EX-99.2 3 exh_992.htm EXHIBIT 99.2

exh_992.htm

EXHIBIT 99.2

Supplemental Investor Package

___________________________________________________

Third Quarter 2012

Investor Contact:

Jennifer DiBerardino

Senior Vice President, Investor Relations and Treasurer

Tel:  973-948-1364

jennifer.diberardino@selective.com

 Selective Insurance Group, Inc.

 Selected Balance Sheet Data (unaudited)

 ($ in thousands, except per share amounts)

		September 30,												September 30,												December 31,
		2012												2011												2011
										Unrecognized/												Unrecognized/												Unrecognized/
		Balance				Market				Unrealized				Balance				Market				Unrealized				Balance				Market				Unrealized
		Sheet				Value				Gain/(Loss)				Sheet				Value				Gain/(Loss)				Sheet				Value				Gain/(Loss)
Invested Assets:
Corporate bonds1		$	2,223,077				2,234,897				119,877			$	1,900,130				1,915,953				68,871			$	1,967,498				1,981,909				73,085
Gov't\ Municipal bonds			1,647,599				1,681,098				108,778				1,725,061				1,757,780				109,189				1,642,223				1,673,508				108,694
Total bonds			3,870,676				3,915,995				228,655				3,625,191				3,673,733				178,060				3,609,721				3,655,417				181,779
Equities			155,577				155,577				27,710				139,203				139,203				(11,314	)			157,355				157,355				13,529
Short-term investments			184,878				184,878				-				162,812				162,812				-				217,044				217,044				-
Other investments			122,081				122,081				(4,702	)			135,560				135,560				(3,189	)			128,301				128,301				(4,520	)
Total invested assets			4,333,212				4,378,531				251,663				4,062,766				4,111,308				163,557				4,112,421				4,158,117				190,788
Invested assets per $ of stockholders' equity2			3.85												3.93												3.89
Total assets2			5,879,941												5,696,189												5,685,469
Liabilities:
Reserve for losses and loss expenses			3,103,111												3,243,622												3,144,924
Unearned premium reserve			1,017,076												902,112												906,991
Total liabilities			4,755,563												4,662,435												4,627,141
Stockholders' equity2			1,124,378												1,033,754												1,058,328
Total debt to capitalization ratio2			21.5	%											20.2	%											22.5	%
Adjusted total debt to capitalization ratio 2, 3			15.2	%											13.3	%											15.9	%
Book value per share			20.44												19.07												19.45
Book value per share excluding
unrealized gain or loss on bond portfolio2			18.28												17.51												17.82
NPW per insurance segment employee (excludes E&S)			816												771												791
Statutory premiums to surplus ratio			1.5	x											1.4	x											1.4	x
Statutory surplus			1,088,494												1,010,144												1,062,707

1 Includes mortgage-backed and asset-backed securities.

2 Prior year results have been restated to reflect the adoption of ASU 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts."

3 The adjusted debt to capitalization ratio reflects an estimated equity treatment of 90% applied to our $100 million Junior Subordinated Notes issued September 25, 2006 as applied by A.M. Best.

Selective Insurance Group, Inc.
Selected Income Statement Data (unaudited)
September 2012			THREE MONTHS ENDED September 30,																NINE MONTHS ENDED September 30,
($ in thousands, except per share amounts)			2012								2011								2012								2011
							Per diluted share								Per diluted share								Per diluted share								Per diluted share
Consolidated
Revenue			$	436,872							$	394,069							$	1,285,127							$	1,197,095
Operating income (loss)1				18,982				0.34				(15,989	)			(0.30	)			34,414				0.62				839				0.01
Net realized (losses) gains, after tax				(708	)			(0.01	)			(1,329	)			(0.02	)			2,241				0.04				3,810				0.07
Income from continuing operations				18,274				0.33				(17,318	)			(0.32	)			36,655				0.66				4,649				0.08
Loss on discontinued operations, after tax				-				-				(650	)			(0.01	)			-				-				(650	)			(0.01	)
Net income (loss)1				18,274				0.33				(17,968	)			(0.33	)			36,655				0.66				3,999				0.07
Operating return on equity1				6.9	%							(6.2	)%							4.2	%							0.1	%
Insurance Operations
Gross premiums written				538,919								476,343								1,549,141								1,354,470
Net premiums written				450,518								396,832								1,296,253								1,133,170
Net premiums earned				406,225								358,963								1,177,266								1,065,886
Underwriting gain (loss)1	- before tax			861								(64,779	)							(27,464	)							(111,479	)
	- after tax			559				0.01				(42,106	)			(0.78	)			(17,852	)			(0.32	)			(72,461	)			(1.32	)
GAAP combined ratio1				99.8	%							118.0	%							102.3	%							110.5	%
Commercial lines
Net premiums earned				334,420								292,363								966,896								869,421
GAAP combined ratio1				101.9	%							112.5	%							103.1	%							107.6	%
Personal lines
Net premiums earned				71,805								66,600								210,370								196,465
GAAP combined ratio1				89.9	%							142.4	%							98.6	%							123.1	%
Investments
Net investment income	- before tax			30,650								35,786								97,284								118,604
	- after tax			23,494				0.42				26,976				0.50				73,979				1.33				88,521				1.60
Effective tax rate				23.3	%							24.6	%							24.0	%							25.4	%
Annual after-tax yield on investment portfolio																				2.3	%							3.0	%
Annual after-tax, after-interest expense yield																				2.0	%							2.7	%
Invested assets per $ of stockholders' equity																				3.85								3.93
Other expenses (net of other income)
Interest expense	- before tax			(4,725	)							(4,559	)							(14,148	)							(13,675	)
	- after tax			(3,071	)			(0.05	)			(2,963	)			(0.05	)			(9,196	)			(0.17	)			(8,888	)			(0.16	)
Other (expense) income - after tax			$	(2,000	)			(0.04	)		$	2,105				0.03			$	(12,517	)			(0.22	)		$	(6,333	)			(0.11	)
Diluted weighted avg shares outstanding				55,862								54,183								55,717								55,172

1 Prior year results have been restated to reflect the adoption of ASU 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts."

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

 (unaudited)

 ($ in thousands)

		For the three months ended								%				Year to Date								%
		September				September				Increase				September				September				Increase
		2012				2011				(Decrease)				2012				2011				(Decrease)
Investment Income:
Interest:
Fixed Maturity Securities			30,839				31,960				(3.5	)			93,948				97,835				(4.0	)
Short-term			36				28				28.6				103				123				(16.3	)
Other Investments:
Alternative Investments			935				4,453				(79.0	)			6,396				23,994				(73.3	)
Other			(438	)			-				N/M				(936	)			-				N/M
Dividends			1,268				1,197				5.9				3,785				2,299				64.6
Miscellaneous			41				41				0.0				105				88				19.3
			32,681				37,679				(13.3	)			103,401				124,339				(16.8	)
Investment Expense			2,031				1,893				7.3				6,117				5,735				6.7
Net Investment Income Before Tax			30,650				35,786				(14.4	)			97,284				118,604				(18.0	)
Tax			7,156				8,810				(18.8	)			23,305				30,083				(22.5	)
Net Investment Income After Tax		$	23,494				26,976				(12.9	)		$	73,979				88,521				(16.4	)
Net Investment Income per Share		$	0.42				0.50				(16.0	)		$	1.33				1.60				(16.9	)
Effective Tax Rate			23.3	%			24.6	%							24.0	%			25.4	%
Average Yields :
Fixed Maturity Securities:
Pre Tax															3.35	%			3.63	%
After Tax															2.53	%			2.77	%
Portfolio:
Pre Tax															3.07	%			3.96	%
After Tax															2.34	%			2.95	%
		For the three months ended												Year to date:
		September				September								September				September
Net Realized Gains(Losses)		2012				2011								2012				2011
Fixed Maturities			1,302				262								1,663				1,497
Equity Securities			(2,390	)			(2,307	)							1,786				4,364
Short Term			-				-								(2	)			-
Other Investments			-				-								1				-
Total			(1,088	)			(2,045	)							3,448				5,861
Net of Tax			(708	)			(1,329	)							2,241				3,810

As of September 30, 2012 new money rates for fixed maturity securities were 2.32% on a pre-tax basis and 1.74% on an after tax-basis.

Selective Insurance Group, Inc.

2012 Statutory Results by Line of Business

3rd Qtr 2012 (unaudited)

($ in thousands)

		Net								Net																Underwriting				Dividends to
		Premiums				Percent				Premiums				Percent				Loss				LAE				Expense				Policyholders				Combined Ratio				Combined Ratio				Underwriting
		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2012				2011				Gain/(Loss)
Personal Lines:
Homeowners		$	35,558				14.5	%		$	29,919				15.4	%			31.4	%			8.8	%			30.3	%			0.0	%			70.5	%			207.4	%		$	7,117
Auto			39,856				3.8	%			38,295				2.5	%			70.6	%			12.1	%			30.1	%			0.0	%			112.8	%			116.7	%			(5,385	)
Other (including flood)			4,022				9.4	%			3,591				8.7	%			50.3	%			(20.9	)%			(44.2	)%			0.0	%			(14.8	)%			(94.3	)%			4,312
Total		$	79,436				8.6	%		$	71,805				7.8	%			53.3	%			9.0	%			26.5	%			0.0	%			88.8	%			141.4	%		$	6,044
Commercial Lines:
Commerical property		$	62,260				11.7	%		$	52,198				8.6	%			41.2	%			6.1	%			34.3	%			(0.3	)%			81.3	%			148.1	%		$	6,303
Workers compensation			66,320				3.2	%			65,592				3.3	%			77.4	%			10.4	%			26.5	%			1.6	%			115.9	%			114.2	%			(10,625	)
General liability			106,020				11.4	%			93,763				7.2	%			54.4	%			14.4	%			31.7	%			(0.1	)%			100.4	%			95.9	%			(4,214	)
Auto			80,725				6.2	%			72,758				3.7	%			57.1	%			8.5	%			30.3	%			(0.2	)%			95.7	%			95.9	%			728
Business owners policies			18,199				10.2	%			17,748				6.5	%			47.2	%			14.1	%			39.9	%			0.0	%			101.2	%			126.3	%			(391	)
Bonds			4,625				(7.9	)%			4,713				(0.3	)%			17.4	%			7.3	%			63.3	%			0.0	%			88.0	%			88.0	%			620
Other			32,933				200.7	%			27,647				1459.1	%			51.0	%			23.6	%			39.7	%			0.0	%			114.3	%			82.9	%			(6,045	)
Total		$	371,082				14.6	%		$	334,420				14.4	%			56.2	%			11.7	%			32.4	%			0.2	%			100.5	%			110.7	%		$	(13,626	)
Grand Total		$	450,518				13.5	%		$	406,225				13.2	%			55.7	%			11.2	%			31.3	%			0.2	%			98.4	%			116.4	%		$	(7,582	)
Note: Some amounts may not foot due to rounding.
							2012				2011
		Losses Paid				$	211,941			$	215,140
		LAE Paid					43,322				35,243
		Total Paid				$	255,263			$	250,383

Selective Insurance Group, Inc.

2012 Statutory Results by Line of Business

September 2012 YTD (unaudited)

($ in thousands)

		Net								Net																Underwriting				Dividends to
		Premiums				Percent				Premiums				Percent				Loss				LAE				Expense				Policyholders				Combined Ratio				Combined Ratio				Underwriting
		Written				Change				Earned				Change				Ratio				Ratio				Ratio				Ratio				2012				2011				Gain/(Loss)
Personal Lines:
Homeowners		$	93,730				14.4	%		$	86,685				14.8	%			52.3	%			9.5	%			31.8	%			0.0	%			93.6	%			149.5	%		$	3,348
Auto		$	117,297				2.9	%			113,648				1.9	%			69.0	%			12.0	%			30.0	%			0.0	%			111.0	%			116.7	%			(13,649	)
Other (including flood)			10,760				9.2	%			10,038				6.7	%			57.5	%			(10.0	)%			(48.9	)%			0.0	%			(1.4	)%			(19.6	)%			10,535
Total		$	221,787				7.8	%		$	210,370				7.1	%			61.6	%			9.9	%			26.9	%			0.0	%			98.4	%			122.8	%		$	235
Commercial Lines:
Commerical property		$	168,481				10.0	%		$	151,945				5.4	%			51.4	%			6.0	%			36.4	%			(0.1	)%			93.7	%			121.8	%		$	3,591
Workers compensation			206,272				3.8	%			198,064				4.3	%			71.3	%			14.3	%			25.9	%			1.6	%			113.1	%			117.7	%			(28,135	)
General liability			305,870				11.5	%			276,538				8.1	%			52.1	%			16.6	%			32.3	%			0.0	%			101.0	%			99.7	%			(12,106	)
Auto			231,475				5.0	%			214,782				2.7	%			56.9	%			8.4	%			30.9	%			(0.1	)%			96.1	%			93.5	%			3,202
Business owners policies			54,386				9.5	%			51,872				4.7	%			46.6	%			14.2	%			40.5	%			0.0	%			101.3	%			119.6	%			(1,698	)
Bonds			14,801				1.0	%			14,076				(1.0	)%			17.4	%			8.3	%			60.9	%			0.0	%			86.6	%			83.3	%			1,452
Other			93,181				473.3	%			59,619				765.3	%			46.9	%			20.3	%			41.3	%			0.0	%			108.5	%			60.9	%			(18,924	)
Total		$	1,074,466				15.9	%		$	966,896				11.2	%			55.9	%			12.6	%			33.0	%			0.3	%			101.8	%			106.6	%		$	(52,617	)
Grand Total		$	1,296,253				14.4	%		$	1,177,266				10.4	%			56.9	%			12.1	%			32.0	%			0.2	%			101.2	%			109.6	%		$	(52,382	)
Note: Some amounts may not foot due to rounding.
							2012				2011
		Losses Paid				$	650,956			$	612,066
		LAE Paid					127,889				113,151
		Total Paid				$	778,845			$	725,217

SELECTIVE INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS		Unaudited
($ in thousands, except share amounts)		September 30, 2012				December 31, 2011
ASSETS
Investments:
Fixed maturity securities, held-to-maturity – at carrying value (fair value:  $646,035 – 2012; $758,043 – 2011)		$	600,716				712,348
Fixed maturity securities, available-for-sale – at fair value (amortized cost: $3,091,740 – 2012; $2,766,856 – 2011)			3,269,960				2,897,373
Equity securities, available-for-sale – at fair value (cost:  $127,867 – 2012; $143,826 – 2011)			155,577				157,355
Short-term investments (at cost which approximates fair value)			184,878				217,044
Other investments			122,081				128,301
Total investments			4,333,212				4,112,421
Cash			315				762
Interest and dividends due or accrued			35,541				35,842
Premiums receivable, net of allowance for uncollectible accounts of:  $3,684 – 2012; $3,768 – 2011			519,953				466,294
Reinsurance recoverables, net			482,579				561,855
Prepaid reinsurance premiums			138,785				147,686
Current federal income tax			6,349				731
Deferred federal income tax			91,916				119,486
Property and equipment – at cost, net of accumulated depreciation and amortization of: $167,052 – 2012; $160,294 – 2011			45,969				43,947
Deferred policy acquisition costs			161,505				135,761
Goodwill			7,849				7,849
Other assets			55,968				52,835
Total assets		$	5,879,941				5,685,469
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for losses and loss expenses		$	3,103,111				3,144,924
Unearned premiums			1,017,076				906,991
Notes payable			307,380				307,360
Accrued salaries and benefits			124,662				119,297
Other liabilities			203,334				148,569
Total liabilities		$	4,755,563				4,627,141
Stockholders’ Equity:
Preferred stock of $0 par value per share:
Authorized shares 5,000,000; no shares issued or outstanding		$	—				—
Common stock of $2 par value per share Authorized shares 360,000,000 Issued: 98,014,074 – 2012; 97,246,711 – 2011			196,028				194,494
Additional paid-in capital			267,527				257,370
Retained earnings			1,131,115				1,116,319
Accumulated other comprehensive income			85,011				42,294
Treasury stock – at cost (shares:  43,012,714 – 2012; 42,836,201 – 2011)			(555,303	)			(552,149	)
Total stockholders’ equity			1,124,378				1,058,328
Total liabilities and stockholders’ equity		$	5,879,941				5,685,469

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME		Quarter ended September 30,								Nine Months ended September 30,
($ in thousands, except per share amounts)		2012				2011				2012				2011
Revenues:
Net premiums earned		$	406,225				358,963			$	1,177,266				1,065,886
Net investment income earned			30,650				35,786				97,284				118,604
Net realized gains (losses):
Net realized investment gains			1,856				498				6,907				9,203
Other-than-temporary impairments			(921	)			(2,693	)			(1,218	)			(3,062	)
Other-than-temporary impairments on fixed maturity securities recognized in other comprehensive income			(2,023	)			150				(2,241	)			(280	)
Total net realized gains (losses)			(1,088	)			(2,045	)			3,448				5,861
Other income			1,085				1,365				7,129				6,744
Total revenues			436,872				394,069				1,285,127				1,197,095
Expenses:
Losses and loss expenses incurred			272,251				305,958				813,060				829,719
Policy acquisition costs			131,849				116,111				391,026				346,318
Interest expense			4,725				4,559				14,148				13,675
Other expenses			7,733				4,924				24,080				18,807
Total expenses			416,558				431,552				1,242,314				1,208,519
Income (loss) from continuing operations before federal income tax			20,314				(37,483	)			42,813				(11,424	)
Federal income tax expense (benefit):
Current			(5,088	)			(20,001	)			1,590				(12,614	)
Deferred			7,128				(164	)			4,568				(3,459	)
Total federal income tax expense (benefit)			2,040				(20,165	)			6,158				(16,073	)
Net income (loss) from continuing operations		$	18,274				(17,318	)		$	36,655				4,649
Loss on disposal of discontinued operations, net of tax $(350) in Third Quarter and Nine Months 2011			—				(650	)			—				(650	)
Net income (loss)			18,274				(17,968	)			36,655				3,999
Earnings per share:
Basic net income (loss) from continuing operations		$	0.33				(0.32	)		$	0.67				0.08
Basic net loss from disposal of discontinued operations			—				(0.01	)			—				(0.01	)
Basic net income (loss)		$	0.33				(0.33	)		$	0.67				0.07
Diluted net income (loss) from continuing operations		$	0.33				(0.32	)		$	0.66				0.08
Diluted net loss from disposal of discontinued operations			—				(0.01	)			—				(0.01	)
Diluted net income (loss)		$	0.33				(0.33	)		$	0.66				0.07
Dividends to stockholders			0.13				0.13				0.39				0.39

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		Quarter ended September 30,								Nine Months ended September 30,
($ in thousands)		2012				2011				2012				2011
Net income (loss)		$	18,274				(17,968	)		$	36,655				3,999
Other comprehensive income, net of tax:
Unrealized gains on investment securities:
Unrealized holding gains arising during period			23,803				9,564				41,777				28,521
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income			1,320				(53	)			1,633				336
Amortization of net unrealized gains on held-to-maturity securities			537				(432	)			(422	)			(2,013	)
Less: reclassification adjustment for gains included in net income			(81	)			1,239				(3,056	)			(3,891	)
Total unrealized gains on investment securities			25,579				10,318				39,932				22,953
Defined benefit pension plans:
Amortization of net actuarial loss included in net income			904				678				2,712				2,114
Amortization of prior service cost included in net income			24				24				73				73
Total defined benefit pension plans			928				702				2,785				2,187
Other comprehensive income			26,507				11,020				42,717				25,140
Comprehensive income (loss)		$	44,781				(6,948	)		$	79,372				29,139

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
		Nine Months ended September 30,
($ in thousands)		2012				2011
Common stock:
Beginning of year		$	194,494				192,725
Dividend reinvestment plan (shares:  68,640 – 2012; 74,777 – 2011)			137				150
Stock purchase and compensation plans (shares:  698,723 – 2012; 607,059 – 2011)			1,397				1,214
End of period			196,028				194,089
Additional paid-in capital:
Beginning of year			257,370				244,613
Dividend reinvestment plan			1,064				1,066
Stock purchase and compensation plans			9,093				8,260
End of period			267,527				253,939
Retained earnings:
Beginning of year, as previously reported			1,116,319				1,176,155
Add:  Adjustment for the cumulative effect on prior years of applying retroactively the new method of accounting for deferred policy acquisition costs			—				(53,068	)
Balance at beginning of year, as adjusted			1,116,319				1,123,087
Net income			36,655				3,999
Dividends to stockholders ($0.39 per share – 2012 and 2011)			(21,859	)			(21,579	)
End of period			1,131,115				1,105,507
Accumulated other comprehensive income:
Beginning of year			42,294				7,024
Other comprehensive income			42,717				25,140
End of period			85,011				32,164
Treasury stock:
Beginning of year			(552,149	)			(549,408	)
Acquisition of treasury stock (shares:  176,513 – 2012; 137,667 – 2011)			(3,154	)			(2,537	)
End of period			(555,303	)			(551,945	)
Total stockholders’ equity		$	1,124,378				1,033,754

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW		Nine Months ended September 30,
($ in thousands)		2012				2011
Operating Activities
Net income		$	36,655				3,999
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			29,386				25,260
Loss on disposal of discontinued operations			—				650
Stock-based compensation expense			6,263				6,383
Undistributed losses (income) of equity method investments			1,090				(1,793	)
Net realized gains			(3,448	)			(5,861	)
Changes in assets and liabilities:
Increase in reserves for losses and loss expenses, net of reinsurance recoverables			37,463				100,584
Increase in unearned premiums, net of prepaid reinsurance and advance premiums			119,269				67,816
Increase in net federal income taxes			(1,050	)			(9,426	)
Increase in premiums receivable			(53,659	)			(63,764	)
Increase in deferred policy acquisition costs			(25,744	)			(10,828	)
Decrease in interest and dividends due or accrued			721				1,943
Increase (decrease) in accrued salaries and benefits			5,365				(2,448	)
Increase (decrease) in accrued insurance expenses			299				(6,772	)
Other-net			15,144				20,817
Net adjustments			131,099				122,561
Net cash provided by operating activities			167,754				126,560
Investing Activities
Purchase of fixed maturity securities, available-for-sale			(676,408	)			(350,140	)
Purchase of equity securities, available-for-sale			(41,004	)			(148,104	)
Purchase of other investments			(9,050	)			(11,778	)
Purchase of short-term investments			(1,231,519	)			(1,030,834	)
Purchase of subsidiary			255				—
Sale of subsidiary			600				919
Sale of fixed maturity securities, available-for-sale			92,170				85,773
Sale of short-term investments			1,263,684				1,029,178
Redemption and maturities of fixed maturity securities, held-to-maturity			91,665				138,907
Redemption and maturities of fixed maturity securities, available-for-sale			297,980				95,951
Sale of equity securities, available-for-sale			58,749				59,991
Distributions from other investments			13,910				15,666
Sale of other investments			1				16,357
Purchase of property and equipment			(9,382	)			(8,932	)
Net cash used in investing activities			(148,349	)			(107,046	)
Financing Activities
Dividends to stockholders			(20,188	)			(19,863	)
Acquisition of treasury stock			(3,154	)			(2,537	)
Net proceeds from stock purchase and compensation plans			2,586				2,718
Excess tax benefit (expense) from share-based payment arrangements			904				(190	)
Net cash used in financing activities			(19,852	)			(19,872	)
Net decrease in cash			(447	)			(358	)
Cash, beginning of year			762				645
Cash, end of period		$	315				287

Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Balance Sheets
($ in thousands)
		Sep-30				Sep-30				Dec-31 *
		2012				2011				2011
ASSETS
Bonds		$	3,606,161				3,482,530				3,452,204
Common stocks			155,577				139,203				157,355
Affiliated mortgage loan			37,618				38,297				38,131
Other investments			188,131				162,689				197,409
Short-term investments			198,334				109,468				183,070
Total investments			4,185,821				3,932,187				4,028,169
Cash on hand and in banks			(42,644	)			(49,209	)			(20,701	)
Interest and dividends due and accrued			35,496				35,173				35,880
Premiums receivable			518,142				475,442				461,482
Reinsurance recoverable on paid losses and expenses			9,200				9,376				12,365
Federal income tax recoverable			-				7,001				-
Deferred tax recoverable			150,194				135,884				137,659
EDP equipment			1,332				1,004				1,804
Equities and deposits in pools and associations			7,491				9,625				4,837
Receivable for sold securities			337				14				644
Other assets			31,489				29,334				27,964
Total assets		$	4,896,858				4,585,831				4,690,103
LIABILITIES
Reserve for losses		$	2,191,838				2,209,177				2,173,028
Reinsurance payable on paid loss and loss expense			2,191				1,243				1,285
Reserve for loss expenses			433,502				408,024				418,542
Unearned premiums			878,291				780,552				759,304
Reserve for commissions payable			47,032				39,987				44,488
Ceded balances payable			17,711				10,746				21,871
Federal income tax payable			8,671				-				12,176
Premium and other taxes payable			21,344				20,291				23,588
Borrowed money			58,042				13,017				58,043
Reserve for dividends to policyholders			3,370				3,451				3,470
Reserves for unauthorized reinsurance			1,785				1,811				1,785
Payable for securities			36,944				976				-
Funds withheld on account of others			6,164				5,690				6,538
Accrued salaries and benefits			85,308				63,306				80,601
Other liabilities			16,171				17,416				22,677
Total liabilities			3,808,364				3,575,687				3,627,396
POLICYHOLDERS' SURPLUS
Capital			42,625				28,325				32,325
Aggregate write-ins for special surplus funds			-				39,055				44,296
Paid in surplus			435,844				255,792				307,022
Unassigned surplus			610,025				686,972				679,064
Total policyholders' surplus			1,088,494				1,010,144				1,062,707
Total liabilities and policyholders' surplus		$	4,896,858				4,585,831				4,690,103

* Includes the December 31, 2011 acquisition of Montpelier U.S. Insurance Company (now known as Mesa

Underwriters Specialty Insurance Company).  Combined statutory filings for 2011 do not reflect the acquisition as this Company was not included in our intercompany pooling until January 1, 2012.

Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Statements of Income
($ in thousands)
		Three Months Ended																Nine Months Ended
		September																September
UNDERWRITING		2012								2011								2012								2011
Net premiums written		$	450,518								396,832								1,296,253								1,133,170
Net premiums earned			406,225								358,963								1,177,266								1,065,886
Net losses paid			211,941								215,140								650,956								612,066
Change in reserve for losses			14,399								50,591								18,810								97,620
Net losses incurred			226,340				55.7	%			265,731				74.0	%			669,766				56.9	%			709,686				66.6	%
Net loss expenses paid			43,322								35,243								127,889								113,151
Change in reserve for loss expenses			2,230								4,449								14,960								6,516
Net loss expenses incurred			45,552				11.2	%			39,692				11.1	%			142,849				12.1	%			119,667				11.2	%
Net underwriting expenses incurred			143,322				31.8	%			123,316				31.0	%			419,086				32.4	%			358,447				31.6	%
Total deductions			415,214								428,739								1,231,701								1,187,800
Statutory underwriting loss			(8,989	)							(69,776	)							(54,435	)							(121,914	)
Net loss from premium balances charged off			(566	)							(1,300	)							(2,671	)							(4,003	)
Finance charges and other income			2,658								1,349								7,553								6,688
Total other income			2,092				-0.5	%			49				0.0	%			4,882				-0.4	%			2,685				-0.2	%
Policyholders' dividends incurred			(685	)			0.2	%			(1,056	)			0.3	%			(2,829	)			0.2	%			(3,803	)			0.4	%
Total underwriting loss			(7,582	)			98.4	%			(70,783	)			116.4	%			(52,382	)			101.2	%			(123,032	)			109.6	%
INVESTMENT
Net investment income earned			31,282								34,967								98,554								117,546
Net realized gain			(1,224	)							(2,061	)							3,309								5,816
Total income before income tax			22,476								(37,877	)							49,481								330
Federal income tax expense / (benefit)			2,108								(14,525	)							13,230								(2,241	)
Net income / (loss)		$	20,368								(23,352	)							36,251								2,571
Policyholders' Surplus
Surplus, beginning of period		$	1,067,881								1,070,297								1,062,707								1,073,025
Net income / (loss)			20,368								(23,352	)							36,251								2,571
Change in deferred taxes			(2,940	)							4,551								4,724								5,471
Change in unrealized gains			6,578								(12,286	)							8,619								(13,446	)
Dividends to stockholders			(151,239	)							(17,006	)							(179,713	)							(46,018	)
Change in cum. effect of acctg principle			-								-								44,296								-
Paid in common stock			8,400								-								10,300								-
Paid in surplus			130,722								-								130,722								-
Surplus - transferred to capital			-								-								(1,900	)							-
Change in non-admitted assets			8,723								(10,894	)							16,758								(8,712	)
Change in additional admitted deferred taxes			-								115								(44,296	)							(1,466	)
Surplus adjustments			1								(1,281	)							26								(1,281	)
Net change in surplus for period			20,613								(60,153	)							25,787								(62,881	)
Surplus, end of period		$	1,088,494								1,010,144								1,088,494								1,010,144
Statutory underwriting loss		$	(7,582	)							(70,783	)							(52,382	)							(123,032	)
Adjustments under GAAP:
Deferred policy acquisition costs1			9,106								7,204								25,744								10,828
Pension costs			70								63								210								1,868
Other, net			(733	)							(1,263	)							(1,036	)							(1,143	)
GAAP underwriting gain (loss)		$	861								(64,779	)							(27,464	)							(111,479	)

1 Prior year results have been restated to reflect the adoption of ASU 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts."

Note:  Some amounts or ratios may not foot due to rounding.

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments
as of September 30, 2012
(unaudited)
	Inception		Original				Remaining				Current				YTD				DPI(1)				TVPI(2)
Fund	Year		Commitment				Commitment				Market Value				Income				Ratio				Ratio
Real Estate
Silverpeak RE II	2005			20,000,000				2,409,941				9,771,126				223,304				0.49				0.97
Silverpeak RE III	2008			15,000,000				8,063,280				2,947,710				(429,672	)			0.02				0.45
Total - Real Estate				35,000,000				10,473,221				12,718,836				(206,368	)			0.38				0.84
Mezzanine Financing
Neovara Euro Mezz	2004			9,000,000				-				726,796				(345,497	)			0.95				1.00
GS Mezz V	2007			25,000,000				15,255,707				8,466,169				1,307,182				0.64				1.26
New Canaan V	2012			7,000,000				5,577,405				1,324,397				(124,846	)			-				0.91
Centerfield Capital	2012			3,000,000				2,340,518				659,482				-				-				1.00
Total - Mezz. Financing				44,000,000				23,173,629				11,176,844				836,839				1.59				1.12
Distressed Debt
Varde VIII	2006			10,000,000				4,420,889				5,614,702				320,048				0.59				1.15
GS Distressed Opp III	2007			15,000,000				2,936,059				7,798,695				605,851				0.45				1.03
Total - Distressed Debt				25,000,000				7,356,948				13,413,397				925,899				0.51				1.08
Private Equity
Prospector	1997			5,000,000				-				410,899				(222	)			2.79				2.88
Trilantic Capital Partners III	2004			10,000,000				1,242,835				4,136,181				324,416				1.29				1.73
NB Co-Invest	2006			15,000,000				1,716,821				9,725,719				1,004,479				0.61				1.29
Trilantic Capital Partners IV	2007			11,098,351				922,808				10,470,360				1,725,996				0.37				1.38
Total - Private Equity				41,098,351				3,882,464				24,743,159				3,054,668				0.99				1.62
Private Equity, Secondary Market
NB SOF	2005			12,000,000				899,494				6,002,684				391,437				0.73				1.27
GS Vintage IV	2007			20,000,000				4,315,101				14,404,989				299,951				0.46				1.21
NB SOF II	2008			12,000,000				2,938,399				8,475,134				707,152				0.49				1.35
Total - Pvt. Eq. Sec. Mkt.				44,000,000				8,152,994				28,882,807				1,398,540				0.54				1.26
Energy/Power Generation
ArcLight I	2002			15,000,000				1,655,505				113,848				(73,351	)			1.80				1.81
ArcLight II	2003			15,000,000				2,295,492				1,601,007				(545,861	)			1.27				1.36
ArcLight III	2006			15,000,000				2,037,794				7,510,994				(966,506	)			0.71				1.19
Quintana Energy	2006			10,000,000				1,641,106				7,198,033				1,513,641				0.39				1.25
ArcLight IV	2007			10,000,000				2,717,373				2,773,544				(378,941	)			0.99				1.27
Total - Energy/Power Generation				65,000,000				10,347,270				19,197,426				(451,018	)			1.12				1.40
Venture Capital
Venture V	2001			9,600,000				400,000				7,651,412				837,159				0.35				1.19
Total - Venture Capital				9,600,000				400,000				7,651,412				837,159				0.35				1.19
TOTAL - ALTERNATIVE INVESTMENTS			$	263,698,351				63,786,526				117,783,881				6,395,719				0.78				1.27
(1) Distributed to paid in ratio
(2) Total value to paid in ratio
Exhibit may not foot due to rounding

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Municipal Bond Portfolio

State and Repayment Source Composition

September 30, 2012

($  in thousands)

(unaudited)

Exposure = 42% Held-to-Maturity; 58% Available-for-Sale

Repayment Source Composition by State
Market Values
State		Revenue				% of  State				General Obligation (GO)-Local				% of State				General Obligation (GO)-State				% of State				TX - Permanent School Fund (PSF)				% of State				Total				% of Total
TX			52,624				51	%			50,475				48	%			1,126				1	%			-				0	%			104,225				8	%
TX-PSF			-				0	%			-				0	%			-				0	%			34,080				100	%			34,080				3	%
WA			49,327				48	%			46,052				45	%			7,270				7	%			-				0	%			102,649				8	%
NY			74,947				95	%			3,678				5	%			-				0	%			-				0	%			78,625				6	%
AZ			62,510				96	%			2,466				4	%			-				0	%			-				0	%			64,976				5	%
FL			55,105				90	%			-				0	%			6,226				10	%			-				0	%			61,331				4	%
CO			21,905				40	%			31,371				57	%			1,756				3	%			-				0	%			55,032				4	%
IL			25,857				56	%			20,324				44	%			-				0	%			-				0	%			46,181				3	%
OH			22,734				53	%			13,338				31	%			7,070				16	%			-				0	%			43,142				3	%
NC			24,313				58	%			13,923				33	%			3,760				9	%			-				0	%			41,996				3	%
MO			21,229				56	%			16,975				44	%			-				0	%			-				0	%			38,204				3	%
Pre-refunded			51,838				52	%			31,696				32	%			12,050				12	%			3,602				4	%			99,186				7	%
Other			359,588				62	%			114,601				20	%			107,180				18	%			-				0	%			581,369				43	%
Grand Total			821,977				61	%			344,899				25	%			146,438				11	%			37,682				3	%			1,350,996				100	%

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Available-for-Sale Fixed Maturity Securities
September 30, 2012
($ in millions)
(unaudited)
		Fair Value				Unrealized Gain (Loss)				Weighted Average Credit Quality
AFS Fixed Maturity Portfolio:
U.S. government obligations1		$	294.2				18.8			AA+
Foreign government obligations			30.3				1.5			AA-
State and municipal obligations			784.5				46.5			AA
Corporate securities			1,425.9				85.5			A
Mortgage-backed securities ("MBS")			613.9				23.7			AA
Asset-backed securities ("ABS")			121.2				2.2			AAA
Total AFS fixed maturity portfolio		$	3,270.0				178.2			AA-
State and Municipal Obligations:
General obligations		$	344.7				22.4			AA+
Special revenue obligations			439.8				24.1			AA
Total state and municipal obligations		$	784.5				46.5			AA
Corporate Securities:
Financial		$	433.4				22.7			A
Industrials			97.1				8.3			A
Utilities			111.7				6.5			BBB+
Consumer discretionary			130.5				9.1			BBB+
Consumer staples			160.6				9.4			A
Healthcare			179.2				11.4			A+
Materials			72.1				4.8			A-
Energy			90.6				5.0			A-
Information technology			93.4				3.9			A
Telecommunications services			45.9				3.0			BBB+
Other			11.4				1.4			AA+
Total corporate securities		$	1,425.9				85.5			A
MBS:
Government Guaranteed Agency commercial mortgage-backed securities ("CMBS")		$	59.9				2.9			AA+
Non-agency CMBS			68.5				0.7			AA-
Other-agency CMBS			1.2				-			AA+
Government Guaranteed Agency residential mortgage-backed securities ("RMBS")			98.1				5.0			AA+
Other Agency RMBS			334.2				13.9			AA+
Non-agency RMBS			45.5				1.1			A-
Alternative-A ("Alt-A") RMBS			6.5				0.1			AA+
Total MBS		$	613.9				23.7			AA
ABS:
ABS		$	119.9				2.2			AAA
Alt-A ABS3			0.7				-			D
Sub-prime ABS2,3			0.6				-			D
Total ABS		$	121.2				2.2			AAA

1 U.S. Government includes corporate securities fully guaranteed by the FDIC.

2 We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650.

3 Alt-A ABS and sub-prime ABS each consist of one security that is currently expected by rating agencies to default on its obligations.

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Held-to-Maturity Securities
September 30, 2012
($ in millions)
(unaudited)
		Fair Value				Carry Value				Unrecognized Holding Gain (Loss)				Unrealized Gain (Loss) in Accumulated Other Comprehensive Income				Total Unrealized Unrecognized Gain (Loss)				Weighted Average Credit Quality
HTM Fixed Maturity Portfolio:
Foreign government obligations		$	5.6				5.5				0.1				0.2				0.3			AA+
State and municipal obligations			566.5				533.1				33.4				8.3				41.7			AA
Corporate securities			53.6				48.5				5.1				(1.0	)			4.1			A
MBS			13.0				7.5				5.5				(1.3	)			4.2			AA-
ABS			7.3				6.1				1.2				(1.1	)			0.1			A
Total HTM portfolio		$	646.0				600.7				45.3				5.1				50.4			AA
State and Municipal Obligations:
General obligations		$	184.4				174.9				9.5				4.3				13.8			AA
Special revenue obligations			382.1				358.2				23.9				4.0				27.9			AA
Total state and municipal obligations		$	566.5				533.1				33.4				8.3				41.7			AA
Corporate Securities:
Financial		$	15.7				14.2				1.5				(0.8	)			0.7			BBB+
Industrials			17.0				15.4				1.6				(0.2	)			1.4			A
Utilities			15.4				13.6				1.8				(0.1	)			1.7			A+
Consumer discretionary			3.5				3.3				0.2				0.1				0.3			AA
Materials			2.0				2.0				-				-				-			BBB
Total corporate securities		$	53.6				48.5				5.1				(1.0	)			4.1			A
MBS:
Non-agency CMBS			13.0				7.5				5.5				(1.3	)			4.2			AA-
Total MBS		$	13.0				7.5				5.5				(1.3	)			4.2			AA-
ABS:
ABS		$	4.9				4.4				0.5				(0.3	)			0.2			BBB+
Alt-A ABS			2.4				1.7				0.7				(0.8	)			(0.1	)		AAA
Total ABS		$	7.3				6.1				1.2				(1.1	)			0.1			A