8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) January 29, 2015

SELECTIVE INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey	001-33067	22-2168890
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
40 Wantage Avenue, Branchville, New Jersey		07890
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code		(973) 948-3000
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition.

On January 29, 2015, Selective Insurance Group, Inc. (the “Company”) issued a press release announcing results for fourth quarter and year ended December 31, 2014.  The press release is attached hereto as Exhibit 99.1.

Section 7 – Regulation FD

Item 7.01.  Regulation FD Disclosure.

Attached as Exhibit 99.2 is supplemental financial information about the Company.

The information contained in this report on Form 8-K, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.  The Company makes no admission as to the materiality of any information in this report or the exhibits attached hereto.

Section 9 – Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits

99.1 Press Release of Selective Insurance Group, Inc. dated January 29, 2015

99.2 Supplemental Investor Package, Fourth Quarter and Full Year 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SELECTIVE INSURANCE GROUP, INC.
Date: January 29, 2015	By:	/s/ Michael H. Lanza
		Michael H. Lanza Executive Vice President and General Counsel

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Selective Insurance Group, Inc. dated January 29, 2015
99.2	Supplemental Investor Package, Fourth Quarter and Full Year 2014

EX-99.1

EXHIBIT 99.1

Selective Insurance Group, Inc. 40 Wantage Avenue Branchville, New Jersey 07890 www.selective.com

For release at 4:15 p.m. (ET) on January 29, 2015

Investor Contact: Jennifer DiBerardino

973-948-1364, jennifer.diberardino@selective.com

Media Contact: Gail Petersen

973-948-1307, gail.petersen@selective.com

Selective Insurance Group Reports

Fourth Quarter and Year-end 2014 Earnings

Net Income per diluted share increased 64% in the quarter

Operating Income per diluted share increased 60% in the quarter

Branchville, NJ – January 29, 2015 – Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported its financial results for the fourth quarter and year ended December 31, 2014. For the quarter, net income per diluted share was $0.72, up 64% over the $0.44 in 2013, and operating income1 per diluted share was $0.72, 60% higher than the $0.45 in 2013.

“The fourth quarter of 2014 significantly contributed to an excellent year in which we accomplished our very aggressive three-year plan established in 2012,” said Gregory E. Murphy, Chairman and Chief Executive Officer. “We achieved an overall statutory combined ratio, excluding catastrophes, of 92.5%, in line with our goal of 92%; met our goal of overall renewal pure price between 5-8% for all three years with 5.6% in 2014, 7.6% in 2013 and 6.3% in 2012; and delivered an operating return on equity of 10.3%.

“For the quarter, our strong 7% growth rate reflects a 28% increase in the Excess and Surplus Lines operation and solid performance in standard Commercial Lines,” continued Murphy. “The overall statutory combined ratio was 93.2%, 6.4 points better than 2013. All three insurance segments posted solid statutory combined ratios with standard Commercial Lines, which represents 76% of our total premium, generating a statutory combined ratio of 96%. The continuing profitability improvement reflects higher standard Commercial Lines renewal pure pricing that was up 4.7% for the quarter due to our pricing sophistication and granularity, coupled with highly automated, account-specific renewal capabilities. Such sophistication also led to retention increasing 2 points to 84% in standard Commercial Lines.

“The standard Personal Lines statutory combined ratio was 78.2%, a 16.7-point improvement over the fourth quarter 2013 due to improved property results. In addition, we successfully launched a new Personal Lines product, The Selective EdgeSM, which offers additional and enhanced coverage for customers who combine their homeowners and auto policies with Selective. For the quarter, net premiums written were down 3%, to $67 million, mainly due to the ongoing strategic non-renewal of dwelling fire business and a reduction in writing monoline homeowners, partially offset by renewal pure price increases of 6.7%,” continued Murphy.

“Our Excess and Surplus Lines had a very strong quarter with net premiums written up 28% due to a 38% increase in new business,” said Murphy. “We have seen a significant increase in our retail agents sending their business to our general agents after heavy promotion of the line at our annual road shows. The statutory combined ratio was 96.6%.

“After-tax investment income declined 7% in the fourth quarter, compared to a year ago, to $25 million, due to lower returns from the alternative investment portfolio. The overall annualized after-tax portfolio yield was 2.2% compared to 2.3% in 2013. The after-tax yield on fixed income securities was 2.2% compared to 2.3% in 2013. Our fixed income purchases for the year ran at an average after-tax yield of 2.0%, while maturities, disposals and sales had an average after-tax yield of 2.3% for 2014,” concluded Murphy.

Highlights for fourth quarter 2014 compared to fourth quarter 2013:

-   Net income was $41.4 million, or $0.72 per diluted share, compared to $25.3 million, or $0.44 per diluted share;

-   Operating income1 was $41.6 million, or $0.72 per diluted share, compared to $26.1 million, or $0.45 per diluted share;

-   Combined ratio: GAAP: 91.8% compared to 97.3%; Statutory: 93.2% compared to 99.6%;

-   Total net premiums written (NPW) were $433.6 million compared to $405.1 million:

o   Standard Commercial Lines NPW were $321.4 million compared to $300.5 million;

o   Standard Personal Lines NPW were $67.5 million compared to $69.6 million;

o   Excess and Surplus Lines NPW were $44.7 million compared to $35.0 million;

-   Catastrophe losseswere negative and included an $8 million reinsurance recoverable, which resulted in a net benefit from catastrophes of $(7.0) million, pre-tax, or (1.5) points on the statutory combined ratio, compared to $14.3 million, or 3.2 points;

-   Non-catastrophe property losses, pre-tax, were $62.8 million, or 13.4 points, compared to $53.4 million, or 11.8 points;

-   Favorable prior year statutory reserve development on our casualty lines, pre-tax, totaled $9.0 million, or 1.9 points, compared to $7.5 million, or 1.7 points;

-   Net investment income, after tax, was $24.5 million compared to $26.4 million; and

-   Total revenue was $503.6 million compared to $488.0 million.

Highlights for year-ended December 31, 2014 compared to year-ended 2013:

-   Net income was $141.8 million, or $2.47 per diluted share, compared to $106.4 million, or $1.87 per diluted share;

-   Operating income1 was $124.5 million, or $2.17 per diluted share, compared to $93.9 million, or $1.65 per diluted share;

-   Combined ratio: GAAP: 95.8% compared to 97.8%; Statutory: 95.7% compared to 97.5%;

-   Total NPW were $1,885.3 million compared to $1,810.2 million:

o   Standard Commercial Lines NPW were $1,441.0 million compared to $1,380.7 million;

o   Standard Personal Lines NPW were $292.1 million compared to $297.8 million;

o   Excess and Surplus Lines NPW were $152.2 million compared to $131.7 million;

-   Catastrophe losses, pre-tax, were $60.0 million, or 3.2 points on the statutory combined ratio, compared to $47.4 million, or 2.7 points;

-   Non-catastrophe property losses, pre-tax, were $287.6 million, or 15.5 points, on the statutory combined ratio compared to $226.6 million, or 13.0 points;

-   Favorable prior year statutory reserve development on our casualty lines, pre-tax, totaled $48.5 million, or 2.6 points, compared to $14.5 million, or 0.8 points;

-   Income of $8.0 million, pre-tax, was generated from the sale of the renewal rights of our Self-Insured Group book of pooled entity business in the first quarter of 2014, which reduced the statutory combined ratio by 0.4 points;

-   Net investment income, after tax, was $104.2 million compared to $101.4 million; and

-   Total revenue was $2.0 billion compared to $1.9 billion.

Balance Sheet and Guidance

At December 31, 2014, Selective’s assets were $6.6 billion and the investment portfolio was $4.8 billion. Statutory surplus was $1.3 billion, up 4% from December 31, 2013. Stockholders’ equity was $1.3 billion, up 11% from year end 2013. Book value per share was $22.54, up from $20.63 at year end 2013. This increase reflects $2.51 in net income coupled with $0.51 in unrealized investment gains on our investment portfolio, partially offset by $0.53 in shareholders’ dividends and $0.60 in unrealized pension losses related to the pension revaluation.

Selective’s Board of Directors declared a $0.14 per share quarterly cash dividend on common stock payable March 2, 2015 to stockholders of record as of February 13, 2015.  

For 2015, Selective expects to generate a full-year statutory combined ratio of 91.0%, excluding catastrophes and any prior year casualty reserve development. Selective currently estimates 4 points of catastrophe losses for 2015. After-tax investment income will be approximately $105 million and weighted average shares at year end are anticipated to be approximately 58 million.

The supplemental investor package, including financial information that is not part of this press release, is available on the Investor Relations’ page of Selective’s public website at www.selective.com. Selective’s quarterly analyst conference call will be simulcast at 8:30 a.m. ET, on January 30, 2015 at www.selective.com. The webcast will be available for rebroadcast until the close of business on March 2, 2015.

About Selective Insurance Group, Inc.

Selective Insurance Group, Inc. is a holding company for ten property and casualty insurance companies rated “A” (Excellent) by A.M. Best. Through independent agents, the insurance companies offer primary and alternative market insurance for commercial and personal risks, and flood insurance underwritten by the National Flood Insurance Program. Selective maintains a website at www.selective.com.

Forward-Looking Statements

In this press release, Selective and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations and projections regarding Selective's future operations and performance.

Certain statements in this report, including information incorporated by reference, are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements.  These statements relate to our intentions, beliefs, projections, estimations or forecasts of future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, or performance to be materially different from those expressed or implied by the forward-looking statements.  In some cases, you can identify forward-looking statements by use of words such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “target,” “project,” “intend,” “believe,” “estimate,” “predict,” “potential,” “pro forma,” “seek,” “likely” or “continue” or other comparable terminology. These statements are only predictions, and we can give no assurance that such expectations will prove to be correct.  We undertake no obligation, other than as may be required under the federal securities laws, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Factors that could cause our actual results to differ materially from those projected, forecasted or estimated by us in forward-looking statements, include, but are not limited to:

· difficult conditions in global capital markets and the economy;

· deterioration in the public debt and equity markets and private investment marketplace that could lead to investment losses and fluctuations in interest rates;

· ratings downgrades could affect investment values and therefore statutory surplus;

· the adequacy of our loss reserves and loss expense reserves;

· the frequency and severity of natural and man-made catastrophic events, including, but not limited to, hurricanes, tornadoes, windstorms, earthquakes, hail, terrorism, explosions, severe winter weather, floods and fires;

· adverse market, governmental, regulatory, legal or judicial conditions or actions;

· the concentration of our business in the Eastern Region;

· the cost and availability of reinsurance;

· our ability to collect on reinsurance and the solvency of our reinsurers;

· uncertainties related to insurance premium rate increases and business retention;

· changes in insurance regulations that impact our ability to write and/or cease writing insurance policies in one or more states, particularly changes in New Jersey automobile insurance laws and regulations;

· recent federal financial regulatory reform provisions that could pose certain risks to our operations;

· our ability to maintain favorable ratings from rating agencies, including A.M. Best, Standard & Poor’s, Moody’s and Fitch;

· our entry into new markets and businesses; and

· other risks and uncertainties we identify in filings with the United States Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and other periodic reports.

These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time-to-time. We can neither predict such new risk factors nor can we assess the impact, if any, of such new risk factors on our businesses or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied in any forward-looking statements

in this report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

Selective’s SEC filings can be accessed through the Investor Relations’ section of Selective’s website, www.selective.com, or through the SEC’s EDGAR Database at www.sec.gov (Selective EDGAR CIK No. 0000230557).

1Operating income differs from net income by the exclusion of realized gains or losses on investments and the results of discontinued operations. It is used as an important financial measure by management, analysts and investors, because the realization of investment gains and losses on sales in any given period is largely discretionary as to timing. In addition, these investment gains and losses, as well as other-than-temporary investment impairments that are charged to earnings and the results of discontinued operations, could distort the analysis of trends. Operating income is not intended as a substitute for net income prepared in accordance with U.S. generally accepted accounting principles (GAAP). A reconciliation of operating income to net income is provided in the GAAP Highlights and Reconciliation of Non-GAAP Measures to Comparable GAAP Measures. Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners Accounting Practices and Procedures Manual and, therefore, is not reconciled to GAAP.

Selective Insurance Group, Inc. (Nasdaq: SIGI) *
GAAP Highlights and Reconciliation of Non-GAAP Measures to Comparable
GAAP Measures
(in thousands, except per share data)
3 months ended December 31:	2014			2013
Net premiums written	$	433,586			405,110
Net premiums earned		469,850			451,312
Net investment income earned		32,108			35,313
Net realized losses		(389	)		(1,208	)
Total revenues		503,583			488,034
Operating income		41,603			26,120
Net realized losses, net of tax		(253	)		(785	)
Net income	$	41,350			25,335
Statutory combined ratio		93.2	%		99.6	%
Statutory combined ratio, excluding catastrophe losses		94.7	%		96.4	%
GAAP combined ratio		91.8	%		97.3	%
Operating income per diluted share	$	0.72			0.45
Net income per diluted share		0.72			0.44
Weighted average diluted shares		57,539			57,065
Book value per share	$	22.54			20.63
12 months ended December 31:	2014			2013
Net premiums written	$	1,885,280			1,810,159
Net premiums earned		1,852,609			1,736,072
Net investment income earned		138,708			134,643
Net realized gains		26,599			20,732
Total revenues		2,034,861			1,903,741
Operating income		124,538			93,939
Net realized gains, net of tax		17,289			13,476
Loss on discontinued operations		—			(997	)
Net income	$	141,827			106,418
Statutory combined ratio		95.7	%		97.5	%
Statutory combined ratio, excluding catastrophe losses		92.5	%		94.8	%
GAAP combined ratio		95.8	%		97.8	%
Operating income per diluted share	$	2.17			1.65
Net income per diluted share		2.47			1.87
Weighted average diluted shares		57,351			56,810
Book value per share	$	22.54			20.63

*All amounts included in this release exclude intercompany transactions.

EX-99.2

EXHIBIT 99.2

		®
Supplemental Investor Package _____________________________________________________________ Fourth Quarter and Full Year 2014
	Investor Contact: Jennifer DiBerardino Senior Vice President, Investor Relations and Treasurer Tel: 973-948-1364 jennifer.diberardino@selective.com

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Balance Sheet Data

(unaudited)

	December 31,							December 31,
($ in thousands, except per share data)	2014							2013
						Unrecognized/							Unrecognized/
	Balance			Market		Unrealized		Balance			Market		Unrealized
	Sheet			Value		Gain		Sheet			Value		Gain
Invested Assets:
Corporate bonds 1	$	2,693,324			2,697,332		47,437	$	2,595,256			2,601,556		27,812
Government and Municipal bonds		1,690,935			1,702,751		59,680		1,513,159			1,530,961		38,106
Total fixed income securities		4,384,259			4,400,083		107,117		4,108,415			4,132,517		65,918
Equities		191,400			191,400		32,389		192,771			192,771		37,420
Short-term investments		131,972			131,972		-		174,251			174,251		-
Other investments		99,203			99,203		-		107,875			107,875		-
Total invested assets	$	4,806,834			4,822,658		139,506	$	4,583,312			4,607,414		103,338
Invested assets per $ of stockholders' equity		3.77							3.97
Total assets		6,581,550							6,270,170
Liabilities:
Reserve for loss and loss expenses		3,477,870							3,349,770
Unearned premium reserve		1,095,819							1,059,155
Total liabilities		5,305,964							5,116,242
Stockholders' equity		1,275,586							1,153,928
Total debt to capitalization ratio		22.9	%						25.4	%
Book value per share		22.54							20.63
Book value per share excluding unrealized gain or loss on bond portfolio		21.49							20.15
NPW per insurance segment employee		908							908
Statutory premiums to surplus ratio		1.4	x						1.4	x
Statutory surplus		1,307,842							1,256,431

1 Includes mortgage-backed and asset-backed securities.

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Income Statement Data

(unaudited)

			Quarter Ended December 31,												Year-to-Date December 31,
($ in thousands, except per share amounts)			2014						2013						2014						2013
						Per diluted share						Per diluted share						Per diluted share						Per diluted share
Consolidated
	Revenue		$	503,583					$	488,034					$	2,034,861					$	1,903,741
	Operating income			41,603			0.72			26,120			0.45			124,538			2.17			93,939			1.65
	Net realized (losses) gains, after tax			(253	)		-			(785	)		(0.01	)		17,289			0.30			13,476			0.24
	Income from continuing operations			41,350			0.72			25,335			0.44			141,827			2.47			107,415			1.89
	Loss on discontinued operations, after tax			-			-			-			-			-			-			(997	)		(0.02	)
	Net income			41,350			0.72			25,335			0.44			141,827			2.47			106,418			1.87
	Operating return on equity			13.1	%					9.2	%					10.3	%					8.4	%
Total Insurance Operations
	Gross premiums written			512,046						491,675						2,254,576						2,177,443
	Net premiums written			433,586						405,110						1,885,280						1,810,159
	Net premiums earned			469,850						451,312						1,852,609						1,736,072
	Underwriting gain	- before tax		38,637						11,971						78,143						38,766
		- after tax		25,114			0.44			7,781			0.14			50,793			0.89			25,198			0.44
	GAAP combined ratio			91.8	%					97.3	%					95.8	%					97.8	%
Standard Commercial Lines
	Net premiums earned			359,621						345,155						1,415,712						1,316,619
	GAAP combined ratio			94.1	%					97.3	%					95.7	%					97.4	%
Standard Personal Lines
	Net premiums earned			73,008						73,034						296,747						294,332
	GAAP combined ratio			77.5	%					94.1	%					94.4	%					97.1	%
Excess and Surplus Lines
	Net premiums earned			37,221						33,123						140,150						125,121
	GAAP combined ratio			97.8	%					104.7	%					99.7	%					103.0	%
Investments
	Net investment income	- before tax		32,108						35,313						138,708						134,643
		- after tax		24,535			0.43			26,361			0.46			104,207			1.82			101,410			1.79
	Effective tax rate			23.6	%					25.4	%					24.9	%					24.7	%
	Annualized after-tax yield on investment portfolio															2.2	%					2.3	%
	Annualized after-tax, after-interest expense yield															1.9	%					1.9	%
	Invested assets per $ of stockholders' equity															3.77						3.97
Other expenses (net of other income)
	Interest expense	- before tax		(5,542	)					(5,567	)					(22,086	)					(22,538	)
		- after tax		(3,602	)		(0.06	)		(3,619	)		(0.06	)		(14,356	)		(0.25	)		(14,650	)		(0.26	)
	Other Expense - after tax		$	(4,444	)		(0.09	)	$	(4,403	)		(0.09	)	$	(16,106	)		(0.29	)	$	(18,019	)		(0.32	)
Diluted weighted avg shares outstanding				57,539						57,065						57,351						56,810

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

Fourth Quarter
($ in thousands)	Quarter Ended December 31, 2014												Quarter Ended December 31, 2013
	Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total			Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total
Net Premiums Written		321,399			67,494			44,693			433,586			300,527			69,542			35,041			405,110
Net Premiums Earned		359,621			73,008			37,221			469,850			345,155			73,034			33,123			451,312
Loss and Loss Expense Incurred		209,495			35,155			23,578			268,228			217,035			48,728			23,215			288,978
Net Underwriting Expenses Incurred		126,510			21,412			12,824			160,746			118,004			20,021			11,457			149,482
Dividends to Policyholders		2,239			-			-			2,239			881			-			-			881
GAAP Underwriting Gain (Loss)		21,377			16,441			819			38,637			9,235			4,285			(1,549	)		11,971
GAAP Ratios
Loss and Loss Expense Ratio		58.3	%		48.2	%		63.3	%		57.1	%		62.9	%		66.7	%		70.1	%		64.0	%
Underwriting Expense Ratio		35.2	%		29.3	%		34.5	%		34.2	%		34.1	%		27.4	%		34.6	%		33.1	%
Dividends to Policyholders Ratio		0.6	%		0.0	%		0.0	%		0.5	%		0.3	%		0.0	%		0.0	%		0.2	%
Combined Ratio		94.1	%		77.5	%		97.8	%		91.8	%		97.3	%		94.1	%		104.7	%		97.3	%
Year-to-Date
($ in thousands)	Year-to-Date December 31, 2014												Year-to-Date December 31, 2013
	Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total			Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total
Net Premiums Written		1,441,047			292,061			152,172			1,885,280			1,380,740			297,757			131,662			1,810,159
Net Premiums Earned		1,415,712			296,747			140,150			1,852,609			1,316,619			294,332			125,121			1,736,072
Loss and Loss Expense Incurred		870,018			197,182			90,301			1,157,501			831,261			206,450			84,027			1,121,738
Net Underwriting Expenses Incurred		478,291			83,029			49,463			610,783			447,228			79,237			44,829			571,294
Dividends to Policyholders		6,182			-			-			6,182			4,274			-			-			4,274
GAAP Underwriting Gain (Loss)		61,221			16,536			386			78,143			33,856			8,645			(3,735	)		38,766
GAAP Ratios
Loss and Loss Expense Ratio		61.5	%		66.4	%		64.4	%		62.5	%		63.1	%		70.1	%		67.2	%		64.6	%
Underwriting Expense Ratio		33.8	%		28.0	%		35.3	%		33.0	%		34.0	%		27.0	%		35.8	%		33.0	%
Dividends to Policyholders Ratio		0.4	%		0.0	%		0.0	%		0.3	%		0.3	%		0.0	%		0.0	%		0.2	%
Combined Ratio		95.7	%		94.4	%		99.7	%		95.8	%		97.4	%		97.1	%		103.0	%		97.8	%

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

December 2014 (unaudited)

		Quarter Ended						%			Year-to-Date						%
		December			December			Increase/			December			December			Increase/
($ in thousands, except per share data)		2014			2013			(Decrease)			2014			2013			(Decrease)
Investment Income:
	Interest:
	Fixed Income Securities	$	30,974			30,626			1.1		$	126,489			121,582			4.0
	Short-term		18			15			20.0			66			117			(43.6	)
	Other Investments:
	Alternative Investments		903			5,098			(82.3	)		13,580			15,846			(14.3	)
	Other		-			-			N/M			-			(638	)		N/M
	Dividends		2,355			1,718			37.1			7,449			6,140			21.3
			34,250			37,457			(8.6	)		147,584			143,047			3.2
Investment Expense			2,142			2,144			(0.1	)		8,876			8,404			5.6
Net Investment Income Before Tax			32,108			35,313			(9.1	)		138,708			134,643			3.0
Tax			7,573			8,952			(15.4	)		34,501			33,233			3.8
Net Investment Income After Tax		$	24,535			26,361			(6.9	)	$	104,207			101,410			2.8
Net Investment Income per Share		$	0.43			0.46			(6.5	)	$	1.82			1.79			1.7
Effective Tax Rate			23.6	%		25.4	%					24.9	%		24.7	%
Average Yields :
	Fixed Income Securities:
	Pre Tax											2.98	%		3.06	%
	After Tax											2.24	%		2.31	%
	Portfolio:
	Pre Tax											2.95	%		3.02	%
	After Tax											2.22	%		2.28	%
		Quarter Ended:									Year-to-date:
		December			December						December			December
Net Realized Gains (Losses)		2014			2013						2014			2013
	Fixed Income Securities		82			831						1,528			3,019
	Equity Securities		109			(1,919	)					25,650			20,620
	Other Investments		(580	)		(120	)					(579	)		(2,907	)
	Total		(389	)		(1,208	)					26,599			20,732
	Net of Tax		(253	)		(785	)					17,289			13,476

As of December 31, 2014 year-to-date new money rates for fixed income securities were 2.5% on a pre-tax basis and 2.0% on an after tax-basis.

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2014 Statutory Results by Line of Business

Quarter Ended December 2014 (unaudited)

	Net					Net											Underwriting			Dividends to
	Premiums		Percent			Premiums		Percent			Loss			LAE			Expense			Policyholders			Combined Ratio			Combined Ratio			Underwriting
($ in thousands)	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2014			2013			Gain/(Loss)
Standard Personal Lines:
Homeowners	$	31,787		(0.9	)%	$	33,442		2.0	%		12.2	%		7.9	%		35.3	%		0.0	%		55.3	%		85.1	%	$	15,528
Auto		34,198		(2.6	)%		37,374		(1.5	)%		65.7	%		5.9	%		33.2	%		0.0	%		104.8	%		115.1	%		(730	)
Other (including flood)		1,510		(59.3	)%		2,192		(40.5	)%		52.9	%		6.0	%		(124.5	)%		0.0	%		(65.6	)%		(19.5	)%		2,780
Total	$	67,494		(4.8	)%	$	73,008		(1.9	)%		40.8	%		6.8	%		30.6	%		0.0	%		78.2	%		94.9	%	$	17,578
Standard Commercial Lines:
Commerical property	$	55,436		8.6	%	$	62,076		5.1	%		31.4	%		4.9	%		41.5	%		0.3	%		78.1	%		82.7	%	$	16,361
Workers compensation		62,209		(0.8	)%		69,448		(1.0	)%		64.9	%		13.2	%		31.2	%		2.7	%		112.1	%		127.3	%		(6,168	)
General liability		98,183		8.2	%		113,635		6.3	%		31.9	%		20.6	%		38.2	%		0.0	%		90.7	%		98.5	%		16,506
Auto		74,792		9.9	%		84,086		4.1	%		60.4	%		8.1	%		35.7	%		0.2	%		104.4	%		96.4	%		(353	)
Business owners policies		23,244		7.9	%		21,991		8.3	%		58.7	%		1.3	%		38.2	%		0.0	%		98.2	%		90.0	%		(92	)
Bonds		4,387		21.1	%		5,007		5.3	%		16.1	%		5.2	%		71.5	%		0.0	%		92.8	%		100.4	%		802
Other		3,149		10.2	%		3,378		7.3	%		3.0	%		0.4	%		55.4	%		0.0	%		58.8	%		54.6	%		1,517
Total	$	321,399		6.9	%	$	359,621		4.2	%		46.0	%		12.0	%		37.4	%		0.6	%		96.0	%		100.2	%	$	28,573
E&S	$	44,693		27.5	%	$	37,221		12.4	%		15.6	%		48.1	%		32.9	%		0.0	%		96.6	%		105.6	%	$	(1,207	)
Total Insurance Operations	$	433,586		6.7	%	$	469,850		3.8	%		42.8	%		14.0	%		35.9	%		0.5	%		93.2	%		99.6	%	$	44,943
Note: Some amounts may not foot due to rounding.
				2014			2013
	Losses Paid		$	210,724		$	204,847
	LAE Paid			48,313			51,322
	Total Paid		$	259,037		$	256,169

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2014 Statutory Results by Line of Business

Year-to-date December 2014 (unaudited)

	Net					Net											Underwriting			Dividends to
	Premiums		Percent			Premiums		Percent			Loss			LAE			Expense			Policyholders			Combined Ratio			Combined Ratio			Underwriting
($ in thousands)	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2014			2013			Gain/(Loss)
Standard Personal Lines:
Homeowners	$	135,825		2.7	%	$	134,273		4.9	%		55.5	%		7.9	%		33.5	%		0.0	%		96.9	%		95.0	%	$	3,576
Auto		149,093		(2.3	)%		151,317		(1.3	)%		61.3	%		8.5	%		31.7	%		0.0	%		101.5	%		110.1	%		(1,632	)
Other (including flood)		7,143		(49.9	)%		11,157		(22.2	)%		55.5	%		(1.0	)%		(149.0	)%		0.0	%		(94.5	)%		(29.9	)%		15,730
Total	$	292,061		(2.4	)%	$	296,747		0.4	%		58.4	%		7.9	%		28.2	%		0.0	%		94.5	%		96.9	%	$	17,675
Standard Commercial Lines:
Commerical property	$	253,625		6.8	%	$	244,792		9.1	%		55.0	%		5.2	%		37.0	%		0.1	%		97.3	%		78.9	%	$	3,366
Workers compensation		269,130		(2.9	)%		274,585		2.6	%		64.8	%		15.1	%		28.2	%		2.0	%		110.1	%		120.6	%		(26,294	)
General liability		453,594		6.4	%		444,938		9.8	%		31.8	%		17.9	%		34.2	%		0.0	%		83.9	%		96.2	%		68,739
Auto		341,926		4.9	%		333,310		7.2	%		56.3	%		7.8	%		32.0	%		0.1	%		96.2	%		96.4	%		9,758
Business owners policies		89,248		8.6	%		85,788		11.3	%		63.5	%		8.1	%		37.1	%		0.0	%		108.7	%		86.6	%		(8,792	)
Bonds		19,928		3.9	%		19,288		1.5	%		16.3	%		6.0	%		62.6	%		0.0	%		84.9	%		83.5	%		2,514
Other		13,597		8.3	%		13,011		6.8	%		0.6	%		0.3	%		51.0	%		0.0	%		51.9	%		48.5	%		5,959
Total	$	1,441,047		4.4	%	$	1,415,712		7.5	%		49.4	%		11.9	%		33.8	%		0.4	%		95.5	%		97.1	%	$	55,250
E&S	$	152,172		15.6	%	$	140,150		12.0	%		40.8	%		23.7	%		34.7	%		0.0	%		99.2	%		102.9	%	$	(3,105	)
Total Insurance Operations	$	1,885,280		4.1	%	$	1,852,609		6.6	%		50.2	%		12.2	%		33.0	%		0.3	%		95.7	%		97.5	%	$	69,818
Note: Some amounts may not foot due to rounding.
				2014			2013
	Losses Paid		$	873,159		$	793,495
	LAE Paid			187,491			184,870
	Total Paid		$	1,060,650		$	978,365

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2014 Net Catastrophe Losses and Prior Year Casualty Reserve Development

Statutory Results by Line of Business

(unaudited)

	Quarter Ended											Year-to-Date
Net Catastrophe Losses Incurred	December 31, 2014						December 31, 2013					December 31, 2014					December 31, 2013
($ in thousands)	Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred		Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred		Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred		Impact on Loss and Loss Expense Ratio
Standard Personal Lines	$	(3,334	)		(4.6	)%	$	2,668		3.6	%	$	19,284		6.5	%	$	19,807		6.7	%
Standard Commercial Lines	$	(4,065	)		(1.1	)%	$	10,882		3.2	%	$	37,881		2.7	%	$	23,010		1.7	%
E&S	$	420			1.1	%	$	755		2.3	%	$	2,805		2.0	%	$	4,598		3.7	%
Total Insurance Operations	$	(6,979	)		(1.5	)%	$	14,305		3.2	%	$	59,971		3.2	%	$	47,415		2.7	%

Prior Year Casualty Reserve Development	Quarter Ended												Year-to-Date
(Favorable) / Unfavorable	December 31, 2014						December 31, 2013						December 31, 2014						December 31, 2013
($ in thousands)	Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio
Standard Personal Lines	$	(3,000	)		(4.1	)%	$	(2,000	)		(2.7	)%	$	(9,000	)		(3.0	)%	$	(5,500	)		(1.9	)%
Standard Commercial Lines	$	(8,000	)		(2.2	)%	$	(5,500	)		(1.6	)%	$	(45,500	)		(3.2	)%	$	(11,500	)		(0.9	)%
E&S	$	2,000			5.4	%	$	-			0.0	%	$	6,000			4.3	%	$	2,500			2.0	%
Total Insurance Operations	$	(9,000	)		(1.9	)%	$	(7,500	)		(1.7	)%	$	(48,500	)		(2.6	)%	$	(14,500	)		(0.8	)%

Note: Some amounts may not foot due to rounding.

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Balance Sheets
December 31,	Unaudited
($ in thousands, except share amounts)	2014			2013
ASSETS
Investments:
Fixed income securities, held-to-maturity – at carrying value (fair value:  $333,961 – 2014; $416,981 – 2013)	$	318,137			392,879
Fixed income securities, available-for-sale – at fair value (amortized cost:  $3,975,786 – 2014; $3,675,977 – 2013)		4,066,122			3,715,536
Equity securities, available-for-sale – at fair value (cost:  $159,011 – 2014; $155,350 – 2013)		191,400			192,771
Short-term investments (at cost which approximates fair value)		131,972			174,251
Other investments		99,203			107,875
Total investments		4,806,834			4,583,312
Cash		23,959			193
Interest and dividends due or accrued		38,901			37,382
Premiums receivable, net of allowance for uncollectible accounts of:  $4,137 – 2014; $4,442 – 2013		558,778			524,870
Reinsurance recoverable, net		581,548			550,897
Prepaid reinsurance premiums		146,993			143,000
Current federal income tax		—			512
Deferred federal income tax		98,449			122,613
Property and equipment – at cost, net of accumulated depreciation and amortization of:  $172,183 – 2014; $179,192 – 2013		59,416			50,834
Deferred policy acquisition costs		185,608			172,981
Goodwill		7,849			7,849
Other assets		73,215			75,727
Total assets	$	6,581,550			6,270,170
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for loss and loss expenses	$	3,477,870			3,349,770
Unearned premiums		1,095,819			1,059,155
Notes payable		379,297			392,414
Current federal income tax		3,921			—
Accrued salaries and benefits		158,382			111,427
Other liabilities		190,675			203,476
Total liabilities	$	5,305,964			5,116,242
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: 99,947,933 – 2014; 99,120,235 – 2013		199,896			198,240
Additional paid-in capital		305,385			288,182
Retained earnings		1,313,440			1,202,015
Accumulated other comprehensive income		19,788			24,851
Treasury stock – at cost (shares: 43,353,181– 2014; 43,198,622 – 2013)		(562,923	)		(559,360	)
Total stockholders’ equity		1,275,586			1,153,928
Commitments and contingencies
Total liabilities and stockholders’ equity	$	6,581,550			6,270,170

Selective Insurance Group, Inc. & Consolidated Subsidiaries Consolidated Statements of Income
	Unaudited Quarter Ended December 31,						Year Ended December 31,
							Unaudited
($ in thousands, except per share amounts)	2014			2013			2014			2013
Revenues:
Net premiums earned	$	469,850			451,312			1,852,609			1,736,072
Net investment income earned		32,108			35,313			138,708			134,643
Net realized gains:
Net realized investment gains		9,333			1,251			37,703			26,375
Other-than-temporary impairments		(9,722	)		(2,459	)		(11,104	)		(5,566	)
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income		—			—			—			(77	)
Total net realized (losses) gains		(389	)		(1,208	)		26,599			20,732
Other income		2,014			2,617			16,945			12,294
Total revenues	$	503,583			488,034			2,034,861			1,903,741
Expenses:
Loss and loss expenses incurred		268,228			288,978			1,157,501			1,121,738
Policy acquisition costs		161,930			151,407			624,470			579,977
Interest expense		5,542			5,567			22,086			22,538
Other expenses		10,683			7,834			33,673			35,686
Total expenses	$	446,383			453,786			1,837,730			1,759,939
Income from continuing operations, before federal income tax	$	57,200			34,248			197,131			143,802
Federal income tax expense:
Current	$	5,723			4,106			28,415			24,147
Deferred		10,127			4,807			26,889			12,240
Total federal income tax expense		15,850			8,913			55,304			36,387
Net income from continuing operations	$	41,350			25,335			141,827			107,415
Loss on disposal of discontinued operations, net of tax of $(538) - 2013		—			—			—			(997	)
Net income	$	41,350			25,335			141,827			106,418
Earnings per share:
Basic net income from continuing operations	$	0.73			0.45			2.52			1.93
Basic net loss from discontinued operations		—			—			—			(0.02	)
Basic net income	$	0.73			0.45			2.52			1.91
Diluted net income from continuing operations	$	0.72			0.44			2.47			1.89
Diluted net loss from discontinued operations		—			—			—			(0.02	)
Diluted net income	$	0.72			0.44			2.47			1.87
Dividends to stockholders	$	0.14			0.13			0.53			0.52

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
December 31,	Unaudited
($ in thousands)	2014			2013			2012
Net income	$	141,827			106,418			37,963
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) arising during period		47,411			(54,557	)		30,937
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income		—			50			1,660
Amount reclassified into net income:
Held-to-maturity securities		(844	)		(1,025	)		(1,581	)
Non-credit other-than-temporary impairments		1,085			9			182
Realized gains on available for sale securities		(18,762	)		(15,301	)		(6,118	)
Total unrealized gains (losses) on investment securities		28,890			(70,824	)		25,080
Defined benefit pension and post-retirement plans:
Net actuarial (loss) gain		(35,189	)		38,775			(17,268	)
Amounts reclassified into net income:
Net actuarial loss		1,236			2,843			3,837
Prior service cost		—			6			97
Curtailment expense		—			11			—
Total defined benefit pension and post-retirement plans		(33,953	)		41,635			(13,334	)
Other comprehensive (loss) income		(5,063	)		(29,189	)		11,746
Comprehensive income	$	136,764			77,229			49,709

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Statements of Stockholders’ Equity
December 31,	Unaudited
($ in thousands, except share amounts)	2014			2013			2012
Common stock:
Beginning of year	$	198,240			196,388			194,494
Dividend reinvestment plan   (shares: 58,309 – 2014; 63,349 – 2013; 90,110 – 2012)		117			127			180
Stock purchase and compensation plans   (shares: 769,389 – 2014; 862,662 – 2013; 857,403 – 2012)		1,539			1,725			1,714
End of year		199,896			198,240			196,388
Additional paid-in capital:
Beginning of year		288,182			270,654			257,370
Dividend reinvestment plan		1,306			1,396			1,419
Stock purchase and compensation plans		15,897			16,132			11,865
End of year		305,385			288,182			270,654
Retained earnings:
Beginning of year		1,202,015			1,125,154			1,116,319
Net income		141,827			106,418			37,963
Dividends to stockholders ($0.53 per share – 2014; $0.52 per share – 2013 and 2012)		(30,402	)		(29,557	)		(29,128	)
End of year		1,313,440			1,202,015			1,125,154
Accumulated other comprehensive income:
Beginning of year		24,851			54,040			42,294
Other comprehensive (loss) income		(5,063	)		(29,189	)		11,746
End of year		19,788			24,851			54,040
Treasury stock:
Beginning of year		(559,360	)		(555,644	)		(552,149	)
Acquisition of treasury stock   (shares: 154,559 – 2014; 167,846 – 2013; 194,575 – 2012)		(3,563	)		(3,716	)		(3,495	)
End of year		(562,923	)		(559,360	)		(555,644	)
Total stockholders’ equity	$	1,275,586			1,153,928			1,090,592

Selective Insurance Group, Inc.
Consolidated Statements of Cash Flow
December 31,	Unaudited
($ in thousands)	2014			2013			2012
Operating Activities:
Net Income	$	141,827			106,418			37,963
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		45,346			43,461			38,963
Sale of renewal rights		(8,000	)		—			—
Loss on disposal of discontinued operations		—			997			—
Stock-based compensation expense		8,702			8,630			6,939
Undistributed (income) losses of equity method investments		(153	)		202			1,651
Net realized gains		(26,599	)		(20,732	)		(8,988	)
Net gain on disposal of property and equipment		(104	)		—			—
Retirement income plan curtailment expense		—			16			—
Changes in assets and liabilities:
Increase in reserves for loss and loss expenses, net of reinsurance recoverables		97,449			151,037			64,763
Increase in unearned premiums, net of prepaid reinsurance		32,671			74,086			82,764
Decrease (increase) in net federal income taxes		31,323			14,834			(7,812	)
Increase in premiums receivable		(33,908	)		(40,482	)		(18,094	)
Increase in deferred policy acquisition costs		(12,627	)		(17,458	)		(19,762	)
(Increase) decrease in interest and dividends due or accrued		(1,536	)		(1,372	)		468
(Decrease) increase in accrued salaries and benefits		(7,182	)		18,685			6,533
(Decrease) increase in accrued insurance expenses		(956	)		14,444			8,831
(Decrease) increase in other assets and other liabilities		(33,490	)		(16,642	)		32,750
Net adjustments		90,936			229,706			188,736
Net cash provided by operating activities		232,763			336,124			226,699
Investing Activities:
Purchase of fixed income securities, available-for-sale		(843,616	)		(1,069,387	)		(884,911	)
Purchase of equity securities, available-for-sale		(186,019	)		(118,072	)		(83,833	)
Purchase of other investments		(10,617	)		(9,332	)		(12,990	)
Purchase of short-term investments		(1,410,123	)		(2,056,576	)		(1,735,691	)
Purchase of subsidiary, net of cash acquired		—			—			255
Sale of subsidiary		—			1,225			751
Sale of fixed maturity securities, available-for-sale		51,002			20,126			103,572
Sale of short-term investments		1,452,402			2,096,805			1,738,255
Redemption and maturities of fixed income securities, held-to-maturity		73,415			116,584			118,260
Redemption and maturities of fixed income securities, available-for-sale		482,816			513,804			439,957
Sale of equity securities, available-for-sale		208,008			115,782			101,740
Distributions from other investments		20,774			12,039			24,801
Sale of other investments		—			—			1
Purchase of property and equipment		(15,510	)		(14,023	)		(12,879	)
Sale of renewal rights		8,000			—			—
Net cash used in investing activities		(169,468	)		(391,025	)		(202,712	)
Financing Activities:
Dividends to stockholders		(28,428	)		(27,416	)		(26,944	)
Acquisition of treasury stock		(3,563	)		(3,716	)		(3,495	)
Net proceeds from stock purchase and compensation plans		7,283			7,119			4,840
Proceeds from issuance of notes payable, net of debt issuance costs		—			178,435			—
Repayment of borrowings		(13,000	)		—			—
Repayment of notes payable		—			(100,000	)		—
Excess tax benefits from share-based payment arrangements		1,020			1,545			1,060
Repayment of capital lease obligations		(2,841	)		(1,083	)		—
Net cash (used in) provided by financing activities		(39,529	)		54,884			(24,539	)
Net increase (decrease) in cash		23,766			(17	)		(552	)
Cash, beginning of year		193			210			762
Cash, end of year	$	23,959			193			210

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Balance Sheets

(unaudited)

	December 31,		December 31,
($ in thousands)	2014		2013
ASSETS
Bonds	$	4,241,580		4,010,464
Common stocks		191,400		192,771
Affiliated mortgage loan		35,961		36,721
Other investments		152,154		173,856
Short-term investments		115,342		158,827
Total investments		4,736,437		4,572,639
Cash on hand and in banks		12,381		(31,186	)
Interest and dividends due and accrued		38,908		37,267
Premiums receivable		556,086		522,907
Reinsurance recoverable on paid losses and expenses		9,570		10,059
Deferred tax recoverable		147,610		154,320
EDP equipment		518		913
Equities and deposits in pools and associations		9,915		9,555
Receivable for sold securities		34		7
Other assets		26,629		30,671
Total assets	$	5,538,088		5,307,152
LIABILITIES
Reserve for losses	$	2,398,531		2,341,476
Reinsurance payable on paid loss and loss expense		2,957		2,557
Reserve for loss expenses		493,510		455,983
Unearned premiums		948,826		916,155
Reserve for commissions payable		70,259		63,482
Ceded balances payable		29,624		33,721
Federal income tax payable		20,524		27,749
Premium and other taxes payable		20,137		27,870
Borrowed money		45,027		58,044
Reserve for dividends to policyholders		3,895		2,070
Reserves for unauthorized reinsurance		7,661		2,735
Payable for securities		19,950		-
Funds withheld on account of others		7,473		6,623
Accrued salaries and benefits		64,207		65,053
Other liabilities		97,665		47,203
Total liabilities		4,230,246		4,050,721
POLICYHOLDERS' SURPLUS
Capital		42,725		42,725
Paid in surplus		492,869		492,869
Unassigned surplus		772,248		720,837
Total policyholders' surplus		1,307,842		1,256,431
Total liabilities and policyholders' surplus	$	5,538,088		5,307,152

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

	Quarter Ended										Year-to-Date
	December										December
($ in thousands)	2014					2013					2014					2013
UNDERWRITING
Net premiums written	$	433,586					406,475					1,885,280					1,811,524
Net premiums earned		469,850					452,677					1,852,609					1,737,437
Net losses paid		210,724					204,847					873,159					793,495
Change in reserve for losses		(9,756	)				24,515					57,055					114,618
Net losses incurred		200,968		42.8	%		229,362		50.7	%		930,214		50.2	%		908,113		52.2	%
Net loss expenses paid		48,313					51,322					187,491					184,870
Change in reserve for loss expenses		17,577					8,145					37,526					28,423
Net loss expenses incurred		65,890		14.0	%		59,467		13.1	%		225,017		12.2	%		213,293		12.3	%
Net underwriting expenses incurred		157,373		36.2	%		146,967		36.1	%		635,760		33.7	%		602,698		33.3	%
Total deductions		424,231					435,796					1,790,991					1,724,104
Statutory underwriting gain		45,619					16,881					61,618					13,333
Net loss from premium balances charged off		(54	)				(676	)				(2,822	)				(2,697	)
Finance charges and other income		1,617					2,834					17,204					13,078
Total other income		1,563		-0.3	%		2,158		-0.5	%		14,382		-0.7	%		10,381		-0.5	%
Policyholders' dividends incurred		(2,239	)	0.5	%		(882	)	0.2	%		(6,182	)	0.3	%		(4,275	)	0.2	%
Total underwriting gain		44,943		93.2	%		18,157		99.6	%		69,818		95.7	%		19,439		97.5	%
INVESTMENT
Net investment income earned		31,745					35,246					137,670					134,866
Net realized gain (loss)		(389	)				(5,200	)				26,594					14,593
Total income before income tax		76,299					48,203					234,082					168,898
Federal income tax expense		11,775					3,773					43,827					46,710
Net income	$	64,524					44,430					190,255					122,188
Policyholders' Surplus
Surplus, beginning of period	$	1,323,097					1,194,797					1,256,431					1,050,107
Net income		64,524					44,430					190,255					122,188
Change in deferred taxes		8,146					(11,861	)				(2,016	)				(5,657	)
Change in net unrealized capital (losses) / gains		693					12,759					(3,721	)				16,434
Dividends to stockholders		(14,378	)				(6,685	)				(57,511	)				(32,129	)
Paid in surplus		-					-					-					57,125
Change in reserve for unauthorized		(4,927	)				4,764					(4,927	)				4,764
Change in non-admitted assets		(15,801	)				11,399					(18,004	)				27,099
Change in Overfunded Contra Asset		(1,285	)				(503	)				(5,925	)				(11,594	)
Qual Pen Trans Liab		(50,660	)				8,427					(45,214	)				(23,605	)
Excess Plan Trans Liab		(1,400	)				(432	)				(1,377	)				(994	)
PRL Plan Trans Liab		(167	)				242					(149	)				(947	)
Change in minimum pension liability		-					-					-					54,755
Surplus adjustments		-					(906	)				-					(1,115	)
Net change in surplus for period		(15,255	)				61,634					51,411					206,324
Surplus, end of period	$	1,307,842					1,256,431					1,307,842					1,256,431
Statutory underwriting gain	$	44,943					18,157					69,818					19,439
Adjustments under GAAP:
Deferred policy acquisition costs		(4,074	)				(4,229	)				12,626					17,458
Pension costs		(136	)				(116	)				(429	)				5,606
Other, net		(2,096	)				(1,841	)				(3,872	)				(3,737	)
GAAP underwriting gain	$	38,637					11,971					78,143					38,766

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

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Alternative Investments

as of December 31, 2014

(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		2,142,141		8,874,486		1,771,424			0.67		1.09
Silverpeak RE III	2008		15,000,000		7,909,214		2,577,523		(31,973	)		0.07		0.43
Total - Real Estate			35,000,000		10,051,355		11,452,009		1,739,452			0.51		0.92
Mezzanine Financing
Neovara Euro Mezz	2004		9,000,000		-		1		-			0.98		0.98
GS Mezz V	2007		25,000,000		10,223,976		5,401,666		1,033,604			1.03		1.32
New Canaan V	2012		7,000,000		1,473,310		3,466,536		516,293			0.49		1.12
Centerfield Capital	2012		3,000,000		1,843,500		985,030		44,805			0.13		0.99
Total - Mezz. Financing			44,000,000		13,540,787		9,853,233		1,594,702			0.91		1.17
Distressed Debt
Varde VIII	2006		10,000,000		-		2,331,563		506,633			1.11		1.35
Distressed Managers III	2007		15,000,000		2,982,132		6,347,694		645,767			0.75		1.23
Total - Distressed Debt			25,000,000		2,982,132		8,679,257		1,152,400			0.91		1.28
Private Equity
Prospector	1997		5,000,000		-		409,742		2,973			2.79		2.88
Trilantic Capital Partners III	2004		10,000,000		1,455,947		2,495,030		261,132			1.63		1.89
NB Co-Invest	2006		15,000,000		1,476,418		6,781,167		995,206			0.96		1.42
Trilantic Capital Partners IV	2007		11,098,351		1,321,501		8,175,671		884,137			1.02		1.76
Trilantic Capital Partners V	2012		7,000,000		4,636,211		2,263,961		137,102			-		0.96
Total - Private Equity			48,098,351		8,890,077		20,125,571		2,280,551			1.29		1.76
Private Equity, Secondary Market
NB SOF	2005		12,000,000		899,494		3,567,937		188,914			1.02		1.34
Vintage IV	2007		20,000,000		4,122,656		11,531,938		892,851			0.77		1.36
NB SOF II	2008		12,000,000		1,978,288		6,707,251		1,059,532			0.96		1.50
Total - Pvt. Eq. Sec. Mkt.			44,000,000		7,000,438		21,807,125		2,141,297			0.89		1.40
Energy/Power Generation
ArcLight I	2002		15,000,000		-		12,455		(24,079	)		1.81		1.81
ArcLight II	2003		15,000,000		2,295,492		553,066		(455,491	)		1.38		1.41
ArcLight III	2006		15,000,000		2,037,794		3,079,880		894,818			1.23		1.42
Quintana Energy	2006		10,000,000		284,272		8,333,018		1,510,737			0.60		1.45
ArcLight IV	2007		10,000,000		2,287,578		2,466,956		1,771,299			1.20		1.44
Arclight VI	2014		15,000,000		15,000,000		-		-
Total - Energy/Power Generation			80,000,000		21,905,136		14,445,375		3,697,284			1.31		1.51
Venture Capital
Venture V	2001		9,600,000		350,000		6,605,440		974,026			0.69		1.40
Total - Venture Capital			9,600,000		350,000		6,605,440		974,026			0.69		1.40
TOTAL - ALTERNATIVE INVESTMENTS		$	285,698,351		64,719,924		92,968,010		13,579,712			1.03		1.39

(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

Credit Quality of Available-for-Sale Fixed Income Securities

December 31, 2014

(unaudited)

($ in millions)	Fair Value		Unrealized Gain (Loss)			Weighted Average Credit Quality
AFS Fixed Income Portfolio:
U.S. government obligations	$	124.1		7.4		AA+
Foreign government obligations		27.8		0.8		AA-
State and municipal obligations		1,246.3		37.5		AA
Corporate securities		1,799.8		36.4		A-
Asset-backed securities (“ABS”)		177.2		0.4		AAA
Mortgage-backed securities (“MBS”)		690.9		7.8		AA+
Total AFS fixed income portfolio	$	4,066.1		90.3		AA-
State and Municipal Obligations:
General obligations	$	563.4		15.9		AA+
Special revenue obligations		682.9		21.6		AA
Total state and municipal obligations	$	1,246.3		37.5		AA
Corporate Securities:
Financial	$	565.5		11.3		A
Industrials		146.9		4.2		A-
Utilities		151.0		2.0		BBB+
Consumer discretionary		207.9		5.1		A-
Consumer staples		171.1		3.3		A-
Healthcare		170.8		4.7		A
Materials		112.6		2.4		BBB+
Energy		103.4		0.2		A-
Information technology		116.7		1.9		A+
Telecommunications services		51.1		1.0		BBB+
Other		2.8		0.3		AA
Total corporate securities	$	1,799.8		36.4		A-
ABS:
ABS	$	176.7		0.3		AAA
Sub-prime ABS1		0.5		0.1		CCC
Total ABS	$	177.2		0.4		AAA
MBS:
Government guaranteed agency commercial MBS (“CMBS”)	$	14.5		0.3		AA+
Other agency CMBS		13.6		(0.1	)	AA+
Non-agency CMBS		151.5		1.4		AA+
Government guaranteed agency residential MBS (“RMBS”)		32.4		0.8		AA+
Other agency RMBS		453.5		5.1		AA+
Non-agency RMBS		21.7		0.2		BB+
Alternative-A (“Alt-A”) RMBS		3.7		0.1		A
Total MBS	$	690.9		7.8		AA+

1Subprime ABS includes one security whose issuer is currently expected by rating agencies to default on its obligations.  We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650.

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Credit Quality of Held-to-Maturity Fixed Income Securities

December 31, 2014

(unaudited)

($ in millions)	Fair Value		Carry Value		Unrecognized Holding Gain		Unrealized Gain (Loss) in Accumulated Other Comprehensive Income			Total Unrealized/ Unrecognized Gain		Weighted Average Credit Quality
HTM Fixed Income Portfolio:
Foreign government obligations	$	5.4		5.3		0.1		—			0.1	AA+
State and municipal obligations		299.1		287.4		11.7		2.1			13.8	AA
Corporate securities		21.4		18.6		2.8		(0.3	)		2.5	A+
ABS		2.9		2.4		0.5		(0.5	)		—	AAA
MBS		5.2		4.4		0.8		(0.4	)		0.4	AAA
Total HTM fixed income portfolio	$	334.0		318.1		15.9		0.9			16.8	AA
State and Municipal Obligations:
General obligations	$	97.8		94.6		3.2		1.0			4.2	AA
Special revenue obligations		201.3		192.8		8.5		1.1			9.6	AA
Total state and municipal obligations	$	299.1		287.4		11.7		2.1			13.8	AA
Corporate Securities:
Financial	$	2.2		1.9		0.3		(0.1	)		0.2		A-
Industrials		6.7		5.7		1.0		(0.2	)		0.8		A+
Utilities		12.5		11.0		1.5		—			1.5		A+
Total corporate securities	$	21.4		18.6		2.8		(0.3	)		2.5		A+
ABS:
ABS	$	0.6		0.6		—		—			—	AA
Alt-A ABS		2.3		1.8		0.5		(0.5	)		—	AAA
Total ABS	$	2.9		2.4		0.5		(0.5	)		—	AAA
MBS:
Non-agency CMBS	$	5.2		4.4		0.8		(0.4	)		0.4	AAA
Total MBS	$	5.2		4.4		0.8		(0.4	)		0.4	AAA