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

Forward-Looking Statements

The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent"), and its subsidiaries, except as expressly indicated or the context otherwise requires. Certain statements in this Annual Report on Form 10-K, including information incorporated by reference, are “forward-looking statements” defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a forward-looking statement safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements discuss our intentions, beliefs, projections, estimations, or forecasts of future events and financial performance. They involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, activity levels, or performance to materially differ from those in or implied by the forward-looking statements. In some cases, forward-looking statements include the words “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely,” “continue,” or comparable terms. Our forward-looking statements are only predictions; we cannot guarantee or assure that such expectations will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements for any reason except as required by law.

We discuss factors that could cause our actual results to differ materially from our project, forecasts, or estimates in forward-looking statements 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 to which any factor or combination of factors may cause actual results to differ materially from any forward-looking statements. Given these risks, uncertainties, and assumptions, the forward-looking events we discuss in this report might not occur.

Introduction

We classify our business into four reportable segments:

•Standard Commercial Lines;

•Standard Personal Lines;

•Excess and Surplus Lines ("E&S Lines"); and

•Investments.

For more details about these segments, refer to Note 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."

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The following is Management's Discussion and Analysis ("MD&A") of our consolidated financial condition and results of operations. Included in the MD&A is an evaluation of the amounts and certainty of cash flows from operations and outside sources, trends, and uncertainties that may have a material impact in future periods. The MD&A discusses and analyzes our 2023 results compared to 2022. Investors should read the MD&A in conjunction with Item 8. "Financial Statements and Supplementary Data." of this Form 10-K. For discussion and analysis of our 2022 results compared to 2021, 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, 2022.

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, 2023, 2022, and 2021;

•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 considered most critical to the preparation of the Financial Statements involved (i) reserves for loss and loss expense, (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities, and (iii) reinsurance.

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. Insurers establish reserves as balance sheet liabilities to recognize liabilities for unpaid 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, 2023 and 2022:

Loss and Loss Expense Reserves

1Includes our flood loss exposure related to our participation in the NFIP's WYO program, to which we cede 100% of our flood losses.

2Includes general liability (97% of net reserves) and commercial auto liability coverages (3% of net reserves).

3Includes commercial property (90% of net reserves) and commercial auto property coverages (10% of net reserves).

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Loss and Loss Expense Reserves

1Includes our flood loss exposure relates to our participation in the NFIP's WYO program, to which we cede 100% of our flood losses.

2Includes general liability (96% of net reserves) and commercial auto liability coverages (4% of net reserves).

3Includes commercial property (90% of net reserves) and commercial auto property coverages (10% of net reserves).

The Insurance Subsidiaries' net loss and loss expense reserves duration was approximately 3.1 years at both December 31, 2023 and December 31, 2022.

How reserves are established

Reserve for loss and loss expense include case reserves on reported claims and IBNR reserves. Case reserves are estimated for each individual claim based on 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 include provisions for (i) claims not yet reported, (ii) future development on reported claims, (iii) closed claims that could reopen in the future, and (iv) anticipated salvage and subrogation recoveries.

We perform quarterly internal reserve reviews using our own loss experience, with consideration given to various internal and external factors. Changes in claim dynamics may inherently alter paid and reported development patterns. While the selections in our reserve analyses aim to account for these impacts, estimated reserves involve an increased risk of variability. In addition to our internal reserve reviews, an external consulting actuary performs an independent semiannual review of our reserves. We do not rely on the external consulting actuary's report to determine our recorded reserves; however, we review and discuss our observations on trends, key assumptions, and actuarial methodologies with our consulting actuary. 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 reserve 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 $4,253 million to $5,004 million at December 31, 2023. 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 but does not represent a distribution of all possible outcomes. Therefore, the final outcomes may be greater than or less than these amounts.

The range of reasonable reserve estimates increased as of December 31, 2023, relative to December 31, 2022. This increase was primarily related to reserve growth commensurate with our net premiums earned ("NPE") growth.

Changes in Reserve Estimates (Loss Development)

Our quarterly reserving 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 2023, we experienced net unfavorable prior year loss

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development of $10.0 million, compared to net favorable development of $78.9 million in 2022 and $82.9 million in 2021. The following table summarizes prior year development by line of business:

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

Businessowners' policies 7.6 (7.3) (0.4)

Commercial property 0.7 (1.6) (2.6)

Bonds — (10.0) —

E&S casualty lines (5.0) (5.0) (7.0)

E&S property lines (1.6) (2.5) (0.8)

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

Standard Market General Liability Line of Business

At December 31, 2023, our general liability line of business had recorded reserves, net of reinsurance, of $1.9 billion, representing 41% of our total net reserves. In 2023, this line experienced unfavorable reserve development of $55.0 million, attributable to social inflationary impacts driving increased loss severities in accident years 2015 through 2020. We see these social inflationary impacts as an industry dynamic with higher propensity for attorney representation and litigation, longer settlement times, and higher settlement values. In 2022, this line experienced favorable development of $5.0 million, attributable to favorable inception-to-date claim frequencies in accident years 2020 and 2021.

This line of business has experienced a long-term historical trend of meaningful severity increases, largely offset by decreases in claim frequencies. In response to potentially increasing social inflationary impacts, we have been embedding higher severity assumptions in our initial loss ratio estimates in recent years, which are materializing in actual results. The trend of lower frequencies has continued, while prior year severities have developed adversely. Despite this, initial estimates for less mature accident years have remained stable. However, if the favorable frequency trend moderates or severities continue to emerge higher than expected, there could be impacts to ultimate loss estimates for this line.

The general liability line of business presents a diverse set of exposures. Various factors influence losses and loss trends, 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, broader liability interpretations, and amounts of associated awards, which influence future settlement values. We monitor claim litigation rates regularly. We have observed modest increases in the percentage of claims with attorney involvement in recent periods, partly due to more litigious coverages, such as management liability coverage. This trend and the impact of previous court closures continue to affect 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 2023 and 2022. We continue to actively manage policy limits and monitor each jurisdiction's statute of limitations to ensure our rate level accounts for the changing exposure, to the extent regulatorily possible. While these underwriting and pricing actions have been necessary to position the portfolio for future profitability, they have limited our CAPS growth in recent years.

We also have exposure to abuse or molestation claims from enacted state laws that extend the statute of limitations or permit windows for abuse or molestation claims and lawsuits that statutes of limitations previously barred. Consequently, we may receive claims decades after the alleged acts involving 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.

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While this should help us better understand this rapidly evolving exposure, the ultimate impact of social, political, and legal trends remains highly uncertain, which could significantly impact the ultimate settlement values for these claims.

Standard Market Workers Compensation Line of Business

At December 31, 2023, our workers compensation line of business had recorded reserves, net of reinsurance, of $804 million, representing 17% of our total net reserves. During 2023, this line experienced favorable reserve development of $74.5 million, primarily due to improved loss severities in accident years 2021 and prior. Similarly, this line experienced favorable reserve development during 2022 of $70.0 million related to favorable inception-to-date claim frequencies in accident year 2020 and improved loss severities in accident years 2020 and prior. During both 2023 and 2022, the lower-than-expected loss emergence was partly due to (i) medical inflation that was lower than initially anticipated and (ii) various 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.

A variety of issues can impact the workers compensation line of business, such as:

Unexpected changes in medical cost inflation – The industry currently is experiencing an extended period of lower medical claim cost inflation. However, medical costs are beginning to rise, though to a lesser degree than the recent elevated economic inflation measured by the Consumer Price Index. Offering some protection are wage increases, which are used as the rating basis for workers compensation coverage and continue to outpace medical inflation. Changes to our historical workers compensation medical costs and potential changes in future medical inflation can add reserve variability;

Changes in statutory workers compensation benefits – Statutory benefit changes may affect all outstanding claims, including past and not-yet-settled claims. Depending on the social and political climate, these changes may either increase or decrease associated claim costs; and

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

Standard Market Commercial Automobile Line of Business

At December 31, 2023, our commercial automobile line of business had recorded reserves, net of reinsurance, of $959 million, representing 20% of our total net reserves. In 2023, this line experienced unfavorable prior year reserve development of $8.0 million, primarily due to increased loss expenses in accident years 2022 and prior. In 2022, this line experienced unfavorable prior year reserve development of $22.5 million, driven by increased severities in the 2021 accident year.

The commercial automobile line has experienced unfavorable trends in recent years that has negatively affected results for us and the industry. Pre-pandemic, increased frequencies were attributable to increased miles driven, likely related to lower unemployment, poor road quality, and increased distracted driving. The pandemic and the governmental "stay-at-home" orders issued in early 2020 dramatically reduced miles driven and road traffic, significantly reducing claims frequency that year. At the same time, the industry reported dramatic increases in risky driving behaviors, such as speeding, distracted driving, and driving under the influence. In addition, traffic deaths per mile driven increased significantly. With increased miles driven in subsequent years, fatality rates per mile driven have tempered but remain well above pre-pandemic levels. Risky driving behaviors and the impacts of social inflation continue to pressure this line's claim severities. As of year-end 2023, frequencies remained somewhat below pre-pandemic levels due to changes in commuting patterns.

Increased property damage and physical damage severities relate to (i) elevated repair costs for increasingly complex vehicles that incorporate more technology, (ii) extended periods of rental reimbursement costs for claims, and (iii) inflationary impacts and disruptions to the supply chain, although these have moderated in recent quarters.

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 continue to leverage our predictive modeling and analytical capabilities that provide guidance and automatic retrieval of relevant public information on existing and potential policyholders 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 vehicle usage information.

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•Aggressively managing new business pricing and hazard mix. 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, 2023, our personal automobile line of business had recorded reserves, net of reinsurance, of $130 million, representing 3% of our total net reserves. This line experienced unfavorable prior year reserve development of $15.3 million in 2023, primarily due to increased loss severities in accident year 2022. This line experienced modest unfavorable prior year reserve development of $0.5 million in 2022.

Some of the same issues affecting the commercial automobile line also impact this line. The COVID-19-related frequency reduction was even more pronounced for the personal automobile line than the commercial automobile line. Frequencies rebounded post-pandemic and have nearly returned to pre-pandemic levels. 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, exacerbated by riskier driving behaviors, including distracted driving trends. We continue recalibrating our predictive models and refining our underwriting and pricing approaches, including prioritizing rate filings state-by-state, to mitigate these rising severities. These filed rate increases began to take effect on a written basis during the first quarter of 2023 and continued to take effect through the end of 2023. We expect the number of rate filings and their rate impacts to continue to increase throughout 2024. 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, increasing the uncertainty in the reserves in the near-term.

E&S Casualty Lines of Business

At December 31, 2023, our E&S casualty lines of business had recorded reserves, net of reinsurance, of $532 million, representing 11% of our total net reserves. Our E&S casualty lines results have improved over recent years. In 2023, this line experienced favorable prior year reserve development of $5.0 million, primarily due to improved loss severities in accident years 2021 and prior. In 2022, this line experienced favorable prior year reserve development of $5.0 million, primarily attributable to favorable policy inception-to-date claim frequencies and improved loss severities in accident years 2020 and 2021.

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 and (ii) social inflationary trends, such as increased attorney involvement, broader liability findings, and more generous settlement awards.

We made underwriting operational changes that improved E&S casualty lines performance. Before 2023, our underwriting operations had substantially exited several targeted business classes with historically volatile results, including commercial automobile liability, liquor liability, and snow removal. We have shifted more policy acquisitions to middle market business without materially increasing the portfolio's overall risk profile.

The following E&S casualty claims operational changes have created further casualty improvements:

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

•We created separate specialized claims teams for "litigated," "non-litigated," and "high exposure" claims.

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

◦Increased the use of employed staff counsel lawyers to defend covered claims litigation;

◦Consistent with our policies' terms related to covered claims, the duty to defend, and regulatory standards, enhanced processes for legal budgeting and expense management; and

◦Implemented a process to review the effectiveness of outside counsel defending our insureds.

While we believe these underwriting and claims operational changes have improved our underwriting experience, these changes have inherent risks. Changes in portfolio composition or our claims processes may affect paid and reported development patterns. While our reserve analyses incorporate methods that adjust for these changes, estimated reserves have a greater risk of fluctuation.

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Other impacts that create additional loss and loss expense reserve uncertainty

Claims Initiative Impacts

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 affecting average case reserve levels and claims settlement rates, directly impacting 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 claims process management to be the longer-term benefit.

Our internal reserve analyses incorporate 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. Like all projection methods, these have their own associated assumptions and judgments. Accordingly, no single method can be considered definitive.

Unanticipated Changes in Economic Inflation

United States ("U.S.") monetary policy and global economic conditions 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. 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, such as:

•The selection of loss and loss expense development factors;

•The weight 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 line of business and accident year. If the actual experience emerges differently than the assumptions underlying the reserve process, possible changes in our reserve estimates could 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 considering the 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 our current or alternative assumptions.

Changes in internal and external trends and operational changes may manifest as changes in 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 key assumptions. These ratios are developed through a rigorous process of projecting recent accident years' experience to an ultimate settlement basis. They are then adjusted to the current accident year's pricing and loss cost levels. The impact of underwriting portfolio and claims handling practice changes is also quantified and reflected where appropriate. As with all estimates, the ultimate loss and loss expense ratios may differ from those currently estimated.

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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 of 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

Workers compensation 15 (85) 85

Commercial automobile liability 12 (105) 105

Personal automobile liability 20 (20) 20

Workers compensation 10 (35) 35

Commercial automobile liability 10 (65) 65

Personal automobile liability 10 (10) 10

There is some overlap between the impacts shown 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 reflect.

Asbestos and Environmental Reserves

Our general liability, businessowners' policies, 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 $19.1 million as of December 31, 2023, and $20.3 million as of December 31, 2022, with asbestos claims constituting approximately 18% of these reserves in 2023 and 23% in 2022.

Environmental claims have arisen primarily from insured landfill exposures in municipal government and small non-manufacturing commercial risks, and leaking underground storage tanks under homeowners policies. Asbestos claims have arisen primarily from policies issued to (i) various distributors of asbestos-containing products, such as electrical and plumbing materials and (ii) contractors exposed to or handling asbestos-containing products, such as heating, ventilation, and air conditioning contractors. 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 then-known facts and circumstances, which IBNR reserves supplement.

Estimating IBNR reserves for asbestos and environmental claims is difficult because these claims have delayed and inconsistent reporting patterns. In addition, significant uncertainties are 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.

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, including in states that 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 the adequacy of our related loss and loss expense reserves to cover these claims remain highly uncertain. These exposures remain in our ongoing portfolio and are reserved in aggregate, with other exposures within the line of business

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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 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 91% 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 9% are classified as either (i) Level 3 and are based on unobservable market inputs because the related securities are not traded on a public market, or (ii) not leveled because the related securities are measured at fair value using net asset value per share (or its practical expedient). For additional information, refer to the following sections within Item 8. "Financial Statements and Supplementary Data." of this Form 10-K: (i) item (d) of Note 2. "Summary of Significant Accounting Policies" for 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 quantitative 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 risk-adjusted 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 securities 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 economic changes. The forecasted economic data incorporated into the models is based on the Federal Reserve Board’s annual supervisory stress test review on certain large banks and financial institutions.

We also can 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 on the probability of the various scenarios occurring.

Based on these analyses, we recorded an allowance for credit losses on our AFS fixed income securities portfolio of $28.2 million at December 31, 2023, and $45.7 million at December 31, 2022. After considering the allowance for credit losses, the remaining unrealized losses on this portfolio were $403.4 million at December 31, 2023 and $537.2 million at December 31, 2022. The decrease in 2023 compared to 2022 was primarily driven by a decrease in benchmark U.S. Treasury rates and, to a lesser extent, a tightening of credit spreads. If the security-specific and macroeconomic assumptions in our DCF analyses or our outlook on the occurrence probability of our DCF model scenarios were to change, our allowance for credit losses and the resulting credit loss expense or benefit will negatively or positively 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 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

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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 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. Other factors impact our reinsurer's credit quality, such as their reserve adequacy, investment portfolio, regulatory capital position, catastrophe aggregations, and risk management practices. 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 was $1.7 million at December 31, 2023, and $1.6 million at December 31, 2022. 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 Highlights of Results for Years Ended December 31, 2023, 2022, and 20211

Financial Data:

Key Metrics:

Per Common Share Amounts:

Dividends declared per share to common stockholders 1.25 1.14 10 1.03 11

Non-GAAP Information2:

Non-GAAP operating income per diluted common share 5.89 5.03 17 6.27 (20)

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 included in net income. Adjusted book value per common share is a measure comparable to book value per common share, but excludes total after-tax unrealized gains and losses on investments included in accumulated other comprehensive income (loss). These non-GAAP measures are important financial measures that we, analysts, and investors use because the timing of realized and unrealized investment gains and losses on securities in any given period is largely discretionary. In addition, net realized and unrealized investment gains and losses on

investments could distort the analysis of trends.

Reconciliations of our GAAP to non-GAAP measures are provided in the tables below:

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Non-GAAP operating income per diluted common share $ 5.89 5.03 6.27

Reconciliation of ROE to non-GAAP operating ROE 2023 2022 2021

Tax on reconciling items — (1.1) 0.2

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

Standard Commercial Lines segment 5.0 % 4.6 0.4 pts 5.9 (1.3) pts

Standard Personal Lines segment (2.5) (0.2) (2.3) 0.1 (0.3)

Net realized and unrealized investment gains (losses) (0.1) (3.6) 3.5 0.5 (4.1)

In 2023, we generated an ROE of 14.3% compared to 8.8% in 2022. Our non-GAAP operating ROE of 14.4% in 2023 was above our target non-GAAP operating ROE of 12% and above our 2022 non-GAAP operating ROE of 12.4%, which marks a significant milestone for us as this was our tenth consecutive year generating double-digit non-GAAP operating ROE. We also exceeded $4 billion of net premiums written ("NPW") for the first time in our nearly 100-year history, as we achieved 16% NPW growth in 2023 compared to 2022. We view our 2023 results as a significant achievement in a year with elevated uncertainty of loss trends influenced by economic and social inflation, the unusual frequency and severity patterns resulting from the pandemic and its longer-term residual impacts, and a heightened frequency of catastrophe losses. Our results reflect the success of our underwriting discipline, active management of our investment portfolio, and profitable growth strategies.

The 2.0-point increase in our non-GAAP operating ROE in 2023, compared to 2022, included the following:

•An increase in after-tax net investment income of $77.3 million, or 3.0 points, in 2023, compared to 2022. The 2023 increase was attributable to greater after-tax net investment income earned on our fixed income securities portfolio. This portfolio benefited from higher book yields we earned on the investment of operating and investing cash flows in the higher interest rate environment over the past two years.

•An increase in Standard Commercial Lines and E&S Lines after-tax underwriting income of $30.1 million, or 1.1 points, in 2023, compared to 2022. These segments represent 90% of our business and delivered underwriting results at or better than our 95% combined ratio target. The 2023 increase was attributable to lower non-catastrophe property loss and loss expenses and improved underwriting expenses, partially offset by higher net catastrophe losses and lower favorable prior year casualty reserve development.

•An increase in Standard Personal Lines after-tax underwriting losses of $56.9 million, or 2.3 points, in 2023, compared

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to 2022, which partially offset the improvements in our other segments. Higher net catastrophe losses and unfavorable prior year casualty reserve development negatively impacted this segment in 2023.

Overall pre-tax net catastrophe losses increased $98.6 million in 2023, compared to 2022. We were impacted by 66 Property Claim Services ("PCS") named events in 2023, compared to 56 in 2022. In addition, favorable prior year casualty reserve development decreased $79.5 million in 2023, compared to 2022, primarily driven by $55 million of unfavorable prior year casualty reserve development in our general liability line of business in 2023 compared to favorable development of $5 million in 2022. While down year-over-year, we reported our 18th consecutive year of net favorable prior year casualty reserve development.

For additional information on our insurance segment results, refer to the insurance segment sections below.

Our ROE was up 3.5 points in 2023 compared to 2022 due to a decrease in net realized and unrealized investment losses. The decrease in net realized and unrealized investment losses was primarily due to (i) a credit loss benefit recorded on our AFS fixed income securities portfolio in 2023, compared to credit loss expense recorded in 2022, and (ii) an increase in valuations reflecting the current public equities market. The 2023 credit loss benefit reflected the decrease in benchmark U.S. Treasury rates and, to a lesser extent, a tightening of credit spreads.

Outlook

2023 marks our tenth consecutive year of double-digit non-GAAP operating ROE. Over those ten years, our operating ROE was 12.2%, exceeding our target of 12%. Our target is set approximately 300 to 400 basis points above our weighted average cost of capital. Throughout the market cycle and under various interest rate environments, we believe a 95% combined ratio should allow us to meet our operating ROE target. Based on current interest rates and the elevated contribution of net investment income to operating ROE, we expect to produce an operating ROE in excess of our target, as was the case in 2023. Our combined ratio target allows us to remain focused on disciplined underwriting and profitable growth while being a stable insurance carrier for our customers and distribution partners.

With our strong capital position and operational results, we are well-positioned to navigate the on-going challenges of elevated economic and social inflation and financial market volatility. In 2024, we will focus on delivering on our strategy for disciplined and profitable growth within our insurance operation segments by:

•Standard Commercial Lines

◦Achieving Standard Commercial Lines renewal pure price increases that reflect our current profitability and forward loss trend expectations;

◦Continuing to expand our Standard Commercial Lines market share by (i) increasing our share towards our 12% target of our agents' premiums, (ii) strategically appointing new agents, and (iii) maximizing new business growth in the small business market through the use of our enhanced small business platform; and

◦Expanding our geographic footprint. In 2022, we began writing Standard Commercial Lines business in Vermont, Alabama, and Idaho. We expect to write new business in West Virginia and Maine in early 2024, and Washington, Oregon, and Nevada in late 2024. Over time, we plan to expand our Standard Commercial Lines footprint into most of the contiguous U.S.

•E&S Lines

◦Achieving E&S Lines renewal pure price increases that reflect our current profitability and forward loss trend expectations; and

◦Continuing to invest in product expansion, risk evaluation, and operational efficiency for middle market E&S accounts.

•Standard Personal Lines

◦Aggressively pursuing profitability on our Standard Personal Lines segment by prioritizing additional rate filings on a state-by-state basis and further refining our pricing factors. These filed rate increases began to take effect early in 2023, increasing in number and magnitude throughout the year, and are expected to continue through 2024. We expect our overall written renewal rate to range from approximately 20% to 25% in 2024, subject to regulatory approvals. In addition, other underwriting actions include the following:

▪Seeking to improve our homeowners line of business profitability through the introduction of new policy terms and conditions, including (i) coverage for older roofs based on depreciation schedules rather than replacement cost, and (ii) implementing mandatory wind/hail deductibles in states exposed to severe convective storms, where allowed by law; and

▪Continuing the migration of our Standard Personal Lines products and services towards customers in

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the mass affluent market, where we believe we can be more competitive with our strong coverage and servicing capabilities.

In addition, we will continue developing our culture centered on the values of diversity, equity, and inclusion that foster innovation, idea generation, and the development of a group of specially trained leaders who can guide us successfully into the future.

For 2024, our full-year guidance is as follows:

•A GAAP combined ratio of 95.5%, including net catastrophe losses of 5.0 points. Our combined ratio estimate assumes no prior year casualty reserve development;

•After-tax net investment income of $360 million that includes $32 million of after-tax net investment income from our alternative investments;

•An overall effective tax rate of approximately 21.0%, which assumes an effective tax rate of 20.5% for net investment income and 21% for all other items; and

•Weighted average shares of 61.5 million on a fully diluted basis, which assumes no share repurchases we may make under our authorization.

Our guidance implies a healthy ROE outlook for 2024 that exceeds our 12% target, with ample runway to continue our trajectory of profitable growth. We have the team, sophisticated tools, and disciplined execution to effectively manage through market dynamics, and believe we are operating from a position of strength.

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 NPW growth of 16% in 2023 compared to 2022 reflected (i) overall renewal pure price increases, and (ii) higher direct new business, as shown in the following table:

Renewal pure price increases 6.8 % 5.1 4.9

Our NPW growth in 2023 also benefited from strong retention and exposure growth on renewal policies.

The increase in NPE in 2023 compared to 2022 resulted from the same impacts to NPW described above.

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Loss and Loss Expenses

The loss and loss expense ratio increased 2.2 points in 2023 compared to 2022, primarily due to the following:

We had higher net catastrophe losses in 2023 compared to 2022. In 2023, 66 PCS named events impacted our footprint, compared to 56 in 2022. In 2023 and 2022, net catastrophe losses primarily impacted our commercial property and homeowners line of business, with 2023 events also impacting our E&S property lines.

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

(Favorable)/Unfavorable Prior Year Casualty Reserve Development

Businessowners' policies — (11.0) (2.0)

Bonds — (10.0) —

Total Standard Commercial Lines (15.5) (81.0) (74.0)

Homeowners — — —

Personal automobile 14.0 — —

Total Standard Personal Lines 14.0 — —

Total (favorable) prior year casualty reserve development $ (6.5) (86.0) (81.0)

(Favorable) impact on loss ratio (0.2) pts (2.5) (2.7)

In addition, the loss and loss expense ratio was impacted by a decrease in current year casualty loss costs of 0.8 points in 2023, compared to 2022, primarily due to the mix of business from the impact of premium growth in 2023 compared to 2022.

For additional qualitative discussion on prior year reserve development, current year casualty loss costs, and non-catastrophe property loss and loss expenses, refer to the insurance segment sections below.

Underwriting Expenses

The underwriting expense ratio decreased 0.9 points in 2023 compared to 2022, primarily due to premium growth outpacing the growth in underwriting expenses.

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Standard Commercial Lines Segment

Insurance Segments Results:

Less:

Combined Ratios:

Dividends to policyholders ratio 0.2 0.2 — 0.2 —

NPW growth of 13% in 2023 compared to 2022 reflected (i) renewal pure price increases, (ii) higher direct new business, and (iii) strong retention as shown in the table below. In addition, NPW growth in 2023 benefited from exposure growth on renewal policies.

For the Year Ended December 31,

Direct new business premiums $ 597.5 $ 512.5

Renewal pure price increases on NPW 7.0 5.4

The increase in NPE in 2023 compared to 2022 resulted from the same impacts to NPW described above.

The 1.0-point increase in the loss and loss expense ratio in 2023 compared to 2022 was primarily driven by the following:

Our loss and loss expenses in 2023 experienced elevated net catastrophe losses compared to 2022, as discussed in the "Insurance Operations" section above. Refer to the line of business sections below for qualitative discussion on the significant drivers of favorable prior year casualty reserve development and non-catastrophe property loss and loss expenses.

In addition, the loss and loss expense ratio was impacted by a decrease in current year casualty loss costs of 1.0 point in 2023 compared to 2022, primarily due to (i) the mix of business from the impact of premium growth in 2023, partially offset by (ii) an increase in current year casualty loss costs in our commercial automobile line of business. Refer to the "Commercial Automobile" section below for a qualitative discussion on these current year loss costs.

The underwriting expense ratio decreased 0.9 points in 2023 compared to 2022, primarily due to premium growth outpacing the growth in underwriting expenses.

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

General Liability

Renewal pure price increases 5.4 4.5 n/a 4.4 n/a

% of total Standard Commercial Lines NPW 33 33 33

1n/a: not applicable.

NPW growth of 13% in 2023 compared to 2022 benefited from exposure growth on renewal policies, strong retention, renewal pure price increases, and higher direct new business.

The combined ratio increased 4.7 points in 2023 compared to 2022, primarily driven by unfavorable prior year casualty reserve development in 2023, as follows:

($ in millions) (Favorable) Prior Year Casualty Reserve Development

The unfavorable prior year casualty reserve development in 2023 was primarily driven by increased loss severities in accident years 2015 through 2020 attributable to social inflationary impacts. We see this as an industry dynamic with higher propensity for attorney representation and litigation, longer settlement times, and higher settlement values. The 2022 favorable prior year casualty reserve development was primarily attributable to favorable inception-to-date claim frequencies in accident years 2021 and 2020.

This line of business has experienced a long-term historical trend of meaningful severity increases, which have been largely offset by decreases in claim frequencies. In response to potential social inflationary impacts, we have been embedding higher severity assumptions in our initial loss ratio estimates in recent years, which are materializing in actual results. The trend of lower frequencies has continued, while prior year severities have developed adversely. Despite this, initial estimates for less mature accident years have remained stable. However, if the favorable frequency trend moderates and severities continue to emerge higher than expected, there could be impacts on ultimate loss estimates for this line.

The combined ratio was also impacted by a decrease in the underwriting expense ratio of 1.2 points in 2023 compared to 2022, primarily due to premium growth outpacing the growth in underwriting expenses.

Commercial Automobile

Renewal pure price increases 9.8 8.1 n/a 8.3 n/a

% of total Standard Commercial Lines NPW 30 30 30

1n/a: not applicable.

NPW growth of 14% in 2023 compared to 2022 benefited from renewal pure price increases, higher direct new business, and strong retention. The higher new business and strong retention contributed to a 5% growth of in-force vehicle counts as of December 31, 2023, compared to December 31, 2022.

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The combined ratio decreased 4.1 points in 2023 compared to 2022, primarily driven by the following:

Loss and loss expenses in 2023 compared to 2022 experienced (i) lower non-catastrophe property loss and loss expenses, as inflationary and supply chain impacts have moderated, partially offset by (ii) elevated net catastrophe losses, as discussed in the "Insurance Operations" section above.

The unfavorable prior year casualty reserve development in 2023 was primarily due to increased loss expenses in accident years 2022 and prior. The 2022 unfavorable prior year casualty reserve development was primarily due to increased severities in the 2021 accident year.

The combined ratio was also impacted by a decrease in the underwriting expense ratio of 1.0 point in 2023 compared to 2022, primarily due to premium growth outpacing the growth in underwriting expenses.

Commercial Property

Renewal pure price increases 9.8 6.2 n/a 6.0 n/a

% of total Standard Commercial Lines NPW 20 18 18

1n/a: not applicable.

NPW growth of 21% in 2023 compared to 2022 benefited from renewal pure price increases, exposure growth on renewal policies, strong retention, and higher direct new business.

The combined ratio decreased 3.2 points in 2023 compared to 2022, primarily driven by the following:

The lower non-catastrophe property loss and loss expenses were primarily due to lower frequencies compared to 2022. We continue to manage our long-term profitability through (i) price increases and (ii) targeted underwriting actions, including an ongoing focus on appropriate policy terms and conditions and achieving accurate insurance-to-value ratios. The elevated net catastrophe losses are further discussed in the "Insurance Operations" section above.

The combined ratio was also impacted by a decrease in the underwriting expense ratio of 1.2 points in 2023 compared to 2022, primarily due to premium growth outpacing the growth in underwriting expenses.

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Workers Compensation

Renewal pure price increases (decreases) (1.5) (0.5) n/a 0.1 n/a

% of total Standard Commercial Lines NPW 12 12 12

1n/a: not applicable.

NPW decreased 1% in 2023 compared to 2022 due to renewal pure price decreases and a slight decrease in retention.

The combined ratio decreased 1.5 points in 2023 compared to 2022, driven by higher favorable prior year casualty reserve development, as follows:

The favorable prior year casualty reserve development in 2023 was primarily due to improved loss severities driven by continued favorable medical cost trends in accident years 2021 and prior. The favorable prior year casualty reserve development in 2022 was primarily due to continued favorable medical trends in accident years 2020 and prior, and favorable inception-to-date claim frequencies in accident year 2020.

Standard Personal Lines Segment

Insurance Segments Results:

Less:

Combined Ratios:

NPW increased 30% in 2023 compared to 2022, primarily due to (i) higher direct new business, (ii) stronger retention, (iii) renewal pure price increases, (iv) higher homeowners coverage amounts due to inflation adjustments, and (v) higher average policy sizes from our mass affluent market strategy. In the third quarter of 2021, we transitioned our personal lines strategy to targeting customers in the mass affluent market, where we believe our strong coverage and servicing capabilities will be more competitive. Over 65% of new business in our homeowners line of business in 2023 had dwelling coverage values over $500,000.

Direct new business premiums1 $ 116.5 $ 62.9

Renewal pure price increases on NPW 5.2 0.7

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

The increase in NPE in 2023 compared to 2022 resulted from the same impacts on NPW discussed above.

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The loss and loss expense ratio increased 19.5 points in 2023 compared to 2022, driven by the following:

Net catastrophe losses in both 2023 and 2022 exceeded our 10-year historical average, with 2023 being elevated over 2022, as discussed in the "Insurance Operations" section above.

We experienced elevated non-catastrophe property loss and loss expenses in 2023 compared to 2022, driven by higher personal automobile physical damage losses and homeowners property losses. The higher automobile damage losses resulted from increased claim frequencies, driven in part by increased miles driven. Higher homeowners property losses were attributable to elevated severities due to (i) higher construction costs impacted by economic inflation and (ii) increasing home values due to higher average policy sizes from our mass affluent market strategy.

The unfavorable prior year casualty reserve development in 2023 was primarily attributable to increased loss severities in accident year 2022. There was no prior year casualty reserve development in 2022.

In addition, the loss and loss expense ratio was impacted by a 6.4-point increase in current year casualty loss costs in 2023 compared to 2022 from (i) elevated prior year severities, which influenced our current year severity estimates, and (ii) increased claim frequencies in the current year.

We are aggressively managing this business by continuing to prioritize additional rate filings on a state-by-state basis to mitigate these inflationary impacts, and refining our pricing factors. These filed rate increases began to take effect early in 2023, increasing in number and magnitude throughout the year, and are expected to continue through 2024. We expect our overall written renewal rate to range from approximately 20% to 25%, subject to regulatory approvals. In addition, we are seeking to improve profitability within our homeowners' line of business by introducing new policy terms and conditions, including (i) coverage for older roofs based on a schedule of factors rather than replacement cost and (ii) implementing mandatory wind/hail deductibles in states exposed to severe convective storms, where allowed by law.

E&S Lines Segment

Insurance Segments Results:

Less:

Combined Ratios:

Loss and loss expense ratio 54.3 % 58.8 (4.5) pts 62.6 % (3.8) pts

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NPW growth of 24% in 2023 compared to 2022, reflected renewal pure price increases and higher direct new business as shown in the table below. NPW growth in 2023 also benefited from property and casualty exposure growth on renewal policies driven by higher rates associated with increased construction costs resulting from economic inflation.

Direct new business premiums $ 209.5 156.3

Renewal pure price increases on NPW 6.9 % 7.3

The increase in NPE in 2023 compared to 2022 resulted from the same impacts to NPW discussed above.

The loss and loss expense ratio decreased 4.5 points in 2023 compared to 2022, primarily driven by a 4.6-point decrease in current year casualty loss costs in 2023 compared to 2022. Our E&S casualty lines results have improved over recent years, benefiting from several underwriting and claims initiatives and strong rate increases. The decrease in current year casualty loss costs reflects the impacts of these actions.

In addition, the loss and loss expense ratio was impacted by the following:

We experienced elevated net catastrophe losses in 2023 compared to 2022, as discussed in the "Insurance Operations" section above. The favorable prior year casualty reserve development in 2023 was primarily due to improved loss severities in accident years 2021 and prior. The favorable prior year casualty reserve development in 2022 was primarily attributable to favorable inception-to-date claim frequencies and lower loss severities in accident years 2021 and 2020.

Reinsurance

We use reinsurance to protect our capital resources and insure against losses on property and casualty risks that we underwrite above the amount of losses we are willing 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 treaties 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 Company ("AM Best").

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The following illustrates the pooling percentages by Insurance Subsidiary as of December 31, 2023:

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. 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 cannot 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 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 categorized as follows:

•Property Reinsurance, which includes our (i) property excess of loss treaties purchased for protection against large individual property losses and (ii) property catastrophe treaties and a property catastrophe bond transaction 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 (i) facultative reinsurance, primarily for large individual casualty risks in excess of our treaty capacity and (ii) 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

Property Catastrophe Reinsurance Program

Our 2024 property catastrophe reinsurance program includes an excess of loss treaty and an indemnity reinsurance agreement with a special purpose insurer that issued a catastrophe bond (discussed more fully below). This program provides coverage of

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$1.1 billion in excess of a $100 million retention. Compared to our expiring program, we extended the exhaustion limit by $290 million and increased our retention by $40 million to respond to our growing property portfolio. In addition, we eliminated co-participations throughout the program. The overall net purchased limits increased to $1.1 billion, from $810 million in the expiring treaty.

We renewed our property catastrophe treaty, which covers our standard market and E&S business, effective January 1, 2024. The highest layer of the treaty provides 35% coverage of the $500 million in excess of $700 million layer. The property catastrophe treaty excludes coverage for communicable disease but retains (i) coverage for strike, riot, civil unrest, severe convective storms, and other traditionally-covered property perils, (ii) coverage for conventional terrorism losses in most geographic areas, and (iii) limited coverage for cybersecurity risks.

To provide additional, fully collateralized coverage at the top end of our property catastrophe reinsurance program, we secured property catastrophe protection through a per occurrence excess of loss indemnity reinsurance agreement effective December 9, 2023, with High Point Re Ltd. ("High Point Re"), an independent Bermuda special purpose insurer. The reinsurance agreement meets the accounting guidance requirements to be accounted for as reinsurance. In connection with the reinsurance agreement, High Point Re issued Series 2023-1, Class A Principal-at-Risk Variable Rates Notes to unrelated investors totaling $325 million, consistent with the coverage provided under the reinsurance agreement. The proceeds were deposited in a reinsurance trust account. The reinsurance agreement provides us with coverage of up to $325 million for the three-year period from December 9, 2023, through December 31, 2026, for property catastrophe losses from named storms, earthquakes, severe thunderstorms, winter storms, wildfires, meteorite impacts, and volcanic eruptions in all states except California, Florida, Texas, and Louisiana. The reinsurance agreement's attachment point and exhaustion limit may be reset annually to adjust the expected loss of the layer within a predetermined range. For the 2024 treaty year, this reinsurance agreement provides us with coverage for 65% of losses in the $500 million in excess of $700 million layer. The reinsurance agreement is collateralized, which is provided by High Point Re using proceeds from the issuance of the Series 2023-1 Notes.

Reinsurance agreements have credit risk associated with collecting amounts due from reinsurers. With High Point Re, that risk is reduced because the collateralized reinsurance trust account is funded with money market funds domiciled in the U.S. The money market funds invest solely in cash or high-quality direct obligations of the U.S. government, such as U.S. treasury bills and other short-term securities backed by the U.S. government.

In addition to the fully collateralized catastrophe bond, 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 $417.5 million in collateralized limit of the total $500 million for that layer of the catastrophe program, including the $325 million secured through High Point Re, compared to $216 million in collateralized limit under the prior year's reinsurance program.

Overall, ceded premium for our property catastrophe reinsurance program will increase considerably in 2024 due to three factors: (i) increases in underlying property exposures in line with our growing property insurance portfolio; (ii) the addition of $290 million of net limit coverage, which improved our net risk profile; and (iii) moderate-risk adjusted price increases from our reinsurers.

We model various catastrophic perils, and hurricane risk remains 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:

Hurricane Name

1This amount represents reported and unreported gross losses estimated as of December 31, 2023.

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 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

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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.

Our established catastrophic risk tolerance requires that no more than 10% of stockholders’ equity is exposed to a loss from a hurricane event at a 99.6% confidence level (1-in-250-year event or 0.4% probability) on a net of reinsurance and after-tax basis. Our property catastrophe reinsurance program limits our net after-tax impact of a 1-in-250-year event to about 4% of our GAAP equity. In addition to the 1-in-250-year modeled event, we evaluate the impact of a number of other scenarios on stockholders’ equity.

The table below shows the gross and net losses modeled results for (i) hurricane peril in our underwriting property portfolio and (ii) the gross and net of reinsurance hurricane losses from the following scenarios:

•Recasts of two large hurricanes that impacted our geographic footprint:

◦1938 New England Hurricane, one of the largest hurricanes to impact the Northeast U.S.; and

◦Hurricane Hazel, a Category 4 storm that made landfall near the border between North Carolina and South Carolina in 1954; and

•Realistic disaster scenarios (“RDS”) for significant potential storms in the Northeast and the Carolinas based on Lloyds of London methodology.

Occurrence Exceedance Probability Hurricane

($ in thousands) GrossLosses1 Net Losses2 Net Losses % of Equity3

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 based on the program structure effective January 1, 2024.

3GAAP stockholders' equity as of December 31, 2023.

As the table above reflects, we are well within our established tolerance for catastrophic risk. Based on a multi-model view of hurricane risk, our current catastrophe reinsurance program exhausts at an approximately 1-in-260-year return period, or events with 0.4% probability. Our actual gross and net losses incurred from hurricanes making U.S. landfall will vary, perhaps materially, from our estimated modeled losses.

In addition to hurricane peril, the table below shows gross and net losses modeled by other wind and earthquake perils in our underwriting property portfolio. Other wind perils include the sub-perils of hail, straight-line wind, and tornado.

Occurrence Exceedance Probability Other Wind Earthquake

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 based on the program structure effective January 1, 2024.

3GAAP stockholders' equity as of December 31, 2023.

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We currently do not write crop insurance, have minimal exposure to private flood, and have a small geographic footprint in the Western U.S., so our exposures to perils such as droughts, wildfires, and flooding, tend to be relatively modest. However, as our geographic expansion progresses, we continually evaluate how we consider physical risks from these perils and others in our strategic decision making.

While we regularly experience property losses from winter storms and use third-party vendor models to help us model and manage our exposure to this peril, we also evaluate our winter storm exposure based on our own historical experience, as winter storm third-party vendor models are currently less mature.

Property Excess of Loss Treaty

We renewed the property excess of loss treaty, which covers our standard market and E&S business, on July 1, 2023, with a $2 million increase on our retention for total coverage of $65 million in excess of a $5 million retention. The remaining terms are substantially the same as the treaty that expired on June 30, 2023.

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

- 100% of losses in excess of $100 million up to $200 million;

- 100% of losses in excess of $200 million up to $400 million;

- 100% of losses in excess of $400 million up to $700 million; and

- 35% of losses in excess of $700 million up to $1.2 billion.

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

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Casualty Reinsurance

We renewed the casualty excess of loss treaty, which covers our standard market and E&S Lines business, on July 1, 2023, on substantially the same terms as the treaty expiring June 30, 2023.

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

To complement our key reinsurance programs and provide reinsurance protection on specific coverages or programs, 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, such as personal cyber and home systems protection, (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 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

Our investment portfolio's objectives are to maximize after-tax net investment income and generate long-term growth in book value per share by maximizing the overall total return of the portfolio by investing the premiums we receive from our insurance operations and the amounts generated through our capital management strategies, which may include debt and equity security issuances. We balance those objectives against prevailing market conditions, capital preservation considerations, and our enterprise risk-taking appetite. We maintain (i) a well-diversified portfolio across issuers, sectors, and asset classes and (ii) a high credit quality fixed income securities portfolio with a duration and maturity profile at an acceptable risk level that provides ample liquidity.

The effective duration of the fixed income securities portfolio, including short-term investments, was 4.0 years as of December 31, 2023. The effective duration is monitored and managed to maximize yield while managing interest rate risk at an acceptable level. Purchases and sales are made with the intent to maximize investment returns in the current market environment while balancing capital preservation.

Our fixed income and short-term investments (i) represented 92% of our invested assets, (ii) had a weighted average credit rating of "AA-", and (iii) had investment grade holdings representing 96% of the total portfolio at both December 31, 2023, and December 31, 2022.

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.

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Total Invested Assets

Invested assets per dollar of common stockholders' equity 3.16 3.37 (6)

Components of unrealized gains (losses) – before tax:

Components of unrealized gains (losses) – after tax:

Invested assets increased by $856.3 million as of December 31, 2023, compared to December 31, 2022, reflecting (i) our active investment of operating and investing cash flows in 2023 and (ii) a $184.1 million decrease in pre-tax unrealized losses during 2023. Operating cash flows during 2023 were 18% of NPW. The decrease in pre-tax unrealized losses was primarily driven by a decrease in benchmark U.S. Treasury rates and, to a lesser extent, a tightening of credit spreads.

Net Investment Income

The components of net investment income earned were as follows:

Annual after-tax yield on fixed income investments 3.9 3.1 0.8 2.6 0.5

Annual after-tax yield on investment portfolio 3.7 2.9 0.8 3.4 (0.5)

After-tax net investment income earned increased 33% in 2023, compared to 2022, primarily driven by higher interest rates, active portfolio management, and operating and investing cash flow deployment.

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 (i) the fundamentals for that security or sector have deteriorated or (ii) the timing is appropriate to opportunistically trade for other securities with better economic-return characteristics. Net realized and unrealized gains and losses for the indicated periods were as follows:

Net credit loss benefit (expense) on CMLs (175) (116) 51 — NM

The credit loss benefit in 2023 shown in the table above reflected the decrease in benchmark U.S. Treasury rates and a tightening of credit spreads, with the decrease in interest rates having the most significant impact.

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For additional information regarding our losses on securities we intend to sell and our methodology for estimating the allowance for credit losses, see Note 2. "Summary of Significant Accounting Policies" and Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Federal Income Taxes

The following table provides information regarding federal income taxes.

1The effective tax rate is calculated by taking "Total federal income tax expense" divided by "Income before federal income tax" less "Preferred stock dividends" on our Consolidated Statements of Income.

Federal income tax expense increased $37.9 million in 2023, compared to 2022, primarily due to an increase in pre-tax income that is taxed at the statutory rate. The increase in pre-tax income was primarily driven by (i) higher net investment income earned in 2023, compared to 2022, resulting from an increase in income earned on our fixed income securities portfolio, and (ii) a decrease in net realized and unrealized investment losses in 2023, compared to 2022, partially offset by (iii) a decrease in underwriting income.

See Note 14. "Federal Income Taxes" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K for (i) a reconciliation of our effective tax rate to the statutory rate of 21% and (ii) details regarding our net deferred tax asset and liability.

Liquidity and Capital Resources

Capital resources and liquidity reflect our ability to generate cash flows from business operations, borrow funds at competitive rates, and raise new capital to meet our operating and growth needs.

Liquidity

We manage liquidity by generating sufficient cash flows to meet our business operations' short-term and long-term cash requirements. As discussed further below, we adjust our liquidity requirements based on economic conditions, market conditions, and future cash flow commitments.

Sources of Liquidity

Sources of cash for the Parent historically have consisted of dividends from the Insurance Subsidiaries, the investment portfolio held at the Parent, borrowings under third-party lines of credit, intercompany revolving demand loan agreements with certain Insurance Subsidiaries, and the issuance of equity (common or preferred) and debt securities. We continue to monitor these sources, considering our short-term and long-term liquidity and capital preservation strategies.

The Parent's cash and components of its investment portfolio were as follows:

Short-term investments have historically been maintained in “AAA” rated money market funds, and fixed income securities are comprised of high-quality, liquid government and corporate securities.

The amount and composition of the Parent's investment portfolio may change over time based on various factors, including the amount and availability of dividends from our Insurance Subsidiaries, investment income, expenses, other Parent cash needs, such as dividends payable to stockholders, asset allocation investment decisions, inorganic growth opportunities, debt retirement, and share repurchases. Our target is for the Parent to maintain liquid investments of at least twice its expected annual net cash outflow needs, or $210 million.

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Insurance Subsidiary Dividends

The Insurance Subsidiaries generate liquidity through insurance float, created by collecting premiums and earning investment income before paying claims. The period of float can extend over many years. Our investment portfolio consists of securities with maturity dates that continually provide a source of cash flow for claims payments in the ordinary course of business. To protect our Insurance Subsidiaries' capital, we purchase reinsurance coverage for significantly large claims or catastrophes that may occur.

The Insurance Subsidiaries paid $80 million in total dividends to the Parent in 2023. As of December 31, 2023, our allowable ordinary maximum dividend is $316 million for 2024. All Insurance Subsidiary dividends to the Parent are (i) subject to the approval and/or review of its domiciliary state insurance regulator, and (ii) generally payable only from earned statutory surplus reported in its annual statements as of the preceding December 31. Although domiciliary state insurance regulators have historically approved dividends, there is no assurance they will approve future Insurance Subsidiary dividends.

New Jersey corporate law also limits the maximum amount of dividends the Parent can pay our stockholders if either (i) the Parent would be unable to pay its debts as they become due in the usual course of business, or (ii) the Parent’s total assets would be less than its total liabilities. The Parent’s ability to pay dividends to stockholders is also impacted by (i) covenants in its credit agreement that obligate it, among other things, to maintain a minimum consolidated net worth and a maximum ratio of consolidated debt to total capitalization, and (ii) the terms of our preferred stock that prohibit dividends from being declared or paid on our common stock if dividends are not declared and paid, or made payable, on all outstanding preferred stock for the latest completed dividend period.

For additional information regarding dividend restrictions and financial covenants, where applicable, see Note 11. "Indebtedness," Note 17. "Equity," and Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Line of Credit

On November 7, 2022, the Parent entered into a Credit Agreement with the lenders named therein (the "Lenders") and Wells Fargo Bank, National Association, as Administrative Agent ("Line of Credit"). Under the Line of Credit, the Lenders have agreed to provide the Parent with a $50 million revolving credit facility that can be increased to $125 million with the Lenders' consent. The Line of Credit will mature on November 7, 2025, and has a variable interest rate based on the Parent’s debt ratings. We expect to continue to maintain a credit facility for liquidity purposes. For additional information regarding the Line of Credit and corresponding representations, warranties, and covenants, refer to Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Four Insurance Subsidiaries are members of Federal Home Loan Bank ("FHLB") branches, as shown in the following table. Membership requires the ownership of branch stock and includes the right to access liquidity. All Federal Home Loan Bank of Indianapolis ("FHLBI") and Federal Home Loan Bank of New York ("FHLBNY") borrowings are required to be secured by investments pledged as collateral. For additional information regarding collateral outstanding, refer to Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Branch Insurance Subsidiary Member

FHLBI SICSC1SICSE1

FHLBNY SICASICNY

1These subsidiaries are jointly referred to as the "Indiana Subsidiaries" because they are domiciled in Indiana.

The Line of Credit permits aggregate borrowings from the FHLBI and the FHLBNY up to 10% of the respective member company’s admitted assets for the previous year. SICNY is domiciled in New York, which limits its FHLBNY borrowings to the lesser of 5% of admitted assets for the most recently completed fiscal quarter or 10% of the previous year-end's admitted assets.

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The following table provides information on the remaining capacity for FHLB borrowings based on these restrictions, as well as the additional FHLB stock purchase requirement to allow these member companies to borrow their remaining capacity amounts:

Short-term Borrowings

On April 6, 2023, SICA borrowed $20 million from the FHLBNY at an interest rate of 5.00% that was repaid on May 8, 2023. These funds were used for general corporate purposes.

Intercompany Loan Agreements

The Parent has lending agreements with the Indiana Subsidiaries, approved by the Indiana Department of Insurance, that provide the Parent with additional intercompany liquidity. Like the Line of Credit, these lending agreements limit the Parent's borrowings from the Indiana Subsidiaries to 10% of the admitted assets of the respective Indiana Subsidiary. The following table provides information on the Parent’s borrowings and remaining borrowing capacity from the two Indiana Subsidiaries:

In November 2023, the Parent borrowed $27 million from SICSC per an intercompany revolving demand loan agreement at an interest rate equal to the federal funds effective rate computed on a daily basis. These funds were used for general corporate purposes.

Capital Market Activities

The Parent had no private or public stock issuances during 2023. In addition, we had no common stock share repurchases in 2023 under our existing share repurchase program. We had $84.2 million of remaining capacity under our share repurchase program as of December 31, 2023. For additional information on the share repurchase program, refer to Note 17. "Equity" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Uses of Liquidity

The Parent uses the liquidity generated from the sources discussed above to pay dividends to our stockholders, among other things. Dividends on shares of the Parent's common and preferred stock are declared and paid at the discretion of the Board based on our operating results, financial condition, capital requirements, contractual restrictions, and other relevant factors. In November 2023, our Board approved a 17% increase in the quarterly cash dividend on common stock, to $0.35 from $0.30 per share. On January 31, 2024, our Board declared:

•A quarterly cash dividend on common stock of $0.35 per common share, that is payable March 1, 2024, to holders of record on February 15, 2024; and

•A cash dividend of $287.50 per share on our 4.60% Non-Cumulative Preferred Stock, Series B (equivalent to $0.28750 per depository share) payable on March 15, 2024, to holders of record as of February 29, 2024.

Our ability to meet our interest and principal repayment obligations on our debt and our ability to continue to pay dividends to our stockholders is dependent on (i) liquidity at the Parent, (ii) the ability of the Insurance Subsidiaries to pay dividends, if necessary, and/or (iii) the availability of other sources of liquidity to the Parent. Our next borrowing principal repayment is $60 million to FHLBI due on December 16, 2026.

Restrictions on the ability of the Insurance Subsidiaries to declare and pay dividends, without alternative liquidity options, could materially affect our ability to service debt and pay dividends on common and preferred stock.

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Capital Resources

Capital resources ensure we can pay policyholder claims, furnish the financial strength to support the business of underwriting insurance risks, and facilitate continued business growth. At December 31, 2023, we had GAAP stockholders’ equity of $3.0 billion and statutory surplus of $2.7 billion. With total debt of $504 million at December 31, 2023, our debt-to-capital ratio was 14.6%. For additional information on our statutory surplus, see Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

The following table summarizes current and long-term material cash requirements as of December 31, 2023, which we expect to fund primarily with operating cash flows.

Payment Due by Period

Less than1 year 1-3years 3-5years More than5 years

($ in millions) Total

Our loss and loss expense payments in the table above represent estimated paid amounts by year on our loss and loss expense reserves. These estimates are based on past experience, adjusted for the effects of current developments and anticipated trends, and include considerable judgment. There is no precise method for evaluating the impact of any specific factor on the projected timing of loss and loss expense reserve payments, so the timing and amounts of the actual payments will be affected by many factors. Therefore, the projected settlement of the reserves for net loss and loss expense may differ, perhaps significantly, from actual future payments. The Insurance Subsidiaries' net loss and loss expense reserves duration was 3.1 years at December 31, 2023.

For more information on our case reserves and estimates of reserves for loss and loss expense IBNR, refer to the "Reserve for Loss and Loss Expense" section in the "Critical Accounting Policies and Estimates" section of this MD&A and Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

For additional information regarding cross-default provisions associated with our notes payable in the table above or our Line of Credit, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." in this Form 10-K.

In addition to the above, the following table summarizes certain contractual obligations we had at December 31, 2023 that may require us to invest additional amounts into our investment portfolio, which we would fund primarily with operating cash flows.

($ in millions) Amount of Obligation

Alternative investments $ 254.3

Non-publicly traded common stock within our equity portfolio 40.0

Privately-placed corporate securities 32.0

There is no certainty (i) that any such additional investments will be required and (ii) about the timing of funding. We expect to have the capacity to fund these commitments through our normal operating and investing activities as they come due.

Our other cash requirements include, without limitation, dividends to stockholders, capital expenditures, and other operating expenses, including commissions to our distribution partners, labor costs, premium taxes, general and administrative expenses, and income taxes.

As of December 31, 2023 and 2022, we had no (i) material guarantees on behalf of others and trading activities involving non-exchange traded contracts accounted for at fair value, (ii) material transactions with related parties other than those disclosed in

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Note 18. "Related Party Transactions" included in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K, and (iii) material relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Consequently, we are not exposed to any material financing, liquidity, market, or credit risk related to off-balance sheet arrangements.

We continually monitor our cash requirements and the capital resources we maintain at the holding company and Insurance Subsidiary levels. As part of our long-term capital strategy, we strive to maintain capital metrics that support our targeted financial strength relative to the macroeconomic environment. Based on our analysis and market conditions, we may take a variety of actions, including, without limitation, contributing capital to the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing existing debt, repurchasing shares of the Parent’s common stock, and adjusting common stockholders’ dividends.

Our capital management strategy is intended to protect the interests of the policyholders of the Insurance Subsidiaries and our stockholders and enhance our financial strength and underwriting capacity. We have a profitable underwriting portfolio and solid capital base, positioning us well to take advantage of potential market opportunities.

Book value per common share increased 18% to $45.42 as of December 31, 2023, from $38.57 as of December 31, 2022, driven by $5.84 in net income available to common stockholders per diluted common share and a $2.27 reduction in net unrealized losses on our fixed income securities portfolio, partially offset by $1.25 in dividends to our common stockholders'. The decrease in net unrealized losses on our fixed income securities was driven by a decrease in benchmark U.S. Treasury rates and, to a lesser extent, a tightening of credit spreads. Our adjusted book value per share, which is book value per share excluding total after-tax unrealized gains or losses on investments included in accumulated other comprehensive income (loss), increased to $50.03 as of December 31, 2023, from $45.49 as of December 31, 2022.

Cash Flows

Net cash provided by operating activities decreased to $759 million in 2023 compared to $802 million in 2022, primarily driven by higher losses paid in 2023 compared to 2022, largely offset by an increase in net cash received from premiums in 2023 compared to 2022.

Net cash used in investing activities decreased to $686 million in 2023, compared to $734 million in 2022, primarily due to reduced cash received from operating activities.

Net cash used in financing activities remained relatively flat at $84 million in 2023, compared to $88 million in 2022.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

The fair value of our assets and liabilities are subject to market risks — primarily interest rate risk, credit risk, equity price risk, and liquidity risk related to our investment portfolio. Our portfolio allocation was 86% fixed income securities, 2% commercial mortgage loans ("CML"), 2% equity securities, 4% short-term investments, 5% alternative investments, and 1% other investments as of December 31, 2023. Alternative investments are limited partnership investments in private equity, private credit, and real estate strategies. We do not directly hold derivatives, commodities, or other investments denominated in foreign currency. We have minimal foreign currency fluctuation risk within our alternative investment portfolio. For a discussion of our investment objective and philosophy, see the "Investments Segment" section of Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." of this Form 10-K.

We manage our investment portfolio to mitigate risks associated with various financial market scenarios. We assume prudent risk to enhance our overall long-term results while managing a conservative, well-diversified investment portfolio to support our underwriting activities.

Interest Rate Risk

Investment Portfolio

We invest in interest rate-sensitive securities, mainly fixed income securities. Our fixed income securities portfolio is comprised of primarily investment grade (investments receiving Standard & Poor's Global Ratings or an equivalent rating of BBB- or above) corporate securities, U.S. government and agency securities, municipal obligations, collateralized loan obligations ("CLO") and other asset-backed securities ("ABS"), and mortgage-backed securities ("MBS"). As of December 31, 2023, approximately 7% (11% at December 31, 2022) of our fixed income securities portfolio was floating rate securities,

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primarily tied to the 90-day U.S. dollar-denominated Secured Overnight Financing Rate. Our strategy to manage interest rate risk is to purchase intermediate-term fixed income investments that are priced attractively in relation to perceived credit risks.

Our exposure to interest rate risk relates primarily to the market price and cash flow variability associated with changes in interest rates. Our fixed income securities portfolio contains interest rate-sensitive instruments, and its performance could be adversely affected by changes in interest rates resulting from governmental monetary policies, domestic and international economic and political conditions, and other factors beyond our control. All else being equal, a rise in interest rates will decrease the fair value of our existing fixed income investments, and a decline in interest rates will increase the fair value of our existing fixed income investments. However, new and reinvested money used to purchase fixed income securities would benefit from rising interest rates and be negatively impacted by falling interest rates.

We seek to manage our interest rate risk associated with holding fixed income investments by maintaining an effective duration of our portfolio that balances maximizing yield and total return with our overall enterprise risk tolerance for potential interest rate changes. The effective duration of the fixed income securities portfolio, including short-term investments, at December 31, 2023, was 4.0 years, which is within our historical range. The Insurance Subsidiaries’ net loss and loss expense reserves duration was approximately 3.1 years at December 31, 2023.

We use an interest rate sensitivity analysis to measure the potential loss or gain in future earnings, fair values, or cash flows of market-sensitive fixed income securities. The sensitivity analysis hypothetically assumes an instant parallel 200 basis point shift in interest rates up and down, in 100 basis point increments from the date of the Financial Statements. We use fair values to measure the potential loss. This analysis is not intended to provide a precise forecast or range of the effect of changes in market interest rates and equity prices on our income or stockholders’ equity. However, it provides insight into the portfolio's sensitivity. These calculations do not consider (i) any actions we may take in response to market fluctuations and (ii) changes to credit spreads, liquidity spreads, and other risk factors that may also impact the value of the fixed income securities portfolio.

The following table presents the sensitivity analysis of interest rate risk as of December 31, 2023:

2023 Interest Rate Shift in Basis Points

Fixed income securities

Fair value change from base (%) 7.8 % 3.9 % (3.9) % (7.8) %

Credit Risk

Our most significant credit risk is within our fixed income securities portfolio, which had an overall credit quality of "AA-" as of December 31, 2023 and December 31, 2022. Non-investment grade exposure represented approximately 4% of the total fixed income and short-term investments at both December 31, 2023 and December 31, 2022.

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Details on the credit quality of our invested assets at December 31, 2023 are provided below:

December 31, 2023 Credit Rating

Fixed income securities:

MBS:

Residential mortgage-backed securities ("RMBS"):

CLO and other ABS:

Equity securities:

Preferred stock 2 2 — 9.3 — — — — — 2 — —

Alternative investments:

Private credit 54 54 0.6 — — — — — — — — 54

Total alternative investments 396 396 4.6 — — — — — — — — 396

Other investments 91 91 1 — — — — — — — — 91

1Includes investments in exchange traded funds, mutual funds, business development corporations, and real estate investment trusts.

Amounts may not foot due to rounding.

Every quarter, we review our invested assets for concentrations of credit risk. The sectors representing 10% or more of our invested assets at December 31, 2023 were (i) agency RMBS within our RMBS allocation (12%) and (ii) the financial sector within corporate securities (15%). We discuss each of these sector holdings in more detail below.

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State and Municipal Obligations

Our state and municipal obligations represented 12% of our invested assets at December 31, 2023. The tables below provide details on this portfolio at December 31, 2023, and 2022:

($ in millions)

General obligation state & local $ 68.7 68.7 (3.2) AA-

Total state and municipal obligations $ 586.0 586.0 (26.3) AA-

($ in millions)

General obligation state & local $ 148.6 148.6 (5.8) AA+

Total state and municipal obligations $ 921.4 921.4 (46.2) AA-

The following table details the top 10 state exposures of this portfolio at December 31, 2023:

($ in thousands) % of Total

% of Total Municipal Portfolio 12 % 88 % 100 %

% of Total Investment Portfolio 1 % 6 % 7 %

Special revenue fixed income securities of municipalities (“special revenue bonds”) represented 6% of our total invested assets at December 31, 2023. Special revenue bonds generally do not have the “full faith and credit” backing of the municipal or state governments like general obligation bonds. However, they have a dedicated revenue stream for repayment. For our special revenue bonds, 63% of the dedicated revenue stream is comprised of the following: (i) essential services (53%), which is comprised of transportation, water and sewer, and electric; and (ii) education (10%), which includes school districts and higher education, including state-wide university systems. Because of the quality of these dedicated revenue streams, we believe our special revenue bond portfolio is appropriate for the current environment.

Corporate Securities

Our corporate securities represented 31% of our invested assets at December 31, 2023. For investment-grade corporate bonds, we address the risk of an individual issuer's default by maintaining a diverse portfolio. The primary risk related to non-investment grade corporate bonds is credit risk. A weak financial profile can lead to credit rating downgrades, which can put further downward pressure on bond prices. Valuations on these bonds are related more directly to underlying operating performance than to general interest rates. Our holdings of non-investment grade corporate bonds, which typically exhibit weaker credit profiles and are subject to more risk of credit loss, represent 2% of our overall investment portfolio.

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The tables below provide details on our corporate bond holdings at December 31, 2023 and 2022:

($ in millions)

($ in millions)

The following tables provide the sector composition of this portfolio at December 31, 2023 and 2022:

As illustrated in the table above, within our allocation to corporate securities, financials is our most significant industry concentration at 17% of our fixed income securities portfolio at December 31, 2023. These holdings represented 15% of our total investment portfolio. The corporate securities portfolio allocation to financials is well-diversified by issuer and has a weighted average credit rating of "A-." No individual issuer comprised more than 1% of our fixed income securities portfolio at December 31, 2023.

MBS (RMBS and CMBS Portfolios)

MBS represent our most significant exposure to real estate. Further breakdown of this exposure is provided in the table above that shows details on the credit quality of our invested assets. To manage and mitigate exposure on our RMBS and CMBS portfolios, we perform analyses at the time of purchase and as part of the ongoing portfolio evaluation. These analyses include reviews of loan-to-value ratios, geographic spread of the assets securing the bond, delinquencies in payments on the underlying mortgages, gains/losses on sales, evaluations of projected cash flows, as well as other information that aids in determination of the health of the underlying assets. We consider the overall credit environment, economic conditions, the investment's total projected return, and overall portfolio asset allocation in deciding to purchase or sell these securities.

Agency RMBS represented approximately 70% of our RMBS allocation and 12% of our total invested assets as of December 31, 2023. These securities are rated “AA+" and had an aggregate unrealized loss of approximately $61.6 million, primarily due to a decrease in benchmark U.S. Treasury rates as of December 31, 2023.

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Our CMBS portfolio comprises most of our commercial real estate ("CRE") exposure. The following table shows our total exposure to CRE:

CMBS:

Real Estate Investment Trusts:

Corporate securities 109.9 BBB+ 1 % 93.1 BBB+ 1 %

Alternative investments 28.9 — 0.3 % 26.4 — — %

Agency-backed securities represented 25% of our CMBS portfolio as of December 31, 2023. The remaining 75% was high-quality non-agency backed securities, with 92% rated "AAA" and an aggregate net unrealized losses of $34.6 million. Our CML portfolio represented 2% of invested assets as of December 31, 2023, and is focused on multi-family and industrial property types, representing more than half of the exposure.

CLO and Other ABS Portfolio

For CLO and other ABS, the primary risk is credit risk. We manage this risk by evaluating several factors, including the deal's structure, the credit quality of underlying loans or assets, the composition of the underlying portfolio, and the portfolio manager's track record and capabilities. We monitor key performance metrics, including over-collateralization, interest coverage, and cash flows, on an on-going basis. When deciding to purchase or sell CLO and other ABS, we consider the overall credit environment, economic conditions, the investment's total projected return, and overall portfolio asset allocation. Other ABS includes structured note obligations and securities collateralized by loans and other financial assets, including, without limitation, auto loans, credit card receivables, equipment leases, and student loans.

The tables below provide details on our CLO and other ABS holdings at December 31, 2023, and December 31, 2022:

($ in millions)

Investment grade:

Non-investment grade:

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($ in millions)

Investment grade:

Non-investment grade:

Total non-investment grade 95.4 95.4 (8.8) B

CLOs represented 9% of our total invested assets as of December 31, 2023. Investment grade CLOs accounted for the majority of this portfolio at 8% of invested assets, while non-investment grade CLOs represented only 1% of invested assets. The CLO portfolio is well diversified by issuer, manager, vintage year, and underlying corporate borrowers and sectors. No individual CLO comprised more than 1% of our fixed income securities portfolio at December 31, 2023, and this portfolio had an average credit quality of "AA-."

Equity Price Risk

Our equity securities portfolio is exposed to risk from potential volatility in equity market prices. We attempt to minimize equity price risk exposure by maintaining a diversified portfolio and limiting concentrations in any one company or industry. The following table presents the hypothetical increases and decreases in 10% increments in the market value of the equity portfolio as of December 31, 2023:

Change in Equity Values in Percent

In addition to our equity securities, we invest in alternative investments that are subject to price risk. These are investments in private limited partnerships that invest in various strategies such as private equity, private credit, and real assets. As of December 31, 2023, alternative investments represented 5% of our total invested assets and 13% of our stockholders’ equity. These investments are subject to risks arising from their valuation being inherently subjective. The general partner of each of these partnerships usually reports the change in the value of the interests in the partnership on a one quarter lag because of the nature of the underlying assets or liabilities. As these partnerships' underlying investments consist primarily of assets or liabilities for which there are no quoted prices in active markets for the same or similar assets, the valuation of interests in these partnerships are subject to a higher level of subjectivity and unobservable inputs than substantially all of our other invested assets. Each of these general partners is required to determine the partnerships' value by the price obtainable for the sale of the interest at the time of determination. Valuations based on unobservable inputs are subject to greater scrutiny and reconsideration from one reporting period to the next, and therefore, may be subject to significant fluctuations, which could lead to significant decreases from one reporting period to the next. We record our investments in these various partnerships under the equity method of accounting, so any decreases in these investments' valuations would negatively impact our results of operations. For additional information regarding these alternative investment strategies, see Note 5. "Investments" in Item 8. "Financial Statements and Supplementary Data." of this Form 10-K.

Liquidity Risk

As a property and casualty insurer, we meet our liquidity needs generally through the cash flow provided by our on going operations, as premium collections and investment income generated from our portfolio provide a significant flow of cash to support policyholder claims and other payment obligations. We also purchase substantial reinsurance to mitigate exposure to significant loss events and we have access to various borrowing facilities if the need to raise capital arises. See the "Liquidity and Capital Resources" section in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for additional information regarding our available borrowing capacity. In addition to this, we monitor our investment portfolio's liquidity profile to ensure it meets our operational liquidity needs.

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The liquidity characteristics of our portfolio are illustrated below:

Asset Category Percentage of Invested Assets

Highly-liquid assets 59 %

Generally liquid assets, may become less liquid with market stress1 23