Selective Insurance (SIGI) 8-K Selective Reports Fourth Quarter 2015 Net Income per Diluted Share of $0.78 and Operating Income1 per Diluted Share of $0.81

EXHIBIT 99.2

 

Supplemental Investor Package

Fourth Quarter and

Full Year 2015

Investor Contact:

Jennifer DiBerardino

Senior Vice President, Investor Relations and Treasurer

Tel: 973-948-1364

jennifer.diberardino@selective.com

Selective Insurance Group, Inc. & Consolidated Subsidiaries

 Selected Balance Sheet Data

(unaudited)

	December 31,							December 31,
($ in thousands, except per share data)	2015							2014
						Unrecognized/							Unrecognized/
	Balance			Market		Unrealized		Balance			Market		Unrealized
	Sheet			Value		Gain		Sheet			Value		Gain
Invested Assets:
Corporate bonds 1	$	2,955,001			2,957,427		8,276	$	2,693,324			2,697,332		47,437
Government and Municipal bonds		1,654,556			1,660,320		55,901		1,690,935			1,702,751		59,680
Total fixed income securities		4,609,557			4,617,747		64,177		4,384,259			4,400,083		107,117
Equities		207,051			207,051		13,235		191,400			191,400		32,389
Short-term investments		194,819			194,819		-		131,972			131,972		-
Other investments		77,842			77,842		-		99,203			99,203		-
Total invested assets	$	5,089,269			5,097,459		77,412	$	4,806,834			4,822,658		139,506
Invested assets per $ of stockholders' equity		3.64							3.77
Total assets		6,904,433							6,574,942
Liabilities:
Reserve for loss and loss expenses		3,517,728							3,477,870
Unearned premium reserve		1,169,710							1,095,819
Total liabilities		5,506,392							5,299,356
Stockholders' equity		1,398,041							1,275,586
Total debt to capitalization ratio		21.7	%						22.6	%
Book value per share		24.37							22.54
Book value per share excluding
unrealized gain or loss on fixed income portfolio		23.74							21.49
NPW per insurance segment employee		979							908
Statutory premiums to surplus ratio		1.5	x						1.4	x
Statutory surplus		1,426,320							1,307,842

¹Includes mortgage-backed and asset-backed securities.

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Income Statement Data

(unaudited)

		Quarter Ended December 31,												Year-to-Date December 31,
($ in thousands, except per share data)		2015						2014						2015						2014
					Per diluted share						Per diluted share						Per diluted share						Per diluted share
Consolidated
Revenue		$	545,530					$	503,583					$	2,131,852					$	2,034,861
Operating income			47,079			0.81			41,603			0.72			157,300			2.70			124,538			2.17
Net realized (losses) gains, after tax			(1,690	)		(0.03	)		(253	)		(0.00	)		8,561			0.15			17,289			0.30
Net income			45,389			0.78			41,350			0.72			165,861			2.85			141,827			2.47
Operating return on equity			13.7	%					13.1	%					11.8	%					10.3	%
Total Insurance Operations
Gross premiums written			558,607						512,046						2,427,367						2,254,576
Net premiums written			474,658						433,586						2,069,904						1,885,280
Net premiums earned			516,087						469,850						1,989,909						1,852,609
Underwriting gain	- before tax		49,053						38,637						149,029						78,143
	- after tax		31,885			0.55			25,114			0.44			96,869			1.67			50,793			0.89
GAAP combined ratio			90.5	%					91.8	%					92.5	%					95.8	%
Standard Commercial Lines
Net premiums earned			397,162						359,621						1,529,442						1,415,712
GAAP combined ratio			86.1	%					94.1	%					89.2	%					95.7	%
Standard Personal Lines
Net premiums earned			71,496						73,008						288,134						296,747
GAAP combined ratio			92.1	%					77.5	%					99.5	%					94.4	%
Excess and Surplus Lines
Net premiums earned			47,429						37,221						172,333						140,150
GAAP combined ratio			124.8	%					97.8	%					109.8	%					99.7	%
Investments
Net investment income	- before tax		30,108						32,108						121,316						138,708
	- after tax		23,294			0.40			24,535			0.43			93,836			1.61			104,207			1.82
Effective tax rate			22.6	%					23.6	%					22.7	%					24.9	%
Annualized after-tax yield on investment portfolio															1.9	%					2.2	%
Annualized after-tax, after-interest expense yield															1.6	%					1.9	%
Invested assets per $ of stockholders' equity															3.64						3.77
Other expenses (net of other income)
Interest expense	- before tax		(5,603	)					(5,668	)					(22,428	)					(23,063	)
	- after tax		(3,641	)		(0.06	)		(3,684	)		(0.06	)		(14,578	)		(0.25	)		(14,991	)		(0.26	)
Other expense - after tax		$	(4,459	)		(0.08	)	$	(4,362	)		(0.09	)	$	(18,827	)		(0.33	)	$	(15,471	)		(0.28	)
Diluted weighted avg shares outstanding			58,387						57,539						58,156						57,351

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

Fourth Quarter
($ in thousands)	Quarter Ended December 31, 2015											Quarter Ended December 31, 2014
	Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total		Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total
Net Premiums Written		356,855			65,989			51,814			474,658		321,399			67,494			44,693			433,586
Net Premiums Earned		397,162			71,496			47,429			516,087		359,621			73,008			37,221			469,850
Loss and Loss Expense Incurred		199,716			43,747			43,357			286,820		209,495			35,155			23,578			268,228
Net Underwriting Expenses Incurred		141,325			22,118			15,842			179,285		126,510			21,412			12,824			160,746
Dividends to Policyholders		929			-			-			929		2,239			-			-			2,239
GAAP Underwriting Gain (Loss)		55,192			5,631			(11,770	)		49,053		21,377			16,441			819			38,637
GAAP Ratios
Loss and Loss Expense Ratio		50.3	%		61.2	%		91.4	%		55.6%		58.3	%		48.2	%		63.3	%		57.1%
Underwriting Expense Ratio		35.6	%		30.9	%		33.4	%		34.7%		35.2	%		29.3	%		34.5	%		34.2%
Dividends to Policyholders Ratio		0.2	%		0.0	%		0.0	%		0.2%		0.6	%		0.0	%		0.0	%		0.5%
Combined Ratio		86.1	%		92.1	%		124.8	%		90.5%		94.1	%		77.5	%		97.8	%		91.8%
Year-to-Date
($ in thousands)	Year-to-Date December 31, 2015											Year-to-Date December 31, 2014
	Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total		Standard Commercial Lines			Standard Personal Lines			Excess & Surplus Lines			Grand Total
Net Premiums Written		1,596,965			283,926			189,013			2,069,904		1,441,047			292,061			152,172			1,885,280
Net Premiums Earned		1,529,442			288,134			172,333			1,989,909		1,415,712			296,747			140,150			1,852,609
Loss and Loss Expense Incurred		819,573			200,237			128,731			1,148,541		870,018			197,182			90,301			1,157,501
Net Underwriting Expenses Incurred		539,154			86,561			60,405			686,120		478,291			83,029			49,463			610,783
Dividends to Policyholders		6,219			-			-			6,219		6,182			-			-			6,182
GAAP Underwriting Gain (Loss)		164,496			1,336			(16,803	)		149,029		61,221			16,536			386			78,143
GAAP Ratios
Loss and Loss Expense Ratio		53.6	%		69.5	%		74.7	%		57.7%		61.5	%		66.4	%		64.4	%		62.5%
Underwriting Expense Ratio		35.2	%		30.0	%		35.1	%		34.5%		33.8	%		28.0	%		35.3	%		33.0%
Dividends to Policyholders Ratio		0.4	%		0.0	%		0.0	%		0.3%		0.4	%		0.0	%		0.0	%		0.3%
Combined Ratio		89.2	%		99.5	%		109.8	%		92.5%		95.7	%		94.4	%		99.7	%		95.8%

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

December 2015 (unaudited)

	Quarter Ended						%			Year-to-Date						%
	December			December			Increase			December			December			Increase
($ in thousands, except per share data)	2015			2014			(Decrease)			2015			2014			(Decrease)
Investment Income:
Interest:
Fixed Income Securities	$	31,003			30,974			0		$	123,230			126,489			(3	)
Short-term		40			18			122			112			66			70
Other Investments		(1,109	)		903			(223	)		(1,890	)		13,580			(114	)
Dividends		2,615			2,355			11			9,161			7,449			23
		32,549			34,250			(5	)		130,613			147,584			(11	)
Investment Expense		2,441			2,142			14			9,297			8,876			5
Net Investment Income Before Tax		30,108			32,108			(6	)		121,316			138,708			(13	)
Tax		6,814			7,573			(10	)		27,480			34,501			(20	)
Net Investment Income After Tax	$	23,294			24,535			(5	)	$	93,836			104,207			(10	)
Net Investment Income per Share	$	0.40			0.43			(7	)	$	1.61			1.82			(12	)
Effective Tax Rate		22.6	%		23.6	%					22.7	%		24.9	%
Average Yields :
Fixed Income Securities:
Pre Tax											2.74	%		2.98	%
After Tax											2.07	%		2.24	%
Portfolio:
Pre Tax											2.45	%		2.95	%
After Tax											1.90	%		2.22	%

	Quarter Ended						Year-to-Date
	December			December			December			December
Net Realized Gains (Losses)	2015			2014			2015			2014
Fixed Income Securities		1,431			82			2,018			1,528
Equity Securities		(4,193	)		109			11,645			25,650
Other Investments		162			(580	)		(492	)		(579	)
Total		(2,600	)		(389	)		13,171			26,599
Net of Tax		(1,690	)		(253	)		8,561			17,289

As of December 31, 2015 year-to-date new money rates for fixed income securities were 2.4% on a pre-tax basis and 1.7% on an after-tax basis.

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2015 Statutory Results by Line of Business

Quarter Ended December 2015 (unaudited)

	Net Premiums		Percent			Net Premiums		Percent			Loss			LAE			Underwriting Expense			Dividends to Policyholders			Combined Ratio			Combined Ratio			Underwriting
($ in thousands)	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2015			2014			Gain/(Loss)
Standard Personal Lines:
Homeowners	$	30,696		(3.4	)%	$	33,261		(0.5	)%		32.2	%		7.9	%		38.5	%		0.0	%		78.6	%		55.3	%	$	8,112
Auto		33,516		(2.0	)%		36,410		(2.6	)%		75.0	%		5.2	%		35.9	%		0.0	%		116.1	%		104.8	%		(4,817)
Other (including flood)		1,777		17.7	%		1,826		(16.7	)%		61.5	%		4.9	%		(98.2	)%		0.0	%		(31.8	)%		(65.6	)%		2,359
Total	$	65,989		(2.2	)%	$	71,496		(2.1	)%		54.8	%		6.4	%		33.5	%		0.0	%		94.7	%		78.2	%	$	5,654
Standard Commercial Lines:
Commercial property	$	63,423		14.4	%	$	69,323		11.7	%		23.1	%		5.5	%		42.4	%		(0.2	)%		70.8	%		78.1	%	$	22,740
Workers compensation		65,964		6.0	%		76,084		9.6	%		39.6	%		17.0	%		31.8	%		1.7	%		90.1	%		112.1	%		10,771
General liability		110,051		12.1	%		125,861		10.8	%		41.9	%		7.0	%		40.0	%		(0.1	)%		88.8	%		90.7	%		20,458
Auto		84,517		13.0	%		93,138		10.8	%		55.9	%		11.5	%		36.4	%		(0.1	)%		103.7	%		104.4	%		(309)
Businessowners' policies		24,480		5.3	%		23,825		8.3	%		41.9	%		4.0	%		40.8	%		0.0	%		86.7	%		98.2	%		2,899
Bonds		4,788		9.1	%		5,213		4.1	%		16.3	%		8.6	%		72.6	%		0.0	%		97.5	%		92.8	%		438
Other		3,633		15.4	%		3,718		10.1	%		1.2	%		0.2	%		60.2	%		0.0	%		61.6	%		58.8	%		1,480
Total	$	356,855		11.0	%	$	397,162		10.4	%		40.7	%		9.5	%		38.8	%		0.2	%		89.2	%		96.0	%	$	58,477
E&S	$	51,814		15.9	%	$	47,429		27.4	%		70.4	%		21.2	%		34.0	%		0.0	%		125.6	%		96.6	%	$	(13,635)
Total Insurance Operations	$	474,658		9.5	%	$	516,087		9.8	%		45.4	%		10.2	%		37.4	%		0.2	%		93.2	%		93.2	%	$	50,497
Note: Some amounts may not foot due to rounding.
				2015			2014
		Losses Paid	$	234,802		$	210,724
		LAE Paid		53,288			48,313
		Total Paid	$	288,090		$	259,037

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2015 Statutory Results by Line of Business

Year-to-date December 2015 (unaudited)

	Net Premiums		Percent			Net Premiums		Percent			Loss			LAE			Underwriting Expense			Dividends to Policyholders			Combined Ratio				Combined Ratio			Underwriting
($ in thousands)	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2015				2014			Gain/(Loss)
Standard Personal Lines:
Homeowners	$	132,533		(2.4	)%	$	134,382		0.1	%		56.9	%		8.1	%		35.6	%		0.0	%		100.6	%			96.9	%	$	(179)
Auto		144,641		(3.0	)%		146,784		(3.0	)%		64.9	%		9.2	%		34.0	%		0.0	%		108.1	%			101.5	%		(11,107)
Other (including flood)		6,752		(5.5	)%		6,968		(37.5	)%		65.2	%		(0.8	)%		(152.7	)%		0.0	%		(88.3	)%			(94.6	)%		12,796
Total	$	283,926		(2.8	)%	$	288,134		(2.9	)%		61.2	%		8.4	%		30.3	%		0.0	%		99.9	%			94.5	%	$	1,510
Standard Commercial Lines:
Commercial property	$	282,731		11.5	%	$	269,022		9.9	%		38.7	%		5.3	%		38.6	%		0.0	%		82.6	%			97.3	%	$	41,608
Workers compensation		299,686		11.4	%		290,075		5.6	%		41.4	%		15.9	%		28.8	%		2.1	%		88.2	%			110.1	%		31,558
General liability		505,891		11.5	%		483,291		8.6	%		32.8	%		13.4	%		35.9	%		0.0	%		82.1	%			83.9	%		78,536
Auto		376,064		10.0	%		358,909		7.7	%		58.9	%		9.8	%		33.2	%		0.0	%		101.9	%			96.2	%		(12,683)
Businessowners' policies		96,257		7.9	%		93,428		8.9	%		53.8	%		10.1	%		39.4	%		0.0	%		103.3	%			108.7	%		(4,172)
Bonds		21,192		6.3	%		20,350		5.5	%		16.4	%		7.4	%		66.0	%		0.0	%		89.8	%			84.9	%		1,513
Other		15,144		11.4	%		14,367		10.4	%		0.4	%		0.2	%		56.8	%		0.0	%		57.4	%			51.9	%		5,684
Total	$	1,596,965		10.8	%	$	1,529,442		8.0	%		42.4	%		11.2	%		35.2	%		0.4	%		89.2	%	��		95.5	%	$	142,044
E&S	$	189,013		24.2	%	$	172,333		23.0	%		55.3	%		19.4	%		33.7	%		0.0	%		108.4	%			99.2	%	$	(20,066)
Total Insurance Operations	$	2,069,904		9.8	%	$	1,989,909		7.4	%		46.2	%		11.5	%		34.4	%		0.3	%		92.4	%			95.7	%	$	123,487
Note: Some amounts may not foot due to rounding.
				2015			2014
		Losses Paid	$	891,485		$	873,159
		LAE Paid		197,433			187,491
		Total Paid	$	1,088,918		$	1,060,650

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2015 Net Catastrophe Losses and Prior Year Casualty Reserve Development

Statutory Results by Line of Business

(unaudited)

	Quarter Ended											Year-to-Date
Net Catastrophe Losses Incurred	December 31, 2015					December 31, 2014						December 31, 2015						December 31, 2014
($ in thousands)	Loss and Loss Expense Incurred		Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred		Impact on Loss and Loss Expense Ratio
Standard Personal Lines	$	1,354		1.9	%	$	(3,334	)		(4.6	)%	$	21,735			7.5	%	$	19,284		6.5	%
														��
Standard Commercial Lines	$	1,072		0.3	%	$	(4,065	)		(1.1	)%	$	34,089			2.2	%	$	37,881		2.7	%
E&S	$	479		1.0	%	$	420			1.1	%	$	3,231			1.9	%	$	2,805		2.0	%
Total Insurance Operations	$	2,906		0.6	%	$	(6,979	)		(1.5	)%	$	59,055			3.0	%	$	59,971		3.2	%

Prior Year Casualty Reserve Development	Quarter Ended												Year-to-Date
(Favorable) / Unfavorable	December 31, 2015						December 31, 2014						December 31, 2015						December 31, 2014
($ in thousands)	Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio			Loss and Loss Expense Incurred			Impact on Loss and Loss Expense Ratio
Standard Personal Lines	$	(2,000	)		(2.8	)%	$	(3,000	)		(4.1	)%	$	(2,000	)		(0.7	)%	$	(9,000	)		(3.0	)%
Standard Commercial Lines	$	(20,000	)		(5.0	)%	$	(8,000	)		(2.2	)%	$	(81,000	)		(5.3	)%	$	(45,500	)		(3.2	)%
E&S	$	10,000			21.1	%	$	2,000			5.4	%	$	16,000			9.3	%	$	6,000			4.3	%
Total Insurance Operations	$	(12,000	)		(2.3	)%	$	(9,000	)		(1.9	)%	$	(67,000	)		(3.4	)%	$	(48,500	)		(2.6	)%

Note: Some amounts may not foot due to rounding.

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Balance Sheets
December 31,	Unaudited
($ in thousands, except share amounts)	2015			2014
ASSETS
Investments:
Fixed income securities, held-to-maturity – at carrying value (fair value:  $209,544 – 2015; $333,961 – 2014)	$	201,354		318,137
Fixed income securities, available-for-sale – at fair value (amortized cost:  $4,352,514 – 2015; $3,975,786 – 2014)	4,408,203			4,066,122
Equity securities, available-for-sale – at fair value (cost:  $193,816 – 2015; $159,011 – 2014)	207,051			191,400
Short-term investments (at cost which approximates fair value)	194,819			131,972
Other investments	77,842			99,203
Total investments	5,089,269			4,806,834
Cash	898			23,959
Interest and dividends due or accrued	38,501			38,901
Premiums receivable, net of allowance for uncollectible accounts of:  $4,422 – 2015; $4,137 – 2014	615,164			558,778
Reinsurance recoverable, net	561,968			581,548
Prepaid reinsurance premiums	140,889			146,993
Deferred federal income tax	92,696			98,449
Property and equipment – at cost, net of accumulated depreciation and amortization of:  $188,548 – 2015; $172,183 – 2014	65,701			59,416
Deferred policy acquisition costs	213,159			185,608
Goodwill	7,849			7,849
Other assets	78,339			66,607
Total assets	$	6,904,433		6,574,942
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for losses and loss expenses	$	3,517,728		3,477,870
Unearned premiums	1,169,710			1,095,819
Notes payable	388,192			372,689
Current federal income tax	7,442			3,921
Accrued salaries and benefits	167,336			158,382
Other liabilities	255,984			190,675
Total liabilities	$	5,506,392		5,299,356
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:  100,861,372 – 2015; 99,947,933 – 2014	201,723			199,896
Additional paid-in capital	326,656			305,385
Retained earnings	1,446,192			1,313,440
Accumulated other comprehensive (loss) income	(9,425		)	19,788
Treasury stock – at cost (shares:  43,500,642 – 2015; 43,353,181 – 2014)	(567,105		)	(562,923	)
Total stockholders’ equity	1,398,041			1,275,586
Commitments and contingencies
Total liabilities and stockholders’ equity	$	6,904,433		6,574,942

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Consolidated Statements of Income

	Unaudited Quarter Ended December 31,						Year Ended December 31,
($ in thousands, except per share amounts)	2015			2014			Unaudited 2015			2014
Revenues:
Net premiums earned	$	516,087			469,850			1,989,909			1,852,609
Net investment income earned		30,108			32,108			121,316			138,708
Net realized gains:
Net realized investment gains		7,939			9,333			31,537			37,703
Other-than-temporary impairments		(10,539	)		(9,722	)		(18,366	)		(11,104	)
Total net realized (losses) gains		(2,600	)		(389	)		13,171			26,599
Other income		1,935			2,014			7,456			16,945
Total revenues		545,530			503,583			2,131,852			2,034,861
Expenses:
Loss and loss expenses incurred		286,820			268,228			1,148,541			1,157,501
Policy acquisition costs		180,525			161,930			689,820			624,470
Interest expense		5,603			5,668			22,428			23,063
Other expenses		8,784			10,557			38,371			32,696
Total expenses		481,732			446,383			1,899,160			1,837,730
Income from continuing operations, before federal income tax		63,798			57,200			232,692			197,131
Federal income tax expense:
Current		16,219			5,723			45,347			28,415
Deferred		2,190			10,127			21,484			26,889
Total federal income tax expense		18,409			15,850			66,831			55,304
Net income	$	45,389			41,350			165,861			141,827
Earnings per share:
Basic net income	$	0.79			0.73			2.90			2.52
Diluted net income	$	0.78			0.72			2.85			2.47
Dividends to stockholders	$	0.15			0.14			0.57			0.53

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
December 31,	Unaudited
($ in thousands)	2015			2014		2013
Net income	$	165,861		141,827		106,418
Other comprehensive loss, net of tax:
Unrealized (losses) gains on investment securities:
Unrealized holding (losses) gains arising during year	(26,143		)	47,411		(54,557	)
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income	—			—		50
Amount reclassified into net income:
Held-to-maturity securities	(377		)	(844	)	(1,025	)
Non-credit other-than-temporary impairment	232			1,085		9
Realized gains on available-for-sale securities	(9,110		)	(18,762	)	(15,301	)
Total unrealized (losses) gains on investment securities	(35,398		)	28,890		(70,824	)
Defined benefit pension and post-retirement plans:
Net actuarial gain (loss)	1,585			(35,189	)	38,775
Amounts reclassified into net income:
Net actuarial loss	4,600			1,236		2,843
Prior service cost	—			—		6
Curtailment expense	—			—		11
Total defined benefit pension and post-retirement plans	6,185			(33,953	)	41,635
Other comprehensive loss	(29,213		)	(5,063	)	(29,189	)
Comprehensive income	$	136,648		136,764		77,229

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Statements of Stockholders’ Equity
December 31,	Unaudited
($ in thousands, except share amounts)	2015			2014		2013
Common stock:
Beginning of year	$	199,896		198,240		196,388
Dividend reinvestment plan (shares:  50,013 – 2015; 58,309 – 2014; 63,349 – 2013)	100			117		127
Stock purchase and compensation plans (shares:  863,426 – 2015; 769,389 – 2014; 862,662 – 2013)	1,727			1,539		1,725
End of year	201,723			199,896		198,240
Additional paid-in capital:
Beginning of year	305,385			288,182		270,654
Dividend reinvestment plan	1,374			1,306		1,396
Stock purchase and compensation plans	19,897			15,897		16,132
End of year	326,656			305,385		288,182
Retained earnings:
Beginning of year	1,313,440			1,202,015		1,125,154
Net income	165,861			141,827		106,418
Dividends to stockholders ($0.57 per share –  2015; $0.53 per share – 2014; $0.52 per share - 2013)	(33,109		)	(30,402	)	(29,557	)
End of year	1,446,192			1,313,440		1,202,015
Accumulated other comprehensive (loss) income:
Beginning of year	19,788			24,851		54,040
Other comprehensive loss	(29,213		)	(5,063	)	(29,189	)
End of year	(9,425		)	19,788		24,851
Treasury stock:
Beginning of year	(562,923		)	(559,360	)	(555,644	)
Acquisition of treasury stock (shares:  147,461 – 2015; 154,559 – 2014; 167,846 – 2013)	(4,182		)	(3,563	)	(3,716	)
End of year	(567,105		)	(562,923	)	(559,360	)
Total stockholders’ equity	$	1,398,041		1,275,586		1,153,928

Selective Insurance Group, Inc. & Consolidated Subsidiaries
Consolidated Statements of Cash Flow
December 31,	Unaudited
($ in thousands)	2015			2014		2013
Operating Activities
Net income	$	165,861		141,827		106,418
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	59,688			45,346		43,461
Sale of renewal rights	—			(8,000	)	—
Loss on disposal of discontinued operations	—			—		997
Stock-based compensation expense	8,973			8,702		8,630
Undistributed losses (gains) of equity method investments	1,889			(153	)	202
Net realized gains	(13,171		)	(26,599	)	(20,732	)
Net gain on disposal of property and equipment	—			(104	)	—
Retirement income plan curtailment expense	—			—		16
Changes in assets and liabilities:
Increase in reserves for losses and loss expenses, net of reinsurance recoverables	59,438			97,449		151,037
Increase in unearned premiums, net of prepaid reinsurance	79,995			32,671		74,086
Decrease in net federal income taxes	25,004			31,323		14,834
Increase in premiums receivable	(56,386		)	(33,908	)	(40,482	)
Increase in deferred policy acquisition costs	(27,551		)	(12,627	)	(17,458	)
Decrease (increase) in interest and dividends due or accrued	407			(1,536	)	(1,372	)
Increase (decrease) in accrued salaries and benefits	11,392			(7,182	)	18,685
Increase (decrease) in accrued insurance expenses	23,342			(956	)	14,444
Increase (decrease) in other assets and other liabilities	42,699			(33,490	)	(16,642	)
Net adjustments	215,719			90,936		229,706
Net cash provided by operating activities	381,580			232,763		336,124
Investing Activities
Purchase of fixed income securities, held-to-maturity	(3,316		)	—		—
Purchase of fixed income securities, available-for-sale	(1,041,916		)	(843,616	)	(1,069,387	)
Purchase of equity securities, available-for-sale	(195,720		)	(186,019	)	(118,072	)
Purchase of other investments	(12,170		)	(10,617	)	(9,332	)
Purchase of short-term investments	(1,602,327		)	(1,410,123	)	(2,056,576	)
Sale of subsidiary	—			—		1,225
Sale of fixed income securities, available-for-sale	61,571			51,002		20,126
Sale of short-term investments	1,539,480			1,452,402		2,096,805
Redemption and maturities of fixed income securities, held-to-maturity	106,621			73,415		116,584
Redemption and maturities of fixed income securities, available-for-sale	567,445			482,816		513,804
Sale of equity securities, available-for-sale	172,561			208,008		115,782
Distributions from other investments	32,457			20,774		12,039
Purchase of property and equipment	(16,229		)	(15,510	)	(14,023	)
Sale of renewal rights	—			8,000		—
Net cash used in investing activities	(391,543		)	(169,468	)	(391,025	)
Financing Activities
Dividends to stockholders	(31,052		)	(28,428	)	(27,416	)
Acquisition of treasury stock	(4,182		)	(3,563	)	(3,716	)
Net proceeds from stock purchase and compensation plans	10,089			7,283		7,119
Proceeds from issuance of notes payable, net of debt issuance costs	—			—		178,435
Proceeds from borrowings	15,000			—		—
Repayment of borrowings	—			(13,000	)	—
Repayment of notes payable	—			—		(100,000	)
Excess tax benefits from share-based payment arrangements	1,736			1,020		1,545
Repayment of capital lease obligations	(4,689		)	(2,841	)	(1,083	)
Net (used in) cash provided by financing activities	(13,098		)	(39,529	)	54,884
Net (decrease) increase in cash	(23,061		)	23,766		(17	)
Cash, beginning of year	23,959			193		210
Cash, end of year	$	898		23,959		193

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Balance Sheets

(unaudited)

	December 31,			December 31,
($ in thousands)	2015			2014
ASSETS
Bonds	$	4,491,136			4,241,580
Common stocks		194,789			191,400
Preferred stocks		11,856			-
Affiliated mortgage loan		35,163			35,961
Other investments		128,788			152,154
Short-term investments		165,678			115,342
Total investments		5,027,410			4,736,437
Cash on hand and in banks		(34,378	)		12,381
Interest and dividends due and accrued		38,466			38,908
Premiums receivable		609,146			556,086
Reinsurance recoverable on paid losses and expenses		10,949			9,570
Deferred tax recoverable		142,066			147,610
EDP equipment		390			518
Equities and deposits in pools and associations		10,920			9,915
Receivable for sold securities		17			34
Other assets		28,300			26,629
Total assets	$	5,833,286			5,538,088
LIABILITIES
Reserve for losses	$	2,426,583			2,398,531
Reinsurance payable on paid loss and loss expense		2,841			2,957
Reserve for loss expenses		525,322			493,510
Unearned premiums		1,028,820			948,826
Reserve for commissions payable		89,740			70,259
Ceded balances payable		37,222			29,624
Federal income tax payable		25,644			20,524
Premium and other taxes payable		23,998			20,137
Borrowed money		60,031			45,027
Reserve for dividends to policyholders		5,805			3,895
Reserves for unauthorized reinsurance		2,030			7,661
Payable for securities		6,204			19,950
Funds withheld on account of others		6,806			7,473
Accrued salaries and benefits		77,933			64,207
Other liabilities		87,987			97,665
Total liabilities		4,406,966			4,230,246
POLICYHOLDERS' SURPLUS
Capital		42,725			42,725
Paid in surplus		492,869			492,869
Unassigned surplus		890,726			772,248
Total policyholders' surplus		1,426,320			1,307,842
Total liabilities and policyholders' surplus	$	5,833,286			5,538,088

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

	Quarter Ended										Year-to-Date
	December 31,										December 31,
($ in thousands)	2015					2014					2015					2014
UNDERWRITING
Net premiums written	$	474,658					433,586					2,069,904					1,885,280
Net premiums earned		516,087					469,850					1,989,909					1,852,609
Net losses paid		234,802					210,724					891,485					873,159
Change in reserve for losses		(441	)				(9,756	)				28,052					57,055
Net losses incurred		234,361		45.4	%		200,968		42.8	%		919,537		46.2	%		930,214		50.2	%
Net loss expenses paid		53,288					48,313					197,433					187,491
Change in reserve for loss expenses		(931	)				17,577					31,813					37,526
Net loss expenses incurred		52,357		10.2	%		65,890		14.0	%		229,246		11.5	%		225,017		12.2	%
Net underwriting expenses incurred		179,153		37.6	%		157,373		36.2	%		716,172		34.6	%		635,760		33.7	%
Total deductions		465,871					424,231					1,864,955					1,790,991
Statutory underwriting gain		50,216					45,619					124,954					61,618
Net loss from premium balances charged off		(773	)				(54	)				(2,919	)				(2,822	)
Finance charges and other income		1,983					1,617					7,671					17,204
Total other income		1,210		-0.2	%		1,563		-0.3	%		4,752		-0.2	%		14,382		-0.7	%
Policyholders' dividends incurred		(929	)	0.2	%		(2,239	)	0.5	%		(6,219	)	0.3	%		(6,182	)	0.3	%
Total underwriting gain		50,497		93.2	%		44,943		93.2	%		123,487		92.4	%		69,818		95.7	%
INVESTMENT
Net investment income earned		29,455					31,745					120,558					137,670
Net realized (loss) gain		(2,600	)				(389	)				13,170					26,594
Total income before income tax		77,352					76,299					257,215					234,082
Federal income tax expense		23,648					11,775					61,377					43,827
Net income	$	53,704					64,524					195,838					190,255
Policyholders' Surplus
Surplus, beginning of period	$	1,367,343					1,323,097					1,307,842					1,256,431
Net income		53,704					64,524					195,838					190,255
Change in deferred taxes		(2,236	)				8,146					(13,637	)				(2,016	)
Change in net unrealized capital gain / (losses)		7,522					693					(12,579	)				(3,721	)
Dividends to stockholders		(14,438	)				(14,378	)				(57,752	)				(57,511	)
Change in reserve for unauthorized		5,631					(4,927	)				5,631					(4,927	)
Change in non-admitted assets		4,510					(15,801	)				(8,151	)				(18,004	)
Change in Overfunded Contra Asset		562					(1,285	)				(280	)				(5,925	)
Qual Pen Trans Liab		2,677					(50,660	)				8,211					(45,214	)
Excess Plan Trans Liab		748					(1,400	)				878					(1,377	)
PRL Plan Trans Liab		297					(167	)				319					(149	)
Net change in surplus for period		58,977					(15,255	)				118,478					51,411
Surplus, end of period	$	1,426,320					1,307,842					1,426,320					1,307,842
Statutory underwriting gain	$	50,497					44,943					123,487					69,818
Adjustments under GAAP:
Deferred policy acquisition costs		(507	)				(4,074	)				27,551					12,626
Other, net		(937	)				(2,232	)				(2,009	)				(4,301	)
GAAP underwriting gain	$	49,053					38,637					149,029					78,143

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

Selective Insurance Group, Inc. and Consolidated Subsidiaries

Alternative Investments

December 31, 2015

(unaudited)

	Number	Original	Remaining	Current
Strategy	of Funds	Commitment	Commitment	Market Value
Private Equity	9	111,498,351	30,204,172	35,087,904
Private Credit	5	60,000,000	15,129,467	13,246,148
Real Assets	7	100,000,000	25,819,631	19,499,570
TOTAL - ALTERNATIVE INVESTMENTS	21	271,498,351	71,153,269	67,833,623

Exhibit may not foot due to rounding