Selective Insurance (SIGI) 8-K Selective Reports Third Quarter 2016 Net Income per Diluted Share of $0.66 and Operating Income1 per Diluted Share of $0.62

EXHIBIT 99.2

 

Supplemental Investor Package

________________________________________________

Third Quarter 2016

Investor Contact:

Rohan Pai

Tel: 973-948-1364

Rohan.Pai@Selective.com

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Balance Sheet Data

(unaudited)

	September 30,								September 30,							December 31,
($ in thousands, except per share data)	2016								2015							2015
							Unrecognized/							Unrecognized/							Unrecognized/
	Balance				Market		Unrealized		Balance			Market		Unrealized		Balance			Market		Unrealized
	Sheet				Value		Gain		Sheet			Value		Gain		Sheet			Value		Gain
Invested Assets:
Corporate bonds1	$	3,312,160				3,314,526		77,917	$	2,901,352			2,904,449		37,945	$	2,955,001			2,957,427		8,276
Government and Municipal bonds		1,650,844				1,654,100		78,164		1,679,563			1,686,985		50,263		1,654,556			1,660,320		55,901
Total fixed income securities		4,963,004				4,968,626		156,081		4,580,915			4,591,434		88,208		4,609,557			4,617,747		64,177
Equities		147,304				147,304		24,323		221,951			221,951		1,131		207,051			207,051		13,235
Short-term investments		169,604				169,604		-		125,855			125,855		-		194,819			194,819		-
Other investments		88,512				88,512		-		85,146			85,146		-		77,842			77,842		-
Total invested assets	$	5,368,424				5,374,046		180,404	$	5,013,867			5,024,386		89,339	$	5,089,269			5,097,459		77,412
Invested assets per $ of stockholders' equity		3.41								3.69							3.64
Total assets		7,363,233								6,891,877							6,904,433
Liabilities:
Reserve for loss and loss expenses		3,686,586								3,517,751							3,517,728
Unearned premium reserve		1,306,255								1,218,884							1,169,710
Total liabilities		5,788,329								5,532,855							5,506,392
Stockholders' equity		1,574,904								1,359,022							1,398,041
Total debt to capitalization ratio		21.2	%							22.2	%						21.7	%
Book value per share		27.22								23.77							24.37
Book value per share excluding
unrealized gain or loss on fixed income portfolio		25.53		��						22.88							23.74
NPW per insurance segment employee		1,021								958							979
Statutory premiums to surplus ratio		1.4	x							1.5	x						1.5	x
Statutory surplus		1,551,227								1,367,343							1,426,320

¹Includes mortgage-backed and asset-backed securities.

Selective Insurance Group, Inc. & Consolidated Subsidiaries

Selected Income Statement Data

(unaudited)

		Quarter Ended September 30,												Year-to-Date September 30,
($ in thousands, except per share amounts)		2016						2015						2016						2015
					Per diluted share						Per diluted share						Per diluted share						Per diluted share
Consolidated
Revenue		$	581,691					$	540,457					$	1,701,912					$	1,586,322
Operating income			36,104			0.62			46,796			0.81			117,348			2.00			110,221			1.90
Net realized gains, after tax			2,398			0.04			200			-			1,787			0.03			10,251			0.18
Net income			38,502			0.66			46,996			0.81			119,135			2.03			120,472			2.08
Return on equity			9.8	%					14.1	%					10.7	%					12.2	%
Operating return on equity			9.2	%					14.0	%					10.5	%					11.2	%
Total Insurance Operations
Gross premiums written			677,488						637,528						2,003,736						1,868,760
Net premiums written			578,773						545,025						1,722,272						1,595,246
Net premiums earned			542,429						507,390						1,596,819						1,473,822
Underwriting gain	- before tax		32,033						44,831						116,765						99,976
	- after tax		20,821			0.35			29,140			0.50			75,897			1.29			64,984			1.12
GAAP combined ratio			94.1	%					91.2	%					92.7	%					93.2	%
Standard Commercial Lines
Net premiums earned			421,586						389,542						1,235,752						1,132,280
GAAP combined ratio			92.9	%					88.7	%					91.8	%					90.3	%
Standard Personal Lines
Net premiums earned			68,690						72,088						209,719						216,638
GAAP combined ratio			93.8	%					96.1	%					90.9	%					102.0	%
Excess and Surplus Lines
Net premiums earned			52,153						45,760						151,348						124,904
GAAP combined ratio			104.5	%					104.4	%					102.3	%					104.0	%
Investments
Net investment income	- before tax		33,375						32,061						95,326						91,208
	- after tax		24,913			0.42			24,555			0.42			71,998			1.23			70,542			1.22
Effective tax rate			25.4	%					23.4	%					24.5	%					22.7	%
Annualized after-tax yield on investment portfolio															1.8	%					1.9	%
Annualized after-tax, after-interest expense yield															1.6	%					1.6	%
Invested assets per $ of stockholders' equity															3.41						3.69
Other expenses (net of other income)
Interest expense	- before tax		(5,714	)					(5,610	)					(16,940	)					(16,826	)
	- after tax		(3,714	)		(0.06	)		(3,646	)		(0.06	)		(11,011	)		(0.19	)		(10,937	)		(0.18	)
Other expense - after tax		$	(5,916	)		(0.09	)	$	(3,253	)		(0.05	)	$	(19,536	)		(0.33	)	$	(14,368	)		(0.26	)
Diluted weighted avg shares outstanding			58,731						57,984						58,612						57,838

Selective Insurance Group, Inc. & Consolidated Subsidiaries

GAAP Insurance Operations Results

(unaudited)

Third Quarter
($ in thousands)	Quarter Ended September 30, 2016												Quarter Ended September 30, 2015
	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	$	449,544			76,225			53,004			578,773		$	414,031			76,927			54,067			545,025
Net Premiums Earned		421,586			68,690			52,153			542,429			389,542			72,088			45,760			507,390
Loss and Loss Expense Incurred		238,215			41,582			36,461			316,258			203,621			49,588			31,952			285,161
Net Underwriting Expenses Incurred		152,706			22,837			18,054			193,597			139,973			19,674			15,830			175,477
Dividends to Policyholders		541			-			-			541			1,921			-			-			1,921
GAAP Underwriting Gain (Loss)	$	30,124			4,271			(2,362	)		32,033		$	44,027			2,826			(2,022	)		44,831
GAAP Ratios
Loss and Loss Expense Ratio		56.5	%		60.5	%		69.9	%		58.3	%		52.3	%		68.8	%		69.8	%		56.2	%
Underwriting Expense Ratio		36.3	%		33.3	%		34.6	%		35.7	%		35.9	%		27.3	%		34.6	%		34.6	%
Dividends to Policyholders Ratio		0.1	%		0.0	%		0.0	%		0.1	%		0.5	%		0.0	%		0.0	%		0.4	%
Combined Ratio		92.9	%		93.8	%		104.5	%		94.1	%		88.7	%		96.1	%		104.4	%		91.2	%

Year-to-Date
($ in thousands)	Year-to-Date September 30, 2016												Year-to-Date September 30, 2015
	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	$	1,353,615			213,770			154,887			1,722,272		$	1,240,110			217,937			137,199			1,595,246
Net Premiums Earned		1,235,752			209,719			151,348			1,596,819			1,132,280			216,638			124,904			1,473,822
Loss and Loss Expense Incurred		683,183			123,489			105,209			911,881			619,857			156,490			85,374			861,721
Net Underwriting Expenses Incurred		447,528			67,229			49,604			564,361			397,829			64,443			44,563			506,835
Dividends to Policyholders		3,812			-			-			3,812			5,290			-			-			5,290
GAAP Underwriting Gain (Loss)	$	101,229			19,001			(3,465	)		116,765		$	109,304			(4,295	)		(5,033	)		99,976
GAAP Ratios
Loss and Loss Expense Ratio		55.3	%		58.9	%		69.5	%		57.1	%		54.7	%		72.2	%		68.4	%		58.5	%
Underwriting Expense Ratio		36.2	%		32.0	%		32.8	%		35.4	%		35.1	%		29.8	%		35.6	%		34.3	%
Dividends to Policyholders Ratio		0.3	%		0.0	%		0.0	%		0.2	%		0.5	%		0.0	%		0.0	%		0.4	%
Combined Ratio		91.8	%		90.9	%		102.3	%		92.7	%		90.3	%		102.0	%		104.0	%		93.2	%

Selective Insurance Group, Inc. and Consolidated Subsidiaries

GAAP Investment Income

September 2016 (unaudited)

	Quarter Ended						%			Year-to-Date						%
	September			September			Increase			September			September			Increase
($ in thousands, except per share data)	2016			2015			(Decrease)			2016			2015			(Decrease)
Investment Income:
Interest:
Fixed Income Securities	$	32,453			30,601			6		$	95,850			92,227			4
Short-term		192			24			700			493			72			585
Other Investments		1,628			1,337			22			(49	)		(781	)		94
Dividends		1,506			2,370			(36	)		5,940			6,546			(9	)
		35,779			34,332			4			102,234			98,064			4
Investment Expense		2,404			2,271			6			6,908			6,856			1
Net Investment Income Before Tax		33,375			32,061			4			95,326			91,208			5
Tax		8,462			7,506			13			23,328			20,666			13
Net Investment Income After Tax	$	24,913			24,555			1		$	71,998			70,542			2
Net Investment Income per Share	$	0.42			0.42			-		$	1.23			1.22			1
Effective Tax Rate		25.4	%		23.4	%					24.5	%		22.7	%
Average Yields :
Fixed Income Securities:
Pre Tax											2.67	%		2.74	%
After Tax											2.00	%		2.08	%
Portfolio:
Pre Tax											2.43	%		2.48	%
After Tax											1.84	%		1.92	%

	Quarter Ended					Year-to-Date
	September		September			September			September
Net Realized Gains (Losses)	2016		2015			2016			2015
Fixed Income Securities	$	2,163		(80	)	$	1,944			587
Equity Securities		1,522		388			806			15,838
Other Investments		3		-			(1	)		(654	)
Total		3,688		308			2,749			15,771
Net of Tax		2,398		200			1,787			10,251

As of September 30, 2016 year-to-date new money rates for fixed income securities were 2.9% on a pre-tax basis and 2.0% on an after-tax basis.

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Quarter Ended September 2016 (unaudited)

	Net					Net											Underwriting			Dividends to
	Premiums		Percent			Premiums		Percent			Loss			LAE			Expense			Policyholders			Combined Ratio			Combined Ratio			Underwriting
($ in thousands)	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2016			2015			Gain (Loss)
Standard Personal Lines:
Homeowners	$	36,131		(3.6	)%	$	32,031		(4.9	)%		41.9	%		8.6	%		35.9	%		0.0	%		86.4	%		96.8	%	$	2,873
Auto		38,114		1.3	%		34,865		(4.8	)%		63.3	%		11.0	%		36.0	%		0.0	%		110.3	%		103.4	%		(4,752	)
Other (including flood)		1,980		8.4	%		1,794		(0.0	)%		62.0	%		(83.5	)%		(143.8	)%		0.0	%		(165.3	)%		(118.3	)%		5,028
Total	$	76,225		(0.9	)%	$	68,690		(4.7	)%		53.3	%		7.4	%		31.3	%		0.0	%		92.0	%		95.0	%	$	3,149
Standard Commercial Lines:
Commercial property	$	82,695		6.5	%	$	74,052		8.0	%		42.0	%		5.1	%		38.0	%		0.1	%		85.2	%		67.8	%	$	7,703
Workers compensation		81,646		9.7	%		78,596		5.4	%		37.0	%		13.4	%		29.5	%		0.2	%		80.2	%		84.0	%		14,689
General liability		141,556		8.3	%		133,981		8.7	%		32.5	%		15.8	%		36.3	%		0.1	%		84.7	%		89.1	%		17,714
Auto		108,655		10.9	%		100,612		10.9	%		70.3	%		10.4	%		33.6	%		0.1	%		114.5	%		104.5	%		(17,257	)
Businessowners' policies		23,985		0.2	%		24,461		3.1	%		55.3	%		11.9	%		39.6	%		0.0	%		106.8	%		100.0	%		(1,482	)
Bonds		6,723		25.1	%		5,795		15.2	%		12.8	%		7.2	%		55.0	%		0.0	%		75.0	%		91.5	%		937
Other		4,282		8.8	%		4,089		12.7	%		0.3	%		0.4	%		60.0	%		0.0	%		60.6	%		60.0	%		1,494
Total	$	449,544		8.6	%	$	421,586		8.2	%		44.8	%		11.7	%		35.4	%		0.1	%		92.0	%		88.4	%	$	23,799
E&S	$	53,004		(2.0	)%	$	52,153		14.0	%		52.1	%		17.9	%		31.4	%		0.0	%		101.4	%		101.1	%	$	(986	)
Total Insurance Operations	$	578,773		6.2	%	$	542,429		6.9	%		46.5	%		11.8	%		34.5	%		0.1	%		92.9	%		90.5	%	$	25,962
Note: Some amounts may not foot due to rounding.
				2016			2015
		Losses Paid	$	226,037		$	237,573
		LAE Paid		48,335			50,084
		Total Paid	$	274,372		$	287,657

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 Statutory Results by Line of Business

Year-to-Date September 2016 (unaudited)

	Net					Net											Underwriting			Dividends to
	Premiums		Percent			Premiums		Percent			Loss			LAE			Expense			Policyholders			Combined Ratio			Combined Ratio			Underwriting
($ in thousands)	Written		Change			Earned		Change			Ratio			Ratio			Ratio			Ratio			2016			2015			Gain (Loss)
Standard Personal Lines:
Homeowners	$	98,697		(3.1	)%	$	98,342		(2.7	)%		39.7	%		8.5	%		37.2	%		0.0	%		85.4	%		108.0	%	$	14,253
Auto		110,093		(0.9	)%		106,526		(3.5	)%		59.8	%		11.2	%		35.4	%		0.0	%		106.4	%		105.5	%		(8,120	)
Other (including flood)		4,980		0.1	%		4,851		(5.7	)%		63.4	%		(50.9	)%		(158.7	)%		0.0	%		(146.2	)%		(108.5	)%		12,148
Total	$	213,770		(1.9	)%	$	209,719		(3.2	)%		50.4	%		8.5	%		31.8	%		0.0	%		90.7	%		101.7	%	$	18,280
Standard Commercial Lines:
Commercial property	$	237,693		8.4	%	$	217,821		9.1	%		41.6	%		4.9	%		38.5	%		0.3	%		85.0	%		86.9	%	$	25,186
Workers compensation		252,032		7.8	%		229,847		7.4	%		40.2	%		13.8	%		28.0	%		0.8	%		82.8	%		87.7	%		33,220
General liability		431,751		9.1	%		391,349		9.5	%		34.5	%		13.7	%		35.5	%		0.2	%		83.9	%		80.0	%		48,820
Auto		325,751		11.7	%		294,927		11.0	%		66.1	%		9.7	%		32.8	%		0.2	%		108.9	%		101.5	%		(36,277	)
Businessowners' policies		74,055		3.2	%		73,016		4.9	%		43.9	%		11.6	%		39.1	%		0.0	%		94.7	%		108.9	%		3,479
Bonds		19,494		18.8	%		16,924		11.8	%		12.8	%		7.4	%		56.7	%		0.0	%		76.8	%		87.5	%		2,463
Other		12,839		11.5	%		11,868		11.4	%		(0.2	)%		0.3	%		56.9	%		0.0	%		56.9	%		56.0	%		4,558
Total	$	1,353,615		9.2	%	$	1,235,752		9.1	%		44.3	%		10.9	%		34.6	%		0.3	%		90.1	%		89.4	%	$	81,449
E&S	$	154,887		12.9	%	$	151,348		21.2	%		50.2	%		19.3	%		31.4	%		0.0	%		100.9	%		101.8	%	$	(2,461	)
Total Insurance Operations	$	1,722,272		8.0	%	$	1,596,819		8.3	%		45.6	%		11.4	%		34.0	%		0.2	%		91.2	%		92.3	%	$	97,268
Note: Some amounts may not foot due to rounding.
				2016			2015
		Losses Paid	$	678,430		$	656,683
		LAE Paid		145,504			144,145
		Total Paid	$	823,934		$	800,828

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

2016 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	September 30, 2016						September 30, 2015						September 30, 2016						September 30, 2015
($ 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	$	2,480			3.6	%	$	5,784			8.0	%	$	6,809			3.2	%	$	20,381			9.4	%
Standard Commercial Lines		6,204			1.5	%		757			0.2	%		21,476			1.7	%		33,016			2.9	%
E&S		1,710			3.3	%		308			0.7	%		4,895			3.2	%		2,752			2.2	%
Total Insurance Operations	$	10,394			1.9	%	$	6,850			1.3	%	$	33,180			2.1	%	$	56,149			3.8	%
Prior Year Casualty Reserve Development	Quarter Ended												Year-to-Date
(Favorable) / Unfavorable	September 30, 2016						September 30, 2015						September 30, 2016						September 30, 2015
($ 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	$	-			0.0	%	$	-			0.0	%	$	-			0.0	%	$	-			0.0	%
Standard Commercial Lines		(19,000	)		(4.5	)%		(19,000	)		(4.9	)%		(49,000	)		(4.0	)%		(61,000	)		(5.4	)%
E&S		-			0.0	%		4,000			8.7	%		3,000			2.0	%		6,000			4.8	%
Total Insurance Operations	$	(19,000	)		(3.5	)%	$	(15,000	)		(3.0	)%	$	(46,000	)		(2.9	)%	$	(55,000	)		(3.7	)%

Note: Some amounts may not foot due to rounding.

Selective Insurance Group, Inc. & Consolidated Subsidiaries Consolidated Balance Sheets	Unaudited
($ in thousands, except share amounts)	September 30,  2016			December 31,  2015
ASSETS
Investments:
Fixed income securities, held-to-maturity – at carrying value (fair value:  $136,094 – 2016; $209,544 – 2015)	$	130,472			201,354
Fixed income securities, available-for-sale – at fair value (amortized cost: $4,682,267 – 2016; $4,352,514 – 2015)		4,832,532			4,408,203
Equity securities, available-for-sale – at fair value (cost:  $122,981 – 2016; $193,816 – 2015)		147,304			207,051
Short-term investments (at cost which approximates fair value)		169,604			194,819
Other investments		88,512			77,842
Total investments		5,368,424			5,089,269
Cash		1,493			898
Interest and dividends due or accrued		39,901			38,501
Premiums receivable, net of allowance for uncollectible accounts of:  $5,907 – 2016; $4,422 – 2015		711,589			615,164
Reinsurance recoverables, net of allowance for uncollectible accounts of: $5,500 – 2016; $5,700 – 2015		640,012			561,968
Prepaid reinsurance premiums		151,981			140,889
Deferred federal income tax		41,656			92,696
Property and equipment – at cost, net of accumulated depreciation and amortization of: $198,171 – 2016; $188,548 – 2015		69,812			65,701
Deferred policy acquisition costs		235,934			213,159
Goodwill		7,849			7,849
Other assets		94,582			78,339
Total assets	$	7,363,233			6,904,433
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Reserve for loss and loss expenses	$	3,686,586			3,517,728
Unearned premiums		1,306,255			1,169,710
Short-term debt		45,000			60,000
Long-term debt		378,551			328,192
Current federal income tax		6,509			7,442
Accrued salaries and benefits		103,583			167,336
Other liabilities		261,845			255,984
Total liabilities	$	5,788,329			5,506,392
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: 101,505,201 – 2016; 100,861,372 – 2015		203,011			201,723
Additional paid-in capital		342,846			326,656
Retained earnings		1,538,928			1,446,192
Accumulated other comprehensive income (loss)		62,209			(9,425	)
Treasury stock – at cost (shares:  43,653,034 – 2016; 43,500,642 – 2015)		(572,090	)		(567,105	)
Total stockholders’ equity	$	1,574,904			1,398,041
Commitments and contingencies
Total liabilities and stockholders’ equity	$	7,363,233			6,904,433

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Income	Quarter ended September 30,						Nine Months ended September 30,
($ in thousands, except per share amounts)	2016			2015			2016			2015
Revenues:
Net premiums earned	$	542,429			507,390			1,596,819			1,473,822
Net investment income earned		33,375			32,061			95,326			91,208
Net realized gains:
Net realized investment gains		4,030			1,590			7,233			23,598
Other-than-temporary impairments		(342	)		(1,282	)		(4,494	)		(7,827	)
Other-than-temporary impairments on fixed income securities recognized in other comprehensive income		—			—			10			—
Total net realized gains		3,688			308			2,749			15,771
Other income		2,199			698			7,018			5,521
Total revenues		581,691			540,457			1,701,912			1,586,322
Expenses:
Loss and loss expense incurred		316,258			285,161			911,881			861,721
Policy acquisition costs		193,835			174,802			567,793			509,295
Interest expense		5,714			5,610			16,940			16,826
Other expenses		10,441			9,045			35,669			29,586
Total expenses		526,248			474,618			1,532,283			1,417,428
Income before federal income tax		55,443			65,839			169,629			168,894
Federal income tax expense:
Current		5,625			9,141			38,027			29,128
Deferred		11,316			9,702			12,467			19,294
Total federal income tax expense		16,941			18,843			50,494			48,422
Net income	$	38,502			46,996			119,135			120,472
Earnings per share:
Basic net income	$	0.66			0.82			2.06			2.11
Diluted net income	$	0.66			0.81			2.03			2.08
Dividends to stockholders	$	0.15			0.14			0.45			0.42

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Comprehensive Income	Quarter ended September 30,						Nine Months ended September 30,
($ in thousands)	2016			2015			2016			2015
Net income	$	38,502			46,996			119,135			120,472
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on investment securities:
Unrealized holding (losses) gains arising during period		(8,444	)		5,442			70,473			(18,132	)
Non-credit portion of other-than-temporary impairments recognized in other comprehensive income		—			—			(6	)		—
Amounts reclassified into net income:
Held-to-maturity securities		(9	)		(63	)		(68	)		(353	)
Non-credit other-than-temporary impairments		—			—			—			232
Realized gains on available-for-sale securities		(2,395	)		(199	)		(1,786	)		(10,906	)
Total unrealized (losses) gains on investment securities		(10,848	)		5,180			68,613			(29,159	)
Defined benefit pension and post-retirement plans:
Amounts reclassified into net income:
Net actuarial loss		1,050			1,110			3,021			3,332
Total defined benefit pension and post-retirement plans		1,050			1,110			3,021			3,332
Other comprehensive (loss) income		(9,798	)		6,290			71,634			(25,827	)
Comprehensive income	$	28,704			53,286			190,769			94,645

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Stockholders’ Equity	Nine Months ended September 30,
($ in thousands, except per share amounts)	2016			2015
Common stock:
Beginning of year	$	201,723			199,896
Dividend reinvestment plan (shares:  29,865 – 2016; 38,947 – 2015)		60			78
Stock purchase and compensation plans (shares:  613,964 – 2016; 686,984 – 2015)		1,228			1,374
End of period		203,011			201,348
Additional paid-in capital:
Beginning of year		326,656			305,385
Dividend reinvestment plan		1,035			1,014
Stock purchase and compensation plans		15,155			14,588
End of period		342,846			320,987
Retained earnings:
Beginning of year		1,446,192			1,313,440
Net income		119,135			120,472
Dividends to stockholders ($0.45 per share – 2016; $0.42 per share – 2015)		(26,399	)		(24,376	)
End of period		1,538,928			1,409,536
Accumulated other comprehensive income (loss):
Beginning of year		(9,425	)		19,788
Other comprehensive income (loss)		71,634			(25,827	)
End of period		62,209			(6,039	)
Treasury stock:
Beginning of year		(567,105	)		(562,923	)
Acquisition of treasury stock (shares: 152,392 – 2016; 139,031 – 2015)		(4,985	)		(3,887	)
End of period		(572,090	)		(566,810	)
Total stockholders’ equity	$	1,574,904			1,359,022

Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Cash Flow	Nine Months ended September 30,
($ in thousands)	2016			2015
Operating Activities
Net income	$	119,135			120,472
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		45,563			43,868
Stock-based compensation expense		8,950			7,626
Undistributed losses of equity method investments		49			781
Net realized gains		(2,749	)		(15,771	)
Changes in assets and liabilities:
Increase in reserve for loss and loss expenses, net of reinsurance recoverables		90,814			60,065
Increase in unearned premiums, net of prepaid reinsurance		125,453			121,424
Decrease in net federal income taxes		11,534			27,980
Increase in premiums receivable		(96,425	)		(95,188	)
Increase in deferred policy acquisition costs		(22,775	)		(28,058	)
(Increase) decrease in interest and dividends due or accrued		(1,356	)		979
Decrease in accrued salaries and benefits		(63,753	)		(338	)
Increase in other assets		(16,280	)		(13,888	)
(Decrease) increase in other liabilities		(20,686	)		29,081
Net adjustments		58,339			138,561
Net cash provided by operating activities		177,474			259,033
Investing Activities
Purchase of fixed income securities, available-for-sale		(842,253	)		(731,154	)
Purchase of fixed income securities, held-to-maturity		(4,235	)		—
Purchase of equity securities, available-for-sale		(24,747	)		(192,717	)
Purchase of other investments		(34,994	)		(6,589	)
Purchase of short-term investments		(1,307,024	)		(1,084,794	)
Sale of fixed income securities, available-for-sale		33,448			22,323
Sale of short-term investments		1,332,239			1,090,911
Redemption and maturities of fixed income securities, held-to-maturity		74,186			79,972
Redemption and maturities of fixed income securities, available-for-sale		483,877			403,510
Sale of equity securities, available-for-sale		99,420			148,228
Distributions from other investments		18,512			22,038
Purchase of property and equipment		(13,421	)		(11,869	)
Net cash used in investing activities		(184,992	)		(260,141	)
Financing Activities
Dividends to stockholders		(24,885	)		(22,848	)
Acquisition of treasury stock		(4,985	)		(3,887	)
Net proceeds from stock purchase and compensation plans		4,906			6,016
Proceeds from borrowings		105,000			15,000
Repayments of borrowings		(70,000	)		—
Excess tax benefits from share-based payment arrangements		1,917			1,498
Repayments of capital lease obligations		(3,840	)		(3,517	)
Net cash provided by (used in) financing activities		8,113			(7,738	)
Net increase (decrease) in cash		595			(8,846	)
Cash, beginning of year		898			23,959
Cash, end of period	$	1,493			15,113

 Selective Insurance Group, Inc.

 Combined Insurance Company Subsidiaries

 Statutory Balance Sheets

 (unaudited)

	September 30,		September 30,			December 31,
($ in thousands)	2016		2015			2015
ASSETS
Bonds	$	4,737,691		4,438,650			4,491,136
Common stocks		135,489		210,197			194,789
Preferred stocks		11,310		11,708			11,856
Affiliated mortgage loan		34,538		35,366			35,163
Other investments		134,972		136,591			128,788
Short-term investments		147,891		109,393			165,678
Total investments		5,201,891		4,941,905			5,027,410
Cash on hand and in banks		5,581		(6,272	)		(34,378	)
Interest and dividends due and accrued		39,843		37,944			38,466
Premiums receivable		705,735		648,264			609,146
Reinsurance recoverable on paid losses and expenses		9,326		11,288			10,949
Deferred tax recoverable		159,475		146,936			142,066
EDP equipment		389		436			390
Equities and deposits in pools and associations		12,533		12,394			10,920
Receivable for sold securities		6		64			17
Other assets		30,343		26,798			28,300
Total assets	$	6,165,122		5,819,757			5,833,286
LIABILITIES
Reserve for losses	$	2,477,012		2,427,024			2,426,583
Reinsurance payable on paid loss and loss expense		3,472		2,677			2,841
Reserve for loss expenses		561,520		526,253			525,322
Unearned premiums		1,154,274		1,070,250			1,028,820
Reserve for commissions payable		83,202		73,293			89,740
Ceded balances payable		46,471		32,626			37,222
Federal income tax payable		18,332		22,996			25,644
Premium and other taxes payable		21,375		24,257			23,998
Borrowed money		95,156		60,029			60,031
Reserve for dividends to policyholders		6,587		5,989			5,805
Reserves for unauthorized reinsurance		2,030		7,661			2,030
Payable for securities		31,326		31,974			6,204
Funds withheld on account of others		10,671		7,695			6,806
Accrued salaries and benefits		69,337		69,837			77,933
Other liabilities		33,130		89,853			87,987
Total liabilities		4,613,895		4,452,414			4,406,966
POLICYHOLDERS' SURPLUS
Capital		42,725		42,725			42,725
Paid in surplus		492,869		492,869			492,869
Unassigned surplus		1,015,633		831,749			890,726
Total policyholders' surplus		1,551,227		1,367,343			1,426,320
Total liabilities and policyholders' surplus	$	6,165,122		5,819,757			5,833,286

Selective Insurance Group, Inc.

Combined Insurance Company Subsidiaries

Statutory Statements Of Income

(unaudited)

	Quarter Ended September										Nine Months Ended September
($ in thousands)	2016					2015					2016					2015
UNDERWRITING
Net premiums written	$	578,773					545,025					1,722,272					1,595,246
Net premiums earned		542,429					507,390					1,596,819					1,473,822
Net losses paid		226,037					237,573					678,430					656,683
Change in reserve for losses		26,528					(11,051	)				50,463					28,493
Net losses incurred		252,565		46.5	%		226,522		44.6	%		728,893		45.6	%		685,176		46.5	%
Net loss expenses paid		48,335					50,084					145,504					144,145
Change in reserve for loss expenses		15,460					8,083					36,198					32,744
Net loss expenses incurred		63,795		11.8	%		58,167		11.5	%		181,702		11.4	%		176,889		12.0	%
Net underwriting expenses incurred		201,060		34.8	%		185,183		33.9	%		590,178		34.3	%		537,019		33.6	%
Total deductions		517,420					469,872					1,500,773					1,399,084
Statutory underwriting gain		25,009					37,518					96,046					74,738
Net loss from premium balances charged off		(734	)				(833	)				(2,058	)				(2,146	)
Finance charges and other income		2,228					772					7,092					5,688
Total other income		1,494		-0.3	%		(61	)	0.1	%		5,034		-0.3	%		3,542		-0.2	%
Policyholders' dividends incurred		(541	)	0.1	%		(1,921	)	0.4	%		(3,812	)	0.2	%		(5,290	)	0.4	%
Total underwriting gain		25,962		92.9	%		35,536		90.5	%		97,268		91.2	%		72,990		92.3	%
INVESTMENT
Net investment income earned		32,398					31,821					93,920					91,103
Net realized gain		3,689					309					2,747					15,770
Total income before income tax		62,049					67,666					193,935					179,863
Federal income tax expense		8,778					17,938					47,283					37,729
Net income	$	53,271					49,728					146,652					142,134
Policyholders' Surplus
Surplus, beginning of period	$	1,506,535					1,344,630					1,426,320					1,307,842
Net income		53,271					49,728					146,652					142,134
Change in deferred taxes		(10,503	)				752					(9,002	)				(11,401	)
Change in net unrealized capital (losses) / gains		(1,078	)				(6,554	)				7,159					(20,101	)
Dividends to stockholders		(15,254	)				(14,438	)				(45,761	)				(43,314	)
Change in non-admitted assets		16,729					(8,390	)				21,471					(12,661	)
Change in Overfunded Contra Asset		(28,408	)				(281	)				(52,108	)				(842	)
Qual Pen Trans Liab		29,908					1,845					56,425					5,534
Excess Plan Trans Liab		22					44					60					130
PRL Plan Trans Liab		5					7					11					22
Net change in surplus for period		44,692					22,713					124,907					59,501
Surplus, end of period	$	1,551,227					1,367,343					1,551,227					1,367,343
Statutory underwriting gain	$	25,962					35,536					97,268					72,990
Adjustments under GAAP:
Deferred policy acquisition costs		7,380					10,442					22,775					28,058
Other, net		(1,309	)				(1,147	)				(3,278	)				(1,072	)
GAAP underwriting gain	$	32,033					44,831					116,765					99,976

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

Selective Insurance Group, Inc. and Consolidated Subsidiaries
Alternative Investments
September 30, 2016
(unaudited)
	Number	Original	Remaining	Current
Strategy	of Funds	Commitment	Commitment	Market Value
Private Equity	15	150,456,790	57,793,283	35,443,848
Private Credit	8	92,000,000	30,762,618	27,708,889
Real Assets	7	100,000,000	22,922,421	15,329,396
TOTAL - ALTERNATIVE INVESTMENTS	30	342,456,790	111,478,322	78,482,133
Exhibit may not foot due to rounding