Selective Insurance Group, Inc.
Investor Presentation
May 2009
Certain statements in this report, including information incorporated by reference, are “forward-
looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995
(“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 1933 and the Securities
Exchange Act of 1934 for forward-looking statements. These statements relate to our intentions,
beliefs, projections, estimations or forecasts of future events or our future financial performance
and involve known and unknown risks, uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, or performance to be materially different from those
expressed or implied by the forward-looking statements. In some cases, you can identify forward-
looking statements by use of words such as "may," "will," "could," "would," "should," "expect,"
"plan," "anticipate," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro
forma," "seek," "likely" or "continue" or other comparable terminology. These statements are only
predictions, and we can give no assurance that such expectations will prove to be correct. We
undertake no obligation, other than as may be required under the federal securities laws, to
publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995
(“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 1933 and the Securities
Exchange Act of 1934 for forward-looking statements. These statements relate to our intentions,
beliefs, projections, estimations or forecasts of future events or our future financial performance
and involve known and unknown risks, uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, or performance to be materially different from those
expressed or implied by the forward-looking statements. In some cases, you can identify forward-
looking statements by use of words such as "may," "will," "could," "would," "should," "expect,"
"plan," "anticipate," "target," "project," "intend," "believe," "estimate," "predict," "potential," "pro
forma," "seek," "likely" or "continue" or other comparable terminology. These statements are only
predictions, and we can give no assurance that such expectations will prove to be correct. We
undertake no obligation, other than as may be required under the federal securities laws, to
publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
Factors, that could cause our actual results to differ materially from those projected, forecasted or
estimated by us in forward-looking statements are discussed in further detail in Selective’s public
filings with the United States Securities and Exchange Commission. These risk factors may not be
exhaustive. We operate in a continually changing business environment, and new risk factors
emerge from time-to-time. We can neither predict such new risk factors nor can we assess the
impact, if any, of such new risk factors on our businesses or the extent to which any factor or
combination of factors may cause actual results to differ materially from those expressed or
implied in any forward-looking statements in this report. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this report might not occur.
estimated by us in forward-looking statements are discussed in further detail in Selective’s public
filings with the United States Securities and Exchange Commission. These risk factors may not be
exhaustive. We operate in a continually changing business environment, and new risk factors
emerge from time-to-time. We can neither predict such new risk factors nor can we assess the
impact, if any, of such new risk factors on our businesses or the extent to which any factor or
combination of factors may cause actual results to differ materially from those expressed or
implied in any forward-looking statements in this report. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this report might not occur.
Forward Looking Statement
Financial Strength
• 22-state super-regional
• $1.5B NPW
• 86% commercial lines
• 14% personal lines
• Distribution partner with 950
independent agents
independent agents
• Best in class field model
• History of financial strength
• A.M. Best rated “A” or better for 75
years, and “A+” for past 47 years
years, and “A+” for past 47 years
Only 10% of P&C carriers rated A+ or better
MN
IA
MO
WI
MI
MI
NC
NY
NJ
DE
CT
MA
TN
Selective Profile
A Foundation of Financial Strength
• Conservative investment portfolio
• Disciplined reserving practices
• Strong reinsurance program
$3.6B Invested Assets
as of March 31, 2009
as of March 31, 2009
Most asset classes became correlated in 2008
Conservative Investment Portfolio
Source: A.M. Best, Barclays Capital
Peers include: Auto-owners Insurance, CINF, CNA, THG, HGIC, Liberty Mutual,
Main Street America, OB, STFC, UFCS, Utica, Westfield
Main Street America, OB, STFC, UFCS, Utica, Westfield
If alternative investments were written down to $0
book value per share would decrease by only $1.80
book value per share would decrease by only $1.80
Asset Allocation to Equities and Other Investments
As of December 2008
As of December 2008
Investment Strategy for the
Current Environment
Current Environment
• Recognition of current high risk investment environment
• Preservation of capital is paramount
• Increased allocation to government and agencies
• Investment grade corporate bonds
• Actively reducing portfolio risk where appropriate
Calendar Year Reserve Development (p/t) | ($10M) | ($5M) | $7M | $16M | $18M |
52.6%
54.8%
56.9%
57.5%
53.9%
Carried
$2,415M
Disciplined Reserving Practices
Actuarial Reserve Ranges
Actuarial Reserve Ranges
Percentages are net of tax, reinsurance and reinstatement premium.
RMS data as of 6/30/08; Equity data as of 3/31/09.
% of Equity at Risk
CAT cover: $310M in excess of $40M
RMS Model
Strong Natural Catastrophe Program
Capital Position
• Premium to surplus: 1.8x
• Debt to total capitalization:
• Total: 23.1%
• Adjusted: 16.7%
• Weighted average life of debt: 35 years
Sound Strategy
Strategies for Long-Term Success
While each of these factors is important,
relationships drive the business
relationships drive the business
Strong Agency Relationships
MN
IL
NJ
DE
TN
Market Opportunity
• Small Business (up to $25K) - $23 billion
• Middle Market ($25K to $250K) - $54 billion
• Large Accounts ($250K to $1M) - $21 billion
140 Claims Management Specialists
1Q2009 Commercial lines new business growth - 12%
Best in Class Field Model
MN
IA
IL
IN
MI
MI
PA
NY
NJ
RI
DE
CT
TN
>4% (NJ)
3% to <4% (MD)
2% to <3% (RI & PA)
1% to <2% (NY)
0% to <1% (GA, KY, NC, SC, TN,
VA, IA, IL, IN, MI, MN, MO, WI, OH,
MA, CT, DE)
VA, IA, IL, IN, MI, MN, MO, WI, OH,
MA, CT, DE)
Not currently in footprint
SIGI’s current average market share = 1.1%.
At 5% market share, premiums would be > $6B
Selective’s Current Market Share
For lines < $50,000
5 & 4 Diamond
3 Diamond
2 & 1 Diamond
Percent of Total New Premium Diamond Distribution
WC, BOP, CPP, CA
Knowledge Management Tools Make a Difference
Knowledge Management Tools Make a Difference
Retention
5 & 4 Diamond
3 Diamond
2 & 1 Diamond
As of March 31, 2009
Pricing
5 & 4 Diamond
3 Diamond
2 & 1 Diamond
As of March 31, 2009
Knowledge Management Tools Make a Difference
2006
2007
2008
April 2009 pure price increase of 0.4%
2009
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | April |
Commercial Lines Pure Price vs. Retention
Segment 41 | 95.6% | ||
Segment 60 | 101.0% |
Segment 21 | 86.3% | ||
Segment 40 | 95.3% |
Segment 1 | 68.7% | ||
Segment 20 | 85.8% |
Segment 61 | 101.2% | ||
Segment 80 | 120.2% |
Operational Areas
Marketing
Safety
Management
Management
Training
Pricing
Average
Lower
Than
Than
Average
Higher
Than
Average
Than
Average
Growth
Marketing
Materials
Materials
Stewardship
Service
Retention
Sales
Training
Training
Boundary
Control
Corrective
Action
Action
*Direct accident year combined ratio as of December 31, 2008
Business Segment
3-Year
Combined
Ratio*
Combined
Ratio*
Broad Underwriting Appetite
Enhanced through Knowledge Management
Enhanced through Knowledge Management
• $24M in-force price change on
$214M book
$214M book
• Underwriting and automation
improvements - - reduced operating
costs and increased data quality
improvements - - reduced operating
costs and increased data quality
• Profitable by 2010
The Road to
Profitability
Profitability
13-state footprint opportunity - $900 million
Key Claims Strategies
• Litigation management
• Vendor management
• Integrated outcomes
• Workers compensation
• Other casualty lines
*
*Fiscal-year dividend
Long-Term Shareholder Value Creation