SCHEDULE II

SELECTIVE INSURANCE GROUP, INC.

(Parent Corporation)

Balance Sheets



	December 31,
($ in thousands, except share amounts)	2013			2012
Assets:
Fixed maturity securities, available-for-sale – at fair value (amortized cost: $55,447 – 2013; $40,701 - 2012)	$	55,623		41,202
Short-term investments	15,399			26,787
Cash	193			210
Investment in subsidiaries	1,493,996			1,356,701
Current federal income tax	28,471			8,133
Deferred federal income tax	15,122			19,840
Other assets	9,410			9,695
Total assets	$	1,618,214		1,462,568

Liabilities:
Notes payable	$	334,414		249,387
Intercompany notes payable	102,721			103,443
Other liabilities	27,151			19,146
Total liabilities	$	464,286		371,976

Stockholders’ Equity:
Preferred stock at $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: 99,120,235 – 2013; 98,194,224 – 2012	198,240			196,388
Additional paid-in capital	288,182			270,654
Retained earnings	1,202,015			1,125,154
Accumulated other comprehensive income	24,851			54,040
Treasury stock – at cost (shares: 43,198,622 – 2013; 43,030,776 – 2012)	(559,360		)	(555,644	)
Total stockholders’ equity	1,153,928			1,090,592
Total liabilities and stockholders’ equity	$	1,618,214		1,462,568

Information should be read in conjunction with the Notes to Consolidated Financial Statements of Selective Insurance Group, Inc. and its subsidiaries in Item 8. “Financial Statements and Supplementary Data.” of this Form 10-K.

SCHEDULE II (continued)

SELECTIVE INSURANCE GROUP, INC.

(Parent Corporation)

Statements of Income



	Year ended December 31,
($ in thousands)	2013			2012		2011
Revenues:
Dividends from subsidiaries	$	32,129		196,091		63,025
Net investment income earned	585			495		231
Other income	55			464		362
Total revenues	32,769			197,050		63,618

Expenses:
Interest expense	24,309			20,711		20,203
Other expenses	27,888			20,632		16,832
Total expenses	52,197			41,343		37,035

(Loss) income from continuing operations, before federal income tax	(19,428		)	155,707		26,583

Federal income tax benefit:
Current	(22,779		)	(4,602	)	(12,785	)
Deferred	4,835			(9,347	)	490
Total federal income tax benefit	(17,944		)	(13,949	)	(12,295	)

Net (loss) income from continuing operations before equity in undistributed income of subsidiaries	(1,484		)	169,656		38,878

Equity in undistributed income of continuing subsidiaries, net of tax	108,899			—		—
Dividends in excess of continuing subsidiaries’ current year earnings	—			(131,693	)	(16,195	)

Net income from continuing operations	107,415			37,963		22,683

Loss on disposal of discontinued operations, net of tax of $(538) - 2013; and $(350) - 2011	(997		)	—		(650	)

Net income	$	106,418		37,963		22,033

SCHEDULE II (continued)

SELECTIVE INSURANCE GROUP, INC.

(Parent Corporation)

Statements of Cash Flows



	Year ended December 31,
($ in thousands)	2013			2012		2011
Operating Activities:
Net income	$	106,418		37,963		22,033

Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed income of subsidiaries, net of tax	(108,899		)	—		—
Dividends in excess of continuing subsidiaries’ current year income	—			131,693		16,195
Stock-based compensation expense	8,630			6,939		7,422
Loss on disposal of discontinued operations	997			—		650
Realized gain	—			(219	)	—
Amortization – other	4,353			450		229

Changes in assets and liabilities:
Increase in accrued salaries and benefits	6,791			5,221		330
(Increase) decrease in net federal income taxes	(14,968		)	4,897		742
Other, net	1,204			(7,014	)	(2,234	)
Net adjustments	(101,892		)	141,967		23,334
Net cash provided by operating activities	4,526			179,930		45,367

Investing Activities:
Purchase of fixed maturity securities, available-for-sale	(21,708		)	(148,604	)	(19,643	)
Redemption and maturities of fixed maturity securities, available-for-sale	6,432			127,344		—
Redemption and maturities of fixed maturity securities, held-to-maturity	—			—		796
Purchase of short-term investments	(241,748		)	(106,539	)	(128,378	)
Sale of short-term investments	253,136			113,700		144,538
Capital contribution to subsidiaries	(57,125		)	(139,122	)	—
Purchase of subsidiary, net of cash acquired	—			255		(51,728	)
Sale of subsidiary	1,225			751		1,152
Net cash used in investing activities	(59,788		)	(152,215	)	(53,263	)

Financing Activities:
Dividends to stockholders	(27,416		)	(26,944	)	(26,513	)
Acquisition of treasury stock	(3,716		)	(3,495	)	(2,741	)
Proceeds from notes payable, net of debt issuance costs	178,435			—		—
Net proceeds from stock purchase and compensation plans	7,119			4,840		5,011
Excess tax benefits (expense) from share-based payment arrangements	1,545			1,060		(90	)
Repayment of notes payable	(100,000		)	—		—
Borrowings from subsidiaries	—			—		45,000
Principal payment on borrowings from subsidiaries	(722		)	(3,688	)	(12,654	)
Net cash provided by (used in) financing activities	55,245			(28,227	)	8,013

Net (decrease) increase in cash	(17		)	(512	)	117
Cash, beginning of year	210			722		605
Cash, end of year	$	193		210		722