<PAGE> 1
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, 1999
[ ] 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
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SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report ........................................................................ 1
Statements of Net Assets Available for Plan
Participants - December 31, 1999 and 1998 .................................................. 2
Statements of Changes in Net Assets Available
for Plan Participants - Years ended
December 31, 1999 and 1998 ................................................................. 3
Notes to Financial Statements ....................................................................... 4-8
Schedule
1 Schedule H Part IV, line 4 (I)- Schedule of Assets Held for
Investment Purposes - December 31, 1999 ........................................ 9
</TABLE>
<PAGE> 3
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, 1999 and 1998, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit 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, 1999 and 1998, and the changes in net assets available
for plan participants for the years then ended in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
accompanying index 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 23, 2000
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SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Statements of Net Assets Available
for Plan Participants
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Assets:
Investments, at fair value $68,020,626 57,012,392
Participant loans receivable 1,516,375 1,244,035
----------- ----------
Net assets available for plan participants $69,537,001 58,256,427
=========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 5
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available
for Plan Participants
Years ended December 31, 1999 and 1998
Additions:
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Contributions:
Plan participants $ 5,167,565 5,522,068
Employer 1,655,582 1,539,109
----------- ----------
Total contributions 6,823,147 7,061,177
----------- ----------
Investment income:
Interest 753,037 809,590
Dividends 5,072,718 2,877,212
Net appreciation in
fair value of investments 2,451,283 167,182
----------- ----------
Total investment income 8,277,038 3,853,984
----------- ----------
Total additions 15,100,185 10,915,161
Withdrawals and distributions 3,819,611 3,862,318
----------- ----------
Net increase in net assets
available for plan participants 11,280,574 7,052,843
Net assets available for plan
participants at beginning of year 58,256,427 51,203,584
----------- ----------
Net assets available for plan
participants at end of year $69,537,001 58,256,427
=========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 6
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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.
(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
(as defined by the Internal Revenue Service) may be limited to
smaller contributions.
(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, 1999 and 1998. 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, 1999 and 1998.
(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:
<TABLE>
<CAPTION>
Years of Service (as defined) Vesting Percentage
---------------- ------------------
<S> <C>
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
</TABLE>
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<PAGE> 7
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Notes to Financial Statements, continued
(1) Plan Description
(e) Vesting, cont.
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 Employer's and 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 various periods of time. The
vested and non-vested portion of the participant's account
attributable to Company 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 the benefit
which can be provided from the participant's account.
Upon termination of employment or disability, if a
participant's present value (as defined) does not exceed
$3,500, 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 present value
exceeds $3,500 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
present value is distributed in the form of a lump-sum
payment.
Effective May 1, 1998, the Plan was amended to increase the
lump-sum payment from $3,500 to $5,000 in accordance with the
Taxpayer Relief Act of 1997.
The vested values of participants who elected to defer
distribution aggregated $2,911,638 and $2,014,976 at December
31, 1999 and 1998, respectively.
(h) Participant Loans
Participants may borrow from their employee 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 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.
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<PAGE> 8
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Notes to Financial Statements, continued
(1) Plan Description
(h) Participant Loans, cont.
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.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles and
use the accrual basis of accounting.
(b) Adoption of Accounting Policies
In September 1999, the American Institute of Certified Public
Accountants issued Statement of Position No. 99-3 "Accounting
for and Reporting of Certain Defined Contribution Plan
Investments and other Disclosure Matters" ("SOP 99-3"). SOP
99-3 simplifies disclosures for certain investments and is
effective for plan year ending after December 15, 1999. The
plan adopted SOP 99-3 during the plan year ending December 31,
1999. Accordingly, information previously required to be
disclosed about participant-directed fund investment programs
is not presented in the Plan's 1999 financial statements. As a
result, certain amounts in the Plan's prior year financial
statements and related notes have been restated to conform
with the 1999 presentation.
(c) Investments
Investment options under the Plan include one Selective
Insurance Stock Fund, eight TRP funds and two Vanguard funds
(collectively referred to as the "Funds"). Fair value of the
funds which are comprised of stocks and bonds are based on
quoted market prices except when otherwise stated.
Transactions recorded in the funds are on a trade date basis.
One of the TRP Funds, 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. In determining fair value, TRPs valuation committee
primarily considers such factors as the benefit responsiveness
of the investment contract and the ability of the parties to
the investment contract to perform in accordance with the
terms of the contract. 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.
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.
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<PAGE> 9
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Notes to Financial Statements, continued
The following presents investments that represent 5 percent or
more of the Plan's net assets:
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Equity Income Fund, 826,743 $20,511,503 20,265,365
and 769,961 shares, respectively
New America Growth Fund, 210,104 10,097,579 8,542,547
and 178,752 shares, respectively
Science & Technology Fund, 149,746 9,540,299 2,798,587
and 74,292 shares, respectively
Prime Reserve Fund 7,670,972 7,670,972 7,663,730
and 7,663,730 shares, respectively
Small Cap Value Fund, 345,644 6,090,251 6,844,374
and 360,800 shares, respectively
International Stock Fund, 303,178 5,769,478 4,245,002
and 283,189 shares, respectively
New Income Fund, 512,693 4,183,573 4,312,842
and 489,539 shares, respectively
</TABLE>
During 1999 and 1998, the Plan's investments (including gains
and losses on investments bought and sold, as well as held
during the year) appreciated in value by $2,451,283 and
$167,182 respectively as follows:
<TABLE>
<S> <C> <C>
Mutual Funds $ 2,606,336 $ 299,762
Common Stock (155,053) (132,580)
----------- ---------
$ 2,451,283 $ 167,182
=========== =========
</TABLE>
(d) Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan
administrator to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the
financial statements and the reported amounts of additions and
deductions during the reporting periods. Actual results could
differ from those estimates.
(3) Fund Management
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.
(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).
Forfeited amounts of $70,229 and $60,563, in 1999 and 1998
respectively, were used to reduce the Company's matching contributions
or pay administrative expenses of the Plan.
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<PAGE> 10
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Notes to Financial Statements, continued
(5) Plan Expenses
Expenses of the Plan were paid by the Company in 1999 and 1998.
(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 become immediately 100% vested.
(7) Tax Status
The plan administrator has obtained a tax determination letter dated
July 23, 1997, from the Internal Revenue Service stating that the Plan
qualifies under the provisions of Section 401(a) of the Internal
Revenue Code and that the related trust is exempt from Federal income
taxes under Section 501(a) of the Internal Revenue 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 Internal Revenue Code.
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<PAGE> 11
Schedule 1
SELECTIVE INSURANCE
RETIREMENT SAVINGS PLAN
Schedule H Part IV, Line 4 (I) - Schedule of Assets Held for
Investment Purposes December 31, 1999
<TABLE>
<CAPTION>
Fair Value
-----------
<S> <C>
Selective Insurance Stock Fund $ 1,167,088
T. Rowe Price Trust Company Funds:
Stable Value Common Trust Fund 1,171,609
Prime Reserve Fund 7,670,972
International Stock Fund 5,769,478
New Income Fund 4,183,573
Small Cap Value Fund 6,090,251
New America Growth Fund 10,097,579
Equity Income Fund 20,511,503
Science & Technology Fund 9,540,299
Vanguard Institutional Index Fund 1,791,441
Vanguard Admiral Intermediate-Term Treasury Fund 26,833
-----------
68,020,626
Participant Loans Receivable 1,516,375
-----------
Total $69,537,001
===========
</TABLE>
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<PAGE> 12
Signatures
The Plan. 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 28, 2000
By: /s/ Dale A. Thatcher
--------------------------------
Dale A. Thatcher
Senior Vice President
and Chief Financial Officer
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ---------------------------------------
<S> <C>
23 Consent of KPMG LLP dated June 28, 2000
</TABLE>
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