Selective Insurance (SIGI) 8-K Selective Insurance Group Reports

SELECTIVE INSURANCE GROUP, INC.

THIRD QUARTER 2009 INVESTOR PACKET

TABLE OF CONTENTS

Earnings Press Release	1
Selected Balance Sheet Data	6
Selected Income Statement Data	7
Quarterly Investment Income	8
Statutory Combined Ratio Summary by LOB Quarter	9
Statutory Combined Ratio Summary by LOB YTD September	10
Consolidated Balance Sheets	11
Consolidated Statements of Income	12
Consolidated Statements of Stockholder’s Equity	13
Consolidated Statements of Cash Flow	14
Statutory Balance Sheets	15
Statutory Statements of Income	16
Investment Portfolio – Appendix
Alternative Investments Exhibit	17
Municipal Bond Portfolio Exhibit	18
Structured Securities Exhibit	19
RMBS & RABS Exhibit	20
RMBS & RABS by Vintage Year Exhibit	21
RMBS and RABS by Type Exhibit	22
Alt-A by Vintage Year Exhibit	23
CMBS Exhibit	24
CMBS by Vintage Year Exhibit	25
CMBS by Type Exhibit	26
Fixed Maturities Severity & Duration of Unrealized/Unrecognized Losses Exhibit	27
Credit Quality of AFS Securities Exhibit	28
Credit Quality of HTM Securities Exhibit	29

Selective Insurance Group, Inc.

Selected Balance Sheet Data (unaudited)

($ in thousands, except per share amounts)

	September 30,									September 30,								December 31,
	2009									2008								2008
				��			Unrealized/								Unrecognized/								Unrecognized/
	Balance				Market		Unrecognized			Balance			Market		Unrealized			Balance			Market		Unrealized
	Sheet				Value		Gain/(Loss)			Sheet			Value		Gain/(Loss)			Sheet			Value		Gain/(Loss)
Invested Assets:
Corporate bonds1,2	$	1,122,000				1,134,012		(23,009	)	$	1,113,483			1,129,880		(58,912	)	$	1,024,179			1,024,181		(124,294	)
Gov't\ Municipal bonds2		2,170,426				2,194,067		96,828			1,908,528			1,892,175		(14,648	)		2,011,262			2,011,275		35,240
Total bonds		3,292,426				3,328,079		73,819			3,022,011			3,022,055		(73,560	)		3,035,441			3,035,456		(89,054	)
Equities		89,892				89,892		13,087			197,201			197,201		39,756			132,131			132,131		6,184
Short-term investments		236,896				236,896		-			181,839			181,839		-			198,111			198,111		-
Trading securities		-				-		-			7,666			7,666		(2,075	)		2,569			2,569		(1,216	)
Other investments		147,482				147,482		(20,381	)		208,947			208,947		16,617			172,057			172,057		(5,585	)
Total invested assets		3,766,696				3,802,349		66,525			3,617,664			3,617,708		(19,262	)		3,540,309			3,540,324		(89,671	)
Invested assets per $ of stockholders' equity		3.82									3.70								3.98
Total assets		5,158,303									5,046,663								4,945,556
Liabilities:
Reserve for losses		2,318,856									2,262,342								2,256,329
Reserve for loss expenses		399,999									380,807								384,644
Unearned premium reserve		895,446									907,846								844,334
Total liabilities		4,171,974									4,068,899								4,055,063
Stockholders' equity		986,329									977,764								890,493
Total debt to capitalization ratio		21.0	%								21.9	%							23.5	%
Adjusted total debt to capitalization ratio 3		15.0	%								15.8	%							17.0	%
Book value per share		18.58									18.53								16.84
Book value per share excluding
unrealized gain or loss on bond portfolio		18.12									19.44								17.94
NPW per insurance segment employee		772									807								797
Statutory premiums to surplus ratio		1.6	x								1.6	x							1.7	x
Statutory surplus		903,488									932,846								884,431

1 Includes mortgage-backed and asset-backed securities.

2 Certain prior year amounts were reclassified to conform with currrent year presentation.

3 The adjusted debt to capitalization ratio reflects a reduction in debt for amounts held in an  irrevocable trust for the benefit of senior note holders as well as the median rating agency equity treatment of 75% applied to our $100 million Junior Subordinated Notes issued September 25, 2006.

Selective Insurance Group, Inc.

Selected Income Statement Data (unaudited)

September 2009

($ in thousands, except per share amounts)

	THREE MONTHS ENDED SEPTEMBER 30,												NINE MONTHS ENDED SEPTEMBER 30,
	2009						2008						2009						2008
				Per diluted share						Per diluted share						Per diluted share						Per diluted share
Consolidated
Revenue	$	390,175					$	389,211						1,124,216					$	1,232,995
Operating income		23,845			0.44			22,916			0.44			49,211			0.92			68,721			1.29
Net realized losses, after tax		(3,239	)		(0.06	)		(14,676	)		(0.28	)		(26,197	)		(0.49	)		(12,441	)		(0.23	)
Income from continuing operations		20,606			0.38			8,240			0.16			23,014			0.43			56,280			1.06
Discontinued operations, net of tax		(7,599	)		(0.14	)		752			0.01			(7,196	)		(0.13	)		1,866			0.03
Net income		13,007			0.24			8,992			0.17			15,818			0.30			58,146			1.09
Operating return on equity		9.9	%					9.2	%					7.0	%					8.9	%
Insurance Operations
Gross premiums written		446,419						470,493						1,312,630						1,362,270
Net premiums written		376,718						402,739						1,117,764						1,184,087
Net premiums earned		355,906						374,708						1,078,090						1,135,349
Underwriting (loss) profit   - before tax		(142	)					(1,194	)					2,927						1,539
- after tax		(92	)		(0.00	)		(776	)		(0.01	)		1,903			0.04			1,000			0.02
GAAP combined ratio		100.0	%					100.3	%					99.7	%					99.9	%
Commercial lines
Net premiums earned		301,279						321,849						918,069						979,137
GAAP combined ratio		99.3	%					99.5	%					98.9	%					99.1	%
Personal lines
Net premiums earned		54,627						52,859						160,021						156,212
GAAP combined ratio		104.2	%					105.6	%					104.5	%					104.4	%
Investments
Net investment income    - before tax		36,585						36,134						78,670						112,515
- after tax		28,382			0.53			28,543			0.54			65,392			1.23			87,996			1.65
Effective tax rate		22.4	%					21.0	%					16.9	%					21.8	%
Annual after-tax yield on investment portfolio														2.4	%					3.2	%
Annual after-tax, after-interest expense yield														2.0	%					2.8	%
Invested assets per $ of stockholders' equity														3.82						3.70
Other expenses (net of other income)
Interest expense    - before tax		(4,751	)					(5,036	)					(14,618	)					(15,472	)
- after tax		(3,089	)		(0.06	)		(3,274	)		(0.06	)		(9,502	)		(0.18	)		(10,057	)		(0.19	)
Other - after tax	$	(1,356	)		(0.03	)	$	(1,577	)		(0.03	)		(8,582	)		(0.17	)	$	(10,218	)		(0.19	)
Diluted weighted avg shares outstanding		53,548						52,994						53,312						53,397

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Quarterly

GAAP Investment Income

(unaudited)

($ in thousands)

	For the three months ended						%			Year to Date						%
	September			September			Increase			September			September			Increase
	2009			2008			(Decrease)			2009			2008			(Decrease)
Investment Income:
Interest:
Fixed Maturity Securities	$	34,747			36,851			(5.7	)	$	106,980			109,681			(2.5	)
Short-term		237			976			(75.7	)		1,161			3,703			(68.6	)
Alternative Investments		2,660			3,183			(16.4	)		(26,744	)		5,360			N/M
Dividends		551			1,004			(45.1	)		1,562			3,683			(57.6	)
Change in Fair Value		-			(4,817	)		100	%		262			(6,448	)		104.1
Miscellaneous		53			112			(52.7	)		293			235			24.7
		38,248			37,309			2.5			83,514			116,214			(28.1	)
Investment Expense		1,663			1,175			41.5			4,844			3,699			31.0
Net Investment Income Before Tax		36,585			36,134			1.2			78,670			112,515			(30.1	)
Tax		8,203			7,591			8.1			13,278			24,519			(45.8	)
Net Investment Income After Tax	$	28,382			28,543			(0.6	)	$	65,392			87,996			(25.7	)
Net Investment Income per Share		0.53			0.54			(1.9	)		1.23			1.65			(25.5	)
Effective Tax Rate		22.4	%		21.0	%					16.9	%		21.8	%
Average Yields:
Fixed Maturity Securities
Pre Tax											4.2	%		4.6	%
After Tax											3.3	%		3.6	%
Portfolio
Pre Tax											2.9	%		4.1	%
After Tax											2.4	%		3.2	%

	For the three months ended						Year to Date
	September			September			September			September
	2009			2008			2009			2008
Net Realized Gains (Losses)
Fixed Maturities		(4,392	)		(27,541	)		(38,038	)		(40,771	)
Equity Securities		259			8,393			(225	)		25,061
Other		(850	)		(3,429	)		(2,039	)		(3,429	)
Total		(4,983	)		(22,577	)		(40,302	)		(19,139	)
Net of Tax		(3,239	)		(14,676	)		(26,197	)		(12,441	)

(1) Certain prior year amounts were reclassified to conform with current year presentaion.

N/M - Not meaningful

Selective Insurance Group, Inc.

2009 Statutory Results by Line of Business

3rd Qtr 2009 (unaudited)

($ in thousands)

	Net					Net											Underwriting			Dividends to
	Premiums		Percent			Premiums		Percent			Loss			LAE			Expense			Policyholders			Combined Ratio			Combined Ratio			Underwriting
	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2009			2008			Gain/(Loss)
Personal Lines:
Homeowners	$	23,538		20.0	%	$	18,613		8.0	%		59.5	%		9.4	%		31.2	%		0.0	%		100.1	%		105.1	%	$	(1,564	)
Auto		35,617		4.9	%		33,318		0.1	%		67.4	%		10.9	%		32.6	%		0.0	%		110.9	%		113.0	%		(4,380	)
Other (including flood)		3,134		17.9	%		2,696		14.8	%		49.3	%		(15.3	)%		(31.5	)%		0.0	%		2.5	%		(40.7	)%		2,766
Total	$	62,290		10.8	%	$	54,627		3.3	%		63.8	%		9.1	%		28.9	%		0.0	%		101.8	%		103.4	%	$	(3,178	)
Commercial Lines:
Fire/IM	$	55,522		0.7	%	$	49,879		2.3	%		41.0	%		5.0	%		35.2	%		0.0	%		81.2	%		98.8	%	$	7,386
Workers compensation		66,101		(23.7	)%		64,742		(17.4	)%		65.0	%		16.2	%		28.2	%		1.5	%		110.9	%		91.0	%		(7,416	)
General liability		88,886		(12.8	)%		88,280		(9.8	)%		51.6	%		18.5	%		33.8	%		0.0	%		103.9	%		98.5	%		(3,682	)
Auto		80,183		(0.5	)%		75,513		0.1	%		60.7	%		9.4	%		28.4	%		0.0	%		98.5	%		98.1	%		(223	)
BOP		15,839		5.3	%		15,805		8.3	%		54.2	%		12.4	%		34.6	%		0.0	%		101.2	%		116.4	%		(196	)
Bonds		5,271		6.2	%		4,634		(2.1	)%		24.9	%		6.2	%		58.4	%		0.0	%		89.5	%		74.7	%		116
Other		2,627		10.2	%		2,426		4.1	%		(0.4	)%		1.0	%		46.5	%		0.0	%		47.1	%		46.7	%		1,191
Total	$	314,429		(9.3	)%	$	301,279		(6.4	)%		54.3	%		12.8	%		32.1	%		0.3	%		99.5	%		96.7	%	$	(2,824	)
Grand Total	$	376,718		(6.5	)%	$	355,907		(5.1	)%		55.8	%		12.3	%		31.4	%		0.3	%		99.8	%		97.6	%	$	(6,002	)

Note: Some amounts may not foot due to rounding.

	2009		2008
Losses Paid	$	177,750	$	195,616
LAE Paid		38,686		34,311
Total Paid	$	216,436	$	229,927

Selective Insurance Group, Inc.

2009 Statutory Results by Line of Business

September 2009 YTD (unaudited)

($ in thousands)

	Net					Net											Underwriting			Dividends to
	Premiums		Percent			Premiums		Percent			Loss			LAE			Expense			Policyholders			Combined Ratio			Combined Ratio			Underwriting
	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2009			2008			Gain/(Loss)
Personal Lines:
Homeowners	$	59,769		14.5	%	$	53,337		5.0	%		64.7	%		9.3	%		33.6	%		0.0	%		107.6	%		102.2	%	$	(6,189	)
Auto		103,251		0.4	%		99,204		0.4	%		64.2	%		13.1	%		31.1	%		0.0	%		108.4	%		112.2	%	$	(9,575	)
Other (including flood)		8,244		16.5	%		7,480		13.2	%		58.7	%		(14.5	)%		(32.2	)%		0.0	%		12.0	%		(24.2	)%		6,832
Total	$	171,265		5.6	%	$	160,021		2.4	%		64.1	%		10.5	%		29.0	%		0.0	%		103.6	%		103.0	%	$	(8,932	)
Commercial Lines:
Fire/IM	$	155,972		2.4	%	$	147,735		0.3	%		45.3	%		5.0	%		36.7	%		(0.2	)%		86.8	%		96.5	%	$	16,414
Workers compensation		202,973		(17.4	)%		201,709		(13.9	)%		57.9	%		15.0	%		26.9	%		1.4	%		101.2	%		94.6	%		(2,666	)
General liability		281,119		(11.7	)%		274,357		(8.9	)%		52.3	%		18.5	%		33.3	%		(0.1	)%		104.0	%		99.6	%		(13,232	)
Auto		236,229		(1.3	)%		226,698		(2.5	)%		60.6	%		8.6	%		28.8	%		(0.1	)%		97.9	%		98.1	%		2,062
BOP		47,991		7.3	%		46,565		8.0	%		66.5	%		12.3	%		34.1	%		0.0	%		112.9	%		111.8	%		(6,474	)
Bonds		14,463		(0.1	)%		13,817		(2.9	)%		26.7	%		5.2	%		59.3	%		0.0	%		91.2	%		77.8	%		828
Other		7,751		6.3	%		7,189		3.6	%		0.7	%		0.8	%		44.2	%		0.0	%		45.7	%		46.1	%		3,656
Total	$	946,500		(7.4	)%	$	918,069		(6.3	)%		54.4	%		12.5	%		31.8	%		0.2	%		98.9	%		97.4	%	$	588
Grand Total	$	1,117,764		(5.6	)%	$	1,078,090		(5.1	)%		55.8	%		12.2	%		31.4	%		0.2	%		99.6	%		98.2	%	$	(8,344	)

Note: Some amounts may not foot due to rounding.

	2009		2008
Losses Paid	$	572,020	$	569,035
LAE Paid		116,193		104,782
Total Paid	$	688,213	$	673,817

ITEM 1.  FINANCIAL STATEMENTS

SELECTIVE INSURANCE GROUP, INC.	Unaudited
CONSOLIDATED BALANCE SHEETS	September 30,			December 31,
($ in thousands, except share amounts)	2009			2008
ASSETS
Investments:
Fixed maturity securities, held-to-maturity –at carry value (fair value of:  $1,839,893 – 2009; $1,178 – 2008)	$	1,804,240			1,163
Fixed maturity securities, available-for-sale – at fair value (amortized cost of:  $1,454,184 – 2009; $3,123,346 – 2008)		1,488,186			3,034,278
Equity securities, available-for-sale – at fair value (cost of:  $76,805 – 2009;  $125,947 – 2008)		89,892			132,131
Short-term investments – at cost which approximates fair value		236,896			198,111
Equity securities, trading – at fair value		-			2,569
Other investments		147,482			172,057
Total investments		3,766,696			3,540,309
Cash and cash equivalents		742			3,606
Interest and dividends due or accrued		35,494			36,538
Premiums receivable, net of allowance for uncollectible
accounts of:  $5,983 – 2009; $4,237 – 2008		491,169			480,894
Reinsurance recoverable on paid losses and loss expenses		5,202			6,513
Reinsurance recoverable on unpaid losses and loss expenses		256,571			224,192
Prepaid reinsurance premiums		108,055			96,617
Current federal income tax		12,788			26,593
Deferred federal income tax		115,009			150,759
Property and equipment – at cost, net of accumulated depreciation and amortization of:  $138,756 – 2009; $129,333 – 2008		45,771			51,580
Deferred policy acquisition costs		223,694			212,319
Goodwill		7,849			7,849
Assets of discontinued operations		44,245			56,468
Other assets		45,018			51,319
Total assets	$	5,158,303			4,945,556
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for losses	$	2,318,856			2,256,329
Reserve for loss expenses		399,999			384,644
Unearned premiums		895,446			844,334
Notes payable		261,599			273,878
Commissions payable		43,666			48,560
Accrued salaries and benefits		104,362			118,422
Liabilities of discontinued operations		27,192			34,138
Other liabilities		120,854			94,758
Total liabilities		4,171,974			4,055,063
Stockholders' Equity:
Preferred stock of $0 par value per share: Authorized shares:  5,000,000; no shares issued or outstanding
Common stock of $2 par value per share:
Authorized shares:  360,000,000
Issued: 95,634,290 – 2009; 95,263,508 – 2008		191,269			190,527
Additional paid-in capital		228,204			217,195
Retained earnings		1,125,415			1,128,149
Accumulated other comprehensive loss		(11,138	)		(100,666	)
Treasury stock – at cost (shares:  42,559,858 – 2009;  42,386,921 – 2008)		(547,421	)		(544,712	)
Total stockholders' equity		986,329			890,493
Commitments and contingencies
Total liabilities and stockholders' equity	$	5,158,303			4,945,556

SELECTIVE INSURANCE GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME	Quarter ended						Nine Months ended
	September 30,						September 30,
($ in thousands, except per share amounts)	2009			2008			2009			2008
Revenues:
Net premiums written	$	376,718			402,739			1,117,764			1,184,087
Net increase in unearned premiums and prepaid reinsurance premiums		(20,812	)		(28,031	)		(39,674	)		(48,738	)
Net premiums earned		355,906			374,708			1,078,090			1,135,349
Net investment income earned		36,585			36,134			78,670			112,515
Net realized (losses) gains:
Net realized investment (losses) gains		(741	)		12,277			3,515			25,499
Other-than-temporary impairments		(5,833	)		(34,854	)		(45,467	)		(44,638	)
Other-than-temporary impairments on fixed maturity securities recognized in other comprehensive income		1,591			-			1,650			-
Total net realized investment losses		(4,983	)		(22,577	)		(40,302	)		(19,139	)
Other income		2,667			946			7,758			4,270
Total revenues		390,175			389,211			1,124,216			1,232,995
Expenses:
Losses incurred		198,495			215,095			602,161			635,140
Loss expenses incurred		43,537			39,453			131,114			125,288
Policy acquisition costs		114,520			119,825			342,148			370,468
Dividends to policyholders		991			1,151			2,268			3,265
Interest expense		4,751			5,036			14,618			15,472
Other expenses		6,054			7,175			18,815			20,776
Total expenses		368,348			387,735			1,111,124			1,170,409
Income from continuing operations, before federal income tax		21,827			1,476			13,092			62,586
Federal income tax expense (benefit):
Current		(426	)		10,252			3,818			34,140
Deferred		1,647			(17,016	)		(13,740	)		(27,834	)
Total federal income tax (benefit) expense		1,221			(6,764	)		(9,922	)		6,306
Net income from continuing operations		20,606			8,240			23,014			56,280
(Loss) income from discontinued operations		(11,746	)		1,090			(11,302	)		2,667
Federal income tax (benefit) expense		(4,147	)		338			(4,106	)		801
Total (loss) income from discontinued operations, net of tax		(7,599	)		752			(7,196	)		1,866
Net income	$	13,007			8,992			15,818			58,146
Earnings per share:
Basic net income from continuing operations		0.39			0.16			0.44			1.07
Basic net income from discontinued operations		(0.14	)		0.01			(0.14	)		0.04
Basic net income	$	0.25			0.17			0.30			1.11
Diluted net income from continuing operations		0.38			0.16			0.43			1.06
Diluted net income discontinued operations		(0.14	)		0.01			(0.13	)		0.03
Diluted net income	$	0.24			0.17			0.30			1.09
Dividends to stockholders	$	0.13			0.13			0.39			0.39

SELECTIVE INSURANCE GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY
	Nine Months Ended September 30,
($ in thousands, except per share amounts)	2009				2008
Common stock:
Beginning of year	$	190,527				189,306
Dividend reinvestment plan
(shares:  96,265 – 2009; 59,704 – 2008)		193				119
Convertible debentures
(shares:  45,759 – 2008)		-				92
Stock purchase and compensation plans
(shares:  274,517 – 2009; 336,191 – 2008)		549				672
End of period		191,269				190,189
Additional paid-in capital:
Beginning of year		217,195				192,627
Dividend reinvestment plan		1,136				1,267
Convertible debentures		-				645
Stock purchase and compensation plans		9,873				18,004
End of period		228,204				212,543
Retained earnings:
Beginning of year		1,128,149				1,105,946
Cumulative-effect adjustment due to fair value election under ASC 825, net of deferred income tax effect of $3,344		-				6,210
Cumulative-effect adjustment due to adoption of other-than-temporary impairment guidance under ASC 320, net of deferred income tax effect of $1,282		2,380				-
Net income		15,818		15,818		58,146		58,146
Cash dividends to stockholders ($0.39 per share – 2009; $0.39 per share – 2008)		(20,932	)			(20,922	)
End of period		1,125,415				1,149,380
Accumulated other comprehensive (loss) income:
Beginning of year		(100,666	)			86,043
Cumulative-effect adjustment due to fair value election under ASC 825, net of deferred income tax effect of $(3,344)		-				(6,210	)
Cumulative-effect adjustment due to adoption of other-than-temporary impairment guidance under ASC 320, net of deferred income tax effect of $(1,282)		(2,380	)			-
Other comprehensive income (loss), increase (decrease) in:
Unrealized (losses) gains on investment securities:
Non-credit portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax effect of $(537)		(998	)			-
Other net unrealized gains (losses) on investment securities, net of deferred income tax effect of:  $49,285 – 2009; $(59,737) – 2008		91,529				(110,940	)
Total unrealized gains (losses) on investment securities		90,531		90,531		(110,940	)	(110,940	)
Defined benefit pension plans, net of deferred income tax effect of:  $742 – 2009; $48 – 2008		1,377		1,377		88		88
End of period		(11,138	)			(31,019	)
Comprehensive income (loss)				107,726				(52,706	)
Treasury stock:
Beginning of year		(544,712	)			(497,879	)
Acquisition of treasury stock
(shares:  172,937 – 2009; 1,979,043 – 2008)		(2,709	)			(45,450	)
End of period		(547,421	)			(543,329	)
Total stockholders’ equity	$	986,329				977,764

SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW	Nine Months ended
	September 30,
($ in thousands)	2009			2008
Operating Activities
Net income	$	15,818			58,146
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,045			21,329
Stock-based compensation expense		9,178			14,094
Undistributed losses of equity method investments		26,744			812
Net realized losses		40,302			19,139
Postretirement life curtailment benefit		(4,217	)		-
Deferred tax		(17,666	)		(27,360	)
Unrealized loss on trading securities		(262	)		6,448
Goodwill impairment		12,214			-
Changes in assets and liabilities:
Increase in reserves for losses and loss expenses, net of reinsurance recoverable on unpaid losses and loss expenses		46,320			88,638
Increase in unearned premiums, net of prepaid reinsurance and advance premiums		39,121			48,609
Decrease in net federal income tax recoverable		13,252			7,842
Increase in premiums receivable		(10,275	)		(46,697	)
(Increase) decrease in deferred policy acquisition costs		(11,375	)		2,331
Decrease in interest and dividends due or accrued		1,038			623
Decrease in reinsurance recoverable on paid losses and loss expenses		1,311			2,363
Decrease in accrued salaries and benefits		(10,920	)		(6,473	)
Decrease in accrued insurance expenses		(4,242	)		(15,849	)
Purchase of trading securities		-			(6,587	)
Sale of trading securities		2,831			17,586
Other-net		(2,905	)		7,097
Net adjustments		151,494			133,945
Net cash provided by operating activities		167,312			192,091
Investing Activities
Purchase of fixed maturity securities, held-to-maturity		(158,827	)		-
Purchase of fixed maturity securities, available-for-sale		(757,538	)		(437,003	)
Purchase of equity securities, available-for-sale		(75,856	)		(50,551	)
Purchase of other investments		(13,466	)		(44,380	)
Purchase of short-term investments		(1,600,685	)		(1,591,302	)
Sale of fixed maturity securities, held-to-maturity		5,819			-
Sale of fixed maturity securities, available-for-sale		470,202			112,890
Sale of short-term investments		1,561,901			1,599,629
Redemption and maturities of fixed maturity securities, held-to-maturity		197,095			4,530
Redemption and maturities of fixed maturity securities, available-for-sale		88,402			229,598
Sale of equity securities, available-for-sale		125,211			63,143
Proceeds from other investments		23,149			11,263
Purchase of property and equipment		(4,139	)		(5,535	)
Net cash used in investing activities		(138,732	)		(107,718	)
Financing Activities
Dividends to stockholders		(19,833	)		(19,391	)
Acquisition of treasury stock		(2,709	)		(45,450	)
Principal payment of notes payable		(12,300	)		(12,300	)
Net proceeds from stock purchase and compensation plans		2,914			5,747
Excess tax benefits from share-based payment arrangements		(1,125	)		1,570
Principal payments of convertible bonds		-			(8,754	)
Net cash used in financing activities		(33,053	)		(78,578	)
Net (decrease) increase in cash and cash equivalents		(4,473	)		5,795
Net (decrease) increase in cash and cash equivalents from discontinued operations		(1,609	)		4,334
Net (decrease) increase in cash and cash equivalents from continuing operations		(2,864	)		1,461
Cash and cash equivalents from continuing operations, beginning of year		3,606			1,965
Cash and cash equivalents from continuing operations, end of period	$	742			3,426

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Unaudited Statutory Balance Sheets

($ in thousands)

	Sep-30			Sep-30			* Dec-31
	2009			2008			2008
ASSETS
Bonds	$	3,224,083			3,088,962			3,104,395
Common stocks		89,892			226,686			134,700
Affiliated mortgage loan		39,559			-			40,000
Other investments		162,798			209,174			172,346
Short-term investments		198,818			105,743			137,878
Total investments		3,715,150			3,630,565			3,589,319
Cash on hand and in banks		(31,778	)		(33,563	)		(36,472	)
Interest and dividends due and accrued		35,649			35,533			36,523
Premiums receivable		487,220			536,602			476,768
Reinsurance recoverable on paid losses and expenses		5,202			2,587			6,513
Federal income tax recoverable		369			-			12,069
Deferred tax recoverable		88,821			89,759			86,208
EDP equipment		2,361			3,656			3,815
Equities and deposits in pools and associations		8,297			9,522			8,517
Receivable for sold securities		5,150			1,262			13,278
Other assets		29,462			29,201			28,719
Total assets	$	4,345,903			4,305,124			4,225,257
LIABILITIES
Reserve for losses	$	2,061,817			2,020,278			2,031,947
Reinsurance payable on paid loss and loss expense		924			1,127			716
Reserve for loss expenses		397,863			378,283			382,796
Unearned premiums		787,390			807,904			747,717
Reserve for commissions payable		43,666			48,842			48,560
Ceded balances payable		12,437			11,144			8,421
Federal income tax payable		-			15,626			-
Premium and other taxes payable		21,372			20,469			20,721
Reserve for dividends to policyholders		3,657			4,884			5,023
Reserves for unauthorized reinsurance		1,416			1,258			1,416
Payable for securities		24,962			1,378			-
Funds withheld on account of others		5,154			5,839			4,977
Accrued salaries and benefits		68,323			41,726			74,287
Other liabilities		13,434			13,520			14,245
Total liabilities		3,442,415			3,372,278			3,340,826
POLICYHOLDERS' SURPLUS
Capital		28,325			28,325			28,325
Paid in surplus		255,792			235,792			235,792
Unassigned surplus		619,371			668,729			620,314
Total policyholders' surplus		903,488			932,846			884,431
Total liabilities and policyholders' surplus	$	4,345,903			4,305,124			4,225,257

*December 31, 2008 results include a retroactive affiliate transaction involving SICA, SIGI, and Wantage Avenue Holding Company.

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Unaudited Statutory Statements Of Income

($ in thousands)

	Three Months Ended										Nine Months Ended
	September										September
	2009					2008					2009					2008
UNDERWRITING
Net premiums written	$	376,718					402,939					1,117,764					1,184,287
Net premiums earned		355,906					374,908					1,078,090					1,135,548
Net losses paid		177,750					195,616					572,020					569,035
Change in reserve for losses		20,698					19,686					29,869					66,318
Net losses incurred		198,448		55.8	%		215,302		57.4	%		601,889		55.8	%		635,353		56.0	%
Net loss expenses paid		38,686					34,311					116,193					104,782
Change in reserve for loss expenses		4,925					5,111					15,067					20,158
Net loss expenses incurred		43,611		12.3	%		39,422		10.5	%		131,260		12.2	%		124,940		11.0	%
Net underwriting expenses incurred		120,436		32.0	%		117,920		29.3	%		355,291		31.8	%		367,173		31.0	%
Total deductions		362,495					372,644					1,088,440					1,127,467
Statutory underwriting (loss) gain		(6,589	)				2,264					(10,350	)				8,082
Net loss from premium balances charged off		(1,078	)				(950	)				(3,446	)				(2,436	)
Finance charges and other income		2,656					569					7,720					3,035
Total other income (expense)		1,578		-0.6	%		(381	)	0.1	%		4,274		-0.4	%		599		-0.1	%
Policyholders' dividends incurred		(991	)	0.3	%		(1,151	)	0.3	%		(2,268	)	0.2	%		(3,265	)	0.3	%
Total underwriting (loss) gain		(6,002	)	99.8	%		732		97.6	%		(8,344	)	99.6	%		5,416		98.2	%
INVESTMENT
Net investment income earned		35,481					45,210					95,980					123,450
Net realized (loss)		(4,878	)				(20,107	)				(41,392	)				(13,960	)
Total income before income tax		24,601					25,835					46,244					114,906
Federal income tax expense		3,269					14,946					17,362					44,894
Net income	$	21,332					10,889					28,882					70,012
Policyholders' Surplus
Surplus, beginning of period	$	873,365					999,676					884,431					1,034,294
Net income		21,332					10,889					28,882					70,012
Change in deferred tax		(919	)				12,106					14,638					19,359
Change in unrealized gains (losses)		10,450					(33,394	)				(11,245	)				(62,396	)
Dividends to stockholders		(12,515	)				(24,502	)				(24,518	)				(77,045	)
Paid in surplus		-					-					20,000					-
Change in cum. effect of acctg principle		2,540					-					2,540					-
Change in non-admitted assets		9,235					(31,761	)				(11,299	)				(51,101	)
Surplus adjustments		-					(168	)				59					(277	)
Net change in surplus for period		30,123					(66,830	)				19,057					(101,448	)
Surplus, end of period	$	903,488					932,846					903,488					932,846
Statutory underwriting (loss) gain:	$	(6,002	)				732					(8,344	)				5,416
Adjustments under GAAP:
Deferred policy acquisition costs		5,678					(1,542	)				11,376					(2,331	)
Other, net		182					(384	)				(105	)				(1,546	)
GAAP underwriting (loss) gain	$	(142	)				(1,194	)				2,927					1,539

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

Certain amounts have been reclassified to conform to the current year's presentation.

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Alternative Investments

as of September 30, 2009

(unaudited)

	Inception	Current				Invest.		3rd QTR			YTD			Remaining
Fund	Year	Market Value		Cost		Multiple(1)		Income			Income			Commitment
Real Estate
LEH RE II	2005	$	10,722,260	$	12,011,057		0.93	$	(464,216	)	$	(4,730,377	)	$	4,090,036
GS Whitehall 2007	2007	$	4,286,568	$	14,250,000		0.30	$	(600,066	)	$	(4,260,853	)	$	750,000
LEH RE III	2008	$	3,562,971	$	6,227,933		0.57	$	(151,426	)	$	(1,630,791	)	$	8,772,067
Total - Real Estate		$	18,571,799	$	32,488,990			$	(1,215,708	)	$	(10,622,021	)	$	13,612,103
Mezzanine Financing
GS Mezz III	2003	$	3,499,312	$	2,403,021		1.11	$	(344,591	)	$	(849,119	)	$	5,637,326
LEH Euro Mezz	2004	$	3,798,334	$	2,377,268		1.11	$	487,024		$	(413,708	)	$	-
GS Mezz 2006	2006	$	4,163,620	$	9,224,574		0.54	$	364,281		$	(3,055,557	)	$	5,228,783
GS Mezz V	2007	$	6,901,493	$	7,094,103		0.98	$	783,413		$	171,440		$	17,752,669
Total - Mezz. Financing		$	18,362,759	$	21,098,966			$	1,290,127		$	(4,146,944	)	$	28,618,778
Distressed Debt
Varde LP	1997	$	12,297,684	$	4,000,000		3.07	$	1,103,215		$	713,183		$	-
Varde VIII	2006	$	11,490,782	$	10,000,000		1.15	$	559,268		$	1,126,823		$	-
GS Distressed Opp III	2007	$	6,276,991	$	10,000,056		0.65	$	336,346		$	(2,143,877	)	$	4,610,862
Total - Distressed Debt		$	30,065,457	$	24,000,056			$	1,998,829		$	(303,871	)	$	4,610,862
Private Equity
Prospector	1997	$	1,777,514	$	1,778,000		2.89	$	(225	)	$	(455	)	$	-
Trilantic Capital Partners III	2004	$	7,158,008	$	3,672,851		1.38	$	168,556		$	(219,317	)	$	1,175,644
NB Co-Invest	2006	$	6,726,007	$	7,815,857		0.90	$	277,608		$	(2,282,621	)	$	4,769,210
GS PEP Asia	2007	$	1,091,993	$	1,478,654		0.74	$	(51,398	)	$	(198,634	)	$	5,505,139
Trilantic Capital Partners IV	2007	$	3,342,178	$	3,987,076		0.84	$	(19,443	)	$	(241,935	)	$	7,111,275
Total - Private Equity		$	20,095,701	$	18,732,438			$	375,098		$	(2,942,961	)	$	18,561,269
Private Equity, Secondary Market
NB SOF	2005	$	7,132,956	$	6,607,465		1.05	$	(44,867	)	$	(1,516,695	)	$	899,494
GS Vintage IV	2007	$	8,977,394	$	11,994,286		0.77	$	(617,289	)	$	(3,590,798	)	$	6,781,085
NB SOF II	2008	$	1,978,602	$	1,774,610		1.11	$	20,995		$	247,727		$	10,223,752
GS Vintage V	2008	$	1,957,161	$	2,200,000		0.89	$	(68,630	)	$	(252,702	)	$	7,800,000
Total - Pvt. Eq. Sec. Mkt.		$	20,046,113	$	22,576,361			$	(709,791	)	$	(5,112,468	)	$	25,704,331
Energy/Power Generation
ArcLight I	2002	$	939,793	$	939,793		1.71	$	255,211		$	(1,641,685	)	$	1,655,505
ArcLight II	2003	$	6,743,410	$	1,639,149		1.27	$	276,947		$	(1,123,165	)	$	2,295,492
ArcLight III	2006	$	12,649,466	$	12,172,972		1.03	$	139,999		$	276,194		$	1,681,702
Quintana Energy	2006	$	5,727,876	$	6,927,238		0.83	$	71,170		$	(524,151	)	$	3,072,762
ArcLight IV	2007	$	6,408,026	$	6,658,531		0.97	$	112,822		$	48,250		$	2,154,097
Total - Energy/Power Generation		$	32,468,571	$	28,337,683			$	856,149		$	(2,964,557	)	$	10,859,558
Venture Capital
Venture V	2001	$	5,625,290	$	6,273,978		0.92	$	65,067		$	(651,606	)	$	2,000,000
Total - Venture Capital		$	5,625,290	$	6,273,978			$	65,067		$	(651,606	)	$	2,000,000
TOTAL - ALTERNATIVE INVESTMENTS		$	145,235,689	$	153,508,473			$	2,659,771		$	(26,744,428	)	$	103,966,902

(1) Market value +  capital returned  divided  by capital called

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Municipal Bond Portfolio
State and Repayment Source Composition

September 30, 2009

($ in thousands)
(unaudited)

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Structured Securities

September 30, 2009

($ in thousands)

(unaudited)

•Market Value = $706,333 ; Unrealized Gain/(Loss) = ($41,661)

•Held to Maturity (HTM) 42%; Available for Sale (AFS) 58%

•Structured Security Portfolio Average Rating = AA+

•Structured Securities = 18.6% of the Total Portfolio

Ratings Migration (1)

September 30, 2009

Original Rating			Current Rating										Downgraded
Rating	Amount		AAA		AA		A		BBB		Below Inv Grade		$		%
AAA		691,931		605,405		13,589		18,738		19,336		34,863		86,526		12.5	%
AA		36,305		5,255		14,845						16,205		16,205		44.6	%
A		13,531						12,116				1,415		1,415		10.5	%
BBB		25,164								7,000		18,164		18,164		72.2	%
Below Inv Grade		5,000										5,000		-		0.0	%
Total Par Value		771,931		610,660		28,434		30,854		26,336		75,647		122,310		15.8	%

Note (1): Migration period is from the purchase date of each security to September 30, 2009

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Residential Mortgage Backed (RMBS) and Residential ABS (RABS) Securities

September 30, 2009

($ in thousands)

(unaudited)

•Market Value = $466,150; Unrealized Gain/(Loss) = ($12,829)

•Held to Maturity (HTM) 35%; Available for Sale (AFS) 65%

•RMBS & RABS Portfolio Average Rating = AA+

•RMBS & RABS Securities = 12.3% of the Total Portfolio

Ratings Migration (1)

September 30, 2009

Original Rating			Current Rating										Downgraded
Rating	Amount		AAA		AA		A		BBB		Below Inv Grade		$		%
AAA		477,154		420,228		13,589		1,351		1,047		40,939		56,926		11.9	%
AA		3,934		256								3,678		3,678		93.5	%
A		3,531						2,116				1,415		1,415		40.1	%
BBB		1,414										1,414		1,414		100.0	%
Total Par Value		486,033		420,484		13,589		3,467		1,047		47,446		63,433		13.1	%

Note (1): Migration period is from the purchase date of each security to September 30, 2009

Selective Insurance Group Inc. and Consolidated Subsidiaries

Residential Mortgage Backed Securities (RMBS) and Residential ABS (RABS) - by Vintage Year

September 30, 2009

($ in thousands)

(unaudited)

Market Value

Vintage Yr	AAA			AA			A			BBB			Below Investment Grade			Total			% of Total RMBS & RABS			% of Total Fixed Income Portfolio			% of Total GAAP Equity
1983	$	12		$	-		$	-		$	-		$	-		$	12			0	%		0	%		0	%
2002		48,585			-			-			715			1,087			50,387			11	%		2	%		5	%
2003		54,620			-			791			-			-			55,411			12	%		2	%		6	%
2004		65,774			3,273			-			-			-			69,047			15	%		2	%		7	%
2005		33,683			7,808			943			-			1,323			43,756			9	%		1	%		4	%
2006		34,437			-			-			-			18,422			52,859			11	%		2	%		5	%
2007		8,702			-			-			-			1,708			10,410			2	%		0	%		1	%
2008		39,615			-			-			-			-			39,615			8	%		1	%		4	%
2009		144,653			-			-			-			-			144,653			32	%		4	%		15	%
Total RMBS & RABS-Market Value	$	430,082		$	11,080		$	1,733		$	715		$	22,540		$	466,150			100	%		14	%		47	%
% of Total RMBS & RABS		92	%		2	%		1	%		0	%		5	%		100	%
% of Total Fixed Income Portfolio		13	%		0	%		0	%		0	%		1	%		14	%
% of Total GAAP Equity		43	%		2	%		0	%		0	%		2	%		47	%
Weighted Average Market Price		102.3			81.5			50.0			68.3			47.5			95.9
Unrealized/Unrecognized Gain/(Loss)
Vintage Yr	AAA			AA			A			BBB			Below Investment Grade			Total
1983	$	-		$	-		$	-		$	-		$	-		$	-
2002		1,552			-			-			(340	)		(471	)		741
2003		1,185			-			(1,308	)		-			-			(123	)
2004		930			(322	)		-			-			-			608
2005		(3,566	)		(2,107	)		(409	)		-			-			(6,082	)
2006		527			-			-			-			(8,356	)		(7,829	)
2007		158			-			-			-			(3,076	)		(2,917	)
2008		873			-			-			-			-			873
2009		1,900			-			-			-			-			1,900
Total RMBS & RABS - Unrealized/Unrecognized	$	3,560		$	(2,429	)	$	(1,717	)	$	(340	)	$	(11,903	)	$	(12,829	)

Note: Some amounts may not foot due to rounding.

Selective Insurance Group Inc. and Consolidated Subsidiaries

Residential Mortgage Backed Securities (RMBS) and Residential ABS (RABS) - by Type

September 30, 2009

($ in thousands)

(unaudited)

Market Value

RMBS Type	AAA			AA			A			BBB			Below Investment Grade			Total			% of Total RMBS & RABS			% of Total Fixed Income Portfolio			% of Total GAAP Equity
Agency	$	395,345		$	-		$	-		$	-		$	-		$	395,345			85	%		12	%		40	%
FHA/VA		4,223			-			-			-			-			4,223			1	%		0	%		0	%
Total Agency		399,568			-			-			-			-			399,568			86	%		12	%		40	%
Alt-A		14,037			1,412			-			-			9,291			24,741			5	%		1	%		2	%
Alt-A CDO		-			-			-			-			1,289			1,289			0	%		0	%		0	%
Home Equity ABS		-			-			-			715			1,087			1,802			0	%		0	%		0	%
Non-Agency & Other Prime		16,476			9,668			1,733			-			10,873			38,751			9	%		1	%		5	%
Total RMBS & RABS-Market Value	$	430,082		$	11,080		$	1,733		$	715		$	22,540		$	466,150			100	%		14	%		47	%
% of Total RMBS & RABS		92	%		2	%		1	%		0	%		5	%		100	%
% of Total Fixed Income Portfolio		13	%		0	%		0	%		0	%		1	%		14	%
% of Total GAAP Equity		43	%		2	%		0	%		0	%		2	%		47	%
Weighted Average Market Price		102.3			81.5			50.0			68.3			47.5			95.9
Unrealized/Unrecognized Gain/(Loss)
RMBS Type	AAA			AA			A			BBB			Below Investment Grade			Total
Agency	$	10,342		$	-		$	-		$	-		$	-		$	10,342
FHA/VA		137			-			-			-			-			137
Total Agency		10,479			-			-			-			-			10,479
Alt-A		(2,475	)		(139	)		-			-			(5,094	)		(7,708	)
Alt-A CDO		-			-			-			-			(223	)		(223	)
Home Equity ABS		-			-			-			(340	)		(471	)		(811	)
Non-Agency & Other Prime		(4,444	)		(2,289	)		(1,717	)		-			(6,115	)		(14,566	)
Total RMBS & RABS - Unrealized/Unrecognized	$	3,560		$	(2,429	)	$	(1,717	)	$	(340	)	$	(11,903	)	$	(12,829	)

Note: Some amounts may not foot due to rounding.

Selective Insurance Group, Inc. and Consolidated Subsidiaries

ALT-A by Vintage Year

September 30, 2009

($ in thousands)

(unaudited)

Market Value

Vintage Yr	ALT-A Fixed-15			Alt-A Fixed-30			Alt-A Hybrid ARM			Alt-A CDO			Total			% of Total Alt- A			% of Total Fixed Income Portfolio			% of Total GAAP Equity
2002	$	4,580		$	-		$	-		$	-		$	4,580			18	%		0	%		1	%
2003		-			1,546			427			-			1,973			8	%		0	%		0	%
2004		-			1,538			1,542			-			3,080			12	%		0	%		0	%
2005		-			3,006			2,811			-			5,817			22	%		0	%		1	%
2006		-			6,767			2,524			1,289			10,580			42	%		1	%		1	%
Total ALT-A, Market Value	$	4,580		$	12,857		$	7,304		$	1,289		$	26,030			100	%		1	%		3	%
% of Total ALT-A		18	%		50	%		28	%		5	%		100	%
% of Total Fixed Income Portfolio		0	%		1	%		0	%		0	%		1	%
% of Total GAAP Equity		1	%		1	%		1	%		0	%		3	%
Weighted Average Market Price		96.8			75.6			67.5			14.5			62.8
Unrealized/Unrecognized Gain/(Loss)
Vintage Yr	ALT-A Fixed-15			Alt-A Fixed-30			Alt-A Hybrid ARM			Alt-A CDO			Total
2002	$	(149	)	$	-		$	-		$	-		$	(149	)
2003		-			(324	)		(37	)		-			(361	)
2004		-			(82	)		(171	)		-			(253	)
2005		-			(469	)		(1,382	)		-			(1,851	)
2006		-			(3,233	)		(1,861	)		(223	)		(5,317	)
Total ALT-A, Unrealized/Unrecognized	$	(149	)	$	(4,108	)	$	(3,451	)	$	(223	)	$	(7,931	)

Note: Some amounts may not foot due to rounding.

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Commercial Mortgage Backed (CMBS) Securities

September 30, 2009

($ in thousands)

(unaudited)

•Market Value = $185,413; Unrealized Gain/(Loss) = ($26,205)

•Held to Maturity (HTM) 54%; Available for Sale (AFS) 46%

•CMBS Portfolio Average Rating = AA+

•CMBS Securities = 4.9% of the Total Portfolio

Ratings Migration (1)

September 30, 2009

Original Rating			Current Rating										Downgraded
Rating	Amount		AAA		AA		A		BBB		Below Inv Grade		$		%
AAA		190,580		161,113				9,424		17,227		2,816		29,467	15.5	%
AA		8,635		5,000								3,635		3,635	42.1	%
A		-												-	0.0	%
BBB		17,000								7,000		10,000		10,000	58.8	%
Below Inv Grade		5,000										5,000		-	0.0	%
Total Par Value		221,215		166,113		-		9,424		24,227		21,451		43,102	19.5	%
Note (1): Migration period is from the purchase date of each security to September 30, 2009

Selective Insurance Group Inc. and Consolidated Subsidiaries

Commercial Mortgage Backed Securities (CMBS) - by Vintage Year

September 30, 2009

($ in thousands)

(unaudited)

Market Value

Vintage Yr	AAA			AA			A			BBB			Below Investment Grade			Total			% of Total CMBS			% of Total Fixed Income Portfolio			% of Total GAAP Equity
1996	$	2,310			-		$	-		$	-		$	-		$	2,310			1	%		0	%		0	%
1999		3,734			-			-			-			-			3,734			2	%		0	%		0	%
2000		27,278			-			-			-			-			27,278			15	%		1	%		3	%
2001		16,577			-			-			-			-			16,577			9	%		0	%		2	%
2002		10,956			-			-			-			-			10,956			6	%		1	%		1	%
2003		2,008			-			-			-			-			2,008			1	%		0	%		0	%
2004		9,698			-			-			-			-			9,698			5	%		0	%		1	%
2005		868			-			1,195			934			253			3,249			2	%		0	%		0	%
2006		54,673			-			-			3,378			-			58,052			32	%		3	%		7	%
2007		34,124			-			1,542			1,505			4,216			41,386			22	%		1	%		4	%
2009		10,164			-			-			-			-			10,164			5	%		0	%		1	%
Total CMBS-Market Value	$	172,390		$	-		$	2,737		$	5,817		$	4,469		$	185,413			100	%		6	%		19	%
% of Total CMBS		94	%		0	%		1	%		3	%		2	%		100	%
% of Total Fixed Income Portfolio		5	%		0	%		0	%		1	%		0	%		6	%
% of Total GAAP Equity		18	%		0	%		0	%		1	%		0	%		19	%
Weighted Average Market Price		103.8			0.0			61.9			24.0			20.8			83.8
Unrealized/Unrecognized Gain/(Loss)
Vintage Yr	AAA			AA			A			BBB			Below Investment Grade			Total
1996	$	(63	)		-		$	-		$	-		$	-		$	(63	)
1999		166			-			-			-			-			166
2000		876			-			-			-			-			876
2001		714			-			-			-			-			714
2002		706			-			-			-			-			706
2003		37			-			-			-			-			37
2004		198			-			-			-			-			198
2005		(153	)		-			(3,229	)		(3,869	)		(2,563	)		(9,814	)
2006		1,047			-			-			(11,202	)		-			(10,155	)
2007		567			-			(3,458	)		(495	)		(5,648	)		(9,034	)
2009		164			-			-			-			-			164
Total CMBS-Unrealized/Unrecognized	$	4,258		$	-		$	(6,688	)	$	(15,566	)	$	(8,210	)	$	(26,205	)

Note: Some amounts may not foot due to rounding.

Selective Insurance Group Inc. and Consolidated Subsidiaries

Commercial Mortgage Backed Securities (CMBS) - by Type

September 30, 2009

($ in thousands)

(unaudited)

Market Value

CMBS Type	AAA			AA			A			BBB			Below Investment Grade			Total			% of Total CMBS			% of Total Fixed Income Portfolio			% of Total GAAP Equity
Agency MultiFamily	$	107,216		$	-		$	-		$	-		$	-		$	107,216			58	%		3	%		11	%
Conduit		11,563			-			-			-		$	-			11,563			6	%		1	%		1	%
Fusion (1)		43,765			-			1,542			934		$	742			46,983			25	%		1	%		5	%
Lease-Backed		3,734			-			-			-		$	-			3,734			2	%		0	%		0	%
Re-Securitization		868			-			1,195			3,378		$	253			5,694			3	%		0	%		1	%
Single Borrower - Multiple Properties		5,245			-			-			1,505		$	3,473			10,223			6	%		1	%		1	%
Total CMBS-Market Value	$	172,390		$	-		$	2,737		$	5,817		$	4,469		$	185,413			100	%		6	%		19	%
% of Total CMBS		94	%		0	%		1	%		3	%		2	%		100	%
% of Total Fixed Income Portfolio		5	%		0	%		0	%		1	%		0	%		6	%
% of Total GAAP Equity		18	%		0	%		0	%		1	%		0	%		19	%
Weighted Average Market Price		103.8			0.0			61.9			24.0			20.8			83.8

Unrealized/Unrecognized Gain/(Loss)

CMBS Type	AAA			AA		A			BBB			Below Investment Grade			Total
Agency MultiFamily	$	3,942		$	-	$	-		$	-		$	-		$	3,942
Conduit		381			-		-			-			-			381
Fusion (1)		(301	)		-		(3,458	)		(3,869	)		(4,121	)		(11,749	)
Lease-Backed		166			-		-			-			-			166
Re-Securitization		(153	)		-		(3,229	)		(11,202	)		(2,563	)		(17,147	)
Single Borrower - Multiple Properties		223			-		-			(495	)		(1,527	)		(1,798	)
Total CMBS-Unrealized/Unrecognized	$	4,258		$	-	$	(6,688	)	$	(15,566	)	$	(8,210	)	$	(26,205	)

(1) Fusion means a CMBS composed of large and small loans.

Note: Some amounts may not foot due to rounding.

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Fixed Maturity Securities

Severity and Duration of Unrealized/Unrecognized Losses

September 30, 2009

($ in millions)

(unaudited)

	Unrealized/ Unrecognized			Fair
Fair Value as a Percentage of Amortized Cost	(Loss) Gain			Value
85% but less than 100% of amortized cost	$	(9.0	)		264.4
75% or more but less than 85% of amortized cost		(8.5	)		36.9
Less than 75% of amortized cost		(47.7	)		36.5
Gross unrealized/unrecognized losses on fixed maturity securities		(65.2	)		337.8
Gross unrealized/unrecognized gains on fixed maturity securities		139.0			2,990.3
Net unrealized/unrecognized losses on fixed maturity securities	$	73.8			3,328.1

Duration of Unrealized/Unrecognized Loss Position	75% or more but less than 85% of Amortized Cost			Less than 75% of Amortized Cost
0 – 3 months	$	(0.8	)		(0.1	)
4 – 6 months		-			(0.7	)
7 – 9 months		-			(4.1	)
10 – 12 months		(3.3	)		(17.6	)
Greater than 12 months		(4.4	)		(25.2	)
Gross unrealized/unrecognized losses	$	(8.5	)		(47.7	)

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Credit Quality of Available-for-Sale Securities

September 30, 2009

($ in millions)

(unaudited)

	September 30, 2009							December 31, 2008
	Fair Value		Unrealized Gain (Loss)			Credit Quality		Fair Value		Unrealized Gain (Loss)			Credit Quality
AFS Portfolio:
U.S. government obligations1	$	352.9		4.3		AAA			252.2		16.6		AAA
State and municipal obligations		407.0		26.8		AA+			1,758.0		18.6		AA+
Corporate securities		318.1		16.6		A+			366.5		(22.9	)	A
Mortgage-backed securities		386.4		(13.5	)	AA+			596.2		(86.1	)	AA+
Asset-backed securities ("ABS")		23.8		(0.2	)	AA			61.4		(15.3	)	AA
Total AFS portfolio	$	1,488.2		34.0		AA+			3,034.3		(89.1	)	AA+
State and Municipal Obligations:
Government obligations	$	231.3		14.9		AA+			574.1		16.2		AA+
Special revenue obligations		175.7		11.9		AA+			1,183.9		2.4		AA+
Total state and municipal obligations	$	407.0		26.8		AA+			1,758.0		18.6		AA+
Corporate Securities:
Financial	$	61.2		2.8		AA-			101.0		(13.1	)	A+
Industrials		50.2		2.8		A			67.7		(2.1	)	A-
Utilities		19.1		1.1		BBB+			47.6		(0.8	)	A
Consumer discretion		21.7		1.8		A-			33.9		(1.5	)	A-
Consumer staples		31.6		1.6		A			42.0		0.5		A
Health care		38.6		2.3		AA+			22.7		0.7		A+
Materials		15.7		0.8		BBB+			13.2		(3.7	)	BBB+
Energy		35.5		1.6		AA-			19.1		(0.2	)	A-
Information technology		12.1		0.1		A			10.1		(1.9	)	BBB
Telecommunications services		11.6		0.6		A			9.2		(0.8	)	A-
Other		20.8		1.1		A			-		-
Total corporate securities	$	318.1		16.6		A+			366.5		(22.9	)	A
Mortgage-backed securities:
Agency CMBS	$	84.7		3.1		AAA			72.9		2.8		AAA
Non-agency CMBS		-		-			-		154.3		(34.8	)	AAA
Agency RMBS		244.1		4.5		AAA			245.5		4.2		AAA
Non-agency RMBS		32.9		(13.4	)	A-			74.3		(28.4	)	AA+
Alternative-A ("Alt-A") RMBS		24.7		(7.7	)	A-			49.2		(29.9	)	AA+
Total MBS	$	386.4		(13.5	)	AA+			596.2		(86.1	)	AA+
Asset-backed securities:
ABS	$	23.8		(0.2	)	AA			59.3		(15.1	)	AA+
Alt-A ABS		-		-		-			0.9		-		B
Sub-prime ABS2		-		-		-			1.2		(0.2	)	A
Total ABS	$	23.8		(0.2	)	AA			61.4		(15.3	)	AA

1 U.S. Governemnt includes coporate securities fully guaranteed by the FDIC.

2 We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650.

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Credit Quality of Held-to-Maturity Securities

September 30, 2009

($ in millions)

(unaudited)

	Fair Value		Carry Value		Unrecognized Holding Gain (Loss)2			Unrealized Gain (Loss) in Other Comprehensive Income3			Total Unrealized / Unrecognized Gain (Loss)			Credit Quality
HTM Fixed Maturity Portfolio1:
U.S. government obligations	$	179.7		177.0		2.7			5.9			8.6		AAA
State and municipal obligations		1,254.4		1,233.5		21.0			36.1			57.1		AA
Corporate securities		109.6		101.2		8.4			(6.3	)		2.1		A-
Mortgage-backed securities		262.1		261.9		0.2			(24.7	)		(24.5	)	AAA
Asset-backed securities		34.0		30.6		3.4			(6.9	)		(3.5	)	AA
Total HTM portfolio	$	1,839.8		1,804.2		35.7			4.1			39.8		AA+
State and Municipal Obligations:
Government obligations	$	310.2		305.9		4.3			15.7			20.0		AA+
Special revenue obligations		944.3		927.6		16.7			20.4			37.1		AA
Total state and municipal obligations	$	1,254.5		1,233.5		21.0			36.1			57.1		AA
Corporate Securities:
Financial	$	34.7		31.6		3.1			(4.2	)		(1.1	)	A
Industrials		29.1		25.6		3.5			(2.2	)		1.3		A-
Utilities		16.6		16.4		0.2			(0.1	)		0.1		A-
Consumer discretion		6.3		6.1		0.3			0.1			0.4		BBB+
Consumer staples		17.3		16.4		0.8			0.5			1.3		AA-
Materials		2.1		1.9		0.2			(0.1	)		0.1		BBB-
Energy		3.5		3.2		0.3			(0.3	)		-		BB+
Total corporate securities	$	109.6		101.2		8.4			(6.3	)		2.1		A-
Mortgage-backed securities:
Agency CMBS	$	22.5		22.1		0.4			0.3			0.8		AAA
Non-agency CMBS		78.2		81.4		(3.2	)		(26.9	)		(30.1	)	AAA
Agency RMBS		155.5		152.5		3.0			3.0			6.0		AAA
Non-agency RMBS		5.9		5.9		-			(1.1	)		(1.2	)	AAA
Total mortgage-backed securities	$	262.1		261.9		0.2			(24.7	)		(24.5	)	AAA
Asset-backed securities:
ABS	$	31.6		28.5		3.1			(5.9	)		(2.8	)	AA
Alt-A ABS		1.3		1.0		0.3			(0.5	)		(0.2	)	CC
Sub-prime ABS4		1.1		1.1		-			(0.5	)		(0.5	)	A
Total ABS	$	34.0		30.6		3.4			(6.9	)		(3.5	)	AA-

1 2008 HTM securities are not presented as they are not material

2 Unrecognized holding gains (losses) are equal to the fair value less the carry value of the security

3 Unrealized gains (losses) are equal to the fair value less the amortized costs of securities transferred from AFS to HTM at the date of transfer, adjusted for subsequent amortization into income

4 We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO® scores below 650.