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THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE 2018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS DISCLOSED IN THIS PROXY STATEMENT.

You can find information about the compensation of our named executive officers in the section entitled, “Executive Compensation” and about Proposal 2 in the section entitled, “Information about Proposal 2” of 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. 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.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE SELECTIVE INSURANCE GROUP, INC. 2014 OMNIBUS STOCK PLAN.

You can find information about the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan (the “Omnibus Stock Plan”) in the section entitled, “Information about Proposal 3” of this Proxy Statement.

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.

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, 2018.2019.

You can find information about Selective’s relationship with KPMG LLP in the section entitled, “Information about Proposal 4”3” of this Proxy Statement.

New Jersey law and Selective’s By-Laws govern the vote on Proposal 4,3, on which you may:

Assuming a quorum is present, Proposal 43 will pass if it receives an affirmative vote of a majority of the votes cast at the Annual Meeting. Abstentions 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.

OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING

The Board of Directors is unaware 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 individuals 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 NASDAQNasdaq Stock Market (“NASDAQ”Nasdaq”) and SEC rules and regulations.

The Chairman of the Annual Meeting may refuse to allow the 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 Annual Meeting are detailed 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 with the SEC 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 applies to all forward-looking statements contained in this document.

VOTING AND PROXY PROCEDURE

HOW DO I VOTE?

You can vote four ways:

Timing is important, so please mail your proxy card promptly. 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, and 4.3. If any other matters requiring a vote arise during the meeting, the named

proxies will exercise their discretion using their best judgment to the extent permitted by applicable law and NASDAQNasdaq and SEC rules and 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 at the Annual Meeting by:

HOW WILL PROXIES BE VOTED IF I GIVE MY AUTHORIZATION?

If you: (i) properly execute your proxy card and return it to Selective; 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 according to 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, and 4.3. If other matters properly come before the Annual Meeting, the named proxies will vote on such matters using their best judgment to the extent permitted by applicable law and NASDAQNasdaq and SEC rules and 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); and the advisory (non-binding) vote on the 2018 compensation of Selective’s named executive officers (Proposal 2); and the approval of the amendment and

restatement of the Omnibus Stock Plan (Proposal 3). In contrast, we believe brokers are permitted tomay, at their discretion, vote uninstructed shares on the ratification of the appointment of our independent registered public accounting firm (Proposal 4) and may choose to do so at their discretion.3), which is a “routine” proposal. 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 represented by proxies that reflect abstentions and broker non-votes are counted for determining whether there is a quorum. We believe brokers may exercise their discretionary voting power for Proposal 4.

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 Proposal 2 and Proposal 3 requires the affirmative vote of a majority of votes cast at the Annual Meeting. Abstentions and broker non-votes do not affect Proposal 2 and Proposal 3.2. Approval of Proposal 43 requires the affirmative vote of a majority of votes cast at the Annual Meeting. Abstentions do not affect Proposal 4.3.

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, MAY 2, 20181, 2019

This Proxy Statement and our 20172018 Annual Report to Stockholders are available on
Selective’s Internet website atwww.Selective.com.

INFORMATION ABOUT PROPOSAL 1

Election of Directors

Under our By-Laws, directors in uncontested elections must be elected by a majority of votes cast. A majority exists when the number of votes cast “for” a director nominee exceeds the number of votes cast “against” that nominee. For more information on our majority voting policy, please see the section entitled, “Corporate Governance – Majority Voting for Directors in Uncontested Elections” of this Proxy Statement.

All directors stand 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’sThe Board of Directors currently has 1314 members. Under Selective’s Amended and Restated Certificate of Incorporation and By-Laws, 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 Directors. 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:

Any stockholder proposing one or more Board candidates must submit in writing all applicable information required by Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires in a solicitation of proxies for, and the election of a directorCompany’s By-Laws to the Chairperson of the Corporate Governance and Nominating Committee, c/o Corporate Secretary, Selective Insurance Group, Inc., 40 Wantage Avenue, Branchville, New Jersey 07890.

Regardless of source, theThe Corporate Governance and Nominating Committee evaluates all candidates, including those recommended by stockholders, 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.

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 ratified the Corporate Governance and Nominating Committee’s nomination of the 1314 directors listed below to stand for election at the 20182019 Annual Meeting for terms expiring at the 20192020 Annual Meeting or until a successor has been duly elected and qualified. A. David BrownPaul D. Bauer will be retiring at the 20182019 Annual Meeting and the Board will be reduced to 13 members.Meeting.

All 1314 nominees have consented to be named in this Proxy Statement and to serve if elected. The Board does not know any reason why any nominee 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 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 contrary instructions are given.

Board Recommendation

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

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Security Ownership of Management

The following table shows as of February 19, 2018:18, 2019:

* 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⁾ Mr. Cavanaugh was appointed to Selective’s Board effective as of July 17, 2018.

⁽³⁾ Mr. McCarthy was appointed to Selective’s Board effective as of January 1, 2018.

⁽⁴⁾Ms. Mitchell was appointed to Selective’s Board effective as of March 9, 2018.

⁽³⁾⁽⁵⁾ Includes: (i) 43,36143,891 shares held by Chas. E. Rue & Son, Inc. t/a Rue Insurance (“Rue Insurance”), an independent insurance agency of which Mr. Rue is Chairman and owner of more than a 10% equity interest (see the section entitled, “Transactions with Related Persons” of this Proxy Statement for more information); and (ii) 5,226 shares held by Mr. Rue’s wife.

⁽⁴⁾ Includes 118 shares held in custody for, and 104 shares held by, a daughter of Mr. Thebault.

Security Ownership of Certain Beneficial Owners

The following table lists the only persons or groups Selective knows to be the beneficial owners of more than 5% of any class of Selective’s voting securities as of December 31, 2017,2018, based on Schedules 13G/A filed by the beneficial owners on January 19, 2018, February 9, 2018,31, 2019, January 10, 2019, and February 9, 2018,8, 2019, respectively, with the SEC.

⁽¹⁾ BlackRock, Inc. (“BlackRock”) filed an amended Schedule 13G with the SEC on January 31, 2019 reporting that it is deemed to be the beneficial owner of an excess of 5% of the outstanding shares of Selective common stock. BlackRock reported that it has sole voting power with respect to 8,221,541 shares, shared voting power with respect to zero shares, sole dispositive power with respect to 8,367,833 shares, and shared dispositive power with respect to zero shares.

⁽²⁾ Vanguard Group, Inc. (“Vanguard”) filed an amended Schedule 13G with the SEC on January 10, 2019 reporting that it is deemed to be the beneficial owner of an excess of 5% of the outstanding shares of Selective common stock. Vanguard reported that it beneficially owns an aggregate of 5,961,045 shares and that it has sole voting power with respect to 57,446 shares, shared voting power with respect to 8,263 shares, sole dispositive power with respect to 5,901,225 shares, and shared dispositive power with respect to 59,820 shares.

⁽³⁾ Dimensional Fund Advisors LP (“Dimensional”) filed an amended Schedule 13G with the SEC on February 8, 2019 reporting that it is deemed to be the beneficial owner of an excess of 5% of the outstanding shares of Selective common stock. Dimensional reported that it has sole voting power with respect to 3,523,220 shares, shared voting power with respect to zero shares, sole dispositive power with respect to 3,617,918 shares, and shared dispositive power with respect to zero shares.

EXECUTIVE OFFICERS

The names of our executive officers and their ages, positions, and biographies are set forth below. Our executive officers are appointed by and serve at the discretion of our board of directors.

§ Various insurance operations and government affairs positions, Selective, 1998 to 2005.

§ Director, Consumer Agent Portal, LLC, since 2011.

§ Director, Commerce and Industry Association of New Jersey, since 2015.

§ Chartered Property Casualty Underwriter (CPCU).

§ Princeton University (B.A.).

§ Harvard University (Advanced Management Program).

TRANSACTIONS WITH RELATED PERSONS

Director William M. Rue is Chairman, and owns more than 10%, of the equity of Rue Insurance, an independent insurance agency that has been appointed to do business on behalf of Selective’s insurance subsidiaries since 1928. Mr. Rue has two children who are employed by Rue Insurance: a daughter; and a son, who also serves as president of the agency.agency and owns more than 10% of the equity of Rue Insurance. The appointment of Rue Insurance as an independent agent was made on similar terms and conditions as other agents of Selective’s insurance subsidiaries and includes the right to: (i) receive commissions for policies placed; and (ii) participate in the Amended and Restated Selective Insurance Group, Inc. Stock Purchase Plan for Independent Insurance Agencies (2010), Amended and Restated as of February 1, 2017.

In 2017,2018, Rue Insurance placed insurance policies for its customers and itself with Selective’s insurance subsidiaries and earned $2.2$2.1 million of commissions on direct premiums written of $11.1$10.1 million. Selective expects the relationship with Rue Insurance will continue in 2018.2019. All contracts and transactions with Rue Insurance were consummated in the ordinary course of business on an arm’s-length basis. For additional information regarding Mr. Rue, see the section entitled, “Information about Proposal 1 – Director Nominees” of this Proxy Statement.

In 2005, we established a private foundation, now named The Selective Insurance Group Foundation (the "Foundation"), under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). The Board of Directors of the Foundation is comprised of some of the officers of the Company and its insurance subsidiaries. We made $0.5 million of contributions to the Foundation in 2018.

BlackRock, a leading publicly traded investment management firm, has purchased our common shares in the ordinary course of its investment business and has previously filed Schedules 13G/A with the SEC. On January 31, 2019, BlackRock filed a Schedule 13G/A reporting beneficial ownership as of December 31, 2018, of 14.2% of our common stock. In connection with purchasing our common shares, BlackRock filed the necessary filings with insurance regulatory authorities. On the basis of those filings, BlackRock is deemed not to be a controlling person for the purposes of applicable insurance law.

We are required to disclose related party information for our transactions with BlackRock. BlackRock is highly regulated, serves its clients as a fiduciary, and has a diverse platform of active (alpha) and index (beta) investment strategies across asset classes that enables it to tailor investment outcomes and asset allocation solutions for clients.

BlackRock also offers the BlackRock Solutions^® investment and risk management technology platform, Aladdin^®, risk analytics, advisory, and technology services and solutions to a broad base of institutional and wealth management investors. We incurred expenses related to BlackRock for services rendered of $2.0 million in 2018. Amounts payable for such services at December 31, 2018 were $1.0 million.

As part of our overall investment diversification, we invest in various BlackRock funds from time to time. The market value of these investments was $0.8 million at December 31, 2018. There were no material transactions related to these holdings in 2018. There were no amounts payable on the settlement of these investment transactions at December 31, 2018.

Our pension plan contained investments in BlackRock funds of $131.9 million at December 31, 2018. We recorded a net investment loss on these funds of $9.3 million in 2018. In addition, our employee deferred compensation plan and defined contribution plan may offer our employees the option to invest in various BlackRock funds. All contracts and transactions with BlackRock were consummated in the ordinary course of business on an arm's-length basis.

Vanguard, one of the world's largest investment management companies, offers low cost mutual funds and exchange-traded funds ("ETFs"), as well as other investment related services. On January 10, 2019, Vanguard filed a Schedule 13G/A reporting beneficial ownership as of December 31, 2018, of 10.1% of our common stock. In connection with purchasing our common shares, Vanguard filed the necessary filings with insurance regulatory authorities. On the basis of those filings, we do not expect Vanguard to be deemed a controlling person for the purposes of applicable insurance law.

We are required to disclose related party information for our transactions with Vanguard. As part of our overall investment diversification, we may invest in various Vanguard funds from time to time. During 2018, we purchased $11.5 million in a Vanguard ETF and recorded dividend income of $0.4 million, with no amounts payable on the settlement of this transaction at December 31, 2018. The market value of this fund in our investment portfolio at December 31, 2018 was $10.5 million.

Our pension plan contained investments in Vanguard funds in 2018, but no investment in these funds existed at December 31, 2018. We recorded a net investment loss on these funds of $5.5 million in 2018. In addition, our deferred compensation plan and defined contribution plan may offer our employees the option to invest in various Vanguard funds. All transactions with Vanguard are consummated in the ordinary course of business on an arm's-length basis.

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 any of 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 in Selective’s common stock.

Under the Related Person Policy, the Audit Committee (or Chairperson of the Audit Committee if between meetings) must approve Related 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 not inconsistent with, the best interests of Selective and its stockholders.

Director Independence

The Board of Directors has determined that all directors and nominees for director are independent under NASDAQNasdaq and SEC rules and regulations – exceptother than Messrs. Marchioni, Murphy, and Rue.Rue^1[1]. In making its determination, the Board considered disclosures made by the directors related to various transactions, relationships, or arrangements involving Selective. Disclosures by the following twofour directors required analysis:

Terrance W. Cavanaugh: In determining that Mr. Cavanaugh is an independent director, the Board considered that a son of Mr. Cavanaugh is employed as a director and Insurance Company Industry Leader of the FINEX Global division of Willis Towers Watson (“WTW”), an organization with which our insurance subsidiaries and employee benefit plans have commercial relationships, although we have not engaged the services of the division for which Mr. Cavanaugh’s son works.

Mr. Cavanaugh also has a daughter who is employed by Hyatt Hotels Corporation as an Event Management Associate. We have commercial relationships with various Hyatt branded entities. However, the Board has determined that these commercial relationships are not material principally because: (i) the payments made were substantially less than 2% of the consolidated gross revenues of WTW and Hyatt, respectively; and (ii) neither Mr. Cavanaugh’s son nor daughter had any involvement with the transactions with WTW and Hyatt.

As: (i) neither Mr. Cavanaugh nor his son or daughter have any involvement in the above transactions; (ii) nearly the entire scope of our relationships with WTW and Hyatt pre-dates the commencement of Mr. Cavanaugh’s service on our Board; and (iii) the amount of revenue generated for WTW and Hyatt through these arrangements is not material to WTW or Hyatt, the Board determined these arrangements do not affect Mr. Cavanaugh’s independence.

Ronald L. O’Kelley: In determining that Mr. O’Kelley is an independent director, the Board considered that twoa daughter of his daughtersMr. O’Kelley is Vice President for Quality Improvement & Compliance with Liberty Mutual Insurance Company (“Liberty Mutual”), with which one of our insurance subsidiaries had a commercial relationship during 2018. However, the Board has determined that the commercial relationship is not material principally because: (i) the payments made between our subsidiary and Liberty Mutual were substantially less than 2% of the consolidated gross revenues of Liberty Mutual; and (ii) Mr. O’Kelley’s daughter had no involvement with Selective’s insurance program with Liberty Mutual.

Another daughter of Mr. O’Kelley is Managing Director of State Street Global Markets, LLC, a son-in-law are employed with companiessubsidiary of State Street Corporation (“State Street”), with which we do business.² As:have a commercial relationship. However, the Board determined that the commercial relationship is not material principally because: (i) the payments were substantially less than 2% of the consolidated gross revenues of State Street; and (ii) Mr. O’Kelley, his daughters, and son-in-law haveO’Kelley’s daughter has no involvement in such transactions; (ii) the relationships with such companies pre-date the employment of his daughters with these companies and his daughter’s marriage to the son-in-law; and (iii) the amount of revenue involved in such arrangements is immaterial to the business of such entities,transactions. Accordingly, the Board determined that these arrangements do not affect Mr. O’Kelley’s independence under applicable NASDAQ and SEC rules and regulations.independence.

John S. Scheid: In determining that Mr. Scheid is an independent director, the Board considered that we currently provide insurance coverage to the Messmer Catholic Schools (“Messmer”), a charitable organization of which Mr. Scheid has been a director since 2013 and chairman since 2016. We provide insurance coverage to Messmer on terms no more favorable than to other third parties. As: (i) Mr. Scheid has no involvement in the securing of such insurance policy coverage; (ii) his relationship with Messmer pre-dates his membership on our Board; and (iii) our business relationship with Messmer pre-dates Mr. Scheid’s appointment to Selective’s Board, the Board determined that this arrangement does not affect Mr. Scheid’s independence under applicable NASDAQindependence.

¹For a description of the transactions, relationships, or arrangements related to Mr. Rue, see the section entitled, “Transactions with Related Persons.”

H. Elizabeth Mitchell: In determining that Ms. Mitchell is an independent director, the Board considered that Ms. Mitchell’s husband retired in 2018 as Chief Risk and SEC rulesActuarial Officer of Partner Re, a reinsurance organization with which our insurance subsidiaries have a commercial relationship. As: (i) neither Ms. Mitchell nor her husband have any involvement in the transactions with Partner Re entities; (ii) the transactions with such companies pre-date Ms. Mitchell’s service on our Board; and regulations.(iii) the amount of revenue involved in such transactions is immaterial to the business of such entities, the Board determined these arrangements do not affect Ms. Mitchell’s independence.

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. Directors, executive officers, and greater than 10% stockholders are required by SEC regulations to furnish Selective with copies of all Section 16(a) Exchange Act reports they file. Based solely on Selective’s review of the provided copies of Forms 3, 4, and 5, or written representations from certain reporting persons that Forms 5 were not required, 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, 2017.2018.

____________________________

¹For a description of the transactions, relationships, or arrangements related to Mr. Rue, see the section entitled, “Transactions with Related Persons.”

²A daughter of Mr. O’Kelley is Vice President for Quality Improvement & Compliance with Liberty Mutual Insurance Company (“Liberty Mutual”). One of our insurance subsidiaries has had an agreement since 2011 with a Liberty Mutual subsidiary that provides long-term disability insurance and long-term, short-term and related disability and leave management services to Selective and its employees. The aggregate annual premium Selective pays for these services is approximately $688,000, including approximately $280,000 of contributions by Selective’s employees for supplemental disability insurance coverage. Liberty Mutual’s aggregate revenues for 2017 were approximately $39.4 billion. In 2014, another daughter of Mr. O’Kelley became Managing Director of State Street Global Markets, LLC, a subsidiary of State Street Corporation (“State Street”). Selective paid State Street Bank and Trust Company, a subsidiary of State Street, approximately $306,000 in 2017 for security custodial and banking services. State Street’s aggregate revenues for 2017 were approximately $11.2 billion. Mr. O’Kelley’s daughter has no involvement with these transactions. This same daughter is married to the Vice President, Executive Relationship Manager – US / Canada of American International Group, Inc. (“AIG”). In 2017, we ceded approximately $155,000 of premium to American International Reinsurance Company (“AIRCO”), an AIG subsidiary. AIRCO is a participant on several layers of our property catastrophe reinsurance program. In addition, National Union Fire Insurance Company of Pittsburgh (“National Union”), a subsidiary of AIG, participated in our 2008 national workers compensation reinsurance pool quota share treaty. In 2017, we received approximately $26,000 in recovered net losses under that treaty from National Union.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

Selective has established Corporate Governance Guidelines that are available for review in the Corporate Governance subsection of the Investors 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. J. Brian Thebault is presently the Lead Independent Director. In 2017,2018, Selective’s independent directors met four times outside the presence of management.

All members of the Audit Committee, the Corporate Governance and Nominating Committee, and the Salary and Employee Benefits Committee are independent directors under NASDAQNasdaq 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. 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. If any incumbent director nominee receives less than a majority of votes cast, the following process must be followed:

Stock Ownership and Retention Requirements and Hedging

Selective believes that stock ownership by directors and management encourages the enhancement of stockholder value. Selective’s stock ownership guidelines, which are based on prevailing corporate governance practices, are included in our Corporate Governance Guidelines, which are available in the Corporate Governance subsection of the Investors section ofwww.Selective.com.

The following table shows the common stock ownership guidelines for our directors and certain officers. Each director must meet the guidelines within five years of his or her first election to the Board and each officer must meet, or have met, the guidelines on the later of March 31, 2015, or within six years of attaining the specified position:

In calculating ownership under the guidelines:

Officers are required to retain direct ownership of at least 75% of the shares acquired under an equity award granted under any Selective equity compensation plan or other written compensatory arrangements that pays out after July 27, 2011, net of taxes and transaction costs, unless the officer has met his or her applicable stock ownership requirement as set forth above. OurAll of our directors and officers have met, or are on track to meet, the required ownership guidelines.

Selective officers, directors, and employees are prohibited from entering into hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involving Selective common stock. These transactions would allow an officer, director, or employee to hold Selective securities without the full risks and rewards of ownership. When that occurs, the officer, director, or employee may no longer have the same objectives as Selective’s other stockholders. For this reason, such hedging or monetization transactions are prohibited.

BOARD MEETINGS AND COMMITTEES

The Board of Directors held five meetings in 2017.2018. All directors attended 75% or more of the aggregate of the meetings of the Board of Directors and their respective committees for the period during which they were directors in 2017.2018. Selective expects all directors to attend the 2019 Annual Meeting, and allMeeting. All directors serving on the Board on April 26, 2017,May 2, 2018 attended the 20172018 Annual Meeting.

The Board has five standing committees:

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

RISK MANAGEMENT

Board Leadership Structure

Our two principal Board leadership positions are: (i) Chairman of the Board; and (ii) Lead Independent Director. The Lead Independent Director position is defined in our Corporate Governance Guidelines and is very similar to the role of an independent, non-executive Chairman. We believe 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 and evaluates their effectiveness of the Board and its committees.

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:

Our Lead Independent Director is J. Brian Thebault, who was appointed in 2017 and has served on our Board since 1996. Our Chairman of the Board since 2000 ishas been Gregory E. Murphy, our Chief Executive Officer.CEO. At this time, we believe there is a benefit to having Mr. Murphy serve as both Chairman of the Board and Chief Executive Officer.CEO. As the executive 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 its appropriate committee.

Enterprise Risk Management

As a property and casualty holding company, our insurance subsidiaries are in the business of assuming risk. We categorize our major risks into the following five broad categories:

Our internal control framework operates with the three lines of defense model. The first line of defense consists of individual functions that deliberately assume risks and own and manage our risk on a day-to-day and business operational basis. The second line of defense is responsible for risk oversight and also supports the first line to understand and manage risk. A dedicated risk team led by the Chief Risk Officer is responsible for this second line and reports to the Chief Financial Officer. The third line of defense is our Internal Audit team, which provides independent, objective assurance as to the assessment of the adequacy and effectiveness of our internal control environment. It also coordinates risk-based audits and compliance reviews and other specific initiatives to evaluate and address risk within targeted areas of our business.model:

We use Enterprise Risk Management (“ERM”) as part of our governance and control process to take an entity-wide view of our major risks and their impact. Our ERM framework is designed to identify, measure, report, and monitor our major risks and develop appropriate responses to support successful execution of our business strategy.

Our Board oversees our ERM process, and sets our overall risk appetite, while the Executive Risk Committee is responsible for the holistic evaluation, management, and supervision of our aggregated risk profile and determination of future risk management actions in support of our overall risk appetite. In addition to the Board’s oversight of our overall risk and the ERM process, various committees of the Board oversee risks specific to their areas of supervision and report their activities and findings to the full Board. The Executive Risk Committee uses various management committees for detailed analysis and management of specific major risks. The Executive Risk Committee primarily consists of the Chief Executive Officer, histhe President and Chief Operating Officer, their direct reports and key operational leaders, each of whom is responsible for management of risk in his or her respective area, and the Chief Risk Officer. 

In addition to the various committees and the governance process over the ERM process, we believe that high-quality and effective ERM is best achieved when it is a shared cultural value throughout the organization. We consider ERM to be a key process that is the responsibility of every employee. We have developed and use tools and processes that we believe support a culture of risk management and create a robust framework of ERM within our organization. In addition, our compensation policies and practices, as well as our governance framework, including our Board’s leadership structure, are designed to support our overall risk appetite and strategy. We believe that our ERM processes and practices help us to identify potential events that may affect us, quantify, evaluate and manage the risks to which we are exposed, and provide reasonable assurance regarding the achievement of our objectives.

We rely on quantitative and qualitative tools to identify, prioritize, and manage our major risks including proprietary and third-party computer modeling as well as various other analyses. 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 Chief Risk Officer reports on the Executive Risk Committee’s activities, analyses, and findings to the Board or the appropriate Board committee, and provides a quarterly update on certain risk metrics. Consistent with the requirements of state insurance regulators, our insurance subsidiaries annually file their Own Risk and Solvency Assessment report, which is an internal assessment of our insurance subsidiaries’ solvency. The Chief Risk Officer develops the report in coordination with members of the Executive Risk Committee, and the report is provided to the Board. The Chief Risk Officer reports on the Executive Risk Committee’s activities, analyses, and findings to the Board or the appropriate Board committee, and provides a quarterly update on certain risk metrics.

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 detailed 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, from time-to-time,time to time, we adjust our compensation programs as risks in our industry and reportable segments change to help ensure that compensation and risk remain appropriately aligned.

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

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 to 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 that provides guiding business ethics principles for all Selective personnel, including executive officers. The Code of Conduct is located in the Corporate Governance subsection of the Investors section of Selective’s website,www.Selective.com. Any material 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.

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³Our statutory combined ratio is similar to our GAAP combined ratio, except that costs related to the successful acquisition of insurance contracts are deferred and amortized over the life of the insurance policies under GAAP, while these costs are expensed under statutory accounting principles, and the expense ratio for GAAP is calculated in relation to net premiums earned, compared to net premiums written under statutory accounting principles. Our combined ratio was 0.9% lower under statutory accounting principles in 2017 than under GAAP.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

Purpose of Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides our stockholders information about our 20172018 compensation program for the following named executive officers (“NEOs”):

Effective December 31, 2014, ourSince January 1, 2017, as designated by the Board of Directors, designated the CEOMessrs. Murphy, Wilcox, Marchioni, and his three direct reports asLanza have been Selective’s only “executive officers” under Section 16 of the Exchange Act. Since January 1, 2017, following Mr. Wilcox’s election as Executive Vice President and Chief Financial Officer, Messrs. Wilcox, Marchioni, and Lanza were Mr. Murphy’s only direct reports.

Consideration of 20172018 Say-on-Pay Advisory Vote Results

Since our initial say-on-pay proposal in 2011, our stockholders have overwhelmingly supported our compensation decisions. At our 20172018 Annual Meeting of Stockholders, our stockholders voted on an advisory basis to approve the compensation of our NEOs, with over 96%97% of votes cast voting in favor of the proposal. We considered these results and, in light of our stockholders’ indicated support for our compensation decisions, did not make any material changes in our 20172018 compensation decisions and policies. We have continued to maintain our emphasis on providing a combination of both short-term and long-term incentive compensation, which we believe rewards our executives for delivering stockholder value.

20172018 Corporate Performance Highlights

During 2017,2018, we madecontinued to make excellent progress executing our Strategic Business Plan Framework that focuses on our five strategic imperatives:

To that end, in 2017,For 2018, we followed through on an aggressive business plan that significantly outperformed the expected industry statutory combined ratio⁴ by over 12 points. We generated a non-generally accepted accounting principles (“GAAP”)GAAP return on equity of 10.2% and a non-GAAP operating return on equity^5[3] (“OROE”ROE”) of 11.4%12.5%, which was: (i) above our budgeted projection for the year,year; and (ii) above the A.M. Best CompanyConning, Inc.’s expected 20172018 U.S. property and casualty insurance industry after-taxGAAP return on surplusequity of 3.6%7.2%. We also produced an impressive GAAP combined ratio of 93.3% (90.4% excluding catastrophe losses)95.0%, or 92.4% on a statutory basis, which was better than our target, and which compares very favorably to A.M. Best Company’sConning, Inc.’s expected 20172018 U.S. property and casualty insurance industry statutory combined ratio of 105.1% with 8.8 points of catastrophe losses.⁶99.4%.

GAAP COMBINED RATIO

In addition to our strong combined ratio results, other key accomplishments for 2017 included the following:

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⁴³The combined ratio is the property and casualty insurance industry standard measure of underwriting profitability. A combined ratio under 100% indicates that an insurance company is generating an underwriting profit and a combined ratio over 100% indicates that an insurance company is generating an underwriting loss.

⁵Operating Non-GAAP operating return on equity is a non-GAAP financial measure and 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) / 2.

Operating income differs from net income by the exclusion of after-tax net realized and unrealized gains orand losses on investments and the deferred tax write-offasset charge that was recognized in 2017 relatedin relation to the enactment of federal tax reform, and the results of discontinued operations.reform. 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. These investment gains and losses, other-than-temporary investment impairments that are charged to earnings, unrealized gains and losses on equity securities, and the deferred tax write-off, and the results of discontinued operations, could distort the analysis of trends. Operating incomereturn on equity is not intended as a substitute for return on equity that is based on net income prepared in accordance with GAAP.

⁶We often refer

In addition to our statutoryexcellent combined ratio and non-GAAP operating ROE, other statutory measures as they relate to our performance versuskey accomplishments for 2018 included the industry as a whole, as industry statutory financial metrics are readily available whereas the equivalent GAAP metrics may not be.following:

In the thirdfourth quarter of 2017,2018, A.M. Best Company reaffirmed our “A (Excellent)” (with a “stable” outlook) financial strength rating, citing our excellent level of risk-adjusted capitalization, strong operating performance,balance sheet, sustained profitability, favorable business profile, and high policy retention rates across our standard lines of business.appropriate enterprise risk management. During the fourth quarter of 2017,2018, S&P Global Ratings (“S&P”) reaffirmed our financial strength rating of “A” (with a “stable” outlook). This rating reaffirmation reflects S&P’s view, citing our improved operating performance in standard lines supported by sophisticated underwriting tools, a strong network of our strong business risk profileindependent agents, and strong financial risk profile, built on our strong competitive position and very strong capital and earnings. Our stable outlook also reflects S&P’s expectation that we will sustain our strong competitive position and operating performance.adequacy. Fitch Ratings reaffirmed our “A+” rating (with a “stable” outlook) in the second quarter of 20172018, citing our strong financial performance andunderwriting results, solid capitalization with growth in stockholders’ equity, as well as a strong competitive positionbusiness profile, and diversified underwriting.stable interest coverage metrics. Moody’s Investors Service’s reaffirmed our “A2” rating (with a “stable” outlook) in the secondfirst quarter of 2017,2018, referencing our solid regional franchise, established independent agency support, solid risk-adjusted capitalization, strong invested asset quality, and good underwriting profitability.

CEO Pay for Performance

The following table presents Mr. Murphy’s compensation over the past five years, its dollar and percentage change from the prior year, and Selective’s TSR for the one-, three-, and five-year periods. We believe the table demonstrates the correlation between changes in Selective’s TSR and Mr. Murphy’s compensation, which is consistent with, and reflects our philosophy of, aligning compensation with the interests of stockholders and long-term performance.

*For 2017, also includes discretionary bonus.

* Note: The value of “Indexed Total Shareholder Return (TSR)” at each year-end shown above is based on the then-current value of an assumed $100 investment in Selective stock on December 31, 2012,2013, and reflects changes in stock price and assumes that dividends paid to stockholders are reinvested in Selective stock.

*For 2017, also includes discretionary bonus.

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 director compensation issues. Compensation Consultant representatives: (i) review senior executive compensation; (ii) prepare comprehensive competitive compensation analyses for our NEOs; (iii) provide counsel to the SEBC regarding award 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.

The Compensation Consultant has advised the SEBC since 2007. The Compensation Consultant’s only business withConsultant does not provide any services to Selective isother than to advise the SEBC on executive and director compensation matters. In light of the factors contained inBased on applicable SEC and NASDAQNasdaq rules, the SEBC has determined that the Compensation Consultant’s services do not raise a conflict of interest.

The SEBC has full autonomy in determining executive compensation and makes all final determinations about CEO and other NEO compensation, incorporating information provided by the Compensation Consultant. The CEO makes compensation recommendations to the SEBC onfor the NEOsPresident and Chief Operating Officer based on the CEO’s assessment of each NEO’sthe President and Chief Operating Officer’s annual performance, contributions to Selective, and potential for advancement. The CEO and President and Chief Operating Officer make compensation recommendations to the SEBC for the other NEOs based on their assessment of the other NEOs’ annual performance, contributions to Selective, and potential for advancement. In making its compensation decisions, the SEBC also considers pre-established guidelines regarding award amounts and pay levels at companies with which we compete for business and executive talent (discussed below), Selective’s performance, executive retention issues, internal compensation parity, and advancement in abilities, experience, and responsibilities. The Executive Vice President, 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 who will drive the organization’s success by creating stockholder value through profitable growth and effective risk management.

Our compensation program is designed to: (i) reward the achievement of our business objectives;objectives through the execution of our Strategic Business Plan Framework and its five strategic imperatives; (ii) recognize our executives for their individual achievements by motivating them to execute their duties and responsibilities in a manner not reasonably likely to have a material adverse effect on our operations or results; and (iii) promote and align both short- and long-term relationshipsinterests of our executives with those of our executives.shareholders. We aim to provide these highly talented and qualified executives with compensation that is competitive, both in value and mix of short-term and long-term cash and stock-based components, with the total compensation paid by other property and casualty insurance companies and other companies with which we compete for executive talent.

Consistent with our pay-for-performance philosophy, we link our annual incentive awards to pre-determined financial and strategic 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 generally 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 it is important to be informed of compensation practices at multiple comparator groups of publicly-traded companies and property and casualty insurance holding companies. The SEBC believes that:

Accordingly, the SEBC receivesreceived from, and reviewsreviewed with, the Compensation Consultant the following benchmarking information:information in late 2017 for purposes of establishing 2018 compensation:

As one reference point in setting 2017 target totalpart of the 2018 compensation for the NEOs,process, in late 2016,2017, the Compensation Consultant furnished the SEBC with the most recent NEO compensation information available as of that time from two market reference sources as follows:the following:

To re-evaluate its earlier 20172018 NEO compensation decisions and in establishing compensation parameters for 2018,2019, the SEBC reviewed the most recent NEO compensation information available as of that time from these two market reference sources in late 2018 and early 2019. OneBeacon Insurance Group, Ltd. was acquired in September 2017 and early 2018.the SEBC determined that it was appropriate to replace OneBeacon Insurance Group, Ltd. with Erie Indemnity Company in the Proxy Peers.

Information for the Proxy Peers in the above table (collectively, the “Proxy Peer Group”) was obtained from proxy statements and other materials filed with the SEC. This information includes data on compensation components and analysiscomparative analyses of the overall financial performance of the organizations in the group. We analyze our performance compared to them.Proxy Peer Group. The Proxy Peer Group is composed of organizations that provide similar products, have a similar geographic market scope, and compete with us for executive talent. The Property and Casualty Insurance Compensation Survey provides supplemental data from organizations 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 and may have to recruit from larger organizations, we look at data from throughout the property and casualty insurance industry. In late 20172018 and early 2018,2019, the SEBC reviewed information reported in the Property and Casualty Insurance Compensation Survey, which reflects data from 5653 organizations, including Selective, that have an annual median direct written premium of $2.7$3.4 billion and annual median revenues of $2.3$3.2 billion.

When the SEBC evaluates the compensation we pay to our NEOs, it seeks to benchmark against positions with comparable job responsibilities whenever possible. Mr. Marchioni’s position, which has broad succession plan-mandated responsibilities, does not have a direct comparator in our multiple market reference groups. The lack of a true benchmark position for Mr. Marchioni impacts the compensation comparison of our NEOs as a group. With this in mind, the SEBC deemed the positioning of aggregate 2017Relative 2018 total NEO compensation, as reported in the Summary Compensation Table, for our NEOs, which was 38%62% above the totalaggregate average median, and 16% below the aggregate average 75th percentile, of the reference market sources, to bewhich the SEBC deemed appropriate given Selective’s performance.corporate performance and the individual performance of our NEOs, and particularly the performance of Mr. Marchioni, for whom there is not an appropriate comparator within the benchmarks. The components comprising total compensation differed from market to varying degrees. Specifically, base salary was above the total average median by 14%12% and annual cash incentive awards and discretionary bonus were 125%130% above the total average median, resulting in annual total cash compensation that was above the total average median by 73%82%. The grant date fair value of our 20172018 long-term incentive awards was 7%30% above the total average median. Considering each individual’s accomplishments and contributions, the degree to which we achieved our 20172018 goals and significantly outperformed A.M. Best Company’srelative to the expected industry performance, the SEBC felt that each NEO’s compensation was appropriately positioned relative to market.appropriate.

20172018 ELEMENTS OF COMPENSATION AND ALLOCATION BETWEEN CURRENT AND
LONG-TERM COMPENSATION

The table below shows the percentage of total variable and total fixed compensation for the CEO and the other NEOs that is short-term incentive compensation (ACIP and discretionary bonus for Messrs. Murphy and Marchioni)(ACIP) versus long-term incentive compensation (LTIP), and fixed compensation (base salary) versus variable compensation (ACIP discretionary bonus for Messrs. Murphy and Marchioni, and LTIP). When evaluating 20172018 compensation for our CEO and other NEOs, the SEBC considered: (i) our overall results compared to budget and projected industry results; (ii) our ability to obtain renewal pure price increases on our insurance business that allowed us to achieve our statutoryproduce a strong combined ratio targets;ratio; (iii) our ability to profitably grow NPW to meet or exceed budgeted targets;NPW; (iv) our investment income performance compared to both budget and benchmark targets; (v) significant claims improvement initiatives; and (vi) retention of top talent. These factors were viewed in light of the relative competitive positioning of the compensation of our CEO and the other NEOs.

As the table indicates, the 20172018 compensation allocation aligns closely with our compensation philosophy, which is designed to motivate executives to achieve short-term and long-term corporate objectives consistent with our stockholders’ economic interests. We strive to achieve a balance between pay incentive vehicles and performance time horizons.

The charts below reflect the allocation of 20172018 compensation to LTIP, ACIP, discretionary bonus, and base salary for the CEO and an average for all other NEOs:NEOs on average:

Base Salary

Our base salary compensation 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 positions with comparable job content and overall market demand for each position. The SEBC generally believes that base salaries should be aligned with market trends for executives with similar responsibilities at comparable companies. When establishing the base salaries of NEOs, the SEBC also considers:

Based on these considerations, the position of each NEO’s salary to competitive data, and the desire to contain fixed costs in support of expense ratio initiatives, Messrs. Murphy, Marchioni, and Lanza did not receivenone of our NEOs received a base salary increase in 2017. Mr. Wilcox, who was hired on January 1, 2017, was not eligible for a salary increase.2018.

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 and/or financial organizational performance goals. For 2017,2018, 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, 2014 (the “Cash Incentive Plan”). ACIP awards made to our NEOs infor 2017 and prior years were intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).Code. For more information regarding the application of Section 162(m) to the executive compensation program for our NEOs, see the section below entitled, “Tax Treatment and Accounting.”

2017 ACIP Measures for NEOs

In order for the 2017 ACIP awards to our NEOs who are “covered employees” under Code Section 162(m) to qualify as performance-based compensation, the SEBC determined in February 2017 that the ACIP awards for covered employees would fund at each NEO’s maximum based on our achievement in 2017 of a single performance measure; positive GAAP net income. The maximum award opportunity established by the SEBC for each of our NEOs under the ACIP is shown below under the section entitled, “2017 ACIP Payment Opportunities and Awards for NEOs.” If we did not achieve positive GAAP net income in 2017, the maximum ACIP awards for executive officers would have been determined entirely on 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”).

By achieving positive GAAP net income of $168.8 million in 2017, we met the performance requirements under Code Section 162(m) and the SEBC could have paid up to the individual maximum amounts for the 2017 ACIP awards or exercised negative discretion.

20172018 Corporate ACIP Measures

Our Corporate ACIP Measures are established to encourage our employees to remain focused on particular financial and strategic objectives, even in the face of especially challenging circumstances in a performance year. For 2017,2018, the SEBC determined that thefor each NEO, his respective Corporate ACIP funding opportunity would be between 0% and 126.7%143.5% of target,each NEO’s maximum ACIP opportunity (expressed as a percentage of salary), and based on attainment of the Corporate ACIP Measures. Zero percent (0%)Measures, which consisted of financial and strategic initiative measures.

As shown below, 0% to 76.7%88.5% of this target percentagethe maximum ACIP opportunity was attributable tobased on a financial performance goal of achieving a statutoryGAAP combined ratio of between 88.5%89.0% and 100%100.5%, and 0% to 50%55% of this target percentagethe maximum ACIP opportunity was attributable tobased on the achievement of 1315 measures related to our five strategic imperatives (with an additional potential 5% from the pure rate profitability improvement goal).imperatives. The table below reflectsshows total potential Corporate ACIP percentagespayouts at various statutory combined ratio percentages, ifassuming all 1315 measures were fully met:

20172018 Corporate ACIP Measure Results

The 20172018 Corporate ACIP Measure results arewere based on our achievement of the financial metric of overall GAAP combined ratio and the strategic measures, as follows:described in greater detail below.

Financial Performance Results

For 2018, our overall GAAP combined ratio was 95.0%. Accordingly, the financial performance component of the Corporate ACIP Measures generated funding at 42.3%. 

Strategic Measures Performance Results

As reflected in the table below, we fully achieved 13 measures, partially achieved one measure, and did not achieve one measure of the 15 total 2018 ACIP strategic measures, which support our five strategic imperatives. Accordingly, the strategic measures performance component of the Corporate ACIP Measures generated funding at 47.5%.

As reflected in the above table, we fully achieved 10 and partially achieved one of the 13 measures under the ACIP’s 2017 four focus areas relating to our five strategic initiatives. These accomplishments equate to the strategic performance goal component under the Corporate ACIP Measures generating funding at 48.5%.

Financial Performance Results

For 2017, our overall statutory combined ratio was 92.4%, which included 2.9 points of catastrophe losses. Accordingly, the financial performance component of the Corporate ACIP Measures generated funding at 50.7%.