UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrantx

Filed by a Party other than the Registrant¨

Check the appropriate box:

SELECTIVE INSURANCE GROUP, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

(3)          Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

¨Fee paid previously with preliminary materials.

¨Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Selective Insurance Group, Inc. 40 Wantage Avenue Branchville, New Jersey 07890 (973) 948-3000

March 26, 201224, 2014

NOTICE OF 20122014 ANNUAL MEETING OF STOCKHOLDERS

AND PROXY STATEMENT

Wednesday, April 25, 201223, 2014

The 20122014 Annual Meeting of Stockholders of Selective Insurance Group, Inc. (“Selective”) will be held Wednesday, April 23, 2014, at 3:00 PM Eastern Time on Wednesday, April 25, 2012, in the Auditorium at Selective’s principal offices, which are located at and have athe mailing address of 40 Wantage Avenue, Branchville, New Jersey 07890.

At the meeting, we will ask stockholders to:

We plan a brief business meeting focused on these items and we will attend to any other business properly brought before the meeting and at any adjournments or postponements of the meeting.The Board of Directors recommends that: (i) you vote “FOR” all of the nominees to the Board of Directors; and (ii) you vote in favor of“FOR” Proposals 2, 3, 4, and 3.5. These proposals are further described in the proxy statement.

Also enclosed is Selective’s 20112013 Annual Report to Stockholders. At the meeting, we will be making a brief presentation on operations and will offer time for your comments and questions.

Selective stockholders of record at the close of business on Thursday, March 5, 20126, 2014 are entitled to notice of, and to vote at, the meeting and any adjournment or postponement of it. A quorum is a majority of outstanding shares.YOUR VOTE IS IMPORTANT.IMPORTANT. WE URGE YOU TO VOTE YOUR SHARES BY: (1) CALLING THE TOLL-FREE TELEPHONE NUMBER LISTED ON THE PROXY CARD; (2) ACCESSING THE INTERNET WEBSITE LISTED ON THE PROXY CARD; OR (3) COMPLETING, DATING, AND SIGNING THE PROXY CARD AND RETURNING IT IN THE ENCLOSED ENVELOPE. YOUR PROXY MAY BE REVOKED AT ANY TIME, AS DESCRIBED IN THE PROXY STATEMENT, PRIOR TO THE TIME IT IS VOTED AT THE 20122014 ANNUAL MEETING. IF YOU HOLD SHARES THROUGH A BROKER OR OTHER CUSTODIAN, PLEASE SEE THE VOTING INSTRUCTIONS PROVIDED TO YOU BY THAT BROKER OR CUSTODIAN.

Very truly yours,

Gregory E. Murphy

Chairman of the Board President and Chief Executive Officer

By Order of the Board of Directors:

Robyn P. Turner

Corporate Secretary

TABLE OF CONTENTSTable of Contents

Table of Contents

(continued)

PROXY STATEMENT

FOR THE 20122014 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD WEDNESDAY, APRIL 25, 201223, 2014

GENERAL INFORMATION ABOUT SELECTIVE’S ANNUAL MEETING

WHEN AND WHERE IS THE ANNUAL MEETING?

The 20122014 Annual Meeting of Stockholders (the “Annual Meeting”) of Selective Insurance Group, Inc. (“Selective” or “we”) will be held on Wednesday, April 25, 2012,23, 2014, at 3:00 PM Eastern Time in the Auditorium at Selective’s principal offices at 40 Wantage Avenue, Branchville, New Jersey 07890. Directions are on the back of this Proxy Statement. Our telephone number is (973) 948-3000.

WHEN WAS THISPROXY STATEMENT MAILED?

This Proxy Statement isand proxy card are being mailed to Selective stockholders on or about March 26, 2012.24, 2014.

WHO IS ENTITLED TOVOTE AT THE ANNUAL MEETING?

Anyone who owned Selective common stock as of the close of business on March 5, 2012,6, 2014 is entitled to one vote per share owned. There were 54,741,40256,217,293 shares outstanding at the close of business on that date.

WHO IS SOLICITING MYPROXY TO VOTE MY SHARES AND WHEN?

Selective’s Board of Directors (“Board of Directors” or the “Board”) is soliciting your “proxy,” orproxy, meaning your authorization for our named proxies, Michael J. MorrisseyA. David Brown and Cynthia S. Nicholson,Ronald L. O’Kelley, to vote your shares.

Unless revoked by you, your proxy will be effective for the Annual Meeting and for any adjournments or postponements of that meeting.

WHAT IS THE COST OFSOLICITING PROXIES AND WHO IS PAYING FOR THE COST?

Selective is bearing the entire cost of soliciting proxies. Proxies will be solicited principally through the mail, but they also may also be solicited personally by telephone, or in writing, by telephone, e-mail, facsimile, or otherwise by Selective directors or officers, or employees of a Selective subsidiary, forwho will receive no additional compensation. Selective has engaged Georgeson Inc. (“Georgeson”), a proxy solicitation firm, to assist in the solicitation of proxies and the distribution of proxy materials. Georgeson Inc. will provide such services for an estimated fee of approximately $8,000, plus expenses. Selective will reimburse banks, brokerage firms, and other custodians, nominees, and fiduciaries for reasonable expenses incurred by them in sending proxy materials to their customers or principals who are the beneficial owners of shares of Selective common stock.

WHAT ARE THEREQUIREMENTS FOR BUSINESS TO BE CONDUCTED AT THE ANNUAL MEETING?

For business to be conducted at the Annual Meeting, owners of 27,370,702shares28,108,648 shares of Selective common stock (a majority of the issued and outstanding shares entitled to vote) constituting a quorum, must be in attendance or represented by proxy. Our common stock is our only class of voting securities.

PROPOSALS FORSTOCKHOLDER VOTE AND APPROVAL REQUIREMENTS

Management is presenting threefive proposals for a stockholder vote.

THE BOARD IS SUBJECT TO ANNUAL ELECTION BY THE STOCKHOLDERS. THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE FOLLOWING ELEVEN NOMINATED DIRECTORS FOR A TERM OF ONE YEAR: PAUL D. BAUER; ANNABELLE G. BEXIGA; A. DAVID BROWN; JOHN C. BURVILLE; JOAN M. LAMM-TENNANT; MICHAEL J. MORRISSEY; GREGORY E. MURPHY; CYNTHIA S. NICHOLSON; RONALD L. O’KELLEY; WILLIAM M. RUE; AND J. BRIAN THEBAULT.

You can find information about these nominees, Selective’s Board of Directors, its committees, and other related matters beginning on page 6.

New Jersey law and Selective’s By-Laws govern the vote on Proposal 1, on which you may:

Under our By-Laws, assuming a quorum is present, directors in uncontested elections must be elected by a majority of votes cast.cast, assuming a quorum is present. A majority means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” the director nominee. In an uncontested election, any director nominee who does not receive a majority of themore “for” than “against” votes cast is required to tender his or her resignation from the Board of Directors within five days of certified election results. In such a case:If that happens: (i) the Corporate Governance and Nominating Committee must make a recommendationrecommend to the Board of Directors as to whether it should accept the resignation; and (ii) the Board of Directors must decide whether to accept suchthe resignation and disclose its decision-making process.

Stockholders may not cumulate their votes. UnderAbstentions and broker non-votes (shares held by a broker, bank, or other nominee that does not have authority, either express or discretionary, to vote on a particular matter) will not be taken into account in determining the outcome of the vote consistent with New Jersey law and consistent with the proxy rules of the United States Securities and Exchange Commission (“SEC”), abstentions and broker non-votes will not be taken into account in determining the outcome of the vote..

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS DISCLOSED IN THIS PROXY STATEMENT.

New Jersey law and Selective’s By-Laws govern the vote on Proposal 2, on which you may:

Assuming a quorum is present, Proposal 2 will pass if approved by an affirmative vote of a majority of the votes cast at the Annual Meeting. Under New Jersey law and consistent with the SEC’s proxy rules, abstentionsAbstentions and broker non-votes will not be taken into account in determining whether the proposal has received the requisite number of affirmative votes.votes consistent with New Jersey law and the SEC’s proxy rules.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2012.SELECTIVE INSURANCE GROUP, INC. 2014 OMNIBUS STOCK PLAN.

You can find information about Selective’s relationship with KPMG LLPthe Selective Insurance Group, Inc. 2014 Omnibus Stock Plan (the “2014 Omnibus Stock Plan”) beginning on page 54.53.

New Jersey law and Selective’s By-Laws govern the vote on Proposal 3, on which you may:

Assuming a quorum is present, Proposal 3 will pass if approved by an affirmative vote of a majority of votes cast at the Annual Meeting. Abstentions and broker non-votes will not be taken into account in determining whether the proposal has received the requisite number of affirmative votes consistent with New Jersey law and the SEC’s proxy rules. To satisfy the requirements of Sections 162(m) and 422 of the Internal Revenue Code of 1986, as amended (the “Code”), a majority of votes cast also is required to approve Proposal 3.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE AMENDMENT AND RESTATEMENT OF THE SELECTIVE INSURANCE GROUP, INC. CASH INCENTIVE PLAN AND THE PERFORMANCE GOALS.

You can find information about the amendment and restatement of the Selective Insurance Group, Inc. Cash Incentive Plan (the “Cash Incentive Plan”) beginning on page 61.

New Jersey law and Selective’s By-Laws govern the vote on Proposal 4, on which you may:

Assuming a quorum is present, Proposal 4 will pass if approved by an affirmative vote of a majority of votes cast at the Annual Meeting. Abstentions and broker non-votes will not be taken into account in determining whether the proposal has received the requisite number of affirmative votes consistent with New Jersey law and the SEC’s proxy rules. To satisfy the requirements of Section 162(m) of the Code, a majority of votes cast is also required to approve Proposal 4.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2014.

You can find information about Selective’s relationship with KPMG LLP beginning on page 67.

New Jersey law and Selective’s By-Laws govern the vote on Proposal 5, on which you may:

Assuming a quorum is present, Proposal 5 will pass if it receives an affirmative vote of a majority of the votes cast at the Annual Meeting. Under New Jersey law and the SEC’s proxy rules, abstentionsAbstentions will not be counted as votes cast and accordingly, will not be taken into account in determining whether the proposal has received the requisite number of affirmative votes.votes consistent with New Jersey law and the SEC’s proxy rules.

OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING

The Board of Directors is not aware of any other business to be presented for a vote at the Annual Meeting. If any other matters are properly presented for a vote, the people named as proxies will have discretionary authority to vote on such matters according to their best judgment to the extent permitted by applicable law and NASDAQ Stock Market (“NASDAQ”) and SEC rules and regulations, to vote on such matters according to their best judgment.regulations.

The Chairman of the Annual Meeting may refuse to allow presentation of a proposal or nominee for the Board of Directors if the proposal or nominee is not properly submitted. The requirements for submitting proposals and nominations for this year’s meetingAnnual Meeting are set forth in Selective’s By-Laws.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This Proxy Statement contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “estimate,” “intend,” and other similar words. These forward-looking statements are based on our beliefs, assumptions, and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. Factors that may cause actual results to differ materially from those contemplated by the statements in this Proxy Statement can be found in our most recent Annual Report on Form 10-K filed with the SEC and in the Quarterly Reports on Form 10-Q we have filed or will file hereafter under the headings “Risk Factors” and “ Forward-Looking Statements.”

You are cautioned not to place undue reliance on any of our forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements, except as required by law. This cautionary statement is applicable to all forward-looking statements contained in this document.

VOTING AND PROXY PROCEDURE

HOW DO I VOTE?

You can vote four ways:

If we receiveTiming is important, so please mail your signed proxy card butpromptly. We must receive it before the beginning of the Annual Meeting. If you do not give voting instructions on your signed and mailed proxy card, the named proxies will vote your shares FOR each of the director nominees and FOR Proposals 2, 3, 4, and 3.5. If any other matters requiring a vote arise during the meeting, that require a vote, the named proxies will exercise their discretion in accordance with their best judgment to the extent permitted by applicable law and NASDAQ and SEC rules and regulations, in accordance with their best judgment.regulations.

HOW DO I REVOKE MY PROXY OR CHANGE MY VOTING INSTRUCTIONS?

You may revoke your proxy at any time before the proxy is exercised by writing to Selective’s Corporate Secretary, Robyn P. Turner, at the address in the meeting notice on the cover of this Proxy Statement. You may also change your vote before the proxy is exercised by entering a new vote via the Internet, by telephone, or by returning a properly executed proxy bearing a later date. Any subsequent timely and valid vote by any means will change your prior vote. For example, if you voted by telephone, a subsequent Internet vote will change your vote. The last vote received before noon central time on April 24, 2012 will be the vote that is counted, except that you may also change your vote by voting in person at the Annual Meeting.Meeting:

HOW WILL PROXIES BE VOTED IF I GIVE MY AUTHORIZATION?

If youyou: (i) properly execute your proxy on the accompanying formcard and return it to SelectiveSelective; or (ii) submit your proxy by telephone or via the Internet, and do not subsequently revoke your proxy, your shares of common stock will be voted at the Annual Meeting in accordance with your instructions.

In the absence of voting instructions, the named proxies will vote your shares FOR each of the director nominees and FOR Proposals 2, 3, 4, and 3.5. If other matters should properly come before the meeting,Annual Meeting, the named proxies will vote on such matters in accordance with their best judgment to the extent permitted by applicable law and NASDAQ and SEC rules and regulations, in accordance with their best judgment.regulations.

WHAT IF MY SHARES ARE NOT REGISTERED IN MY NAME?

If you are a beneficial owner of our stock, meaning that the Selective stock you own is held in the name of a bank, broker, or other nominee (commonly referred to as holding shares in “street name”), you should have received access to these proxy materials from your bank, broker, or other nominee by mail or e-mail with information on how to submit your voting instructions. Unless you provide voting instructions to your bank, broker, or other nominee, your shares will not be voted on the election of directors (Proposal 1), the advisory (non-binding) vote on the compensation of Selective’s named executive officers (Proposal 2), the approval of the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan (Proposal 3), or the approval of the amendment and restatement of the Selective Insurance Group, Inc. Cash Incentive Plan and approval of the performance goals set out under the plan for purposes of Section 162(m) of the Code (Proposal 4), resulting in so-called “broker non-votes.” In contrast, brokers can vote uninstructed shares on the ratification of the appointment of our independent registered public accounting firm (Proposal 5). Broker non-votes count toward a quorum, but otherwise do not affect the outcome of any proposal.

HOW WILL VOTES BE COUNTED?

The inspectors of election appointed for the Annual Meeting by the Board of Directors will separately tabulate affirmative and negative votes, abstentions, and broker non-votes (shares held by a broker, bank or other nominee that does not have authority, either express or discretionary, to vote on a particular matter).non-votes. Shares represented by proxies that reflect abstentions and broker non-votes are counted for determining whether there is a quorum. BrokersWe believe brokers may exercise their discretionary voting power for Proposal 3.5.

For Proposal 1, abstentions and broker non-votes will not be considered in determining whether director nominees have received more “for” votes than “against” votes. Approval of ProposalProposals 2, 3, 4, and 5 requires the affirmative vote of a majority of votes cast at the Annual Meeting. Abstentions and broker non-votes have no effect on the outcome of Proposal 2. Approval of ProposalProposals 2, 3, requires the affirmative vote of a majority of votes cast at the Annual Meeting. Abstentionsand 4, and abstentions have no effect on Proposal 3.5.

WHAT IF MY SHARES ARE NOT REGISTERED IN MY NAME?

If you own your shares in “street name,” meaning that your broker is actually the record owner, you should contact your broker. When a broker does not have voting instructions and withholds its vote on one of these matters, it is called a “broker non-vote.” Broker non-votes count toward a quorum, but otherwise do not affect the outcome of any proposal.

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, APRIL 25, 201223, 2014

This Proxy Statement isand our 2013 Annual Report to Stockholders are available on
Selective’s internetInternet website atwww.selective.comwww.selective.com..

INFORMATION ABOUT PROPOSAL 1

Election of Directors

Under our By-Laws, as amended on December 3, 2010, directors in uncontested elections must be elected by a majority of votes cast. A majority means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee. For more information on our majority voting policy, please see “Corporate Governance – Majority Voting for Directors in Uncontested Elections” beginning on page 16.15.

At our 2010 Annual Meeting of Stockholders, as part of an ongoing effort to adopt “best practices” in corporate governance, the Board recommended, and Selective’s stockholders approved, amendments to Selective’s Restated Certificate of Incorporation and By-Laws to phase out Selective’s classified board structure over the two-year period following the 2010 Annual Meeting. Accordingly, at this Annual Meeting, allAll directors are standingstand for election for a one-year term. In all cases, each director will hold office until a successor has been elected and qualified, or until the director’s earlier resignation or removal.

Selective’s Board of Directors currently has 11 members. Pursuant to Selective’s Amended and Restated Certificate of Incorporation, as amended, and its By-Laws, as amended, Selective may have a minimum of seven and a maximum of 20 directors. By majority vote, the Board of Directors may set the number of directors within this range at any time.

Process for Review and Nomination of Director Candidates

The Corporate Governance and Nominating Committee is responsible for the review and nomination of candidates to the Board of DirectorsDirectors.¹. The Corporate Governance and Nominating Committee reviews all director candidates for possible nomination and election to the Board and seeks such candidates from any source, including:

¹See chart on page 18 for further discussion of the Corporate Governance and Nominating Committee’s other responsibilities.

Any stockholder proposing Board candidate(s) must submit in writing all information required to be disclosed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in a solicitation of proxies for the election of a director to the ChairmanChairperson of the Corporate Governance and Nominating Committee, c/o Corporate Secretary, 40 Wantage Avenue, Branchville, New Jersey 07890.

Regardless of source, the Corporate Governance and Nominating Committee evaluates all candidates based on, among other things, the following standards:

Although Selective has no formal diversity policy, our Corporate Governance Guidelines provide that the composition of the Board should encompass a broad range of skills, expertise, industry knowledge, and diversity of opinion. Accordingly, diversity of thought, experience, gender, race, and ethnic background are greatly considered in the director evaluation process.

¹ See chart on page 17 for further discussion of the Corporate Governance and Nominating Committee’s other responsibilities.

Director Nominees

No family relationships exist between any of Selective’s current directors, executive officers, and persons nominated by Selective to become a director.

The Board has ratified the Corporate Governance and Nominating Committee’s nomination of the following elevendirectors11 directors listed below to stand for election at the 20122014 Annual Meeting for terms expiring at the 20132015 Annual Meeting or until a successor has been duly elected and qualified: Paul D. Bauer; Annabelle G. Bexiga; A. David Brown; John C. Burville; Joan M. Lamm-Tennant; Michael J. Morrissey; Gregory E. Murphy; Cynthia S. Nicholson; Ronald L. O’Kelley; William M. Rue; and J. Brian Thebault. S. Griffin McClellan III will be retiring at the Annual Meeting. The Board thanks him for his 32 years of service to Selective.qualified.

All 11 nominees have consented to being named in this Proxy Statement and to serving if elected. The Board does not know of any reason why any of these nominees would decline or be unable to serve if elected. If a nominee becomes unavailable or unable to serve before the Annual Meeting, the Board can either reduce its size or designate a substitute nominee. If the Board designates a substitute nominee, proxies that would have been cast for the original nominee will be cast for the substitute nominee unless instructions are given to the contrary.

Board Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE NOMINEES OFTO THE BOARD OF DIRECTORS.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Security Ownership of Management

The following table shows as of February 24, 2012:21, 2014:

* Less than 1% of the common stock outstanding.

⁽¹⁾No directors or executive officers hold Selective common stock in margin accounts or have Selective common stock pledged for a loan or stock purchase.

⁽²⁾Includes: (i) 38,43040,432 shares held by Chas. E. Rue & Son, Inc. t/a Rue Insurance (“Rue Insurance”), an independent insurance agency of which Mr. Rue is PresidentChairman and owner of more than a 10% equity interest (see page 1413 of this Proxy Statement for more information); and (ii) 5,226 shares held by Mr. Rue’s wife.

⁽³⁾Includes: (i) 10,841 shares held by a grantor retained annuity trust; (ii) 240244 shares held in custody for, and 344110 shares held by, one daughter of Mr. Thebault’s son; (iii) 240Thebault; and (ii) 110 shares held in custody for and 332 shares held by, a daughter of Mr. Thebault; (iv) 232 shares held in custody for, and 105 shares held by, a second daughter of Mr. Thebault; and (v) 105 shares held in custody for a thirdanother daughter of Mr. Thebault.

Security Ownership of Certain Beneficial Owners

The following table lists the only persons or groups known to Selective to be the beneficial owners of more than 5% of any class of Selective’s voting securities as of December 31, 2011,2013, based on Schedules 13G filed by the beneficial owners on January 30, 2014, February 10, 2012, February 14, 2012,2014, and February 10, 2012,11, 2014, respectively, with the SEC.

EXECUTIVE OFFICERS

Information regarding Executive Officers is incorporated by reference to the section entitled “Executive Officers of the Registrant” in Part I, Item 1. Business. of Selective’s Annual Report on Form 10-K for the year ended December 31, 2011.2013.

TRANSACTIONS WITH RELATED PERSONS

William M. Rue, Director. Mr. Rue owns more than 10% of the equity, and is PresidentChairman of, Rue Insurance, an independent insurance agency. Through February 2014, Mr. Rue served as President of Rue Insurance. Rue Insurance has been an appointed independent agent of Selective’s insurance subsidiaries since 1928 and Selective expects that relationship to continue in 2012.2014. The appointment of Rue Insurance as an independent agent was made on similar terms and conditions as other Selective agents and includes the right to participate in the Amended and Restated Selective Insurance Group, Inc. Stock Purchase Plan for Independent Insurance Agencies (2010). In 2011,2013, Rue Insurance:Insurance placed insurance policies with Selective’s insurance subsidiaries. Direct premiums written associated with these policies was $8.2 million in 2013. In return, Selective’s insurance subsidiaries paid commissions to Rue Insurance of $1.3 million. For additional information regarding Mr. Rue, see page 11.

The Selective Insurance Group Foundation, a private foundation Selective established under Section 501(c)(3) of the Internal Revenue Code (the “Selective Foundation”). The Selective Foundation makes grants to charitable organizations in accordance with its By-Laws and funding guidelines, which guidelines are available atwww.selective.com. In 2011,2013, the Selective Foundation made grants in excess of $20,000 in the following amounts to the following organizations with ties to Selective, all of which are located in Sussex County, New Jersey, where Selective is headquartered and over half of its headquarter-based employees live:

In 2011, SICA also provided corporate sponsorship payments totaling $4,700 to NMCF. 

Review, Approval, or Ratification of Transactions with Related Persons

Selective has a written Related Person Transactions Policy and Procedures (the “Related Person Policy”).

The Related Person Policy defines “Related Person Transactions” as any transaction, arrangement, or relationship in which Selective or its subsidiaries was, is, or will be a participant and the amount involved exceeds $20,000, and in which any “Related Person” had, has, or will have a direct or indirect interest. A “Related Person” under the Related Person Policy is generally: (i) any director, executive officer, or nominee to become director of Selective or an immediate family member of such person; (ii) a beneficial owner of more than 5% of Selective’s common stock or an immediate family member of such beneficial owner; and (iii) any firm, corporation, or other entity in which any person included in (i) or (ii) is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

Under the Related Person Policy, the Audit Committee (or ChairChairperson of the Audit Committee if between meetings) must approve “RelatedRelated Person Transactions.” In its review, the Audit Committee considers all available relevant facts and circumstances of the proposed transaction, including: (i) the benefits to Selective; (ii) the impact on a director’s independence; (iii) the availability of other sources for comparable products and services; (iv) the terms of the transaction; and (v) the terms available to unrelated third parties or to employees generally. No Audit Committee member may participate in any review, consideration, or approval of any Related Person Transaction in which such director or any of his or her immediate family members is the Related Person. The Audit Committee only approves those Related Person Transactions that it considers are in, or are not inconsistent with, the best interests of Selective and its stockholders.

Director Independence

The Board of Directors has determined that all directors are independent as defined by applicableunder NASDAQ and SEC rules and regulations – except Messrs. Murphy and Rue. In making its determination, the Board considered various transactions, relationships, or arrangements that relate to the Directors.directors. For a description of the transactions, relationships, or arrangements related to Mr. Rue, see the section entitled “Transactions with Related Persons” on page 14.13.

In May 2007, Ms. Lamm-Tennant, a member of the Finance Committee, was appointed Global Chief Economist & Risk Strategist of Guy Carpenter & Company, LLC (“Guy Carpenter”), in May 2007. Guy Carpenter is a subsidiary of Marsh & McLennan Companies, Inc. (“Marsh”). From February 2009 through January 2011,, of which Ms. Lamm-Tennant also served as Vice President from February 2009 to January 2011. Marsh has implemented a strategy of Marsh. The Board reviewed the material termspurchasing independent insurance agencies and has purchased certain agencies which are appointed agents of the broker service agreement betweenSelective’s insurance subsidiaries. In 2013, agencies owned by Marsh placed insurance policies with total direct premiums of approximately $4.7 million with Selective’s insurance subsidiaries, and Guy Carpenter underSelective paid commissions to Marsh-owned agencies totaling approximately $643,000. Selective also uses the services of two other Marsh subsidiaries, which reinsurance is placed.advise on information technology and compensation issues. In 2011, Guy Carpenter earned2013, Selective paid these two Marsh subsidiaries approximately $1.5 million on our reinsurance placements and had total revenues of approximately $1.04 billion. Accordingly, the transactions with us represented less than 0.11% of Guy Carpenter’s$61,000. On September 19, 2011, total revenue. Selective’s insurance subsidiaries ended their engagement of Guy Carpenter on September 19, 2011.for reinsurance placement

services, although Guy Carpenter may receive immaterial amounts of additional commission over the next 10 years from reinstatement premiums Selective’s insurance subsidiaries may pay to reinstate reinsurance treaties if certain claims payment limits are exceeded. Marsh’s aggregate revenues in 2013 were approximately $12 billion.

We occasionally use the services of Marsh subsidiaries other than Guy Carpenter. In 2011, we made aggregate payments totaling less than $32,000 to those other Marsh subsidiaries. As: (i) Ms. Lamm-Tennant is not a reinsurance broker or an insurance agent and had no involvement in these transactions; (ii) Guy Carpenter and Marsh have established an internal segregation to separate Ms. Lamm-Tennant from knowledge of specific transactions involving us;Selective; and (iii) the aggregate amount of revenue from such transactions is immaterial to the business of Guy Carpenter and Marsh, the Board determined that these transactions do not affect Ms. Lamm-Tennant’s independence under applicable NASDAQ and SEC rules and regulations.

In 2013, a daughter of Ronald L. O’Kelley, Chairman of the Audit Committee, and a member of the Executive and Finance Committees, became employed by Liberty Mutual Insurance Company (“Liberty Mutual”) as a personal lines homeowners claims special projects implementation manager. One of our insurance subsidiaries has had an agreement with a Liberty Mutual subsidiary since 2011 to provide long-term disability insurance and long-term, short-term and related disability management services to Selective’s employees. The aggregate annual premium Selective pays for these services is approximately $725,000, including $276,000 of contributions by Selective’s employees for supplemental disability insurance coverage. Liberty Mutual’s aggregate revenues for 2013 were approximately $39 billion. Mr. O’Kelley’s daughter has no involvement with Selective’s insurance program with Liberty Mutual.

As: (i) neither Mr. O’Kelley nor his daughter have any involvement in Selective’s insurance program with Liberty Mutual; and (ii) the amount of revenue from such arrangement is immaterial to the business of Liberty Mutual, the Board determined that this arrangement does not affect Mr. O’Kelley’s independence under applicable NASDAQ and SEC rules and regulations.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act, requires Selective’s directors and executive officers, and persons who beneficially own more than 10% of a registered class of Selective’s equity securities, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of Selective’s equity securities. SuchDirectors, executive officers, directors, and greater than 10% stockholders are required by SEC regulations to furnish Selective with copies of all of the Section 16(a) Exchange Act reports that they file. Based solely on itsSelective’s review of the provided copies of Forms 3, 4, and 5, or written representations from certain reporting persons that no Forms 5 were not required, for those persons, Selective believes that all directors, executive officers, and greater than 10% beneficial owners timely met all reporting requirements under Section 16(a) for the fiscal year ended December 31, 2011, were met in a timely manner by its directors, executive officers, and greater than 10% beneficial owners except that Mr. Burville filed one Form 4 late.2013.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

Selective has established Corporate Governance Guidelines that are available for review in the Corporate Governance subsection of the Investor Relations section of Selective’s website,www.selective.com. These guidelines provide for the election of a Lead Independent Director, who supervises meetings of Selective’s independent directors that occur at least semi-annually. A. David BrownPaul D. Bauer is presently the Lead Independent Director. In 2011,2013, Selective’s independent directors met threefour times outside the presence of management.

All of the members of the Audit Committee, the Corporate Governance and Nominating Committee, and the Salary and Employee Benefits Committee are independent directors as defined byunder NASDAQ and SEC rules and regulations.

Majority Voting for Directors in Uncontested Elections

Selective’s Board of Directors has adopted a majority voting policy for uncontested elections of incumbent directors. In accordance with our By-Laws,To be re-elected to the Board, an incumbent director must receive a majority vote by stockholders, unless the Corporate Secretary determines that the number of nominees exceeds the number of directors to be elected, aelected. If any incumbent director nominee must receive more votes cast “for”receives less than “against” to be elected or re-elected to the Board. Any nominee who receives fewer “for” votes than “against” votes must tender his or her resignation to the Chairman of the Board within five days following certification of the meeting’s election results. Within 45 days after the meeting, the Corporate Governance and Nominating Committee will make a recommendation to the Board regarding whether to accept the director’s resignation. The Corporate Governance and Nominating Committee, in making its recommendation to the Board, may consider any factors it deems relevant. The Corporate Governance and Nominating Committee, as it deems appropriate, may consider a range of possible alternatives concerning the director’s tendered resignation. Any director who fails to receive a majority of votes cast, and tenders resignation pursuant to this requirement may not participate in the deliberations of the Corporate Governance and Nominating Committee or the Board related to the decision to accept the offer of resignation.

Within 90 days after the stockholders’ meeting, the Board of Directors shall formally act on the Corporate Governance and Nominating Committee’s recommendation and, in a Form 8-K filed with the SEC within four business days of such decision, disclose its decision to accept or reject the director’s resignation and the rationale andfollowing process for such decision. If every member of the Corporate Governance and Nominating Committee fails to receive a majority vote in favor of election at the same stockholders’ meeting, then those independent directors who received a majority vote, and any independent directors who did not stand for election, will appoint from amongst themselves an ad hoc Board committee to consider the resignation offers and recommend to the Board whether it should accept them. In such a situation, if fewer than three directors wouldmust be on such an ad hoc committee, the entire Board (other than the individual director whose resignation is being considered) will make the determination to accept or reject the director’s resignation.followed:

BOARD MEETINGS AND COMMITTEES

The Board of Directors held seven6 meetings in 2011.2013. All continuing directors attended 75% or more of the aggregate of the meetings of the Board of Directors and their respective committees in 2011. It is Selective’s policy that2013. Selective expects all directors are expected to attend the Annual Meeting, and all continuing directors did so in 2011.2013.

The Board has five standing committees:

The following providestables provide information on each of the five committees:

RISK MANAGEMENT

Board Leadership Structure

Gregory E. Murphy, our Chief Executive Officer, has served asOur two principal Board leadership positions are: (i) Chairman of the Board since April 2000. Since July 2004, we have had aBoard; and (ii) Lead Independent Director, which was created and first filled in July 2004. The Lead Independent Director position is defined in our Corporate Governance Guidelines provideand is very similar to the role of an independent non-executive Chairman. We believe that our current Board leadership structure provides effective oversight of management and strong leadership of the independent directors. The Corporate Governance and Nominating Committee also conducts annual self-assessments of the Board will designate a Lead Independent Director. A. David Brown has served as the Lead Independent Director since April 2009.and its various committees and evaluates their effectiveness.

The Lead Independent Director is responsible for coordinating the activities of the independent directors and performing various other duties. The Lead Independent Director’s general authority and responsibilities are as follows:

The defined role of Selective’s

Our Lead Independent Director is very similar to the role of an independent non-executive Chairman. We believe thatPaul D. Bauer, who succeeded A. David Brown in April 2013 and has served on our current Board leadership structure provides effective oversight of management and strong leadership of the independent directors. In addition, the Corporate Governance and Nominating Committee, of which Mr. Brown is a member, conducts annual self-assessmentssince 1998. Our Chairman of the Board and its various committees to evaluate their effectiveness.since April 2000 is Gregory E. Murphy, our Chief Executive Officer. At this time, we believe there is a benefit to having Mr. Murphy serve as both Chairman of the Board and Chief Executive Officer. As the individualexecutive with primary responsibility for managing our day-to-day operations, he is best positioned to chair regular Board meetings and to ensure that key business issues and risks are brought to the attention of our Board or theits appropriate committee’s attention.committee.

Enterprise Risk Management

Our Board oversees our overall enterprise risk management process, which follows, among other things, the 1992Enterprise Risk Management – Integrated Framework of the Treadway Commission of the Committee of Sponsoring Organizations (COSO). We began our formal enterprise risk management process over tenthirteen years ago. TheIts key components of our enterprise risk management process include identification and measurement, reporting, and monitoring of major risks, and the development of appropriate responses.

In addition to the Board’s oversight of overall risk and the enterprise risk management process, various committees of the Board oversee risks specific to their areas of supervision and report their activities and findings to the Board:

The Chief Executive Officer, who continues to beis the executive ultimately responsible for risk, and the Executive Risk Committee together are responsible for the holistic evaluation and supervision of our major risks. The Executive Risk Committee primarily consists of the Chief Executive Officer, and his direct reports and key operational leaders, each of whom is responsible for management of risk in his or her respective area, and a Chief Risk Officer, who reports to the Chief Financial Officer. The Executive Risk Committee meets at least quarterly and reviews and discusses various aspects and the interrelation of Selective’s major risks, including, but not limited to, capital modeling results, capital adequacy, risk metrics, emerging risks, and sensitivity analysis. The Executive Risk Committee uses various management committees for detailed analysis and management of individual risks and determines future risk management actions. The Executive Risk Committee provides a structured forum for the discussionconsideration of Selective’s major risks.risks that either may preclude us from achieving our strategic goals or may provide potential opportunities to be pursued. The Chief Risk Officer reports the analysis and findings ofon the Executive Risk CommitteeCommittee’s activities, analyses, and findings to the Board or the appropriate Board committee, along withand provides a quarterly update ofon certain risk metrics.

In overseeing the analysis and management of risk, the Board regularly receives, analyzes, and makes due inquiry regarding reports from its various committees and management regarding risk. We believe our Board’s leadership structure with aand the Lead Independent Director position supports the Board’s ability to effectively evaluate and manage risk.

Compensation Risk Assessment

We do not believe that risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on our operations or results. To make this determination, we conducted an internal risk assessment of our compensation policies and programs. In performing the risk assessment, we considered that we operate in an industry based almost entirely on managing risk, and we believe that our risk management function is robust. We also analyzed the issues set forth in the proxy disclosure rules and gave close consideration to the following points:

We also considered our overall compensation program, including:

We also considered that we adjust our compensation programs from time-to-time as risks in our industry and operating segments change to help ensure that compensation and risk remain appropriately aligned.

Finally, we reviewed our various risk mitigation strategies in the compensation context including:

STOCKHOLDER COMMUNICATIONS

Stockholders may send communications to the Board of Directors or individual directors in writing c/o Corporate Secretary, Selective Insurance Group, Inc., 40 Wantage Avenue, Branchville, New Jersey 07890 or by e-mail tocorporate.governance@selective.com. corporate.governance@selective.com. The Board has instructed the Corporate Secretary to use discretion in forwarding unsolicited advertisements, invitations to conferences, or other promotional material.

CODE OF CONDUCT

Selective has adopted a Code of Conduct statingthat sets out guiding business ethics guiding principles for all Selective personnel, including executive officers. The Code of Conduct can be found in the Corporate Governance subsection of the Investor Relations section of Selective’s website,www.selective.com. Any amendment to or waiver from the provisions of the Code of Conduct that applies to Selective’s senior executive officers will be posted to Selective’s website,www.selective.com.website.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

Purpose of Compensation Discussion and Analysis

ThisThe purpose of this Compensation Discussion and Analysis providesis to provide relevant information about the 2011to our stockholders regarding our 2013 compensation program for the following named executive officers (“NEOs”):

Consideration of 20112013 Say-on-Pay Advisory Vote Results

At our 20112013 Annual Meeting of Stockholders, we were required to give our stockholders their first opportunity to votevoted on an advisory basis pursuant to Item 402 of Regulation S-K, onapprove the compensation of our named executive officers. OurNEOs. Again, as they did in 2012, our stockholders overwhelmingly supported our compensation decisions, with over 93%approximately 94% of votes cast voting in favor of the proposal. We considered these results and believe they indicate stockholders are supportive of our compensation decisions. Accordingly, we did not make any material changes in our 2013 compensation decisions and policies and we have maintained our emphasis on short- and long-term incentive compensation that we believe rewardsreward our executives for delivering stockholder value, and we did not make any material changes in our 2011 compensation decisions and policies.value.

20112013 Corporate Performance Highlights

We made significant progress in 2011 in positioning Selective for long-term success, even though it wasIn 2012, we established a record year for catastrophe and other storm losses for both Selective and the property and casualty insurance industry. Our Claims team responded to over 6,000 claims filed in the aftermath of Hurricane Irene, which represented the largest single catastrophe loss in Selective’s history. Ourthree-year targeted statutory combined ratio² was 106.7% excluding catastrophes of 92%, which included 8.3 points of catastrophe losses - well above historical trends. While we cannot ignore the impact of these catastrophes on our results, a number of positive events occurred in 2011 that we expect to help drivemeet in 2014. This expectation excludes our resultsassumption for catastrophe losses of approximately 4 points and any prior year development, favorable or unfavorable. In 2013, we performed better than expected and exceeded almost every significant budget target we established. We remain confident in future market cycles.Specifically:achieving this plan, particularly in light of the following noteworthy events in 2013:

² The statutory combined ratio is the property and casualty insurance industry standard measure of underwriting profitability. A statutory combined ratio under 100% generally indicates that an insurance company is generating an underwriting profit and a statutory combined ratio over 100% generally indicates that an insurance company is generating an underwriting loss.

In 2011,June 2013, our “A+“A (Excellent)” (with a stable outlook) financial strength rating from A.M. Best Company, (“A.M. Best”), a worldwide insurance rating company, was affirmed, for the 50th consecutive year, as we maintained strong surplus of $1.1 billion.  In its affirmation notification, A.M. Best cited, among other things, “areflecting our solid risk-adjusted capitalization resulting from our consistent and profitable operating results, achieved through our disciplined underwriting culture, strong independent agency relationships, a strong loss reserve position,focus and improved diversification.”increased use of predictive modeling.

Our 2011 financial and operational results decreased from 2010 levels and were negatively impacted by a record level of catastrophe losses at nearly $119 million. Our stock price ended 20112013 at $17.73, a decrease$27.06, an increase of 2.3%40.4% from 2010,year end 2012, while our total stockholder return (“TSR”), which is determined using the change in Selective’s common stock price and reinvested dividends, was +0.8%43.5%, compared to the Standard & Poor’s 500 Index total return of 32.4%. Our strategic initiatives resulted in obtaining ongoing positive rate and higher retention, which resulted in a 7% increase in net premiums written.

In 2011,2013, we continued to focus on our strategies for profitable growth, diversification, and creating long-term value for our stockholders.

CEO Pay for Performance

The following table sets forth Mr. Murphy’s compensation over the past four years, as shown inits actual dollar and percentage change from the prior year, and Selective’s TSR for the one and three year periods. We believe the table below, demonstrates the direct correlation between changes in his compensation with that of Selective’s TSR over the same period. This correlationand Mr. Murphy’s compensation, which is consistent with, and reflects our philosophy of, aligning compensation with both short-term and long-term business objectives and the interests of stockholders.stockholders and long-term performance.

* Also includes discretionary cash bonus awards for 2009 and 2010.award.

Role and Function of the Salary and Employee Benefits Committee

The Salary and Employee Benefits Committee of the Board of Directors (“SEBC”) oversees executive compensation. The SEBC retains an independent executive compensation consultant, Exequity LLP (“Compensation Consultant”), to advise it on executive and non-employee director compensation issues. Representatives of the Compensation Consultant: (i) review senior executive compensation; (ii) prepare for the SEBC comprehensive competitive compensation analyses for our NEOs; (iii) make recommendationsprovide counsel to the SEBC regarding theaward metrics, components of compensation, amounts allocated to those components, and the total compensation opportunities for the CEO and the other NEOs; and (iv) attend SEBC meetings, as requested by the SEBC.

Exequity LLPThe Compensation Consultant has served as the SEBC’s Compensation ConsultantSEBC since April 2007. The Compensation Consultant’s only business with Selective is to advise the SEBC on non-employee director and executive compensation matters. The SEBC has determined, in light of the factors set forth in SEC and NASDAQ rules, that the Compensation Consultant’s services do not raise a conflict of interest.

The SEBC has full autonomy in determining executive compensation and primarily based onmakes all final determinations regarding CEO and other NEO compensation, incorporating information provided by the Compensation Consultant, makes all final determinations regarding the CEO and other NEO compensation.Consultant. The CEO also makes compensation recommendations to the SEBC regarding each of the executive vice presidents and certain other members of senior executives that report directly to himmanagement based on the CEO’s assessment of each executive officer’sindividual’s annual performance, contributions to Selective, and potential for advancement. In making its compensation decisions, the SEBC also considers the medians of the benchmark sources discussed belowpay levels at companies with which we compete for business and executive talent (discussed below) and pre-established guidelines regarding award amounts, Selective’s performance, executive retention issues, internal compensation parity, and advancement in abilities, experience, and responsibilities. The Executive Vice President and Chief Human Resources Officer and certain other human resources officers, as part of their usual duties and responsibilities, provide the SEBC with information regarding the overall design of the executive compensation program and its individual components.

DESIGN CONSIDERATIONS OF SELECTIVE’S EXECUTIVE COMPENSATION PROGRAM

Selective’s Executive Compensation Program Objective and Philosophy

The objective of our executive compensation program is to attract, retain, and motivate executive talent thatwho will drive the organization’s success and create stockholder value. Our compensation program is designed to reward the achievement of both financial and strategic goals and recognize our executives for their individual achievements and promote a long-term relationship with us. We seek to attract and retain talented and qualified executives by paying compensation that is generally targeted atin the 50^thrange of the 50th – 75^th75th percentile of total compensation paid by comparable companies in the property and casualty insurance industry.companies, with pay levels more likely to approach the upper end of that range in years when company performance is strong. Consistent with our pay-for-performance philosophy, we tie our annual incentive awards to pre-determined strategicfinancial and financialstrategic business objectives and individual contributions, and we align our long-term compensation to the achievement of pre-determined specific performance measures that impact the generation of long-term stockholder value.

Compensation Elements

Our executive compensation program consists of the following key elements selected to: (i) address the market-based realities of attracting and retaining quality executives; and (ii) align the executives’ compensation with our stockholders’ interests:

Compensation Best Practices

Selective primarily uses the following compensation structures and practices:

Benchmarking

When making compensation decisions, the SEBC believes that it is important to be informed generally on compensation practices at publicly-traded companies and particularly at property and casualty insurance holding companies. The SEBC believes that:

Accordingly, the SEBC receives from, and reviews with, the Compensation Consultant, the following benchmarking information:

For 2011,2013, the Compensation Consultant furnished the SEBC with 20112013 NEO compensation information from two market reference sources as follows:

Information for the Proxy Peers in the above table (collectively, the “Proxy Peer Group”) is obtained from proxy statements and other materials filed with the SEC. This information includes data on compensation components and analysis of the overall financial performance of the organizations in the group, and comparesgroup. We analyze our performance in relation to them. For 2011, we consolidated two previous peer groups (Market/ProductThe Proxy Peer Group and the Peer Size Group) into a single group to reduce overlap and increase alignment withis composed of companies that better represent ourprovide similar products, have our geographic market scope, and compete with us for executive talent. The PCICProperty and Casualty Insurance Compensation Survey provides supplemental data from companies of various sizes. This information is divided into segments that most accurately reflect the size of our organization. Because we strive to engage the best talent, which may require recruitingus to recruit from organizations larger than us, we look at data from: (i) the overall property and casualty insurance industry; and (ii) organizations with direct written premiums of less than $2 billion.

In 2011,2013, our aggregate NEO total compensation when compared towas 26.0% above the total average survey mediansmedian of the market reference sources, but was 6.2%well below the total average median. Base75^th percentile of the market reference sources, representing a positioning relative to market that the SEBC deemed to be appropriate based on Selective’s performance in 2013. The components comprising total compensation differed from market to varying degrees. Specifically, base salary was above the total average median by 6.7%, and annual incentive awards were 104.5% above the total average median, resulting in annual total cash compensation werethat was above thesethe total average mediansmedian by 2.4%48.7%. This positioning reflected substantial improvement in annual operating results and 2.1%, respectively. Long-termshareholder returns in 2013 relative to 2012 market data. The grant date fair value of our 2013 long-term incentive awards and total direct compensation were below thesewas 7.3% above the total average medians by 8.7%median. The SEBC felt that each NEO’s compensation was appropriately-positioned relative to market based on the accomplishments and 6.2%, respectively. This comparison is tabulated bycontributions of that particular NEO, and the Compensation Consultant and suggests that NEO pay is within the SEBC’s accepted rangedegree of the defined external benchmarks.company’s achievement relative to 2013 goals.

20112013 ELEMENTS OF COMPENSATION AND ALLOCATION BETWEEN CURRENT AND LONG-TERM COMPENSATION

We allocate compensation among: (i) a fixed base salary; (ii) variable annual cash incentive and discretionary cash bonuses;bonus; and (iii) a variable long-term component. Together, these three components link compensation opportunities for executives to short-term and long-term financial and strategic objectives. The table below shows the percentage of total compensation for the CEO, Chief Financial Officer, and other NEOs that is short-term incentive compensation (ACIP and discretionary cash bonus)(ACIP) versus long-term incentive compensation (LTIP), and fixed (base pay)salary) versus variable (ACIP discretionary cash bonus, and LTIP).

As the table indicates, the 20112013 compensation allocation aligns closely with our compensation philosophy, which is designed to motivate executives to achieve short-term and long-term corporate objectives that are consistent with our stockholders’ economic interests. We strive to achieve a balance between pay incentive vehicles and performance time horizons, generally placing the most weight on achievement of long-term success that increases long-term stockholder value.

* Includes any discretionary cash bonus awards.

Base Salary

Our base salary compensation component is intended to provide stable, competitive compensation while taking into account each executive’s scope of responsibility, relevant background, training, and experience. In setting base salaries, the SEBC considers both competitive market data for similar positions and overall market demand for each position. The SEBC generally believes that base salaries should be aligned with market trends for executives in similar positions with similar responsibilities at comparable companies. When establishing the base salaries of NEOs, the SEBC also considers:

When evaluating 20112013 base salaries for our CEO and other NEOs, the SEBC also considered: (i) our overall results; (ii) the ongoingcontinuing price competition in our industry, including our ability to obtain favorable and appropriate underwriting rates; andrenewal pure prices; (iii) the prolonged delay in overall economic recoverycontinuing challenging economy impacting our various target markets.markets; and (iv) retention of top talent. These factors were viewed in light of the relative competitive positioning of the base salaries of our CEO and the other NEOs, and the fact that our CEO has not received a base salary increase since 2007, and that none of the other NEOs (other than Mr. Marchioni who received a base salary increase in 2009 in recognition of his expanded responsibilities as the newly appointed head of Insurance Operations) received a base salary increase in 2009 or 2010.2007. Based on these considerations, the SEBC decided not to provide an increase in base salary to the CEO and Chief Actuary, but awarded base salary increases to the other NEOs in 2011.early 2013, during our regular salary review process, of between 3.2% and 15.8% based on their respective accomplishments and contributions as described below in the section entitled “2013 Compensation Actions for the CEO and the other NEOs.” Mr. Marchioni received an additional salary increase of 31.8% in the third quarter of 2013 in conjunction with his election as President and Chief Operating Officer.

Annual Cash Incentive Program (ACIP)

Our ACIP is intended to link a meaningful portion of annual cash compensation to one or more pre-established near-term strategic andand/or financial organizational performance goals. For 2011,2013, all of the NEOs were eligible to participate in the ACIP. ACIP awards are granted under the Selective Insurance Group, Inc. Cash Incentive Plan As Amended and Restated as of May 1, 2010 (the “Cash Incentive Plan”). ACIP awards made to our NEOs are intended to qualify as performance-based compensation under Code Section 162(m).

2013 ACIP Measures for NEOs

In order for the 2013 ACIP awards for employees who are covered under Code Section 162(m), which includes most of the NEOs, to qualify as performance-based compensation, the SEBC determined in February 2013 that the 2013 ACIP awards for covered employees would fund at each individual’s maximum based on our achievement in 2013 of a single performance measure; namely positive net income as defined under generally accepted accounting principles. The maximum award opportunity established by the SEBC approves annualfor each of our NEOs under the ACIP is shown below under the section entitled “2013 ACIP Payment Opportunities and Awards for NEOs.”

As we achieved positive net income of $106.4 million in 2013, the performance requirements under Code Section 162(m) were met and the SEBC could pay up to the individual maximum amounts for the 2013 ACIP awards. In its exercise of negative discretion from these maximum amounts, the SEBC reduced the award payable from the individual maximum for each covered employee and determined actual ACIP awards based on their individual performance and the degree of achievement of the general corporate financial and strategic performance goals used in determining the funding of ACIP awards for employees other than covered employees (the “Corporate ACIP Measures”).

The SEBC may also use its discretion to further increase (but not above the ACIP.  If nonemaximum payment opportunity for each NEO set forth in the table in the section entitled “2013 ACIP Payment Opportunities and Awards for NEOs”) or decrease actual awards above or below the amount determined based on the achievement of the Corporate ACIP goals are achieved, noMeasures and the individual performance of each executive officer in 2013.

If we did not achieve positive net income in 2013, the maximum ACIP payments are made. If ACIP goals are attained,awards for executive officers would have been determined based entirely on the ACIP award pool is funded.  An individual’s ACIP award is based on: (i) position grade level; and (ii) corporatedegree of achievement of variousthe Corporate ACIP annualMeasures.

2013 Corporate ACIP Measures

Our Corporate ACIP Measures are established to encourage our employees to remain focused on particular financial and strategic goals. Negative discretion may be exercised to decrease the amount of an ACIP award based on the SEBC’s evaluation of each NEO’s individual accomplishments during the year.

2011 ACIP Targets and Results

2011 ACIP Targets

In 2011, the SEBC made a change to our ACIP program and moved from single “cliff” target measures for each strategic objective to establishing performance ranges for certain strategic objectives. We established minimum, target, and maximum performance levels, as applicable, to encourage employees’ continued focus on pursuing a particular strategic objective,objectives, even in the face of especially challenging circumstances throughoutin a performance year. For 2011,2013, the SEBC determined that the Corporate ACIP funding opportunity towould be between 0% and 108%110% of target, based on attainment of our overall financial and strategic performance goals.the Corporate ACIP Measures. Zero percent (0%) to 50% of this target percentage was attributable to a financial performance goal of achieving a statutory combined ratio of between 98%95% and 102%101.5%, and 0% to 58%60% of this target percentage was attributable to the achievement of seven specific17 measures related to six strategic goals.  The SEBC determined that four of the seven strategic measures would have a target value of eight percentage points and the remaining three strategic measures would have a target value of six percentage points. Of the seven measures, four of the measures each have an additional two percentage point premium potential for above target performance, providing a total potential payout of 58 percentage points.initiatives. The table below reflects total potential Corporate ACIP payout totalspercentages at various statutory combined ratio percentages if all sevensix strategic measuresinitiatives were met and all potential premium potential targetspoints were achieved:

2013 Corporate ACIP Strategic Initiative Measure Results

The 2013 Corporate ACIP Measure results are as follows:

Performance Goals

2011 ACIP Results

As reflected in the above table, we achieved all six of the 2013 strategic initiatives, which equates to the strategic performance goal component under the Corporate ACIP Measures generating funding at 58.3%.

Financial Performance Measure

For 2013, our overall statutory combined ratio was 97.5%, which included 2.7 points of catastrophe losses. Accordingly, the financial performance component of the Corporate ACIP Measures generated funding at 30.8%.

20112013 ACIP Payment Opportunities and Awards for NEOs

The ACIP payment opportunities for the NEOs earned in 20112013 and paid in 2012 under the Cash Incentive Plan2014 were based on competitive market levels and set as a percentage of annual base salary. While our NEOs and other executive officers were all eligible for their maximum 2013 ACIP awards upon our achievement in 2013 of positive net income, the SEBC exercised negative discretion in determining actual ACIP awards for each executive officer based on: (i) their respective accomplishments and contributions; and (ii) the degree of achievement of the Corporate ACIP Measures, determined as a percentage of annual base salary relative to corresponding levels of performance against the annual performance goals.performance. The SEBC can exercise negative discretion to award no incentive payments or to award amounts lower than the maximum opportunity. The following table sets forth the 2011NEOs’ 2013 minimum and maximum ACIP opportunity,opportunities, the SEBC’s actual 20112013 award for the continuing NEOseach NEO as a percentage of base salary, and the percentage increase or decrease in ACIP from 20102012 to 2011:2013:

ELEMENTS OF LONG-TERM COMPENSATION

Design Elements

Our long-term incentive opportunities are intended to reward our leaders and assist with their long-term retention. By aligning financial rewards with the economic interests of our stockholders, leaders are encouraged to achieve our long-term strategic objectives and increase stockholder value. We use both cash and non-cash vehicles to deliver long-term compensation, which is consistent with the market practices of the companies included in our Proxy Peer Group. We use our LTIP to motivate our executives to achieve long-term corporate objectives. ForWe establish a

dollar denominated target for each employee eligible to participate in the LTIP, including the NEOs, a dollar denominated target award is established.NEOs. To determine the amount of the total LTIP award pool, all individual target award amounts are aggregated.

For certain executives, including the NEOs, LTIP awards are granted in overlapping three-year cycles, and may be allocated among any of three components including: (i) performance-based restricted stock units; (ii) performance-based cash incentive units; and (iii) stock options. By granting performance-based restricted stock units and performance-based cash incentive units with three-year performance periods, and options with three-year ratable vesting periods, we encourage executive officers to continue their tenure with us and align their interests with those of our stockholders. In addition to his regular performance-based restricted stock unit grant in 2013, Mr. Marchioni received a special grant of time-based restricted stock units in conjunction with his election as President and Chief Operating Officer. The majority of Mr. Marchioni’s outstanding, unvested long-term incentive compensation, however, consists of performance-based awards.

Long-Term Incentive Program Award Grants

Performance goals for the long-term incentive awards granted in 20092011 through 20112013 are as follows:

⁽¹⁾Return on equity is calculated at the end of each year in the performance period as follows: net income from the performance period / (stockholders’ equity at the beginning of the performance period + stockholders’ equity at the end of the year) / 2. Operating return on equity is calculated as follows: operating income from the performance period / (stockholders’ equity at the beginning of the performance period + stockholders’ equity at the end of the year-unrealized gains from the beginning of the performance period)/2. Operating 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”).principles.

In determining the amount of LTIP awards granted to the NEOs in 2011,2013, the SEBC considered several factors, including: (i) each NEO’s ability to drive and impact our performance over the three-year performance period; (ii) each NEO’s performance during the previous year, including the achievement of departmental goals and other projects and endeavors accomplished throughout the year, as outlined below; (iii) each NEO’s total compensation in comparison to our Proxy Peer Group and PCICProperty and Casualty Insurance Compensation Survey data; and (iv) our desire for long-term retention of high-performing executives.

Performance-Based Restricted Stock Units: Sixty percent (60%) of the total monetized value of each NEO’s LTIP award made in 20112013 consisted of performance-based restricted stock units granted under the Selective Insurance Group, Inc. 2005 Omnibus Stock Plan As Amended and Restated Effective as of May 1, 2010 (the “Omnibus Stock Plan”).³ Performance-based restricted stock unit awards generally are generally subject to vesting based on time and attainment of certain performance measures that are set by the SEBC for each award at the outset of the award’s performance period. The 20112013 performance-based grants are subject to the following conditions:

³ Other than Mr. Marchioni’s special grant of time-based restricted stock units.

Dividend equivalent units (“DEUs”) are credited on performance-based restricted stock units at the same time and at the same dividend rate paid to all Selective stockholders. Payment of DEUs, which are payable in shares of Selective common stock, remains subject to the same vesting conditions and performance measures applicable to the underlying restricted stock units. This use of performance-based restricted stock units aligns this component of NEOs’ compensation with overall corporate performance and stockholder interests.

Performance-Based Cash Incentive Units: The remaining forty percent (40%) of the monetized value of the NEOs’ LTIP award granted in 20112013 consisted of performance-based cash incentive units granted under the Cash Incentive Plan. The cash incentive unit grants take into account: (i) our three-year performance, based on NPW growth and cumulative statutory combined ratio, in each case relative to a peer group; and (ii) TSR of Selective common stock. Accordingly, these awards are also directly linked to Selective’s performance and the interests of stockholders. Performance-based cash incentive units granted in 20112013 are subject to the following terms:

The peer group (the “Cash Incentive Unit Peer Group”) established for 20112013 for comparing performance for the purposes of determining the ultimate number of performance-based cash incentive units earned consists of the companies in the following companies.table:

In establishing the Cash Incentive Unit Peer Group, the SEBC strived to include companies that have a similar mix of products, operate in the same geographic regions, have similar premium volume, and distribute their products through independent agents. The Cash Incentive Unit Peer Group differs from the Proxy Peer Group, as the Proxy Peer Group also includes companies with which we compete for executive talent.

Stock Options: Prior to 2011, incentive stock options (“ISOs”) comprised a portion of the monetized value of our NEOs’ LTIP awards. We didhave not grant ISOs in 2011granted stock options since 2010 based on aan annual competitive review of our plan design, performed by Towers Watson in 2010 and agreed upon byconsultation with the Compensation Consultant and the SEBC.Consultant. The Omnibus Stock Plan, however, allows for future awards of ISOs,stock options, if the SEBC deems appropriate.

20082010 Long-Term Incentive Program Award Grant Results

The following table summarizes the achievement of the performance metrics for the 20082010 LTIP award grants and the corresponding payout in 2011:2013:

⁽¹⁾Cash incentive unit awards are denominated in units with an initial value of $100. Appreciation or depreciation is based on TSR, which is determined using the change in Selective’s common stock price and reinvested dividends over the three-year performance period for the award. The number of units ultimately earned increases or decreases based on: (i) cumulative three-year statutory NPW growth relative to the Cash Incentive Unit Peer Group index; and (ii) cumulative three-year statutory combined ratio relative to this peer group index.

Timing of LTIP Awards: If made, restricted stock unit, cash incentive unit, and stock option awards are generally granted each year following the release of Selective’s fourth quarter and year-end earnings results. The SEBC and the Board of Directors review final year-end results for the prior year in connection with their regularly scheduled first quarter meeting and the SEBC makes final determinations on compensation.

20112013 Compensation Actions for the CEO and the other NEOs

In making its 20112013 compensation decisions for our NEOs, including the CEO, with respect to base salary, ACIP awards, and LTIP awards, the SEBC considered the overall accomplishments and contributions of each NEO. As noted in theThe ACIP and LTIP discussions, these components of our compensation program are limited by the required achievement of pre-determined financial and strategic goals. The SEBC also may also award discretionary cash bonuses or other awards to executives when it deems it appropriate to recognize an NEO’s extraordinary accomplishments.accomplishments, or other special circumstances. No discretionary cash bonuses were awarded to any NEO for the 2013 performance year.

We structure our reward programs to retain and motivate our best performing employees and those in critical positions. Our 2011 compensation decisions reflected the highly competitive pricing environment, the prolonged economic recovery, our financial performance, and the degree of success each executive officer achieved in meeting these challenges.  We believe our management responded appropriately to an extremely challenging climate, maintained strategic focus, and took action to achieve profitable growth over the long term.

In balancing our strategic results achieved with ongoing price competition the prolonged economic recovery, and the significant impact of historic catastrophe losses that affected the entire property and casualty insurance industry,continuing challenging economy, the SEBC made the following compensation decisions in 2011:2013:

In making its compensation decisions for Mr. Murphy, the SEBC reviewed our overall corporate performance, and a comprehensive written performance appraisal that was completed by non-employee members of Selective’s Board of Directors, and a questionnaire completed by all of Mr. Murphy’s direct reports and submitted anonymously to the SEBC Chairman.Directors. Mr. Murphy, as CEO, has ultimate responsibility for the achievement of all financial, strategic, and investment goals. Accordingly, with respect to 20112013 compensation decisions for Mr. Murphy, the SEBC considered the following:

Based on the achievement of positive net income, the degree of achievement of the Corporate ACIP financial and strategic measures,Measures, and guidance provided by the Compensation Consultant regarding CEO pay trends, the SEBC determined that Mr. Murphy’s 20112013 ACIP would be set at 67%166.7% of base salary. This compares to his initial ACIP opportunity range of 0-200% of base salary, and his performance formula adjusted ACIP maximum opportunity of 80% of base salary. This is equalan increase of 87.5% compared to the combined total of his 20102012 ACIP and discretionary cash bonus payments.payment. As the ACIP component of Mr. Murphy’s compensation is tied to our annual financial and strategic goals, including net income, the 20112013 ACIP payment reflects the mixedsolid results the company achieved in a challenging

year.by our Insurance Operations. The SEBC determined that Mr. Murphy’s ACIP payment was appropriate and consistent with Selective’s pay-for-performance philosophy.

Our other NEOs were critical in executing Selective’s 20112013 strategic goals and key accomplishments. In light of these accomplishments, the SEBC made the following compensation decisions in 20112013 for the other NEOs: