Selective Group Reports 4thQ Net Income of $12.3M

February 5, 2003

New Jersey-based Selective Insurance Group, Inc. reported net income of $12.3 million, or $0.46 per diluted share, for the fourth quarter ended Dec. 31, 2002, compared with $6.4 million, or $0.25 per diluted share, for the same period last year.

Net premiums written rose 11 percent to $236.3 million for the fourth quarter 2002, compared with the prior year quarter, and reached $1.1 billion for the year. Selective’s statutory combined ratio dropped to 103.4 percent for the quarter, down five points from the fourth quarter of 2001. This was on track with the company’s expectations and led by ongoing increases in commercial renewal prices, which were up 18 percent for the quarter. For the full year, commercial lines renewal price increases advanced to a 19 percent average, up from 16 percent in 2001, and 13 percent in 2000. These higher prices lowered the full-year overall statutory combined ratio to 103.2 percent, down from 106.7 percent last year. At the same time, Selective outperformed the industry, as estimated by A.M. Best, by an average of three points, continuing a ten-year trend.

Selective Insurance Group, Inc., Chairman, President and CEO Gregory E. Murphy noted, “This was a strong quarter, capping off a solid year, in which we achieved our financial and strategic goals set for 2002 in the face of significant insurance industry and economic challenges. We delivered solid profit growth and an annual total return to our shareholders of 18.7% – a performance that surpassed the S&P 500 and the S&P Property and Casualty indices. We experienced our eleventh straight quarter of double-digit price increases in our core commercial lines operation, which represents more than 80 percent of our overall premium volume. We anticipate ongoing upward commercial lines renewal pricing into 2003, and given our small-to-medium sized market we expect strong underwriting results from our core commercial lines.

“We have also significantly narrowed underwriting losses in the personal lines area, where our statutory combined ratio for the fourth quarter, which includes flood operations, improved to 105.0 percent, down from 115.3 percent for the same period last year. This 10-point drop reflected improvements in our New Jersey homeowners and automobile lines of business. Though still unprofitable, New Jersey personal automobile results demonstrate the favorable impact of price increases over the last two years. An additional automobile price increase of 2.8 percent will become effective in March, which should continue to drive improvements in this difficult line of business. As a result of our diversification efforts, New Jersey personal automobile now represents less than 12 percent of our total premium volume.”

Through other subsidiaries, the company offers medical claim management services; human resources benefits and administration services; risk management products and services; and flood insurance policy, administration and claim services.

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