pay 80% of losses above the deductible, with the insurer retaining 20%. Although TRIPRA will mitigate some of our loss exposure to a large-scale terrorist attack, our deductible could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. If the U.S. Secretary of the Treasury does not certify specific terrorist events (as occurred with the 2013 Boston Marathon bombing and the 2015 San Bernardino shootings), we could be required to pay terrorism-related covered losses without TRIPRA's risk-sharing benefits. We also could be required to pay terrorism-related losses for customers who declined terrorism coverage.

Our primary workers compensation policies are required to cover terrorism risk, so TRIPRA applies to those policies.Insureds with non-workers compensation commercial policies have the option to accept or decline our terrorism coverage or negotiate with us for other terms. In 2021, 85% of our Standard Commercial Lines non-workers compensation policyholders purchased terrorism coverage that included nuclear, biological, chemical, and radioactive ("NBCR") events. TRIPRA also applies to cyber liability insurance policies reported under a Terrorism Risk Insurance Program-eligible line of insurance.

Many states mandate that commercial property policies cover fire following an act of terrorism - regardless of whether the insured purchased terrorism coverage. We also sometimes elect to provide terrorism coverage for lines of business not included in TRIPRA, such as Commercial Automobile. TRIPRA has never covered personal lines of business. Our Standard Personal Lines homeowner policies exclude nuclear losses but not biological or chemical losses. Our current reinsurance programs generally cover losses from conventional foreign and domestic terrorism acts, but not NBCR events.

We are exposed to credit risk.

We face credit risk in several areas of our insurance operations, including from:

•Our reinsurers, which are obligated to make payments to us under our reinsurance agreements. Reinsurance credit risk can fluctuate over time, increasing during periods of high industry catastrophe and liability losses. Reinsurers generally manage their large loss exposure through their own reinsurance programs, or retrocessions, about which we do not always have the full details. If our reinsurers have difficulty collecting on their retrocession programs or reinstating retrocession coverage after a large loss, we may not receive timely or full payment of our reinsurance claims. This means that we have direct and indirect counterparty credit risk to our reinsurers and the reinsurance industry, which is a global but concentrated market.

•Certain life insurance companies, if they fail to fulfill their annuity contract obligations to our policyholders or claimants under annuities we purchased as part of structured claims settlements.

•Some of our independent distribution partners, who collect premiums from our policyholders for us.

•Some policyholders, who are directly obligated to us for premium and/or deductible payments, the timing of which may be impacted by mandated payment moratoriums.

Our exposure to credit risk could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings.

We depend on distribution partners.

We market and sell our insurance products through independent, non-employee distribution partners. Insurance law and regulation makes us responsible for the business practices and customer interactions of our distribution partners. Independent distribution partners have – and we expect will continue to have – a significant role in overall insurance industry premium production. While our customers find advantages in using independent distribution partners, our reliance on independent distribution partners presents risks and challenges, including:

•Competition in our distribution channel, as we must market our products and services to our independent distribution partners who have access to products from multiple carriers and markets.

•Challenges in developing brand recognition because we closely coordinate with our distribution partners and some customers cannot differentiate their insurance agent from their insurance carrier.

•Our market share growth is tied to our distribution partners' market share. Independent retail insurance agencies control 85% of standard commercial lines business and 36% of standard personal lines business in the U.S. Consequently, growth in our Standard Personal Lines could be more limited than in our Standard Commercial Lines. Competitors have focused on lower-cost "direct-to-customer" distribution models that emphasize digital ease and efficiencies to address the discrepancy in agency control of standard personal lines business. Continued advancements in "direct-to-customer" distribution models may impact the overall market share our independent distribution partners control, make it more difficult for us to grow, or require us to establish relationships with more distribution partners.

•Aggregation and consolidation of our independent distribution partners and their market share, as some publicly-traded and private equity-backed independent distribution partners have deployed consolidation strategies to acquire other independent distribution partners and increase their market share ("Aggregators") over the last decade. If more of our independent distribution partners become Aggregators or are acquired by Aggregators, Aggregator demands and influence on our business could increase. For example, Aggregators could develop and implement strategies to consolidate their business with fewer insurers and demand higher base and supplemental commissions. Aggregators accounted for approximately 36% of our DPW at December 31, 2021, up from 28% three years ago. Currently, no one distribution partner is responsible for 10% or more of our combined insurance operations' premium.

Our financial condition and results of operations are impacted by our independent distribution partners' success in marketing and selling our products and services.

National and global economic conditions could adversely and materially affect our business, results of operations, financial condition, and growth.

Unfavorable economic developments, such as increased inflation levels and the effect, lifting, or lapsing of COVID-19-related governmental directives experienced in 2021, could adversely affect our earnings if our policyholders need less insurance coverage, cancel existing insurance policies, modify coverage, or choose not to renew with us. Inflation and unemployment increases could significantly impact our claims severity across multiple lines of business and could result in adverse reserve development. Heightened levels of economic inflation also could cause higher interest rates, which would likely result in unrealized losses within our portfolio of fixed income securities and lower total returns from our other invested assets. The effect, lifting, or lapsing of COVID-19-related governmental directives in 2021 disrupted supply chains and caused shortages of products, services, and labor. These economic condition-induced shortages may impact our ability to attract and retain labor, including increasing attrition rates, wages, and the cost and difficulty of obtaining third-party resources. An economic downturn also could lead to increased credit and premium receivable risk, failure of reinsurance counterparties and other financial institutions, limitations on our ability to issue new debt, reduced liquidity, and declines in our investments' fair value and financial strength ratings. These potential events and other economic factors could adversely and materially affect our business, results of operations, financial condition, and growth. During 2021, 28% of DPW in our Standard Commercial Lines business was based on payroll or sales of our underlying policyholders. An economic downturn in which our policyholders experience declines in revenue or employee count could adversely affect our total written premium, including audit and endorsement premium.

The COVID-19 pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on ordinary business commerce and financial markets. Federal and state governments have acted to contain the virus, including establishing social distancing requirements, travel restrictions, and vaccination initiatives. While pandemic containment efforts have resulted in the relaxation of some restrictions, new virus variants are leading to new outbreaks and restrictions. The COVID-19 pandemic has and will likely continue to impact our results of operations, financial position, and liquidity. There is substantial uncertainty about the nature and degree of its continued effects over time. The impact of the COVID-19 pandemic on our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic, its impact on economic activity, including the possibility of financial market instability or recession, and the response of government, businesses, and individuals.

A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and could have a material adverse effect on our financial condition and results of operations.

A significant financial strength rating downgrade, particularly from AM Best, would affect our ability to write new or renewal business. Most policyholders are required by various third-party agreements, primarily with lenders, to maintain insurance policies from a carrier with a minimum AM Best or S&P rating. Credit rating downgrades could also make it more expensive for us to access capital markets. We cannot predict the possible rating actions NRSROs might take that could adversely affect our business or our potential actions in response. Any significant downgrade in our financial strength and credit ratings could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. For additional information on our current financial strength and credit ratings, refer to "Overview" in Item 1. "Business." of this Form 10-K.

Markets for insurance products and services are highly competitive and subject to rapid technological change, and we may be unable to compete effectively.

We offer our insurance products and services in a highly competitive market characterized by aggressive price competition and downward pressure on underwriting margins, introduction of new products and services, evolving industry standards, continual improvement in product pricing based on performance characteristics and larger data sets, rapid competitor adoption of technological advancements, and consumer and business price sensitivity. Our ability to compete successfully depends heavily on our timely and consistent introduction of innovative new products and services through digital platforms.

We face substantial competition from a wide range of property and casualty insurance companies for customers, distribution partners, and employees. Competitors include public, private, and mutual insurance companies. Many competitors are larger and may have lower relative operating costs, lower cost of capital, or greater ability to absorb or diversify more risk while maintaining their financial strength ratings. Other competitors, such as mutual or reciprocal companies, are owned by or operated cooperatively for insureds and, unlike us, do not have shareholders who evaluate ROE performance. Consequently, some competitors may be able to price their products more competitively.

The Internet has emerged as a significant competitive digital marketplace for existing and new competitors. Established insurance competitors, such as The Progressive Corporation, are beginning to explore broader digital Internet offerings, while new competitors with variations on traditional business models have emerged, such as Lemonade, Root, and Next. Because the Internet makes it easier and less expensive to bundle products and services, it also is possible that non-insurance companies

conducting business on the Internet could enter the insurance business or form strategic alliances with insurers in the future. Changes in competitors and competition, particularly on the Internet, could cause changes in the supply or demand for insurance and adversely affect our business.

The increasing importance of the Internet, technology, and digital strategy in our industry also highlights our need to attract and retain employees in difficult-to-fill data science, advanced analytics, and IT roles – and the potential negative impact if we fail in so doing.

We have less loss experience data than our larger competitors.

Insurers depend on access to reliable data about their policyholders and loss experience to build complex analytics and predictive models that assess risk profitability, reserve adequacy, adverse claim development potential, recovery opportunities, fraudulent activities, and customer buying habits. Because we use and depend on the aggregated industry loss data assembled by rating bureaus under the antitrust exemptions of the McCarran-Ferguson Act, we likely would be at a competitive disadvantage to larger insurers if Congress repealed the McCarran-Ferguson Act.

We expect the use of data science and analytics to increase and become more complex and accurate, particularly with larger sets of relevant data. Some larger competitors have significantly more data about the performance of their underwritten risks. In comparison, we may not have sufficient volumes of loss experience data to analyze and project our future costs as accurately or granularly. We use industry loss experience from ISO, AAIS, NCCI, and other publicly available sources to supplement our data. While relevant, industry data may not correlate specifically to the performance of our underwritten risks and be as predictive as data on a larger book of our own business.

We are subject to various modeling risks that could have a material adverse impact on our business results.

We rely on complex financial and other statistical models, developed internally and by third parties, to predict (i) underwriting results on individual risks and our overall portfolio, (ii) claims fraud and other claims impacts, such as escalation, (iii) impacts from catastrophes, (iv) enterprise risk management capital scenarios, and (v) investment portfolio changes. We rely on these financial and other statistical models to analyze historical loss costs and pricing, claims severity and frequency trends, catastrophe losses, reinsurance attachment and exhaustion points, investment performance, portfolio risk, and our economic capital position. Flaws in these financial and other statistical models, or in their embedded assumptions, could lead to increased losses. Our statistical models are extremely useful in monitoring and controlling risk, but they are not a substitute for senior management's experience or judgment.

Risks Related to Our Investments Segment

Our investments are exposed to credit risk, interest rate fluctuation, and changes in value.

We depend on income from our investment portfolio for a significant portion of our revenue and earnings. Our investments can be negatively affected by (i) liquidity, (ii) credit deterioration, (iii) financial results, (iv) public equity and/or debt market changes, (v) economic conditions, including heightened levels of economic inflation and any ongoing COVID-19-related governmental orders, (vi) political risk, (vii) sovereign risk, (viii) interest rate fluctuations, or (ix) other factors, including climate change risk and civil unrest. Our investment portfolio's value is subject to credit risk from the issuers, and/or guarantors and insurers, of the securities we hold and other counterparties in certain transactions. Defaults on any of our investments by any issuer, guarantor, insurer, or other counterparty could reduce our net investment income and net realized investment gains - or result in investment losses. We are subject to the risk that the issuers or guarantors of fixed income securities we own may default on principal and interest payment obligations.

Additionally, we are exposed to interest rate risk, primarily related to the market price and cash flow variability associated with changes in interest rates. Consequently, the value and liquidity of our cash, cash equivalents, and marketable and non-marketable securities may fluctuate substantially. Future fluctuations in the value of our cash, cash equivalents, and marketable and non-marketable securities could result in significant losses and have a material adverse impact on our financial condition and operating results.

Our investment portfolio also has climate change-related transition risks. Transition risks arise from society’s transition towards a low-carbon economy, driven by policy and regulations, low-carbon technology advancement, and shifting sentiment and societal preferences. This transition can lead to stranded assets in areas such as the fossil-fuel and automotive industries. It can also result in increased costs to reinvest in and replace infrastructure and litigation against fossil-fuel companies. Transition risks can lead to corporate asset devaluation, lower corporate profitability, lower property values, and lower household wealth. Transition risks may reduce the market value of some energy, transportation, and other investments with high carbon footprints

or those closely tied to carbon-based economic activity. As of December 31, 2021, sectors identified as carbon intensive within our fixed income securities portfolio represented less than 5% of our total invested assets.

Significant future investment value declines could require further losses recorded on securities we intend to sell and credit losses. For more information regarding market interest rate, credit, and equity price risk, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.” of this Form 10-K.

We have securities tied to LIBOR, which will be eliminated on June 30, 2023.

As of December 31, 2021, approximately 15% of our fixed income securities portfolio had floating rate securities primarily tied to the 1- and 3-month U.S. dollar-denominated London Interbank Offered Rate ("LIBOR"). The global banking industry has used LIBOR as a primary metric to calculate interest rates for numerous types of debt obligations, including personal and commercial loans, interest rate swaps, and other derivative products. In anticipation of LIBOR's elimination, the U.S. Federal Reserve established the Alternative Reference Rates Committee ("ARRC") to select a replacement index for U.S. Dollar LIBOR. The ARRC, comprised of a broad group of private-market participants, including banks, asset managers, insurers, and industry regulators, identified the Secured Overnight Financing Rate ("SOFR") as the recommended benchmark rate to replace LIBOR. SOFR is based on overnight repurchase agreement transactions backed by U.S. Treasury securities. The ARRC announced a paced transition plan for this new rate, including specific steps and timelines designed to encourage the adoption of SOFR. Effective December 31, 2021, LIBOR can no longer be used as a benchmark reference rate in new issue loans, securitized products, and other floating rate instruments. Effective June 30, 2023, LIBOR will cease to exist and require remaining floating rate securities to transition to SOFR. Consequently, our fixed income securities portfolio may be subject to (i) interest rate and prepayment risk associated with the resetting of our floating rate coupons from LIBOR to SOFR, (ii) potential rating agency downgrades, (iii) reduced trading liquidity on securities with insufficient fallback transition language, and (iv) lower returns associated with basis risk from a reference rate mismatch between liabilities and assets in certain securitized assets. We continue to monitor the potential impact, if any, the elimination of LIBOR and the transition to SOFR will have on our floating rate investments' performance. We have and continue to evaluate and monitor other LIBOR risks across the organization.

We are subject to the risks inherent in investing in private limited partnerships.

Our other investments include investments in private limited partnerships that invest in various strategies, such as private equity, private credit, and real assets. The primary assets and liabilities underlying the investments in these limited partnerships generally do not have quoted prices in active markets for the same or similar assets, so their valuation is subject to a higher level of subjectivity and unobservable inputs than substantially all of our other investments. Because these limited partnership investments are recorded under the equity method of accounting, any valuation decreases could negatively impact our results of operations. Because of their return relative to risk, we currently expect to slightly increase our allocation to these investments, which may produce additional variability in our net investment income.

The determination of the amount of credit losses taken on our investments is highly subjective and could materially impact our results of operations or our financial position.

The determination of the amount of credit losses taken on our investments is based on our quarterly evaluation and assessment of our investments and known and inherent risks associated with the various asset classes. Such evaluations and assessments are revised as conditions change and new information becomes available. Management updates its evaluations regularly and reflects changes in credit losses at the time of evaluation. There can be no assurance that management has accurately assessed the level of credit losses recorded in our Financial Statements. For further information about our evaluation and considerations for determining whether a security has a credit loss, please refer to “Critical Accounting Policies and Estimates” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” of this Form 10-K.

Risks Related to Evolving Laws, Regulations, and Public Policy Debates

We are subject to complex and changing laws, regulations, and public policy debates that expose us to regulatory scrutiny, potential liabilities, increased costs, reputational harm, and other adverse effects on our business.

Our operations are subject to complex and changing state and federal laws, regulations, and public policy debates on subjects, including, without limitation, the following:

•Pricing and underwriting practices;

•Claims practices;

•Loss and loss adjustment expense reserves;

•Exiting geographic markets and/or canceling or non-renewing policies;

•Environmental, social, and governance ("ESG") related issues, including ESG investment mandates;

•Assessments for guaranty funds and second-injury funds, and other mandatory assigned risks and reinsurance;

•The types, quality, and concentration of investments we make;

•Minimum capital requirements for the Insurance Subsidiaries;

•Dividends from our Insurance Subsidiaries to the Parent;

•Privacy and data security;

•Tax;

•Antitrust;

•Consumer protection;

•Advertising;

•Sales;

•Billing and e-commerce;

•Intellectual property ownership and infringement;

•Digital platforms;

•Internet, telecommunications, and mobile communications;

•Media and digital content;

•Availability of third-party software applications and services;

•Labor and employment;

•Anti-money laundering; and

•Workplace environmental, health, and safety issues.

Changes to laws and regulations can adversely affect our business by increasing our costs, limiting our ability to offer a product or service to customers, requiring changes to our business practices, or otherwise making our products and services less attractive to customers.

If Congress enacted a law directly regulating insurance, particularly insurer solvency oversight, and state regulators remained responsible for rate approval, we could be subject to a conflicting and inconsistent regulatory framework that could impact our profitability and capital adequacy.

While we underwrite risks only in the U.S., international regulatory developments, particularly related to capital adequacy and risk management requirements in the European Union (“EU”), may influence U.S. regulators as they develop or revise domestic regulatory standards. In the fourth quarter of 2020, the NAIC's Group Capital Calculation Working Group adopted the basic structure of its new Group Capital Calculation and drafted model law changes that provide for its adoption as a state law requirement for U.S. insurance groups. It is expected that state legislatures will begin to adopt the group capital calculation model law by year-end 2022. The changes could increase the amount of capital our insurance subsidiaries are required to hold.

We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations. However, we can provide no assurance that our employees, contractors, or independent distribution partners will not violate such laws and regulations or our policies and procedures. To some degree, we have multiple regulators whose authority may overlap and may have different interpretations and/or regulations related to the same legal issues. This creates the risk that one regulator's position or interpretation may conflict with another regulator on the same issue. The cost of complying with various, potentially conflicting laws and regulations, and changes in those laws and regulations, could have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings.

Insurers are subject to intense regulatory, political, and media scrutiny. We are subject to government market conduct review and investigations, legal actions, and penalties. There can be no assurance that our business will not be materially adversely affected by the outcomes of such examinations, investigations, or media scrutiny in the future. If we are found to have violated laws and regulations, it could materially adversely affect our reputation, financial condition, and operating results.

Our business is subject to a variety of state, federal, and other laws, rules, policies, and other obligations regarding data protection.

We are subject to federal and state laws relating to the collection, use, retention, security, and transfer of personally identifiable information (“PII”). Federal laws include the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act, the Drivers Privacy Protection Act, the Health Insurance Portability and Accountability Act, and Unfair and Deceptive Acts and Practices laws. Several states, like New York, Nevada, Colorado, Virginia, and California, have passed laws in this area, and other jurisdictions are considering imposing additional restrictions or creating new rights concerning PII. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing requirements may cause us to incur substantial costs or require us to change our business practices. Noncompliance could result in significant reputational harm, penalties, and legal liability.

The EU adopted the General Data Protection Regulation ("GDPR") in 2016. Effective since 2018 after a two-year implementation period, GDPR regulates data protection and privacy in the EU and transfers of personal data outside the EU.

GDPR’s main tenet is to give individuals primary control over their personal data. Because we do not write coverages in the EU, GDPR has no direct impact on us. Some U.S. states have subsequently incorporated individual-control mechanisms into state privacy laws. Future EU data privacy actions likely will influence U.S. regulators over time.

We make statements about our use and disclosure of PII through our privacy policy, information provided on our website, and other public statements. If we fail to comply with these public statements or federal and state privacy-related and data protection laws and regulations, we could be subject to litigation or governmental actions. Such proceedings could impact our reputation and result in penalties, including ongoing audit requirements and significant legal liability.

We are engaged in ordinary routine legal proceedings incidental to our insurance operations that, because litigation outcomes are inherently unpredictable, could impact our reputation and/or have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.

We are engaged in ordinary routine legal proceedings incidental to our insurance operations that include:

•Defense of or indemnity for third-party suits brought against our insureds;

•Defense of actions brought against us by our insureds who disagree with our coverage decisions, some of which allege bad faith claims handling and seek extra-contractual damages, punitive damages, or other penalties;

•Actions we file, primarily for declaratory judgment, seeking confirmation that we have made appropriate coverage decisions under our insurance contracts;

•Actions brought against us or competitors alleging improper business practices and sometimes seeking class status. Such actions historically have included issues and allegations, without limitation, related to (i) unfairly discriminatory underwriting practices, including the impact of credit score usage, (ii) managed care practices, such as provider reimbursement, and (iii) automobile claims practices; and

•Actions we file against third parties and other insurers for subrogation and recovery of other amounts we paid on behalf of our insureds.

From time-to-time, legal proceedings in which we are involved may receive media attention based on their perceived newsworthiness and/or relationship to a variety of broad economic, political, social, and legal developments or trends. Such media stories could negatively impact our reputation.

We expect any potential ultimate liability for ordinary routine legal proceedings incidental to our insurance business will not be material to our consolidated financial condition after considering estimated loss provisions. Litigation outcomes, however, are inherently unpredictable even with meritorious defenses. The time a case is in litigation also is unpredictable, as state court dockets are increasingly overcrowded. Generally, the longer a case is in litigation, the more expensive it can become. Because the amounts sought in certain of these actions are large or indeterminate, any adverse outcomes could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.

Additionally, we do not have any material litigation risks related to climate change.

Risks Related to Our Corporate Structure and Governance

We are a holding company, and our ability to declare dividends to our shareholders, pay indebtedness, and enter into affiliate transactions may be limited because our Insurance Subsidiaries are regulated.

Restrictions on our Insurance Subsidiaries' ability to pay dividends, make loans or advances to the Parent, or enter into transactions with affiliates may materially affect our ability to pay dividends on our preferred stock and common stock, or repay our indebtedness.

Based on these restrictions, the maximum in ordinary annual dividends the Insurance Subsidiaries can provide the Parent in 2022 is $322 million. Their ability to pay dividends or make loans or advances, however, is subject to domiciliary state insurance regulators' approval or review. For additional details regarding dividend restrictions, 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 this Form 10-K.

The Parent’s ability to pay dividends to its stockholders is also impacted by covenants in its credit agreement (the “Line of Credit”) among the Parent, the lenders named therein (the “Lenders”), and the Bank of Montreal, Chicago Branch, as Administrative Agent. These covenants obligate the Parent to, among other things, maintain a minimum consolidated net worth and a maximum ratio of debt to capitalization. Under the terms of our Preferred Stock, the Parent's ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of its common stock or any shares of the Parent that rank junior to, or on parity with, the Preferred Stock will be subject to certain restrictions if the Parent does not declare and pay (or set aside) dividends on the Preferred Stock for the last preceding dividend period. For additional details about the Line of Credit’s

financial covenants, see Note 11. “Indebtedness” in Item 8. "Financial Statements and Supplementary Data" of this Form 10-K. For additional details about conditions related to our Preferred Stock, see Note 17. "Preferred Stock" in Item 8. "Financial Statements and Supplementary Data" of this Form 10-K.

Because we are a New Jersey corporation and an insurance holding company, we may be less attractive to potential acquirers and the value of our common stock could be adversely affected.

We are a New Jersey company, and provisions of the New Jersey Shareholders’ Protection Act and our Amended and Restated Certificate of Incorporation may discourage, delay, or prevent us from being acquired. A supermajority of our shareholders must approve (i) certain business combinations with interested shareholders, or (ii) any amendment to the related provisions of our Amended and Restated Certificate of Incorporation unless certain conditions are met. These conditions may relate to, among other things, the interested stockholder’s acquisition of stock, the approval of the business combination by disinterested members of our Board and disinterested stockholders, and the price and payment of the consideration proposed in the business combination. In addition to considering the effects of any action on our shareholders (including any offer or proposal to acquire the Parent), our Board may consider: (i) the long-term, as well as the short-term, interests of the Parent and our shareholders, including the possibility that these interests may best be served by the continued independence of the Parent; (ii) the effects of the action on the Parent's employees, suppliers, creditors, and customers; and (iii) the effects of the action on the community in which the Parent operates.

These provisions of our Amended and Restated Certificate of Incorporation and New Jersey law could deprive our common shareholders of an opportunity to receive a premium over the prevailing market price in the event of a hostile takeover and may adversely affect the value of our common stock.

Because we own insurance subsidiaries, any party seeking to acquire 10% or more of our common stock must seek prior approval from the subsidiaries' domiciliary insurance regulators and file extensive information about their business operations and finances. The New Jersey Department of Banking and Insurance Commissioner, who regulates seven of our Insurance Subsidiaries, also considers whether (i) the acquisition of control of an insurer would be adverse to the public interest or the protection of existing and future policyholders or (ii) persons seeking control would use control adversely to the public interest or the protection of policyholders.

Risks Related to Our General Operations

We, our distribution partners, and our vendors are subject to attempted cyber-attacks, other cybersecurity risks, and system availability risk.

Our business heavily relies on IT and application systems that may be accessed from, or are connected to, the Internet. Consequently, a malicious cyber-attack could affect us. Our systems also contain proprietary and confidential information, including PII, about our operations, employees, agents, and customers and their employees and property. A malicious cyber-attack on (i) our systems, (ii) our distribution partners or their key operating systems, and (iii) any other of our third-party partners or vendors and their key operating systems may interrupt our ability to operate, damage our reputation and result in monetary damages that are difficult to quantify, and have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings.

We have implemented systems and processes, through encryption and authentication technologies, intended to mitigate or secure our IT systems and prevent unauthorized access to, or loss of, sensitive data. As cyber-attacks continue to evolve daily, our security measures may not be sufficient for all eventualities. We may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management, or other irregularities. Any disruption or breach of our systems or data security could damage our reputation, result in monetary damages that are difficult to quantify, and have a material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings. To mitigate this risk, we have and expect to continue to (i) conduct employee education programs and tabletop exercises and (ii) develop and invest in a variety of controls to prevent, detect, and appropriately react to cyber-attacks, including frequently testing our systems' security and access controls. We have insurance coverage for certain cybersecurity risks, including privacy breach incidents, which coverage may be insufficient to indemnify all losses or types of claims that may arise.

In addition to cyber-attack risk, we face system availability risk. Our business relies heavily on various IT and application systems. We have robust business continuity plans, which are designed to minimize the duration and impact of an unexpected loss of availability of any of these systems. Nevertheless, we could experience an event that impacts one or more of these systems, including those based in facilities where we or our vendors operate, which may interrupt our ability to operate and negatively impact our results of operations, despite our business continuity plans.

Our long-term strategy to deploy operational leverage is dependent on the success of our risk management strategies, and their failure could have a material adverse effect on our financial condition or results of operations.

As an insurer, we assume risk from our policyholders. Our long-term strategy includes the use of above-average operational leverage, which can be measured as the ratio of NPW to our equity or statutory surplus. We balance and mitigate our operational leverage risk with several risk management strategies within our insurance operations to achieve a balance of growth and profit, including using significant amounts of reinsurance, a disciplined approach to reserving, and a conservative investment philosophy. These strategies have inherent limitations. We cannot be certain that an event or series of unanticipated events will not occur and result in losses greater than we expect. Given our higher operating leverage than that of our industry, an event or series of unanticipated events could have a more material adverse effect on our results of operations, liquidity, financial condition, financial strength, and debt ratings compared to our industry.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our headquarters occupy a 315,000 square foot building located on an owned 56-acre site zoned for office and professional use in Branchville, New Jersey. We lease all our other facilities from unrelated parties. The principal office locations of our insurance operations are listed in the “Geographic Markets” section of Item 1. “Business.” of this Form 10-K. Our Investments operations are principally located in leased space in Farmington, Connecticut. Our facilities provide adequate space for our present needs and, if additional space is needed, should be available on reasonable terms. Our headquarters site also contains our ground-mount solar facility that annually generates approximately three million kilowatt hours ("kWh") of electricity that we sell to others.

Item 3. 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 Item 1A. “Risk Factors.” and Note 21. "Litigation" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. As of December 31, 2021, 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 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a) Market Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol “SIGI.”

(b) Holders

We had 2,949 common stockholders of record as of January 31, 2022, according to the records maintained by our transfer agent.

Dividends on shares of our common stock are declared and paid at the discretion of the Board of Directors (the "Board") based on our results of operations, financial condition, capital requirements, contractual restrictions, and other relevant factors. We currently expect to continue to pay quarterly cash dividends on shares of our common stock in the future.

On October 27, 2021, the Board approved a 12% increase in our common stock dividend to $0.28 per share. In addition, on February 3, 2022, the Board declared a $0.28 per share quarterly cash dividend on common stock that is payable March 1, 2022, to stockholders of record as of February 15, 2022.

(d) Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information about our common stock authorized for issuance under equity compensation plans as of December 31, 2021:

(a) (b) (c)

Equity compensation plans approved by security holders — $ — 5,506,750

1Includes 1,184,849 shares available for issuance under our Employee Stock Purchase Plan (2021); 1,608,234 shares available for issuance under the Stock Purchase Plan for Independent Insurance Agencies; and 2,713,667 shares for issuance under the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan ("Stock Plan"). Future grants under the Stock Plan can be made, among other things, as stock options, restricted stock units, or restricted stock.

(e) Performance Graph

The following chart, produced by Research Data Group, Inc., depicts our performance for the period beginning December 31, 2016, and ending December 31, 2021, comparing total stockholder return on our common stock to the total return of (i) the NASDAQ Composite Index and (ii) a select group of peer companies comprised of NASDAQ-listed companies in SIC Code 6330-6339, Fire, Marine, and Casualty Insurance.

This performance graph is not incorporated into any other filing we have made with the U.S. Securities and Exchange Commission ("SEC") and will not be incorporated by reference into any future SEC filing unless we so specifically state. This performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC unless we specifically request so or specifically incorporate it by reference in any filing we make with the SEC.

(f) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information regarding our purchases of our common stock in the fourth quarter of 2021:

1We purchased these shares from employees to satisfy tax withholding obligations associated with the vesting of their restricted stock units.

2On December 2, 2020, we announced our Board 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 6. Reserved.

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

Certain statements in this report, including information incorporated by reference, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. These statements relate to 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 industry actual results, activity levels, or performance to materially differ from those expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by words such as “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, and we can give no assurance that such expectations will prove correct. We undertake no obligation, other than as federal securities laws may require, to publicly update or revise any forward-looking statements for any reason.

Factors that could cause our actual results to differ materially from what we project, forecast, or estimate in forward-looking statements are discussed in further detail in Item 1A. “Risk Factors.” of this Form 10-K. 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 any new 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 1. "Organization" and Note 12. "Segment Information" in Item 8. “Financial Statements and Supplementary Data.” of this Form 10-K.

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 ("WYO"). 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 the consolidated results of operations and financial condition, as well as known trends and uncertainties, that may have a material impact in future periods. The MD&A discusses and analyzes our 2021 results compared to 2020. Investors should read the MD&A in conjunction with Item 8. "Financial Statements." of this Form 10-K. For discussion and analysis of our 2020 results compared to 2019, refer to Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations." of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

In the MD&A, we will discuss and analyze the following:

•Critical Accounting Policies and Estimates;

•Financial Highlights of Results for Years Ended December 31, 2021, 2020, and 2019;

•Results of Operations and Related Information by Segment;

•Federal Income Taxes; and

•Liquidity and Capital Resources.

Critical Accounting Policies and Estimates

We have identified the policies and estimates critical to our business operations and the understanding of our results of operations. The policies and estimates we consider most critical to the preparation of the Financial Statements involved (i) reserves for loss and loss expense, (ii) investment valuations and the allowance for credit losses on available-for-sale ("AFS") fixed income securities, and (iii) reinsurance.

Reserves for Loss and Loss Expense

Significant time can elapse between the occurrence of an insured loss, the reporting of the claim to us, and the final settlement and payment of the claim. To recognize liabilities for unpaid loss and loss expense, insurers establish reserves as balance sheet liabilities representing an estimate of amounts needed to pay reported and unreported loss and loss expense. The following tables provide case and incurred but not reported (“IBNR”) reserves for loss and loss expenses, and reinsurance recoverable on unpaid loss and loss expense as of December 31, 2021 and 2020:

Loss and Loss Expense Reserves

1Includes general liability (95% of net reserves) and commercial auto liability coverages (5% of net reserves).

2Includes commercial property (91% of net reserves) and commercial auto property coverages (9% of net reserves).

Loss and Loss Expense Reserves

1Includes general liability (95% of net reserves) and commercial auto liability coverages (5% of net reserves).

2Includes commercial property (92% of net reserves) and commercial auto property coverages (8% of net reserves).

The Insurance Subsidiaries' net loss and loss expense reserves duration was approximately 3.5 years at December 31, 2021, down from 3.7 years at December 31, 2020.

How reserves are established

Reserves for loss and loss expense include case reserves on reported claims and IBNR reserves. Case reserves are estimated on each individual claim based on claim-specific facts and circumstances known at the time. Case reserves may be adjusted up or down as the claim's specific facts and circumstances change. IBNR reserves are established at more aggregated levels, and they include provisions for (i) claims not yet reported, (ii) future development on reported claims, (iii) closed claims that will reopen in the future, and (iv) anticipated salvage and subrogation recoveries.

Our robust reserve process relies on quarterly internal reserve reviews, based on our own loss experience, with consideration given to various internal and external factors. In addition to our internal reserve reviews, we have an external consulting actuary perform an independent review of our reserves semi-annually. We do not rely on the external consulting actuary's report to determine our recorded reserves; however, we review and discuss with the consulting actuary our respective observations regarding trends, key assumptions, and actuarial methodologies. While not required, our independent consulting actuary issues the annual statutory Statements of Actuarial Opinion for our Insurance Subsidiaries. For additional information on our accounting policy for reserves for loss and loss expense, refer to Note. 2. “Summary of Significant Accounting Policies” in Item 8. “Financial Statements and Supplementary Data.” of this Form 10-K.

Range of reasonable reserve estimates

We have estimated a range of reasonable reserve estimates for net loss and loss expense of $3,564 million to $4,236 million at December 31, 2021. This range reflects low and high reasonable reserve estimates determined by judgmentally adjusting the methods, factors, and assumptions selected within the internal reserve review. This approach produces a range of reasonable reserve estimates, and does not represent a distribution of all possible outcomes. Therefore, the final outcomes may fall above or below these amounts. The range does not include a provision for potential increases or decreases associated with asbestos, environmental, and certain other continuous exposure claims, which by their nature are more variable and, therefore, traditional actuarial techniques cannot be effectively applied.

The range of reasonable reserve estimates increased as of December 31, 2021 relative to December 31, 2020. This increase primarily relates to the growth in reserves commensurate with our growth in net premiums earned ("NPE") and additional risk created by the current inflationary environment.

Changes in Reserve Estimates (Loss Development)

Our quarterly reserve process may lead to changes in the recorded reserves for prior accident years, referred to as favorable or unfavorable prior year loss and loss expense development. In 2021, we experienced net favorable prior year loss development of $82.9 million, compared to $72.9 million in 2020 and $50.3 million in 2019. The following table summarizes prior year development by line of business:

(Favorable)/Unfavorable Prior Year Loss and Loss Expense Development

Businessowners' policies (0.4) 3.9 1.9

Commercial property (2.6) 9.2 5.1

Personal automobile (0.2) (1.8) 4.4

E&S casualty lines (7.0) — 2.0

E&S property lines (0.8) (4.0) 1.0

Other — — 0.1

A detailed discussion of recent reserve development by line of business follows.

Standard Market General Liability Line of Business

At December 31, 2021, our general liability line of business had recorded reserves, net of reinsurance, of $1.6 billion, representing 39% of our total net reserves. In 2021, this line experienced favorable development of $29.0 million, attributable to lower loss severities in accident years 2018 and prior. During 2020, this line experienced favorable development of $35.0 million, attributable to lower loss severities in accident years 2017 and prior.

By its nature, general liability presents a diverse set of exposures. Losses and loss trends are influenced by various factors, including legislative enactments, judicial decisions, and economic and social inflation. Economic inflation directly impacts our claims severities by increasing the costs of raw materials, medical procedures and labor. Social inflation may impact both the frequency and severity of claims by affecting (i) the propensity for a claimant to file a claim, (ii) the percentage of claimants who engage lawyers, and (iii) the nature of judicial verdicts and amount of the associated awards, which influence settlement values going forward. We monitor claim litigation rates regularly and have observed modest increases in the percentage of claims with attorney involvement in recent periods. This trend and the impact of court closures are affecting the time to settle claims.

We have exposure to abuse or molestation claims, mainly through insurance policies that we (i) underwrite through our Community and Public Services ("CAPS") strategic business unit and (ii) issue to schools, religious institutions, day-care facilities, and other social services. These customers within our CAPS business unit represented approximately 10% of our total Standard Commercial Lines NPW in 2021 and 11% in 2020. Through 2017, our exposure to abuse or molestation risk increased, reflective of our CAPS book's growth. In 2018, we implemented more stringent underwriting eligibility guidelines and partnered with a third party to better assess exposure and enhance loss control measures. In 2019, we filed and approved significant rate increases for this exposure. We continue to monitor each jurisdiction's statute of limitations to ensure our rate level accounts for the changing exposure as best we reasonably can. While these underwriting and pricing actions have been necessary to ensure the profitability of the portfolio going forward, they have limited our CAPS growth in recent years.

We also have exposure to abuse or molestation claims from recently enacted state laws that extend the statute of limitations or permit windows for abuse or molestation claims and lawsuits to be filed that statutes of limitations previously barred. Consequently, we may receive claims decades after the alleged acts occurred that will involve complex claims coverage determinations, potential litigation, higher defense costs, and the need to collect from reinsurers under older reinsurance agreements. Our claims and actuarial departments actively monitor these claims to identify changes in frequency or severity and any emerging or shifting trends. While this should help us better understand this rapidly evolving exposure, the ultimate impact of social, political, and legal trends remains highly uncertain, and may significantly impact the ultimate settlement values for these claims.

The COVID-19 pandemic and resulting economic slowdown have presented additional risks to this line of business.The impact of the pandemic, including related governmental orders, court closures, and other behavioral and procedural changes, such as slower than usual timing in which an individual might bring a claim, may have or could impact claims reporting or

settlement patterns. Settlement patterns may be further impacted by a general trend towards increased attorney involvement in the claims process, as previously discussed.

Standard Market Workers Compensation Line of Business

At December 31, 2021, our workers compensation line of business had recorded reserves, net of reinsurance, of $855 million, representing 21% of our total net reserves. During 2021, this line experienced favorable reserve development of $58.0 million, driven by accident years 2019 and prior. Similarly, this line experienced favorable reserve development during 2020 of $60.0 million, driven by accident years 2018 and prior. During both 2021 and 2020, the lower loss emergence than expected was partly due to: (i) medical inflation that was lower than originally anticipated; and (ii) various significant claims initiatives we have implemented. Because of the length of time injured workers can receive related medical treatment, decreases in medical inflation can cause favorable loss development over an extended number of accident years.

While we believe our underwriting and claims operational changes improved our underwriting experience, there is risk associated with these changes. Most notably, changes in operations may inherently change paid and reported development patterns. While our reserve analyses incorporate methods that adjust for these changes, a greater risk of fluctuation remains in the estimated reserves.

In addition to the operational changes, a variety of other issues can impact the workers compensation line of business, such as the following:

Unexpected changes in medical cost inflation –The industry is currently experiencing a period of lower medical claim cost inflation. However, some signs indicate inflationary pressure on these costs. Changes in our historical workers compensation medical costs, along with potential changes in future medical inflation, can create additional variability in our reserves;

Changes in statutory workers compensation benefits – Benefit changes may be enacted that affect all outstanding claims, including claims that have occurred in the past, but have not yet been settled. Depending on the social and political climate, these changes may either increase or decrease associated claim costs;

Changes in utilization of the workers compensation system –These changes may be driven by economic, legislative, or other changes, such as increased pharmaceutical prescriptions, more complex medical procedures, changes in permanently injured workers' life expectancy, and health insurance availability.

COVID-19-related impacts – While not a major insurer of front-line workers (e.g. medical facilities and hospitals), we have potential exposure to employees contracting COVID-19 in the course of their employment. These claims may be asserted under certain state "presumption statutes" that shift the burden of proof from the claimant to the insurer. Medical system service and supply constraints, coupled with injured workers delaying non-essential procedures, may extend the duration of non-COVID-19 claims. To date, we have not seen significant COVID-19-related workers compensation losses

Standard Market Commercial Automobile Line of Business

At December 31, 2021, our commercial automobile line of business had recorded reserves, net of reinsurance, of $732 million, which represented 18% of our total net reserves. In 2021, this line experienced unfavorable prior year reserve development of $13.3 million, driven by higher loss severities in accident years 2016 through 2019. In 2020, this line experienced unfavorable prior year reserve development of $7.1 million, driven by higher loss severities in accident years 2016 through 2019 and higher than expected frequencies in accident year 2019.

For both us and the industry, the commercial automobile line has experienced unfavorable trends in recent years. Pre-pandemic, increased frequencies were likely due to increased miles driven related to lower unemployment, poor road quality, and an increase in distracted driving. The onset of the COVID-19 pandemic in early 2020, along with governmental "stay-at-home" orders, dramatically reduced miles driven and road traffic, significantly reducing claims frequency in 2020. While miles driven increased in 2021, driving patterns have also shifted, including changes in the days of the week and times of day people are driving. As of the end of 2021, frequencies remained somewhat below pre-pandemic levels.

Since the pandemic's start, we have seen increasing severities in both the liability and physical damage coverages. The average value of our bodily injury paid loss settlements has increased, possibly relating to higher average driving speeds, higher jury awards, and an increase in distracted driving. Increasing property damage severities may relate to elevated repair costs for increasingly complex vehicles that incorporate more technology, as well as recent disruptions to the supply chain. Continued complications in the supply chain, including labor shortages, increase the risk of longer-term elevated economic inflation.

Over the last several years, we have taken actions to improve the profitability of this line of business, including:

•Taking meaningful rate and underwriting actions on our renewal portfolio. We will continue to leverage our predictive modeling and analytical capabilities to provide more granular insights about where we should focus our actions.

•Reducing premium leakage by improving the quality of our rating information, including validating application information with third-party data and obtaining more detailed driver information.

•Implementing new tools to score drivers to underwrite more effectively and align rate with exposure.

•Aggressively managing new business pricing and hazard mix while deploying co-underwriting by our regional underwriters and corporate underwriting teams' subject matter experts for selected higher hazard classes to improve risk driver recognition and exposure-based pricing.

Standard Market Personal Automobile Line of Business

At December 31, 2021, our personal automobile line of business had recorded reserves, net of reinsurance, of $102 million, which represented 3% of our total net reserves. In 2021, this line experienced favorable prior year reserve development of $0.2 million. In 2020, this line experienced unfavorable prior year reserve development of $1.8 million.

Some of the same issues affecting the commercial automobile line are affecting this line. The COVID-19-related reduction in frequencies was even more pronounced than in commercial automobile line. As with the commercial automobile line, these frequencies significantly rebounded in 2021, yet remain less than pre-pandemic levels. This line also has a similar potential for higher average severities like the commercial automobile line. In addition to the COVID-19-related temporary impacts, the underlying trends of increased vehicle repair costs and poor road quality are likely causes of rising severities, possibly exacerbated by distracted driving trends. We continue to recalibrate our predictive models and refine our underwriting and pricing approaches. While we believe these underwriting and pricing changes will ultimately lead to improved profitability and greater stability, the resulting changes to our exposure profile may impact paid and reported development patterns, thereby increasing the uncertainty in the reserves in the near term.

E&S Casualty Lines of Business

At December 31, 2021, our E&S casualty lines of business had recorded reserves, net of reinsurance, of $445 million, representing 11% of our total net reserves. Our E&S casualty lines results have improved over recent years. In 2021, this line experienced favorable prior year reserve development of $7.0 million, primarily attributable to lower loss severities in accident years 2016 and prior. In 2020, this line did not experience prior year reserve development.

Some of the risk factors for the general liability line also affect the E&S casualty lines.These include (i) economic inflation, such as materials and labor costs; (ii) social trends, such as increased attorney involvement; and (iii) COVID-19-related impacts, such as court closures.

The E&S casualty lines also are impacted by operational changes we have made to improve the portfolio's performance. Our underwriting operations have substantially exited several targeted business classes that have historically produced volatile results, including commercial automobile liability, liquor liability, and snow removal.

Recent E&S casualty claims actions have created further casualty improvements:

•In 2020, we created a dedicated E&S claims team in our corporate claims function, bringing greater expertise and consistency to E&S claims handling.

•We have segregated “litigated,” “non-litigated,” and "high exposure" claims, with separate specialized teams for each.

•We implemented the following operational and expense improvement initiatives for legal counsel:

◦Increased the use of staff counsel, increasing legal staff in their assigned territories to support claims volume;

◦Heightened focus on legal budgeting and expense management; and

◦Implemented a panel counsel review process.

While we believe these underwriting and claims operational changes improved our underwriting experience, there is risk associated with these changes. Most notably, changes in portfolio composition or our claims processes may inherently change paid and reported development patterns. While our reserve analyses incorporate methods that adjust for these changes, there remains a greater risk of fluctuation in the estimated reserves.

Other impacts creating additional loss and loss expense reserve uncertainty

Claims Initiative Impacts

Consistent with our strategic imperative to optimize operational efficiency, our Claims Department continually identifies areas for improvement and efficiency to increase our value proposition to policyholders. These improvements may lead to claims practice changes that affect average case reserve levels and claims settlement rates, which directly impact the data used to project ultimate loss and loss expense. While these changes may increase uncertainty in our estimates in the short term, we expect refined management of the claims process to be the longer-term benefit.

Our internal reserve analyses incorporate certain actuarial projection methods that make adjustments for changes in case reserve adequacy and claims settlement rates. These methods adjust our historical loss experience to the current case adequacy or settlement rate level, providing a more consistent basis for projecting future development patterns. These methods, like all projection methods, have their own associated assumptions and judgments. Therefore, no single method can be interpreted as definitive.

Unanticipated Changes in Inflation

United States ("U.S.") monetary policy and global economic conditions will bring additional uncertainty related to inflationary trends. Changes in inflation affect the ultimate settlement costs for many of our lines of business, with the greatest reserve impact on the longer-tailed lines such as general liability and workers compensation. Therefore, uncertainty about future inflation or deflation creates the potential for additional reserve variability in these lines of business.

Sensitivity analysis: Potential impact on reserve estimates due to changes in key assumptions

Our process to establish reserves includes a variety of key assumptions, including without limitation:

•The selection of loss and loss expense development factors;

•The weight to be applied to each individual actuarial projection method;

•Projected future loss trends; and

•Expected claim frequencies, severities, and ultimate loss and loss expense ratios for the current accident year.

The importance of any single assumption depends on several considerations, such as the line of business and the accident year. If the actual experience emerges differently than the assumptions underlying the reserve process, changes in our reserve estimates are possible that may be material to the results of operations in future periods. Below are sensitivity tests highlighting potential impacts to loss and loss expense reserves for the major casualty lines of business under different scenarios. These tests consider each assumption and line of business individually, without any consideration of correlation between lines of business and accident years. Therefore, the results do not constitute an actuarial range. While the figures represent possible impacts from variations in certain key assumptions, there is no assurance that future loss and loss expense emergence will be consistent with either our current or alternative sets of assumptions.

While the sources of reserve variability are generated by different internal and external trends and operational changes, they ultimately manifest themselves as changes in the expected loss and loss expense development patterns. These patterns are a key assumption in the reserving process. In addition, the current accident year expected loss and loss expense ratios are also a key assumption. These ratios are developed through a rigorous process of projecting recent accident years' experience to an ultimate settlement basis. Then they are adjusted to the current accident year's pricing and loss cost levels. The impact from underwriting portfolio and claims handling practice changes are also quantified and reflected where appropriate. As with all estimates, the ultimate loss and loss expense ratios may differ from those currently estimated.

The sensitivities of loss and loss expense reserves to these key assumptions are illustrated below for the major casualty lines. The first table displays estimated impacts from changes in expected reported loss and loss expense development patterns for our major casualty lines of business. It shows line of business reserve impacts if the actual calendar year incurred amounts are greater or less than current expectations by the selected percentages. While judgmental, the selected percentages by line are based on the reserve range analysis and the actual historical reserve development for the line of business. The second table displays the estimated impacts from changes to the expected loss and loss expense ratios for the current accident year. It shows reserve impacts by line of business if the expected loss and loss expense ratios for the current accident year are greater or less than current expectations by the selected percentages.

Reserve Impacts of Changes to Expected Loss and Loss Expense Reporting Patterns

Commercial automobile liability 15 (90) 90

Personal automobile liability 15 (10) 10

General liability 10 pts $ (80) $ 80

Workers compensation 10 (30) 30

Commercial automobile liability 10 (50) 50

Personal automobile liability 10 (10) 10

Note that there is some overlap between the impacts in the two tables. For example, increases in the calendar year development would ultimately impact our view of the current accident year's loss and loss expense ratios. However, these tables provide perspective on the sensitivity of each key assumption. While the changes represent outcomes based on reasonably likely changes to our underlying reserving assumptions, they do not represent a range of possible outcomes. Our reserves could increase or decrease significantly from what the tables above reflect.

Asbestos and Environmental Reserves

Our general liability, excess liability, and homeowners reserves include exposure to asbestos and environmental claims. The emergence of these claims occurs over an extended period and can be unpredictable. The total recorded net loss and loss expense reserves for these claims were $21.1 million as of December 31, 2021 and $21.4 million as of December 31, 2020, with asbestos claims constituting approximately 23% of these reserves in both years.

Environmental claims have arisen primarily from insured landfill exposures in municipal government and small non-manufacturing commercial risk, as well as leaking underground storage tanks within our homeowners policies. Asbestos claims have arisen primarily from policies issued to various distributors of asbestos-containing products, such as electrical and plumbing materials. We handle our asbestos and environmental claims in a centralized and specialized asbestos and environmental claim unit. That unit establishes case reserves on individual claims based on the facts and circumstances known at a given point in time, supplemented by bulk IBNR reserves.

Estimating IBNR reserves for asbestos and environmental claims is difficult because these claims have delayed and inconsistent reporting patterns. In addition, there are significant uncertainties associated with estimating critical reserve assumptions, such as average clean-up costs, third-party costs, potentially responsible party shares, allocation of damages, litigation and coverage costs, and potential state and federal legislative changes. Limiting our exposure to asbestos and environmental claims are (i) the fuel oil system exclusion on our New Jersey homeowners policies that we introduced in 2007, and (ii) the Insurance Services Office, Inc.'s Total Pollution Exclusion that was introduced in the mid-1980's, Prior to the mid-1980's, we primarily wrote Standard Personal Lines, which has also limited our exposure to asbestos and environmental claims.

Other Latent Exposures

We also have other latent and continuous trigger exposures in our ongoing portfolio. Examples include claims for construction defect and abuse or molestation, for which states have increased and expanded the statute of limitations. We manage our exposure to these liabilities through our underwriting and claims practices, and, a dedicated claims unit, similar to our handling of asbestos and environmental claims. The impact of social, political, and legal trends on these claims remains highly uncertain, so our related loss and loss expense reserves remain highly uncertain. These exposures remain in our ongoing portfolio, and as such, are reserved in aggregate, with other exposures within the line of business reserves.

Investment Valuation and the Allowance for Credit Losses on AFS Fixed Income Securities

Investment Valuation

Accounting guidance defines the fair value of our investment portfolio as the exit price, or the amount that would be (i) received to sell an asset or (ii) paid to transfer a liability in an orderly transaction between market participants. When determining an exit price we must rely on observable market data, if available. Most securities in our equity portfolio have readily determinable fair values and are recorded at fair value with changes in unrealized gains or losses recognized through income. Our AFS fixed income securities portfolio is recorded at fair value, and the related unrealized gains or losses are reflected in stockholders' equity, net of tax. For our AFS fixed income securities portfolios, fair value is a key factor in the measurement of (i) losses on securities for which we have the intent to sell, and (ii) changes in the allowance for credit losses.

The fair value of approximately 96% of our investments measured at fair value are classified as either Level 1 or Level 2 in the fair value hierarchy and are priced using observable inputs for identical or similar assets. About 3% are classified as Level 3 and are based on unobservable market inputs because the related securities are not traded on a public market. For additional information, refer to the following within Item 8. "Financial Statements and Supplementary Data." of this Form 10-K: (i) item (d) of Note 2. "Summary of Significant Accounting Policies" regarding descriptions of the levels within the fair value hierarchy and the valuation techniques used for our Level 3 securities, and (ii) Note 7. "Fair Value Measurements" for additional information on the unobservable inputs in our securities measured using Level 3 inputs.

Allowance for Credit Losses on AFS Fixed Income Securities

When fixed income securities are in an unrealized loss position and we do not intend to sell them, we record an allowance for credit losses for the portion of the unrealized loss related to an expected credit loss. We estimate expected credit losses on these securities by performing a discounted cash flow (“DCF”). The allowance for credit losses is the excess of amortized cost over the greater of (i) our estimate of the present value of expected future cash flows, or (ii) fair value. The allowance for credit losses cannot exceed the unrealized loss, and therefore it may fluctuate with changes in the security's fair value. We also consider the need to record losses on securities in an unrealized loss position for which we have the intent to sell.

We analyze unrealized losses for credit loss in accordance with our existing accounting policy, which includes performing DCF analyses on each security at the lot level and analyzing these DCFs using various economic scenarios. In performing these DCF analyses, we calculate the present value of future cash flows using various models specific to the major security types in our portfolio. These models use security-specific information and forecasted macroeconomic data to determine possible expected credit loss scenarios based on projected changes in the economy. The models contain forecasted economic data from the Federal Reserve Board’s annual supervisory stress test review on certain large banks and financial institutions. We also have the ability to incorporate internally-developed forecast information into the models as we deem appropriate. In developing our best estimate of the allowance for credit losses, we consider our outlook as to the probability of the various scenarios occurring.

Based on these analyses, we recorded an allowance for credit losses of $9.7 million in 2021 and $4.0 million in 2020 on our AFS fixed income securities portfolio. After considering the allowance for credit losses, the remaining unrealized losses on this portfolio were $17.4 million in 2021 and $11.5 million in 2020. If the security-specific and macroeconomic assumptions in our DCF analyses or our outlook as to the occurrence probability of our DCF model scenarios were to change, our allowance for credit losses and the resulting credit loss expense will negatively impact our results of operations. Factors considered in determining the allowance for credit losses require significant judgment, including our evaluation of the security's projected cash flow stream.

For additional information regarding our allowance for credit losses on AFS fixed income securities, see item (c) of Note 2. "Summary of Significant Accounting Policies" and item (i) of Note 5. "Investments" within Item 8. "Financial Statements and Supplementary Data." of this Form 10-K, respectively.

Reinsurance

Reinsurance recoverables on paid and unpaid loss and loss expense represent our estimates of the amounts we will recover from reinsurers. Each reinsurance contract is analyzed to ensure that sufficient risk is transferred to record the transactions appropriately as reinsurance in the Financial Statements. Amounts recovered from reinsurers are recognized as assets contemporaneously and in a manner consistent with the paid and unpaid losses associated with the reinsured policies. An allowance for credit losses on our reinsurance recoverable balance is recorded based on an evaluation of balances due from reinsurers and other available information, including collateral we hold under the terms and conditions of the underlying agreements. Reinsurers often purchase and rely on their own retrocessional reinsurance programs to manage their capital position and improve their financial strength ratings. Details about retrocessional reinsurance programs are not always transparent, making it difficult to assess our reinsurers' exposure to counterparty credit risk. Our reinsurer's credit quality is

also impacted by other factors, such as their reserve adequacy, investment portfolio, regulatory capital position, catastrophe aggregations, and risk management expertise. In addition, contractual language interpretations and willingness to pay valid claims can impact our allowance for estimated uncollectible reinsurance. Our allowance for estimated uncollectible reinsurance totaled $1.6 million at December 31, 2021, and $1.8 million at December 31, 2020. We continually monitor developments that may impact recoverability from our reinsurers, for which we have contractual remedies if necessary. For further information regarding reinsurance, see the “Reinsurance” section below in "Results of Operations and Related Information by Segment" and Note 9. “Reinsurance” in Item 8. “Financial Statements and Supplementary Data.” of this Form 10-K.

Financial Data:

Key Metrics:

Return on average common equity ("ROE") 14.8 % 10.4 4.4 pts 13.6 (3.2) pts

Per Common Share Amounts:

Dividends declared per share to common stockholders 1.03 0.94 10 0.83 13

Non-GAAP Information:

Diluted non-GAAP operating income per common share2 6.27 4.15 51 4.40 (6)

1Refer to the Glossary of Terms attached to this Form 10-K as Exhibit 99.1 for definitions of terms used in this financial review.

2Non-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, and after-tax debt retirement costs. They are used as important financial measures by us, analysts, and investors because the timing of realized investment gains and losses on sales of securities in any given period is largely discretionary. In addition, net realized and unrealized investment gains and losses on investments that are charged to earnings and the debt retirement costs could distort the analysis of trends.

Reconciliations of net income available to common stockholders, net income available to common stockholders per diluted common share, and ROE to non-GAAP operating income, non-GAAP operating income per diluted common share, and non-GAAP operating ROE, respectively, are provided in the tables below:

Net realized and unrealized (gains) losses, before tax (17,599) 4,217 (14,422)

Debt retirement costs, before tax — — 4,175

Net realized and unrealized (gains) losses, before tax (0.29) 0.07 (0.24)

Debt retirement costs, before tax — — 0.07

Non-GAAP operating income per diluted common share $ 6.27 4.15 4.40

Reconciliation of ROE to non-GAAP operating ROE 2021 2020 2019

Net realized and unrealized (gains) losses, before tax (0.7) 0.2 (0.7)

Debt retirement costs, before tax — — 0.2

Tax on reconciling items 0.2 (0.1) 0.2

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

Standard Commercial Lines segment 5.9 % 5.1 0.8 pts 5.8 (0.7) pts

Standard Personal Lines segment 0.1 (0.5) 0.6 0.3 (0.8)

Net realized and unrealized gains (losses) 0.5 (0.1) 0.6 0.5 (0.6)

Debt retirement costs — — — (0.2) 0.2

Net realized and unrealized (gains) losses, after tax (0.5) 0.1 (0.6) (0.5) 0.6

Debt retirement costs, after tax — — — 0.2 (0.2)

In 2021, we met the challenges associated with (i) the economic and societal impacts of the COVID-19 pandemic, (ii) higher inflation, (iii) severe natural catastrophes, and (iv) a competitive labor market and delivered another exceptional year of results. We generated our eighth consecutive year of double-digit non-GAAP operating ROEs, with a 14.3% non-GAAP operating ROE, above our full-year 2021 target of 11% and our 2020 non-GAAP operating ROE of 10.5%. Our 2021 results included exceptional growth in revenues and a record level of net income available to common stockholders per diluted common share as discussed below. Our ongoing financial success led to an AM Best Company ("AM Best") rating upgrade to “A+” (Superior) from "A" (Excellent) in November 2021, reflecting our financial strength, accomplishments, and future prospects.

In 2021, we grew book value per common share by 9%. This increase reflected $6.50 per diluted common share of net income available to common stockholders, partially offset by $2.07 of lower unrealized gains on our fixed income securities portfolio and $1.03 in dividends paid to our common stockholders. Non-GAAP operating income per diluted common share of $6.27 in 2021, increased $2.12, or 51%, compared to 2020, with the increase driven by strong contributions from both underwriting and net investment income.

The increase in non-GAAP operating income per diluted common share in 2021 compared to 2020 was primarily driven by (i) a 60% increase in after-tax underwriting income to $172.7 million, or $2.85 per share, resulting from a decrease in net catastrophe losses of $1.02 due to industry-wide U.S. catastrophe loss activity in 2020 that significantly exceeded the 10-year historical median, and (ii) a 42% increase in after-tax net investment income to $263 million, or $4.34 per share. The $1.28 per share increase in after-tax net investment income in 2021 was driven by a $1.19 per share increase in after-tax net investment income from our alternative investments within our other investments portfolio. These strong alternative investment returns principally reflect our private equity holdings and the results were driven by strong corporate earnings and robust valuations.

Outlook

For 2022, we have established a non-GAAP operating ROE target of 11%. We have based our 2022 target on (i) our current estimated weighted average cost of capital ("WACC"), (ii) an approximate 350 basis point spread over our estimated WACC, (iii) the current interest rate environment, and (iv) property and casualty insurance market conditions. Our 2022 11% ROE target sets a high bar for our financial performance, challenges us to perform at our best, and aligns our incentive compensation structure with shareholder interests. We entered 2022 in the strongest financial position in our 95-year history, with having a record level of GAAP equity, statutory capital and surplus, and holding company cash and investments. We are well positioned to continue executing on our strategic objectives and delivering growth and profitability.

Our focus in 2022 will be on several areas to position us for ongoing success:

•Delivering on our strategy for continued disciplined and profitable growth by:

◦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 utilization of our enhanced small business platform;

◦Expanding our geographic footprint, with a plan to commence writing Standard Commercial Lines business in the states of Vermont, Alabama, and Idaho, subject to regulatory approvals, in the near-term, and other states over time;

◦Increasing customer retention by delivering a superior omnichannel experience and offering value-added technologies and services;

◦Shifting our focus towards targeting new and renewal customers in the mass affluent market within our Standard Personal Lines segment, where we believe we can be more competitive with the strong coverage and servicing capabilities that we offer; and

◦Deploying our new underwriting platform in our E&S segment that will improve agents' ease of interactions with us.

•Continuing to achieve written renewal pure price increases, along with underwriting improvements, that are in line with expected loss trend, while delivering on our strategy for continued disciplined growth.

•Continuing to build on a culture centered on the values of diversity, equity, and inclusion that fosters innovation, idea

generation, and developing a group of specially trained leaders who can guide us successfully into the future.

For 2022, our full-year guidance is as follows:

•A GAAP combined ratio, excluding catastrophe losses, of 91.0%. Our combined ratio estimate assumes no prior-year casualty reserve development;

•Net catastrophe losses of 4.0 points on the combined ratio;

•After-tax net investment income of $200 million that includes $20 million in after-tax net investment income from our alternative investments;

•An overall effective tax rate of approximately 20.5% that assumes an effective tax rate of 19.5% for net investment income and 21.0% for all other items; and

•Weighted average shares of 61 million on a fully diluted basis.

Results of Operations and Related Information by Segment

Insurance Operations

The following table provides quantitative information for analyzing the combined ratio:

Insurance Operations Results:

Less:

Combined Ratios:

Dividends to policyholders ratio 0.2 0.1 0.1 0.2 (0.1)

The 15% NPW growth in 2021 compared to the prior-year period reflects our strong relationships with best-in-class distribution partners, sophisticated underwriting and pricing tools, and excellent customer servicing capabilities. This solid growth included (i) renewal pure price increases, and (ii) new business growth, as follows

Renewal pure price increases 4.9 % 4.3 0.6 pts 3.7 % 0.6 pts

In addition, our strong NPW growth in 2021 benefited from exposure growth driven by robust economic activity in the U.S., which resulted in our customers increasing their sales, payrolls, and exposure units, all of which favorably impacted our NPW.

The growth in 2021 was further impacted by the 2020 COVID-19-related $75 million estimate of return audit and mid-term endorsement premium and $19.7 million of premium credits to our personal and commercial automobile customers, which reduced NPW by $94.7 million in 2020. The reduction in NPW in 2020 from COVID-19-related adjustments had the impact of increasing our 2021 NPW growth rate by 4 percentage points.

Consistent with the impacts to NPW, the increase in NPE in 2021 compared to 2020 reflected the items discussed above.

Loss and Loss Expenses

The loss and loss expense ratio decreased 0.9 points in 2021 compared to 2020, primarily due to (i) non-catastrophe and catastrophe property loss and loss expenses, (ii) prior year casualty reserve development, and (iii) the current year loss and loss expense ratio, which is detailed as follows:

Net catastrophe losses of 5.4 points in 2021 and 8.0 points in 2020 were higher than our longer-term net catastrophe loss averages. Catastrophe losses in 2021 included gross losses of $53 million from Hurricane Ida, or net losses of approximately $41 million, or 1.4 points, after factoring in the benefit from our Property Catastrophe Excess of Loss Treaty, which attaches at $40 million. The structure of our Property Catastrophe Excess of Loss Treaty is detailed in the "Reinsurance" section in "Results of Operations and Related Information by Segment" of this MD&A. The majority of the Hurricane Ida losses, which included meaningful property losses from damage to personal and commercial automobiles, occurred in New Jersey and the

surrounding states. Losses in 2020 were mainly driven by a tornado and subsequent hail event that impacted Tennessee in March, two large storms in April, civil unrest claims, the Midwestern derecho, and Hurricane Isaias.

($ in millions) Favorable Prior Year Casualty Reserve Development

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

(Favorable)/Unfavorable Prior Year Casualty Reserve Development

Businessowners' policies (2.0) — —

Total Standard Commercial Lines (74.0) (85.0) (69.0)

Personal automobile — — 6.0

Total Standard Personal Lines — — 6.0

Total (favorable) prior year casualty reserve development $ (81.0) (85.0) (61.0)

(Favorable) impact on loss ratio (2.7) pts (3.2) (2.3)

In addition to the prior year casualty reserve development, the current year loss and loss expense ratio was 0.9 points higher in 2021 compared to 2020. In 2020, we experienced lower claims frequencies in our commercial and personal automobile lines of business reflecting reductions in miles driven due to the pandemic environment, which benefited our loss ratio in 2020. Although some benefit continued in 2021, it was not as significant as in 2020.

For additional qualitative reserve development discussion, refer to the insurance segment sections below.

Underwriting Expenses

The underwriting expense ratio decreased 1.3 points in 2021 compared to 2020. The underwriting expense ratio in 2020 was elevated by 1.1 points for COVID-19-related items. The decrease in the underwriting expense ratio in 2021 reflects the absence of these COVID-19-related impacts, as well as a continued below-normal travel and entertainment expense levels due to most of 2021's pandemic-related limited business travel. The COVID-19-related items included in 2020 results were as follows: (i) lower NPE from the estimate of return audit and mid-term endorsement premium and premium credits given to our personal and commercial automobile customer; and (ii) a $13.5 million increase to our allowance for credit losses on premiums receivable.

Standard Commercial Lines Segment

Insurance Segments Results:

Less:

Combined Ratios:

Dividends to policyholders ratio 0.2 0.2 — 0.2 —

NPW growth of 16% in this segment in 2021 compared to 2020 reflected (i) renewal pure price increases, (ii) new business growth, and (iii) stable retention as follows:

For the Year Ended December 31,

Renewal pure price increases on NPW 5.3 4.4

Consistent with our overall insurance operations, NPW growth in 2021 (i) benefited from exposure growth, and (ii) was positively impacted by approximately four points due to the following 2020 COVID-19 related items that did not reoccur in 2021:

•A $75 million estimate of return audit and mid-term endorsement premium that reduced 2020 NPW.

•A $15.4 million premium credit to our commercial automobile customers that reduced 2020 NPW.

Consistent with the impacts to NPW, the increase in NPE in 2021 compared to 2020 reflected the items discussed above.

The 0.3-point increase in the loss and loss expense ratio in 2021 compared to 2020 was driven by the following:

($ in millions) Non-Catastrophe Property Losses Catastrophe Losses

Our losses in 2021 and 2020 included elevated levels of catastrophe losses, with 4.3 points this year and 5.5 points last year. Both years compared unfavorably to our longer-term catastrophe loss average for this segment. Catastrophe losses for this segment are consistent with the discussion in the "Insurance Operations" section above.

In addition to the prior year casualty reserve development above, current year casualty loss costs were 0.4 points higher in 2021 compared to 2020, driven by our commercial automobile line of business, which experienced an increase in claim frequencies as driving patterns continued to evolve in the COVID-19 environment, despite still being below our 2019 pre-pandemic levels. In 2020, we experienced lower claim frequencies in our commercial automobile line of business due to the pandemic environment. Lower claims frequencies and lower non-catastrophe property losses provided an offset to the $15.4 million premium credit to customers in 2020.

For quantitative information on the prior year development by line of business, see "Financial Highlights of Results for Years Ended December 2021, 2020, and 2019" above and for qualitative information about the significant drivers of this development, see the line of business discussions below.

The Standard Commercial Lines underwriting expense ratio decreased 1.3-points in 2021 compared to 2020. The ratio was elevated in 2020 by 1.2 points for COVID-19-related items, as discussed in the "Insurance Operations" section above. The decrease in the 2021 underwriting expense ratio reflects the absence of these COVID-19-related impacts.

The following is a discussion of our most significant Standard Commercial Lines of business:

General Liability

% of total standard commercial NPW 33 32 33

NPW grew 20% in 2021 due to renewal pure price increases, exposure growth, and higher direct new business. NPW growth in 2021 also included a 7-point benefit from the 2020 COVID-19-related $46 million estimate of return audit and mid-term endorsement premium recorded on this line in the first quarter of 2020, which did not reoccur in 2021.

The combined ratio decreased 0.4 points in 2021, driven principally by a decrease in the underwriting expense ratio of 1.5 points, the drivers of which are consistent with the items discussed in the Standard Commercial Lines Segment above.

Partially offsetting this decrease in the combined ratio was less favorable prior year casualty reserve development compared to 2020, asoutlined in the table below.

In 2021, the prior year reserve development was primarily attributable to favorable reserve development on loss severities in accident years 2018 and prior. In 2020, the prior year reserve development was primarily attributable to favorable reserve development on loss severities in accident years 2017 and prior. While this line experienced favorable prior year casualty reserve development in 2021 and 2020, it is also exposed to changes in economic and social trends, including litigation propensity and outcomes, and changes in state laws such as those that extend the statute of limitations or open windows for previously time-barred actions.

Commercial Automobile

% of total standard commercial NPW 30 30 28

NPW growth of 17% benefited from renewal pure price increases and higher direct new business, as shown in the table above. Additionally, NPW growth in 2021 included (i) exposure growth, and (ii) a 3-point benefit from the 2020 COVID-19-related

$15.4 million premium credit to our commercial automobile customers in the second quarter of 2020, which did not reoccur in 2021.

The 2.7-point increase in the combined ratio in 2021 compared to 2020 was primarily driven by the items in the tables shown below.

($ in millions) Non-Catastrophe Property Losses Catastrophe Losses

The 2021 and 2020 prior year casualty reserve development was primarily attributable to unfavorable reserve development on loss severities in accident years 2016 through 2019. The 2020 prior year casualty reserve development also experienced higher than expected frequencies in accident year 2019.

In addition to the items in the table above, the combined ratio variances included the following:

•A 1.4-point increase in the current year casualty loss costs in 2021 compared to 2020, driven primarily by increased claim frequencies in 2021 due to driving patterns that continue to evolve in the COVID-19 environment compared to 2020. Last year experienced lower claim frequencies reflecting reductions in miles driven due to the COVID-19-related driving pattern shifts impacting this line of business. Lower claims frequencies and lower non-catastrophe property losses provided an offset to the $15.4 million of premium credits to customers in 2020.

•A 2.2-point decrease in the underwriting expense ratio in 2021 compared to 2020, the drivers of which are consistent with the items discussed in the Standard Commercial Lines Segment above.

This line of business remains an area of focus for us and most of the industry, as profitability challenges continue to generate

combined ratios higher than risk-adjusted targets. We will continue to (i) actively implement price increases consistent with levels experienced in 2021 and 2020, (ii) enhance our underwriting tools to further improve the accuracy of our rating information to prevent premium leakage, and (iii) actively manage our new and renewal business.

Workers Compensation

Renewal pure price increases (decreases) 0.1 (2.0) 2.1 (2.8) 0.8

% of total standard commercial NPW 12 12 14

NPW increased 17% in 2021 compared to 2020 due to higher retention, exposure growth, and increased direct new business. Additionally, NPW growth in 2021 included an 11-point benefit due to the 2020 COVID-19-related $29 million estimate of return audit and mid-term endorsement premium recorded on this line in the first quarter of 2020 that did not reoccur in 2021.

The decrease in the combined ratio in 2021 compared to 2020 was primarily due to: (i) a decrease in the underwriting expense ratio of 1.7 points, the drivers of which are consistent with the items discussed in the Standard Commercial Lines Segment above; and (ii) a 1.4-point reduction in the current year casualty loss costs. This reduction was in recognition of the favorable frequency trends and sustained lower medical severity trends impacting this line.

Partially offsetting the decreases in the combined ratio was less favorable prior year casualty reserve development compared to 2020, as follows:

($ in millions)

For both periods, the favorable reserve development was due to continued favorable medical severity trends impacting accident years 2019 and prior. Due to the length of time injured workers can receive related medical treatment, decreases in medical inflation can cause favorable loss development across an extended number of accident years.

Commercial Property

% of total standard commercial NPW 18 19 17

NPW growth of 14% in this line in 2021 compared to 2020 was driven by renewal pure price increases, exposure growth, and higher new business.

Quantitative information regarding property losses is as follows:

Our losses in 2021 and 2020 included elevated levels of catastrophe losses, with 18.2 points this year and 23.3 points last year. Both years compare unfavorably to our longer-term catastrophe loss average for this line of business. Catastrophe losses for this segment are consistent with the discussion in the "Insurance Operations" section above.

Standard Personal Lines Segment

Insurance Segments Results:

Less:

Combined Ratios:

NPW declined 1% in 2021 compared to 2020, primarily driven by a reduction in direct new business and slightly lower retention, both of which were impacted by the challenging personal automobile competitive environment. This decrease was

partially offset by the impact of the COVID-19 related premium credits to our personal automobile customers, which reduced NPW by $4.3 million in 2020 and added one point of growth in 2021 compared to 2020, as these premium credits did not reoccur in 2021. In the third quarter of 2021, we transitioned our personal lines strategy to targeting new and renewal customers in the mass affluent market where we believe our strong coverage and servicing capabilities can be more competitive.

Direct new business premiums1 $ 40.9 $ 44.7

Renewal pure price increases on NPW 1.0 2.5

1Excludes our flood direct premiums written, which is 100% ceded to the NFIP and therefore has no impact on our NPW.

The reduction in NPE in 2021 compared to 2020 reflects the decreases in NPW discussed above.

The loss and loss expense ratio decreased 5.8 points in 2021 compared to 2020, the primary drivers of which were as follows:

($ in millions) Non-Catastrophe Property Losses Catastrophe Losses

Our 2021 losses were impacted by 44 events that were designated as catastrophes by Property Claims Services ("PCS"), an internationally recognized authority on insured catastrophe property losses, including two severe thunderstorms accompanied by wind and hail occurring in March and June, Hurricane Ida in late August and early September, and a series of severe tornadoes that swept the Midwest in December. Our 2020 losses were impacted by 38 events that PCS designated as catastrophes, including a tornado affecting Tennessee in March, two severe April storms with damaging winds and tornadoes affecting the Midwestern states, Hurricane Isaias in late July and early August, and the August derecho in the Midwest.

There was no prior year casualty reserve development in either 2021 and 2020. However, current year casualty loss costs were 1.2 points higher in 2021 compared to 2020, driven by our personal automobile line of business, reflecting increases in claim frequencies as driving patterns continued to evolve in the COVID-19 environment.

The underwriting expense ratio decreased 0.8-points in 2021 compared to 2020. The ratio was elevated in 2020 by 1.0 points for COVID-19-related items, as discussed in the "Insurance Operations" section above. The decrease in the underwriting expense ratio in 2021 reflects the absence of these COVID-19-related impacts.

E&S Lines Segment

Insurance Segments Results:

Less:

Combined Ratios:

The strong NPW growth of 23% in 2021 was due to increases in direct new business, renewal pure price, and exposure growth driven by favorable market conditions in E&S lines in the U.S.

Quantitative information is as follows:

Overall renewal price increases 6.5 % 6.2

Direct new business premiums $ 137.7 113.9

The increase in NPE in 2021 compared to 2020 reflects the increases in NPW discussed above.

The 2.9-point decrease in the loss and loss expense ratio in 2021 compared to 2020 was primarily attributable to favorable prior year casualty reserve development and a decrease in property losses. This was partially offset by an increase in current year casualty loss costs of 1.4 points, driven primarily by increased claim frequencies in 2021 compared to the decreased levels experienced in 2020.

Quantitative information regarding our property losses and prior year casualty reserve development are as follows:

($ in millions) Non-Catastrophe Property Losses Catastrophe Losses

Our 2021 losses were impacted by 50 events that PCS designated as catastrophes, including Winter Storm Uri affecting Texas in February, a series of large storms affecting the Southern and Midwestern states in May, and Hurricane Ida in late August and early September. Our 2020 losses were impacted by 49 events that PCS designated as catastrophes, including the civil unrest throughout the country in June and Hurricane Laura in August.

The favorable prior year casualty reserve development in 2021 was primarily attributable to lower loss severities in accident years 2016 and prior. There was no prior year casualty reserve development in 2020.

The 2.7-point decrease in the underwriting expense ratio in 2021 compared to 2020 was primarily driven by: (i) a decrease in labor expenses of 1.5 points and (ii) a decrease in compensation to our distribution partners of 0.6 points from changes in premium mix and corresponding commission rates. In addition, the underwriting expense ratio in 2020 was elevated by 0.9 points for the COVID-19-related increase in our allowance for credit losses on premiums receivable, as discussed in "Insurance Operations" above. The decrease in the underwriting expense ratio in 2021 reflects the absence of this COVID-19-related impact.

Reinsurance

We use reinsurance to protect our capital resources and insure against losses on property and casualty risks that we underwrite in excess of the amount that we are prepared to accept. We use two main reinsurance vehicles: (i) a reinsurance pooling agreement among our Insurance Subsidiaries through which each company agrees to share in premiums and losses based on certain specified percentages; and (ii) reinsurance contracts and arrangements with third parties that cover various policies that we issue to our customers.

Reinsurance Pooling Agreement

The primary purposes of the Insurance Subsidiaries' reinsurance pooling agreement are to:

•Pool or share proportionately the underwriting profit and loss results of property and casualty insurance underwriting operations through reinsurance;

•Reduce administration expenses; and

•Permit all the Insurance Subsidiaries to obtain a uniform rating from AM Best.

The following illustrates the pooling percentages by Insurance Subsidiary as of December 31, 2021:

Insurance Subsidiary Pooling Percentage

Selective Insurance Company of America ("SICA") 32.0%

Selective Way Insurance Company ("SWIC") 21.0%

Selective Insurance Company of South Carolina ("SICSC") 9.0%

Selective Insurance Company of the Southeast ("SICSE") 7.0%

Selective Insurance Company of New York ("SICNY") 7.0%

Selective Casualty Insurance Company ("SCIC") 7.0%

Selective Auto Insurance Company of New Jersey ("SAICNJ") 6.0%

Mesa Underwriters Specialty Insurance Company ("MUSIC") 5.0%

Selective Insurance Company of New England ("SICNE") 3.0%

Selective Fire and Casualty Insurance Company ("SFCIC") 3.0%

Reinsurance Treaties and Arrangements

By entering into reinsurance treaties and arrangements, we can increase our underwriting capacity, accepting larger individual risks and aggregations of risks without directly increasing our capital or statutory surplus. Our reinsurance program principally consists of traditional reinsurance. Under our reinsurance treaties, we cede to our reinsurers a portion of our incurred losses from an individual policy or group of policies in exchange for a portion of the premium on those policies. Amounts not reinsured below a specified dollar threshold are known as retention. Reinsurance does not legally discharge us from liability under the terms and limits of our policies, but it does make our reinsurers liable to us for the amount of liability we cede to them. Our reinsurers often rely on their own reinsurance programs, or retrocessions, to manage their large loss exposures. The size of the global reinsurance community is relatively small. If our reinsurers are unable to collect on their retrocessional programs, it may impair their ability to pay us for the amounts we cede to them.

Consequently, our reinsurers present us with direct, indirect, and contingent counterparty credit risk. We attempt to mitigate this credit risk by (i) pursuing relationships with reinsurers rated “A-” or higher by AM Best and/or (ii) obtaining collateral to secure reinsurance obligations. Some of our reinsurance treaties permit us to terminate or commute them – or require the reinsurer to post collateral if the reinsurer's financial condition or rating deteriorates. We monitor our reinsurers' financial condition, and we review the quality of reinsurance recoverables and reserves for uncollectible reinsurance. For additional information regarding our reinsurance counterparty credit risk, see Note 9. "Reinsurance" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

We have reinsurance contracts that separately cover our property and casualty insurance business that can be segregated into the following key categories:

•Property Reinsurance, which includes our (i) property excess of loss treaties purchased for protection against large individual property losses and (ii) property catastrophe treaties purchased to provide protection for the overall property portfolio against severe catastrophic events. We also purchase a limited amount of facultative reinsurance, primarily for large individual property risks greater than our property excess of loss treaty capacity.

•Casualty Reinsurance, which provides protection for both individual large casualty losses and catastrophic casualty losses involving multiple claimants or insureds. We also may use facultative reinsurance for large individual casualty risks in excess of our treaty capacity. We may also purchase quota share capacity for certain new or higher severity casualty lines of business.

•Terrorism Reinsurance, which provides a federal reinsurance backstop, behind the protection built into our property and casualty reinsurance treaties, for terrorism losses covered under the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA”). For further information about TRIPRA, see Item 1A. “Risk Factors.” of this Form 10-K.

•Flood Reinsurance, for which all of the premiums and losses related to our participation in the WYO (for which we also receive a servicing fee) are 100% ceded to the federal government.

Property Reinsurance

We renewed our main property catastrophe treaty, which covers both our standard market and E&S business, effective January 1, 2022. For this treaty, we purchased an additional $50 million in limit to respond to our growing property portfolio, thereby

extending the coverage to $835 million in excess of the $40 million retention. Due to growth in our E&S property book of business, more challenging market conditions, and our recent and planned Standard Commercial Lines geographic expansion, we restructured our non-footprint catastrophe treaty from a $35 million in excess of $5 million structure covering a limited number of states to a $30 million in excess of $10 million treaty, covering all 50 states and the District of Columbia, for our E&S business only. This removed our five newest Standard Commercial Lines states from coverage under this treaty, as they are covered under the main property catastrophe treaty. We also increased our co-participation from 15% to 34% to balance the cost versus volatility protection provided by this treaty. Consistent with the prior year, both treaties were renewed with restrictions in coverage related to the systemic perils of communicable disease and first-party cybersecurity coverage, in line with current market conditions. Consequently, the property catastrophe program excludes coverage for communicable disease, but retains limited reinsurance coverage for cybersecurity risks. Despite these limitations, coverage for traditionally covered property perils was maintained.

We seek to minimize reinsurance credit risk by transacting with highly-rated reinsurance partners and purchasing collateralized reinsurance products, particularly for high-severity, low-probability events, if feasible. Our current reinsurance program includes $259 million in collateralized limit, primarily in the top layer of the catastrophe program, compared to $281 million in collateralized limit under the prior year's reinsurance program.

Overall, we expect ceded premium for our property catastrophe reinsurance treaties to increase modestly in 2022 due to three factors: (i) increases in underlying property exposures in line with our growing property insurance portfolio; (ii) the addition of $50 million of coverage purchased to maintain stability in our net risk profile; and (iii) modest risk-adjusted price increases.

We model various catastrophic perils, and hurricane risk continues to be our portfolio's most significant natural catastrophe peril because of the geographic location of the risks we insure. The table below illustrates the impact of the five largest hurricane losses we have experienced in the last 35 years:

($ in millions) Actual Gross Loss1 Net Loss2 AccidentYear

Hurricane Name

1This amount represents reported and unreported gross losses estimated as of December 31, 2021.

2Net loss does not include reinstatement premiums, taxes, or flood claims handling fees.

We review our exposure to hurricane risk by examining third-party vendor models and conducting our own proprietary analysis. The third-party vendor models provide a long-term view that closely relates modeled event frequency to historical hurricane activity, adjusting to reflect certain non-modeled cost assumptions, such as the impact of loss expenses, residual market assessments, and automobile-related losses. We believe that modeled estimates provide a range of potential outcomes, and we review multiple estimates to understand our catastrophic risk.

Occurrence Exceedance Probability Modeled Losses

1Gross losses include uncertainty associated with damage/loss estimation, demand and storm surge, and assumptions for certain un-modeled costs, such as the impact of loss expenses, residual market assessments, and automobile-related losses, which collectively increase our gross losses by approximately 13%.

2Net losses are after-tax losses net of catastrophe reinsurance including reinstatement premiums.

3GAAP Equity as of December 31, 2021.

Our current catastrophe reinsurance program exhausts at an approximately 1 in 216 year return period, or events with 0.5% probability, based on a multi-model view of hurricane risk. Our actual gross and net losses incurred from hurricanes making U.S.-landfall will vary, perhaps materially, from our estimated modeled losses.

We renewed the property excess of loss treaty, which covers both our standard market and E&S business, on July 1, 2021, and the top layer renewed on January 1, 2022. This treaty was renewed with an increase in the retention on the first layer to $3.0 million from $2.0 million to manage the overall reinsurance cost on our growing portfolio and maintain projected earnings volatility protection in line with our historical levels.

The following table summarizes of our property reinsurance treaties and arrangements covering our Insurance Subsidiaries:

PROPERTY REINSURANCE ON INSURANCE PRODUCTS

Treaty Name Reinsurance Coverage Terrorism Coverage

- 82% of losses in excess of $40 million up to $100 million;

- 97% of losses in excess of $100 million up to $225 million;

- 97% of losses in excess of $225 million up to $525 million; and

- 90% of losses in excess of $525 million up to $875 million.

- $7 million in excess of $3 million layer provides unlimited reinstatements;

Flood 100% reinsurance by the federal government’s WYO. None

Casualty Reinsurance

We renewed the casualty excess of loss treaty, which covers both our standard market and E&S Lines business, on July 1, 2021, substantially on the same terms as the treaty expiring June 30, 2021.

The following table summarizes our casualty reinsurance treaties and arrangements covering our Insurance Subsidiaries:

CASUALTY REINSURANCE ON INSURANCE PRODUCTS

Treaty Name Reinsurance Coverage Terrorism Coverage

We have other reinsurance treaties, such as our (i) Surety and Fidelity Excess of Loss Reinsurance Treaty, (ii) National Workers Compensation Reinsurance Pool Quota Share, which covers business assumed from the involuntary workers compensation pool, (iii) Endurance Specialty Quota share and Loss Development Cover, which protects against losses on policies written before the acquisition and any development on reserves established by MUSIC as of the date of acquisition, (iv) Equipment Breakdown Coverage Reinsurance Treaty, (v) Multi-line Quota Share, which covers additional personal lines coverages, (vi) Cyber Liability Quota Share, and (vii) Excess Liability Quota Share, which covers MUSIC's excess liability business.

We regularly evaluate our overall reinsurance program, and we try to develop effective ways to manage the transfer of risk. We base our analysis on a comprehensive process that includes periodic analysis of modeling results, our own loss experience, aggregation of exposures, exposure growth, diversification of risks, limits written, projected reinsurance costs, reinsurer financial strength, and projected impact on earnings, equity, and statutory surplus. We strive to balance reinsurer credit quality, price, terms, and our appetite to retain a certain level of risk.

Investments Segment

The primary objective of the investment portfolio is to maximize after-tax net investment income and the overall total return of the portfolio, while maintaining a high credit quality core fixed income securities portfolio and managing our duration risk profile. The effective duration of the fixed income securities portfolio, including short-term investments, was 3.9 years as of December 31, 2021, compared to the Insurance Subsidiaries' net loss and loss expense reserves duration of 3.5 years. The effective duration is monitored and managed to maximize yield while managing interest rate risk at an acceptable level. We maintain a well-diversified portfolio across sectors, with credit quality and maturities that provide ample liquidity. 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 91% of our invested assets at December 31, 2021, and 92% at December 31, 2020. These investments had a weighted average credit rating of “A+” as of December 31, 2021 and "AA-" as of December 31, 2020, with a 96% allocation to investment grade holdings at both December 31, 2021 and December 31, 2020. The weighted average credit rating decline reflects a planned reduction in our sector allocation to agency residential mortgage-backed securities over the past year as lower interest rates accelerated prepayments, as expected. Given the very low reinvestment rates for this asset class, we reallocated these non-sale disposal cash flows into other high-quality fixed income sectors, including corporate securities and other asset-backed security classes without a "AAA" rating but in our view currently offer a better risk and reward trade-off.

For further details on the composition, credit quality, and the various risks to which our portfolio is subject, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.” of this Form 10-K.

Total Invested Assets

Invested assets per dollar of common stockholders' equity 2.88 2.96 (3)

1Includes unrealized gain on fixed income securities of $229 million and equity securities of $27 million at December 31, 2021.

Invested assets increased $521 million at December 31, 2021, compared to December 31, 2020, reflecting strong 2021 operating cash flows of $771 million, partially offset by a decrease in pre-tax unrealized gains of $140 million. The majority of this $140 million decrease was related to our fixed income securities portfolio, which was impacted by an increase in benchmark U. S. Treasury rates, partially offset by a tightening of credit spreads.

Net Investment Income

The components of net investment income earned were as follows:

Commercial mortgage loans ("CMLs") 2,743 844 225 — n/m

Annual after-tax yield on fixed income investments 2.6 2.6 — 2.9 (0.3)

Annual after-tax yield on investment portfolio 3.4 2.6 0.8 2.9 (0.3)

The $78.4 million increase in after-tax net investment income in 2021 compared to 2020 was driven by higher alternative investments gains in our other investment portfolio of $93.0 million, after-tax, in 2021 compared to $20.9 million, after-tax, in 2020, resulting in a $72.0 million increase in after-tax net investment income in 2021. Our alternative investments are accounted for under the equity method of accounting and are recorded on a one-quarter lag. The results on alternative investments in 2021 principally reflected unrealized gains on our holdings that benefited from the strong equity and credit capital market performance in the 12-month period ended September 2021.

Realized and Unrealized Investment 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 the fundamentals for that security or sector have deteriorated or 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:

Net unrealized gains (losses) on equity securities 17,881 7,939 (8,649)

Net credit loss (expense) on fixed income securities, AFS (6,858) (5,042)

Net credit loss (expense) benefit on fixed income securities, HTM (49) 4

Losses on securities for which we have the intent to sell (519) (16,266)

Net other-than-temporary-impairment losses recognized earnings (3,644)

Realized and unrealized investment gains (losses) in 2020 were significantly impacted by COVID-19-related market volatility in the first quarter of 2020, and substantially all of the $16.3 million of losses on securities we intended to sell were recorded in that quarter to provide our investment managers flexibility to trade and optimize our investment portfolio. The increase in unrealized gains on equity securities in 2021 was driven by strong public equities performance in the year.

SIGI US Equity

SIGI · 10-K · period ended 2021-12-31

Item 1A. Risk Factors.

Item 1B. Unresolved Staff Comments.

Item 2. Properties.

Item 3. Legal Proceedings.

Item 4. Mine Safety Disclosures.

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 6. Reserved.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SIGI US Equity☆

SIGI · 10-K · period ended 2021-12-31

Item 1A. Risk Factors.

Item 1B. Unresolved Staff Comments.

Item 2. Properties.

Item 3. Legal Proceedings.

Item 4. Mine Safety Disclosures.

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 6. Reserved.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SIGI US Equity