Selective Insurance Group, Inc. announces highest annual operating income in its history.

BRANCHVILLE, N.J.--(BUSINESS WIRE)--Feb. 12, 1996--Selective Insurance Group, Inc. today reported the highest annual operating income since it commenced business in 1926. Reflecting employee efforts to produce this result, more than 85% of Selective employees participated in the largest cash incentive reward ever granted by the Company. Operating income for 1995 was up 48% to $52,457,000, from $35,526,000 in 1994. For the fourth quarter, operating income increased 17% to $13,513,000 versus $11,589,000 for the same period one year ago.

CEO James W. Entringer said the property/casualty insurer's improved financial results "indicate that the strategic changes implemented since the restructuring in 1993 are working. The commitment of our employees and their drive to meet the challenges we face have resulted in this improvement, which is indicated by key financial measures. Assets, revenues, stockholders' equity, operating income and productivity all reached record levels in 1995. Through increased automation we processed $460,000 of net premiums written per employee in 1995, a 45% increase over 1993."

During 1995, cash provided from operations increased $55 million, or 46% to approximately $175 million. Increased premium volume and a 7% reduction in the statutory underwriting expense ratio accounted for most of the growth in cash provided from operations. The higher level of cash produced a 14% growth in net investment income for 1995 over 1994, while assets and stockholders' equity reached all-time highs of $2.1 billion and $437 million, respectively. "Our shareholders participated in this improved financial success through dividends and a higher share price, which together generated a total return of 45% for 1995," Entringer said.

Fourth quarter operating earnings amounted to $13,513,000 or $.94 per primary share, up from $11,589,000 or $.83 per share in 1994. For the quarter, investment income was up 13% to $24,586,000 and the statutory combined ratio was 102.3%, down from 102.7% for the same period one year ago. The favorable underwriting results exhibited the ongoing improvement in the statutory expense ratio due to a reduction in the workforce and a lower than anticipated assessment from the New Jersey Unsatisfied Claim & Judgment Fund ("UCJF"). The lower UCJF assessment increased primary operating earnings by approximately $.16 per share for the quarter and $.46 per share for the year.

For the year ended December 31, 1995, operating income was $52,457,000 or $3.67 per primary share, compared to $35,526,000 or $2.56 in 1994. For the year, net investment income increased 14% and the statutory combined ratio was 101.6%, down from 104.3% in 1994.

Stockholders' equity increased 33% to $436,749,000 or $30.33 per share, compared to $329,164,000 or $23.23 per share at December 31, 1994. The significant growth reflected increased operating income and increased net unrealized gains on available-for-sale securities, including a net unrealized gain (net of tax) on securities transferred from "held-to-maturity" to "available-for-sale" classifications. For the year ending December 31, 1995, the increase in net unrealized gains amounted to $64,889,000 or $4.51 per share (which includes the net unrealized gains on transferred securities of $12,896,000 or $.90 per share).

The Board of Directors of Selective Insurance Group, Inc. declared a $.28 per share quarterly cash dividend on its common stock payable March 1,1996, to stockholders of record on February 22,1996. Selective Insurance Group, Inc., headquartered in Branchville, New Jersey, is a holding company for five property/casualty insurance companies that offer primary insurance for commercial and personal risks. Selective's insurance companies are rated A+ by both A.M. Best and Standard & Poor's Insurance Rating Services. -0-

Selective Insurance Group, Inc. (O)
                                 1995             1994
     Quar. December 31:
Net premiums earned          186,356,000      178,025,000
Net inv inc                   24,586,000       21,722,000
Operating income              13,513,000       11,589,000
Cap gain, after tax              705,000          149,000
Net income                    14,218,000       11,738,000
Operating income per share:
 Primary                             .94              .83
 Fully diluted                       .91              .80
Net income per share:
     Primary                         .99              .84
     Fully diluted                   .96              .81
Weighted average shares:
     Primary                  14,364,000       14,037,000
     Fully diluted            14,879,000       14,630,000

     12 Mos. December 31:
Net premiums earned          742,817,000      680,270,000
Net inv inc                   91,640,000       80,657,000
Operating income              52,457,000       35,526,000
Cap gain, after tax              585,000        2,750,000
Net income                    53,042,000       38,276,000
Operating income per share:
 Primary                            3.67             2.56
 Fully diluted                      3.57             2.47
Net income per share:
     Primary                        3.71             2.76
     Fully diluted                  3.61             2.66
Weighted average shares:
     Primary                  14,286,000       13,880,000
     Fully diluted            14,803,000       14,593,000

CONTACT: Selective Insurance Group, Inc., Branchville

Gregory E. Murphy

Senior Vice President

Chief Financial Officer

201-948-1292