SELECTIVE INSURANCE GROUP , INC. NYSSA 1 5 TH A NNUAL I NSURANCE - PowerPoint PPT Presentation

– SELECTIVE INSURANCE GROUP , INC. – NYSSA 1 5 TH A NNUAL I NSURANCE NYSSA 1 5 TH A NNUAL I NSURANCE I NDUSTRY C ONFERENCE I NDUSTRY C ONFERENCE I NDUSTRY C ONFERENCE I NDUSTRY C ONFERENCE S ELECTIVE I NSURANCE G ROUP S ELECTIVE I NSURANCE G ROUP , I NC . , I NC . F EBRUARY 8, 2011 F EBRUARY 8, 2011 , Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

– SELECTIVE INSURANCE GROUP , INC. – F I NANCI AL S TRENGTH F I NANCI AL S TRENGTH D ALE T HATCHER D ALE T HATCHER C HIEF F INANCIAL O FFICER C HIEF F INANCIAL O FFICER Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

Forw ard Looking Statem ent Forw ard Looking Statem ent 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”) (“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 1933 and the Securities Th PSLRA id f h b d th S iti A t f 1933 d th S iti 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- p p y g , y y 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, publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Factors, that could cause our actual results to differ materially from those projected, forecasted or estimated by us in forward-looking statements are discussed in further detail in Selective’s public filings with the United States Securities and Exchange Commission. These risk factors may not be g g y 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. assumptions the forward-looking events discussed in this report might not occur Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

W ho W e Are W ho W e Are • 22-state super-regional MI MN MA • 2010: $1.4B NPW WI NY CT RI MI • 82% commercial lines 82% i l li IA PA NJ OH MD DE IL IN • 18% personal lines MO VA KY • High tech, high touch business model NC TN TN • Partner of choice – 980 independent SC agents GA • Focus on enterprise risk management • Rated A+ by A.M. Best for 49 years Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Financial Financial Com m ercial Com m ercial W ho W e Are W ho W e Are Strength Strength Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

Focus on Enterprise Risk Managem ent Focus on Enterprise Risk Managem ent • Historically strong capital position • Business model generates more earnings stability • S Sophisticated underwriting and granular pricing hi i d d i i d l i i • Strong reserving practices • Conservative reinsurance • Deep investment management talent Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Financial Financial Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow Strength Strength

More Earnings Stability More Earnings Stability Com bined Ratio – SI GI vs. I ndustry 125 125 SIGI ( STD. DEV 4 .4 ) 120 Industry ( STD. DEV 6 .7 ) 115 110 105 100 95 90 90 Source: A.M. Best, III Financial Financial Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

More Earnings Stability More Earnings Stability Com bined Ratio – SI GI vs. National Peers 125 125 SIGI ( STD. DEV 4 .4 ) 120 National Peers ( STD. DEV 9 .7 ) 115 110 105 100 95 90 90 Source: SNL Financial Source: SNL Financial Note: National Peers include CNA, CB, HIG, TRV and WRB Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Financial Financial Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow Strength Strength

More Earnings Stability More Earnings Stability Com bined Ratio – SI GI vs. Regional Peers 125 125 SIGI ( STD. DEV 4 .4 ) 120 Regional Peers ( STD. DEV 5 .1 ) 115 110 105 100 95 90 90 Source: SNL Financial Note: Regional Peers include CINF, THG, HGIC, STFC and UFCS Financial Financial Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

Adverse/ ( Favorable) Points of Calendar Year Developm ent C l d Y D l t 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* U S P&C Industry U.S. P&C Industry SIGI SIGI Source: AM Best *SIGI and Industry data as of 9/30/10 Financial Financial Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Strength Strength Success Success Lines Lines Tom orrow Tom orrow Lines Lines

Prem ium -to-Surplus Prem ium to Surplus SIGI SIGI P&C P&C 1.9 1 9 1.9X 1.8 1.8 1.7 1.7 1.7 1.7X 1.6 1.5 1.5 1.5 1 5X 1.5X 1.3 1.3 1.3X 1.2 1.1 1.1 1.1X 1.0 1.0 1.0 1.0 0.9 0.9X 0.9 0.8 0.8 0.7X 0.5X 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 1 point of Combined Ratio = 1 point of ROE 1 point of Combined Ratio 1 point of ROE Note: Industry data as of 9/30/10 Financial Financial Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Strength Strength Success Success Lines Lines Tom orrow Tom orrow Lines Lines

High Quality I nvestm ent Portfolio High Quality I nvestm ent Portfolio $ $3.9B Invested Assets d • Outsourcing provides access December 31, 2010 to broader market expertise Bonds 90.6% • Reallocation of risk for better Reallocation of risk for better risk adjusted returns • Average “AA” bond quality • Approximately 3.5 year average duration, including Equities short-term & cash 1.8% • Equities and alternative Alternative investments 5% of invested Short ‐ Term Investments 4.1% 3.5% assets Financial Financial Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow

Diversified Municipal Portfolio Diversified Municipal Portfolio Repayment Source p y December 31, 2010 • $1.4 billion portfolio TX-PSF • AA rated GO-State 3 % 9 % • • 33% of portfolio matures 33% of portfolio matures GO-Local within 3 years 2 5 % • Diversified among 293 issuers • • NY CA NJ IL represent $34M NY, CA, NJ, IL represent $34M or 2.3% of portfolio Revenue 6 3 % Financial Financial Financial Financial Pricing Pricing Personal Personal Prepared for Prepared for Com m ercial Com m ercial Strength Strength Strength Strength Success Success Lines Lines Lines Lines Tom orrow Tom orrow