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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) April 29, 2015 SELECTIVE INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) New Jersey (State or other jurisdiction of incorporation) 001-33067 (Commission File Number) 22-2168890 (I.R.S. Employer Identification No.) 40 Wantage Avenue, Branchville, New Jersey (Address of principal executive offices) 07890 (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)) Section 2 – Financial Information Item 2.02. Results of Operations and Financial Condition. On April 29, 2015, Selective Insurance Group, Inc. (the “Company”) issued a press release announcing results for the first quarter ended March 31, 2015. 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. (d) Financial Statements and Exhibits. Exhibits 99.1 99.2 Press Release of Selective Insurance Group, Inc. dated April 29, 2015 Supplemental Investor Package, First Quarter 2015 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: April 29, 2015 By: /s/ Michael H. Lanza Michael H. Lanza Executive Vice President and General Counsel EXHIBIT INDEX Exhibit No. 99.1 99.2 Description Press Release of Selective Insurance Group, Inc. dated April 29, 2015 Supplemental Investor Package, First Quarter 2015 EXHIBIT 99.1 Selective Reports Net Income per Diluted Share of $0.69 and Operating Income per Diluted Share of $0.48 for the First Quarter of 2015 In the first quarter of 2015: Net premiums written grew 9% GAAP combined ratio was 94.5% Statutory combined ratio was 93.0% After-tax net investment income declined 20% Total return on equity was 12.3% and operating return on equity was 8.5% Branchville, NJ – April 29, 2015 – Selective Insurance Group, Inc. (NASDAQ: SIGI) today reported its financial results for the first quarter ended March 31, 2015. Net income per diluted share was $0.69, compared to $0.31 in 2014, and operating income 1 per diluted share was $0.48, compared to $0.23 in 2014. “We are seeing the benefits of our strategic initiatives that drive progress towards our longer-term combined ratio and operating return on equity targets. For the first quarter, we generated a very profitable 93% statutory combined ratio,” said Gregory E. Murphy, Chairman and Chief Executive Officer. “Written and earned renewal pure price increases above expected claim inflation, stable retention, and our multi-disciplinary workers compensation efforts will continue to drive profitability improvement.” “Growth in the quarter was strong, as overall net premiums written increased 9% with 26% growth in Excess and Surplus Lines and excellent Standard Commercial Lines new business production of $88 million, up 28% from a year ago. Overall renewal pure price increases in the quarter were 3.9%, in-line with our expectations of 4% increases for 2015.” Consolidated Financial Results $ in millions, except per share data Quarter Ended March 31, 2015 $518.1 $476.1 $26.9 $18.9 $523.9 $27.4 $12.3 $39.7 93.0% 5.3 pts 14.9 pts (4.2) pts 94.5% $0.48 $0.69 57.7M $23.11 Net premiums written Net premiums earned Net investment income earned Net realized gains, pre-tax Total revenues Operating income 1 Capital gains, net of tax Net income Statutory combined ratio Catastrophe losses Non-catastrophe property losses (Favorable) prior year statutory reserve development on casualty lines GAAP combined ratio Operating income per diluted share 1 Net income per diluted share Weighted average diluted shares Book value per share 1 2014 $476.8 $456.5 $35.5 $7.2 $509.1 $13.3 $4.7 $18.0 100.8% 7.5 pts 20.0 pts (3.1) pts 101.1% $0.23 $0.31 57.2M $21.09 Change 9% 4% (24)% 162% 3% 107% 162% 121% (7.8) pts (2.2) pts (5.1) pts (1.1) pts (6.6) pts 109% 123% 1% 10% 1 Operating income differs from net income by the exclusion of realized gains or losses on investments. It is used as an important financial measure by management, analysts, and investors, because the realization of investment gains and losses on sales in any given period is largely discretionary as to timing. In addition, these investment gains and losses, as well as other-than-temporary investment impairments that are charged to earnings, could distort the analysis of trends. Operating income is not intended as a substitute for net income prepared in accordance with U.S. generally accepted accounting principles (GAAP). A reconciliation of operating income to net income is provided in the Consolidated Financial Results table. Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners Accounting Practices and Procedures Manual and, therefore, is not reconciled to GAAP. Note: All amounts included in this release exclude intercompany transactions. Operating Highlights Standard Commercial Lines Standard Commercial Lines premiums were up 9% in the first quarter, reflecting renewal pure price increases of 3.5%, stable retention at 84%, and a 28% increase in new business. The quarter’s statutory combined ratio improved by 10.6 points, driven by earned rate exceeding claim inflation, higher levels of favorable prior year casualty reserve development at $21 million or 5.7 points, and lower catastrophe and non-catastrophe weather-related losses. Standard Commercial Lines $ in millions, statutory results Quarter Ended March 31, 2015 $415.3 $365.5 56.5% 32.8% 0.4% 89.7% 91.8% Net premiums written Net premiums earned Loss & loss expense ratio Underwriting expense ratio Dividends to policyholders ratio Combined ratio GAAP combined ratio 2014 $379.4 $349.5 69.4% 30.5% 0.4% 100.3% 101.0% Change 9% 5% (12.9) pts 2.3 pts (10.6) pts (9.2) pts Standard Personal Lines Standard Personal Lines premiums decreased 3% in the quarter compared to a year ago from targeted non-renewals of less profitable accounts coupled with a decrease in new business. Retention remained at 82% and renewal pure price was 6.4%, including a 9.9% renewal pure price increase in homeowners. Our rollout of The Selective Edge TM product continues to be well received by our agents and we are encouraged by early results. The statutory combined ratio in Standard Personal Lines was 105.1%, which included 8.7 points of catastrophe losses. There was no prior year casualty reserve development this quarter in Standard Personal Lines, although there was favorable prior year casualty development of $2 million or 2.7 combined ratio points in the first quarter of 2014. Standard Personal Lines $ in millions, statutory results Quarter Ended March 31, 2015 $65.0 $72.5 73.5% 31.6% 105.1% 103.4% Net premiums written Net premiums earned Loss & loss expense ratio Underwriting expense ratio Combined ratio GAAP combined ratio 2 2014 $67.3 $74.8 77.6% 26.9% 104.5% 103.2% Change (3)% (3)% (4.1) pts 4.7 pts 0.6 pts 0.2 pts Excess and Surplus Lines Excess and Surplus Lines continued to generate strong growth, with a 26% increase in net premiums written. We have opportunities to write a greater share of our retail agents’ Excess and Surplus Lines business and grow through our 50-state footprint of wholesale agents. The statutory combined ratio in the quarter was 102.1%, including adverse prior year casualty development of $1 million or 2.6 points and the impact of catastrophe and non-catastrophe losses which increased the combined ratio by 0.9 points compared to a year ago. Excess & Surplus Lines $ in millions, statutory results Quarter Ended March 31, 2015 $37.8 $38.1 67.7% 34.4% 102.1% 104.1% Net premiums written Net premiums earned Loss & loss expense ratio Underwriting expense ratio Combined ratio GAAP combined ratio 2014 $30.1 $32.2 61.7% 36.2% 97.9% 97.0% Change 26% 18% 6.0 pts (1.8) pts 4.2 pts 7.1 pts Investment Income After-tax investment income in the first quarter was $21 million, down 20% compared to a year ago. The decline was largely driven by losses in energy-exposed limited partnerships that were negatively impacted by lower oil prices in the fourth quarter of 2014. The decline in alternative investment income and the continued low interest rate environment reduced earned after tax portfolio yields to 1.7% from 2.3% a year ago. After-tax new money yields averaged 1.8% in the quarter. Investments $ in millions, except per share data Quarter Ended March 31, Change 2015 $3.72 $21.2 $0.37 21.2% 2014 $3.91 $26.5 $0.46 25.5% (5)% (20)% (20)% (4.3) pts Pre-tax After-tax 2.8% 2.1% 3.0% 2.2% (0.2) pts (0.1) pts Pre-tax After-tax 2.2% 1.7% 3.1% 2.3% (0.9) pts (0.6) pts Invested assets per dollar of stockholders’ equity Net investment income earned, after-tax Net investment income per share Effective tax rate Average yields: Fixed Income Securities: Portfolio: 3 Balance Sheet Balance Sheet $ in millions, except per share data Total assets Investment portfolio Notes payable Statutory surplus Stockholders’ equity Book value per share March 31, December 31, Change 2015 $6,701 $4,902 $394 $1,322 $1,316 $23.11 2014 $6,582 $4,807 $379 $1,308 $1,276 $22.54 2% 2% 4% 1% 3% 3% The increase in book value reflects $0.69 in net income, partially offset by $0.14 in shareholders’ dividends. Selective’s Board of Directors declared a $0.14 per share quarterly cash dividend on common stock payable June 1, 2015 to stockholders of record as of May 15, 2015. Guidance For 2015, Selective expects to generate the following results: Statutory combined ratio of 91.0%, excluding catastrophes and any further prior year casualty reserve development 4 points of catastrophe losses After-tax investment income of approximately $100 million Weighted average shares of approximately 58 million The supplemental investor package, including financial information that is not part of this press release, is available on the Investor Relations’ page of Selective’s public website at www.selective.com . Selective’s quarterly analyst conference call will be simulcast at 8:30 a.m. ET, on April 30, 2015 at www.selective.com . The webcast will be available for rebroadcast until the close of business on June 1, 2015. 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 . 4 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; • 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 Investor Relations’ section of Selective’s website, www.selective.com , or through the SEC’s EDGAR Database at www.sec.gov (Selective EDGAR CIK No. 0000230557). Investor and Media Contact: Jennifer DiBerardino 973-948-1364 [email protected] Selective Insurance Group, Inc. 40 Wantage Avenue Branchville, New Jersey 07890 www.selective.com 5 EXHIBIT 99.2 Supplemental Investor Package First Quarter 2015 Investor Contact: Jennifer DiBerardino Senior Vice President, Investor Relations and Treasurer Tel: 973-948-1364 [email protected] Selective Insurance Group, Inc. & Consolidated Subsidiaries Selected Balance Sheet Data (unaudited) March 31, ($ in thousands, except per share data) 2015 Balance Sheet Invested Assets: Corporate bonds 1 $ Government and Municipal bonds Total fixed income securities Equities Short-term investments Other investments Total invested assets $ Invested assets per $ of stockholders' equity March 31, Market Value December 31, 2014 Unrecognized/ Unrealized Gain 2,757,212 2,761,191 69,590 1,713,587 1,724,144 4,470,799 211,571 124,376 95,020 4,901,766 Balance Sheet $ Market Value 2014 Unrecognized/ Unrealized Gain 2,662,019 2,666,877 44,021 60,852 1,535,890 1,552,512 4,485,335 211,571 130,442 11,954 4,197,909 197,687 124,376 95,020 4,916,302 142,396 137,733 106,720 4,640,049 $ Balance Sheet $ Market Value 2,693,324 2,697,332 47,437 46,657 1,690,935 1,702,751 59,680 4,219,389 197,687 90,678 35,317 4,384,259 191,400 4,400,083 191,400 107,117 32,389 137,733 106,720 4,661,529 125,995 131,972 99,203 4,806,834 131,972 99,203 4,822,658 139,506 $ 3.72 3.91 3.77 Total assets 6,701,145 6,370,236 6,581,550 Liabilities: Reserve for loss and loss expenses Unearned premium reserve 3,516,268 3,432,432 3,477,870 1,132,733 1,078,012 1,095,819 Total liabilities 5,385,207 5,184,705 5,305,964 Stockholders' equity 1,315,938 1,185,531 1,275,586 Total debt to capitalization ratio 23.1 % 24.9 % 22.9 % Book value per share 23.11 21.09 22.54 Book value per share excluding unrealized gain or loss on fixed income portfolio 21.78 20.29 21.49 NPW per insurance segment employee 926 925 908 Statutory premiums to surplus ratio 1.5 x 1.5 x 1.4 x Statutory surplus 1 1,322,422 Includes mortgage-backed and asset-backed securities. 1,263,795 Unrecognized/ Unrealized Gain 1,307,842 Selective Insurance Group, Inc. & Consolidated Subsidiaries Selected Income Statement Data (unaudited) Quarter Ended March 31, 2015 2014 Per diluted Per diluted share share ($ in thousands, except per share amounts) Consolidated Revenue Operating income Net realized gains, after tax Net income Operating return on equity $ 523,892 27,434 12,274 39,708 8.5 % Total Insurance Operations Gross premiums written Net premiums written Net premiums earned Underwriting gain - before tax - after tax GAAP combined ratio Standard Commercial Lines Net premiums earned GAAP combined ratio Standard Personal Lines Net premiums earned GAAP combined ratio Excess and Surplus Lines Net premiums earned GAAP combined ratio Investments Net investment income - before tax - after tax Other expenses (net of other income) Interest expense - before tax - after tax Other Expense after tax Diluted weighted avg shares outstanding $ $ 509,071 13,283 4,691 17,974 4.5 % 604,864 565,741 518,088 476,750 476,123 26,021 16,914 456,495 (5,015 ) (3,260 ) 0.29 94.5 % 101.1 % 365,533 91.8 % 349,441 101.0 % 72,479 103.4 % 74,818 103.2 % 38,111 104.1 % 32,236 97.0 % 26,917 21,208 21.2 % 1.7 % 1.5 % 3.72 Effective tax rate Annualized after-tax yield on investment portfolio Annualized after-tax, after-interest expense yield Invested assets per $ of stockholders' equity 0.48 0.21 0.69 (5,479 ) (3,561 ) (0.06 ) (7,127 ) (0.12 ) 57,720 35,534 26,486 25.5 % 2.3 % 2.0 % 3.91 0.37 $ 0.23 0.08 0.31 (0.06 ) 0.46 (5,561 ) (3,615 ) (0.06 ) (6,328 ) (0.11 ) 57,172 Selective Insurance Group, Inc. & Consolidated Subsidiaries GAAP Insurance Operations Results (unaudited) First Quarter ($ in thousands) Quarter Ended March 31, 2015 Standard Commercial Lines Net Premiums Written Net Premiums Earned Loss and Loss Expense Incurred Net Underwriting Expenses Incurred Dividends to Policyholders GAAP Underwriting Gain (Loss) GAAP Ratios Loss and Loss Expense Ratio Underwriting Expense Ratio Dividends to Policyholders Ratio Combined Ratio Standard Personal Lines Excess & Surplus Lines Quarter Ended March 31, 2014 Grand Total Standard Commercial Lines Standard Personal Lines Excess & Surplus Lines Grand Total 415,258 65,024 37,806 518,088 379,350 67,338 30,062 476,750 365,533 72,479 38,111 476,123 349,441 74,818 32,236 456,495 206,148 52,969 25,882 284,999 242,639 58,027 19,880 320,546 127,824 21,976 13,778 163,578 109,194 19,151 11,381 139,726 1,525 - - 1,525 1,238 - - 1,238 26,021 (3,630 ) 30,036 (2,466 ) (1,549 ) (2,360 ) 975 (5,015 ) 56.4 % 73.1 % 67.9 % 59.9 % 69.4 % 77.6 % 61.7 % 70.2 % 35.0 % 30.3 % 36.2 % 34.3 % 31.2 % 25.6 % 35.3 % 30.6 % 0.4 % 91.8 % 0.0 % 103.4 % 0.0 % 104.1 % 0.3 % 94.5 % 0.4 % 101.0 % 0.0 % 103.2 % 0.0 % 97.0 % 0.3 % 101.1 % Selective Insurance Group, Inc. and Consolidated Subsidiaries GAAP Investment Income March 2015 (unaudited) ($ in thousands, except per share data) Investment Income: Interest: Fixed Income Securities Short-term Other Investments Dividends Quarter Ended: March March 2015 2014 $ Investment Expense Net Investment Income Before Tax Tax % Increase/ (Decrease) 30,967 25 (3,540 ) 1,792 29,244 31,028 19 5,218 1,449 37,714 (0.2 ) 31.6 (167.8 ) 23.7 (22.5 ) 2,327 2,180 6.7 26,917 35,534 (24.3 ) 5,709 9,048 (36.9 ) Net Investment Income After Tax $ 21,208 26,486 (19.9 ) Net Investment Income per Share $ 0.37 0.46 (19.6 ) 21.2 % 25.5 % Fixed Income Securities: Pre Tax After Tax 2.80 % 2.12 % 2.99 % 2.24 % Portfolio: Pre Tax After Tax 2.22 % 1.75 % 3.08 % 2.30 % Effective Tax Rate Average Yields : Net Realized Gains (Losses) Fixed Income Securities Equity Securities Other Investments Total Net of Tax Quarter Ended: March March 2015 2014 379 35 19,158 7,183 (654 ) 18,883 12,274 7,218 4,691 As of March 31, 2015 year-to-date new money rates for fixed income securities were 2.4% on a pre-tax basis and 1.8% on an after tax-basis. Selective Insurance Group, Inc. Combined Insurance Company Subsidiaries 2015 Statutory Results by Line of Business Quarter Ended March 2015 (unaudited) Net Premiums ($ in thousands) Written Standard Personal Lines: Homeowners $ Auto Other (including flood) Total 28,078 35,580 1,366 $ 65,024 Net Premiums Earned Percent Change ) (2.2 % $ ) (3.4 % ) (25.0 % ) (3.4 % $ 33,721 Percent Change Loss Ratio Underwriting Expense Ratio LAE Ratio Dividends to Policyholders Ratio Combined Ratio 2015 Combined Ratio 2014 1.3 % ) (3.2 % ) (46.9 % ) (3.1 % 67.7 % 7.5 % 38.5 % 0.0 % 113.7 % 61.0 % 11.2 % 0.0 % 65.1 % % 64.1 6.1 % % 9.4 34.5 % ) (189.6 % % 31.6 0.0 % % 0.0 106.7 % ) (118.4 % % 105.1 56.8 % 5.0 % 36.5 % 0.2 % 68,477 114,971 86,355 7.3 % ) (1.3 % 5.7 % 5.0 % 48.3 % 22.2 % 59.6 % 14.7 % 17.2 % 8.4 % 25.9 % 33.5 % 31.3 % 9.6 % 22,699 7.1 % 5,000 9.7 % 3,468 9.5 % $ 365,533 8.8 % 5.1 % 9.0 % 4.6 % 69.8 % 16.4 % 0.7 % 44.7 % 11.5 % 4.2 % 0.2 % 11.8 % 18.2 % 48.6 % 19.1 % 37,010 1,748 72,479 Underwriting Gain/(Loss) 121.7 % $ (2,442 ) 100.9 % ) (93.4 % % 104.5 $ (1,978 ) 98.5 % 131.4 % (1,319 ) 1.8 % 0.1 % 0.1 % 90.7 % 73.0 % 99.4 % 105.9 % 80.7 % 94.9 % 2,406 25,905 (2,670 ) 37.5 % 64.0 % 51.5 % 32.8 % 0.0 % 0.0 % 0.0 % 0.4 % 118.8 % 84.6 % 52.4 % 89.7 % 129.8 % 76.9 % 42.7 % 100.3 % $ (4,852 ) 633 1,365 21,467 34.4 % 0.0 % 102.1 % 97.9 % $ (714 ) 3,094 ) (1,326 Standard Commercial Lines: Commerical property Workers compensation General liability Auto Business owners policies Bonds Other Total $ 70,898 10.6 % 83,805 130,482 96,587 10.3 % 9.2 % 8.4 % 24,252 5,212 4,022 $ 415,258 E&S $ 37,806 Total Insurance Operations $ 518,088 $ 25.8 % $ 64,563 38,111 % 8.7 % $ 476,123 Note: Some amounts may not foot due to rounding. Losses Paid LAE Paid Total Paid 2015 2014 $ 194,366 44,994 $ 239,360 $ 213,297 44,764 $ 258,061 4.3 % 48.0 % 12.0 % 32.7 % 0.3 % 93.0 $ % 100.8 $ 19,427 Selective Insurance Group, Inc. Combined Insurance Company Subsidiaries 2015 Net Catastrophe Losses and Prior Year Casualty Reserve Development Statutory Results by Line of Business (unaudited) Quarter Ended March 31, 2015 March 31, 2014 Impact on Impact on Loss and Loss and Loss and Loss and Loss Loss Loss Loss Expense Expense Expense Expense Incurred Ratio Incurred Ratio Net Catastrophe Losses Incurred ($ in thousands) Standard Personal Lines $ 6,318 8.7 % $ 8,280 11.1 % Standard Commercial Lines $ 18,650 5.1 % $ 25,906 7.4 % E&S $ 352 0.9 % $ 186 0.6 % $ 25,320 5.3 % $ 34,372 7.5 % Total Insurance Operations Prior Year Casualty Reserve Development (Favorable) / Unfavorable ($ in thousands) Quarter Ended March 31, 2015 March 31, 2014 Impact on Impact on Loss and Loss and Loss and Loss and Loss Loss Loss Loss Expense Expense Expense Expense Incurred Ratio Incurred Ratio 0.0 % $ (2,000 ) ) (2.7 % (21,000 ) ) (5.7 % $ (12,000 ) ) (3.4 % $ 1,000 2.6 % $ $ (20,000 ) Standard Personal Lines $ Standard Commercial Lines $ E&S Total Insurance Operations Note: Some amounts may not foot due to rounding. - ) (4.2 % $ - (14,000 ) 0.0 % ) (3.1 % Selective Insurance Group, Inc. & Consolidated Subsidiaries Consolidated Balance Sheets ($ in thousands, except share amounts) ASSETS Investments: Fixed income securities, held-to-maturity – at carrying value (fair value: $311,093 – 2015; $333,961 – 2014) Fixed income securities, available-for-sale – at fair value (amortized cost: $4,059,034 – 2015; $3,975,786 – 2014) Equity securities, available-for-sale – at fair value (cost: $199,617 – 2015; $159,011 – 2014) Short-term investments (at cost which approximates fair value) Other investments Total investments Cash Interest and dividends due or accrued Premiums receivable, net of allowance for uncollectible accounts of: $4,201 – 2015; $4,137 – 2014 Reinsurance recoverable, net Prepaid reinsurance premiums Deferred federal income tax Property and equipment – at cost, net of accumulated depreciation and amortization of: $175,896 – 2015; $172,183 – 2014 Deferred policy acquisition costs Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Reserve for loss and loss expenses Unearned premiums Notes payable Current federal income tax Accrued salaries and benefits Other liabilities Total liabilities Stockholders’ Equity: Preferred stock of $0 par value per share: Authorized shares 5,000,000; no shares issued or outstanding Common stock of $2 par value per share: Authorized shares: 360,000,000 Issued: 100,430,480 – 2015; 99,947,933 – 2014 Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock – at cost (shares: 43,482,438 – 2015; 43,353,181 – 2014) Total stockholders’ equity Commitments and contingencies Total liabilities and stockholders’ equity (Unaudited) March 31, 2015 December 31, 2014 296,557 318,137 4,174,242 211,571 124,376 95,020 4,901,766 14,804 38,416 596,888 574,982 141,941 92,061 4,066,122 191,400 131,972 99,203 4,806,834 23,959 38,901 558,778 581,548 146,993 98,449 61,855 191,956 7,849 78,627 6,701,145 59,416 185,608 7,849 73,215 6,581,550 $ 3,516,268 1,132,733 394,301 10,627 142,092 189,186 5,385,207 3,477,870 1,095,819 379,297 3,921 158,382 190,675 5,305,964 $ — — $ $ $ $ 200,861 312,930 1,345,035 23,615 (566,503 ) 1,315,938 199,896 305,385 1,313,440 19,788 (562,923 ) 1,275,586 6,701,145 6,581,550 Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Income ($ in thousands, except per share amounts) Revenues: Net premiums earned Net investment income earned Net realized gains: Net realized investment gains Other-than-temporary impairments Other-than-temporary impairments on fixed income securities recognized in other comprehensive income Total net realized gains Other income Total revenues Quarter Ended March 31, 2014 2015 $ 476,123 26,917 456,495 35,534 20,977 (2,094 ) — 18,883 1,969 523,892 8,181 (963 ) — 7,218 9,824 509,071 284,999 164,723 5,479 12,401 467,602 320,546 149,266 5,561 8,614 483,987 Income before federal income tax 56,290 25,084 Federal income tax expense: Current Deferred Total federal income tax expense 12,254 4,328 16,582 6,538 572 7,110 Expenses: Loss and loss expense incurred Policy acquisition costs Interest expense Other expenses Total expenses Net income $ 39,708 17,974 Earnings per share: Basic net income $ 0.70 0.32 $ 0.69 0.31 $ 0.14 0.13 Diluted net income Dividends to stockholders Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Comprehensive Income ($ in thousands) Net income Quarter Ended March 31, 2014 2015 17,974 $ 39,708 Other comprehensive income, net of tax: Unrealized gains on investment securities: Unrealized holding gains arising during period Amount reclassified into net income: Held-to-maturity securities Non-credit other-than-temporary impairments Realized gains on available for sale securities Total unrealized gains on investment securities Defined benefit pension and post-retirement plans: Amounts reclassified into net income: Net actuarial loss Total defined benefit pension and post-retirement plans Other comprehensive income Comprehensive income $ 15,586 21,426 (170 ) 232 (12,932 ) 2,716 (296 ) — (4,699 ) 16,431 1,111 1,111 3,827 43,535 247 247 16,678 34,652 Selective Insurance Group, Inc. & Consolidated Subsidiaries Unaudited Consolidated Statements of Stockholders’ Equity ($ in thousands, except share amounts) Common stock: Beginning of year Dividend reinvestment plan (shares: 13,533 – 2015; 15,283 – 2014) Stock purchase and compensation plans (shares: 469,014 – 2015; 401,179 – 2014) End of period Quarter Ended March 31, 2014 2015 $ Additional paid-in capital: Beginning of year Dividend reinvestment plan Stock purchase and compensation plans End of period Retained earnings: Beginning of year Net income Dividends to stockholders ($0.14 per share – 2015; $0.13 per share – 2014) End of period Accumulated other comprehensive income: Beginning of year Other comprehensive income End of period Treasury stock: Beginning of year Acquisition of treasury stock (shares: 129,257 – 2015; 118,876 – 2014) End of period Total stockholders’ equity 199,896 27 938 200,861 198,240 31 802 199,073 305,385 346 7,199 312,930 288,182 320 5,863 294,365 1,313,440 39,708 (8,113 ) 1,345,035 1,202,015 17,974 (7,412 ) 1,212,577 19,788 3,827 23,615 $ (562,923 ) (3,580 ) (566,503 ) 1,315,938 24,851 16,678 41,529 (559,360 ) (2,653 ) (562,013 ) 1,185,531 Selective Insurance Group, Inc. Unaudited Consolidated Statements of Cash Flow Quarter Ended March 31, 2014 2015 ($ in thousands) Operating Activities: Net Income 39,708 17,974 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Sale of renewal rights Stock-based compensation expense Undistributed losses (gains) of equity method investments Net realized gains 14,041 — 3,681 3,541 (18,883 ) 10,578 (8,000 ) 4,176 (33 ) (7,218 ) Changes in assets and liabilities: Increase in reserves for loss and loss expenses, net of reinsurance recoverables Increase in unearned premiums, net of prepaid reinsurance Decrease in net federal income taxes Increase in premiums receivable Increase in deferred policy acquisition costs Decrease in interest and dividends due or accrued Decrease in accrued salaries and benefits Decrease in accrued insurance expenses Increase in other assets and other liabilities Net adjustments Net cash provided by operating activities 44,964 41,966 11,034 (38,110 ) (6,348 ) 510 (16,290 ) (24,255 ) 5,015 20,866 60,574 58,938 20,254 4,332 (29,042 ) (4,697 ) 414 (21,869 ) (26,957 ) 16,914 17,790 35,764 (238,000 ) (150,500 ) (1,724 ) (333,550 ) 9,305 341,146 20,720 145,661 129,052 5,845 (4,064 ) — (76,109 ) (182,809 ) (61,360 ) (4,615 ) (398,348 ) 1,302 434,865 9,396 104,358 61,523 5,704 (5,699 ) 8,000 (27,683 ) (7,591 ) (3,580 ) 2,271 15,000 1,398 (1,118 ) 6,380 (9,155 ) 23,959 14,804 (6,948 ) (2,653 ) 1,261 — 770 (459 ) (8,029 ) 52 193 245 Investing Activities: Purchase of fixed income securities, available-for-sale Purchase of equity securities, available-for-sale Purchase of other investments Purchase of short-term investments Sale of fixed maturity securities, available-for-sale Sale of short-term investments Redemption and maturities of fixed income securities, held-to-maturity Redemption and maturities of fixed income securities, available-for-sale Sale of equity securities, available-for-sale Distributions from other investments Purchase of property and equipment Sale of renewal rights Net cash used in investing activities Financing Activities: Dividends to stockholders Acquisition of treasury stock Net proceeds from stock purchase and compensation plans Proceeds from borrowings Excess tax benefits from share-based payment arrangements Repayment of capital lease obligations Net cash provided by (used in) financing activities Net (decrease) increase in cash Cash, beginning of year Cash, end of period $ Selective Insurance Group, Inc. Combined Insurance Company Subsidiaries Statutory Balance Sheets (unaudited) March 31, 2015 ($ in thousands) ASSETS Bonds Common stocks Preferred stocks Affiliated mortgage loan Other investments Short-term investments Total investments Cash on hand and in banks Interest and dividends due and accrued Premiums receivable Reinsurance recoverable on paid losses and expenses Deferred tax recoverable EDP equipment Equities and deposits in pools and associations Receivable for sold securities Other assets Total assets LIABILITIES Reserve for losses Reinsurance payable on paid loss and loss expense Reserve for loss expenses Unearned premiums Reserve for commissions payable Ceded balances payable Federal income tax payable Premium and other taxes payable Borrowed money Reserve for dividends to policyholders Reserves for unauthorized reinsurance Payable for securities Funds withheld on account of others Accrued salaries and benefits Other liabilities Total liabilities POLICYHOLDERS' SURPLUS Capital Paid in surplus Unassigned surplus Total policyholders' surplus Total liabilities and policyholders' surplus $ $ $ $ March 31, 2014 December 31, 2014 4,299,029 190,937 20,521 35,765 147,468 113,117 4,806,837 4,072,964 197,688 36,534 172,691 122,118 4,601,995 4,241,580 191,400 35,961 152,154 115,342 4,736,437 1,538 38,376 593,248 10,919 143,060 460 10,373 8 27,206 5,632,025 (40,405 ) 36,862 551,784 13,068 154,620 834 8,557 8 26,535 5,353,858 12,381 38,908 556,086 9,570 147,610 518 9,915 34 26,629 5,538,088 2,432,544 3,297 505,752 990,791 46,691 29,303 23,786 19,450 60,031 4,486 7,661 31,790 7,485 48,287 98,249 4,309,603 2,396,417 2,098 463,527 936,409 41,455 29,728 31,587 22,940 58,044 2,019 2,735 1,773 7,724 46,499 47,108 4,090,063 2,398,531 2,957 493,510 948,826 70,259 29,624 20,524 20,137 45,027 3,895 7,661 19,950 7,473 64,207 97,665 4,230,246 42,725 492,869 786,828 1,322,422 5,632,025 42,725 492,869 728,201 1,263,795 5,353,858 42,725 492,869 772,248 1,307,842 5,538,088 Selective Insurance Group, Inc. Combined Insurance Company Subsidiaries Statutory Statements Of Income (unaudited) Quarter Ended March ($ in thousands) UNDERWRITING Net premiums written 2014 2015 $ 518,088 476,750 Net premiums earned 476,123 456,495 Net losses paid Change in reserve for losses Net losses incurred 194,366 34,014 228,380 48.0 % 213,297 54,941 268,238 58.8 % 44,994 12,243 57,237 12.0 % 44,764 7,544 52,308 11.4 % Net underwriting expenses incurred 170,938 33.0 % 153,790 32.2 % Total deductions Statutory underwriting gain / (loss) 456,555 19,568 Net loss expenses paid Change in reserve for loss expenses Net loss expenses incurred 474,336 (17,840 ) Net loss from premium balances charged off Finance charges and other income Total other income Policyholders' dividends incurred Total underwriting gain / (loss) (610 ) 1,994 1,384 (1,525 ) 19,427 INVESTMENT Net investment income earned Net realized gain Total income before income tax 27,127 18,883 65,437 35,495 7,215 32,796 7,261 5,845 Federal income tax expense -0.3 % 0.3 % 93.0 % (874 ) 10,038 9,164 (1,238 ) (9,914 ) Net income $ 58,176 26,951 Policyholders' Surplus Surplus, beginning of period $ 1,307,842 1,256,431 Net income Change in deferred taxes Change in net unrealized capital (losses) Dividends to stockholders Change in non-admitted assets Change in Overfunded Contra Asset Qual Pen Trans Liab Excess Plan Trans Liab PRL Plan Trans Liab Net change in surplus for period Surplus, end of period $ 58,176 (10,194 ) (12,910 ) (14,438 ) (7,669 ) (281 ) 1,846 43 7 26,951 (1,282 ) (1,312 ) (14,376 ) (2,900 ) (1,547 ) 1,816 8 6 14,580 7,364 1,322,422 1,263,795 -1.9 % 0.3 % 100.8 % Statutory underwriting gain / (loss) Adjustments under GAAP: Deferred policy acquisition costs Other, net GAAP underwriting gain / (loss) Note: Some amounts or ratios may not foot due to rounding $ 19,427 (9,914 ) $ 6,348 246 26,021 4,697 202 (5,015 ) Selective Insurance Group, Inc. and Consolidated Subsidiaries Alternative Investments as of March 31, 2015 (unaudited) TVPI Fund Real Estate Silverpeak RE II Silverpeak RE III Total - Real Estate Inception Year Original Commitment Remaining Commitment Current Market Value YTD Income DPI (1) Ratio (2) Ratio 2005 2008 20,000,000 15,000,000 35,000,000 2,142,141 7,873,466 10,015,607 9,583,009 2,403,262 11,986,271 708,523 (174,261 ) 534,262 0.67 0.07 0.52 1.12 0.41 0.94 Mezzanine Financing Neovara Euro Mezz GS Mezz V New Canaan V Centerfield Capital Total - Mezz. Financing 2004 2007 2012 2012 9,000,000 25,000,000 7,000,000 3,000,000 44,000,000 10,143,611 1,611,184 1,843,500 13,598,296 4,513,832 2,871,839 977,414 8,363,086 (56,366 ) (318,713 ) (7,616 ) (382,695 ) 0.98 1.08 0.57 0.13 0.94 0.98 1.32 1.06 0.98 1.15 Distressed Debt Varde VIII Distressed Managers III Total - Distressed Debt 2006 2007 10,000,000 15,000,000 25,000,000 2,982,268 2,982,268 1,934,398 5,634,231 7,568,629 39,955 (238,142 ) (198,187 ) 1.16 0.79 0.95 1.35 1.21 1.27 1997 5,000,000 - 319,799 36,726 2.82 2.88 2004 2006 10,000,000 15,000,000 1,455,947 1,421,610 2,089,035 5,877,247 (405,995 ) - 1.63 1.02 1.85 1.42 2007 11,098,351 1,382,106 7,126,052 (923,241 ) 1.03 1.68 2012 7,000,000 48,098,351 4,619,329 8,878,992 2,107,325 17,519,458 (169,113 ) (1,461,623 ) 1.31 0.89 1.73 Private Equity, Secondary Market NB SOF 2005 Vintage IV 2007 NB SOF II 2008 Total - Pvt. Eq. Sec. Mkt. 12,000,000 20,000,000 12,000,000 44,000,000 899,494 4,200,580 1,939,398 7,039,472 3,567,806 10,517,998 6,122,079 20,207,883 (131 ) (249,716 ) (7,878 ) (257,724 ) 1.02 0.81 1.00 0.92 1.34 1.35 1.50 1.39 Energy/Power Generation ArcLight I 2002 ArcLight II 2003 ArcLight III 2006 Quintana Energy 2006 ArcLight IV 2007 Arclight VI 2014 Total - Energy/Power Generation 15,000,000 15,000,000 15,000,000 10,000,000 10,000,000 15,000,000 80,000,000 2,295,492 2,037,794 284,272 2,287,578 15,000,000 21,905,136 12,455 280,140 3,174,516 6,636,978 2,289,449 12,393,538 4,325 94,636 (1,696,040 ) (177,507 ) (1,774,586 ) 1.81 1.40 1.23 0.60 1.20 1.81 1.41 1.43 1.28 1.42 1.32 1.49 9,600,000 9,600,000 350,000 350,000 6,235,634 6,235,634 0.73 0.73 1.40 1.40 285,698,351 64,769,770 84,274,499 1.05 1.38 Private Equity Prospector Trilantic Capital Partners III NB Co-Invest Trilantic Capital Partners IV Trilantic Capital Partners V Total - Private Equity Venture Capital Venture V Total - Venture Capital 2001 TOTAL - ALTERNATIVE INVESTMENTS Distributed to paid in ratio Total value to paid in ratio Exhibit may not foot due to rounding (1) (2) $ - (3,540,554 ) Selective Insurance Group, Inc. and Consolidated Subsidiaries Credit Quality of Available-for-Sale Fixed Income Securities March 31, 2015 (unaudited) ($ in millions) AFS Fixed Income Portfolio: U.S. government and government agencies Foreign government Obligations of states and political subdivisions Corporate securities Asset-backed securities (“ABS”) Mortgage-backed securities (“MBS”) Total AFS fixed income portfolio Obligations of States and Political Subdivisions: General obligations Special revenue obligations Total obligations of state and political subdivisions Corporate Securities: Financial Industrials Utilities Consumer discretionary Consumer staples Healthcare Materials Energy Information technology Telecommunications services Other Total corporate securities ABS: ABS Sub-prime ABS 1 Total ABS MBS: Government guaranteed agency commercial MBS (“CMBS”) Other agency CMBS Non-agency CMBS Government guaranteed agency residential MBS (“RMBS”) Other agency RMBS Non-agency RMBS Alternative-A (“Alt-A”) RMBS Total MBS Fair Value $ $ $ $ $ $ $ $ $ $ Unrealized Gain (Loss) Weighted Average Credit Quality 119.5 27.9 1,294.4 1,824.2 185.4 722.8 4,174.2 7.3 0.9 40.3 53.6 1.1 12.0 115.2 AA+ AAAA AAAA AA+ AA- 567.5 726.9 1,294.4 16.8 23.5 40.3 AA+ AA AA 610.0 144.0 151.3 214.8 165.6 162.2 108.2 97.7 122.2 47.5 0.7 1,824.2 15.4 5.4 4.8 6.8 4.7 6.7 3.2 1.4 3.6 1.5 0.1 53.6 A ABBB+ AAA BBB+ AA BBB+ AA A- 185.1 0.3 185.4 1.0 0.1 1.1 AAA D AAA 12.8 12.4 175.3 29.1 468.5 21.2 3.5 722.8 0.3 0.1 2.9 0.7 7.8 0.2 — 12.0 AA+ AA+ AAA AA+ AA+ BB+ A AA+ 1 Subprime ABS includes one security whose issuer is currently expected by rating agencies to default on its obligations. We define sub-prime exposure as exposure to direct and indirect investments in non-agency residential mortgages with average FICO ® scores below 650. Selective Insurance Group, Inc. and Consolidated Subsidiaries Credit Quality of Held-to-Maturity Fixed Income Securities March 31, 2015 (unaudited) ($ in millions) HTM Fixed Income Portfolio: Foreign government Obligations of states and political subdivisions Corporate securities ABS MBS Total HTM fixed income portfolio Obligations of states and political subdivisions: General obligations Special revenue obligations Total obligations of states and political subdivisions Corporate Securities: Financial Industrials Utilities Total corporate securities ABS: ABS Alt-A ABS Total ABS MBS: Non-agency CMBS Total MBS Fair Value Carry Value Unrecognized Holding Gain 5.3 5.3 — 277.0 21.2 2.5 5.1 266.5 18.3 2.1 4.4 10.5 2.9 0.4 0.7 $ 311.1 296.6 $ 90.3 186.7 $ $ Unrealized Gain (Loss) in Accumulated Other Comprehensive Income Weighted Average Credit Quality — AA+ 1.7 (0.2 ) (0.4 ) (0.4 ) 12.2 2.7 — 0.3 AA A+ AAA AAA 14.5 0.7 15.2 AA 87.4 179.1 2.9 7.6 0.8 0.9 3.7 8.5 AA AA 277.0 266.5 10.5 1.7 12.2 AA 2.2 6.4 12.6 21.2 1.9 5.4 11.0 18.3 0.3 1.0 1.6 2.9 (0.1 ) (0.1 ) — (0.2 ) 0.2 0.9 1.6 2.7 AA+ A+ A+ $ 0.5 2.0 2.5 0.5 1.6 2.1 — 0.4 0.4 — (0.4 ) (0.4 ) — — — AA AAA AAA $ $ 5.1 5.1 4.4 4.4 0.7 0.7 (0.4 ) (0.4 ) 0.3 0.3 AAA AAA $ $ $ — Total Unrealized/ Unrecognized Gain