-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WWYG2aLQ7uhQG6gnFb2RM99Mly9aqwo3oXPOtNNUmbeXHIjc6Z121ZG373n6Dk0R DvEX+edv4pY0WAysQP4pkg== 0000950123-02-006516.txt : 20020626 0000950123-02-006516.hdr.sgml : 20020626 20020626163138 ACCESSION NUMBER: 0000950123-02-006516 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020626 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: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08641 FILM NUMBER: 02687970 BUSINESS ADDRESS: STREET 1: 40 WANTAGE AVENUE CITY: BRANCHVILLE STATE: NJ ZIP: 07890 BUSINESS PHONE: 2019483000 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 11-K 1 y61819e11vk.txt SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 29549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period ______________ to _____________ Commission file number: 0-8641 SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN OF SELECTIVE INSURANCE COMPANY OF AMERICA Selective Insurance Group, Inc. 40 Wantage Avenue Branchville, NJ 07890 SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE DECEMBER 31, 2001 AND 2000 (WITH INDEPENDENT AUDITORS' REPORT THEREON) SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Index
Page Independent Auditors' Report .......................................... 1 Statements of Net Assets Available for Plan Participants - December 31, 2001 and 2000 .................... 2 Statements of Changes in Net Assets Available for Plan Participants - Years ended December 31, 2001 and 2000 3 Notes to Financial Statements ......................................... 4-8 Supplemental Schedule 1 Schedule H, Line 4 (i) - Schedule of Assets [Held at End of Year] December 31, 2001. . . . . . . . . . . . . . . . . . .. . . . . . 9
* - Schedules required by Form 5500 that are not required have been omitted. Independent Auditors' Report The Trustees Selective Insurance Retirement Savings Plan: We have audited the accompanying statements of net assets available for plan participants of the Selective Insurance Retirement Savings Plan (the "Plan") as of December 31, 2001 and 2000, and the related statements of changes in net assets available for plan participants for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan participants of the Plan as of December 31, 2001 and 2000, and the changes in net assets available for plan participants for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule H, Line 4 (i) - Schedule of Assets [Held at End of Year] - December 31, 2001, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP New York, New York June 25, 2002 -1- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Statements of Net Assets Available for Plan Participants
December 31, 2001 2000 ----------- ----------- Assets: Investments, at fair value: Company stock $ 1,622,050 1,440,779 Mutual funds 70,163,682 68,440,311 Common trust fund 1,768,544 1,510,560 Participant loans receivable 1,740,385 1,715,548 ----------- ----------- Net assets available for plan participants $75,294,661 73,107,198 =========== ===========
See accompanying notes to financial statements. -2- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Statements of Changes in Net Assets Available for Plan Participants
Additions: 2001 2000 ------------ ------------ Contributions: Plan participants $ 6,967,713 7,065,391 Employer 2,266,160 1,911,656 ------------ ------------ Total contributions 9,233,873 8,977,047 ------------ ------------ Investment income: Interest 889,052 942,405 Dividends 1,862,484 6,773,356 Net (depreciation) in fair value of investments (6,146,573) (9,385,212) ------------ ------------ Total investment loss (3,395,037) (1,669,451) ------------ ------------ Total additions 5,838,836 7,307,596 Withdrawals and distributions (3,651,373) (3,737,399) ------------ ------------ Net increase in net assets available for plan participants 2,187,463 3,570,197 Net assets available for plan participants at beginning of year 73,107,198 69,537,001 ------------ ------------ Net assets available for plan participants at end of year $ 75,294,661 73,107,198 ============ ============
See accompanying notes to financial statements. -3- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 2001 and 2000 (1) Plan Description ----------------- (a) General The Selective Insurance Retirement Savings Plan (the "Plan") is a voluntary defined contribution retirement savings plan available to all eligible employees (as defined) of Selective Insurance Company of America (the "Company", or "Employer"). All contributions, including the Employer's contributions, are participant directed. Participants may elect to invest contributions in one or more of the available funds. Participants should refer to the plan document for more complete information. See "Note 8-Subsequent Event" on page 8 of these financial statements for plan changes effective July 1, 2002. (b) Plan Participants Contributions A participant may contribute to the Plan, on a before or after-tax basis, through payroll deductions, amounts ranging from 2% to 6% of such participant's compensation (as defined), which are subject to matching by the Company. Participants may contribute up to an additional 6% of compensation which is not subject to matching by the Company. Highly compensated employees may have their contributions limited as defined by the Internal Revenue Service (IRS). (c) Employers Contributions Contributions were made by the Company in amounts equal to 50% of each participant's contribution that was subject to Company matching for the years ended December 31, 2001 and 2000. The Company may make an additional discretionary contribution for any plan year as determined by the Board of Directors. No additional discretionary contribution was made for the plan years ended December 31, 2001 and 2000. (d) Participants' Accounts The participant record-keeping services are provided by T. Rowe Price Trust Company (TRP). Each participant's account is credited with the participant's contribution, the appropriate amount of the Employer's contribution and an allocation of investment fund earnings or losses in which the participant has directed his or her contributions. (e) Vesting All Plan Participants' contributions and earnings or losses thereon are fully vested at all times. Employer's contributions and earnings or losses thereon vest as follows:
Years of Service (as defined) Vesting Percentage ----------------------------- ------------------ Less than two 0% Two but less than three 30 Three but less than four 40 Four but less than five 50 Five but less than six 75 Six or more 100
-4- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Notes to Financial Statements Units representing Employer's contributions and earnings or losses thereon vest 100% immediately in case of death, or retirement on or at age 65. (f) Withdrawals During employment, a participant may make withdrawals of amounts applicable to the vested portion of the Employer's contributions and the Plan Participants' contributions and earnings or losses thereon, subject to certain restrictions. Certain withdrawals preclude the participant from making further contributions or further withdrawals under the Plan for a period of time. The vested and non-vested portion of the participant's account contributions and earnings or losses thereon will be put in a suspended status until the participant's retirement, death, disability, termination, or re-enrollment in the Plan no earlier than 12 months after the effective date of the withdrawal, whichever of these occurs earliest. (g) Benefit Payments The benefit to which a participant is entitled is provided from the participant's account. Upon termination of employment or disability, if a participant's account balance (as defined) does not exceed $5,000, the vested value is either distributed in the form of a lump-sum payment, or the participant may elect to defer distribution for a period of 12 months following the date of termination, but in no event later than the participant's required beginning date, as defined. If the account balance exceeds $5,000 the participant may request a lump-sum payment or may elect to defer distribution until age 65, as set forth in the Plan. Upon a participant's death the entire vested account balance is distributed in the form of a lump-sum payment. (h) Participant Loans Participants may borrow from their before-tax contribution accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan transactions are treated as a transfer from the participant investment fund to the loan fund. Loan terms range from zero to five years or up to 15 years for the purchase of a primary residence. Loans are secured by the vested balance in the participant's account. Withdrawal requests which reduce the security amount lower than the outstanding loan balance are not permitted. Interest is repaid to the participant's account. Interest rates are determined to be prime rate (established at the loan inception) plus 1%. Principal and interest is repaid through bi-weekly payroll deductions. -5- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Notes to Financial Statements (2) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and use the accrual basis of accounting. (b) Use of Estimates The preparation of the financial statements in conformity with GAAP requires the Plan administrator to make estimates and assumptions that affect the reported financial statement balances, as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. (c) Investment Valuation and Income Recognition Investment options under the Plan include one Selective Insurance Stock Fund, ten mutual funds and one common trust fund (collectively referred to as the "Funds"). Fair value of the common stock and mutual funds, which are comprised of stocks and bonds, are based on quoted market prices except when otherwise stated. The Stable Value Common Trust Fund is valued at investment contract value which approximates fair value. The contracts are nontransferable but provide for benefit responsive withdrawals by plan participants at contract value. Benefit responsive withdrawals are provided for on a proportional basis by the issuers of the investment contracts. Generally, fair value approximates contract value (contributions made plus interest accrued at the contract rate, less withdrawals and fees). If, however, an event has occurred that may impair the ability of the contract issuer to perform in accordance with the contract terms, fair value may be less than contract value. Participant loans are valued at cost which approximates fair value. Investments are recorded on the trade date basis. Dividends are recorded on the ex-dividend date. Interest is recorded when earned. The assets of the Plan are primarily financial instruments which are monetary in nature. As a result, interest rates may have a more significant impact on the Plan's performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services as measured by the consumer price index. Investments in funds are subject to risk conditions of the individual fund objectives, stock market, interest rates, economic conditions and world affairs. (d) Withdrawals and Distributions Withdrawals and distributions are recorded when paid. -6- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Notes to Financial Statements (3) Investments The Plan assets in the fund are held in trust and managed by TRP. The trustee has full discretionary authority over the underlying investment fund alternatives provided to the participants. Plan contributions to the trust funds are deposited with TRP in one or more of the Funds, as directed by the participant. The following presents investments that represent 5 percent or more of the Plan's net assets:
2001 2000 ----------- ----------- T.Rowe Price Trust Company Funds: Equity Income Fund, 957,399 $22,642,488 21,510,013 and 871,910 shares, respectively Small Cap Value Fund, 430,431 9,753,563 7,322,038 and 382,552 shares, respectively Prime Reserve Fund 9,719,308 9,719,308 8,414,341 and 8,414,341 shares, respectively New America Growth Fund, 236,920 7,313,710 9,439,426 and 263,892 shares, respectively New Income Fund, 671,422 5,827,943 4,728,267 and 556,267 shares, respectively Science & Technology Fund, 275,579 5,765,107 8,757,542 and 246,206 shares, respectively International Stock Fund, 373,888 and 4,109,027 5,443,393 374,889 shares, respectively
The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value as follows:
2001 2000 Mutual Funds $(5,955,626) $(9,808,044) Common Stock (190,947) 422,832 ----------- ----------- $(6,146,573) $(9,385,212) =========== ===========
(4) Forfeitures Upon termination of a participant's employment, any non-vested Company contributions are placed in a separate account and will become a forfeiture when the participant incurs a break-in-service (as defined). Forfeitures were $101,803 in 2001 and $85,333 in 2000. In 2000, $78,169 in forfeited amounts was used to reduce the Company's matching contributions to the Plan. The 2001 forfeited amounts were not used to reduce Company contributions, and are available to reduce future years contributions. -7- SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Notes to Financial Statements, continued (5) Plan Expenses Expenses of the Plan were paid by the Company in 2001 and 2000. (6) Plan Termination The Plan has no termination date, and it is the Company's intention to continue the Plan indefinitely. However, the Company may terminate, amend, modify or suspend the Plan at any time that it may deem advisable. Upon termination of the Plan or upon complete discontinuance of Company contributions, all of the amounts credited to participants' accounts will immediately become 100% vested. (7) Tax Status The plan administrator has obtained a tax determination letter dated July 23, 1997, from the IRS stating that the Plan qualifies under the provisions of Section 401(a) of the Internal Revenue Code (Code) and that the related trust is exempt from Federal income taxes under Section 501(a) of the Code. In the opinion of the Plan administrator, the Plan and its underlying trust have operated within the terms of the Plan and remain qualified under the applicable provisions of the Code. (8) Related Party Transactions (Parties in Interest) Certain investments of the Plan are shares of mutual funds advised by T. Rowe Price, the recordkeeper and custodian of the Plan. Another investment in the Plan is an investment fund comprised primarily of shares of common stock issued by the Company. The Company is the Plan sponsor as defined by the Plan. Certain fees paid to related parties for services to the Plan were paid by the Plan sponsor. Alternately, mutual funds operating expenses come out of a fund's assets and are reflected in the fund's share/unit price and dividends. (9) Subsequent Event The following plan modifications were approved by the Board of Directors and are effective July 1, 2002: A participant may contribute to the Plan, on a before or after-tax basis, through payroll deductions, amounts ranging from 2% to 7% of such participant's compensation (as defined), which are subject to matching by the Company. Participants may contribute up to an additional 43% of compensation which is not subject to matching by the Company. Highly compensated employees may have their contributions limited as defined by the IRS. Contributions will be made by the Company in amounts equal to 65%, up from 50%, of each participant's contribution that is subject to Company matching. The Company may make an additional discretionary contribution for any plan year as determined by the Board of Directors. Employer contributions and earnings or losses thereon will vest as follows:
Years of Service (as defined) Vesting % 2002 - ---------------- -------------- Less than two 0% Two but less than three 20 Three but less than four 40 Four but less than five 60 Five but less than six 80 Six or more 100
-8- Schedule 1 SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN Schedule H, Line 4 (i) - Schedule of Assets [Held at End of Year] December 31, 2001
Identity of Issuer Description Fair Value ------------------ ----------- ---------- *Selective Insurance Stock Fund Common Stock; 74,646 shares $ 1,622,050 *T. Rowe Price Trust Company Funds: Stable Value Common Trust Fund Mutual Fund; 1,768,545 shares 1,768,544 Prime Reserve Fund Mutual Fund; 9,719,308 shares 9,719,308 International Stock Fund Mutual Fund; 373,888 shares 4,109,027 New Income Fund Mutual Fund; 671,422 shares 5,827,943 Small Cap Value Fund Mutual Fund; 430,431 shares 9,753,563 Mid Cap Growth Fund Mutual Fund; 33,294 shares 1,311,786 New America Growth Fund Mutual Fund; 236,920 shares 7,313,710 Equity Income Fund Mutual Fund; 957,399 shares 22,642,488 Science & Technology Fund Mutual Fund; 275,579 shares 5,765,107 *Vanguard Funds: Vanguard Institutional Index Fund Mutual Fund; 30,597 shares 3,209,331 Vanguard Admiral Intermediate-Term Treasury Fund Mutual Fund; 46,366 shares 511,419 ----------- 73,554,276 *Participant Loans Receivable 401 loans (Rates from 7 to 10%), 1,740,385 ----------- Total $75,294,661 ===========
*Party-in-interest as defined by ERISA See accompanying independent auditors' report. -9- Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Selective Insurance Retirement Savings Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. PLAN: SELECTIVE INSURANCE RETIREMENT SAVINGS PLAN PLAN ADMINISTRATOR: Selective Insurance Company of America Date: June 25, 2002 By: /s/ Dale A. Thatcher _____________________________________ Dale A. Thatcher Senior Vice President Finance, Chief Financial Officer and Treasurer INDEX TO EXHIBITS
Exhibit No. Description - ----------- ----------- 23 Consent of KPMG LLP dated June 26, 2002
-10- EX-23 3 y61819exv23.txt CONSENT OF KPMG LLP EXHIBIT 23 INDEPENDENT AUDITORS CONSENT The Board of Directors and Stockholders Selective Insurance Group, Inc. We consent to the incorporation by reference in the registration statement (No. 333-10477) on Form S-8 of Selective Insurance Group, Inc. of our report dated June 25, 2002, relating to the statements of net assets available for plan participants of Selective Insurance Retirement Savings Plan as of December 31, 2001 and 2000, and the related statements of changes in net assets available for plan participants for the years then ended, and related schedule, which report appears in the December 31, 2001 annual report on Form 11-K of Selective Insurance Group, Inc. /s/ KPMG LLP New York, New York June 26, 2002 -11- -----END PRIVACY-ENHANCED MESSAGE-----