2022 Annual Report Narrative Section

OUR BUSINESS

Selective Insurance Group, Inc. (NASDAQ: SIGI) is a New Jersey holding company for ten property and casualty insurance companies with $10.8 billion in assets as of December 31, 2022. A customer-centric company, we are dedicated to serving our customers' unique insurance needs through customized risk management solutions and value-added services. In collaboration with our distribution partners, we oˆer standard and specialty insurance to businesses, non-profits, public entitites, and individuals through the following segments:

Excess & Surplus

OUR FOOTPRINT

StandardPersonal15 states

Standard Commercial

(30 states and the District of Columbia,

including Idaho, Alabama, and Vermont,

which opened in 2022)

Flood and Excess & Surplus(50 states)

^Non-GAAP (U.S. Generally Accepted Accounting Principles) operating income, non-GAAP operating income per diluted common share, and non-GAAP operating retuon common equity are non-GAAP measures. Refer to the section entitled "Financial Highlights of Results for Years Ended December 31, 2022, 2021, and 2020" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a reconciliation of the non-GAAP measures to the equivalent GAAP measures.

2022 FINANCIAL HIGHLIGHTS

% or Point Change

($ in millions, except per share data)

2022

2021

Better (Worse)

Insurance OperationsNet premiums written Combined ratio

$3,573.6

$3,189.7

Underwriting income after-tax

Retuon common equity from insurance operations after-tax

95.1% $131.8 5.4%

92.8% $172.7 6.5%

12% 2.3 pts (24)% (1.1) pts

Investments

Net investment income after-tax

$232.2

$263.0

(12)%

Net realized and unrealized investment (losses) gains after-tax Total invested assets

$(90.7)

$13.9

(752)%

$7,837.5

$8,027.0

(2)%

Invested assets per dollar of common stockholders' equity Annual after-tax yield on investment portfolio

$3.37

$2.88

17%

2.9%

3.4%

(0.5) pts

Retuon common equity from net investment income after-taxSummary Data

9.4%

9.9%

(0.5) pts

Total revenues

$3,558.1

$3,379.2

5%

Net income available to common stockholders Retuon common equity

$215.7

$394.5

(45)%

8.8%

14.8%

(6.0) pts

Non-GAAP operating income*

$306.4

$380.6

(19)%

Non-GAAP operating retuon common equity* Operating cash flow as % of net premiums written Total assets

12.4%

14.3%

(1.9) pts

22.5%

24.2%

(1.7) pts

$10,802.3

$10,461.4

3%

Stockholders' equity

$2,527.6

$2,982.9

(15)%

Common stockholders' equity

$2,327.6

$2,782.9

(16)%

Per Common Share Data

Diluted net income available to common stockholders Diluted non-GAAP operating income*

Dividends to common stockholders Book value

$3.54 $5.03 $1.14 $38.57

$6.50 $6.27 $1.03 $46.24

(46)% (20)%

11% (17)%

AVERAGE ANNUAL RETURN

$25,000

$20,000

Growth of a $10,000 investment

(year-end 2017-2022)

$15,000 $10,000 $5,000

SIGI

S&P 500

$0

S&P Prop/Cas

2017

2018

2019

2020

2021

2022

*Non-GAAP (U.S. Generally Accepted Accounting Principles) operating income, non-GAAP operating income per diluted common share, and non-GAAP operating retuon common equity are non-GAAP measures. Refer to the section entitled "Financial Highlights of Results for Years Ended December 31, 2022, 2021, and 2020" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a reconciliation of the non-GAAP measures to the equivalent GAAP measures.

SELECTIVE2022 ANNUAL REPORT 1

2022 ANNUAL REPORT SHAREHOLDER LETTER

Dear Shareholders:

2022 was a remarkable year for Selective. We demonstrated our resiliency and ability to manage e ectively through several macroeconomic challenges. We proudly delivered a superior omni-channel service experience to customers and independent insurance agency partners, opportunities for our employees, and strong results for our shareholders.

Our e ective execution enabled us to generate a 12.4% non-GAAP operating retuon common equity ("ROE"), our ninth consecutive year of delivering double-digit returns. Very few in our industry can match that track record. Despite elevated catastrophe losses, rising inflation, and capital market volatility over the past nine years, we delivered annualized total shareholder retuof approximately 16%. Over that period, we also generatedabout 10% annual growth in tangible book value per share plus accumulated dividends, the metric we view as the best long-term indicator of property and casualty industry value creation. Our results reflect the success of our underwriting discipline and profitable growth strategies.

I firmly believe we have the tools, technology, talent, and distribution partner relationships to continue generating strong and sustainable performance - regardless of market conditions - in 2023 and well into the future.

2022 FINANCIAL HIGHLIGHTS:

• • Strong bottom-line performance: Non-GAAP operating ROE of 12.4% outperformed our full-year 2022 operating ROE target of 11% because of our disciplined underwriting strategy. Net income available to common stockholders was $216 million ($3.54 per diluted common share), and non-GAAP operating income was $306 million ($5.03 per diluted common share).

• • Continued financial flexibility: At year-end 2022, our balance sheet remained extremely strong. During the year, we increased our quarterly shareholder dividend by 7%, to $0.30 per share. We also had approximately $84 million in remaining capacity under our Board-authorized $100 million share repurchase program.

• • Strong share price outperformance: Selective's 2022 total shareholder retuwas 9.7%, meaningfully exceeding the S&P 500 Index's 18.1% decline. Over the past ten years, total annualized shareholder returns of 18.4% have exceeded the S&P 500 Index's 12.6% average annual performance.

  HISTORICAL NON GAAP OPERATING ROEs* RELATIVE TO PEER AVERAGE

'16

'17

'18

'19

'20

SIGIPeer Avg.

'21

'22

HISTORICAL TOTAL RETURN: SIGI VS. BENCHMARKS DECEMBER 31, 2022'

SIGIS&P Prop/CasS&P 500

25% 20% 15% 10% 5% 0%

2

*Non-GAAP (U.S. Generally Accepted Accounting Principles) operating income, non-GAAP operating income per diluted common share, and non-GAAP operating retuon common equity are non-GAAP measures. Refer to the section entitled "Financial Highlights of Results for Years Ended December 31, 2022, 2021, and 2020" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a reconciliation of the non-GAAP measures to the equivalent GAAP measures.

2022 STRATEGIC AND OPERATING HIGHLIGHTS:

• • We advanced our geographic expansion strategy by launching our commercial lines products in Vermont, Idaho, and Alabama. We are on target to open West Virginia and Maine as expected in early 2024. Over time, an expanded footprint will enhance our access to new business, further reduce our geographic concentration risk, and help us better serve our customers and distribution partners.

• • We appointed 118 new agencies, bringing the total to approximately 1,500 agencies and 2,600 storefronts.

• • We resumed premium growth in our personal lines segment, driven by strong market acceptance of our product designed for mass aŠuent customers.

• • We published our inaugural Task Force for Climate-Related Financial Disclosures (TCFD) report, significantly enhancing our climate strategy disclosure.

EXECUTION OF KEY STRATEGIC PRIORITIES

Our strong financial performance this past year provides us the financial flexibility to continue executing our strategic objectives that support profitable growth over the long term, despite an uncertain near-term macroeconomic backdrop.

Maintaining underwriting discipline and pricing adequacy is a top priority. We built the organizational muscle and underwriting focus to e™ectively manage profitability and retention rates, even in the current dynamic loss-trend environment. Our commitment to underwriting discipline has positioned us well in recent years, permitting us to adjust our go-to-market strategy and prices as necessary.

COMMERCIAL LINES PRICING AND RETENTION

We continue to develop and implement new tools and technologies to create operating ešciencies and strengthen our market position. Our recent investments to enhance our small business and E&S technology platforms position us well for the future.

Our commitment to continuous improvement includes enhancing customers' experience with Selective at every touchpoint. This is critical to becoming a stronger competitor. We made significant investments in digital capabilities that enable our customers to engage in their chosen manner and increase the adoption of our self-service platform and value-added services, all expected to increase future retention.

BOARD MEMBER RETIREMENTS

As we look ahead to our many opportunities, I want to recognize three long-standing Board members - John C. Burville; Michael J. Morrissey; and William M. Rue - who are retiring at the 2023 Annual Meeting of Stockholders, having reached our mandatory retirement age. Each played an integral role in our success, providing valuable insights and guidance throughout their tenure. We thank them for their strategic counsel and wish them the best.

CONCLUSION

Our outstanding 2022 performance gives us a solid foundation to advance our near-term strategic priorities and position us for consistent long-term growth and value creation. We could not have accomplished this without all our supporters. I want to thank our shareholders for their investment in our business and strategy and their confidence in our management teams' continued execution. I'd also like to thank our customers and distribution partners for their continued trust in our operations.

Most importantly, I want to thank our talented employees, whose dedication and e™orts continue to strengthen our customer and distribution partner relationships and drive our organization. I am confident their work furthering our unique culture will drive our success in the future.

Every day, our interactions with our customers and agency partners reinforce the importance of our role in rebuilding lives and businesses, making communities safer, and supporting economic expansion. We recognize and appreciate our responsibilities to the communities we serve as an employer providing a great place to work, as a safety resource helping mitigate risks, and as a neighbor supporting safe, sustainable, just, and diverse communities. Responsibility empowers our people to be and do their very best.

Our 2023 Annual Meeting of Stockholders will be held virtually, allowing attendance from anywhere in the world. We hope you will join us.

John J. MarchioniChairman, President and Chief Executive O cer

SELECTIVE2022 ANNUAL REPORT

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Selective Insurance Group Inc. published this content on 30 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 March 2023 18:09:09 UTC.