<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended...June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ----------------
Commission file number: 0-8641
SELECTIVE INSURANCE GROUP, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
New Jersey 22-2168890
---------------------------- ------------------------------
<S> <C>
State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
40 Wantage Avenue
Branchville, New Jersey 07890
---------------------------- ---------------------------
(Address of principal (Zip Code)
executive offices)
</TABLE>
973 948-3000
-------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Common stock, par value $2 per share, outstanding as of July 31, 2000:
25,631,684
1
<PAGE> 2
SELECTIVE INSURANCE GROUP, INC
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Unaudited
---------------------------------------------------------------------------------------------------------------------
June 30, December 31,
($ in thousands, except share amounts) 2000 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
INVESTMENTS:
Debt securities, held-to-maturity - at amortized cost
(fair value: $246,294-2000; $271,604-1999) $ 245,535 271,384
Debt securities, available-for-sale - at fair value
(amortized cost: $1,171,684-2000; $1,141,167-1999) 1,149,400 1,122,786
Equity securities, available-for-sale - at fair value
(cost of: $123,147-2000; $115,626-1999) 259,393 251,998
Short-term investments - (at cost which approximates 37,665 48,807
fair value)
Other investments 17,136 15,963
----------- ----------
Total investments 1,709,129 1,710,938
Cash 7,122 8,588
Interest and dividends due or accrued 22,875 23,545
Premiums receivables 281,792 248,910
Other trade receivables 19,358 15,488
Reinsurance recoverable on paid losses and loss expenses 11,186 9,797
Reinsurance recoverable on unpaid losses and loss expenses 176,121 192,044
Prepaid reinsurance premiums 31,304 32,531
Current Federal income tax 4,936 4,417
Deferred Federal income tax 17,964 16,129
Real estate, furniture, equipment, and software development 56,915 54,558
Deferred policy acquisition costs 117,884 109,095
Goodwill 50,838 52,001
Other assets 32,521 29,504
----------- ----------
Total assets $ 2,539,945 2,507,545
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Reserve for losses $ 1,085,616 1,092,026
Reserve for loss expenses 178,642 181,782
Unearned premiums 442,972 413,601
Convertible subordinated debentures 4,936 6,157
Short-term debt -- 51,302
Notes payable 166,928 75,428
Other liabilities 108,896 117,285
----------- ----------
Total liabilities 1,987,990 1,937,581
----------- ----------
STOCKHOLDERS' EQUITY:
Common stock of $2 par value per share:
Authorized shares: 180,000,000
Issued: 38,454,098-2000; 37,964,405-1999 76,908 75,929
Additional paid-in capital 58,880 53,470
Retained earnings 520,722 514,477
Accumulated other comprehensive income 74,075 76,694
Treasury stock - at cost (shares: 12,962,107-2000; 11,406,722-1999) (170,673) (143,875)
Deferred compensation expense and notes receivable from stock sales (7,957) (6,731)
----------- ----------
Total stockholders' equity 551,955 569,964
----------- ----------
Total liabilities and stockholders' equity $ 2,539,945 2,507,545
=========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 3
SELECTIVE INSURANCE GROUP, INC.
Consolidated Statements of Income
<TABLE>
<CAPTION>
($ in thousands, except per share amounts)
Unaudited Unaudited
Quarter ended Six Months ended
June 30 June 30
----------------- -----------------
2000 1999 2000 1999
----------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Net premiums written $ 218,089 215,059 $ 431,050 422,784
Net increase in unearned
premiums and prepaid
reinsurance premiums (17,463) (18,605) (30,598) (33,302)
-------- ------- -----------------
Net premiums earned 200,626 196,454 400,452 389,482
Net investment income earned 24,498 23,455 47,798 46,928
Net realized gains 446 23,604 2,719 32,201
Diversified insurance services revenue 18,364 7,613 36,031 16,495
Other income 1,311 772 2,092 1,497
-------- ------- -----------------
Total revenues 245,245 251,898 489,092 486,603
-------- ------- -----------------
Expenses:
Losses incurred 136,081 121,029 263,868 246,563
Loss expenses incurred 17,420 18,600 35,941 36,948
Policy acquisition costs 66,510 62,330 128,366 122,681
Dividends to policyholders 1,569 1,589 3,450 3,450
Interest expense 3,534 2,155 6,242 4,317
Diversified insurance services expenses 17,380 7,220 33,771 15,466
Other expenses 2,224 1,021 4,350 2,550
-------- ------- -----------------
Total expenses 244,718 213,944 475,988 431,975
-------- ------- -----------------
Income before Federal income tax 527 37,954 13,104 54,628
-------- ------- -----------------
Federal income tax expense(benefit)
Current (2,175) 10,904 (487) 14,477
Deferred (404) (565) (425) (1,487)
-------- ------- -----------------
Total Federal income tax expense (benefit) (2,579) 10,339 (912) 12,990
-------- ------- -----------------
Net income $ 3,106 27,615 $ 14,016 41,638
======== ======= =================
Earnings per share:
Basic $ 0.12 1.00 $ 0.55 1.49
Diluted $ 0.12 0.95 $ 0.53 1.43
Dividends to stockholders $ 0.15 0.15 $ 0.30 0.29
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
SELECTIVE INSURANCE GROUP, INC.
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Unaudited Unaudited
June 30 June 30
($ in thousands, except per share amounts) 2000 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock:
Beginning of year $ 75,929 74,833
Dividend reinvestment plan
(shares: 34,089-2000; 32,131-1999) 68 64
Convertible subordinated debentures
(shares: : 172,451-2000; 4,518-1999) 345 9
Stock purchase and compensation plans
(shares: 283,153-2000; 312,618-1999) 566 625
------- --------
End of period 76,908 75,531
------- --------
Additional paid-in capital:
Beginning of year 53,470 45,449
Dividend reinvestment plan 510 534
Convertible subordinated debentures 862 14
Stock purchase and compensation plans 4,038 4,824
------- --------
End of period 58,880 50,821
------- --------
Retained Earnings:
Beginning of year 514,477 477,118
Net income 14,016 14,016 41,638 41,638
Cash dividends to stockholders ($.30 per share-2000; $.29
per share-1999) (7,771) (8,102)
------- --------
End of period 520,722 510,654
------- --------
Accumulated other comprehensive
income:
Beginning of year 76,694 114,323
Other comprehensive income-decrease in net
unrealized gains on available-for-sale securities,
net of deferred income tax effect (2,619) (2,619) (32,957) (32,957)
------ ------- -------- -------
End of period 74,075 81,366
------- --------
Comprehensive income 11,397 8,681
======= =======
Treasury stock:
Beginning of year (143,875) (97,990)
Acquisition of treasury stock
(shares: 1,555,385-2000; 1,112,054-1999) (26,798) (21,302)
------- --------
End of period (170,673) (119,292)
------- --------
Deferred compensation expense and
notes receivable from stock sales:
Beginning of year (6,731) (6,150)
Deferred compensation expense (2,824) (3,190)
Amortization of deferred
compensation expense and
amounts received on notes 1,598 1,476
------- --------
End of period (7,957) (7,864)
------- --------
Total stockholders' equity $ 551,955 591,216
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 5
SELECTIVE INSURANCE GROUP, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Unaudited
($ in thousands) Six Months ended June 30,
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 14,016 41,638
------- ------
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in reserves for losses and loss expenses, net of 6,373 9,691
reinsurance recoverable on unpaid losses and loss expenses
Net increase in unearned premiums and prepaid reinsurance premiums 30,598 33,302
Federal income tax (943) 5,511
Depreciation and amortization 7,288 5,626
Increase in premiums receivables (32,882) (36,349)
Increase in other trade receivables (3,870) (508)
Increase in deferred policy acquisition costs (8,789) (8,061)
Decrease (increase) in interest and dividends due or accrued 670 (913)
Increase in reinsurance recoverable on paid losses and loss expenses (1,389) (3)
Net realized gains on investments (2,719) (32,201)
Other- net (8,298) (1,330)
------- -------
Net adjustments (13,961) (25,235)
------- -------
Net cash provided by operating activities 55 16,403
------- -------
INVESTING ACTIVITIES
Purchase of debt securities, available-for-sale (76,570) (141,264)
Purchase of equity securities, available-for-sale (16,322) (5,589)
Purchase of other investments (1,233) (527)
Purchase adjustments of subsidiaries acquired (5,988) --
Sale of debt securities, available-for-sale 11,030 22,026
Redemption and maturities of debt securities, held-to-maturity 25,817 47,058
Redemption and maturities of debt securities, available-for-sale 35,193 10,319
Sale of equity securities, available-for-sale 11,527 57,484
Proceeds from other investments 60 106
Increase (decrease) in net payable for security transactions 5,249 (12,280)
Net additions to real estate, furniture, equipment and software development (6,476) (3,942)
------- -------
Net cash used in investing activities (17,713) (26,609)
------- -------
FINANCING ACTIVITIES
Dividends to stockholders (7,771) (8,102)
Acquisition of treasury stock (26,798) (21,302)
Net proceeds from notes payable 88,513 --
Paydown of (proceeds from) short-term debt (51,302) 3,465
Net proceeds from dividend reinvestment plan 578 598
Net proceeds from stock purchase and compensation plans 4,604 5,449
Increase in deferred compensation expense and amounts received on notes
receivable from stock sales (2,774) (3,138)
------- -------
Net cash provided by (used in) financing activities 5,050 (23,030)
------- -------
Net decrease in short-term investments and cash (12,608) (33,236)
Short-term investments and cash at beginning of year 57,395 58,836
------- -------
Short-term investments and cash at end of year $ 44,787 25,600
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the period for:
Interest $ 5,090 4,729
Federal income tax -- 7,400
Supplemental schedule of non-cash financing activity:
Conversion of convertible subordinated debentures 1,221 32
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 6
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The interim financial statements are unaudited but reflect all adjustments
which, in the opinion of management, are necessary to provide a fair
statement of the results of the Selective Insurance Group, Inc. and its
consolidated subsidiaries (collectively, the "Company") for the interim
periods presented. References herein to "Selective" are to Selective
Insurance Group, Inc. All such adjustments are of a normal recurring
nature. The results of operations for any interim period are not
necessarily indicative of results for a full year. These financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
2. RECLASSIFICATIONS
Certain amounts in the Company's prior year consolidated financial
statements have been reclassified to conform with the 2000 presentation.
Such reclassification had no effect on the Company's net income or
stockholders' equity.
3. CURRENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FASB 133"). FASB 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires that
an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair
value. This statement was previously effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. Earlier application was
encouraged, but was permitted only as of the beginning of any fiscal
quarter that begins after issuance of financial statements of prior
periods. In June 1999, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 137, which defers the
effective date of FASB 133 to all fiscal quarters of fiscal years
beginning after June 15, 2000. In June 2000, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, which amends the accounting and reporting standards of FASB
133 for certain derivative instruments and certain hedging activities.
The Company will adopt FASB 133 and FASB 138 for the fiscal year
beginning January 1, 2001 and does not anticipate the adoption of these
statements to have a material effect on the Company's results of
operations or financial condition.
4. SEGMENT INFORMATION
The Company is primarily engaged in writing property and casualty
insurance. The Company has classified its business into three segments
which are Insurance Operations (commercial lines underwriting, personal
lines underwriting), Investments, and Diversified Insurance Services
(formerly called Fee-For-Service Operations). The insurance segment is
evaluated based on GAAP underwriting results, investments are evaluated
based on after-tax investment returns, and the diversified insurance
operations are evaluated based on results of operations in accordance
with Generally Accepted Accounting Principals ("GAAP").
The GAAP underwriting results of the Insurance Operations segment are
determined taking into account net premiums earned, incurred losses and
loss expenses, policy acquisition costs and other underwriting expenses
and policyholders dividends. Management of the investment portfolio is
separate from the insurance underwriting segment and, therefore, has been
classified as a segment. The operating results of the investments segment
take into account net investment income and net realized gains and losses.
The Diversified Insurance Services business is managed independently from
the other segments and, therefore, has been classified separately. The
Diversified Insurance Services segment consists of medical managed care
operations, professional employer organization operations, preferred
provider organization operations, software development and program
administration operations, the flood business managed by the Company for
the National Flood Insurance Program and income from alternative market
affiliation programs. The segment's results are determined taking into
account the net revenues generated in each of the businesses, less the
costs of operation.
In computing the results of each segment, no adjustment is made for
interest expense, net general corporate expenses or federal income taxes.
The Company does not maintain separate investment portfolios for the
segments and, therefore, does not allocate
6
<PAGE> 7
assets to the segments.
The following summaries present revenues (net investment income and net
realized gains (losses) in the case of the investments segment) and
pre-tax income for the individual segments:
Revenue by segment
<TABLE>
<CAPTION>
Unaudited, Quarter Unaudited, Six Months
($ in thousands) ended June 30, ended June 30,
------------------ ---------------------
2000 1999 2000 1999
-------------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
INSURANCE OPERATIONS:
Commercial lines net premiums earned $ 148,162 138,508 $ 294,041 275,280
Personal lines net premiums earned 52,464 57,946 106,411 114,202
------- ------- ------- --------
Total insurance operations revenues 200,626 196,454 400,452 389,482
INVESTMENTS:
Net investment income 24,498 23,455 47,798 46,928
Net realized gains on investments 446 23,604 2,719 32,201
------- ------- ------- --------
Total investment revenues 24,944 47,059 50,517 79,129
DIVERSIFIED INSURANCE SERVICES REVENUES 18,364 7,613 36,031 16,495
------- ------- ------- --------
Total revenues all segments 243,934 251,126 487,000 485,106
------- ------- ------- --------
Other income 1,311 772 2,092 1,497
------- ------- ------- --------
TOTAL REVENUES $ 245,245 251,898 $ 489,092 486,603
======= ======= ======= ========
</TABLE>
Income or (loss) before Federal income tax by segment
<TABLE>
<CAPTION>
Unaudited, Quarter Unaudited, Six Months
($ in thousands) ended June 30, ended June 30,
--------------- ---------------------
2000 1999 2000 1999
-------------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
INSURANCE OPERATIONS:
Commercial lines underwriting $ (11,501) (5,309) $ (19,718) (19,191)
Personal lines underwriting (8,820) (710) (11,164) (67)
------ ------ ------- -------
Underwriting loss, before (20,321) (6,019) (30,882) (19,258)
Federal income tax
INVESTMENTS:
Net investment income 24,498 23,455 47,798 46,928
Net realized gains on investments 446 23,604 2,719 32,201
------ ------ ------- ------
Total investment income, before Federal income tax 24,944 47,059 50,517 79,129
DIVERSIFIED INSURANCE SERVICES:
Income before federal income tax 984 393 2,260 1,029
------ ------ ------- ------
TOTAL ALL SEGMENTS 5,607 41,433 21,895 60,900
Interest expense (3,534) (2,155) (6,242) (4,317)
General corporate expenses (1,546) (1,324) (2,549) (1,955)
------ ------ ------- ------
INCOME BEFORE FEDERAL INCOME TAX $ 527 37,954 $ 13,104 54,628
====== ====== ======= ======
</TABLE>
7
<PAGE> 8
5. REINSURANCE
The following is a table of assumed and ceded amounts by income statement
caption:
<TABLE>
<CAPTION>
Unaudited, Quarter ended Unaudited, Six Months ended
June 30, June 30,
----------------------------------------------------------------------------------------
($ in thousands) 2000 1999 2000 1999
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Premiums written:
Assumed(1) $ 1,361 2,435 $ 6,164 10,238
Ceded (23,107) (19,579) (44,379) (37,783)
Premiums earned:
Assumed(1) 3,129 4,428 6,567 11,087
Ceded (23,115) (19,797) (45,606) (39,144)
Losses incurred:
Assumed(1) 745 2,860 1,221 7,280
Ceded (13,914) (19,261) (31,953) (33,647)
Loss expenses incurred:
Assumed(1) 233 315 472 936
Ceded (543) (1,124) (1,119) (1,169)
</TABLE>
(1) Assumed business has declined when compared to the prior year due to a
decrease in involuntary commercial automobile plans.
FORWARD-LOOKING STATEMENTS
Some of the statements in this report are not historical facts and are
"forward-looking statements" (as defined in the Private Securities Litigation
Reform Act of 1995). These statements use words such as "believes," "expects,"
"intends," "may," "will," "should," "anticipates," and other similar words and,
among other things, describe our current strategies, opinions, expectations of
future results and other forward-looking information. We derive forward-looking
information from information which we currently have and numerous assumptions
which we make. We cannot assure that results which we anticipate will be
achieved, since results may differ materially because of both known and unknown
risks and uncertainties which we face. Factors which could cause actual results
to differ materially from our expectations include, but are not limited to: the
effects of economic conditions and conditions which affect the market for
property and casualty insurance; laws, rules and regulations which apply to
insurance companies, including the impact of personal automobile reform
legislation in New Jersey; the effects of competition from other insurers and
banks, and the trend toward self- insurance; risks we face in entering new
markets and diversifying the products and services we offer; weather-related
events and other catastrophes affecting our insureds, our ability to obtain
rate increases and to retain business; the performance of our independent
insurance agencies; and other risks and uncertainties we identify in filings
with the Securities and Exchange Commission, including, but not limited to the
Annual Report on Form 10-K, although we do not promise to update such
forward-looking statements to reflect actual results or changes in assumptions
or other factors that could affect these statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion relates to the Company's results of operations,
financial condition and liquidity for the interim periods indicated. References
to the "Company" and to "Selective" mean Selective Insurance Group, Inc. and
its consolidated subsidiaries, collectively.
RESULTS OF OPERATIONS
The following discussion is a comparison of the second quarter ended June 30,
2000 ("Second Quarter 2000") and the six month period ended June 30, 2000 ("Six
Months 2000") to the second quarter ended June 30, 1999 ("Second Quarter 1999")
and the six month period ended June 30, 1999 ("Six Months 1999").
OPERATING SEGMENTS
The Company is primarily engaged in writing property and casualty insurance.
The Company has classified its business into three segments, each of which is
managed separately. The three segments are Insurance Operations (commercial
lines underwriting and
8
<PAGE> 9
personal lines underwriting), Investments, and Diversified Insurance Services
(formerly called Fee-For-Service Operations). All segments are evaluated based
on their underwriting or operating results, which are prepared in accordance
with Generally Accepted Accounting Principles ("GAAP"). For an additional
description of these accounting policies, refer to Note 1 to the Company's
Consolidated Financial Statements on pages 41 through 43 of the Annual Report
on Form 10-K for the year ended December 31, 1999. See note 4 to the June 30,
2000 Unaudited Consolidated Financial Statements beginning on page 6 of this
Quarterly Report on Form 10-Q for revenues and related income before Federal
income taxes for each individual segment discussed below.
Insurance Operations Segment
<TABLE>
<CAPTION>
($ in thousands) Unaudited, Quarter ended Unaudited, Six Months
June 30, ended June 30,
2000 1999 2000 1999
----------------------- ------- -------
<S> <C> <C> <C> <C>
TOTAL INSURANCE OPERATIONS
Net premiums written $ 218,089 215,059 431,050 422,784
======= ======= ======= =======
Net premiums earned $ 200,626 196,454 400,452 389,482
Losses and loss expenses incurred 153,501 139,629 299,809 283,511
Net underwriting expenses incurred 65,877 61,255 128,075 121,779
Dividends to policyholders 1,569 1,589 3,450 3,450
------- ------- ------- -------
Underwriting loss $ (20,321) (6,019) (30,882) (19,258)
------- ------- ------- -------
GAAP RATIOS:
Loss and loss expense ratio 76.5 % 71.1 74.8 % 72.8
Underwriting expense ratio 32.8 % 31.2 32.0 % 31.2
Dividends to policyholders ratio 0.8 % 0.8 0.9 % 0.9
------- ------- ------- -------
Combined ratio 110.1 % 103.1 107.7 % 104.9
======= ======= ======= =======
</TABLE>
Net premiums written for Second Quarter 2000 increased approximately $ 3
million, or 1% to $218 million and $8 million, or 2% to $431 million for Six
Months 2000. Premiums written included $39 million and $87 million in net new
business for Second Quarter 2000 and Six Months 2000 compared to $66 million and
$127 million during the same periods in 1999. The growth in premiums written,
despite lower new business numbers, reflects renewal premium increases in
commercial lines of 13% for Second Quarter 2000 and 11% for Six Months 2000. For
the Second Quarter 2000, the 6.5% growth in commercial lines was partially
offset by a 10.9% decrease in personal lines premiums written primarily due to a
decline in New Jersey involuntary automobile premiums written. The Company pays
a fixed fee to a servicing carrier in exchange for the carrier taking on the
Company's responsibility to write a share of the New Jersey involuntary Personal
Automobile Insurance Program ("PAIP").
The combined ratio increased 7.0 points to 110.1% for Second Quarter 2000 and
2.8 points to 107.7% for Six Months 2000. The ratio of losses and loss expenses
incurred to net premiums earned increased 5.9 points for Second Quarter 2000 to
77.3% and 2.2 points to 75.2% for Six Months 2000 compared to the same periods
in 1999. Increased weather-related catastrophes accounted for 1.7 points of the
increase in the loss ratio during Second Quarter 2000 compared to 1999.
Catastrophes for Six Months 2000 were comparable to Six Months 1999. The
remainder of the deterioration in Second Quarter 2000 was caused by the
lingering effects of pricing competition on current accident year results and
the effect of the rate roll back and Urban Enterprise zone business on New
Jersey personal automobile. The deterioration in New Jersey personal automobile
results alone accounted for 1.8 points of the increase in the overall combined
ratio for Second Quarter 2000.
The underwriting expense ratio increased 1.1 points to 32.1% for Second Quarter
2000 and increased 0.5 points to 31.6% for Six Months 2000. Higher expense
levels reflect: i) a .7 point increase due to a fixed fee paid to a servicing
carrier to write Selective's share of New Jersey assigned PAIP business; ii) a
.7 point increase due to expenses related to the Company's strategic
initiatives; and iii) increased labor costs due to the expansion in Mid-America,
the Northeast ,and Personal Lines in states outside New Jersey and increased
wages for existing employees due to a tight labor market. The Company has
announced two strategies to eliminate duplication and save overhead. These are
the consolidation of the two New Jersey offices and the consolidation of the
Richmond, Virginia and Chesapeake, Maryland regional office in conjunction with
the formation of a service center in Richmond.
9
<PAGE> 10
Commercial Lines Underwriting
<TABLE>
<CAPTION>
Unaudited, Quarter Unaudited, Six Months
COMMERCIAL LINES ended June 30 ended June 30
($ in thousands) 2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
GAAP INSURANCE OPERATION RESULTS
Net premiums written $ 163,475 153,775 $ 325,540 302,838
======= ======= ======= =======
Net premiums earned $ 148,162 138,508 294,041 275,280
Losses and loss expenses incurred 107,406 97,342 212,749 198,782
Net underwriting expenses incurred 50,688 44,886 97,560 92,239
Dividends to policyholders 1,569 1,589 3,450 3,450
------- ------ ------- -------
Underwriting loss $ (11,501) (5,309) $ (19,718) (19,191)
------- ------- ------- -------
GAAP RATIOS:
Loss and loss expense ratio 72.5 % 70.3 72.3 % 72.2
Underwriting expense ratio 34.2 % 32.4 33.2 % 33.5
Dividends to policyholders ratio 1.1 % 1.1 1.2 % 1.3
------- ------- ------- -------
Combined ratio 107.8 % 103.8 106.7 % 107.0
======= ======= ======= =======
</TABLE>
Commercial Lines Underwriting, which consists of six strategic business units
("SBUs"), accounted for approximately 75% of net premiums written during both
Second Quarter 2000 and Six Months 2000. Net premiums written increased $10
million, or 6%, for Second Quarter 2000 and $ 23 million, or 7%, for Six Months
2000 compared to the same periods in 1999. These increases were reflected in the
performance of all commercial SBUs and included $28 million and $65 million in
net new business for Second Quarter 2000 and Six Months 2000, compared to $46
million and $89 million for the same periods one year ago. The commercial lines
pricing environment appears to be improving as the market has stabilized and
pricing is moving upward. In the Second Quarter 2000, the Company increased its
renewal premium year over year approximately 13%, of which about 8.5 %
represented price increases. For Six Months 2000 our renewal premium increased
about 11% of which approximately 7% represented price increases. While these
increases have met the Company's preliminary goal of an 8% pure price increase,
we will continue to implement additional price increases where warranted.
Renewal retention remains consistent with 1999 at 75% for both Second Quarter
and Six Months 2000. We expect the benefit of price increases will have only a
modest impact on our 2000 second half results with a somewhat more significant
impact in 2001 when price increases will be fully reflected in earned premium.
For Second Quarter 2000 the Commercial Lines combined ratio increased 4 points
to 107.8% and decreased 0.3 points to 106.7% for Six Months 2000 when compared
to the same periods in 1999. The higher combined ratio for Second Quarter 2000
reflects a 1.5 point increase due to higher weather-related catastrophe losses
compared to Second Quarter 1999. Increased large property losses and
non-catastrophe storm losses accounted for most of the remaining increase.
Personal Lines Underwriting
<TABLE>
<CAPTION>
Unaudited, Quarter Unaudited, Six Months
PERSONAL LINES ended June 30 ended June 30
($ in thousands) 2000 1999 2000 1999
------ ------- ------- ------
<S> <C> <C> <C> <C>
GAAP INSURANCE OPERATION RESULTS
Net premiums written $ 54,614 61,284 $ 105,510 119,946
====== ======= ======= =======
Net premiums earned $ 52,464 57,946 106,411 114,202
Losses and loss expenses incurred 46,095 42,287 87,060 84,729
Net underwriting expenses incurred 15,189 16,369 30.515 29,540
------ ------- ------- ------
Underwriting (loss) or gain $ (8,820) (710) (11,164) (67)
------ ------- ------- ------
GAAP RATIOS:
Loss and loss expense ratio 87.9% 73.0 81.8 % 74.2
Underwriting expense ratio 28.9% 28.2 28.7 % 25.9
------ ------- ------- ------
Combined ratio 116.8% 101.2 110.5 % 100.1
====== ======= ======= ======
</TABLE>
Personal Lines Underwriting net premiums written decreased $7 million, or 11 %
to $55 million for Second Quarter 2000 and $14 million, or 12%, to $106 million
for Six Months 2000 when compared to the same periods in 1999. Net premiums
written included net new business written of $11 million in Second Quarter 2000
and $22 million in Six Months 2000 compared to $21 million in
10
<PAGE> 11
Second Quarter 1999 and $38 million in Six Months 1999. The Six Months 2000
decrease in net premiums written reflected i) the effects of the 15% rate
rollback mandated by the New Jersey auto reform legislation effective March 1999
on New Jersey personal automobile premium; ii) a $10 million decrease due to
declining PAIP assignments and transferring this New Jersey involuntary auto
business to a third party carrier; iii) a $5 million decrease in personal lines
premiums written in the Southern region due to intense pricing competition; and
iv) a $ 2 million decrease in involuntary Urban Enterprise Zone ("UEZ")
business.
The Personal Lines SBU combined ratio was 116.8% for Second Quarter 2000, up
15.6 points from the same period in 1999. This increase was primarily due to an
increase in the loss and loss expense ratio for personal lines of 15 points. The
loss ratio includes: i) 3.5 points of increased weather-related catastrophe
losses compared to Second Quarter 1999; ii) a 5 point increase due to a
deterioration in New Jersey automobile loss ratios due to the mandated 15% rate
rollback and unprofitable UEZ business; and iii) a 3 point increase due to a
higher loss and loss expense ratio in the expansion states driven by a
significant increase in hail damage claims and higher than expected losses on
policies in certain insurance rate tiers. The Company is taking action to ensure
that adequate rates will be charged for these classes of insureds going forward.
The Personal Lines SBU combined ratio was 110.5% Six Months 2000, up 10.4 points
from the same period in 1999. This increase was primarily due to an increase in
the loss and loss expense ratio of 7.6 points for Six Months 2000. The loss
ratio includes 2.1 points of increased weather related catastrophes compared to
Six Months 1999. In addition to higher levels of weather related catastrophes
this year, New Jersey Automobile loss ratios have deteriorated due to the 15%
rate rollback and unprofitable UEZ business. We expect the New Jersey Automobile
combined ratio to be in the range of 105% to 109% for the full year 2000.
The UEZ Program requires New Jersey auto insurers to write, at the Company's
voluntary rate levels, an amount of involuntary urban auto insurance
proportionate to their voluntary market share, which is currently estimated at
3.1% for Selective. As of July 2000, the Company is in compliance with the
assigned number of policies required under the plan and expects to remain in
compliance for the balance of 2000. Net premiums written under the involuntary
UEZ program decreased to $2 million for Second Quarter 2000 and $5 million for
Six Months 2000 from $3 million and $7 million for the same periods in 1999.
The Company is seeking more adequately priced full coverage business in these
territories.
The Company's New Jersey automobile rates remain inadequate and the Company
filed for an overall 18.9% rate increase in July 2000. The filing seeks to
increase the Company's liability rates which have historically been inadequate
and to reduce physical damage rates which are redundant. The filing has been
deemed complete and the Company will seek to expedite the resolution of the
filing and work with state regulators on ways to improve results in this line.
INVESTMENTS SEGMENT
Net investment income earned for Second Quarter 2000 was $25 million compared to
$23 million for Second Quarter 1999 and $48 million for Six Months 2000 compared
to $47 million for Six Months 1999. Net investment income earned after tax for
Second Quarter 2000 and Six Months 2000 of $19 million and $37 million, remained
relatively flat compared to the same periods during 1999. The Company had a 4.5%
annualized after-tax investment yield for Six Months 2000, up slightly from 4.4%
in 1999. Net realized gains for Second Quarter 2000 and Six Months 2000
decreased $23 million and $29 million to $0.4 million and $2.7 million
respectively. Realized investment gains and losses fluctuate based on investment
decisions regarding individual securities as well as tax planning
considerations.
11
<PAGE> 12
DIVERSIFIED INSURANCE SERVICES SEGMENT
<TABLE>
<CAPTION>
Unaudited Unaudited,
Quarter ended Six Months ended
June 30, 2000 June 30, 2000
-----------------------------------------------------------------------------------------
($ in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLOOD INSURANCE
Net Revenue $ 2,890 2,388 $ 5,487 4,315
Income Before Federal Income Tax 494 457 965 817
MEDICAL COST CONTAINMENT
Managed Care
Net Revenue 2,053 1,484 3,764 3,355
Income Before Federal Income Tax 421 198 819 608
Preferred Provider
Organization
Net Revenue 1,271 N/A 2,661 N/A
Income Before Federal Income Tax 260 N/A 292 N/A
PROFESSIONAL EMPLOYER ORGANIZATION
Net Revenue 7,236 N/A 14,361 N/A
Income Before Federal Income Tax 51 N/A 348 N/A
SOFTWARE DEVELOPMENT AND
PROGRAM ADMINISTRATION
Net Revenue 4,661 3,741 9,202 8,825
Loss Before Federal Income Tax (276) (262) (277) (396)
OTHER
Net Revenue 253 N/A 556 N/A
Income Before Federal Income Tax 34 N/A 113 N/A
TOTAL
Net Revenue 18,364 7,613 36,031 16,495
Income Before Federal Income Tax 984 393 2,260 1,029
Net Income 614 238 1,409 634
Return on Net Revenue 3.3% 3.1% 3.9% 3.8%
</TABLE>
Diversified Insurance Services businesses generated $18.4 million of revenue and
$0.6 million of net income for Second Quarter 2000 and $36 million of revenue
and $1.4 million of net income for Six Months 2000. This compared to $7.6
million and $16.5 million of revenue and $0.2 million and $0.6 million of net
income for the same periods in 1999. The segment generated a return on net
revenue of 3.3% and 3.9% for the Second Quarter 2000 and Six Months 2000,
consistent with the prior year.
We intend to continue to focus our Diversified Insurance Services businesses on
revenue growth, geographic expansion and inter-business marketing opportunities.
During Second Quarter 2000, the Company continued marketing, through independent
insurance agents, a product that combines Professional Employer Organizational
("PEO") services and commercial lines insurance coverages. This represents a
unique way to address many risk management and human resources issues that our
small to mid-sized business customers face.
Flood Insurance
Selective is a servicing carrier for the National Flood Insurance Program. The
Company provides a market for flood insurance to its agents, including
flood-only appointmented agents, across the country. The premiums collected by
the Company are ceded 100% to the federal government. As a servicing carrier,
Selective bears no risk of policyholder loss. The Company receives a servicing
fee from which it pays agency commissions and other related expenses. In
addition to the underwriting fees, the Company receives fees for handling
claims. Together these fees generated $2.9 million of revenue for the Second
Quarter 2000 and $5.5 million of revenue for Six Months 2000. The resulting
pre-tax profit for this unit was $0.5 million for Second Quarter 2000 and $1.0
million for Six Months 2000. The increase in additional revenues in 2000 were
substantially offset by increased expenses due to start-up costs associated
with FloodConnect, LLC.
12
<PAGE> 13
Medical Cost Containment - Alta Services and Consumer Health Network
Alta Services, LLC ("Alta") manages workers' compensation and automobile medical
claims for the underwriting subsidiaries of the Company, for unrelated
companies, and for self-insured businesses and employer groups. Alta bears no
underwriting risk and offers a full array of medical cost containment services.
During 2000, Alta has generated revenue of $2.1 million and $3.8 million for
Second Quarter 2000 and Six Months 2000 compared to $1.5 million and $3.4
million in the same period of 1999. Pre-tax net income increased in 2000 to $0.4
million and $0.8 million for Second Quarter 2000 and Six Months 2000, from $0.2
million and 0.6 million in 1999.
Consumer Health Network ("CHN"), acquired in July 1999, is a preferred provider
organization ("PPO"), which develops networks of medical providers and leases
these networks to insurers, large employers, third party administrators(such as
Alta Services), unions and other entities that pay medical claims. In return for
bringing the medical providers patients, the PPO negotiates discounts for its
customers. The costs associated with these efforts have reduced return on
revenue margins in the Six Months 2000. CHN generated $1.3 million and $2.7
million in revenue and $260,000 and $292,000 in pre-tax net income,
respectively, during Second Quarter 2000 and Six Months 2000.
Professional Employer Organization ("PEO") - Selective HR Solutions
The PEO, acquired in July 1999 provides human resource administration, including
benefits, payroll and employee management services, and risk and compliance
management products and services, including workers' compensation to small or
mid-sized businesses. A PEO, by the nature of its product package, provides a
very high level of day-to-day services to its customers, which the Company
believes, will be attractive to small business owners. The Company believes that
small to mid-sized businesses will begin demanding new and better solutions to
many of their operational problems. The PEO concept provides an answer to many
problems employers face from hiring and retaining good employees, to providing
competitive benefits, to eliminating administrative and compliance burdens that
keep the business owners from focusing on their core operations.
As independent agents write insurance for about 70% of the small business (those
with 25 or less employees) insurance market, the Company believes it can
successfully market the PEO product in its operating territories through its
agents. The Company is steadily introducing the PEO product in its operating
territories throughout 2000 and 2001, building on existing agent/business owner
relationships. The marketing and selling of PEO Services is expected to generate
business opportunities for Alta and CHN. Selective HR Solutions will also begin
using an Internet-enabled payroll and benefits management system in 2000, which
is expected to further improve efficiency and service levels. Selective HR
Solutions generated $7.2 million in revenue and $51,000 in net income for Second
Quarter 2000 and $14.4 million in revenue and $348,000 in net income for Six
Months 2000. Investments in hiring and training additional employees greatly
reduced pre-tax profit levels in the Second Quarter 2000. We expect these
investments to continue throughout 2000.
Software Development and Program Administration -- PDA Software Services, Inc.
13
<PAGE> 14
PDA Software Services, Inc. ("PDA") was acquired in late 1998. PDA has assisted
in the development of the Company's automated claim and flood processing
systems. In addition, PDA provides administrative services to the federal
government's Women, Infants and Children ("WIC") nutritional program
administered by the states. Currently, PDA administers the WIC program in 14
states.
PDA incurred a pre-tax loss of $276,000 and $277,000 for Second Quarter 2000 and
Six Months 2000 compared to a pre-tax loss of $263,000 and $397,000 during the
same periods a year ago. The loss is partially attributable to the amortization
of goodwill as well as the retention bonuses paid to several key employees. The
employment retention bonuses continue as a charge against income through
2002. Revenues for Second Quarter 2000 and Six Months 2000 were $4.6 million and
$9.2 million respectively compared to $3.7 million and $8.8 million for the same
periods in 1999.
FEDERAL INCOME TAXES
Total Federal income tax expense decreased by $13 million and $12 million to a
benefit of $3 million and $1 million for Second Quarter 2000 and Six Months
2000. The decrease reflects lower income for the year due to increased
underwriting losses and decreased realized gains. The Company's effective tax
rate differs from the Federal corporate rate of 35% primarily as a result of
tax-exempt investment income.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Selective Insurance Group, Inc. ("The Parent") is an insurance holding company
whose principal assets are its investments in its insurance and diversified
insurance services subsidiaries. As an insurance holding company, The Parent
meets its cash requirements through dividends from its insurance subsidiaries,
the payments of which are subject to state regulatory requirements, and proceeds
from the sales of common stock and debt. The Parent's cash requirements also
include the cost of shares of common stock repurchased under its common stock
repurchase program. As of June 30, 2000, the Company had repurchased a total of
6.4 million shares at a total cost of $122 million under the program which
commenced in 1996 with 0.7 million shares repurchased during Second Quarter
2000 at a total cost of $13 million. For Six Months 2000 the Company purchased
1.5 million shares at a total cost of $26 million. There is remaining
authorization to purchase an additional 1.6 million shares.
On May 4, 2000, the Company successfully completed a private placement bond
offering in the amount of $91.5 million. The offering consists of two traunches:
a five year average life traunche of $30 million at 8.63% and an eight year
average life traunche of $61.5 million at 8.87%. The majority of the proceeds,
$68.2 million, were used to pay off the outstanding balances on lines of credit.
The increase in interest expense for the Second Quarter 2000 and Six Months 2000
is attributable to i) increases in the lines of credit primarily for treasury
stock purchases prior to their pay-off; ii) increases in interest rates on the
lines of credit; and iii) higher overall debt level and interest rates related
to the private placement.
The overall obligations and cash outflow of the Company include: claim
settlements; commissions; labor costs; premium taxes; general and administrative
expenses; investment purchases; interest expenses; capital expenditures with
respect to the Company's automation initiatives and principal payments on the
senior notes and dividends to policyholders and stockholders. The insurance
14
<PAGE> 15
subsidiaries satisfy their obligations and cash outflow through premium
collections, interest and dividend income and maturities of investments. For Six
Months 2000 and Six Months 1999, cash provided by operating activities was
$55,000 and $16 million respectively. The $16 million decrease in cash provided
by operating activities was primarily due to an increase in losses and loss
expenses paid resulting from catastrophic and severe storms, increased large
property losses, as well as an increase in underwriting expenses due primarily
to an increase in overall compensation and benefits.
Total assets increased 1.3%, or $32 million, from December 31, 1999 to June 30,
2000. This increase was primarily due to the increase in premium receivables of
$33 million resulting from the Company's book of business which generates
higher volumes of premiums written in the first and second quarter of each year
compared to the fourth quarter. The fluctuations in premium volume has a
corresponding impact on outstanding receivables.
Assets also increased by (i) other trade receivables of $4 million, primarily
attributable to growth in revenue of the diversified insurance services segment,
(ii) an increase of deferred policy acquisition cost of $9 million due to the
increase in premiums activity and, (iii) an increase in other assets of $3
million in connection with capitalization costs associated with the May 4, 2000
private placement. These increases were offset by a decrease in reinsurance
recoverables on unpaid losses and loss expenses of $16 million primarily due to
a decrease in recoverables from flood business.
The increase in total liabilities of 2.6%, or $50 million, from December 31,
1999 to June 30,2000 was mainly attributable to: i) a net increase in debt of
$39 million resulting from the May 4, 2000; private placement of $91.5 and ii)
unearned premiums increased by $29 million due to the premiums written
fluctuation discussed above. These increases were offset by i) an overall
decrease in reserves for loss and loss expenses of $10 million due mainly to
the settlement of flood claims; and ii) a decrease in other liabilities of $8
million reflecting primarily the impact on agent profit sharing reserves from
the 1999 program paid at the beginning of 2000.
YEAR 2000
Many currently installed computer systems and software products use only two
digits to identify a year in the date field with the assumption that the first
two digits of the year are always "19." Consequently, on January 1, 2000,
computers that were not "Year 2000" ("Y2K") compliant may have read the year as
1900. Systems that calculate, compare or sort using the incorrect date may
malfunction. As a result, prior to the end of 1999, computer systems and/or
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements. Significant uncertainty exists in the software
industry concerning the potential effect associated with such compliance.
Through July 2000, the Company did not experience Y2K related business
disruptions internally or as a result of its dealings with suppliers or service
providers.
The Company believes that most significant Y2K insurance claims are likely to
occur in the information technology business sector, and under errors and
omissions (E&O) and directors and officers liability (D&O) insurance coverages.
The Company has not significantly participated in the technology business
sector, nor has it significantly written E&O and D&O coverage types. The
Company has also communicated to agents and policyholders that policies issued
do not include coverage for Y2K losses, with the possible exception of certain
losses involving property damage or bodily injury which can not be quantified
at this time. The Company has used the Insurance Services Office Y2K
exclusionary endorsements on most commercial lines policies. In addition, the
Company's casualty excess of loss treaty was amended, effective July 1, 1998,
to include as covered losses all Y2K losses aggregated as a single event, with
protection totaling $38 million in excess of $12 million retention. The treaty
covers any Y2K claim that is asserted in the 36 month period beginning on July
1, 1998.
As of July 31, 2000, the Company has not received any Y2K claims.
RECENT LEGISLATION REGARDING PRIVACY OF CONSUMER FINANCIAL INFORMATION
On June 1, 2000, federal regulators issued final regulations implementing the
provisions of the Financial Services Modernization Act of 1999, also known as
the Gramm-Leach-Bliley Act ("The Act"), governing the privacy of consumer
financial information. The regulations become effective on November 13, 2000,
and the date for compliance with the regulations is July 1, 2001. The
regulations limit disclosure by financial institutions of "nonpublic personal
information" about individuals who obtain financial products or services for
personal, family, or household purposes. The Act and the regulations generally
apply to disclosures to nonaffiliated third parties, subject to specified
exceptions, but not to disclosures to affiliates. It is anticipated that the
states or the NAIC will adopt regulations that are at least as restrictive that
will be imposed on insurance companies. This is an evolving area of regulation
requiring the Company's continued monitoring.
While the Company believes it is in compliance with all currently effective and
applicable laws effecting its operations, and the Company will before the
effective date of the federal regulations review the steps necessary to comply
with the Act, the Company can not currently quantify the financial impact it
will incur to satisfy revised or additional regulatory requirements.
15
<PAGE> 16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the information about market risk set
forth in the Company's Annual Report on Form 10-K.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits required by Item 601 of Regulation S-K are listed in
the Exhibit Index, which immediately precedes the exhibits filed
with this Form 10-Q.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the period covered by
this report.
16
<PAGE> 17
SELECTIVE INSURANCE GROUP, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
10.16a Amendment Number 2, dated May 5, 2000, to the employment
agreement between Selective Insurance Company of America and
Gregory E. Murphy, filed herewith.
10.16b Amendment Number 2, dated May 5, 2000, to the employment
agreement between Selective Insurance Company of America and
Jaime Ochiltree III, filed herewith.
10.16c Amendment, dated May 5, 2000, to the employment agreement
between Selective Insurance Company of America and James W.
Coleman, filed herewith.
10.16d Employment Agreement, dated May 5, 2000, between Selective
Insurance Company of America and Richard H. Eskow, filed
herewith.
10.16e Termination Agreement, dated May 5, 2000, between Selective
Insurance Company of America and Richard H. Eskow, filed
herewith.
10.16f Employment Agreement, dated May 5, 2000, between Selective
Insurance Company of America and Dale A. Thatcher, filed
herewith.
10.16g Termination Agreement, dated May 5, 2000, between Selective
Insurance Company of America and Dale A. Thatcher, filed
herewith.
10.27 Form of Note Purchase Agreement dated May 4, 2000 with respect
to Selective Insurance Group, Inc. 8.63% Series A Senior Notes
due May 4, 2007 and Series B Notes due May 4, 2010, filed
herewith.
10.28 Commercial Loan Note of $10,000,000 Line of Credit with First
Union National Bank as of October 22, 1999 filed herewith.
11 Statement Re: Computation of Per Share Earnings, filed
herewith.
27 Financial Data Schedule filed herewith.
</TABLE>
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SELECTIVE INSURANCE GROUP, INC.
REGISTRANT
By: /s/ Dale A. Thatcher August 14, 2000
-------------------------------------------------------------------------------
Dale A. Thatcher
Senior Vice President of Finance and Chief Financial Officer
By: /s/ Gregory E. Murphy August 14, 2000
-------------------------------------------------------------------------------
Gregory E. Murphy
Chairman, President and Chief Executive Officer
18
