Selective Insurance (SIGI) 8-K Results of Operations and Financial Condition

EXHIBIT 99.2

Supplemental Investor Package

___________________________________________________

Third Quarter 2012

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,
	2012								2011								2011
						Unrecognized/								Unrecognized/								Unrecognized/
	Balance			Market		Unrealized			Balance			Market		Unrealized			Balance			Market		Unrealized
	Sheet			Value		Gain/(Loss)			Sheet			Value		Gain/(Loss)			Sheet			Value		Gain/(Loss)
Invested Assets:
Corporate bonds1	$	2,223,077			2,234,897		119,877		$	1,900,130			1,915,953		68,871		$	1,967,498			1,981,909		73,085
Gov't\ Municipal bonds		1,647,599			1,681,098		108,778			1,725,061			1,757,780		109,189			1,642,223			1,673,508		108,694
Total bonds		3,870,676			3,915,995		228,655			3,625,191			3,673,733		178,060			3,609,721			3,655,417		181,779
Equities		155,577			155,577		27,710			139,203			139,203		(11,314	)		157,355			157,355		13,529
Short-term investments		184,878			184,878		-			162,812			162,812		-			217,044			217,044		-
Other investments		122,081			122,081		(4,702	)		135,560			135,560		(3,189	)		128,301			128,301		(4,520	)
Total invested assets		4,333,212			4,378,531		251,663			4,062,766			4,111,308		163,557			4,112,421			4,158,117		190,788
Invested assets per $ of stockholders' equity2		3.85								3.93								3.89
Total assets2		5,879,941								5,696,189								5,685,469
Liabilities:
Reserve for losses and loss expenses		3,103,111								3,243,622								3,144,924
Unearned premium reserve		1,017,076								902,112								906,991
Total liabilities		4,755,563								4,662,435								4,627,141
Stockholders' equity2		1,124,378								1,033,754								1,058,328
Total debt to capitalization ratio2		21.5	%							20.2	%							22.5	%
Adjusted total debt to capitalization ratio 2, 3		15.2	%							13.3	%							15.9	%
Book value per share		20.44								19.07								19.45
Book value per share excluding
unrealized gain or loss on bond portfolio2		18.28								17.51								17.82
NPW per insurance segment employee (excludes E&S)		816								771								791
Statutory premiums to surplus ratio		1.5	x							1.4	x							1.4	x
Statutory surplus		1,088,494								1,010,144								1,062,707

1 Includes mortgage-backed and asset-backed securities.

2 Prior year results have been restated to reflect the adoption of ASU 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts."

3 The adjusted debt to capitalization ratio reflects an estimated equity treatment of 90% applied to our $100 million Junior Subordinated Notes issued September 25, 2006 as applied by A.M. Best.

Selective Insurance Group, Inc.
Selected Income Statement Data (unaudited)
September 2012		THREE MONTHS ENDED September 30,												NINE MONTHS ENDED September 30,
($ in thousands, except per share amounts)		2012						2011						2012						2011
					Per diluted share						Per diluted share						Per diluted share						Per diluted share
Consolidated
Revenue		$	436,872					$	394,069					$	1,285,127					$	1,197,095
Operating income (loss)1			18,982			0.34			(15,989	)		(0.30	)		34,414			0.62			839			0.01
Net realized (losses) gains, after tax			(708	)		(0.01	)		(1,329	)		(0.02	)		2,241			0.04			3,810			0.07
Income from continuing operations			18,274			0.33			(17,318	)		(0.32	)		36,655			0.66			4,649			0.08
Loss on discontinued operations, after tax			-			-			(650	)		(0.01	)		-			-			(650	)		(0.01	)
Net income (loss)1			18,274			0.33			(17,968	)		(0.33	)		36,655			0.66			3,999			0.07
Operating return on equity1			6.9	%					(6.2	)%					4.2	%					0.1	%
Insurance Operations
Gross premiums written			538,919						476,343						1,549,141						1,354,470
Net premiums written			450,518						396,832						1,296,253						1,133,170
Net premiums earned			406,225						358,963						1,177,266						1,065,886
Underwriting gain (loss)1	- before tax		861						(64,779	)					(27,464	)					(111,479	)
	- after tax		559			0.01			(42,106	)		(0.78	)		(17,852	)		(0.32	)		(72,461	)		(1.32	)
GAAP combined ratio1			99.8	%					118.0	%					102.3	%					110.5	%
Commercial lines
Net premiums earned			334,420						292,363						966,896						869,421
GAAP combined ratio1			101.9	%					112.5	%					103.1	%					107.6	%
Personal lines
Net premiums earned			71,805						66,600						210,370						196,465
GAAP combined ratio1			89.9	%					142.4	%					98.6	%					123.1	%
Investments
Net investment income	- before tax		30,650						35,786						97,284						118,604
	- after tax		23,494			0.42			26,976			0.50			73,979			1.33			88,521			1.60
Effective tax rate			23.3	%					24.6	%					24.0	%					25.4	%
Annual after-tax yield on investment portfolio															2.3	%					3.0	%
Annual after-tax, after-interest expense yield															2.0	%					2.7	%
Invested assets per $ of stockholders' equity															3.85						3.93
Other expenses (net of other income)
Interest expense	- before tax		(4,725	)					(4,559	)					(14,148	)					(13,675	)
	- after tax		(3,071	)		(0.05	)		(2,963	)		(0.05	)		(9,196	)		(0.17	)		(8,888	)		(0.16	)
Other (expense) income - after tax		$	(2,000	)		(0.04	)	$	2,105			0.03		$	(12,517	)		(0.22	)	$	(6,333	)		(0.11	)
Diluted weighted avg shares outstanding			55,862						54,183						55,717						55,172

1 Prior year results have been restated to reflect the adoption of ASU 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts."

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
	2012			2011			(Decrease)			2012			2011			(Decrease)
Investment Income:
Interest:
Fixed Maturity Securities		30,839			31,960			(3.5	)		93,948			97,835			(4.0	)
Short-term		36			28			28.6			103			123			(16.3	)
Other Investments:
Alternative Investments		935			4,453			(79.0	)		6,396			23,994			(73.3	)
Other		(438	)		-			N/M			(936	)		-			N/M
Dividends		1,268			1,197			5.9			3,785			2,299			64.6
Miscellaneous		41			41			0.0			105			88			19.3
		32,681			37,679			(13.3	)		103,401			124,339			(16.8	)
Investment Expense		2,031			1,893			7.3			6,117			5,735			6.7
Net Investment Income Before Tax		30,650			35,786			(14.4	)		97,284			118,604			(18.0	)
Tax		7,156			8,810			(18.8	)		23,305			30,083			(22.5	)
Net Investment Income After Tax	$	23,494			26,976			(12.9	)	$	73,979			88,521			(16.4	)
Net Investment Income per Share	$	0.42			0.50			(16.0	)	$	1.33			1.60			(16.9	)
Effective Tax Rate		23.3	%		24.6	%					24.0	%		25.4	%
Average Yields :
Fixed Maturity Securities:
Pre Tax											3.35	%		3.63	%
After Tax											2.53	%		2.77	%
Portfolio:
Pre Tax											3.07	%		3.96	%
After Tax											2.34	%		2.95	%
	For the three months ended									Year to date:
	September			September						September			September
Net Realized Gains(Losses)	2012			2011						2012			2011
Fixed Maturities		1,302			262						1,663			1,497
Equity Securities		(2,390	)		(2,307	)					1,786			4,364
Short Term		-			-						(2	)		-
Other Investments		-			-						1			-
Total		(1,088	)		(2,045	)					3,448			5,861
Net of Tax		(708	)		(1,329	)					2,241			3,810

As of September 30, 2012 new money rates for fixed maturity securities were 2.32% on a pre-tax basis and 1.74% on an after tax-basis.

Selective Insurance Group, Inc.

2012 Statutory Results by Line of Business

3rd Qtr 2012 (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			2012			2011			Gain/(Loss)
Personal Lines:
Homeowners	$	35,558		14.5	%	$	29,919		15.4	%		31.4	%		8.8	%		30.3	%		0.0	%		70.5	%		207.4	%	$	7,117
Auto		39,856		3.8	%		38,295		2.5	%		70.6	%		12.1	%		30.1	%		0.0	%		112.8	%		116.7	%		(5,385	)
Other (including flood)		4,022		9.4	%		3,591		8.7	%		50.3	%		(20.9	)%		(44.2	)%		0.0	%		(14.8	)%		(94.3	)%		4,312
Total	$	79,436		8.6	%	$	71,805		7.8	%		53.3	%		9.0	%		26.5	%		0.0	%		88.8	%		141.4	%	$	6,044
Commercial Lines:
Commerical property	$	62,260		11.7	%	$	52,198		8.6	%		41.2	%		6.1	%		34.3	%		(0.3	)%		81.3	%		148.1	%	$	6,303
Workers compensation		66,320		3.2	%		65,592		3.3	%		77.4	%		10.4	%		26.5	%		1.6	%		115.9	%		114.2	%		(10,625	)
General liability		106,020		11.4	%		93,763		7.2	%		54.4	%		14.4	%		31.7	%		(0.1	)%		100.4	%		95.9	%		(4,214	)
Auto		80,725		6.2	%		72,758		3.7	%		57.1	%		8.5	%		30.3	%		(0.2	)%		95.7	%		95.9	%		728
Business owners policies		18,199		10.2	%		17,748		6.5	%		47.2	%		14.1	%		39.9	%		0.0	%		101.2	%		126.3	%		(391	)
Bonds		4,625		(7.9	)%		4,713		(0.3	)%		17.4	%		7.3	%		63.3	%		0.0	%		88.0	%		88.0	%		620
Other		32,933		200.7	%		27,647		1459.1	%		51.0	%		23.6	%		39.7	%		0.0	%		114.3	%		82.9	%		(6,045	)
Total	$	371,082		14.6	%	$	334,420		14.4	%		56.2	%		11.7	%		32.4	%		0.2	%		100.5	%		110.7	%	$	(13,626	)
Grand Total	$	450,518		13.5	%	$	406,225		13.2	%		55.7	%		11.2	%		31.3	%		0.2	%		98.4	%		116.4	%	$	(7,582	)
Note: Some amounts may not foot due to rounding.
				2012			2011
	Losses Paid		$	211,941		$	215,140
	LAE Paid			43,322			35,243
	Total Paid		$	255,263		$	250,383

Selective Insurance Group, Inc.

2012 Statutory Results by Line of Business

September 2012 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			2012			2011			Gain/(Loss)
Personal Lines:
Homeowners	$	93,730		14.4	%	$	86,685		14.8	%		52.3	%		9.5	%		31.8	%		0.0	%		93.6	%		149.5	%	$	3,348
Auto	$	117,297		2.9	%		113,648		1.9	%		69.0	%		12.0	%		30.0	%		0.0	%		111.0	%		116.7	%		(13,649	)
Other (including flood)		10,760		9.2	%		10,038		6.7	%		57.5	%		(10.0	)%		(48.9	)%		0.0	%		(1.4	)%		(19.6	)%		10,535
Total	$	221,787		7.8	%	$	210,370		7.1	%		61.6	%		9.9	%		26.9	%		0.0	%		98.4	%		122.8	%	$	235
Commercial Lines:
Commerical property	$	168,481		10.0	%	$	151,945		5.4	%		51.4	%		6.0	%		36.4	%		(0.1	)%		93.7	%		121.8	%	$	3,591
Workers compensation		206,272		3.8	%		198,064		4.3	%		71.3	%		14.3	%		25.9	%		1.6	%		113.1	%		117.7	%		(28,135	)
General liability		305,870		11.5	%		276,538		8.1	%		52.1	%		16.6	%		32.3	%		0.0	%		101.0	%		99.7	%		(12,106	)
Auto		231,475		5.0	%		214,782		2.7	%		56.9	%		8.4	%		30.9	%		(0.1	)%		96.1	%		93.5	%		3,202
Business owners policies		54,386		9.5	%		51,872		4.7	%		46.6	%		14.2	%		40.5	%		0.0	%		101.3	%		119.6	%		(1,698	)
Bonds		14,801		1.0	%		14,076		(1.0	)%		17.4	%		8.3	%		60.9	%		0.0	%		86.6	%		83.3	%		1,452
Other		93,181		473.3	%		59,619		765.3	%		46.9	%		20.3	%		41.3	%		0.0	%		108.5	%		60.9	%		(18,924	)
Total	$	1,074,466		15.9	%	$	966,896		11.2	%		55.9	%		12.6	%		33.0	%		0.3	%		101.8	%		106.6	%	$	(52,617	)
Grand Total	$	1,296,253		14.4	%	$	1,177,266		10.4	%		56.9	%		12.1	%		32.0	%		0.2	%		101.2	%		109.6	%	$	(52,382	)
Note: Some amounts may not foot due to rounding.
				2012			2011
	Losses Paid		$	650,956		$	612,066
	LAE Paid			127,889			113,151
	Total Paid		$	778,845		$	725,217

SELECTIVE INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS	Unaudited
($ in thousands, except share amounts)	September 30, 2012			December 31, 2011
ASSETS
Investments:
Fixed maturity securities, held-to-maturity – at carrying value (fair value:  $646,035 – 2012; $758,043 – 2011)	$	600,716			712,348
Fixed maturity securities, available-for-sale – at fair value (amortized cost: $3,091,740 – 2012; $2,766,856 – 2011)		3,269,960			2,897,373
Equity securities, available-for-sale – at fair value (cost:  $127,867 – 2012; $143,826 – 2011)		155,577			157,355
Short-term investments (at cost which approximates fair value)		184,878			217,044
Other investments		122,081			128,301
Total investments		4,333,212			4,112,421
Cash		315			762
Interest and dividends due or accrued		35,541			35,842
Premiums receivable, net of allowance for uncollectible accounts of:  $3,684 – 2012; $3,768 – 2011		519,953			466,294
Reinsurance recoverables, net		482,579			561,855
Prepaid reinsurance premiums		138,785			147,686
Current federal income tax		6,349			731
Deferred federal income tax		91,916			119,486
Property and equipment – at cost, net of accumulated depreciation and amortization of: $167,052 – 2012; $160,294 – 2011		45,969			43,947
Deferred policy acquisition costs		161,505			135,761
Goodwill		7,849			7,849
Other assets		55,968			52,835
Total assets	$	5,879,941			5,685,469
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for losses and loss expenses	$	3,103,111			3,144,924
Unearned premiums		1,017,076			906,991
Notes payable		307,380			307,360
Accrued salaries and benefits		124,662			119,297
Other liabilities		203,334			148,569
Total liabilities	$	4,755,563			4,627,141
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: 98,014,074 – 2012; 97,246,711 – 2011		196,028			194,494
Additional paid-in capital		267,527			257,370
Retained earnings		1,131,115			1,116,319
Accumulated other comprehensive income		85,011			42,294
Treasury stock – at cost (shares:  43,012,714 – 2012; 42,836,201 – 2011)		(555,303	)		(552,149	)
Total stockholders’ equity		1,124,378			1,058,328
Total liabilities and stockholders’ equity	$	5,879,941			5,685,469

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME	Quarter ended September 30,						Nine Months ended September 30,
($ in thousands, except per share amounts)	2012			2011			2012			2011
Revenues:
Net premiums earned	$	406,225			358,963		$	1,177,266			1,065,886
Net investment income earned		30,650			35,786			97,284			118,604
Net realized gains (losses):
Net realized investment gains		1,856			498			6,907			9,203
Other-than-temporary impairments		(921	)		(2,693	)		(1,218	)		(3,062	)
Other-than-temporary impairments on fixed maturity securities recognized in other comprehensive income		(2,023	)		150			(2,241	)		(280	)
Total net realized gains (losses)		(1,088	)		(2,045	)		3,448			5,861
Other income		1,085			1,365			7,129			6,744
Total revenues		436,872			394,069			1,285,127			1,197,095
Expenses:
Losses and loss expenses incurred		272,251			305,958			813,060			829,719
Policy acquisition costs		131,849			116,111			391,026			346,318
Interest expense		4,725			4,559			14,148			13,675
Other expenses		7,733			4,924			24,080			18,807
Total expenses		416,558			431,552			1,242,314			1,208,519
Income (loss) from continuing operations before federal income tax		20,314			(37,483	)		42,813			(11,424	)
Federal income tax expense (benefit):
Current		(5,088	)		(20,001	)		1,590			(12,614	)
Deferred		7,128			(164	)		4,568			(3,459	)
Total federal income tax expense (benefit)		2,040			(20,165	)		6,158			(16,073	)
Net income (loss) from continuing operations	$	18,274			(17,318	)	$	36,655			4,649
Loss on disposal of discontinued operations, net of tax $(350) in Third Quarter and Nine Months 2011		—			(650	)		—			(650	)
Net income (loss)		18,274			(17,968	)		36,655			3,999
Earnings per share:
Basic net income (loss) from continuing operations	$	0.33			(0.32	)	$	0.67			0.08
Basic net loss from disposal of discontinued operations		—			(0.01	)		—			(0.01	)
Basic net income (loss)	$	0.33			(0.33	)	$	0.67			0.07
Diluted net income (loss) from continuing operations	$	0.33			(0.32	)	$	0.66			0.08
Diluted net loss from disposal of discontinued operations		—			(0.01	)		—			(0.01	)
Diluted net income (loss)	$	0.33			(0.33	)	$	0.66			0.07
Dividends to stockholders		0.13			0.13			0.39			0.39

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Quarter ended September 30,						Nine Months ended September 30,
($ in thousands)	2012			2011			2012			2011
Net income (loss)	$	18,274			(17,968	)	$	36,655			3,999
Other comprehensive income, net of tax:
Unrealized gains on investment securities:
Unrealized holding gains arising during period		23,803			9,564			41,777			28,521
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income		1,320			(53	)		1,633			336
Amortization of net unrealized gains on held-to-maturity securities		537			(432	)		(422	)		(2,013	)
Less: reclassification adjustment for gains included in net income		(81	)		1,239			(3,056	)		(3,891	)
Total unrealized gains on investment securities		25,579			10,318			39,932			22,953
Defined benefit pension plans:
Amortization of net actuarial loss included in net income		904			678			2,712			2,114
Amortization of prior service cost included in net income		24			24			73			73
Total defined benefit pension plans		928			702			2,785			2,187
Other comprehensive income		26,507			11,020			42,717			25,140
Comprehensive income (loss)	$	44,781			(6,948	)	$	79,372			29,139

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
	Nine Months ended September 30,
($ in thousands)	2012			2011
Common stock:
Beginning of year	$	194,494			192,725
Dividend reinvestment plan (shares:  68,640 – 2012; 74,777 – 2011)		137			150
Stock purchase and compensation plans (shares:  698,723 – 2012; 607,059 – 2011)		1,397			1,214
End of period		196,028			194,089
Additional paid-in capital:
Beginning of year		257,370			244,613
Dividend reinvestment plan		1,064			1,066
Stock purchase and compensation plans		9,093			8,260
End of period		267,527			253,939
Retained earnings:
Beginning of year, as previously reported		1,116,319			1,176,155
Add:  Adjustment for the cumulative effect on prior years of applying retroactively the new method of accounting for deferred policy acquisition costs		—			(53,068	)
Balance at beginning of year, as adjusted		1,116,319			1,123,087
Net income		36,655			3,999
Dividends to stockholders ($0.39 per share – 2012 and 2011)		(21,859	)		(21,579	)
End of period		1,131,115			1,105,507
Accumulated other comprehensive income:
Beginning of year		42,294			7,024
Other comprehensive income		42,717			25,140
End of period		85,011			32,164
Treasury stock:
Beginning of year		(552,149	)		(549,408	)
Acquisition of treasury stock (shares:  176,513 – 2012; 137,667 – 2011)		(3,154	)		(2,537	)
End of period		(555,303	)		(551,945	)
Total stockholders’ equity	$	1,124,378			1,033,754

SELECTIVE INSURANCE GROUP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW	Nine Months ended September 30,
($ in thousands)	2012			2011
Operating Activities
Net income	$	36,655			3,999
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,386			25,260
Loss on disposal of discontinued operations		—			650
Stock-based compensation expense		6,263			6,383
Undistributed losses (income) of equity method investments		1,090			(1,793	)
Net realized gains		(3,448	)		(5,861	)
Changes in assets and liabilities:
Increase in reserves for losses and loss expenses, net of reinsurance recoverables		37,463			100,584
Increase in unearned premiums, net of prepaid reinsurance and advance premiums		119,269			67,816
Increase in net federal income taxes		(1,050	)		(9,426	)
Increase in premiums receivable		(53,659	)		(63,764	)
Increase in deferred policy acquisition costs		(25,744	)		(10,828	)
Decrease in interest and dividends due or accrued		721			1,943
Increase (decrease) in accrued salaries and benefits		5,365			(2,448	)
Increase (decrease) in accrued insurance expenses		299			(6,772	)
Other-net		15,144			20,817
Net adjustments		131,099			122,561
Net cash provided by operating activities		167,754			126,560
Investing Activities
Purchase of fixed maturity securities, available-for-sale		(676,408	)		(350,140	)
Purchase of equity securities, available-for-sale		(41,004	)		(148,104	)
Purchase of other investments		(9,050	)		(11,778	)
Purchase of short-term investments		(1,231,519	)		(1,030,834	)
Purchase of subsidiary		255			—
Sale of subsidiary		600			919
Sale of fixed maturity securities, available-for-sale		92,170			85,773
Sale of short-term investments		1,263,684			1,029,178
Redemption and maturities of fixed maturity securities, held-to-maturity		91,665			138,907
Redemption and maturities of fixed maturity securities, available-for-sale		297,980			95,951
Sale of equity securities, available-for-sale		58,749			59,991
Distributions from other investments		13,910			15,666
Sale of other investments		1			16,357
Purchase of property and equipment		(9,382	)		(8,932	)
Net cash used in investing activities		(148,349	)		(107,046	)
Financing Activities
Dividends to stockholders		(20,188	)		(19,863	)
Acquisition of treasury stock		(3,154	)		(2,537	)
Net proceeds from stock purchase and compensation plans		2,586			2,718
Excess tax benefit (expense) from share-based payment arrangements		904			(190	)
Net cash used in financing activities		(19,852	)		(19,872	)
Net decrease in cash		(447	)		(358	)
Cash, beginning of year		762			645
Cash, end of period	$	315			287

Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Balance Sheets
($ in thousands)
	Sep-30			Sep-30			Dec-31 *
	2012			2011			2011
ASSETS
Bonds	$	3,606,161			3,482,530			3,452,204
Common stocks		155,577			139,203			157,355
Affiliated mortgage loan		37,618			38,297			38,131
Other investments		188,131			162,689			197,409
Short-term investments		198,334			109,468			183,070
Total investments		4,185,821			3,932,187			4,028,169
Cash on hand and in banks		(42,644	)		(49,209	)		(20,701	)
Interest and dividends due and accrued		35,496			35,173			35,880
Premiums receivable		518,142			475,442			461,482
Reinsurance recoverable on paid losses and expenses		9,200			9,376			12,365
Federal income tax recoverable		-			7,001			-
Deferred tax recoverable		150,194			135,884			137,659
EDP equipment		1,332			1,004			1,804
Equities and deposits in pools and associations		7,491			9,625			4,837
Receivable for sold securities		337			14			644
Other assets		31,489			29,334			27,964
Total assets	$	4,896,858			4,585,831			4,690,103
LIABILITIES
Reserve for losses	$	2,191,838			2,209,177			2,173,028
Reinsurance payable on paid loss and loss expense		2,191			1,243			1,285
Reserve for loss expenses		433,502			408,024			418,542
Unearned premiums		878,291			780,552			759,304
Reserve for commissions payable		47,032			39,987			44,488
Ceded balances payable		17,711			10,746			21,871
Federal income tax payable		8,671			-			12,176
Premium and other taxes payable		21,344			20,291			23,588
Borrowed money		58,042			13,017			58,043
Reserve for dividends to policyholders		3,370			3,451			3,470
Reserves for unauthorized reinsurance		1,785			1,811			1,785
Payable for securities		36,944			976			-
Funds withheld on account of others		6,164			5,690			6,538
Accrued salaries and benefits		85,308			63,306			80,601
Other liabilities		16,171			17,416			22,677
Total liabilities		3,808,364			3,575,687			3,627,396
POLICYHOLDERS' SURPLUS
Capital		42,625			28,325			32,325
Aggregate write-ins for special surplus funds		-			39,055			44,296
Paid in surplus		435,844			255,792			307,022
Unassigned surplus		610,025			686,972			679,064
Total policyholders' surplus		1,088,494			1,010,144			1,062,707
Total liabilities and policyholders' surplus	$	4,896,858			4,585,831			4,690,103

* Includes the December 31, 2011 acquisition of Montpelier U.S. Insurance Company (now known as Mesa

Underwriters Specialty Insurance Company).  Combined statutory filings for 2011 do not reflect the acquisition as this Company was not included in our intercompany pooling until January 1, 2012.

Selective Insurance Group, Inc.
Combined Insurance Company Subsidiaries
Unaudited Statutory Statements of Income
($ in thousands)
	Three Months Ended										Nine Months Ended
	September										September
UNDERWRITING	2012					2011					2012					2011
Net premiums written	$	450,518					396,832					1,296,253					1,133,170
Net premiums earned		406,225					358,963					1,177,266					1,065,886
Net losses paid		211,941					215,140					650,956					612,066
Change in reserve for losses		14,399					50,591					18,810					97,620
Net losses incurred		226,340		55.7	%		265,731		74.0	%		669,766		56.9	%		709,686		66.6	%
Net loss expenses paid		43,322					35,243					127,889					113,151
Change in reserve for loss expenses		2,230					4,449					14,960					6,516
Net loss expenses incurred		45,552		11.2	%		39,692		11.1	%		142,849		12.1	%		119,667		11.2	%
Net underwriting expenses incurred		143,322		31.8	%		123,316		31.0	%		419,086		32.4	%		358,447		31.6	%
Total deductions		415,214					428,739					1,231,701					1,187,800
Statutory underwriting loss		(8,989	)				(69,776	)				(54,435	)				(121,914	)
Net loss from premium balances charged off		(566	)				(1,300	)				(2,671	)				(4,003	)
Finance charges and other income		2,658					1,349					7,553					6,688
Total other income		2,092		-0.5	%		49		0.0	%		4,882		-0.4	%		2,685		-0.2	%
Policyholders' dividends incurred		(685	)	0.2	%		(1,056	)	0.3	%		(2,829	)	0.2	%		(3,803	)	0.4	%
Total underwriting loss		(7,582	)	98.4	%		(70,783	)	116.4	%		(52,382	)	101.2	%		(123,032	)	109.6	%
INVESTMENT
Net investment income earned		31,282					34,967					98,554					117,546
Net realized gain		(1,224	)				(2,061	)				3,309					5,816
Total income before income tax		22,476					(37,877	)				49,481					330
Federal income tax expense / (benefit)		2,108					(14,525	)				13,230					(2,241	)
Net income / (loss)	$	20,368					(23,352	)				36,251					2,571
Policyholders' Surplus
Surplus, beginning of period	$	1,067,881					1,070,297					1,062,707					1,073,025
Net income / (loss)		20,368					(23,352	)				36,251					2,571
Change in deferred taxes		(2,940	)				4,551					4,724					5,471
Change in unrealized gains		6,578					(12,286	)				8,619					(13,446	)
Dividends to stockholders		(151,239	)				(17,006	)				(179,713	)				(46,018	)
Change in cum. effect of acctg principle		-					-					44,296					-
Paid in common stock		8,400					-					10,300					-
Paid in surplus		130,722					-					130,722					-
Surplus - transferred to capital		-					-					(1,900	)				-
Change in non-admitted assets		8,723					(10,894	)				16,758					(8,712	)
Change in additional admitted deferred taxes		-					115					(44,296	)				(1,466	)
Surplus adjustments		1					(1,281	)				26					(1,281	)
Net change in surplus for period		20,613					(60,153	)				25,787					(62,881	)
Surplus, end of period	$	1,088,494					1,010,144					1,088,494					1,010,144
Statutory underwriting loss	$	(7,582	)				(70,783	)				(52,382	)				(123,032	)
Adjustments under GAAP:
Deferred policy acquisition costs1		9,106					7,204					25,744					10,828
Pension costs		70					63					210					1,868
Other, net		(733	)				(1,263	)				(1,036	)				(1,143	)
GAAP underwriting gain (loss)	$	861					(64,779	)				(27,464	)				(111,479	)

1 Prior year results have been restated to reflect the adoption of ASU 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts."

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

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments
as of September 30, 2012
(unaudited)
	Inception	Original		Remaining		Current		YTD			DPI(1)		TVPI(2)
Fund	Year	Commitment		Commitment		Market Value		Income			Ratio		Ratio
Real Estate
Silverpeak RE II	2005		20,000,000		2,409,941		9,771,126		223,304			0.49		0.97
Silverpeak RE III	2008		15,000,000		8,063,280		2,947,710		(429,672	)		0.02		0.45
Total - Real Estate			35,000,000		10,473,221		12,718,836		(206,368	)		0.38		0.84
Mezzanine Financing
Neovara Euro Mezz	2004		9,000,000		-		726,796		(345,497	)		0.95		1.00
GS Mezz V	2007		25,000,000		15,255,707		8,466,169		1,307,182			0.64		1.26
New Canaan V	2012		7,000,000		5,577,405		1,324,397		(124,846	)		-		0.91
Centerfield Capital	2012		3,000,000		2,340,518		659,482		-			-		1.00
Total - Mezz. Financing			44,000,000		23,173,629		11,176,844		836,839			1.59		1.12
Distressed Debt
Varde VIII	2006		10,000,000		4,420,889		5,614,702		320,048			0.59		1.15
GS Distressed Opp III	2007		15,000,000		2,936,059		7,798,695		605,851			0.45		1.03
Total - Distressed Debt			25,000,000		7,356,948		13,413,397		925,899			0.51		1.08
Private Equity
Prospector	1997		5,000,000		-		410,899		(222	)		2.79		2.88
Trilantic Capital Partners III	2004		10,000,000		1,242,835		4,136,181		324,416			1.29		1.73
NB Co-Invest	2006		15,000,000		1,716,821		9,725,719		1,004,479			0.61		1.29
Trilantic Capital Partners IV	2007		11,098,351		922,808		10,470,360		1,725,996			0.37		1.38
Total - Private Equity			41,098,351		3,882,464		24,743,159		3,054,668			0.99		1.62
Private Equity, Secondary Market
NB SOF	2005		12,000,000		899,494		6,002,684		391,437			0.73		1.27
GS Vintage IV	2007		20,000,000		4,315,101		14,404,989		299,951			0.46		1.21
NB SOF II	2008		12,000,000		2,938,399		8,475,134		707,152			0.49		1.35
Total - Pvt. Eq. Sec. Mkt.			44,000,000		8,152,994		28,882,807		1,398,540			0.54		1.26
Energy/Power Generation
ArcLight I	2002		15,000,000		1,655,505		113,848		(73,351	)		1.80		1.81
ArcLight II	2003		15,000,000		2,295,492		1,601,007		(545,861	)		1.27		1.36
ArcLight III	2006		15,000,000		2,037,794		7,510,994		(966,506	)		0.71		1.19
Quintana Energy	2006		10,000,000		1,641,106		7,198,033		1,513,641			0.39		1.25
ArcLight IV	2007		10,000,000		2,717,373		2,773,544		(378,941	)		0.99		1.27
Total - Energy/Power Generation			65,000,000		10,347,270		19,197,426		(451,018	)		1.12		1.40
Venture Capital
Venture V	2001		9,600,000		400,000		7,651,412		837,159			0.35		1.19
Total - Venture Capital			9,600,000		400,000		7,651,412		837,159			0.35		1.19
TOTAL - ALTERNATIVE INVESTMENTS		$	263,698,351		63,786,526		117,783,881		6,395,719			0.78		1.27
(1) Distributed to paid in ratio
(2) Total value to paid in ratio
Exhibit may not foot due to rounding

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Municipal Bond Portfolio

State and Repayment Source Composition

September 30, 2012

($  in thousands)

(unaudited)

Exposure = 42% Held-to-Maturity; 58% Available-for-Sale

Repayment Source Composition by State
Market Values
State	Revenue		% of  State			General Obligation (GO)-Local		% of State			General Obligation (GO)-State		% of State			TX - Permanent School Fund (PSF)		% of State			Total		% of Total
TX		52,624		51	%		50,475		48	%		1,126		1	%		-		0	%		104,225		8	%
TX-PSF		-		0	%		-		0	%		-		0	%		34,080		100	%		34,080		3	%
WA		49,327		48	%		46,052		45	%		7,270		7	%		-		0	%		102,649		8	%
NY		74,947		95	%		3,678		5	%		-		0	%		-		0	%		78,625		6	%
AZ		62,510		96	%		2,466		4	%		-		0	%		-		0	%		64,976		5	%
FL		55,105		90	%		-		0	%		6,226		10	%		-		0	%		61,331		4	%
CO		21,905		40	%		31,371		57	%		1,756		3	%		-		0	%		55,032		4	%
IL		25,857		56	%		20,324		44	%		-		0	%		-		0	%		46,181		3	%
OH		22,734		53	%		13,338		31	%		7,070		16	%		-		0	%		43,142		3	%
NC		24,313		58	%		13,923		33	%		3,760		9	%		-		0	%		41,996		3	%
MO		21,229		56	%		16,975		44	%		-		0	%		-		0	%		38,204		3	%
Pre-refunded		51,838		52	%		31,696		32	%		12,050		12	%		3,602		4	%		99,186		7	%
Other		359,588		62	%		114,601		20	%		107,180		18	%		-		0	%		581,369		43	%
Grand Total		821,977		61	%		344,899		25	%		146,438		11	%		37,682		3	%		1,350,996		100	%

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Available-for-Sale Fixed Maturity Securities
September 30, 2012
($ in millions)
(unaudited)
	Fair Value		Unrealized Gain (Loss)		Weighted Average Credit Quality
AFS Fixed Maturity Portfolio:
U.S. government obligations1	$	294.2		18.8	AA+
Foreign government obligations		30.3		1.5	AA-
State and municipal obligations		784.5		46.5	AA
Corporate securities		1,425.9		85.5	A
Mortgage-backed securities ("MBS")		613.9		23.7	AA
Asset-backed securities ("ABS")		121.2		2.2	AAA
Total AFS fixed maturity portfolio	$	3,270.0		178.2	AA-
State and Municipal Obligations:
General obligations	$	344.7		22.4	AA+
Special revenue obligations		439.8		24.1	AA
Total state and municipal obligations	$	784.5		46.5	AA
Corporate Securities:
Financial	$	433.4		22.7	A
Industrials		97.1		8.3	A
Utilities		111.7		6.5	BBB+
Consumer discretionary		130.5		9.1	BBB+
Consumer staples		160.6		9.4	A
Healthcare		179.2		11.4	A+
Materials		72.1		4.8	A-
Energy		90.6		5.0	A-
Information technology		93.4		3.9	A
Telecommunications services		45.9		3.0	BBB+
Other		11.4		1.4	AA+
Total corporate securities	$	1,425.9		85.5	A
MBS:
Government Guaranteed Agency commercial mortgage-backed securities ("CMBS")	$	59.9		2.9	AA+
Non-agency CMBS		68.5		0.7	AA-
Other-agency CMBS		1.2		-	AA+
Government Guaranteed Agency residential mortgage-backed securities ("RMBS")		98.1		5.0	AA+
Other Agency RMBS		334.2		13.9	AA+
Non-agency RMBS		45.5		1.1	A-
Alternative-A ("Alt-A") RMBS		6.5		0.1	AA+
Total MBS	$	613.9		23.7	AA
ABS:
ABS	$	119.9		2.2	AAA
Alt-A ABS3		0.7		-	D
Sub-prime ABS2,3		0.6		-	D
Total ABS	$	121.2		2.2	AAA

1 U.S. Government includes corporate 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 Alt-A ABS and sub-prime ABS each consist of one security that is currently expected by rating agencies to default on its obligations.

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Credit Quality of Held-to-Maturity Securities
September 30, 2012
($ in millions)
(unaudited)
	Fair Value		Carry Value		Unrecognized Holding Gain (Loss)		Unrealized Gain (Loss) in Accumulated Other Comprehensive Income			Total Unrealized Unrecognized Gain (Loss)			Weighted Average Credit Quality
HTM Fixed Maturity Portfolio:
Foreign government obligations	$	5.6		5.5		0.1		0.2			0.3		AA+
State and municipal obligations		566.5		533.1		33.4		8.3			41.7		AA
Corporate securities		53.6		48.5		5.1		(1.0	)		4.1		A
MBS		13.0		7.5		5.5		(1.3	)		4.2		AA-
ABS		7.3		6.1		1.2		(1.1	)		0.1		A
Total HTM portfolio	$	646.0		600.7		45.3		5.1			50.4		AA
State and Municipal Obligations:
General obligations	$	184.4		174.9		9.5		4.3			13.8		AA
Special revenue obligations		382.1		358.2		23.9		4.0			27.9		AA
Total state and municipal obligations	$	566.5		533.1		33.4		8.3			41.7		AA
Corporate Securities:
Financial	$	15.7		14.2		1.5		(0.8	)		0.7		BBB+
Industrials		17.0		15.4		1.6		(0.2	)		1.4		A
Utilities		15.4		13.6		1.8		(0.1	)		1.7		A+
Consumer discretionary		3.5		3.3		0.2		0.1			0.3		AA
Materials		2.0		2.0		-		-			-		BBB
Total corporate securities	$	53.6		48.5		5.1		(1.0	)		4.1		A
MBS:
Non-agency CMBS		13.0		7.5		5.5		(1.3	)		4.2		AA-
Total MBS	$	13.0		7.5		5.5		(1.3	)		4.2		AA-
ABS:
ABS	$	4.9		4.4		0.5		(0.3	)		0.2		BBB+
Alt-A ABS		2.4		1.7		0.7		(0.8	)		(0.1	)	AAA
Total ABS	$	7.3		6.1		1.2		(1.1	)		0.1		A