SELECTIVE INSURANCE GROUP, INC. February 14, 2018 2018 Bank of - PowerPoint PPT Presentation

SELECTIVE INSURANCE GROUP, INC. February 14, 2018 2018 Bank of America Merrill Lynch Insurance Conference

CLICK TO EDIT MASTER TITLE STYLE SAFE HARBOR STATEMENT PAGE 2 PAGE 2  Edit Master text styles In this presentation, we make certain statements and reference other information that are “forward - looking statements” as defined i n the o Second level Private Securities Litigation Reform Act of 1995 (“PSLRA”). The PSLRA provides a safe harbor under the Securities Act of 193 3 and the  Securities Exchange Act of 1934 for forward-looking statements that relate to our intentions, beliefs, projections, estimations, or forecasts of Third level future events or our future financial performance. Forward-looking statements involve known and unknown risks, uncertainties, and other  Fourth level factors that may result in materially differing actual results. We can give no assurance that our expectations expressed in forward-looking  Fifth level statements will prove to be correct. 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 Commi ssion. We undertake no obligation to publicly update or revise any forward-looking statements – whether as a result of new information, future events or otherwise – other than as the federal securities laws may require. This presentation also includes certain non-GAAP financial measures within the meaning of Regulation G, including “non -GAAP operating earnings per share,” “non - GAAP operating income,” and “non -GAAP operating return on equity .” Definitions of these non-GAAP measures and a reconciliation to the most comparable GAAP figures pursuant to Regulation G are available in our Annual Report on Form 10-K and our Supplemental Investor Package, which can be found on our website <www.selective.com > under “Investors/Reports, Earnings and Presentations.” We believe investors and other interested persons find these measurements beneficial and useful. We have co nsistently provided these financial measurements in previous investor communications so they have a consistent basis for comparing our results between quarters and with our industry competitors. These non-GAAP measures, however, may not be comparable to similarly titled measures used outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing our overall financial performance.

CLICK TO EDIT MASTER TITLE STYLE PAGE 3  Edit Master text styles o Second level  Third level  Fourth level  Fifth level STRATEGIC OVERVIEW Greg Murphy Chairman and Chief Executive Officer

CLICK TO EDIT MASTER TITLE STYLE A SUPER-REGIONAL COMPANY WITH NATIONAL CAPABILITIES PAGE 4 PAGE 4  Edit Master text styles 25 state footprint $3.4B Market Cap (as of 2/12/17) o Second level significant expansion plans  Third level  Fourth level 90+ years of financial strength and  93.3% GAAP Combined Ratio Fifth level superior execution $2.4B NPW (up 6% Y/Y) $119M A/T investment income (up 20% Y/Y) 2017 non-GAAP operating ROE of 11.4% – in line with long-term target of 300 bps over WACC

CLICK TO EDIT MASTER TITLE STYLE OUR SUSTAINABLE COMPETITIVE ADVANTAGES PAGE 5 PAGE 5  Enables effective management of pricing and retention True franchise value with “ivy  Edit Master text styles  Increase share of wallet and new agent appointments league” distribution partners o Second level  Agent overall satisfaction rating of 8.8/10  Third level  Fourth level  Locally-based underwriting, claims, and safety management specialists Unique field model enabled by  Fifth level sophisticated tools and  Agile capability and excellent data analytics technology Superior customer experience  Customer-centricity has been the centerpiece of our strategy delivered by best-in-class  employees Developing holistic solution for 24-hour omni-channel shared experience  Each full point on CR = 110 basis points of non-GAAP operating ROE* Above-average operating leverage enhances ROEs  Investments to stockholders’ equity ratio of 3.32 suggests ~800 basis points of non-GAAP operating ROE* * Refer to “Safe Harbor Statement” on page 2 of this presentation for further detail regarding certain non -GAAP financial measures.

TRUE FRANCHISE VALUE WITH DISTRIBUTION PARTNERS CLICK TO EDIT MASTER TITLE STYLE PAGE 6 PAGE 6 E&S Standard Commercial Standard Personal  Edit Master text styles (13% of 2017 NPW) (9% of 2017 NPW) (78% of 2017 NPW) o Second level  Third level  Fourth level  Fifth level All 50 States 25 States 13 States 1,250 distribution partners 700 distribution partners 85 wholesale distribution partners

UNIQUE UNDERWRITING FIELD MODEL ENABLED BY SOPHISTICATED CLICK TO EDIT MASTER TITLE STYLE TOOLS AND TECHNOLOGY PAGE 7 PAGE 7  Empowered field underwriting model  Edit Master text styles Small o Second level Business  Local decision making supported by Team  Third level centralized expertise  Fourth level   Armed with sophisticated underwriting and Agency Fifth level Management claims tools Specialist  Focused on delivering best-in-class Field customer service Safety Claims Management Adjusters Specialist Regional Underwriting Team The cornerstone of our “High -tech, High-touch ” business strategy

CLICK TO EDIT MASTER TITLE STYLE DELIVER A SUPERIOR OMNI-CHANNEL CUSTOMER EXPERIENCE PAGE 8 PAGE 8  Changing expectations from customers, and  Edit Master text styles potential disruptive threats from traditional and o Second level non-traditional competitors  Third level  Partnering with agents to invest in joint strategies  Fourth level to provide a seamless customer experience  Fifth level  Eliminating customer friction points, and build-out of customized, proactive messaging  Identifying value-added services to increase switching costs Customer-centricity is core to who we are as a company

CLICK TO EDIT MASTER TITLE STYLE 2017: EXCELLENT OPERATING PERFORMANCE PAGE 9 PAGE 9  2017 pure written price increases by segment:  Edit Master text styles Commercial Lines – 2.9% o GAAP Combined Ratios o Second level Personal Lines – 3.0% o 110% Underlying Combined Ratio  Third level E&S – 5.0% o 107.2% Reported Combined Ratio  Fourth level 105%  Expected claim inflation of ~3.0%  Fifth level 100.9%  100% Underwriting and claim improvement  Focus on lowering expense ratio 95% 93.3% 92.5% Underlying* GAAP Combined Ratios 90% 2016 Improvement 2017 85% 93.3% 0.8 pts 92.5% 2011 2012 2013 2014 2015 2016 2017 *Underlying GAAP combined ratio excludes catastrophe losses and prior year casualty reserve development 2018 forecast of a 91.0% underlying GAAP combined ratio

CLICK TO EDIT MASTER TITLE STYLE LONG HISTORY OF DISCIPLINED & PROFITABLE GROWTH PAGE 10 PAGE 10 Historical Net Premiums Written  Edit Master text styles Lower COMMERCIAL LINES GROWTH o Second level Risk DRIVERS: $2.5B Combined Managed Premium  Third level opportunity Volume During Soft  Fourth level at 3% Market  Growing share of wallet to 12%  market Fifth level with existing distribution partners share implies  New appointments to represent potential 25% share in existing markets company  Geo-expansion (3 new states) profile in excess of  New products and M&A $4B of NPW Higher $0B 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Risk Successful track record of cycle management and profitable growth

COMMERCIAL LINES GEO-EXPANSION ENHANCES GROWTH CLICK TO EDIT MASTER TITLE STYLE OPPORTUNITIES PAGE 11 PAGE 11  Diversification and spread of risk  Edit Master text styles o Targeting 30 fully operational states o Second level o Remainder to support multi-state accounts  Third level  Fourth level  Leverage existing Selective leaders and hire local  Fifth level underwriters who know the market and agencies  Successful start in AZ and NH in 2017; CO in January 2018  UT and NM on target for later this year Current States Expansion States Fill-in States A well-thought out and disciplined approach to geo-expansion

CLICK TO EDIT MASTER TITLE STYLE STANDARD COMMERCIAL (78% OF BUSINESS): A PROFIT ENGINE PAGE 12 PAGE 12 ($ in billions)  Edit Master text styles  Focused on disciplined and profitable growth 110% NPW GAAP Combined Ratio o $2.2B Second level  Third level 7% CAGR of NPW  Drivers of profitability are: from 2011-2017  Fourth level Price increases ≥ expected claim inflation o 100%  Fifth level o Underwriting mix improvement o Enhanced claims outcomes 90% o Expense management $0B 80% 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 Selective has the right tools, technology, and team in place to continue driving profitable growth in Standard Commercial Lines