SELECTIVE INSURANCE GROUP INC - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

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8-K - FORM 8-K - SELECTIVE INSURANCE GROUP INC	f8k_072512.htm
EX-99.1 - EXHIBIT 99.1 - SELECTIVE INSURANCE GROUP INC	exh_991.htm

EXHIBIT 99.2

Supplemental Investor Package

___________________________________________________

Second 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)

	June 30,								June 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	$	2,127,036			776,480		26,312		$	1,833,490			1,852,486		52,861		$	1,967,498			1,981,909		73,085
Gov't\ Municipal bonds		1,639,471			3,034,507		172,001			1,762,325			1,793,729		91,461			1,642,223			1,673,508		108,694
Total bonds		3,766,507			3,810,987		198,313			3,595,815			3,646,215		144,322			3,609,721			3,655,417		181,779
Equities		148,117			148,117		17,860			136,577			136,577		8,390			157,355			157,355		13,529
Short-term investments		135,823			135,823		-			142,809			142,809		-			217,044			217,044		-
Other investments		125,540			125,540		(4,517	)		132,137			132,137		(4,255	)		128,301			128,301		(4,520	)
Total invested assets		4,175,987			4,220,467		211,656			4,007,338			4,057,738		148,457			4,112,421			4,158,117		190,788


Invested assets per $ of stockholders' equity2		3.85								3.83								3.89

Total assets2		5,687,408								5,314,673								5,685,469

Liabilities:
Reserve for losses and loss expenses		3,044,363								2,898,592								3,144,924
Unearned premium reserve		970,806								858,627								906,991

Total liabilities		4,602,362								4,268,614								4,627,141

Stockholders' equity2		1,085,046								1,046,059								1,058,328

Total debt to capitalization ratio2		22.1	%							20.1	%							22.5	%
Adjusted total debt to capitalization ratio 2, 3		15.6	%							13.2	%							15.9	%

Book value per share2		19.75								19.31								19.45

Book value per share excluding
unrealized gain or loss on bond portfolio2		17.93								18.19								17.82

NPW per insurance segment employee (excludes E&S)		807								760								791

Statutory premiums to surplus ratio		1.5	x							1.3	x							1.4	x

Statutory surplus		1,067,881								1,070,297								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)
June 2012		THREE MONTHS ENDED June 30,												SIX MONTHS ENDED June 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		$	428,907					$	399,570					$	848,255					$	803,026
Operating income1			172			0.01			72			-			15,432			0.28			16,828			0.31
Net realized gains, after tax			116			-			1,395			0.03			2,949			0.05			5,139			0.09
Net income1			288			0.01			1,467			0.03			18,381			0.33			21,967			0.40
Operating return on equity1			0.1	%					0.0	%					2.9	%					3.3	%

Insurance Operations
Gross premiums written			512,267						449,132						1,010,222						878,127
Net premiums written			425,563						374,503						845,735						736,338
Net premiums earned			392,212						355,580						771,041						706,923
Underwriting loss1	- before tax		(26,962	)					(34,002	)					(28,325	)					(46,700	)
	- after tax		(17,525	)		(0.31	)		(22,101	)		(0.40	)		(18,411	)		(0.33	)		(30,355	)		(0.55	)
GAAP combined ratio1			106.9	%					109.6	%					103.7	%					106.6	%

Commercial lines
Net premiums earned			322,256						290,295						632,476						577,058
GAAP combined ratio1			106.1	%					108.1	%					103.8	%					105.1	%
Personal lines
Net premiums earned			69,956						65,285						138,565						129,865
GAAP combined ratio1			110.6	%					116.2	%					103.1	%					113.1	%

Investments
Net investment income	- before tax		34,006						39,345						66,634						82,818
	- after tax		25,710			0.46			29,420			0.53			50,485			0.91			61,545			1.12
Effective tax rate			24.4	%					25.2	%					24.2	%					25.7	%
Annual after-tax yield on investment portfolio															2.4	%					3.1	%
Annual after-tax, after-interest expense yield															2.1	%					2.8	%
Invested assets per $ of stockholders' equity															3.85						3.83

Other expenses (net of other income)
Interest expense	- before tax		(4,723	)					(4,559	)					(9,423	)					(9,116	)
	- after tax		(3,070	)		(0.06	)		(2,963	)		(0.05	)		(6,125	)		(0.11	)		(5,925	)		(0.11	)

Other Expense - after tax		$	(4,944	)		(0.08	)	$	(4,284	)		(0.08	)	$	(10,517	)		(0.19	)	$	(8,437	)		(0.15	)

Diluted weighted avg shares outstanding			55,681						55,135						55,642						55,092

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						%
		June			June			Increase			June			June			Increase
		2012			2011			(Decrease)			2012			2011			(Decrease)
Investment Income:
	Interest:
	Fixed Maturity Securities	$	31,759			32,752			(3.0	)	$	63,109			65,875			(4.2	)
	Short-term		29			33			(12.1	)		67			95			(29.5	)
	Other Investments:
	Alternative Investments		3,166			7,900			(59.9	)		5,461			19,541			(72.1	)
	Other		(203	)		-			N/M			(498	)		-			N/M
	Dividends		1,280			785			63.1			2,517			1,102			128.4
	Miscellaneous		25			22			13.6			64			47			36.2
			36,056			41,492			(13.1	)		70,720			86,660			(18.4	)

Investment Expense			2,050			2,147			(4.5	)		4,086			3,842			6.4

Net Investment Income Before Tax			34,006			39,345			(13.6	)		66,634			82,818			(19.5	)

Tax			8,296			9,925			(16.4	)		16,149			21,273			(24.1	)

Net Investment Income After Tax		$	25,710			29,420			(12.6	)	$	50,485			61,545			(18.0	)

Net Investment Income per Share		$	0.46			0.53			(13.2	)	$	0.91			1.12			(18.8	)


Effective Tax Rate			24.4	%		25.2	%					24.2	%		25.7	%

Average Yields :

Fixed Maturity Securities:
	Pre Tax											3.42	%		3.68	%
	After Tax											2.59	%		2.81	%

Portfolio:
	Pre Tax											3.22	%		4.18	%
	After Tax											2.44	%		3.10	%



		For the three months ended									Year to date:
		June			June						June			June
Net Realized Gains(Losses)		2012			2011						2012			2011
	Fixed Maturities		177			1,678						361			1,235
	Equity Securities		-			468						4,176			6,671
	Short Term		-			-						(2	)		-
	Other Investments		1			-						1			-

	Total		178			2,146						4,536			7,906
	Net of Tax		116			1,395						2,949			5,139

As of June 30, 2012 new money rates for taxable fixed maturity securities were 2.45% on a pre-tax basis and 1.86% on an after-tax basis.

Selective Insurance Group, Inc.
2012 Statutory Results by Line of Business
2nd 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	$	32,964		14.8	%	$	28,808		15.0	%		80.9	%		7.6	%		31.2	%		0.0	%		119.7	%		127.0	%	$	(6,981	)
Auto		40,166		2.4	%		37,897		1.9	%		68.7	%		11.8	%		30.0	%		0.0	%		110.5	%		114.8	%		(4,639	)
Other (including flood)		3,675		12.6	%		3,251		7.1	%		72.7	%		(11.8	)%		(56.5	)%		0.0	%		4.4	%		23.2	%		3,349
Total	$	76,805		7.9	%	$	69,956		7.2	%		74.0	%		8.9	%		26.3	%		0.0	%		109.2	%		115.3	%	$	(8,271	)

Commercial Lines:

Commerical property	$	53,194		8.4	%	$	50,377		5.2	%		72.9	%		5.8	%		37.5	%		0.1	%		116.3	%		130.9	%	$	(9,291	)
Workers compensation		66,764		0.1	%		66,661		4.4	%		68.4	%		16.4	%		26.4	%		1.5	%		112.7	%		116.3	%		(8,519	)
General liability		99,222		9.7	%		92,632		8.1	%		51.0	%		18.0	%		33.3	%		0.0	%		102.3	%		103.0	%		(4,361	)
Auto		74,912		3.0	%		71,540		3.4	%		55.7	%		8.3	%		31.8	%		0.2	%		96.0	%		92.5	%		1,751
Business owners policies		17,956		7.7	%		17,266		5.2	%		48.8	%		14.3	%		40.2	%		0.0	%		103.3	%		120.3	%		(841	)
Bonds		5,531		8.1	%		4,700		(0.5	)%		17.5	%		9.7	%		57.1	%		0.0	%		84.3	%		88.9	%		265
Other		31,179		N/M			19,080		N/M			45.2	%		17.6	%		41.6	%		0.0	%		104.4	%		44.1	%		(5,861	)
Total	$	348,758		15.0	%	$	322,256		11.0	%		58.1	%		13.2	%		33.9	%		0.4	%		105.6	%		108.2	%	$	(26,858	)

Grand Total	$	425,563		13.6	%	$	392,212		10.3	%		60.9	%		12.5	%		32.5	%		0.3	%		106.2	%		109.5	%	$	(35,129	)

Note: Some amounts may not foot due to rounding.

				2012			2011
	Losses Paid		$	232,122		$	208,085
	LAE Paid			41,031			39,894
	Total Paid		$	273,153		$	247,979

Selective Insurance Group, Inc.
2012 Statutory Results by Line of Business
June 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	$	58,171		14.3	%	$	56,766		14.4	%		63.4	%		9.8	%		32.6	%		0.0	%		105.8	%		119.3	%	$	(3,769	)
Auto		77,441		2.4	%		75,353		1.6	%		68.1	%		12.0	%		30.0	%		0.0	%		110.1	%		116.8	%		(8,264	)
Other (including flood)		6,738		9.2	%		6,446		5.7	%		61.5	%		(3.9	)%		(51.8	)%		0.0	%		5.8	%		20.9	%		6,224
Total	$	142,351		7.3	%	$	138,565		6.7	%		65.9	%		10.3	%		27.2	%		0.0	%		103.4	%		113.3	%	$	(5,809	)

Commercial Lines:

Commerical property	$	106,222		9.1	%	$	99,748		3.8	%		56.8	%		6.0	%		37.5	%		0.0	%		100.3	%		108.8	%	$	(2,711	)
Workers compensation		139,952		4.1	%		132,472		4.8	%		68.3	%		16.3	%		25.6	%		1.6	%		111.8	%		119.5	%		(17,510	)
General liability		199,850		11.5	%		182,775		8.6	%		50.9	%		17.7	%		32.7	%		0.0	%		101.3	%		101.7	%		(7,891	)
Auto		150,750		4.3	%		142,024		2.3	%		56.8	%		8.3	%		31.2	%		0.0	%		96.3	%		92.4	%		2,474
Business owners policies		36,187		9.2	%		34,123		3.7	%		46.3	%		14.2	%		40.9	%		0.0	%		101.4	%		116.1	%		(1,307	)
Bonds		10,175		5.6	%		9,363		(1.4	)%		17.5	%		8.7	%		59.7	%		0.0	%		85.9	%		81.0	%		833
Other		60,248		N/M			31,971		N/M			43.4	%		17.5	%		42.1	%		0.0	%		103.0	%		45.6	%		(12,879	)
Total	$	703,384		16.5	%	$	632,476		9.6	%		55.7	%		13.1	%		33.3	%		0.3	%		102.4	%		104.4	%	$	(38,991	)

Grand Total	$	845,735		14.9	%	$	771,041		9.1	%		57.5	%		12.6	%		32.3	%		0.3	%		102.7	%		106.1	%	$	(44,800	)

Note: Some amounts may not foot due to rounding.

				2012			2011
	Losses Paid		$	439,015		$	396,926
	LAE Paid			84,567			77,908
	Total Paid		$	523,582		$	474,834


SELECTIVE INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS	Unaudited
($ in thousands, except share amounts)	June 30, 2012			December 31, 2011
ASSETS
Investments:
Fixed maturity securities, held-to-maturity – at carrying value (fair value: $687,981 – 2012; $758,043 – 2011)	$	643,501		712,348
Fixed maturity securities, available-for-sale – at fair value (amortized cost: $2,974,819 – 2012; $2,766,856 – 2011)	3,123,006			2,897,373
Equity securities, available-for-sale – at fair value (cost: $130,257 – 2012; $143,826 – 2011)	148,117			157,355
Short-term investments (at cost which approximates fair value)	135,823			217,044
Other investments	125,540			128,301
Total investments	4,175,987			4,112,421
Cash	141			762
Interest and dividends due or accrued	36,110			35,842
Premiums receivable, net of allowance for uncollectible accounts of: $3,470 – 2012; $3,768 – 2011	523,588			466,294
Reinsurance recoverables, net	441,492			561,855
Prepaid reinsurance premiums	136,808			147,686
Current federal income tax	1,230			731
Deferred federal income tax	113,925			120,094
Property and equipment – at cost, net of accumulated depreciation and amortization of:
$164,835 – 2012; $160,294 – 2011	45,689			43,947
Deferred policy acquisition costs	152,399			135,761
Goodwill	7,849			7,849
Other assets	52,190			52,227
Total assets	$	5,687,408			5,685,469

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for losses and loss expenses	$	3,044,363		3,144,924
Unearned premiums	970,806			906,991
Notes payable	307,373			307,360
Accrued salaries and benefits	113,598			119,297
Other liabilities	166,222			148,569
Total liabilities	$	4,602,362			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: 97,960,814 – 2012; 97,246,711 – 2011	195,921			194,494
Additional paid-in capital	265,729			257,370
Retained earnings	1,120,143			1,116,319
Accumulated other comprehensive income	58,504			42,294
Treasury stock – at cost (shares: 43,009,821 – 2012; 42,836,201 – 2011)	(555,251		)	(552,149		)
Total stockholders’ equity	1,085,046			1,058,328
Commitments and contingencies
Total liabilities and stockholders’ equity	$	5,687,408			5,685,469


SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME	Quarter ended June 30,						Six Months ended June 30,
($ in thousands, except per share amounts)	2012			2011			2012			2011
Revenues:
Net premiums earned	$	392,212		355,580			$	771,041		706,923
Net investment income earned	34,006			39,345			66,634			82,818
Net realized gains (losses):
Net realized investment gains	272			2,315			5,051			8,705
Other-than-temporary impairments	(40		)	163			(297		)	(369		)
Other-than-temporary impairments on fixed maturity securities recognized in other comprehensive income	(54		)	(332		)	(218		)	(430		)
Total net realized gains (losses)	178			2,146			4,536			7,906
Other income	2,511			2,499			6,044			5,379
Total revenues	428,907			399,570			848,255			803,026

Expenses:
Losses and loss expenses incurred	287,903			274,555			540,809			523,761
Policy acquisition costs	131,219			115,163			259,177			230,207
Interest expense	4,723			4,559			9,423			9,116
Other expenses	5,754			5,392			16,347			13,883
Total expenses	429,599			399,669			825,756			776,967
(Loss) income before federal income tax	(692		)	(99		)	22,499			26,059
Federal income tax expense (benefit):
Current	(500		)	3,111			6,678			7,387
Deferred	(480		)	(4,677		)	(2,560		)	(3,295		)
Total federal income tax expense (benefit)	(980		)	(1,566		)	4,118			4,092
Net income	$	288			1,467		$	18,381			21,967

Earnings per share:
Basic net income	$	0.01		0.03			$	0.34		0.41
Diluted net income	$	0.01		0.03			$	0.33		0.40
Dividends to stockholders	$	0.13		0.13			$	0.26		0.26

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Quarter ended June 30,						Six Months ended June 30,
($ in thousands)	2012			2011			2012			2011
Net income	$	288		1,467			18,381			21,967

Other comprehensive income, net of tax:
Unrealized gains on investment securities:
Unrealized holding gains arising during period	5,101			19,563			17,974			18,957
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income	75			272			313			389
Amortization of net unrealized gains on held-to-maturity securities	(443		)	(817		)	(959		)	(1,581		)
Less: reclassification adjustment for gains included in net income	(142		)	(1,393		)	(2,975		)	(5,130		)
Total unrealized gains on investment securities	4,591			17,625			14,353			12,635

Defined benefit pension plans:
Amortization of net actuarial loss included in net income	905			718			1,808			1,436
Amortization of prior service cost included in net income	24			25			49			49
Total defined benefit pension plans	929			743			1,857			1,485
Other comprehensive income	5,520			18,368			16,210			14,120
Comprehensive income	$	5,808			19,835		$	34,591			36,087

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
	Six Months ended June 30,
($ in thousands)	2012			2011
Common stock:
Beginning of year	$	194,494		192,725
Dividend reinvestment plan (shares: 46,603 – 2012; 47,488 – 2011)	93			95
Stock purchase and compensation plans (shares: 667,500 – 2012; 577,745 – 2011)	1,334			1,156
End of period	195,921			193,976

Additional paid-in capital:
Beginning of year	257,370			244,613
Dividend reinvestment plan	712			716
Stock purchase and compensation plans	7,647			6,860
End of period	265,729			252,189

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	18,381			21,967
Dividends to stockholders ($0.26 per share – 2012 and 2011)	(14,557		)	(14,370		)
End of period	1,120,143			1,130,684

Accumulated other comprehensive income:
Beginning of year	42,294			7,024
Other comprehensive income	16,210			14,120
End of period	58,504			21,144

Treasury stock:
Beginning of year	(552,149		)	(549,408		)
Acquisition of treasury stock (shares: 173,620 – 2012; 136,904 – 2011)	(3,102		)	(2,526		)
End of period	(555,251		)	(551,934		)
Total stockholders’ equity	$	1,085,046			1,046,059

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW	Six Months ended June 30,
($ in thousands)	2012			2011
Operating Activities
Net income	$	18,381			21,967

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,550			16,261
Stock-based compensation expense		5,160			5,286
Undistributed losses (income) of equity method investments		496			(726	)
Net realized gains		(4,536	)		(7,906	)

Changes in assets and liabilities:
Increase in reserves for losses and loss expenses, net of reinsurance recoverables		19,802			49,164
Increase in unearned premiums, net of prepaid reinsurance and advance premiums		75,172			30,183
(Decrease) increase in net federal income taxes		(3,058	)		601
Increase in premiums receivable		(57,294	)		(53,017	)
Increase in deferred policy acquisition costs		(16,638	)		(3,624	)
(Increase) decrease in interest and dividends due or accrued		(500	)		514
Decrease in accrued salaries and benefits		(5,699	)		(555	)
Decrease in accrued insurance expenses		(4,500	)		(7,045	)
Other-net		5,823			8,694
Net adjustments		33,778			37,830
Net cash provided by operating activities		52,159			59,797

Investing Activities
Purchase of fixed maturity securities, available-for-sale		(426,346	)		(252,529	)
Purchase of equity securities, available-for-sale		(40,430	)		(123,141	)
Purchase of other investments		(6,355	)		(7,715	)
Purchase of short-term investments		(795,707	)		(694,764	)
Purchase of subsidiary		255			—
Sale of subsidiary		445			670
Sale of fixed maturity securities, available-for-sale		37,699			64,104
Sale of short-term investments		876,928			713,111
Redemption and maturities of fixed maturity securities, held-to-maturity		57,152			99,560
Redemption and maturities of fixed maturity securities, available-for-sale		197,199			66,805
Sale of equity securities, available-for-sale		58,176			59,663
Distributions from other investments		8,442			14,046
Sale of other investments		1			16,357
Purchase of property and equipment		(6,793	)		(2,843	)
Net cash used in investing activities		(39,334	)		(46,676	)

Financing Activities
Dividends to stockholders		(13,442	)		(13,225	)
Acquisition of treasury stock		(3,102	)		(2,526	)
Net proceeds from stock purchase and compensation plans		2,225			2,355
Excess tax benefits from share-based payment arrangements		873			(185	)
Net cash used in financing activities		(13,446	)		(13,581	)
Net decrease in cash		(621	)		(460	)
Cash, beginning of year		762			645
Cash, end of period	$	141			185

Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Balance Sheets
($ in thousands)


	Jun-30			Jun-30			Dec-31 *
	2012			2011			2011

ASSETS
Bonds	$	3,569,892			3,488,872			3,452,204
Common stocks		148,117			136,577			157,355
Affiliated mortgage loan		37,791			38,462			38,131
Other investments		191,608			162,290			197,409
Short-term investments		113,584			102,166			183,070
Total investments		4,060,992			3,928,367			4,028,169

Cash on hand and in banks		(29,939	)		(38,996	)		(20,701	)
Interest and dividends due and accrued		36,069			36,703			35,880
Premiums receivable		521,684			465,437			461,482
Reinsurance recoverable on paid losses and expenses		9,852			5,204			12,365
Deferred tax recoverable		148,848			131,197			137,659
EDP equipment		1,527			1,097			1,804
Equities and deposits in pools and associations		6,168			5,814			4,837
Receivable for sold securities		1,154			14			644
Other assets		27,065			29,475			27,964
Total assets	$	4,783,420			4,564,312			4,690,103

LIABILITIES
Reserve for losses	$	2,177,438			2,158,586			2,173,028
Reinsurance payable on paid loss and loss expense		1,282			886			1,285
Reserve for loss expenses		431,272			403,575			418,542
Unearned premiums		833,998			742,684			759,304
Reserve for commissions payable		43,046			40,309			44,488
Ceded balances payable		17,516			11,885			21,871
Federal income tax payable		6,563			4,884			12,176
Premium and other taxes payable		20,531			19,696			23,588
Borrowed money		58,042			13,017			58,043
Reserve for dividends to policyholders		3,670			3,197			3,470
Reserves for unauthorized reinsurance		1,785			1,811			1,785
Payable for securities		17,171			9,026			-
Funds withheld on account of others		7,136			5,156			6,538
Accrued salaries and benefits		76,876			63,729			80,601
Other liabilities		19,213			15,574			22,677
Total liabilities		3,715,539			3,494,015			3,627,396


POLICYHOLDERS' SURPLUS
Capital		34,225			28,325			32,325
Aggregate write-ins for special surplus funds		-			38,940			44,296
Paid in surplus		305,122			255,792			307,022
Unassigned surplus		728,534			747,240			679,064
Total policyholders' surplus		1,067,881			1,070,297			1,062,707
Total liabilities and policyholders' surplus	$	4,783,420			4,564,312			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											Six Months Ended
				June											June
UNDERWRITING	2012						2011					2012						2011


Net premiums written	$	425,563						374,503					845,735						736,338

Net premiums earned		392,212						355,580					771,041						706,923


Net losses paid		232,122						208,085					439,015						396,926
Change in reserve for losses		6,841						25,695					4,411						47,029
Net losses incurred		238,963			60.9	%		233,780		65.7	%		443,426			57.5	%		443,955		62.8	%
Net loss expenses paid		41,031						39,894					84,567						77,908
Change in reserve for loss expenses		7,942						975					12,730						2,067
Net loss expenses incurred		48,973			12.5	%		40,869		11.5	%		97,297			12.6	%		79,975		11.3	%
Net underwriting expenses incurred		139,245			32.8	%		120,322		32.2	%		275,764			32.6	%		235,131		32.0	%
Total deductions		427,181						394,971					816,487						759,061
Statutory underwriting loss		(34,969	)					(39,391	)				(45,446	)					(52,138	)



Net loss from premium balances charged off		(864	)					(1,345	)				(2,105	)					(2,703	)
Finance charges and other income		1,934						2,481					4,895						5,339
Total other income		1,070			-0.3	%		1,136		-0.3	%		2,790			-0.3	%		2,636		-0.4	%
Policyholders' dividends incurred		(1,230	)		0.3	%		(1,461	)	0.4	%		(2,144	)		0.3	%		(2,747	)	0.4	%
Total underwriting loss		(35,129	)		106.2	%		(39,716	)	109.5	%		(44,800	)		102.7	%		(52,249	)	106.1	%


INVESTMENT
Net investment income earned		33,793						41,321					67,272						82,579
Net realized gain		175						2,117					4,533						7,877
Total income before income tax		(1,161	)					3,722					27,005						38,207
Federal income tax expense		1,529						3,014					11,122						12,284


Net income / (loss)	$	(2,690	)					708					15,883						25,923


Policyholders' Surplus
Surplus, beginning of period	$	1,083,174						1,083,848					1,062,707						1,073,025


Net income / (loss)		(2,690	)					708					15,883						25,923
Change in deferred taxes		5,578						473					7,664						920
Change in unrealized gains		(2,917	)					(1,211	)				2,041						(1,160	)
Dividends to stockholders		(12,709	)					(14,506	)				(28,474	)					(29,012	)
Change in cum. effect of acctg principle		-						-					44,296						-
Surplus - transferred to capital		(1,900	)					-					(1,900	)					-
Paid in common stock		1,900						-					1,900						-
Change in non-admitted assets		(2,524	)					(602	)				8,035						2,182
Change in additional admitted deferred taxes		-						1,587					(44,296	)					(1,581	)
Surplus adjustments		(31	)					-					25						-


Net change in surplus for period		(15,293	)					(13,551	)				5,174						(2,728	)


Surplus, end of period	$	1,067,881						1,070,297					1,067,881						1,070,297


Statutory underwriting loss	$	(35,129	)					(39,716	)				(44,800	)					(52,249	)

Adjustments under GAAP:
Deferred policy acquisition costs1		8,068						4,620					16,638						3,624
Pension costs		70						902					140						1,805
Other, net		29						192					(303	)					120
GAAP underwriting loss	$	(26,962	)					(34,002	)				(28,325	)					(46,700	)

1Prior 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 June 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		9,766,552		218,730			0.49		0.97
Silverpeak RE III	2008		15,000,000		8,063,280		3,194,035		(183,347	)		0.02		0.48
Total - Real Estate			35,000,000		10,473,221		12,960,587		35,383			0.38		0.85
Mezzanine Financing
Neovara Euro Mezz	2004		9,000,000		-		788,057		(284,236	)		0.95		1.01
GS Mezz V	2007		25,000,000		15,255,707		8,537,660		1,201,962			0.63		1.25
New Canaan V	2012		7,000,000		5,179,212		1,820,787		-			-		1.00
Centerfield Capital	2012		3,000,000		3,000,000		-		-			-		-
Total - Mezz. Financing			44,000,000		23,434,919		11,146,504		917,726			1.58		1.12
Distressed Debt
Varde VIII	2006		10,000,000		-		6,001,370		67,487			0.53		1.13
GS Distressed Opp III	2007		15,000,000		2,985,812		8,700,642		(32,915	)		0.32		0.99
Total - Distressed Debt			25,000,000		2,985,812		14,702,012		34,572			0.41		1.05
Private Equity
Prospector	1997		5,000,000		-		410,981		(140	)		2.79		2.88
Trilantic Capital Partners III	2004		10,000,000		1,242,835		4,005,128		193,363			1.29		1.72
NB Co-Invest	2006		15,000,000		1,818,701		9,899,339		992,858			0.59		1.29
Trilantic Capital Partners IV	2007		11,098,351		922,808		9,423,717		679,353			0.36		1.22
Total - Private Equity			41,098,351		3,984,344		23,739,165		1,865,434			0.97		1.57
Private Equity, Secondary Market
NB SOF	2005		12,000,000		899,494		6,476,281		262,569			0.68		1.26
GS Vintage IV	2007		20,000,000		4,544,079		14,570,906		62,247			0.43		1.20
NB SOF II	2008		12,000,000		3,207,509		8,548,882		510,837			0.43		1.35
Total - Pvt. Eq. Sec. Mkt.			44,000,000		8,651,082		29,596,069		835,653			0.50		1.25
Energy/Power Generation
ArcLight I	2002		15,000,000		1,655,505		130,689		(56,510	)		1.80		1.81
ArcLight II	2003		15,000,000		2,295,492		2,789,988		(182,795	)		1.23		1.38
ArcLight III	2006		15,000,000		2,037,794		8,135,801		(341,699	)		0.71		1.23
Quintana Energy	2006		10,000,000		1,676,467		7,236,789		1,343,626			0.36		1.23
ArcLight IV	2007		10,000,000		2,717,373		3,284,522		132,037			0.99		1.33
Total - Energy/Power Generation			65,000,000		10,382,631		21,577,789		894,659			1.11		1.42
Venture Capital
Venture V	2001		10,000,000		800,000		7,856,075		877,440			0.34		1.19
Total - Venture Capital			10,000,000		800,000		7,856,075		877,440			0.34		1.19
TOTAL - ALTERNATIVE INVESTMENTS		$	264,098,351		60,712,009		121,578,201		5,460,867			0.76		1.27
(1) Distributed to paid in ratio
(2) Total value to paid in ratio
Note: Some amounts may not foot due to rounding

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Municipal Bond Portfolio

State and Repayment Source Composition

June 30, 2012

($ in thousands)

(unaudited)

Exposure = 45% Held-to-Maturity; 55% 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		54,345		54	%		44,361		45	%		1,120		1	%		-		0	%		99,826		7	%
TX-PSF		-		0	%		-		0	%		-		0	%		35,072		100	%		35,072		3	%
WA		35,592		39	%		49,282		53	%		7,084		8	%		-		0	%		91,958		7	%
NY		81,363		96	%		3,564		4	%		-		0	%		-		0	%		84,927		6	%
AZ		65,353		90	%		7,189		10	%		-		0	%		-		0	%		72,542		5	%
CO		21,929		38	%		34,405		59	%		1,775		3	%		-		0	%		58,109		4	%
FL		50,243		93	%		-		0	%		3,619		7	%		-		0	%		53,862		4	%
IL		27,397		57	%		20,353		43	%		-		0	%		-		0	%		47,750		4	%
OH		22,818		53	%		13,398		31	%		7,133		16	%		-		0	%		43,349		3	%
NC		24,259		58	%		13,791		33	%		3,724		9	%		-		0	%		41,774		3	%
MO		21,052		55	%		17,017		45	%		-		0	%		-		0	%		38,069		3	%
Pre-refunded		50,901		58	%		20,717		24	%		12,170		14	%		3,623		4	%		87,411		7	%
Other		357,350		62	%		118,756		20	%		105,032		18	%		-		0	%		581,138		44	%
Grand Total		812,602		61	%		342,833		26	%		141,657		10	%		38,695		3	%		1,335,787		100	%

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Available-for-Sale Fixed Maturity Securities
June 30, 2012
($ in millions)
(unaudited)


	Fair Value		Unrealized Gain (Loss)			Average Credit Quality
AFS Fixed Maturity Portfolio:
U.S. government obligations1	$	288.0		19.1		AA+
Foreign government obligations		42.8		1.2		AA
State and municipal obligations		736.5		41.3		AA
Corporate securities		1,348.7		65.6		A
Mortgage-backed securities ("MBS")		612.2		19.2		AA
Asset-backed securities ("ABS")		94.8		1.8		AAA
Total AFS fixed maturity portfolio	$	3,123.0		148.2		AA-

State and Municipal Obligations:
Government obligations	$	327.2		20.3		AA+
Special revenue obligations		409.3		21.0		AA
Total state and municipal obligations	$	736.5		41.3		AA

Corporate Securities:
Financial	$	430.3		13.9		A
Industrials		95.9		7.3		A
Utilities		89.8		4.8		A-
Consumer discretion		124.6		6.9		BBB+
Consumer staples		148.8		8.2		A
Healthcare		160.3		9.7		A+
Materials		66.7		4.0		A-
Energy		88.0		3.9		A-
Information technology		81.3		3.1		A
Telecommunications services		51.6		2.4		BBB+
Other		11.4		1.4		AA+
Total corporate securities	$	1,348.7		65.6		A

MBS:
Government Guaranteed Agency commercial mortgage-backed securities ("CMBS")	$	67.0		3.5		AA+
Non-agency CMBS		51.1		(1.4	)	A+
Government Guaranteed Agency residential mortgage-backed securities ("RMBS")		102.6		4.8		AA+
Other Agency RMBS		340.1		11.8		AA+
Non-agency RMBS		44.6		0.4		BBB+
Alternative-A ("Alt-A") RMBS		6.8		0.1		AA+
Total MBS	$	612.2		19.2		AA

ABS:
ABS	$	93.5		1.8		AAA
Alt-A ABS3		0.7		-		D
Sub-prime ABS2,3		0.6		-		D
Total ABS	$	94.8		1.8		AAA

1 U.S. Government includes coporate 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
June 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)			Average Credit Quality
HTM Fixed Maturity Portfolio:
Foreign government obligations	$	5.4		5.5		(0.1	)		0.2			0.1		AA+
State and municipal obligations		599.3		566.6		32.7			9.3			42.0		AA
Corporate securities		62.0		56.7		5.3			(1.3	)		4.0		A
MBS		13.8		8.4		5.4			(1.4	)		4.0		AA-
ABS		7.5		6.3		1.2			(1.2	)		-		A
Total HTM fixed maturity portfolio	$	688.0		643.5		44.5			5.6			50.1		AA

State and Municipal Obligations:
Government obligations	$	196.0		186.6		9.4			5.0			14.4		AA
Special revenue obligations		403.3		380.0		23.3			4.3			27.6		AA
Total state and municipal obligations	$	599.3		566.6		32.7			9.3			42.0		AA

Corporate Securities:
Financial	$	15.6		14.0		1.6			(1.0	)		0.6		BBB+
Industrials		19.1		17.4		1.7			(0.3	)		1.4		A
Utilities		15.4		13.7		1.7			(0.1	)		1.6		A
Consumer discretion		4.8		4.6		0.2			0.1			0.3		AA
Consumer staples		5.0		5.0		-			-			-		A
Materials		2.1		2.0		0.1			-			0.1		BBB
Total corporate securities	$	62.0		56.7		5.3			(1.3	)		4.0		A

MBS:
Non-agency CMBS		13.8		8.4		5.4			(1.4	)		4.0		AA-
Total MBS	$	13.8		8.4		5.4			(1.4	)		4.0		AA-

ABS:
ABS	$	5.2		4.6		0.6			(0.4	)		0.2		BBB+
Alt-A ABS		2.3		1.7		0.6			(0.8	)		(0.2	)	AAA
Total ABS	$	7.5		6.3		1.2			(1.2	)		-		A

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SELECTIVE INSURANCE GROUP INC Reports