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

Supplemental Investor Package

_______________________________________________

Third Quarter 2010

Investor Contact:

Jennifer DiBerardino

Senior Vice President, Investor Relations and Treasurer

Tel:  973-948-1364

jennifer.diberardino@selective.com

Selective Insurance Group, Inc.
Selected Balance Sheet Data (unaudited)
($ in thousands, except per share amounts)
	September 30,								September 30,								December 31,
	2010								2009								2009
						Unrealized/								Unrecognized/								Unrecognized/		��
	Balance			Market		Unrecognized			Balance			Market		Unrealized			Balance			Market		Unrealized
	Sheet			Value		Gain/(Loss)			Sheet			Value		(Loss)/Gain			Sheet			Value		(Loss)/Gain
Invested Assets:
Corporate bonds1	$	1,548,160			1,569,975		73,054		$	1,122,000			1,134,012		(23,009	)	$	1,144,692			1,163,973		(13,031	)
Government and municipal bonds		1,939,587			1,985,217		121,589			2,170,426			2,194,067		96,828			2,201,580			2,212,107		72,101
Total bonds		3,487,747			3,555,192		194,643			3,292,426			3,328,079		73,819			3,346,272			3,376,080		59,070
Equities		63,116			63,116		8,065			89,892			89,892		13,087			80,264			80,264		15,874
Short-term investments		265,043			265,043		-			236,896			236,896		-			213,848			213,848		-
Other investments		154,728			154,728		(19,452	)		147,482			147,482		(20,381	)		140,667			140,667		(25,774	)
Total invested assets		3,970,634			4,038,079		183,256			3,766,696			3,802,349		66,525			3,781,051			3,810,859		49,170
Invested assets per $ of stockholders' equity		3.64								3.82								3.77
Total assets		5,334,521								5,158,303								5,114,827
Liabilities:
Reserve for losses and loss expenses		2,809,797								2,718,855								2,745,799
Unearned premium reserve		880,698								895,446								844,847
Total liabilities		4,242,205								4,171,974								4,112,452
Stockholders' equity		1,092,316								986,329								1,002,375
Total debt to capitalization ratio		19.4	%							21.0	%							21.5	%
Adjusted total debt to capitalization ratio 2		13.8	%							15.0	%							15.6	%
Book value per share		20.41								18.58								18.83
Book value per share excluding
unrealized gain or loss on bond portfolio		18.87								18.12								18.47
NPW per insurance segment employee		760								772								766
Statutory premiums to surplus ratio		1.4	x							1.6	x							1.5	x
Statutory surplus		1,034,321								903,505								981,955
1 Includes mortgage-backed and asset-backed securities.
2 The adjusted debt to capitalization ratio reflects an estimated equity treatment of 75% applied to our $100 million Junior Subordinated Notes issued September 25, 2006.

1

Selective Insurance Group, Inc.
Selected Income Statement Data (unaudited)
September 2010		THREE MONTHS ENDED September 30,												NINE MONTHS ENDED September 30,
($ in thousands, except per share amounts)		2010						2009						2010						2009
					Per diluted share						Per diluted share						Per diluted share						Per diluted share
Consolidated
Revenue		$	389,702					$	390,175					$	1,170,532					$	1,124,216
Operating income			18,794			0.35			23,845			0.44			47,641			0.88			49,211			0.92
Net realized gains (losses), after tax			37			-			(3,239	)		(0.06	)		(2,126	)		(0.04	)		(26,197	)		(0.49	)
Income from continuing operations			18,831			0.35			20,606			0.38			45,515			0.84			23,014			0.43
Loss on discontinued operations, after tax			(1,634	)		(0.03	)		(7,599	)		(0.14	)		(3,749	)		(0.07	)		(7,196	)		(0.13	)
Net income			17,197			0.32			13,007			0.24			41,766			0.77			15,818			0.30
Operating return on equity			7.0	%					9.9	%					6.1	%					7.0	%
Insurance Operations
Gross premiums written			446,684						446,419						1,295,622						1,312,630
Net premiums written			367,114						376,718						1,088,729						1,117,764
Net premiums earned			354,709						355,906						1,063,101						1,078,090
Underwriting (loss) gain	- before tax		(3,933	)					(142	)					(21,699	)					2,927
	- after tax		(2,556	)		(0.05	)		(92	)		-			(14,104	)		(0.26	)		1,903			0.04
GAAP combined ratio			101.1	%					100.0	%					102.0	%					99.7	%
Commercial lines
Net premiums earned			293,225						301,279						884,134						918,069
GAAP combined ratio			100.0	%					99.3	%					100.9	%					98.9	%
Personal lines
Net premiums earned			61,484						54,627						178,967						160,021
GAAP combined ratio			106.4	%					104.2	%					107.8	%					104.5	%
Investments
Net investment income	- before tax		32,986						36,585						104,237						78,670
	- after tax		25,305			0.46			28,382			0.53			80,058			1.47			65,392			1.23
Effective tax rate			23.3	%					22.4	%					23.2	%					16.9	%
Annual after-tax yield on investment portfolio															2.8	%					2.4	%
Annual after-tax, after-interest expense yield															2.4	%					2.0	%
Invested assets per $ of stockholders' equity															3.64						3.82
Other expenses (net of other income)
Interest expense	- before tax		(4,559	)					(4,751	)					(14,056	)					(14,618	)
	- after tax		(2,963	)		(0.05	)		(3,089	)		(0.06	)		(9,136	)		(0.17	)		(9,502	)		(0.18	)
Other - after tax		$	(992	)		(0.01	)	$	(1,356	)		(0.03	)		(9,177	)		(0.16	)	$	(8,582	)		(0.17	)
Diluted weighted avg. shares outstanding			54,573						53,548						54,390						53,312

2

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

 (unaudited)

 ($ in thousands)

		For the three months ended						%			Year to Date						%
		September			September			Increase			September			September			Increase
		2010			2009			(Decrease)			2010			2009			(Decrease)
Investment Income:
	Interest:
	Fixed Maturity Securities		31,741			34,747			(8.7	)		97,914			106,980			(8.5	)
	Short-term		134			237			(43.5	)		367			1,161			(68.4	)
	Alternative Investments		2,359			2,660			(11.3	)		11,122			(26,744	)		141.6
	Dividends		347			551			(37.0	)		1,279			1,562			(18.1	)
	Changes in Fair Value		-			-			N/M			-			262			(100.0	)
	Miscellaneous		41			53			(22.6	)		94			293			(67.9	)
			34,622			38,248			(9.5	)		110,776			83,514			32.6
Investment Expense			1,636			1,663			(1.6	)		6,539			4,844			35.0
Net Investment Income Before Tax			32,986			36,585			(9.8	)		104,237			78,670			32.5
Tax			7,681			8,203			(6.4	)		24,179			13,278			82.1
Net Investment Income After Tax		$	25,305			28,382			(10.8	)	$	80,058			65,392			22.4
Net Investment Income per Share		$	0.46			0.53			(13.2	)	$	1.47			1.23			19.5
Effective Tax Rate			23.3	%		22.4	%					23.2	%		16.9	%
Average Yields :
Fixed Maturity Securities:
	Pre Tax											3.60	%		4.25	%
	After Tax											2.81	%		3.35	%
Portfolio:
	Pre Tax											3.59	%		2.87	%
	After Tax											2.75	%		2.39	%
		For the three months ended									Year to date:
		September			September						September			September
Net Realized Gains(Losses)			2010			2009						2010			2009
	Total Fixed Maturities		1,791			(4,392	)					(14,806	)		(38,038	)
	Total Equity Securities		(1,734	)		259						11,535			(225	)
	Total Other Investments		-			(850	)					-			(2,039	)
	Total		57			(4,983	)					(3,271	)		(40,302	)
	Net of Tax		37			(3,239	)					(2,126	)		(26,197	)

 

3

Selective Insurance Group, Inc.
2010 Statutory Results by Line of Business
3rd Qtr 2010 (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			2010			2009			Gain/(Loss)
Personal Lines:
Homeowners	$	28,261		20.1	%	$	22,544		21.1	%		70.9	%		7.6	%		29.9	%		0.0	%		108.4	%		100.1	%	$	(3,589	)
Auto		38,445		7.9	%		35,928		7.8	%		67.6	%		11.9	%		29.5	%		0.0	%		109.0	%		110.9	%		(3,959	)
Other (including flood)		3,403		8.6	%		3,013		11.7	%		73.8	%		(17.2	)%		(62.0	)%		0.0	%		(5.4	)%		2.5	%		3,419
Total	$	70,110		12.6	%	$	61,484		12.6	%		69.1	%		8.9	%		25.2	%		0.0	%		103.2	%		101.8	%	$	(4,129	)
Commercial Lines:
Fire/IM	$	53,764		(3.2	)%	$	49,558		(0.6	)%		50.1	%		4.6	%		35.6	%		(0.1	)%		90.2	%		81.2	%	$	3,352
Workers compensation		57,997		(12.3	)%		61,179		(5.5	)%		85.9	%		15.0	%		28.0	%		1.3	%		130.2	%		110.9	%		(17,598	)
General liability		84,141		(5.3	)%		83,249		(5.7	)%		47.6	%		17.3	%		34.2	%		0.0	%		99.1	%		103.9	%		442
Auto		75,425		(5.9	)%		73,440		(2.7	)%		45.0	%		9.2	%		29.1	%		0.0	%		83.3	%		98.5	%		11,688
BOP		15,632		(1.3	)%		16,400		3.8	%		57.5	%		13.4	%		34.8	%		0.0	%		105.7	%		101.2	%		(667	)
Bonds		5,295		0.5	%		4,884		5.4	%		11.9	%		7.6	%		56.8	%		0.0	%		76.3	%		89.5	%		922
Other		2,764		5.2	%		2,529		4.2	%		0.9	%		0.2	%		46.5	%		0.0	%		47.6	%		47.1	%		1,215
Total	$	295,019		(6.2	)%	$	291,239		(3.3	)%		55.0	%		12.1	%		32.4	%		0.3	%		99.8	%		99.5	%	$	(646	)
Grand Total	$	365,129		(3.1	)%	$	352,723		(0.9	)%		57.4	%		11.5	%		31.2	%		0.2	%		100.3	%		99.8	%	$	(4,775	)
Note: Some amounts may not foot due to rounding.
				2010			2009
	Losses Paid		$	219,404		$	177,750
	LAE Paid			40,101			38,686
	Total Paid		$	259,505		$	216,436

4

Selective Insurance Group, Inc.
2010 Statutory Results by Line of Business
September 2010 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			2010			2009			Gain/(Loss)
Personal Lines:
Homeowners	$	71,656		19.9	%	$	64,163		20.3	%		70.6	%		7.6	%		31.9	%		0.0	%		110.1	%		107.6	%	$	(8,840	)
Auto		112,278		8.7	%		105,490		6.3	%		71.1	%		11.6	%		29.6	%		0.0	%		112.3	%		108.4	%	$	(14,936	)
Other (including flood)		9,000		9.2	%		9,314		24.5	%		57.5	%		(18.0	)%		(43.1	)%		0.0	%		(3.6	)%		12.0	%		9,517
Total	$	192,934		12.7	%	$	178,967		11.8	%		70.2	%		8.6	%		27.1	%		0.0	%		105.9	%		103.6	%	$	(14,259	)
Commercial Lines:
Fire/IM	$	153,405		(1.6	)%	$	150,188		1.7	%		54.9	%		4.2	%		37.3	%		(0.1	)%		96.3	%		86.8	%	$	4,384
Workers compensation		187,540		(7.6	)%		187,889		(6.9	)%		79.9	%		15.6	%		27.1	%		1.8	%		124.4	%		101.2	%		(45,833	)
General liability		257,188		(8.5	)%		252,438		(8.0	)%		44.0	%		17.0	%		34.2	%		(0.1	)%		95.1	%		104.0	%		10,704
Auto		223,680		(5.3	)%		220,932		(2.5	)%		49.7	%		8.3	%		29.5	%		(0.1	)%		87.4	%		97.9	%		27,120
BOP		48,887		1.9	%		48,838		4.9	%		73.3	%		13.7	%		34.5	%		0.0	%		121.5	%		112.9	%		(10,532	)
Bonds		15,136		4.6	%		14,315		3.6	%		15.2	%		6.3	%		59.8	%		0.0	%		81.3	%		91.2	%		2,178
Other		7,972		2.9	%		7,549		5.0	%		1.9	%		0.3	%		44.8	%		0.0	%		47.0	%		45.7	%		3,812
Total	$	893,809		(5.6	)%	$	882,148		(3.9	)%		55.7	%		11.8	%		32.7	%		0.3	%		100.5	%		98.9	%	$	(8,167	)
Grand Total	$	1,086,744		(2.8	)%	$	1,061,116		(1.6	)%		58.2	%		11.3	%		31.6	%		0.3	%		101.4	%		99.6	%	$	(22,426	)
Note: Some amounts may not foot due to rounding.
				2010			2009
	Losses Paid		$	588,974		$	572,020
	LAE Paid			114,703			116,193
	Total Paid		$	703,677		$	688,213

5

SELECTIVE INSURANCE GROUP, INC.	Unaudited
CONSOLIDATED BALANCE SHEETS	September 30,			December 31,
($ in thousands, except share amounts)	2010			2009
ASSETS
Investments:
Fixed maturity securities, held-to-maturity – at carry value
(fair value:  $1,440,143 – 2010; $1,740,211  – 2009)	$	1,372,698			1,710,403
Fixed maturity securities, available-for-sale – at fair value
(amortized cost:  $2,006,685 – 2010; $1,616,456 – 2009)		2,115,049			1,635,869
Equity securities, available-for-sale – at fair value
(cost of:  $55,051 – 2010; $64,390 – 2009)		63,116			80,264
Short-term investments (at cost which approximates fair value)		265,043			213,848
Other investments		154,728			140,667
Total investments		3,970,634			3,781,051
Cash		422			811
Interest and dividends due or accrued		36,283			34,651
Premiums receivable, net of allowance for uncollectible
accounts of:  $4,856 – 2010; $5,880  – 2009		460,394			446,577
Reinsurance recoverables, net		307,105			276,018
Prepaid reinsurance premiums		115,745			105,522
Current federal income tax		24,760			17,662
Deferred federal income tax		79,799			111,038
Property and equipment – at cost, net of accumulated
depreciation and amortization of:  $149,255 – 2010; $141,251 – 2009		41,832			46,287
Deferred policy acquisition costs		218,590			218,601
Goodwill		7,849			7,849
Other assets		71,108			68,760
Total assets	$	5,334,521			5,114,827
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for losses and loss expenses	$	2,809,797			2,745,799
Unearned premiums		880,698			844,847
Notes payable		262,326			274,606
Accrued salaries and benefits		101,464			103,802
Other liabilities		187,920			143,398
Total liabilities	$	4,242,205			4,112,452
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:  96,189,223 – 2010; 95,822,959 – 2009		192,378			191,646
Additional paid-in capital		241,472			231,933
Retained earnings		1,159,496			1,138,978
Accumulated other comprehensive income (loss)		48,220			(12,460	)
Treasury stock – at cost (shares:  42,677,198 – 2010; 42,578,779 – 2009)		(549,250	)		(547,722	)
Total stockholders’ equity		1,092,316			1,002,375
Commitments and contingencies
Total liabilities and stockholders’ equity	$	5,334,521			5,114,827

6

SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME	Quarter ended						Nine Months ended
	September 30,						September 30,
($ in thousands, except per share amounts)	2010			2009			2010			2009
Revenues:
Net premiums earned	$	354,709			355,906			1,063,101			1,078,090
Net investment income earned		32,986			36,585			104,237			78,670
Net realized gains (losses):
Net realized investment gains (losses)		2,864			(741	)		13,960			3,515
Other-than-temporary impairments		(4,091	)		(5,833	)		(16,326	)		(45,467	)
Other-than-temporary impairments on fixed maturity securities
recognized in other comprehensive income		1,284			1,591			(905	)		1,650
Total net realized gains (losses)		57			(4,983	)		(3,271	)		(40,302	)
Other income		1,950			2,667			6,465			7,758
Total revenues		389,702			390,175			1,170,532			1,124,216
Expenses:
Losses and loss expenses incurred		245,019			242,032			739,142			733,275
Policy acquisition costs		114,042			114,520			346,143			342,148
Interest expense		4,559			4,751			14,056			14,618
Other expenses		4,022			7,045			18,636			21,083
Total expenses		367,642			368,348			1,117,977			1,111,124
Income from continuing operations, before federal income tax		22,060			21,827			52,555			13,092
Federal income tax expense (benefit):
Current		(1,691	)		(426	)		8,475			3,818
Deferred		4,920			1,647			(1,435	)		(13,740	)
Total federal income tax expense (benefit)		3,229			1,221			7,040			(9,922	)
Net income from continuing operations		18,831			20,606			45,515			23,014
Loss from discontinued operations, net of tax of $(4,147) for Third
Quarter 2009 and $(4,106) for Nine Months 2009		-			(7,599	)		-			(7,196	)
Loss on disposal of discontinued operations, net of tax of $(880) for
Third Quarter 2010 and $(2,019) for Nine Months 2010		(1,634	)		-			(3,749	)		-
Total discontinued operations, net of tax		(1,634	)		(7,599	)		(3,749	)		(7,196	)
Net income	$	17,197			13,007			41,766			15,818
Earnings per share:
Basic net income from continuing operations		0.35			0.39			0.85			0.44
Basic net loss from disposal of discontinued operations		(0.03	)		(0.14	)		(0.07	)		(0.14	)
Basic net income	$	0.32			0.25			0.78			0.30
Diluted net income from continuing operations		0.35			0.38			0.84			0.43
Diluted net loss from disposal of discontinued operations		(0.03	)		(0.14	)		(0.07	)		(0.13	)
Diluted net income	$	0.32			0.24			0.77			0.30
Dividends to stockholders	$	0.13			0.13			0.39			0.39

7

SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY
	Nine Months ended September 30,
($ in thousands, except per share amounts)	2010				2009
Common stock:
Beginning of year	$	191,646				190,527
Dividend reinvestment plan
(shares:  81,471 – 2010; 96,265 – 2009)		163				193
Stock purchase and compensation plans
(shares:  284,793 – 2010; 274,517 – 2009)		569				549
End of period		192,378				191,269
Additional paid-in capital:
Beginning of year		231,933				217,195
Dividend reinvestment plan		1,098				1,136
Stock purchase and compensation plans		8,441				9,873
End of period		241,472				228,204
Retained earnings:
Beginning of year		1,138,978				1,128,149
Cumulative effect adjustment due to adoption of other-than-temporary
impairment guidance under ASC 320, net of deferred income tax		-				2,380
Net income		41,766		41,766		15,818		15,818
Cash dividends to stockholders ($0.39 per share – 2010;
$0.39 per share – 2009)		(21,248	)			(20,932	)
End of period		1,159,496				1,125,415
Accumulated other comprehensive income (loss):
Beginning of year		(12,460	)			(100,666	)
Cumulative-effect adjustment due to adoption of other-than-temporary
impairment guidance under ASC 320, net of deferred income tax		-				(2,380	)
Other comprehensive income (loss), increase (decrease) in:
Unrealized gains on investment securities:
Non-credit portion of other-than-temporary impairment losses
recognized in other comprehensive income, net of deferred income tax		3,026				(998	)
Other net unrealized gains on investment securities, net of
deferred income tax		55,556				91,529
Total unrealized gains on investment securities		58,582		58,582		90,531		90,531
Defined benefit pension plans, net of deferred income tax		2,098		2,098		1,377		1,377
End of period		48,220				(11,138	)
Comprehensive income				102,446				107,726
Treasury stock:
Beginning of year		(547,722	)			(544,712	)
Acquisition of treasury stock
(shares:  98,419 – 2010; 172,937 – 2009)		(1,528	)			(2,709	)
End of period		(549,250	)			(547,421	)
Total stockholders’ equity	$	1,092,316				986,329

8

SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW	Nine Months ended
	September 30,
($ in thousands)	2010			2009
Operating Activities
Net Income	$	41,766			15,818
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,175			21,045
Loss on disposal of discontinued operations		3,749			-
Stock-based compensation expense		9,774			9,178
Undistributed (income) losses of equity method investments		(6,338	)		26,744
Net realized losses		3,271			40,302
Postretirement life curtailment benefit		-			(4,217	)
Unrealized gain on trading securities		-			(262	)
Goodwill impairment		-			12,214
Deferred tax benefit		(1,435	)		(17,666	)
Changes in assets and liabilities:
Increase in reserves for losses and loss expenses, net of reinsurance recoverables		32,912			47,631
Increase in unearned premiums, net of prepaid reinsurance and advance premiums		25,123			39,121
Increase (decrease) in net federal income tax recoverable		(5,079	)		13,252
Increase in premiums receivable		(13,817	)		(10,275	)
Decrease (increase) in deferred policy acquisition costs		11			(11,375	)
(Increase) decrease in interest and dividends due or accrued		(1,491	)		1,038
Decrease in accrued salaries and benefits		(2,749	)		(10,920	)
Decrease in accrued insurance expenses		(6,872	)		(4,242	)
Sale of trading securities		-			2,831
Other-net		1,284			(2,905	)
Net adjustments		61,518			151,494
Net cash provided by operating activities		103,284			167,312
Investing Activities
Purchase of fixed maturity securities, held-to-maturity		-			(158,827	)
Purchase of fixed maturity securities, available-for-sale		(699,133	)		(757,538	)
Purchase of equity securities, available-for-sale		(47,930	)		(75,856	)
Purchase of other investments		(14,348	)		(13,466	)
Purchase of short-term investments		(1,409,971	)		(1,600,685	)
Sale of subsidiary		681			-
Sale of fixed maturity securities, held-to-maturity		-			5,819
Sale of fixed maturity securities, available-for-sale		157,823			470,202
Sale of short-term investments		1,358,779			1,561,901
Redemption and maturities of fixed maturity securities, held-to-maturity		238,923			197,095
Redemption and maturities of fixed maturity securities, available-for-sale		251,875			88,402
Sale of equity securities, available-for-sale		76,277			125,211
Proceeds from other investments		18,468			23,149
Purchase of property and equipment		(4,062	)		(4,139	)
Net cash used in investing activities		(72,618	)		(138,732	)
Financing Activities
Dividends to stockholders		(19,516	)		(19,833	)
Acquisition of treasury stock		(1,528	)		(2,709	)
Principal payment of notes payable		(12,300	)		(12,300	)
Net proceeds from stock purchase and compensation plans		3,084			2,914
Excess tax benefits from share-based payment arrangements		(795	)		(1,125	)
Net cash used in financing activities		(31,055	)		(33,053	)
Net decrease in cash and cash equivalents		(389	)		(4,473	)
Net decrease in cash and cash equivalents from discontinued operations		-			(1,609	)
Net decrease in cash from continuing operations		(389	)		(2,864	)
Cash from continuing operations, beginning of year		811			3,606
Cash from continuing operations, end of period	$	422			742

9

 Selective Insurance Group, Inc.

 Combined Insurance Company Subsidiaries

 Unaudited Statutory Balance Sheets

 ($ in thousands)

	Sep-30			Sep-30			Dec-31
	2010			2009			2009
ASSETS
Bonds	$	3,355,540			3,224,083			3,289,336
Common stocks		63,116			89,892			80,264
Affiliated mortgage loan		38,944			39,559			39,408
Other investments		190,958			162,798			176,983
Short-term investments		212,664			198,818			165,957
Total investments		3,861,222			3,715,150			3,751,948
Cash on hand and in banks*		(33,420	)		(31,761	)		(29,110	)
Interest and dividends due and accrued		36,448			35,649			34,808
Premiums receivable		456,588			487,220			443,223
Reinsurance recoverable on paid losses and expenses		6,097			5,202			4,408
Federal income tax recoverable		14,679			369			1,608
Deferred tax recoverable		123,873			88,821			119,377
EDP equipment		1,331			2,361			2,134
Equities and deposits in pools and associations		7,530			8,297			4,886
Receivable for sold securities		23,698			5,150			19,655
Other assets		31,964			29,462			29,747
Total assets	$	4,530,010			4,345,920			4,382,684
LIABILITIES
Reserve for losses	$	2,100,648			2,061,817			2,072,376
Reinsurance payable on paid loss and loss expense		1,191			924			1,011
Reserve for loss expenses		404,738			397,863			399,457
Unearned premiums		764,953			787,390			739,325
Reserve for commissions payable		41,525			43,666			49,237
Ceded balances payable		13,313			12,437			9,856
Premium and other taxes payable		23,129			21,372			22,283
Borrowed money		13,017			-			13,016
Reserve for dividends to policyholders		2,568			3,657			3,718
Reserves for unauthorized reinsurance		1,013			1,416			1,013
Payable for securities		45,918			24,962			-
Funds withheld on account of others		5,771			5,154			6,261
Accrued salaries and benefits		64,405			68,323			66,847
Other liabilities		13,500			13,434			16,329
Total liabilities		3,495,689			3,442,415			3,400,729
POLICYHOLDERS' SURPLUS
Capital		28,325			28,325			28,325
Aggregate write-ins for special surplus funds		34,971			-			33,951
Paid in surplus		255,792			255,792			255,792
Unassigned surplus*		715,233			619,388			663,887
Total policyholders' surplus		1,034,321			903,505			981,955
Total liabilities and policyholders' surplus	$	4,530,010			4,345,920			4,382,684

* Prior year balances have been adjusted for $17K elimination entry

10

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Unaudited Statutory Statements Of Income

($ in thousands)

	Three Months Ended										Nine Months Ended
	September										September
UNDERWRITING	2010					2009					2010					2009
Net premiums written	$	365,129					376,718					1,086,744					1,117,764
Net premiums earned		352,723					355,906					1,061,115					1,078,090
Net losses paid		219,404					177,750					588,974					572,020
Change in reserve for losses		(16,787	)				20,698					28,272					29,869
Net losses incurred		202,617		57.4	%		198,448		55.8	%		617,246		58.2	%		601,889		55.8	%
Net loss expenses paid		40,101					38,686					114,703					116,193
Change in reserve for loss expenses		608					4,925					5,281					15,067
Net loss expenses incurred		40,709		11.5	%		43,611		12.3	%		119,984		11.3	%		131,260		12.2	%
Net underwriting expenses incurred		114,210		31.4	%		120,436		32.0	%		346,042		31.8	%		355,291		31.8	%
Total deductions		357,536					362,495					1,083,272					1,088,440
Statutory underwriting loss		(4,813	)				(6,589	)				(22,157	)				(10,350	)
Net loss from premium balances charged off		(1,239	)				(1,078	)				(4,085	)				(3,446	)
Finance charges and other income		2,005					2,656					6,683					7,720
Total other income		766		-0.2	%		1,578		-0.6	%		2,598		-0.2	%		4,274		-0.4	%
Policyholders' dividends incurred		(728	)	0.2	%		(991	)	0.3	%		(2,867	)	0.3	%		(2,268	)	0.2	%
Total underwriting loss		(4,775	)	100.3	%		(6,002	)	99.8	%		(22,426	)	101.4	%		(8,344	)	99.6	%
INVESTMENT
Net investment income earned		31,750					35,481					98,659					95,980
Net realized loss		(108	)				(4,878	)				(3,373	)				(41,392	)
Total income before income tax		26,867					24,601					72,860					46,244
Federal income tax expense		990					3,269					17,304					17,362
Net income	$	25,877					21,332					55,556					28,882
Policyholders' Surplus
Surplus, beginning of period	$	1,008,534					873,365					981,955					884,431
Net income		25,877					21,332					55,556					28,882
Change in deferred tax		(8,831	)				(919	)				(772	)				14,638
Change in unrealized losses		6,771					10,450					13,692					(11,245	)
Dividends to stockholders		(12,003	)				(12,515	)				(36,008	)				(24,518	)
Paid in surplus		-					-					-					20,000
Change in cum. effect of acctg principle		-					2,540					-					2,540
Change in non-admitted assets		15,279					9,252					19,114					(11,282	)
Change in additional admitted deferred tax		(1,446	)				-					1,020					-
Surplus adjustments		140					-					(236	)				59
Net change in surplus for period		25,787					30,140					52,366					19,074
Surplus, end of period	$	1,034,321					903,505					1,034,321					903,505
Statutory underwriting loss:	$	(4,775	)				(6,002	)				(22,426	)				(8,344	)
Adjustments under GAAP:
Deferred policy acquisition costs		390					5,678					(11	)				11,376
Other, net		452					182					738					(105	)
GAAP underwriting (loss) gain	$	(3,933	)				(142	)				(21,699	)				2,927

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

11

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments (Insurance Companies' Portfolio)
as of September 30, 2010
(unaudited)
			Paid in
	Inception	Original	Contributed	Remaining	Total	Current	YTD	DPI(1)	TVPI(2)
Fund	Year	Commitment	Capital	Commitment	Distributions	Market Value	Income	Ratio	Ratio
Real Estate
LEH RE II	2005	20,000,000	17,301,168	2,698,832	7,438,741	10,006,633	(283,777)	0.43	1.01
GS Whitehall 2007	2007	15,000,000	14,250,000	750,000	-	2,753,703	(1,397,182)	-	0.19
LEH RE III	2008	15,000,000	6,256,937	8,743,063	29,004	2,948,792	(374,733)	0.00	0.48
Total - Real Estate		50,000,000	37,808,105	12,191,895	7,467,745	15,709,128	(2,055,692)	0.20	0.61
Mezzanine Financing
GS Mezz III	2003	10,000,000	4,362,674	5,637,326	7,596,979	3,722,882	197,330	1.74	2.59
LEH Euro Mezz	2004	9,000,000	9,000,000	-	12,355,149	1,740,876	(599,037)	1.37	1.57
GS Mezz 2006	2006	15,000,000	9,771,217	5,228,783	1,875,410	8,439,788	2,705,439	0.19	1.06
GS Mezz V	2007	25,000,000	9,747,331	15,252,669	3,104,720	9,505,955	702,225	0.32	1.29
Total - Mezz. Financing		59,000,000	32,881,222	26,118,778	24,932,258	23,409,501	3,005,957	0.76	1.47
Distressed Debt
Varde LP	1997	4,000,000	4,000,000	-	12,146,213	-	16,619	3.04	3.04
Varde VIII	2006	10,000,000	10,000,000	-	-	11,719,123	(58,002)	-	1.17
GS Distressed Opp III	2007	15,000,000	10,389,138	4,610,862	512,894	8,660,524	1,236,658	0.05	0.88
Total - Distressed Debt		29,000,000	24,389,138	4,610,862	12,659,107	20,379,647	1,195,274	0.52	1.35
Private Equity
Prospector	1997	5,000,000	5,000,000	-	13,965,078	411,566	(82,745)	2.79	2.88
Trilantic Capital Partners III	2004	10,000,000	9,076,175	923,825	5,943,965	7,097,044	48,705	0.65	1.44
NB Co-Invest	2006	15,000,000	11,190,692	3,809,308	3,685,797	8,548,788	776,035	0.33	1.09
GS PEP Asia	2007	7,000,000	2,300,371	4,699,629	25,606	2,013,111	51,342	0.01	0.89
Trilantic Capital Partners IV	2007	11,098,351	5,104,390	5,993,961	13,611	5,164,301	556,271	0.00	1.01
Total - Private Equity		48,098,351	32,671,628	15,426,724	23,634,057	23,234,810	1,349,609	0.72	1.43
Private Equity, Secondary Market
NB SOF	2005	12,000,000	11,100,506	899,494	5,255,537	7,257,635	654,808	0.47	1.13
GS Vintage IV	2007	20,000,000	14,414,450	5,585,550	2,064,628	13,650,620	2,385,301	0.14	1.09
NB SOF II	2008	12,000,000	3,972,476	8,027,524	502,534	4,422,045	656,368	0.13	1.24
GS Vintage V	2008	10,000,000	3,328,337	6,671,663	179,522	3,274,561	228,037	0.05	1.04
Total - Pvt. Eq. Sec. Mkt.		54,000,000	32,815,769	21,184,231	8,002,220	28,604,861	3,924,514	0.24	1.12
Energy/Power Generation
ArcLight I	2002	15,000,000	13,344,495	1,655,505	27,358,382	1,326,936	201,209	2.05	2.15
ArcLight II	2003	15,000,000	12,704,508	2,295,492	17,071,041	6,484,004	1,347,372	1.34	1.85
ArcLight III	2006	15,000,000	12,962,206	2,037,794	3,998,052	13,070,723	616,920	0.31	1.32
Quintana Energy	2006	10,000,000	7,840,628	2,159,372	392,978	6,630,326	217,049	0.05	0.90
ArcLight IV	2007	10,000,000	7,009,043	2,990,957	3,320,050	6,700,093	1,057,149	0.47	1.43
Total - Energy/Power Generation		65,000,000	53,860,880	11,139,120	52,140,503	34,212,082	3,439,699	0.97	1.60
Venture Capital
Venture V	2001	10,000,000	8,600,000	1,400,000	1,999,996	6,341,205	262,870	0.23	0.97
Total - Venture Capital		10,000,000	8,600,000	1,400,000	1,999,996	6,341,205	262,870	0.23	0.97
TOTAL - ALTERNATIVE INVESTMENTS		$ 315,098,351	223,026,741	92,071,610	130,835,886	151,891,234	11,122,231	0.59	1.27
(1) Distributed to paid in ratio
(2) Total value to paid in ratio

12

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Municipal Bond Portfolio

State and Repayment Source Composition

September 30, 2010

($s in thousands)

(unaudited)

Exposure = 69% Held-to-Maturity; 31% Available-for-Sale

Repayment Source Composition by State %s

Market Values

State	Revenue	% of State	General Obligation (GO)-Local	% of State	General Obligation (GO)-State	% of State	Pre- refunded	% of State	TX -Permanent School Fund (PSF)	% of State	Total	% of Total
TX	65,549	52%	53,910	43%	6,141	5%	-	0%	-	0%	125,600	8%
TX-PSF	-	0%	-	0%	-	0%	-	0%	49,894	100%	49,894	3%
WA	47,407	49%	48,679	51%	-	0%	-	0%	-	0%	96,086	6%
FL	82,404	99%	-	0%	515	1%	-	0%	-	0%	82,919	5%
AZ	70,483	91%	7,071	9%	-	0%	-	0%	-	0%	77,554	5%
NC	28,930	40%	42,567	60%	-	0%	-	0%	-	0%	71,497	5%
NY	70,463	100%	-	0%	-	0%	-	0%	-	0%	70,463	5%
IL	46,612	69%	20,865	31%	-	0%	-	0%	-	0%	67,477	4%
OH	38,317	64%	14,069	23%	7,511	13%	-	0%	-	0%	59,897	4%
CO	23,331	39%	34,328	58%	1,712	3%	-	0%	-	0%	59,371	4%
MN	12,722	23%	5,317	10%	36,609	67%	-	0%	-	0%	54,648	4%
Pre-refunded	-	0%	-	0%	-	0%	74,670	100%	-	0%	74,670	5%
Other	439,400	68%	134,013	21%	75,444	12%	-	0%	-	0%	648,857	42%
Grand Total	925,618	60%	360,819	23%	127,932	8%	74,670	5%	49,894	3%	1,538,933	100%

13

Selective Insurance Group, Inc. and Consolidated Subsidiaries

  Structured Securities

 September 30, 2010

($ in thousands)

    (unaudited)

Market Value	606,373
Unrealized/Unrecognized Gain/(Losses)	17,567
Held to Maturity (HTM)	30%
Available for Sale (AFS)	70%
Structured Security Portfolio Average Rating	AA+
Structured Security % of Total Portfolio	17%

14

 Selective Insurance Group, Inc. and Consolidated Subsidiaries

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

 September 30, 2010

($ in thousands)

  (unaudited)

Market Value	407,574
Unrealized/Unrecognized Gain/(Losses)	12,993
Held to Maturity (HTM)	26%
Available for Sale (AFS)	74%
RMBS & RABS Portfolio Average Rating	AA+
RMBS & RABS % of Total Portfolio	11.5%

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Commercial Mortgage Backed (CMBS) Securities

September 30, 2010

($ in thousands)

(unaudited)

Market Value	166,451
Unrealized/Unrecognized Gain/(Losses)	3,758
Held to Maturity (HTM)	39%
Available for Sale (AFS)	61%
CMBS Portfolio Average Rating	AA
CMBS % of Total Portfolio	4.7%

15

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Credit Quality of Available-for-Sale Fixed Maturity Securities

September 30, 2010

($ in millions)

(unaudited)

	Fair Value		Unrealized Gain (Loss)			Credit Quality
AFS Fixed Maturity Portfolio:
U.S. government obligations1	$	330.6		11.9		AAA
Foreign government obligations		8.5		0.6		AA-
State and municipal obligations		480.3		33.6		AA+
Corporate securities		869.5		48.5			A+
Mortgage-backed securities ("MBS")		402.1		13.1		AA+
Asset-backed securities ("ABS")2		24.0		0.7		AA+
Total AFS fixed maturity portfolio	$	2,115.0		108.4		AA
State and Municipal Obligations:
Government obligations	$	281.8		19.5		AA+
Special revenue obligations		198.5		14.1			A+
Total state and municipal obligations	$	480.3		33.6		AA+
Corporate Securities:
Financial	$	261.7		11.5			A+
Industrials		74.1		6.2			A-
Utilities		49.7		2.4			A-
Consumer discretion		70.2		3.9			A
Consumer staples		87.2		5.0			A-
Health care		132.1		8.7		AA-
Materials		45.3		2.5			A-
Energy		39.9		2.4			A+
Information technology		47.8		2.0			A+
Telecommunications services		37.5		1.5			A
Other		24.0		2.4			A
Total corporate securities	$	869.5		48.5			A+
Mortgage-backed securities:
Gov't Guaranteed Agency CMBS	$	74.7		5.7		AAA
Non-agency CMBS		27.3		(2.0	)		A-
Gov't Guaranteed Agency RMBS		93.6		3.4		AAA
Other Agency RMBS		160.2		7.4		AAA
Non-agency RMBS		36.0		(1.1	)		A-
Alternative-A ("Alt-A") RMBS		10.3		(0.3	)	AAA
Total MBS	$	402.1		13.1		AA+
Asset-backed securities:
ABS	$	23.1		0.9		AAA
Sub-prime ABS2,3		0.9		(0.2	)		D
Total ABS	$	24.0		0.7		AA+

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

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

3 Sub-prime ABS includes one security which is currently expected to defualt on its obligations according to the rating agencies.

16

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Credit Quality of Held-to-Maturity Securities

September 30, 2010

($ in millions)

(unaudited)

	Fair Value		Carry Value		Unrecognized Holding Gain (Loss)		Unrealized Gain (Loss) in Accumulated Other Comprehensive Income			Total Unrealized / Unrecognized Gain (Loss)			Credit Quality
HTM Fixed Maturity Portfolio:
U.S. government obligations1	$	107.1		99.6		7.5		4.9			12.4		AAA
State and municipal obligations		1,058.6		1,020.5		38.1		25.0			63.1		AA-
Corporate securities		94.1		83.2		10.9		(4.0	)		6.9			A-
Mortgage-backed securities ("MBS")		167.5		157.8		9.7		(4.5	)		5.2		AA+
Asset-backed securities ("ABS")2		12.8		11.6		1.2		(2.6	)		(1.4	)		A
Total HTM fixed maturity portfolio	$	1,440.1		1,372.7		67.4		18.8			86.2		AA-
State and Municipal Obligations:
Government obligations	$	286.1		277.2		8.9		11.2			20.1		AA-
Special revenue obligations		772.5		743.3		29.2		13.8			43.0		AA-
Total state and municipal obligations	$	1,058.6		1,020.5		38.1		25.0			63.1		AA-
Corporate Securities:
Financial	$	29.4		25.4		4.0		(2.4	)		1.6		BBB+
Industrials		23.1		19.3		3.8		(1.3	)		2.5		BBB+
Utilities		17.6		16.2		1.4		(0.1	)		1.3			A-
Consumer discretion		12.8		12.2		0.6		0.2			0.8			A+
Consumer staples		5.4		4.9		0.5		(0.1	)		0.4			A
Materials		2.2		1.9		0.3		(0.1	)		0.2		BBB-
Energy		3.6		3.3		0.3		(0.2	)		0.1		BBB-
Total corporate securities	$	94.1		83.2		10.9		(4.0	)		6.9			A-
Mortgage-backed securities:
Gov't guaranteed agency CMBS	$	10.2		9.9		0.3		-			0.3		AAA
Other agency CMBS		3.6		3.6		-		-			-		AA
Non-agency CMBS		50.5		44.8		5.7		(6.0	)		(0.3	)	AA+
Gov't guaranteed agency RMBS		4.4		4.0		0.4		-			0.4		AA
Other agency RMBS		98.7		95.4		3.3		1.5			4.8		AA
Non-agency RMBS		0.1		0.1		-		-			-		AA
Total mortgage-backed securities	$	167.5		157.8		9.7		(4.5	)		5.2		AA+
Asset-backed securities:
ABS	$	9.9		9.1		0.8		(1.1	)		(0.3	)		A
Alt-A ABS		2.9		2.5		0.4		(1.5	)		(1.1	)		A+
Total ABS	$	12.8		11.6		1.2		(2.6	)		(1.4	)		A

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