Document

0000230557-19-000004.txt : 20190131 0000230557-19-000004.hdr.sgml : 20190131 20190131162653 ACCESSION NUMBER: 0000230557-19-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20190131 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190131 DATE AS OF CHANGE: 20190131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SELECTIVE INSURANCE GROUP INC CENTRAL INDEX KEY: 0000230557 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 222168890 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33067 FILM NUMBER: 19556198 BUSINESS ADDRESS: STREET 1: 40 WANTAGE AVENUE CITY: BRANCHVILLE STATE: NJ ZIP: 07890 BUSINESS PHONE: 9739483000 MAIL ADDRESS: STREET 1: 40 WANTAGE AVE STREET 2: 40 WANTAGE AVE CITY: BRANCHVILLE STATE: NJ ZIP: 07890 FORMER COMPANY: FORMER CONFORMED NAME: SRI CORP DATE OF NAME CHANGE: 19860508 8-K 1 q42018pressrelease8-k.htm 8-K Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of earliest event reported)	January 31, 2019

SELECTIVE INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)



New Jersey	001-33067	22-2168890
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)



40 Wantage Avenue, Branchville, New Jersey		07890
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code		(973) 948-3000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Section 2 – Financial Information

Item 2.02. Results of Operations and Financial Condition.

On January 31, 2019, Selective Insurance Group, Inc. (the “Company”) issued a press release announcing results for the fourth quarter and year ended December 31, 2018. The press release is attached hereto as Exhibit 99.1.

Section 7 – Regulation FD

Item 7.01. Regulation FD Disclosure.

Attached as Exhibit 99.2 is supplemental financial information about the Company.

The information contained in this report on Form 8-K, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. The Company makes no admission as to the materiality of any information in this report or the exhibits attached hereto.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release of Selective Insurance Group, Inc. dated January 31, 2019

99.2 Financial Supplement, Fourth Quarter and Full Year 2018

EXHIBIT INDEX



Exhibit No.	Description
99.1	Press Release of Selective Insurance Group, Inc. dated January 31, 2019
99.2	Financial Supplement, Fourth Quarter and Full Year 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		SELECTIVE INSURANCE GROUP, INC.

Date:	January 31, 2019	By:	/s/ Michael H. Lanza
			Michael H. Lanza
			Executive Vice President and General Counsel

EX-99.1 2 q42018pressreleaseexh991.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1

Selective Reports Excellent Results for the Fourth Quarter of 2018 - Net Income per Diluted Share of $0.76;

Record Non-GAAP Operating Income¹ per Diluted Share of $1.20; and Strong Full Year 2018 Results with a Return on Equity ("ROE") of 10.2% and Non-GAAP Operating ROE¹ of 12.5%

In the fourth quarter of 2018:


•	Net premiums written ("NPW") grew 5%


•	GAAP combined ratio was 92.7%


•	After-tax net investment income was up 42%, to $44 million


•	Annualized ROE was 10.4% and non-GAAP operating ROE was 16.3%

Branchville, NJ - January 31, 2019 - Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported its financial results for the fourth quarter ended December 31, 2018. Net income per diluted share was $0.76, compared to $0.51 a year ago. Non-GAAP operating income per diluted share was up 40%, to $1.20. After-tax net realized losses were $0.44 per diluted share in the fourth quarter, reflecting significant opportunistic trading activity that will enhance our fixed income portfolio and 2019 after-tax net investment income. The Company generated an overall after-tax portfolio yield of 2.8% in 2018 and ended the year with 3.33 of invested assets per dollar of stockholders' equity.

"In the fourth quarter, we generated a 92.7% GAAP combined ratio, or 90.3% excluding catastrophe losses," said Gregory E. Murphy, Chairman and Chief Executive Officer. "For the year, non-GAAP operating ROE was 12.5%, exceeding our ROE target of 12%. We are extremely proud of our continued track record of generating solid returns for our shareholders, as this was the fifth consecutive year the Company generated double digit non-GAAP operating ROEs."

"We continue to execute on disciplined growth, with our net premiums written increasing 6% in 2018, driven by commercial lines renewal pure price increases of 3.5% and strong retention in our standard lines of business of 83%," Mr. Murphy added. "Our investment portfolio generated superior results for the year with after-tax net investment income up 35% from 2017, to $160 million, driven by: (i) higher interest rates; (ii) active portfolio management; (iii) excellent operating cash flow that was 18% of NPW; (iv) improved alternative investment returns; and (v) a lower Federal income tax rate."

Mr. Murphy continued, "The Company's financial results and our best in class employees' successful execution on our strategic objectives, have allowed Selective to be in its strongest financial position ever going into 2019. We maintained our standard commercial lines written renewal pure price increases in line with expected claim inflation. The targeted underwriting actions we took in our excess and surplus lines have improved results in this segment. Through our state expansion efforts, we entered five new states for standard commercial lines and two new states for standard personal lines in the last 18 months, which provides additional runway for growth. All of these achievements coupled with strong relationships with our 'ivy league' distribution partners, continued investment in sophisticated underwriting tools, and a focus to provide a superior experience to our customers, will allow for continued outperformance relative to the industry."

Operating Highlights



Consolidated Financial Results	Quarter ended December 31,						Change			Year-to-Date December 31,						Change
$ and shares in millions, except per share data	2018				2017		Change			2018				2017		Change
Net premiums written	$	582.8			553.8		5		%	$	2,514.3			2,370.6		6		%
Net premiums earned	625.3				590.1		6			2,436.2				2,291.0		6
Net investment income earned	54.1				42.6		27			195.3				161.9		21
Net realized and unrealized (losses) gains, pre-tax	(37.9		)		(1.1	)	(3,263	)		(54.9		)		6.4		(964	)
Total revenues	643.0				633.7		1			2,586.1				2,470.0		5
Net underwriting income, after-tax	35.9				27.5		30			95.7				100.3		(5	)
Net investment income, after-tax	44.2				31.2		42			160.5				118.5		35
Net income	45.8				30.2		51			178.9				168.8		6
Non-GAAP operating income¹	72.0				51.2		41			218.6				184.9		18
Combined ratio	92.7			%	92.8		(0.1	)	pts	95.0			%	93.3		1.7		pts
Loss and loss expense ratio	58.7				57.8		0.9			61.5				58.7		2.8
Underwriting expense ratio	33.7				34.7		(1.0	)		33.2				34.4		(1.2	)
Dividends to policyholders ratio	0.3				0.3		—			0.3				0.2		0.1
Catastrophe losses	2.4			pts	0.3		2.1			3.6			pts	2.9		0.7
Non-catastrophe property losses	13.3				14.8		(1.5	)		14.8				13.3		1.5
(Favorable) prior year reserve development on casualty lines	(2.8		)		(1.7	)	(1.1	)		(1.7		)		(2.1	)	0.4
Net income per diluted share	$	0.76			0.51		49		%	$	3.00			2.84		6		%
Non-GAAP operating income per diluted share¹	1.20				0.86		40			3.66				3.11		18
Weighted average diluted shares	59.8				59.5		1			59.7				59.4		1
Book value per share	$	30.40			29.28		4			30.40				29.28		4

Standard Commercial Lines

Standard Commercial Lines premiums, which represented 79% of total 2018 net premiums written, were up 6% in the fourth quarter compared to a year ago. This growth reflects strong renewal pure price increases of 3.4%, retention of 83%, and an increase in new business of 10%, to $92 million. The 0.9-point increase in the fourth quarter's combined ratio, to 92.9%, was driven by the items in the table below coupled with a $13.5 million, or 2.8 points, increase in current year loss costs above expectations driven by our commercial auto line of business. The favorable prior year casualty reserve development was predominantly driven by the workers compensation line of business, partially offset by adverse development in the commercial auto line of business that was driven by the 2015 to 2017 accident years.

For the year, premiums were up 6%, driven by 3.5% of renewal pure price increases and a 4% increase in new business. The combined ratio was 94.3%, compared to 91.6% from 2017, the drivers of which are outlined in the table below, as well as a $29.5 million, or 1.5 points, increase in current year loss costs above expectations driven by our commercial auto line of business. The favorable prior year casualty reserve development was predominantly driven by the workers compensation and general liability lines of business, partially offset by adverse development in the commercial auto line of business that was driven by the 2015 to 2017 accident years.



Standard Commercial Lines	Quarter ended December 31,						Change			Year-to-Date December 31,						Change
$ in millions	2018				2017		Change			2018				2017		Change
Net premiums written	$	449.4			424.2		6		%	$	1,975.7			1,858.7		6		%
Net premiums earned	489.8				461.2		6			1,912.2				1,788.5		7
Combined ratio	92.9			%	92.0		0.9		pts	94.3			%	91.6		2.7		pts
Loss and loss expense ratio	57.8				56.1		1.7			59.7				56.3		3.4
Underwriting expense ratio	34.8				35.5		(0.7	)		34.2				35.0		(0.8	)
Dividends to policyholders ratio	0.3				0.4		(0.1	)		0.4				0.3		0.1
Catastrophe losses	2.5			pts	0.4		2.1			3.4			pts	2.2		1.2
Non-catastrophe property losses	11.8				12.5		(0.7	)		12.8				11.5		1.3
(Favorable) prior year reserve development on casualty lines	(4.5		)		(2.8	)	(1.7	)		(3.0		)		(3.7	)	0.7

Standard Personal Lines

Standard Personal Lines premiums, which represented 12% of total 2018 net premiums written, was similar in the quarter compared to a year ago and included renewal pure price increases of 4.6% and stable retention of 84%. The combined ratio in the fourth quarter was 91.8%, a 3.4-point decrease from a year ago, the drivers of which are outlined in the table below. The unfavorable prior year casualty reserve development was predominantly driven by the personal auto line of business for the 2016 and 2017 accident years.

For the year, premiums were up 4%, driven by renewal pure price increases of 3.8% and stable retention of 84%. The combined ratio was 95.8%, a 0.4-point decrease from a year ago, the drivers of which are outlined in the table below.



Standard Personal Lines	Quarter ended December 31,					Change			Year-to-Date December 31,				Change
$ in millions	2018				2017	Change			2018			2017	Change
Net premiums written	$	72.7			72.8	—		%	$	309.3		296.8	4		%
Net premiums earned	77.4				74.2	4			304.4			289.7	5
Combined ratio	91.8			%	95.2	(3.4	)	pts	95.8		%	96.2	(0.4	)	pts
Loss and loss expense ratio	63.8				64.9	(1.1	)		67.9			65.4	2.5
Underwriting expense ratio	28.0				30.3	(2.3	)		27.9			30.8	(2.9	)
Catastrophe losses	(0.8		)	pts	1.0	(1.8	)		5.7		pts	5.6	0.1
Non-catastrophe property losses	27.5				28.0	(0.5	)		30.1			26.3	3.8
Unfavorable prior year reserve development on casualty lines	5.8				4.0	1.8			1.5			2.8	(1.3	)

Excess and Surplus Lines

Excess and Surplus Lines premiums, which represented 9% of total 2018 net premiums written, increased 7% in the quarter compared to a year ago, driven by a 29% increase in new business. We continue to address profitability in this line through targeted price increases, business mix shifts, and improved underwriting standards. Over the past year, we have taken steps to exit some underperforming classes of E&S business, while entering into new distribution relationships. The premium growth in the fourth quarter continues to reflect the impact of one particularly large relationship that we established in the second quarter of 2018. The combined ratio for the fourth quarter was 92.9%, which was 3.6 points lower than a year ago, the drivers of which are outlined in the table below.

For the year, premiums were up 7%, driven by an 8% increase in new business, to $98 million, coupled with overall renewal pure price increases of 4.7%. The combined ratio was 100.3%, a 2.7-point decrease from a year ago, the drivers of which are outlined in the table below. The unfavorable prior year casualty reserve development was primarily driven by the 2015 and 2016 accident years, reflecting for the most part severity.



Excess and Surplus Lines	Quarter ended December 31,					Change			Year-to-Date December 31,				Change
$ in millions	2018			2017		Change			2018			2017	Change
Net premiums written	$	60.7		56.9		7		%	$	229.3		215.1	7		%
Net premiums earned	58.1			54.6		6			219.6			212.8	3
Combined ratio	92.9		%	96.5		(3.6	)	pts	100.3		%	103.0	(2.7	)	pts
Loss and loss expense ratio	61.5			63.0		(1.5	)		68.5			69.4	(0.9	)
Underwriting expense ratio	31.4			33.5		(2.1	)		31.8			33.6	(1.8	)
Catastrophe losses	6.0		pts	(1.0	)	7.0			2.8		pts	5.3	(2.5	)
Non-catastrophe property losses	7.1			15.5		(8.4	)		11.2			10.6	0.6
Unfavorable prior year reserve development on casualty lines	—			—		—			5.5			4.7	0.8

Investment Income

Net investment income, after-tax, in the fourth quarter was $44 million, up 42% compared to a year ago. For the year, after-tax investment income was $160 million, up 35% from the prior year. The improvements in both periods were driven by: (i) higher interest rates; (ii) active portfolio management; (iii) excellent operating cash flow that was 18% of NPW; (iv) improved alternative investment returns; and (v) a lower Federal income tax rate. Our alternative investments generated $14 million in after-tax income in 2018, compared to $8 million in the prior year. In addition, after-tax net investment income benefited from higher reinvestment yields in 2018, including a 111 basis point increase in the 90-day London Interbank Offered Rate ("LIBOR"), which affected our floating rate securities that represented approximately 16% of our fixed income securities portfolio at year-end. The after-tax earned income yield on the portfolio averaged 2.8% during 2018. After-tax new money yields averaged 2.9%, and the weighted average after-tax book yield on the fixed income portfolio was 3.0% at year-end. Invested assets per dollar of stockholders' equity was 3.33 at year-end.



Investments	Quarter ended December 31,				Change			Year-to-Date December 31,				Change
$ in millions, except per share data	2018			2017	Change			2018			2017	Change
Net investment income earned, after-tax	$	44.2		31.2	42		%	$	160.5		118.5	35		%
Net investment income per share	0.74			0.52	42			2.69			2.00	35
Effective tax rate	18.3		%	26.8	(8.5	)	pts	17.8		%	26.8	(9.0	)	pts
Average yields:
Fixed income securities:
Pre-tax	3.6		%	3.1	0.5		pts	3.4		%	3.0	0.4		pts
After-tax	2.9			2.3	0.6			2.8			2.2	0.6
Portfolio:
Pre-tax	3.7			3.0	0.7			3.4			2.9	0.5
After-tax	3.0			2.2	0.8			2.8			2.1	0.7

Balance Sheet



$ in millions, except per share data	December 31, 2018		December 31, 2017	Change
Total assets	$	7,952.7	7,686.4	3	%
Total investments	5,960.7		5,685.2	5
Long-term debt	439.5		439.1	—
Stockholders’ equity	1,791.8		1,713.0	5
Invested assets per dollar of stockholders’ equity	3.33		3.32	—
Book value per share	30.40		29.28	4

Book value per share increased 4% for the year, driven by net income, partially offset by unrealized losses on our fixed income securities portfolio from rising interest rates, coupled with dividends paid to shareholders.

Guidance

For 2019, Selective expects to generate the following results:


•	A GAAP combined ratio, excluding catastrophe losses, of 92.0%. This assumes no prior year casualty reserve development;


•	Catastrophe losses of 3.5 points;


•	After-tax net investment income of $175 million, which includes $8 million of after-tax net investment income from our alternative investments;


•	An overall effective tax rate of approximately 19%, which also includes an effective tax rate of 18% for net investment income, reflecting a tax rate of 5.25% for tax-advantaged municipal bonds, and a tax rate of 21% for all other items; and


•	Weighted average shares outstanding of 60 million.

The supplemental investor package, including financial information that is not part of this press release, is available on the Investors page of Selective’s website at www.Selective.com. Selective’s quarterly analyst conference call will be simulcast at 10:00 a.m. ET, on Friday, February 1, 2019 at www.Selective.com. The webcast will be available for rebroadcast until the close of business on March 1, 2019.

About Selective Insurance Group, Inc.

Selective Insurance Group, Inc. is a holding company for ten property and casualty insurance companies rated “A” (Excellent) by A.M. Best. Through independent agents, the insurance companies offer standard and specialty insurance for commercial and personal risks, and flood insurance underwritten by the National Flood Insurance Program. Selective maintains a website at www.Selective.com.

¹Reconciliation of Net Income to Non-GAAP Operating Income and Certain Other Non-GAAP Measures

Non-GAAP operating income, non-GAAP operating income per diluted share, and non-GAAP operating return on equity differ from net income, net income per diluted share, and return on equity, respectively, by the exclusion of after-tax net realized and unrealized gains and losses on investments and the deferred tax asset charge that was recognized in 2017 in relation to tax reform. They are used as important financial measures by management, analysts, and investors, because the realization of net investment gains and losses on sales of securities in any given period is largely discretionary as to timing. In addition, these net realized investment gains and losses, other-than-temporary investment impairments that are charged to earnings, unrealized gains and losses on equity securities, and the deferred tax asset charge could distort the analysis of trends. These operating measurements are not intended as a substitute for net income, income per share, or return on equity prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of net income, net income per diluted share, and return on equity to non-GAAP operating income, non-GAAP operating income per diluted share, and non-GAAP operating return on equity, respectively, are provided in the tables below.

Note: All amounts included in this release exclude intercompany transactions.

Reconciliation of Net Income to Non-GAAP Operating Income



$ in millions	Quarter ended December 31,					Year-to-Date December 31,
$ in millions	2018			2017		2018		2017
Net income	$	45.8		30.2		178.9		168.8
Net realized and unrealized losses (gains), before tax	37.9			1.1		54.9		(6.4	)
Tax on net realized and unrealized losses (gains)	(11.7		)	(0.3	)	(15.3	)	2.2
Net realized and unrealized losses (gains)	26.2			0.7		39.6		(4.1	)
Tax reform impact²	—			20.2		—		20.2
Non-GAAP operating income	$	72.0		51.2		218.6		184.9

Reconciliation of Net Income per Diluted Share to Non-GAAP Operating Income per Diluted Share



	Quarter ended December 31,					Year-to-Date December 31,
	2018			2017		2018		2017
Net income per diluted share	$	0.76		0.51		3.00		2.84
Net realized and unrealized losses (gains), before tax	0.63			0.02		0.92		(0.11	)
Tax on net realized and unrealized losses (gains)	(0.20		)	(0.01	)	(0.26	)	0.04
Net realized and unrealized losses (gains)	0.44			0.01		0.66		(0.07	)
Tax reform impact²	—			0.34		—		0.34
Non-GAAP operating income per diluted share	$	1.20		0.86		3.66		3.11

Reconciliation of Return on Equity to Non-GAAP Operating Return on Equity



	Quarter ended December 31,					Year-to-Date December 31,
	2018			2017		2018		2017
Annualized Return on Equity	10.4		%	7.1		10.2		10.4
Net realized and unrealized losses (gains), before tax	8.6			0.3		3.1		(0.4	)
Tax on net realized and unrealized losses (gains)	(2.7	)		(0.1	)	(0.8	)	0.2
Net realized and unrealized losses (gains)	5.9			0.2		2.3		(0.2	)
Tax reform impact²	—			4.7		—		1.2
Annualized Non-GAAP Operating Return on Equity	16.3		%	12.0		12.5		11.4

Note: Amounts in the tables above may not foot due to rounding.

² Deferred tax write-off that was recognized in the fourth quarter of 2017 in relation to the adoption of tax reform.

Forward-Looking Statements

In this press release, Selective and its management discuss and make statements based on currently available information regarding their intentions, beliefs, current expectations, and projections regarding Selective's future operations and performance.

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.

Factors that could cause our actual results to differ materially from those projected, forecasted, or estimated by us in forward-looking statements, include, but are not limited to:


•	difficult conditions in global capital markets and the economy;


•	deterioration in the public debt and equity markets and private investment marketplace that could lead to investment losses and fluctuations in interest rates;


•	ratings downgrades could affect investment values and, therefore, statutory surplus;


•	the adequacy of our loss reserves and loss expense reserves;


•	the frequency and severity of natural and man-made catastrophic events, including, but not limited to, hurricanes, tornadoes, windstorms, earthquakes, hail, terrorism, explosions, severe winter weather, floods, and fires;


•	adverse market, governmental, regulatory, legal, or judicial conditions or actions;


•	the concentration of our business in the Eastern Region;


•	the cost and availability of reinsurance;


•	our ability to collect on reinsurance and the solvency of our reinsurers;


•	the impact of changes in U.S. trade policies and imposition of tariffs on imports that may lead to higher than anticipated inflationary trends for our loss and loss adjustment expenses;


•	uncertainties related to insurance premium rate increases and business retention;


•	changes in insurance regulations that impact our ability to write and/or cease writing insurance policies in one or more states;


•	recent federal financial regulatory reform provisions that could pose certain risks to our operations;


•	our ability to maintain favorable ratings from rating agencies, including A.M. Best, Standard & Poor’s, Moody’s, and Fitch;


•	our entry into new markets and businesses; and


•	other risks and uncertainties we identify in filings with the United States Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and other periodic reports.

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.

Selective’s SEC filings can be accessed through the Investors page of Selective’s website, www.Selective.com, or through the SEC’s EDGAR Database at www.sec.gov (Selective EDGAR CIK No. 0000230557).



Investor Contact: Rohan Pai 973-948-1364 Rohan.Pai@Selective.com	Media Contact: Jamie M. Beal 973-948-1234 Jamie.Beal@Selective.com

Selective Insurance Group, Inc. 40 Wantage Avenue Branchville, New Jersey 07890 www.Selective.com

EX-99.2 3 q42018pressreleasesuppleme.htm EXHIBIT 99.2 Exhibit

Exhibit 99.2

FINANCIAL SUPPLEMENT

FOURTH QUARTER AND FULL YEAR 2018

Forward-Looking Statements

Factors that could cause our actual results to differ materially from those projected, forecasted, or estimated by us in forward-looking statements, include, but are not limited to:


▪	difficult conditions in global capital markets and the economy;


▪	deterioration in the public debt and equity markets and private investment marketplace that could lead to investment losses and fluctuations in interest rates;


▪	ratings downgrades could affect investment values and, therefore, statutory surplus;


▪	the adequacy of our loss reserves and loss expense reserves;


▪	the frequency and severity of natural and man-made catastrophic events, including, but not limited to, hurricanes, tornadoes, windstorms, earthquakes, hail, terrorism, explosions, severe winter weather, floods, and fires;


▪	adverse market, governmental, regulatory, legal, or judicial conditions or actions;


▪	the concentration of our business in the Eastern Region;


▪	the cost and availability of reinsurance;


▪	our ability to collect on reinsurance and the solvency of our reinsurers;


▪	the impact of changes in U.S. trade policies and imposition of tariffs on imports that may lead to higher than anticipated inflationary trends for our loss and loss adjustment expenses;


▪	uncertainties related to insurance premium rate increases and business retention;


▪	changes in insurance regulations that impact our ability to write and/or cease writing insurance policies in one or more states;


▪	recent federal financial regulatory reform provisions that could pose certain risks to our operations;


▪	our ability to maintain favorable ratings from rating agencies, including A.M. Best, Standard & Poor’s, Moody’s, and Fitch;


▪	our entry into new markets and businesses; and


▪	other risks and uncertainties we identify in filings with the United States Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K and other periodic reports.

Selective Insurance Group, Inc. & Consolidated Subsidiaries

TABLE OF CONTENTS



	Page
Consolidated Financial Highlights	1
Consolidated Statements of Operations	2
Consolidated Balance Sheets	3
Financial Metrics	4

Consolidated Insurance Operations Statement of Operations	5
Standard Commercial Lines Statement of Operations and Supplemental Data	6
Standard Commercial Lines GAAP Line of Business Results	7
Standard Personal Lines Statement of Operations and Supplemental Data	8
Standard Personal Lines GAAP Line of Business Results	9
Excess and Surplus Lines Statement of Operations and Supplemental Data	10
Excess and Surplus Lines GAAP Line of Business Results	11

Consolidated Investment Income	12
Consolidated Composition of Invested Assets	13

Reconciliation of Net Income to Non-GAAP Operating Income and Certain Other Non-GAAP Measures	14

Ratings and Contact Information	15

Selective Insurance Group, Inc. & Consolidated Subsidiaries

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)



		Quarter ended												Year-to-date
		Dec. 31,				Sep. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ and shares in millions, except per share data)		2018				2018		2018		2018		2017		2018		2017

For Period Ended
	Gross premiums written	$	676.6			759.9		759.9		720.5		642.3		2,916.9		2,760.1
	Net premiums written	582.8				651.7		655.2		624.6		553.8		2,514.3		2,370.6
	Change in net premiums written, from comparable prior year period	5			%	8		7		4		8		6		6

	Underwriting income, before-tax	$	45.4			33.0		38.0		4.7		42.4		121.2		154.3
	Net investment income earned, before-tax	54.1				52.4		45.6		43.2		42.6		195.3		161.9
	Net realized and unrealized investment (losses) gains, before-tax*	(37.9		)		(4.8	)	(1.7	)	(10.5	)	(1.1	)	(54.9	)	6.4

	Net income	$	45.8			55.4		58.8		18.9		30.2		178.9		168.8
	Non-GAAP operating income**	72.0				59.2		60.1		27.3		51.2		218.6		184.9

At Period End
	Total assets	7,952.7				7,986.8		7,705.7		7,659.9		7,686.4		7,952.7		7,686.4
	Total invested assets	5,960.7				5,861.1		5,665.6		5,678.6		5,685.2		5,960.7		5,685.2
	Stockholders' equity	1,791.8				1,738.5		1,698.2		1,659.8		1,713.0		1,791.8		1,713.0
	Shares outstanding	58.9				58.9		58.8		58.7		58.5		58.9		58.5

Per Share and Share Data
	Net income per diluted share	$	0.76			0.93		0.99		0.32		0.51		3.00		2.84
	Non-GAAP operating income per diluted share**	1.20				0.99		1.01		0.46		0.86		3.66		3.11

	Weighted average diluted shares outstanding	59.8				59.7		59.6		59.6		59.5		59.7		59.4

	Book value per share	$	30.40			29.52		28.86		28.25		29.28		30.40		29.28

	Dividends paid per share	0.20				0.18		0.18		0.18		0.18		0.74		0.66

Financial Ratios
	Loss and loss expense ratio	58.7			%	61.7		60.5		65.0		57.8		61.5		58.7
	Underwriting expense ratio	33.7				32.5		32.9		33.8		34.7		33.2		34.4
	Dividends to policyholders ratio	0.3				0.4		0.3		0.4		0.3		0.3		0.2
	GAAP combined ratio	92.7			%	94.6		93.7		99.2		92.8		95.0		93.3

	Annualized ROE	10.4				12.9		14.0		4.5		7.1		10.2		10.4

	Annualized non-GAAP operating ROE**	16.3				13.8		14.3		6.5		12.0		12.5		11.4

	Debt to total capitalization	19.7				20.2		20.6		22.9		20.4		19.7		20.4

	Net premiums written to policyholders' surplus	1.4			x	1.4x		1.4x		1.4x		1.4x		1.4x		1.4x

	Invested assets per dollar of stockholders' equity	$	3.33			3.37		3.34		3.42		3.32		3.33		3.32

*	Refer to Page 2 for components of realized and unrealized investment losses and gains.
**	Non-GAAP measure. Refer to Page 14 for definition.

Page 1

Selective Insurance Group, Inc. & Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



		Quarter ended											Year-to-date
		Dec. 31,			Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ and shares in millions, except per share data)		2018			2018		2018		2018		2017		2018		2017

Revenues
	Net premiums earned	$	625.3		614.3		604.8		591.8		590.1		2,436.2		2,291.0
	Net investment income earned	54.1			52.4		45.6		43.2		42.6		195.3		161.9
	Net realized and unrealized (losses) gains:
	Net realized investment (losses) gains on disposals	(23.0		)	(0.8	)	—		4.7		(1.0	)	(19.0	)	11.2
	Other-than-temporary impairments	(1.1		)	(1.4	)	(2.8	)	(1.2	)	(0.1	)	(6.6	)	(4.8	)
	Unrealized (losses) gains on equity securities	(13.8		)	(2.6	)	1.1		(14.1	)	—		(29.4	)	—
	Total net realized and unrealized (losses) gains	(37.9		)	(4.8	)	(1.7	)	(10.5	)	(1.1	)	(54.9	)	6.4
	Other income	1.5			2.5		3.2		2.2		2.2		9.4		10.7
	Total revenues	643.0			664.5		651.9		626.7		633.7		2,586.1		2,470.0

Expenses
	Loss and loss expense incurred	367.7			379.2		366.3		384.9		341.5		1,498.1		1,345.1
	Amortization of deferred policy acquisition costs	126.8			124.5		122.7		121.1		119.2		495.0		469.2
	Other insurance expenses	87.0			80.1		81.0		83.2		89.3		331.3		333.1
	Interest expense	6.1			6.1		6.1		6.2		6.1		24.4		24.4
	Corporate expenses	3.4			7.5		3.3		11.3		9.6		25.4		36.3
	Total expenses	590.9			597.3		579.4		606.8		565.6		2,374.4		2,208.0

Income before federal income taxes		52.1			67.1		72.5		19.9		68.2		211.7		262.0
Federal income tax expense		6.4			11.7		13.7		1.0		37.9		32.8		93.1

Net Income		$	45.8		55.4		58.8		18.9		30.2		178.9		168.8

Net realized and unrealized investment losses (gains), after tax*		26.2			3.8		1.3		8.3		0.7		39.6		(4.1	)

Tax reform impact - deferred tax write-off*		—			—		—		—		20.2		—		20.2

Non-GAAP operating income**		$	72.0		59.2		60.1		27.3		51.2		218.6		184.9

Weighted average shares outstanding (diluted)		59.8			59.7		59.6		59.6		59.5		59.7		59.4

	Net income per share (diluted)	$	0.76		0.93		0.99		0.32		0.51		3.00		2.84

	Non-GAAP operating income per share (diluted)**	$	1.20		0.99		1.01		0.46		0.86		3.66		3.11

*	Amounts are provided to reconcile net income to non-GAAP operating income.
**	Non-GAAP measure. Refer to Page 14 for definition.

	Note: Amounts may not foot due to rounding.

Page 2

Selective Insurance Group, Inc. & Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)



			Dec. 31,			Sept. 30,		June 30,		Mar. 31,		Dec. 31,
($ in millions, except per share data)			2018			2018		2018		2018		2017

ASSETS
Investments
	Fixed income securities, held-to-maturity, at carrying value		$	37.1		44.6		42.0		41.6		42.1
	Fixed income securities, available-for-sale, at fair value		5,273.1			5,190.2		5,137.7		5,141.6		5,162.5
	Equity securities, at fair value		147.6			157.9		176.6		168.8		182.7
	Short-term investments		323.9			304.6		164.1		183.0		165.6
	Other investments		178.9			163.9		145.2		143.6		132.3
		Total investments	5,960.7			5,861.1		5,665.6		5,678.6		5,685.2
Cash			0.5			0.4		4.9		0.7		0.5
Restricted cash			16.4			12.4		11.6		16.3		44.2
Interest and dividends due or accrued			41.6			41.0		41.0		42.0		40.9
Premiums receivable, net of allowance			770.5			826.9		821.2		766.3		747.0
Reinsurance recoverable, net of allowance			549.2			603.8		545.0		560.9		594.8
Prepaid reinsurance premiums			157.7			167.1		157.6		151.4		153.5
Current federal income tax			—			—		—		0.2		3.2
Deferred federal income tax			53.5			52.3		51.6		48.2		32.0
Property and equipment, net of accumulated depreciation and amortization			65.2			64.2		62.7		62.0		64.0
Deferred policy acquisition costs			252.6			258.0		248.5		239.3		235.1
Goodwill			7.8			7.8		7.8		7.8		7.8
Other assets			76.9			91.5		88.3		86.2		78.2
		Total assets	$	7,952.7		7,986.8		7,705.7		7,659.9		7,686.4

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Reserve for loss and loss expense			$	3,893.9		3,925.2		3,804.4		3,792.1		3,771.2
Unearned premiums			1,431.9			1,483.8		1,436.9		1,380.3		1,349.6
Short-term debt			—			—		—		55.0		—
Long-term debt			439.5			439.4		439.3		439.2		439.1
Current federal income tax			1.3			12.1		5.1		—		—
Accrued salaries and benefits			116.7			95.4		85.4		90.5		131.9
Other liabilities			277.6			292.4		236.5		243.1		281.6
		Total liabilities	$	6,160.9		6,248.2		6,007.5		6,000.2		5,973.5

Stockholders' Equity
Preferred stock of $0 par value per share			$	—		—		—		—		—
Common stock of $2 par value per share			205.7			205.6		205.5		205.3		204.6
Additional paid-in capital			390.3			385.5		381.6		375.2		367.7
Retained earnings			1,858.4			1,824.6		1,779.9		1,731.8		1,698.6
Accumulated other comprehensive (loss) income			(78.0		)	(92.6	)	(84.5	)	(68.2	)	20.2
Treasury stock, at cost			(584.7		)	(584.5	)	(584.4	)	(584.2	)	(578.1	)
		Total stockholders' equity	$	1,791.8		1,738.5		1,698.2		1,659.8		1,713.0
Commitments and contingencies

		Total liabilities and stockholders' equity	$	7,952.7		7,986.8		7,705.7		7,659.9		7,686.4

Note: Amounts may not foot due to rounding.

Page 3

Selective Insurance Group, Inc. & Consolidated Subsidiaries

FINANCIAL METRICS

(Unaudited)



			Quarter ended												Year-to-date
			Dec. 31,				Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ and shares in millions, except per share data)			2018				2018		2018		2018		2017		2018		2017

Book value per share
		Stockholders' equity	$	1,791.8			1,738.5		1,698.2		1,659.8		1,713.0		1,791.8		1,713.0
		Common shares issued and outstanding, at period end	58.9				58.9		58.8		58.7		58.5		58.9		58.5
		Book value per share	$	30.40			29.52		28.86		28.25		29.28		30.40		29.28
		Book value per share excluding unrealized gain or loss on fixed income securities	30.36				29.88		29.08		28.19		28.34		30.36		28.34

Financial results (after-tax)
		Underwriting income	35.9				26.1		30.0		3.7		27.5		95.7		100.3
		Net investment income	44.2				42.9		37.6		35.8		31.2		160.5		118.5
		Interest expense	(4.8		)		(4.8	)	(4.8	)	(4.9	)	(4.0	)	(19.3	)	(15.8	)
		Corporate expense	(3.3		)		(4.9	)	(2.7	)	(7.4	)	(3.6	)	(18.4	)	(18.1	)
		Net realized and unrealized investment (losses) gains*	(26.2		)		(3.8	)	(1.3	)	(8.3	)	(0.7	)	(39.6	)	4.1
		Tax reform impact - deferred tax write-off	—				—		—		—		(20.2	)	—		(20.2	)
		Total after-tax net income	45.8				55.4		58.8		18.9		30.2		178.9		168.8

Return on average equity
		Insurance segments	8.1			%	6.1		7.2		0.9		6.5		5.5		6.2
		Net investment income	10.0				10.0		9.0		8.5		7.3		9.2		7.3
		Interest expense	(1.1		)		(1.1	)	(1.2	)	(1.2	)	(0.9	)	(1.1	)	(1.0	)
		Corporate expense	(0.7		)		(1.2	)	(0.7	)	(1.7	)	(0.9	)	(1.1	)	(1.1	)
		Net realized and unrealized investment (losses) gains, net of tax	(5.9		)		(0.9	)	(0.3	)	(2.0	)	(0.2	)	(2.3	)	0.2
		Tax reform impact - deferred tax write-off	—				—		—		—		(4.7	)	—		(1.2	)
		Annualized ROE	10.4				12.9		14.0		4.5		7.1		10.2		10.4
		Net realized and unrealized losses (gains), net of tax**	5.9				0.9		0.3		2.0		0.2		2.3		(0.2	)
		Tax reform impact - deferred tax write-off**	—				—		—		—		4.7		—		1.2
		Annualized Non-GAAP Operating ROE***	16.3			%	13.8		14.3		6.5		12.0		12.5		11.4

Debt and total capitalization
	Notes payable:
		1.61% Borrowings from FHLBNY	$	25.0			25.0		25.0		25.0		25.0		25.0		25.0
		1.56% Borrowings from FHLBNY	25.0				25.0		25.0		25.0		25.0		25.0		25.0
		1.98% Borrowings from FHLBNY	—				—		—		55.0		—		—		—
		3.03% Borrowings from FHLBI	60.0				60.0		60.0		60.0		60.0		60.0		60.0
		7.25% Senior Notes	49.7				49.7		49.7		49.7		49.7		49.7		49.7
		6.70% Senior Notes	99.1				99.1		99.0		99.0		99.0		99.1		99.0
		5.875% Senior Notes	180.8				180.7		180.6		180.5		180.4		180.8		180.4
	Total debt		439.5				439.4		439.3		494.2		439.1		439.5		439.1
	Stockholders' equity		1,791.8				1,738.5		1,698.2		1,659.8		1,713.0		1,791.8		1,713.0
	Total capitalization		$	2,231.3			2,178.0		2,137.5		2,154.0		2,152.1		2,231.3		2,152.1
	Ratio of debt to total capitalization		19.7			%	20.2		20.6		22.9		20.4		19.7		20.4

Policyholders' surplus			$	1,769.0			1,737.4		1,708.3		1,673.8		1,672.9		1,769.0		1,672.9

*		Refer to Page 2 for components of realized and unrealized investment losses and gains.
**		Amounts are provided to reconcile annualized ROE to annualized non-GAAP operating ROE.
***		Non-GAAP measure. Refer to Page 14 for definition.

		Note: Amounts may not foot due to rounding.

Page 4

Selective Insurance Group, Inc. & Consolidated Subsidiaries

CONSOLIDATED INSURANCE OPERATIONS

STATEMENT OF OPERATIONS

(Unaudited)



		Quarter ended												Year-to-date
		Dec. 31,				Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ in millions)		2018				2018		2018		2018		2017		2018		2017

Underwriting results
Net premiums written		$	582.8			651.7		655.2		624.6		553.8		2,514.3		2,370.6
Change in net premiums written, from comparable prior year period		5			%	8		7		4		8		6		6

Net premiums earned		$	625.3			614.3		604.8		591.8		590.1		2,436.2		2,291.0
Losses and loss expenses incurred		367.7				379.2		366.3		384.9		341.5		1,498.1		1,345.1
Net underwriting expenses incurred		210.5				199.8		198.9		199.7		204.5		808.9		787.0
Dividends to policyholders		1.7				2.3		1.6		2.4		1.8		8.0		4.6
GAAP underwriting gain		$	45.4			33.0		38.0		4.7		42.4		121.2		154.3


Catastrophe losses		$	15.2			28.1		18.7		26.0		2.0		88.0		67.3
(Favorable) prior year casualty reserve development		(17.5		)		(12.0	)	(4.0	)	(8.0	)	(10.0	)	(41.5	)	(48.6	)

Underwriting ratios
Loss and loss expense ratio		58.7			%	61.7		60.5		65.0		57.8		61.5		58.7
Underwriting expense ratio		33.7				32.5		32.9		33.8		34.7		33.2		34.4
Dividends to policyholders ratio		0.3				0.4		0.3		0.4		0.3		0.3		0.2
	Combined ratio	92.7			%	94.6		93.7		99.2		92.8		95.0		93.3


Catastrophe losses		2.4			pts	4.6		3.1		4.4		0.3		3.6		2.9
(Favorable) prior year casualty reserve development		(2.8		)	pts	(2.0	)	(0.7	)	(1.4	)	(1.7	)	(1.7	)	(2.1	)
	Combined ratio before catastrophe losses	90.3			%	90.0		90.6		94.8		92.5		91.4		90.4

	Combined ratio before catastrophe losses and prior year casualty development	93.1				92.0		91.3		96.2		94.2		93.1		92.5

Other Statistics
Non-catastrophe property losses		$	83.0			89.8		82.9		105.7		87.1		361.5		303.7
Non-catastrophe property losses		13.3			pts	14.6		13.7		17.9		14.8		14.8		13.3
Direct new business		$	129.8			135.7		137.2		128.1		117.6		530.8		509.5


Note: Amounts may not foot due to rounding.

Page 5

Selective Insurance Group, Inc. & Consolidated Subsidiaries

STANDARD COMMERCIAL LINES

STATEMENT OF OPERATIONS AND SUPPLEMENTAL DATA

(Unaudited)



		Quarter ended												Year-to-date
		Dec. 31,				Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ in millions)		2018				2018		2018		2018		2017		2018		2017

Underwriting results
Net premiums written		$	449.4			502.3		514.9		509.1		424.2		1,975.7		1,858.7
Change in net premiums written, from comparable prior year period		6			%	6		8		5		8		6		6

Net premiums earned		$	489.8			481.1		476.0		465.4		461.2		1,912.2		1,788.5
Losses and loss expenses incurred		282.5				291.1		273.9		293.5		258.8		1,141.0		1,008.2
Net underwriting expenses incurred		170.6				161.3		159.5		162.6		163.8		654.1		626.2
Dividends to policyholders		1.7				2.3		1.6		2.4		1.8		8.0		4.6
GAAP underwriting gain		$	35.0			26.3		41.0		6.8		36.9		109.1		149.5


Catastrophe losses		$	12.3			22.1		10.1		19.8		1.9		64.3		40.0
(Favorable) prior year casualty reserve development		(22.0		)		(18.0	)	(10.0	)	(8.0	)	(13.0	)	(58.0	)	(66.6	)

Underwriting ratios
Loss and loss expense ratio		57.8			%	60.5		57.6		63.0		56.1		59.7		56.3
Underwriting expense ratio		34.8				33.5		33.5		35.0		35.5		34.2		35.0
Dividends to policyholders ratio		0.3				0.5		0.3		0.5		0.4		0.4		0.3
	Combined ratio	92.9			%	94.5		91.4		98.5		92.0		94.3		91.6


Catastrophe losses		2.5			pts	4.6		2.1		4.3		0.4		3.4		2.2
(Favorable) prior year casualty reserve development		(4.5		)		(3.7	)	(2.1	)	(1.7	)	(2.8	)	(3.0	)	(3.7	)
	Combined ratio before catastrophe losses	90.4			%	89.9		89.3		94.2		91.6		90.9		89.4

	Combined ratio before catastrophe losses and prior year casualty development	94.9				93.6		91.4		95.9		94.4		93.9		93.1

Other Statistics
Non-catastrophe property losses		$	57.6			60.1		57.0		70.8		57.9		245.5		204.9
Non-catastrophe property losses		11.8			pts	12.5		12.0		15.2		12.5		12.8		11.5
Direct new business		$	91.8			90.4		101.1		97.9		83.8		381.2		368.2
Renewal pure price increases		3.4			%	3.7		3.5		3.2		2.9		3.5		2.9
Retention		83			%	84		84		85		84		83		83


Note: Amounts may not foot due to rounding.

Page 6

Selective Insurance Group, Inc. & Consolidated Subsidiaries

STANDARD COMMERCIAL LINES

GAAP LINE OF BUSINESS RESULTS

(Unaudited)



	Quarter Ended December 31, 2018												Quarter Ended December 31, 2017
	Commercial			Workers	General	Commercial							Commercial		Workers	General	Commercial
($ in millions)	Property			Compensation	Liability	Auto		BOP	Bonds	Other		Total	Property		Compensation	Liability	Auto		BOP		Bonds	Other	Total
Net premiums written	$	78.7		67.9	144.7	119.4		26.9	7.2	4.5		449.4	75.2		69.8	133.1	107.4		26.6		7.9	4.2	424.2
Net premiums earned	84.1			80.0	158.4	127.9		26.0	8.7	4.7		489.8	79.3		81.6	146.7	115.7		25.4		8.2	4.4	461.2

Loss and loss expense ratio	53.0		%	29.6	54.6	90.8		40.6	13.6	(0.7	)	57.8	41.3		33.8	54.9	87.4		60.5		16.7	0.2	56.1
Underwriting expense ratio	39.7			27.6	35.2	32.9		40.6	48.9	53.1		34.8	39.6		28.5	36.3	33.0		41.0		57.8	60.1	35.5
Dividend ratio	0.1			1.8	—	0.1		—	—	—		0.3	0.1		2.0	—	—		—		—	—	0.4
Combined ratio	92.8		%	59.0	89.8	123.8		81.2	62.5	52.4		92.9	81.0		64.3	91.2	120.4		101.5		74.5	60.3	92.0

Underwriting gain (loss)	$	6.1		32.8	16.2	(30.5	)	4.9	3.3	2.2		35.0	15.1		29.1	12.9	(23.6	)	(0.4	)	2.1	1.7	36.9


	Year-to-Date December 31, 2018												Year-to-Date December 31, 2017
	Commercial			Workers	General	Commercial							Commercial		Workers	General	Commercial
($ in millions)	Property			Compensation	Liability	Auto		BOP	Bonds	Other		Total	Property		Compensation	Liability	Auto		BOP		Bonds	Other	Total
Net premiums written	$	342.0		316.6	639.7	518.9		104.8	34.9	18.7		1,975.7	322.3		323.3	594.8	465.6		102.5		32.5	17.7	1,858.7
Net premiums earned	329.7			317.6	616.2	493.1		103.4	34.0	18.3		1,912.2	311.9		318.0	569.2	442.8		100.3		29.1	17.2	1,788.5

Loss and loss expense ratio	62.5		%	41.0	53.6	83.2		57.8	13.5	(0.3	)	59.7	51.4		50.9	46.8	81.6		54.8		10.3	0.1	56.3
Underwriting expense ratio	38.3			27.4	34.9	32.4		37.2	54.4	51.0		34.2	38.4		28.1	35.9	33.2		38.1		60.5	57.8	35.0
Dividend ratio	0.2			1.9	0.1	0.1		—	—	—		0.4	(0.1	)	1.6	—	(0.1	)	—		—	—	0.3
Combined ratio	101.0		%	70.3	88.6	115.7		95.0	67.9	50.7		94.3	89.7		80.6	82.7	114.7		92.9		70.8	57.9	91.6

Underwriting (loss) gain	$	(3.2	)	94.4	70.3	(77.4	)	5.2	10.9	9.0		109.1	32.0		61.7	98.2	(65.3	)	7.2		8.5	7.2	149.5



Note: Amounts may not foot due to rounding.

Page 7

Selective Insurance Group, Inc. & Consolidated Subsidiaries

STANDARD PERSONAL LINES

STATEMENT OF OPERATIONS AND SUPPLEMENTAL DATA

(Unaudited)



		Quarter ended									Year-to-date
		Dec. 31,				Sept. 30,	June 30,	Mar. 31,		Dec. 31,	Dec. 31,	Dec. 31,
($ in millions)		2018				2018	2018	2018		2017	2018	2017

Underwriting results
Net premiums written		$	72.7			84.7	83.9	67.9		72.8	309.3	296.8
Change in net premiums written, from comparable prior year period		—			%	4	7	5		7	4	5

Net premiums earned		$	77.4			77.2	75.7	74.3		74.2	304.4	289.7
Losses and loss expenses incurred		49.4				52.6	49.3	55.4		48.2	206.8	189.3
Net underwriting expenses incurred		21.6				21.4	21.6	20.3		22.5	84.9	89.3
GAAP underwriting gain (loss)		$	6.3			3.2	4.8	(1.5	)	3.6	12.8	11.1


Catastrophe losses		$	(0.6	)		5.4	5.8	6.8		0.7	17.5	16.1
Unfavorable prior year casualty reserve development		4.5				—	—	—		3.0	4.5	8.0

Underwriting ratios
Loss and loss expense ratio		63.8			%	68.2	65.1	74.6		64.9	67.9	65.4
Underwriting expense ratio		28.0				27.7	28.6	27.4		30.3	27.9	30.8
	Combined ratio	91.8			%	95.9	93.7	102.0		95.2	95.8	96.2


Catastrophe losses		(0.8		)	pts	7.1	7.7	9.2		1.0	5.7	5.6
Unfavorable prior year casualty reserve development		5.8				—	—	—		4.0	1.5	2.8
	Combined ratio before catastrophe losses	92.6			%	88.8	86.0	92.8		94.2	90.1	90.6

	Combined ratio before catastrophe losses and prior year casualty development	86.8				88.8	86.0	92.8		90.2	88.6	87.8

Other Statistics
Non-catastrophe property losses		$	21.3			24.7	19.8	25.6		20.8	91.5	76.2
Non-catastrophe property losses		27.5			pts	32.1	26.2	34.5		28.0	30.1	26.3
Direct new business		$	10.7			13.1	15.9	11.8		12.7	51.5	50.9
Renewal pure price increases		4.6			%	3.8	3.4	3.8		3.7	3.8	3.0
Retention		84			%	85	85	85		84	84	84


Note: Amounts may not foot due to rounding.

Page 8

Selective Insurance Group, Inc. & Consolidated Subsidiaries

STANDARD PERSONAL LINES

GAAP LINE OF BUSINESS RESULTS

(Unaudited)



	Quarter Ended December 31, 2018							Quarter Ended December 31, 2017
	Personal							Personal
($ in millions)	Auto			Homeowners	Other		Total	Auto		Homeowners	Other		Total
Net premiums written	$	40.3		30.6	1.8		72.7	39.9		30.8	2.0		72.8
Net premiums earned	43.2			32.2	1.9		77.4	39.9		32.3	2.0		74.2

Loss and loss expense ratio	85.1		%	40.8	(28.6	)	63.8	84.7		43.1	22.0		64.9
Underwriting expense ratio	31.0			33.4	(134.6	)	28.0	32.5		33.9	(73.1	)	30.3
Combined ratio	116.1		%	74.2	(163.2	)	91.8	117.2		77.0	(51.1	)	95.2

Underwriting (loss) gain	$	(7.0	)	8.3	5.0		6.3	(6.9	)	7.4	3.0		3.6


	Year-to-Date December 31, 2018							Year-to-Date December 31, 2017
	Personal							Personal
($ in millions)	Auto			Homeowners	Other		Total	Auto		Homeowners	Other		Total
Net premiums written	$	173.3		128.6	7.4		309.3	160.9		128.8	7.1		296.8
Net premiums earned	168.3			129.0	7.2		304.4	153.1		129.7	6.9		289.7

Loss and loss expense ratio	74.4		%	63.2	(1.7	)	67.9	78.2		53.1	9.6		65.4
Underwriting expense ratio	31.9			32.3	(142.6	)	27.9	34.6		35.1	(134.3	)	30.8
Combined ratio	106.3		%	95.5	(144.3	)	95.8	112.8		88.2	(124.7	)	96.2

Underwriting (loss) gain	$	(10.7	)	5.8	17.7		12.8	(19.6	)	15.3	15.4		11.1



Note: Amounts may not foot due to rounding.

Page 9

Selective Insurance Group, Inc. & Consolidated Subsidiaries

EXCESS AND SURPLUS LINES

STATEMENT OF OPERATIONS AND SUPPLEMENTAL DATA

(Unaudited)



		Quarter ended										Year-to-date
		Dec. 31,			Sept. 30,	June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ in millions)		2018			2018	2018		2018		2017		2018		2017

Underwriting results
Net premiums written		$	60.7		64.6	56.4		47.6		56.9		229.3		215.1
Change in net premiums written, from comparable prior year period		7		%	27	(1	)	(6	)	4		7		3

Net premiums earned		$	58.1		56.1	53.1		52.2		54.6		219.6		212.8
Losses and loss expenses incurred		35.8			35.5	43.1		36.0		34.5		150.3		147.6
Net underwriting expenses incurred		18.2			17.1	17.8		16.8		18.3		69.9		71.5
GAAP underwriting gain (loss)		$	4.2		3.5	(7.8	)	(0.6	)	1.9		(0.7	)	(6.3	)


Catastrophe losses		$	3.5		0.6	2.8		(0.6	)	(0.6	)	6.2		11.2
Unfavorable prior year casualty reserve development		—			6.0	6.0		—		—		12.0		10.0

Underwriting ratios
Loss and loss expense ratio		61.5		%	63.2	81.2		69.0		63.0		68.5		69.4
Underwriting expense ratio		31.4			30.5	33.5		32.1		33.5		31.8		33.6
	Combined ratio	92.9		%	93.7	114.7		101.1		96.5		100.3		103.0


Catastrophe losses		6.0		pts	1.0	5.3		(1.2	)	(1.0	)	2.8		5.3
Unfavorable prior year casualty reserve development		—			10.7	11.3		—		—		5.5		4.7
	Combined ratio before catastrophe losses	86.9		%	92.7	109.4		102.3		97.5		97.5		97.7

	Combined ratio before catastrophe losses and prior year casualty development	86.9			82.0	98.1		102.3		97.5		92.0		93.0

Other Statistics
Non-catastrophe property losses		$	4.1		5.0	6.1		9.3		8.5		24.5		22.6
Non-catastrophe property losses		7.1		pts	8.9	11.5		17.8		15.5		11.2		10.6
Direct new business		$	27.3		32.2	20.3		18.3		21.2		98.0		90.5
Renewal pure price increases		2.9		%	4.9	5.3		5.0		3.3		4.7		5.0


Note: Amounts may not foot due to rounding.

Page 10

Selective Insurance Group, Inc. & Consolidated Subsidiaries

EXCESS & SURPLUS LINES

GAAP LINE OF BUSINESS RESULTS

(Unaudited)



	Quarter Ended December 31, 2018						Quarter Ended December 31, 2017
($ in millions)	Casualty			Property	Total		Casualty		Property		Total
Net premiums written	$	47.4		13.3	60.7		42.3		14.6		56.9
Net premiums earned	44.2			13.9	58.1		40.3		14.3		54.6

Loss and loss expense ratio	63.3		%	55.5	61.5		63.7		61.4		63.0
Underwriting expense ratio	31.8			30.1	31.4		33.5		33.2		33.5
Combined ratio	95.1		%	85.6	92.9		97.2		94.6		96.5

Underwriting gain (loss)	$	2.1		2.0	4.2		1.1		0.8		1.9


	Year-to-Date December 31, 2018						Year-to-Date December 31, 2017
($ in millions)	Casualty			Property	Total		Casualty		Property		Total
Net premiums written	$	174.7		54.6	229.3		158.8		56.3		215.1
Net premiums earned	164.3			55.3	219.6		157.4		55.5		212.8

Loss and loss expense ratio	71.7		%	59.1	68.5		70.2		67.2		69.4
Underwriting expense ratio	31.9			31.6	31.8		33.3		34.3		33.6
Combined ratio	103.6		%	90.7	100.3		103.5		101.5		103.0

Underwriting (loss) gain	$	(5.8	)	5.1	(0.7	)	(5.5	)	(0.8	)	(6.3	)



Note: Amounts may not foot due to rounding.

Page 11

Selective Insurance Group, Inc. & Consolidated Subsidiaries

CONSOLIDATED INVESTMENT INCOME

(Unaudited)



		Quarter ended												Year-to-date
		Dec. 31,				Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ in millions)		2018				2018		2018		2018		2017		2018		2017

Net investment income
Fixed income securities
	Taxable	$	39.1			36.6		34.9		32.4		29.6		142.9		114.5
	Tax-exempt	8.1				8.5		8.9		9.6		10.2		35.2		38.7
Total fixed income securities		47.2				45.1		43.8		42.0		39.8		178.1		153.2
Equity securities		1.9				2.1		1.8		2.0		2.0		7.8		6.4
Other investments		6.9				7.2		2.1		1.6		3.4		17.8		12.9
Short-term investments		1.5				0.9		0.6		0.5		0.5		3.5		1.5
Investment income		57.5				55.2		48.3		46.1		45.6		207.1		174.1
Investment expenses		(3.4		)		(2.8	)	(2.7	)	(2.9	)	(3.1	)	(11.8	)	(12.2	)
Investment tax expense		(9.9		)		(9.6	)	(8.0	)	(7.4	)	(11.4	)	(34.9	)	(43.4	)
Total net investment income, after-tax		$	44.2			42.9		37.6		35.8		31.2		160.5		118.5

Net realized and unrealized capital (losses) gains
	Fixed income securities	$	(21.0	)		(9.4	)	(1.2	)	(3.3	)	0.4		(35.0	)	6.9
	Equity securities	0.7				8.7		1.2		8.0		(0.6	)	18.7		4.6
	Short-term investments	—				—		—		—		—		—		—
	Other investments	(2.7		)		—		—		—		(0.8	)	(2.7	)	(0.4	)
Realized net (losses) gains on the disposal of securities		(23.0		)		(0.7	)	—		4.7		(1.0	)	(19.0	)	11.2
Other-than-temporary impairment losses		(1.1		)		(1.4	)	(2.8	)	(1.2	)	(0.1	)	(6.6	)	(4.8	)
Unrealized (losses) gains on equity securities		(13.8		)		(2.6	)	1.1		(14.1	)	—		(29.4	)	—
Total net realized and unrealized capital (losses) gains recognized in net income, before-tax		$	(37.9	)		(4.8	)	(1.7	)	(10.5	)	(1.1	)	(54.9	)	6.4

Change in unrealized gains (losses) recognized in other comprehensive income, before-tax		$	29.2			(10.7	)	(21.1	)	(80.8	)	(11.3	)	(83.4	)	59.9


Average investment yields
	Fixed income securities, before-tax	3.6			%	3.5		3.4		3.2		3.1		3.4		3.0
	Fixed income securities, after-tax	2.9				2.8		2.8		2.7		2.2		2.8		2.2

	Total portfolio, before-tax	3.7			%	3.6		3.2		3.0		3.0		3.4		2.9
	Total portfolio, after-tax	3.0				3.0		2.7		2.5		2.2		2.8		2.1


Effective tax rate on net investment income		18.3			%	18.2		17.5		17.2		26.8		17.8		26.8
New money purchase rates for fixed income securities, before-tax		4.1				3.7		3.8		3.3		2.9		3.7		3.1
New money purchase rates for fixed income securities, after-tax		3.3				2.9		3.0		2.6		2.1		2.9		2.1
Effective duration of fixed income portfolio including short-term (in years)		3.6				3.7		3.9		3.8		3.7		3.6		3.7


Note: Amounts may not foot due to rounding.

Page 12

Selective Insurance Group, Inc. & Consolidated Subsidiaries

CONSOLIDATED COMPOSITION OF INVESTED ASSETS

(Unaudited)



	Dec. 31,					Sept. 30,		June 30,		Mar. 31,		Dec. 31,
	2018					2018		2018		2018		2017
($ in millions)	Amount		Percent			Amount	Percent	Amount	Percent	Amount	Percent	Amount	Percent

Fixed income securities, at fair value	$	5,311.4	89		%	5,236.4	89	5,181.0	92	5,184.9	92	5,206.6	92
Equity securities, at fair value	147.6		2			157.9	3	176.6	3	168.8	3	182.7	3
Other investments	178.9		3			163.9	3	145.2	2	143.6	2	132.3	2
Short-term investments	323.9		5			304.6	5	164.1	3	183.0	3	165.6	3
Total investments	$	5,961.9	100		%	5,862.8	100	5,666.9	100	5,680.3	100	5,687.1	100

Fixed income portfolio, at carry value
U.S. government obligations	$	121.3	2		%	96.5	2	38.9	1	50.9	1	49.7	1
Foreign government obligations	23.1		—			18.0	—	18.0	—	18.2	—	18.6	—
Obligations of state and political subdivisions	1,155.9		22			1,186.8	23	1,276.2	25	1,343.3	26	1,608.2	31
Corporate securities	1,637.0		31			1,672.3	32	1,634.0	31	1,638.2	32	1,634.4	31
Collateralized loan obligations and other asset-backed securities	717.4		14			774.8	15	771.6	15	794.5	15	795.5	15
Residential mortgage-backed securities	1,128.3		10			996.8	19	989.4	19	911.5	18	714.9	14
Commercial mortgage-backed securities	527.1		21			489.5	9	451.6	9	426.6	8	383.4	7
Total fixed income securities	$	5,310.2	100		%	5,234.7	100	5,179.7	100	5,183.2	100	5,204.7	100

Weighted average credit quality
Investment grade credit quality	$	5,186.2	98		%	5,105.0	97	5,037.3	97	5,033.1	97	5,055.6	97
Non-investment grade credit quality	125.2		2			131.4	3	143.7	3	151.8	3	151.0	3
Total fixed income securities, at fair value	$	5,311.4	100		%	5,236.4	100	5,181.0	100	5,184.9	100	5,206.6	100

Weighted average credit quality of fixed income portfolio	AA-					AA-		AA-		AA-		AA-


Expected maturities of fixed income securities at carry value
Due in one year or less	$	201.8	4		%	190.5	4	194.4	4	242.8	5	326.9	6
Due after one year through five years	2,057.7		39			2,128.2	40	2,061.8	40	1,958.7	38	2,122.6	41
Due after five years through 10 years	2,869.8		54			2,769.2	53	2,740.0	53	2,745.7	53	2,518.4	48
Due after 10 years	180.9		3			146.8	3	183.5	3	236.0	5	236.8	5
Total fixed income securities	$	5,310.2	100		%	5,234.7	100	5,179.7	100	5,183.2	100	5,204.7	100



Alternative investments	December 31, 2018
							Current
	Number of		Original			Remaining	Market
Strategy	Funds		Commitment			Commitment	Value
Private equity	30		$	202.7		93.7	84.4
Private credit	13		172.3			81.5	41.7
Real assets	10		86.5			27.1	27.9
Total	53		$	461.5		202.3	153.9


Note: Amounts may not foot due to rounding.

Page 13

Selective Insurance Group, Inc. & Consolidated Subsidiaries

RECONCILIATION OF NET INCOME TO NON-GAAP OPERATING INCOME AND CERTAIN OTHER NON-GAAP MEASURES

(Unaudited)



	Quarter ended												Year-to-date
	Dec. 31,				Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
($ in millions, except per share data)	2018				2018		2018		2018		2017		2018		2017

Reconciliation of net income to non-GAAP operating income
Net income	$	45.8			55.4		58.8		18.9		30.2		178.9		168.8
Net realized and unrealized losses (gains), before tax*	37.9				4.8		1.7		10.5		1.1		54.9		(6.4	)
Tax on net realized and unrealized losses (gains)	(11.7		)		(1.0	)	(0.3	)	(2.2	)	(0.3	)	(15.3	)	2.2
Net realized and unrealized losses (gains), after tax	26.2				3.8		1.4		8.3		0.7		39.6		(4.1	)
Tax reform impact - deferred tax write-off	—				—		—		—		20.2		—		20.2
Non-GAAP operating income	$	72.0			59.2		60.1		27.3		51.2		218.6		184.9

Reconciliation of net income per diluted share to non-GAAP operating income per diluted share
Net income per diluted share	$	0.76			0.93		0.99		0.32		0.51		3.00		2.84
Net realized and unrealized losses (gains), before tax*	0.63				0.08		0.03		0.18		0.02		0.92		(0.11	)
Tax on net realized and unrealized losses (gains)	(0.20		)		(0.02	)	(0.01	)	(0.04	)	(0.01	)	(0.26	)	0.04
Net realized and unrealized losses (gains), after tax	0.44				0.06		0.02		0.14		0.01		0.66		(0.07	)
Tax reform impact - deferred tax write-off	—				—		—		—		0.34		—		0.34
Non-GAAP operating income per diluted share	$	1.20			0.99		1.01		0.46		0.86		3.66		3.11

Reconciliation of annualized ROE to annualized non-GAAP operating ROE
Annualized ROE	10.4			%	12.9		14.0		4.5		7.1		10.2		10.4
Net realized and unrealized losses (gains), before tax*	8.6				1.1		0.4		2.5		0.3		3.1		(0.4	)
Tax on net realized and unrealized losses (gains)	(2.7		)		(0.2	)	(0.1	)	(0.5	)	(0.1	)	(0.8	)	0.2
Net realized and unrealized losses (gains), after tax	5.9				0.9		0.3		2.0		0.2		2.3		(0.2	)
Tax reform impact - deferred tax write-off	—				—		—		—		4.7		—		1.2
Annualized non-GAAP operating ROE	16.3			%	13.8		14.3		6.5		12.0		12.5		11.4

Non-GAAP operating income, non-GAAP operating income per diluted share, and non-GAAP operating return on equity differ from net income, income per diluted share, and return on equity, respectively, by the exclusion of after-tax net realized and unrealized gains and losses on investments, and the deferred tax asset charge that was recognized in 2017 in relation to tax reform. They are used as important financial measures by management, analysts, and investors, because the realization of investment gains and losses on sales of securities in any given period is largely discretionary as to timing. In addition, these net realized investment gains and losses, other-than-temporary investment impairments that are charged to earnings, unrealized gains and losses on equity securities, and the deferred tax asset charge, could distort the analysis of trends. These operating measurements are not intended as a substitute for net income, income per share, or return on equity prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of net income, net income per diluted share, and return on equity to non-GAAP operating income, non-GAAP operating income per diluted share, and non-GAAP operating return on equity, respectively, are provided in the tables above.








* Refer to Page 2 for components of realized and unrealized investment losses and gains.

Note: Amounts may not foot due to rounding.

Page 14

Selective Insurance Group, Inc. & Consolidated Subsidiaries

RATINGS AND CONTACT INFORMATION



Address:	As of December 31, 2018
40 Wantage Avenue		A.M. Best	Standard & Poor's	Moody's	Fitch
Branchville, NJ 07890	Financial Strength Ratings:	A	A	A2	A+

Corporate Website:	Long-Term Debt Credit Rating:	bbb+	BBB	Baa2	BBB+
www.Selective.com



Investor Contact:	REGISTRAR AND TRANSFER AGENT
Rohan Pai	EQ Shareowner Services
Senior Vice President	P.O. Box 64854
Investor Relations & Treasurer	St. Paul, MN 55164
Phone: 973-948-1364	866-877-6351
Rohan.Pai@Selective.com

Media Contact:
Jamie M. Beal
Vice President
Director of Communications
Phone: 973-948-1234
Jamie.Beal@Selective.com

Page 15

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