INVESTOR DAY PRESENTATION SETTING THE STAGE FOR SUSTAINED - PowerPoint PPT Presentation

INVESTOR DAY PRESENTATION SETTING THE STAGE FOR SUSTAINED OUTPERFORMANCE

SAFE HARBOR STATEMENT PAGE 2 In this presentation, we make certain statements and reference other information that are “forward - looking statements” as defined i n the 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 future events or our future financial performance. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may result in materially differing actual results. We can give no assurance that our expectations expressed in forward-looking 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 “operating ear nings per share,” “operating income,” and “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 consistently 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.

SETTING THE STAGE FOR SUSTAINED OUTPERFORMANCE Greg Murphy - Chairman and Chief Executive Officer

SEL SELECT ECTIVE VE : A SUPER-REGIONAL COMPANY CLICK TO EDIT MASTER TITLE STYLE PAGE 4 PAGE 4 CAPABILITIES OF A NATIONAL  Edit Master text styles & o Second level RELATIONSHIPS OF A REGIONAL  Third level  Fourth level  $3.4B Market Cap (as of 11/6/17) 24 state footprint Fifth level significant expansion plans 90+ years of financial STRENGTH and $1.7B GAAP Equity (as of 9/30/17) SUPERIOR execution $2.4B NPW forecast for 2017 92% Stat Combined Ratio (as of 9/30/17) Our YTD combined ratio is 18 points better than the expected industry average for the full-year 2017

THREE SEGMENTS FUEL DIVERSIFICATION FOR CLICK TO EDIT MASTER TITLE STYLE GROWTH AND PROFITABILITY PAGE 5 PAGE 5 Standard Commercial Standard Personal E&S and Flood  Edit Master text styles o Second level  Third level  Fourth level  Fifth level 24 States 13 States All 50 States 80 wholesale distribution partners 1,250 distribution partners 700 distribution partners 5,000 Flood distribution partners YTD 9/30/17 Net Premiums Written Breakdown 9 % 12 % 79 %

CLICK TO EDIT MASTER TITLE STYLE UNDERWRITING DIVERSIFICATION IMPROVES PERFORMANCE PAGE 6 PAGE 6 EXCESS & SURPLUS COMMERCIAL LINES PERSONAL LINES  Edit Master text styles o Second level  Third level  Fourth level  Fifth level  Unique model – drives new   Extension of what we already write in Complements standard CL business business growth commercial lines  Homeowners at target profitability levels   Opportunistic strategy – drive price and Profitable renewal inventory management balancing margin/rate business mix to improve profitability and  Auto improvement through pricing, and retention targets diversify geography growth and expense initiatives   Record profitability in recent years  Flood business (NFIP – WYO program) Long term goal is for consistent target acts as hedge from catastrophe losses margins Strategy in each segment is underpinned by a strong focus on customer experience

CLICK TO EDIT MASTER TITLE STYLE SUSTAINABLE COMPETITIVE ADVANTAGES SET US APART PAGE 7 PAGE 7 IN INDUSTR USTRY SELECTIVE SELECTIV  Edit Master text styles   1,250 distribution partners o 38,500 agents in industry Second level True franchise value with “ivy    Split business model – small vs. medium/large Business plan to increase share of wallet Third level league” distribution partners   Fourth level  Capabilities of a national with local relationships Slow growth  Fifth level   Socialized experience, not unique or Unique, locally-based underwriting, Unique field model enabled by responsive claims and safety management specialists sophisticated tools and technology   Buyer/supplier changing dynamics Agile capability and excellent data analytics  Nimble, strategic execution  Multiple technology platforms makes Superior customer experience integration difficult  New/renewal pricing capabilities and delivered by best-in-class feedback loop employees  Challenged relationship model  Holistic solution for 24-hour shared experience   Lower operating and investment Higher operating and investment leverage Above-average leverage leverage, and higher combined ratio enhances ROEs enhances ROEs   Premium dollars needs to work harder Conservative balance sheet management to generate the same ROE

CLICK TO EDIT MASTER TITLE STYLE INDUSTRY FACING TURBULENCE PAGE 8 PAGE 8 HEAD HEADWIN WINDS TAIL ILWIN WINDS  Edit Master text styles o Second level  Third level  2017 ROE forecast of “0%”  Record low interest rates and macro uncertainty  Fourth level around inflation, growth, GDP and taxes  Fifth level  Underwriting improvement only through renewal  Competitive pricing environment and higher pure pricing power reinsurance costs  Potential for more favorable regulatory and tax  New entrants and digitization environment  Buyer/supplier changing dynamics  Deliver value-added products/services, sensors, and other technologies, to enhance relevance and  Increased expectations around customer increase “switching costs” experience with 24-hour service capability

FINANCIAL AND OPERATING OVERVIEW SETTING THE STAGE FOR SUSTAINED OUTPERFORMANCE Mark Wilcox – EVP, Chief Financial Officer

CLICK TO EDIT MASTER TITLE STYLE STRONG CAPITAL POSITION AND OPERATING PERFORMANCE PAGE 10 PAGE 10  OVERVIEW Edit Master text styles o Second level  Business model  Third level   Fourth level Operating segments  Fifth level  Reinsurance, reserves, and catastrophe losses  Underwriting margins and guidance  Capital and liquidity management Conservative balance sheet and strong operating performance

CLICK TO EDIT MASTER TITLE STYLE LOWER RISK PROFILE AND STRONG FINANCIAL STRENGTH PAGE 11 PAGE 11 A Lower Risk Profile Strong Financial Strength Ratings  Edit Master text styles o Second level A.M. Best A  Third level  Fourth level  Fifth level Fitch A+ Low to Medium Hazard Moody’s A2 Writer S&P Global A Lower risk profile allows for higher operating leverage – a differentiated business model

CLICK TO EDIT MASTER TITLE STYLE HIGHER UNDERWRITING AND INVESTMENT LEVERAGE HAS HELPED ROE PAGE 12 PAGE 12 1.0 point of operating ROE* equates to ~:  Edit Master text styles 1.0 point of underwriting margin SIGI 1.4x o Second level NPW/Surplus  Third level 2.0 points of underwriting margin 0.7x Industry  Fourth level  Fifth level 40 bps of investment yield (p-t) 3.4x SIGI Investments/Surplus 2.2x 60 bps of investment yield (p-t) Industry * Refer to “Safe Harbor Statement” on page 2 of this presentation for further detail regarding certain non -GAAP financial measures. At current interest rates, SIGI can generate attractive ROEs compared to the industry

STRONG OPERATING ROE** IN 2017 AND WELL POSITIONED CLICK TO EDIT MASTER TITLE STYLE FOR THE FUTURE PAGE 13 PAGE 13 7.2%  Edit Master text styles 14% o Second level 11.0%  Third level (2.2)%  Fourth level 8.5%  Fifth level 6.0% 7% 0% Underwriting Investments Other* Operating Estimated ROE** WACC for SIGI * Interest expense + other expenses ** Refer to “Safe Harbor Statement” on page 2 of this presentation for further detail regarding certain non -GAAP financial measures. ROE reconciliation is for the first nine months of 2017 Operating ROE** in Line With Long-Term Target for 2017