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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: September 30, 2021
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: 001-33067
SELECTIVE INSURANCE GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)

New Jersey 22-2168890
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

40 Wantage Avenue
Branchville, New Jersey 07890
(Address of Principal Executive Offices) (Zip Code)

973 948-3000
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol (s) Name of each exchange on which registered
Common Stock, par value $2 per share SIGI The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 4.60% Non-Cumulative Preferred Stock, Series B, without par value SIGIP The Nasdaq Stock Market LLC

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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒           No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                           
Yes ☐ No ☒
As of October 15, 2021, there were 60,123,535 shares of common stock, par value $2.00 per share, outstanding. 

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SELECTIVE INSURANCE GROUP, INC.
Table of Contents
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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.

SELECTIVE INSURANCE GROUP, INC.
CONSOLIDATED BALANCE SHEETS 		Unaudited
($ in thousands, except share amounts) September 30, 2021 December 31,
2020
ASSETS    
Investments:    
Fixed income securities, held-to-maturity – at carrying value (fair value: $26,037 – 2021; $18,001 – 2020)
$ 25,323  16,846 
Less: allowance for credit losses (71) (22)
Fixed income securities, held-to-maturity, net of allowance for credit losses 25,252  16,824 
Fixed income securities, available-for-sale – at fair value
(allowance for credit losses: $7,169 – 2021 and $3,969 – 2020; amortized cost: $6,401,167 – 2021 and $6,073,517 – 2020)
6,677,070  6,455,928 
Commercial mortgage loans – at carrying value (fair value: $86,001 – 2021 and $47,289 – 2020)
83,993  46,306 
Less: allowance for credit losses —  — 
Commercial mortgage loans, net of allowance for credit losses 83,993  46,306 
Equity securities – at fair value (cost:  $299,541 – 2021; $301,551 – 2020)
324,186  310,367 
Short-term investments 355,937  409,852 
Other investments 392,788  266,322 
Total investments (Note 4 and 5) $ 7,859,226  7,505,599 
Cash 477  394 
Restricted cash 34,312  14,837 
Interest and dividends due or accrued 46,082  45,004 
Premiums receivable 1,001,331  857,014 
Less: allowance for credit losses (Note 6) (16,500) (21,000)
Premiums receivable, net of allowance for credit losses 984,831  836,014 
Reinsurance recoverable 687,812  589,269 
Less: allowance for credit losses (Note 7) (1,595) (1,777)
Reinsurance recoverable, net of allowance for credit losses 686,217  587,492 
Prepaid reinsurance premiums 187,969  170,531 
Current federal income tax 1,220  — 
Property and equipment – at cost, net of accumulated depreciation and amortization of:
$256,826 – 2021; $240,150 – 2020
75,014  77,696 
Deferred policy acquisition costs 333,995  288,578 
Goodwill 7,849  7,849 
Other assets 224,982  153,919 
Total assets $ 10,442,174  9,687,913 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Liabilities:    
Reserve for loss and loss expense (Note 8) $ 4,610,340  4,260,355 
Unearned premiums 1,847,273  1,618,271 
Long-term debt 500,904  550,743 
Current federal income tax —  14,021 
Deferred federal income tax 3,215  27,096 
Accrued salaries and benefits 113,708  114,868 
Other liabilities 444,638  363,670 
Total liabilities $ 7,520,078  6,949,024 
Stockholders’ Equity:    
Preferred stock of $0 par value per share:
$ 200,000  200,000 
Authorized shares 5,000,000; Issued shares: 8,000 with $25,000 liquidation preference per share - 2021 and 2020
Common stock of $2 par value per share:
Authorized shares 360,000,000
Issued: 104,389,125 – 2021; 104,032,912 – 2020
208,778  208,066 
Additional paid-in capital 458,143  438,985 
Retained earnings 2,523,810  2,271,537 
Accumulated other comprehensive income (Note 11) 140,224  220,186 
Treasury stock – at cost (shares:  44,265,590 – 2021; 44,127,109 – 2020) (Note 12)
(608,859) (599,885)
Total stockholders’ equity $ 2,922,096  2,738,889 
Commitments and contingencies
Total liabilities and stockholders’ equity $ 10,442,174  9,687,913 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME 		Quarter ended September 30, Nine Months ended September 30,
($ in thousands, except per share amounts) 2021 2020 2021 2020
Revenues:    
Net premiums earned $ 767,247  694,541  $ 2,232,725  1,976,915 
Net investment income earned 93,032  68,185  246,479  158,596 
Net realized and unrealized investment gains (losses) 177  7,721  15,353  (24,296)
Other income 4,588  6,119  14,912  12,627 
Total revenues 865,044  776,566  2,509,469  2,123,842 
Expenses:    
Loss and loss expense incurred 505,269  447,802  1,340,293  1,252,075 
Amortization of deferred policy acquisition costs 160,868  142,291  464,276  415,723 
Other insurance expenses 94,759  89,530  278,531  269,477 
Interest expense 7,242  7,781  21,967  23,310 
Corporate expenses 4,270  3,905  22,936  19,310 
Total expenses 772,408  691,309  2,128,003  1,979,895 
Income before federal income tax 92,636  85,257  381,466  143,947 
Federal income tax expense:    
Current 18,878  17,412  79,319  25,948 
Deferred 53  (2,030) (2,711) (1,295)
Total federal income tax expense 18,931  15,382  76,608  24,653 
Net income $ 73,705  69,875  $ 304,858  119,294 
Preferred stock dividends 2,300  —  7,053  — 
Net income available to common stockholders $ 71,405  69,875  $ 297,805  119,294 
Earnings per common share:    
Net income available to common stockholders - Basic $ 1.19  1.17  $ 4.95  1.99 
Net income available to common stockholders - Diluted $ 1.18  1.16  $ 4.92  1.98 
    
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.


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SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 		Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Net income $ 73,705  69,875  $ 304,858  119,294 
Other comprehensive income (loss) ("OCI"), net of tax:    
Unrealized (losses) gains on investment securities:    
Unrealized holding (losses) gains arising during period (27,875) 29,889  (81,402) 104,771 
Unrealized (losses) gains on securities with credit loss recognized in earnings (1,851) 7,299  (2,906) (14,751)
  Amounts reclassified into net income:
Held-to-maturity ("HTM") securities 1  —  (3) (5)
Net realized (gains) losses on disposals and intent-to-sell available-for-sale ("AFS") securities (1,024) (406) (501) 7,210 
Credit loss (benefit) expense 1,054  (2,254) 3,207  6,328 
Total unrealized (losses) gains on investment securities (29,695) 34,528  (81,605) 103,553 
Defined benefit pension and post-retirement plans:    
Amounts reclassified into net income:
Net actuarial loss 548  596  1,643  1,787 
  Total defined benefit pension and post-retirement plans
548  596  1,643  1,787 
Other comprehensive (loss) income (29,147) 35,124  (79,962) 105,340 
Comprehensive income $ 44,558  104,999  $ 224,896  224,634 
 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.


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SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 		Quarter ended September 30, Nine Months ended September 30,
($ in thousands, except share and per share amounts) 2021 2020 2021 2020
Preferred stock:
Beginning of period $ 200,000  —  $ 200,000  — 
Issuance of preferred stock —  —  —  — 
End of period 200,000  —  200,000  — 
Common stock:    
Beginning of period 208,742  207,875  208,066  206,968 
Dividend reinvestment plan 10  14  34  44 
Stock purchase and compensation plans 26  34  678  911 
End of period 208,778  207,923  208,778  207,923 
Additional paid-in capital:    
Beginning of period 454,459  435,019  438,985  418,521 
Dividend reinvestment plan 416  401  1,261  1,216 
Stock purchase and compensation plans 3,268  3,454  17,897  19,137 
End of period 458,143  438,874  458,143  438,874 
Retained earnings:    
Beginning of period, as previously reported 2,467,596  2,103,629  2,271,537  2,080,529 
Cumulative effect adjustment due to adoption of guidance on allowance for credit losses, net of tax —  —  —  1,435 
Balance at beginning of period, as adjusted 2,467,596  2,103,629  2,271,537  2,081,964 
Net income 73,705  69,875  304,858  119,294 
Dividends to preferred stockholders (2,300) —  (7,053) — 
Dividends to common stockholders (15,191) (13,907) (45,532) (41,661)
End of period 2,523,810  2,159,597  2,523,810  2,159,597 
Accumulated other comprehensive income (loss) ("AOCI"):    
Beginning of period 169,371  151,966  220,186  81,750 
Other comprehensive (loss) income (29,147) 35,124  (79,962) 105,340 
End of period 140,224  187,090  140,224  187,090 
Treasury stock:    
Beginning of period (608,801) (599,814) (599,885) (592,832)
Acquisition of treasury stock - share repurchase authorization —  —  (3,404) — 
Acquisition of treasury stock - shares acquired related to employee-share based compensation plans (58) (57) (5,570) (7,039)
End of period (608,859) (599,871) (608,859) (599,871)
Total stockholders’ equity $ 2,922,096  2,393,613  $ 2,922,096  2,393,613 
Dividends declared per preferred share $ 287.50  —  $ 881.67  — 
Dividends declared per common share $ 0.25  0.23  $ 0.75  0.69 
Preferred stock, shares outstanding:
Beginning of period 8,000  —  8,000  — 
Issuance of preferred stock —  —  —  — 
End of period 8,000  —  8,000  — 
Common stock, shares outstanding:
Beginning of period 60,106,236  59,811,742  59,905,803  59,461,153 
Dividend reinvestment plan 5,096  7,026  17,152  21,900 
Stock purchase and compensation plan 12,946  16,936  339,061  455,537 
Acquisition of treasury stock - share repurchase authorization —  —  (52,781) — 
Acquisition of treasury stock - shares acquired related to employee share-based compensation plans (743) (1,002) (85,700) (103,888)
End of period 60,123,535  59,834,702  60,123,535  59,834,702 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS 		Nine Months ended September 30,
($ in thousands) 2021 2020
Operating Activities    
Net income $ 304,858  119,294 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization 40,706  44,435 
Stock-based compensation expense 13,431  13,935 
Undistributed gains of equity method investments (65,215) (5,146)
Distributions in excess of current year income of equity method investments 2,750  3,136 
Net realized and unrealized (gains) losses (15,353) 24,296 
Loss on disposal of fixed assets 50  17 
Changes in assets and liabilities:    
Increase in reserve for loss and loss expense, net of reinsurance recoverable 251,260  190,796 
Increase in unearned premiums, net of prepaid reinsurance 211,564  114,672 
Increase in net federal income taxes (17,866) (10,775)
Increase in premiums receivable (148,817) (28,239)
Increase in deferred policy acquisition costs (45,417) (21,523)
Increase in interest and dividends due or accrued (1,249) (1,507)
Decrease in accrued salaries and benefits (1,160) (33,677)
Increase in other assets (22,045) (23,388)
Increase (decrease) in other liabilities 35,806  (5,443)
Net cash provided by operating activities 543,303  380,883 
Investing Activities    
Purchase of fixed income securities, held-to-maturity (11,250) — 
Purchase of fixed income securities, available-for-sale (1,660,798) (1,373,226)
Purchase of commercial mortgage loans (38,129) (29,800)
Purchase of equity securities (82,223) (87,307)
Purchase of other investments (63,661) (61,051)
Purchase of short-term investments (3,443,597) (4,475,128)
Sale of fixed income securities, available-for-sale 384,586  411,263 
Proceeds from commercial mortgage loans 442  109 
Sale of short-term investments 3,497,243  4,377,024 
Redemption and maturities of fixed income securities, held-to-maturity 2,735  1,646 
Redemption and maturities of fixed income securities, available-for-sale 910,741  738,238 
Sale of equity securities 85,373  1,320 
Sale of other investments 5,377  3,879 
Distributions from other investments 10,524  12,890 
Purchase of property and equipment (15,123) (17,858)
Net cash used in investing activities (417,760) (498,001)
Financing Activities    
Dividends to preferred stockholders (7,053) — 
Dividends to common stockholders (43,756) (39,972)
Acquisition of treasury stock (8,974) (7,039)
Net proceeds from stock purchase and compensation plans 4,575  5,478 
Preferred stock issued, net of issuance costs (479) — 
Proceeds from borrowings —  487,000 
Repayments of borrowings (50,000) (320,000)
Repayments of finance lease obligations (298) (429)
Net cash (used in) provided by financing activities (105,985) 125,038 
Net increase in cash and restricted cash 19,558  7,920 
Cash and restricted cash, beginning of year 15,231  7,975 
Cash and restricted cash, end of period $ 34,789  15,895 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Basis of Presentation
The words "Company,” “we,” “us,” or “our” refer to Selective Insurance Group, Inc. (the "Parent") and its subsidiaries, except as expressly indicated or the context requires otherwise. We have prepared our interim unaudited consolidated financial statements (“Financial Statements”) in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. These require us to make estimates and assumptions that affect the reported financial statement balances and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. All significant intercompany accounts and transactions between the Parent and its subsidiaries are eliminated in consolidation.

Our Financial Statements reflect all adjustments that, in our opinion, are normal, recurring, and necessary for a fair presentation of our results of operations and financial condition. Our Financial Statements cover the third quarters ended September 30, 2021 (“Third Quarter 2021”) and September 30, 2020 (“Third Quarter 2020”) and the nine-month periods ended September 30, 2021 (“Nine Months 2021”) and September 30, 2020 (“Nine Months 2020”). Our Financial Statements do not include all information and disclosures required by GAAP and the SEC for audited annual financial statements. Because results of operations for any interim period are not necessarily indicative of results for a full year, our Financial Statements should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”) filed with the SEC.

NOTE 2. Adoption of Accounting Pronouncements 
In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (“ASU 2019-12”). Among other items, ASU 2019-12 simplifies the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment; however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. ASU 2019-12 provides that all effects of a tax law change, including adjustment of the estimated annual effective tax rate, are recognized in the period of enactment.

For year-to-date losses in interim periods, an entity is required currently to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. When an interim period loss exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this limitation and an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate.

We adopted this guidance on January 1, 2021, and it did not have a material impact to our financial condition, cash flows, or results of operations.

Pronouncements to be effective in the future
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition away from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. Companies can elect to adopt ASU 2020-04 as of the beginning of the interim period that includes March 2020, or any date thereafter through December 31, 2022. We are currently evaluating the impact of this guidance on our financial condition and results of operations.

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NOTE 3. Statements of Cash Flows
Supplemental cash flow information was as follows:
  Nine Months ended September 30,
($ in thousands) 2021 2020
Cash paid during the period for:    
Interest $ 23,278  24,449 
Federal income tax 93,000  34,000 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases 6,480  7,077 
Operating cash flows from financing leases 5  13 
Financing cash flows from finance leases 298  429 
Non-cash items:
Corporate actions related to fixed income securities, AFS1
50,501  32,580 
Corporate actions related to fixed income securities, HTM1
—  2,596 
Corporate actions related to equity securities1
527  890 
Assets acquired under finance lease arrangements 183  119 
Assets acquired under operating lease arrangements 273  22,104 
Non-cash purchase of property and equipment —  9 
1Examples of corporate actions include exchanges, non-cash acquisitions, and stock splits.

The following table reconciles cash and restricted cash reported in the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows:
($ in thousands) September 30, 2021 December 31, 2020
Cash $ 477  394 
Restricted cash 34,312  14,837 
Total cash and restricted cash shown in the Consolidated Statements of Cash Flows $ 34,789  15,231 

Amounts included in restricted cash represent cash received from the National Flood Insurance Program ("NFIP"), which is restricted to pay flood claims under the Write Your Own program.

NOTE 4. Investments
(a) Information about our AFS securities as of September 30, 2021, and December 31, 2020, was as follows:
September 30, 2021
($ in thousands) Cost/
Amortized
Cost 		Allowance for Credit Losses Unrealized
Gains 		Unrealized
Losses 		Fair
Value
AFS fixed income securities:
U.S. government and government agencies $ 128,415  —  3,600  (957) 131,058 
Foreign government 14,567  (47) 695  (75) 15,140 
Obligations of states and political subdivisions 1,094,619  (99) 71,507  (103) 1,165,924 
Corporate securities 2,420,904  (4,719) 131,442  (3,101) 2,544,526 
Collateralized loan obligations ("CLO") and other asset-backed securities ("ABS") 1,326,348  (926) 18,896  (4,517) 1,339,801 
Residential mortgage-backed securities ("RMBS")
785,840  (1,363) 33,361  (1,056) 816,782 
Commercial mortgage-backed securities ("CMBS") 630,474  (15) 34,465  (1,085) 663,839 
Total AFS fixed income securities $ 6,401,167  (7,169) 293,966  (10,894) 6,677,070 
 
7
December 31, 2020
($ in thousands) Cost/
Amortized
Cost 		Allowance for Credit Losses Unrealized
Gains 		Unrealized
Losses 		Fair
Value
AFS fixed income securities:
U.S. government and government agencies $ 110,038  —  6,239  (137) 116,140 
Foreign government 16,801  (1) 1,569  (3) 18,366 
Obligations of states and political subdivisions 1,159,588  (4) 87,564  (11) 1,247,137 
Corporate securities 2,152,203  (2,782) 180,971  (2,340) 2,328,052 
CLO and other ABS 1,014,820  (592) 20,166  (7,843) 1,026,551 
RMBS 999,485  (561) 53,065  (201) 1,051,788 
CMBS 620,582  (29) 48,348  (1,007) 667,894 
Total AFS fixed income securities
$ 6,073,517  (3,969) 397,922  (11,542) 6,455,928 

The following tables provide a roll forward of the allowance for credit losses on our AFS fixed income securities for the periods indicated:
Quarter ended September 30, 2021
($ in thousands) Beginning Balance Current Provision for Securities without Prior Allowance Increase (Decrease) on Securities with Prior Allowance, excluding intent (or Requirement) to Sell Securities Reductions for Securities Sold Reductions for Securities Identified as Intent (or Requirement) to Sell during the Period Ending Balance
Foreign government $ 49  —  (2) —  —  47 
Obligations of states and political subdivisions 38  61  —  —  —  99 
Corporate securities 3,477  1,307  64  (49) (80) 4,719 
CLO and other ABS 1,399  46  (517) (2) —  926 
RMBS 1,034  248  125  (44) —  1,363 
CMBS 14  4  (3) —  —  15 
Total AFS fixed income securities $ 6,011  1,666  (333) (95) (80) 7,169 

Quarter ended September 30, 2020
($ in thousands) Beginning Balance Current Provision for Securities without Prior Allowance Increase (Decrease) on Securities with Prior Allowance, excluding intent (or Requirement) to Sell Securities Reductions for Securities Sold Reductions for Securities Identified as Intent (or Requirement) to Sell during the Period Ending Balance
Foreign government $ 28  —  (2) (19) —  7 
Obligations of states and political subdivisions 17  9  (11) —  —  15 
Corporate securities 8,077  1,016  (3,455) (265) (15) 5,358 
CLO and other ABS 1,389  —  (210) (51) (7) 1,121 
RMBS 831  —  (157) (27) —  647 
CMBS 53  —  (21) —  —  32 
Total AFS fixed income securities $ 10,395  1,025  (3,856) (362) (22) 7,180 

Nine Months ended September 30, 2021
($ in thousands) Beginning Balance Current Provision for Securities without Prior Allowance Increase (Decrease) on Securities with Prior Allowance, excluding intent (or Requirement) to Sell Securities Reductions for Securities Sold Reductions for Securities Identified as Intent (or Requirement) to Sell during the Period Ending Balance
Foreign government $ 1  47  (1) —  —  47 
Obligations of states and political subdivisions 4  84  11  —  —  99 
Corporate securities 2,782  3,413  (765) (570) (141) 4,719 
CLO and other ABS 592  573  (219) (20) —  926 
RMBS 561  1,018  (95) (121) —  1,363 
CMBS 29  4  (18) —  —  15 
Total AFS fixed income securities $ 3,969  5,139  (1,087) (711) (141) 7,169 





8
Nine Months ended September 30, 2020
($ in thousands) Beginning Balance Current Provision for Securities without Prior Allowance Increase (Decrease) on Securities with Prior Allowance, excluding intent (or Requirement) to Sell Securities Reductions for Securities Sold Reductions for Securities Identified as Intent (or Requirement) to Sell during the Period Ending Balance
Foreign government $ —  26  —  (19) —  7 
Obligations of states and political subdivisions —  15  —  —  —  15 
Corporate securities —  6,100  —  (659) (83) 5,358 
CLO and other ABS —  1,237  —  (109) (7) 1,121 
RMBS —  690  —  (43) —  647 
CMBS —  32  —  —  —  32 
Total AFS fixed income securities $ —  8,100  —  (830) (90) 7,180 

For information on our methodology and significant inputs used to measure expected credit losses, our accounting policy for recognizing write-offs of uncollectible amounts, and our treatment of accrued interest, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report. Accrued interest on AFS securities was $44.9 million as of September 30, 2021, and $43.8 million as of December 31, 2020. We did not record any material write-offs during 2021 or 2020.

(b) Quantitative information about unrealized losses on our AFS portfolio is provided below.

September 30, 2021 Less than 12 months 12 months or longer Total
($ in thousands) Fair Value Unrealized
Losses 		Fair Value Unrealized
Losses 		Fair Value Unrealized
Losses
AFS fixed income securities:        
U.S. government and government agencies $ 34,717  (940) 156  (17) 34,873  (957)
Foreign government 3,114  (75) —  —  3,114  (75)
Obligations of states and political subdivisions 7,936  (103) —  —  7,936  (103)
Corporate securities 236,164  (3,067) 2,412  (34) 238,576  (3,101)
CLO and other ABS 515,458  (3,723) 57,153  (794) 572,611  (4,517)
RMBS 111,648  (1,055) 20  (1) 111,668  (1,056)
CMBS 75,714  (941) 8,286  (144) 84,000  (1,085)
Total AFS fixed income securities $ 984,751  (9,904) 68,027  (990) 1,052,778  (10,894)

December 31, 2020 Less than 12 months 12 months or longer Total
($ in thousands) Fair
Value 		Unrealized
Losses 		Fair Value Unrealized
Losses 		Fair Value Unrealized
Losses
AFS fixed income securities:        
U.S. government and government agencies $ 11,519  (137) —  —  11,519  (137)
Foreign government 1,122  (3) —  —  1,122  (3)
Obligations of states and political subdivisions 2,223  (11) —  —  2,223  (11)
Corporate securities 65,187  (2,152) 2,400  (188) 67,587  (2,340)
CLO and other ABS 261,746  (2,995) 165,661  (4,848) 427,407  (7,843)
RMBS 18,227  (194) 1,181  (7) 19,408  (201)
CMBS 55,482  (616) 16,093  (391) 71,575  (1,007)
Total AFS fixed income securities $ 415,506  (6,108) 185,335  (5,434) 600,841  (11,542)

We do not currently intend to sell any of the securities reflected in the tables above, nor do we expect that we will be required to sell any of these securities. The decrease in gross unrealized losses during Nine Months 2021 was driven by a tightening of credit spreads, partially offset by an increase in longer-dated benchmark United States Treasury rates. Considering these factors and our review of these securities under our credit loss policy as described in Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report, we have concluded that no allowance for credit loss is required on these balances. This conclusion reflects our current judgment about the financial position and future prospects of the entity that issued the investment security and underlying collateral.

9
(c) Fixed income securities at September 30, 2021 are summarized below by contractual maturity. Mortgage-backed securities are reflected in the table using the estimated average life of each security. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without call or prepayment penalties. 
AFS HTM
($ in thousands) Fair Value Carrying Value Fair Value
Due in one year or less $ 511,751  32  33 
Due after one year through five years 3,389,351  14,548  15,340 
Due after five years through 10 years 2,101,275  10,672  10,664 
Due after 10 years 674,693  —  — 
Total fixed income securities $ 6,677,070  25,252  26,037 

(d) The following table summarizes our other investment portfolio by strategy:
Other Investments September 30, 2021 December 31, 2020
($ in thousands) Carrying Value Remaining Commitment
Maximum Exposure to Loss1
Carrying Value Remaining Commitment
Maximum Exposure to Loss1
Alternative Investments    
   Private equity $ 257,160  103,792  360,952  157,276  100,905  258,181 
   Private credit 62,462  91,991  154,453  54,017  98,330  152,347 
   Real assets 22,870  23,466  46,336  19,659  16,493  36,152 
Total alternative investments 342,492  219,249  561,741  230,952  215,728  446,680 
Other securities 50,296  —  50,296  35,370  —  35,370 
Total other investments $ 392,788  219,249  612,037  266,322  215,728  482,050 
1The maximum exposure to loss includes both the carry value of these investments and the related remaining commitments. In addition, tax credits that have been previously recognized in Other securities are subject to the risk of recapture, which we do not consider significant.

We are contractually committed to make additional investments up to the remaining commitments stated above. We have not provided any non-contractual financial support at any time during 2021 or 2020.

The following table shows gross summarized financial information for our other investments portfolio, including the portion we do not own. The majority of these investments are carried under the equity method of accounting and report results to us on a one-quarter lag. The following table provides (i) the gross summarized financial statement information for these investments for the three and nine-months ended June 30, and (ii) the portion of these results included in our Third Quarter and Nine Months results:
Income Statement Information Quarter ended September 30, Nine Months ended September 30,
($ in millions) 2021 2020 2021 2020
Net investment income $ 60.4  83.4  $ 550.3  92.9 
Realized gains 1,857.6  731.3  4,026.2  1,075.0 
Net change in unrealized appreciation 11,188.2  2,230.4  20,767.9  571.6 
Net income $ 13,106.2  3,045.1  $ 25,344.4  1,739.5 
Alternative investment income included in "Net investment income earned" on our Consolidated Statements of Income $ 42.8  18.7  $ 92.9  8.9 

(e) Certain of our insurance subsidiaries, as members of the Federal Home Loan Bank of Indianapolis ("FHLBI") and the Federal Home Loan Bank of New York ("FHLBNY"), have pledged certain AFS fixed income securities as collateral. Additionally, to comply with insurance laws, certain of our insurance subsidiaries have deposited certain securities with various state and regulatory agencies at September 30, 2021. We retain all rights regarding all securities pledged as collateral. The following table summarizes the market value of these securities at September 30, 2021:
($ in millions) FHLBI Collateral FHLBNY Collateral State and
Regulatory Deposits 		Total
U.S. government and government agencies $ —  —  22.1  22.1 
Obligations of states and political subdivisions —  —  4.0  4.0 
RMBS 67.8  44.8  —  112.6 
CMBS 6.6  14.6  —  21.2 
Total pledged as collateral $ 74.4  59.4  26.1  159.9 

(f) We did not have exposure to any credit concentration risk of a single issuer greater than 10% of our stockholders' equity, other than certain U.S. government-backed investments, as of September 30, 2021, or December 31, 2020.
10
(g) The components of pre-tax net investment income earned were as follows:
  Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Fixed income securities $ 51,683  51,285  $ 157,114  152,617 
Commercial mortgage loans ("CMLs") 683  245  1,892  463 
Equity securities 2,955  1,948  8,425  5,523 
Short-term investments 64  244  204  1,830 
Other investments 42,865  18,671  93,158  9,167 
Investment expenses (5,218) (4,208) (14,314) (11,004)
Net investment income earned $ 93,032  68,185  $ 246,479  158,596 
The increases in net investment income earned in Third Quarter and Nine Months 2021 compared to the prior year periods were driven by the alternative investments in our other investments portfolio. The results principally reflect unrealized gains on our private equity holdings that benefited from the upward movement in private market valuations in the three and nine-month periods ending June 30, 2021, as our results on these holdings are recorded on a one-quarter lag.

(h) The following table summarizes net realized and unrealized gains and losses for the periods indicated:
Quarter ended September 30, Nine Months ended September 30,
($ in thousands)  2021  2020  2021  2020
Gross gains on sales $ 7,151  2,975  $ 12,906  15,129 
Gross losses on sales (2,505) (2,402) (8,787) (7,841)
Net realized gains on disposals 4,646  573  4,119  7,288 
Net unrealized (losses) gains on equity securities (3,111) 4,338  15,830  (7,098)
Net credit loss (expense) benefit on fixed income securities, AFS (1,334) 2,853  (4,059) (8,011)
Net credit loss benefit (expense) on fixed income securities, HTM 6  3  (54) 4 
Net credit loss benefit (expense) on CMLs —  (2) —  (220)
Losses on securities for which we have the intent to sell (30) (44) (483) (16,259)
Net realized and unrealized gains (losses) $ 177  7,721  $ 15,353  (24,296)

Unrealized gains (losses) recognized in income on equity securities, as reflected in the table above, include the following:
Quarter ended September 30, Nine Months ended September 30,
($ in thousands)  2021  2020  2021  2020
Unrealized gains (losses) recognized in income on equity securities:
On securities remaining in our portfolio at period end $ 269  4,338  $ 14,767  (7,101)
On securities sold during period (3,380) —  1,063  3 
Total unrealized (losses) gains recognized in income on equity securities $ (3,111) 4,338  $ 15,830  (7,098)

The improvement in net realized and unrealized gains in Nine Months 2021 compared to Nine Months 2020 was primarily driven by (i) unrealized gains on our equity securities compared to unrealized losses last year, driven by COVID-19-related market disruption, and (ii) lower intent-to-sell losses given the significant trading flexibility we allowed our investment managers given last year's market conditions.

11
NOTE 5. Fair Value Measurements
The financial assets in our investment portfolio are primarily measured at fair value as disclosed on the Consolidated Balance Sheets. The following table presents the carrying amounts and estimated fair values of our financial liabilities as of September 30, 2021, and December 31, 2020:
September 30, 2021 December 31, 2020
($ in thousands) Carrying Amount Fair Value Carrying Amount Fair Value
Financial Liabilities
Long-term debt:
7.25% Senior Notes $ 49,917  64,955  49,914  66,148 
6.70% Senior Notes 99,514  127,279  99,499  127,886 
5.375% Senior Notes 294,307  382,961  294,241  383,669 
1.61% borrowings from FHLBNY —  —  25,000  25,182 
1.56% borrowings from FHLBNY —  —  25,000  25,198 
3.03% borrowings from FHLBI 60,000  65,109  60,000  67,513 
Subtotal long-term debt 503,738  640,304  553,654  695,596 
Unamortized debt issuance costs (3,228) (3,419)
Finance lease obligations 394  508 
Total long-term debt $ 500,904  550,743 

For a discussion of the fair value hierarchy and techniques used to value our financial assets and liabilities, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report.

The following tables provide quantitative disclosures of our financial assets that were measured and recorded at fair value at September 30, 2021, and December 31, 2020:
September 30, 2021   Fair Value Measurements Using
($ in thousands) Assets
 Measured at
 Fair Value 		Quoted Prices in
Active Markets for
Identical Assets/
Liabilities (Level 1) 		Significant Other
 Observable
Inputs
 (Level 2) 		Significant Unobservable
 Inputs
 (Level 3)
Description        
Measured on a recurring basis:        
AFS fixed income securities:
U.S. government and government agencies $ 131,058  59,264  71,794  — 
Foreign government 15,140  —  15,140  — 
Obligations of states and political subdivisions 1,165,924  —  1,157,920  8,004 
Corporate securities 2,544,526  —  2,434,240  110,286 
CLO and other ABS 1,339,801  —  1,277,372  62,429 
RMBS 816,782  —  816,782  — 
CMBS 663,839  —  663,839  — 
Total AFS fixed income securities 6,677,070  59,264  6,437,087  180,719 
Equity securities:
Common stock1
322,074  225,911  —  — 
Preferred stock 2,112  2,112  —  — 
Total equity securities 324,186  228,023  —  — 
Short-term investments 355,937  355,937  —  — 
Total assets measured at fair value $ 7,357,193  643,224  6,437,087  180,719 

12
December 31, 2020   Fair Value Measurements Using
($ in thousands) Assets
 Measured at
 Fair Value 		Quoted Prices in
 Active Markets for
Identical Assets/Liabilities
(Level 1) 		Significant
Other Observable
Inputs
 (Level 2) 		Significant Unobservable
Inputs
 (Level 3)
Description        
Measured on a recurring basis:        
AFS fixed income securities:
U.S. government and government agencies $ 116,140  40,960  75,180  — 
Foreign government 18,366  —  18,366  — 
Obligations of states and political subdivisions 1,247,137  —  1,244,243  2,894 
Corporate securities 2,328,052  —  2,257,352  70,700 
CLO and other ABS 1,026,551  —  970,176  56,375 
RMBS 1,051,788  —  1,051,788  — 
CMBS 667,894  —  667,894  — 
Total AFS fixed income securities 6,455,928  40,960  6,284,999  129,969 
Equity securities:
Common stock1
308,632  261,846  —  — 
Preferred stock 1,735  1,735  —  — 
Total equity securities 310,367  263,581  —  — 
Short-term investments 409,852  405,400  4,452  — 
Total assets measured at fair value $ 7,176,147  709,941  6,289,451  129,969 
1Investments amounting to $96.2 million at September 30, 2021, and $46.8 million at December 31, 2020, were measured at fair value using net asset value per share (or its practical expedient) and are not classified in the fair value hierarchy. These investments are not redeemable and the timing of liquidations of the underlying assets is unknown at each reporting period. The fair value amounts in this table enables reconciliation of the fair value hierarchy to total assets measured at fair value.

The following table provides a summary of Level 3 changes in Nine Months 2021 and Nine Months 2020:
September 30, 2021
($ in thousands) Obligations of States and Political Subdivisions Corporate Securities CLO and Other ABS Total
Fair value, December 31, 2020 $ 2,894  70,700  56,375  129,969 
Total net (losses) gains for the period included in:
OCI 9  2,607  206  2,822 
   Net realized and unrealized (losses) gains —  (185) (35) (220)
Net investment income earned —  14  9  23 
Purchases —  43,833  19,041  62,874 
Sales —  —  —  — 
Issuances —  —  —  — 
Settlements —  (210) (1,750) (1,960)
Transfers into Level 3 5,101  981  3,226  9,308 
Transfers out of Level 3 —  (7,454) (14,643) (22,097)
Fair value, September 30, 2021 $ 8,004  110,286  62,429  180,719 
Change in unrealized losses for the period included in earnings for assets held at period end —  (185) (35) (220)
Change in unrealized gains for the period included in OCI for assets held at period end 9  2,607  206  2,822 

13
September 30, 2020
($ in thousands) Obligation of state and Political Subdivisions Corporate Securities CLO and Other ABS Total
Fair value, December 31, 2019 $ —  17,051  17,034  34,085 
Total net (losses) gains for the period included in:
OCI (36) (2,415) 732  (1,719)
Net realized and unrealized (losses) gains —  (456) (247) (703)
Net investment income earned —  —  3  3 
Purchases —  19,002  11,751  30,753 
Sales —  —  —  — 
Issuances —  —  —  — 
Settlements —  (138) (1,030) (1,168)
Transfers into Level 3 2,890  4,592  26,401  33,883 
Transfers out of Level 3 —  —  (9,924) (9,924)
Fair value, September 30, 2020 $ 2,854  37,636  44,720  85,210 
Change in unrealized gains (losses) for the period included in earnings for assets held at period end —  (456) (247) (703)
Change in unrealized gains (losses) for the period included in OCI for assets held at period end (36) (2,415) 732  (1,719)

The following tables provide quantitative information regarding our financial assets and liabilities that were disclosed at fair value at September 30, 2021, and December 31, 2020:
September 30, 2021   Fair Value Measurements Using
($ in thousands) Assets/
Liabilities
Disclosed at
Fair Value 		Quoted Prices in
 Active Markets for
 Identical Assets/
Liabilities
(Level 1) 		Significant Other
Observable Inputs
(Level 2) 		Significant
Unobservable
Inputs
(Level 3)
Financial Assets        
HTM:        
Obligations of states and political subdivisions $ 3,619  —  3,619  — 
Corporate securities 22,418  —  22,418  — 
Total HTM fixed income securities $ 26,037  —  26,037  — 
CMLs $ 86,001  —  —  86,001 
Financial Liabilities        
Long-term debt:
7.25% Senior Notes $ 64,955  —  64,955  — 
6.70% Senior Notes 127,279  —  127,279  — 
5.375% Senior Notes 382,961  —  382,961  — 
3.03% borrowings from FHLBI 65,109  —  65,109  — 
Total long-term debt $ 640,304  —  640,304  — 

14
December 31, 2020   Fair Value Measurements Using
($ in thousands) Assets/
Liabilities
Disclosed at
Fair Value 		Quoted Prices in
 Active Markets for
 Identical Assets/
Liabilities
(Level 1) 		Significant Other
Observable Inputs
(Level 2) 		Significant
Unobservable
Inputs
(Level 3)
Financial Assets        
HTM:        
Obligations of states and political subdivisions $ 4,795  —  4,795  — 
Corporate securities 13,206  —  13,206  — 
Total HTM fixed income securities $ 18,001  —  18,001  — 
CMLs $ 47,289  —  —  47,289 
Financial Liabilities        
Long-term debt:
7.25% Senior Notes $ 66,148  —  66,148  — 
6.70% Senior Notes 127,886  —  127,886  — 
5.375% Senior Notes 383,669  —  383,669  — 
1.61% borrowings from FHLBNY 25,182  —  25,182  — 
1.56% borrowings from FHLBNY 25,198  —  25,198  — 
3.03% borrowings from FHLBI 67,513  —  67,513  — 
Total long-term debt $ 695,596  —  695,596  — 

NOTE 6. Allowance for Credit Losses on Premiums Receivable
The following table provides a roll forward of the allowance for credit losses on our premiums receivable balance for the periods indicated:
Quarter ended September 30, Nine Months ended September 30,
($ in thousands)  2021  2020  2021  2020
Balance at beginning of period $ 18,300  $ 21,000  $ 21,000  $ 6,400 
Cumulative effect adjustment1
—  —  —  1,058 
Balance at beginning of period, as adjusted $ 18,300  $ 21,000  $ 21,000  $ 7,458 
Current period provision for expected credit losses 180  802  1,721  16,369 
Write-offs charged against the allowance for credit losses (2,154) (996) (6,554) (3,272)
Recoveries 174  194  333  445 
Allowance for credit losses, end of period $ 16,500  $ 21,000  $ 16,500  $ 21,000 
1Represents the impact of our adoption of ASU 2016-13, Financial Instruments - Credit Losses.

In Nine Months 2020, we recognized an additional allowance for credit losses of $13.5 million, net of write-offs and recoveries. We based this increase on an evaluation of the recoverability of our premiums receivable in light of (i) the billing accommodations we announced during the first quarter of 2020 and (ii) the impact of certain state regulations that provided for deferral of payments without cancellation for a period up to 90 days and increased earned but uncollected premiums. The billing accommodations included individualized payment flexibility and suspending the effect of policy cancellations, late payment notices, and late or reinstatement fees. The heightened credit risk experienced in 2020 led us to increase the allowance for credit losses to $21.0 million last year. During Nine Months 2021, we realized a portion of the anticipated write-offs, which reduced our allowance. The reduction was partially offset by the additional provision established on current-year premiums, which resulted in the end of period allowance of $16.5 million.

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NOTE 7. Reinsurance
We evaluate and monitor the financial condition of our reinsurers under voluntary reinsurance arrangements to minimize our exposure to significant losses from reinsurer insolvencies. The following tables provide (i) a disaggregation of our reinsurance recoverable balance by financial strength rating and (ii) an aging analysis of our past due reinsurance recoverable balances as of September 30, 2021, and December 31, 2020:
September 30, 2021
($ in thousands) Current Past Due Total Reinsurance Recoverables
Financial strength rating of rated reinsurers
A++ $ 39,325  $ 13  $ 39,338 
A+ 338,912  887  339,799 
A 96,071  439  96,510 
A- 3,166  271  3,437 
B++ —  —  — 
B+ —  —  — 
Total rated reinsurers $ 477,474  $ 1,610  $ 479,084 
Non-rated reinsurers
Federal and state pools $ 204,001  $ —  $ 204,001 
Other than federal and state pools 4,698  29  4,727 
Total non-rated reinsurers $ 208,699  $ 29  $ 208,728 
Total reinsurance recoverable, gross $ 686,173  $ 1,639  $ 687,812 
Less: allowance for credit losses1
(1,595)
Total reinsurance recoverable, net $ 686,217 

December 31, 2020
($ in thousands) Current Past Due Total Reinsurance Recoverables
Financial strength rating of rated reinsurers
A++ $ 37,464  $ 102  $ 37,566 
A+ 354,846  2,452  357,298 
A 105,652  415  106,067 
A- 2,139  —  2,139 
B++ 56  324  380 
B+ —  —  — 
Total rated reinsurers $ 500,157  $ 3,293  $ 503,450 
Non-rated reinsurers
Federal and state pools $ 82,575  $ —  $ 82,575 
Other than federal and state pools 2,676  568  3,244 
Total non-rated reinsurers $ 85,251  $ 568  $ 85,819 
Total reinsurance recoverable, gross $ 585,408  $ 3,861  $ 589,269 
Less: allowance for credit losses1
(1,777)
Total reinsurance recoverable, net $ 587,492 
1Represents our current expectation of credit losses on total current and past due reinsurance recoverables, and is not identifiable by reinsurer.

The $98.7 million increase in "Total reinsurance recoverable, net," was primarily driven by losses ceded to the NFIP due to seasonal catastrophic storms, mainly Hurricane Ida, and subsequent flooding. See below for further discussion on ceded premiums written, ceded premiums earned, and ceded loss and loss expenses incurred related to our participation in the NFIP.

For a discussion of the methodology used to evaluate our estimate of expected credit losses, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report.


16
The following table provides a rollforward of the allowance for credit losses on our reinsurance recoverable balance for the periods indicated:
($ in thousands) Quarter ended September 30, Nine Months ended September 30,
 2021  2020  2021  2020
Balance at beginning of period $ 1,777  2,396  $ 1,777  4,400 
Cumulative effect adjustment1
—  —  —  (2,903)
Balance at beginning of period, as adjusted $ 1,777  2,396  $ 1,777  1,497 
Current period provision for expected credit losses (182) (565) (182) 334 
Write-offs charged against the allowance for credit losses —  —  —  — 
Recoveries —  —  —  — 
Allowance for credit losses, end of period $ 1,595  1,831  $ 1,595  1,831 
1Represents the impact of our adoption of ASU 2016-13, Financial Instruments - Credit Losses.

The following table contains a listing of direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and loss and loss expenses incurred for the periods indicated. For more information about reinsurance, refer to Note 9. “Reinsurance” in Item 8. “Financial Statements and Supplementary Data.” of our 2020 Annual Report.
Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Premiums written:        
Direct $ 932,752  839,275  $ 2,796,296  2,420,350 
Assumed 7,136  5,450  17,541  17,902 
Ceded (126,982) (125,217) (369,548) (346,665)
Net $ 812,906  719,508  $ 2,444,289  2,091,587 
Premiums earned:        
Direct $ 877,620  803,957  $ 2,568,445  2,292,495 
Assumed 6,304  6,147  16,391  18,375 
Ceded (116,677) (115,563) (352,111) (333,955)
Net $ 767,247  694,541  $ 2,232,725  1,976,915 
Loss and loss expenses incurred:        
Direct $ 655,483  530,192  $ 1,557,063  1,407,000 
Assumed 4,143  4,232  10,807  13,430 
Ceded (154,357) (86,622) (227,577) (168,355)
Net $ 505,269  447,802  $ 1,340,293  1,252,075 

Direct premiums written ("DPW") increased $375.9 million, or 16%, in Nine Months 2021 compared to Nine Months 2020 from (i) overall renewal pure price increases, (ii) strong retention, and (iii) new business growth. This increase included four percentage points from the $75 million return audit and endorsement premium accrual that was recorded in the first quarter of 2020 and a $19.7 million premium credit to automobile policyholders in the second quarter of 2020.

The return audit and endorsement premium accrual recorded in 2020 reflected lower exposure levels, which determine the premium we charge, attributable to the economic impacts of the COVID-19 pandemic and the anticipated decline in sales and payroll exposures on the general liability and workers compensation lines of business in 2020.

Ceded premiums written, ceded premiums earned, and ceded loss and loss expenses incurred related to our participation in the NFIP, to which we cede 100% of our NFIP flood premiums, losses, and loss expenses, were as follows:
Ceded to NFIP Quarter ended September 30, Nine Months ended September 30,
($ in thousands)  2021 2020 2021 2020
Ceded premiums written $ (77,697) (77,318) $ (218,520) (213,592)
Ceded premiums earned (69,197) (68,427) (203,549) (202,656)
Ceded loss and loss expenses incurred (153,713) (48,132) (174,861) (66,219)

The increase in ceded loss and loss expenses incurred related to our participation in the NFIP in Third Quarter and Nine Months 2021 compared to Third Quarter and Nine Months 2020 was due to the seasonal catastrophic storms mentioned above.

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NOTE 8. Reserve for Loss and Loss Expense
The table below provides a roll forward of reserve for loss and loss expense balances:
Nine Months ended September 30,
($ in thousands) 2021 2020
Gross reserve for loss and loss expense, at beginning of year $ 4,260,355  4,067,163 
Less: reinsurance recoverable on unpaid loss and loss expense, at beginning of year1
554,269  547,066 
Net reserve for loss and loss expense, at beginning of year 3,706,086  3,520,097 
Incurred loss and loss expense for claims occurring in the:    
Current year 1,408,240  1,295,285 
Prior years (67,947) (43,210)
Total incurred loss and loss expense 1,340,293  1,252,075 
Paid loss and loss expense for claims occurring in the:    
Current year 430,288  421,981 
Prior years 675,782  646,974 
Total paid loss and loss expense 1,106,070  1,068,955 
Net reserve for loss and loss expense, at end of period 3,940,309  3,703,217 
Add: Reinsurance recoverable on unpaid loss and loss expense, at end of period 670,031  590,059 
Gross reserve for loss and loss expense at end of period $ 4,610,340  4,293,276 
1 Nine Months 2020 includes an adjustment of $2.9 million related to our adoption of ASU 2016-13, Financial Instruments - Credit Losses.

Prior year reserve development in Nine Months 2021 was favorable by $67.9 million, which included $66.0 million of casualty reserve development. The favorable casualty reserve development included $29.0 million in our general liability line of business, $28.0 million in our workers compensation line of business, $7.0 million in our Excess and Surplus ("E&S") casualty lines of business, and $2.0 million in our businessowners' policies line of business.

Prior year reserve development in Nine Months 2020 was favorable by $43.2 million, which included $50.0 million of casualty reserve development, partially offset by $6.8 million of unfavorable property reserve development. The favorable casualty reserve development included $40.0 million in our workers compensation line of business and $20 million in our general liability line of business, partially offset by $10.0 million of unfavorable reserve development in our commercial automobile line of business.

NOTE 9. Segment Information
We evaluate the results of our four reportable segments as follows:

•Our Standard Commercial Lines, Standard Personal Lines, and E&S Lines are evaluated on before and after-tax underwriting results (net premiums earned, incurred loss and loss expense, policyholder dividends, policy acquisition costs, and other underwriting expenses), return on equity ("ROE") contribution, and combined ratios.
•Our Investments segment is primarily evaluated on after-tax net investment income and its ROE contribution. After-tax net realized and unrealized gains and losses, which are not included in non-GAAP operating income, are also included in our Investments segment results.

In computing each segment's results, we do not make adjustments for interest expense or corporate expenses, nor do we allocate assets.

18
The following summaries present revenues (net investment income and net realized and unrealized gains and losses on investments for the Investments segment) and pre-tax income for the individual segments:
Revenue by Segment Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Standard Commercial Lines:    
Net premiums earned:    
Commercial property $ 111,981  97,997  $ 320,904  287,279 
Workers compensation 78,318  75,595  230,845  204,207 
General liability 205,904  181,459  596,717  509,312 
Commercial automobile 185,610  160,937  535,519  449,162 
Businessowners' policies 23,025  27,605  80,963  82,157 
Bonds 8,850  9,226  26,436  28,075 
Other 5,883  5,266  17,082  15,477 
Miscellaneous income 4,168  5,521  13,670  11,107 
Total Standard Commercial Lines revenue 623,739  563,606  1,822,136  1,586,776 
Standard Personal Lines:
Net premiums earned:
Personal automobile 40,575  42,458  122,977  123,134 
Homeowners 30,633  31,395  91,801  94,537 
Other 2,154  2,123  5,698  6,066 
Miscellaneous income 420  598  1,242  1,520 
Total Standard Personal Lines revenue 73,782  76,574  221,718  225,257 
E&S Lines:
Net premiums earned:
Casualty lines 52,983  43,650  144,458  130,444 
Property lines 21,331  16,830  59,325  47,065 
Total E&S Lines revenue 74,314  60,480  203,783  177,509 
Investments:        
Net investment income 93,032  68,185  246,479  158,596 
Net realized and unrealized investment gains (losses) 177  7,721  15,353  (24,296)
Total Investments revenue 93,209  75,906  261,832  134,300 
Total revenues $ 865,044  776,566  $ 2,509,469  2,123,842 

Income Before and After Federal Income Tax Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Standard Commercial Lines:    
Underwriting gain, before federal income tax $ 17,413  42,718  $ 154,850  76,574 
Underwriting gain, after federal income tax 13,756  33,746  122,332  60,493 
Combined ratio 97.2  % 92.3  91.4  95.1 
ROE contribution 2.1  5.7  6.2  3.5 
Standard Personal Lines:
Underwriting gain (loss), before federal income tax $ (11,146) (14,404) $ 2,193  (20,342)
Underwriting gain (loss), after federal income tax (8,805) (11,379) 1,732  (16,070)
Combined ratio 115.2  % 119.0  99.0  109.1 
ROE contribution (1.3) (1.9) 0.1  (0.9)
E&S Lines:
Underwriting gain (loss), before federal income tax $ 4,672  (7,277) $ 7,494  (3,965)
Underwriting gain (loss), after federal income tax 3,691  (5,748) 5,920  (3,132)
Combined ratio 93.7  % 112.0  96.3  102.2 
ROE contribution 0.5  (1.0) 0.3  (0.2)
Investments:    
Net investment income $ 93,032  68,185  $ 246,479  158,596 
Net realized and unrealized investment gains (losses) 177  7,721  15,353  (24,296)
Total investments segment income, before federal income tax 93,209  75,906  261,832  134,300 
Tax on investments segment income 18,379  14,676  51,229  24,338 
Total investments segment income, after federal income tax $ 74,830  61,230  $ 210,603  109,962 
ROE contribution of after-tax net investment income 11.0  9.4  10.1  7.5 

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Reconciliation of Segment Results to Income Before Federal Income Tax Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Underwriting gain
Standard Commercial Lines $ 17,413  42,718  $ 154,850  76,574 
Standard Personal Lines (11,146) (14,404) 2,193  (20,342)
E&S Lines 4,672  (7,277) 7,494  (3,965)
Investment income 93,209  75,906  261,832  134,300 
Total all segments 104,148  96,943  426,369  186,567 
Interest expense (7,242) (7,781) (21,967) (23,310)
Corporate expenses (4,270) (3,905) (22,936) (19,310)
Income, before federal income tax $ 92,636  85,257  $ 381,466  143,947 
Preferred stock dividends (2,300) —  (7,053) — 
Income available to common stockholders, before federal income tax $ 90,336  85,257  $ 374,413  143,947 

NOTE 10. Retirement Plans
The primary pension plan for our employees is the Retirement Income Plan for Selective Insurance Company of America (the “Pension Plan”). Selective Insurance Company of America (“SICA”) also sponsors the Supplemental Excess Retirement Plan (the “Excess Plan”) and a life insurance benefit plan. All plans are closed to new entrants, and benefits ceased accruing under the Pension Plan and the Excess Plan after March 31, 2016. For more information about SICA's retirement plans, see Note 15. “Retirement Plans” in Item 8. “Financial Statements and Supplementary Data.” of our 2020 Annual Report.

The following tables provide information about the Pension Plan:
Pension Plan Pension Plan
Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020  2021 2020
Net Periodic Pension Cost (Benefit):
Interest cost $ 2,148  2,828  $ 6,445  8,484 
Expected return on plan assets (5,744) (5,477) (17,232) (16,430)
Amortization of unrecognized net actuarial loss 626  704  1,876  2,112 
Total net periodic pension benefit1
$ (2,970) (1,945) $ (8,911) (5,834)
1 The components of net periodic pension cost (benefit) are included within "Loss and loss expense incurred" and "Other insurance expenses" on the Consolidated Statements of Income.

Pension Plan
Nine Months ended September 30,
2021 2020
Weighted-Average Expense Assumptions:
Discount rate 2.68  % 3.33  %
Effective interest rate for calculation of interest cost 2.06  2.95 
Expected return on plan assets 5.40  5.80 
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NOTE 11. Comprehensive Income
The following are the components of comprehensive income, both gross and net of tax, for Third Quarter and Nine Months 2021 and 2020:
Third Quarter 2021      
($ in thousands) Gross Tax Net
Net income $ 92,636  18,931  73,705 
Components of OCI:      
Unrealized losses on investment securities:
     
Unrealized holding losses during the period (35,285) (7,410) (27,875)
Unrealized losses on securities with credit loss recognized in earnings (2,343) (492) (1,851)
Amounts reclassified into net income:
HTM securities 1  —  1 
Net realized gains on disposals and losses on intent-to-sell AFS securities (1,296) (272) (1,024)
Credit loss expense 1,334  280  1,054 
    Total unrealized losses on investment securities (37,589) (7,894) (29,695)
Defined benefit pension and post-retirement plans:      
Amounts reclassified into net income:      
Net actuarial loss 693  145  548 
    Total defined benefit pension and post-retirement plans 693  145  548 
Other comprehensive loss (36,896) (7,749) (29,147)
Comprehensive income $ 55,740  11,182  44,558 
Third Quarter 2020      
($ in thousands) Gross Tax Net
Net income $ 85,257  15,382  69,875 
Components of OCI:      
Unrealized gains on investment securities:
     
Unrealized holding gains during the period 37,836  7,947  29,889 
Unrealized gains on securities with credit loss recognized in earnings 9,239  1,940  7,299 
Amounts reclassified into net income:
HTM securities (1) (1) — 
Net realized gains on disposals and losses on intent-to-sell AFS securities (515) (109) (406)
Credit loss benefit (2,853) (599) (2,254)
    Total unrealized gains on investment securities 43,706  9,178  34,528 
Defined benefit pension and post-retirement plans:      
Amounts reclassified into net income:      
Net actuarial loss 754  158  596 
    Total defined benefit pension and post-retirement plans 754  158  596 
Other comprehensive income 44,460  9,336  35,124 
Comprehensive income $ 129,717  24,718  104,999 

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Nine Months 2021      
($ in thousands) Gross Tax Net
Net income $ 381,466  76,608  304,858 
Components of OCI:    
Unrealized losses on investment securities:
   
Unrealized holding losses during the period (103,040) (21,638) (81,402)
Unrealized losses on securities with credit loss recognized in earnings (3,678) (772) (2,906)
Amounts reclassified into net income:
HTM securities (4) (1) (3)
Net realized gains on disposals and losses on intent-to-sell AFS securities (634) (133) (501)
Credit loss expense 4,059  852  3,207 
    Total unrealized losses on investment securities (103,297) (21,692) (81,605)
Defined benefit pension and post-retirement plans:      
Amounts reclassified into net income:      
Net actuarial loss 2,079  436  1,643 
    Total defined benefit pension and post-retirement plans 2,079  436  1,643 
Other comprehensive loss (101,218) (21,256) (79,962)
Comprehensive income $ 280,248  55,352  224,896 
Nine Months 2020      
($ in thousands) Gross Tax Net
Net income $ 143,947  24,653  119,294 
Components of OCI:      
Unrealized gains on investment securities:
     
Unrealized holding gains during the period 132,623  27,852  104,771 
Unrealized losses on securities with credit loss recognized in earnings (18,672) (3,921) (14,751)
Amounts reclassified into net income:
HTM securities (7) (2) (5)
Net realized losses on disposals and losses on intent-to-sell AFS securities 9,126  1,916  7,210 
Credit loss expense 8,010  1,682  6,328 
    Total unrealized gains on investment securities 131,080  27,527  103,553 
Defined benefit pension and post-retirement plans:      
Amounts reclassified into net income:      
Net actuarial loss 2,261  474  1,787 
    Total defined benefit pension and post-retirement plans 2,261  474  1,787 
Other comprehensive income 133,341  28,001  105,340 
Comprehensive income $ 277,288  52,654  224,634 

The following are the balances and changes in each component of AOCI (net of taxes) as of September 30, 2021:
September 30, 2021 Defined Benefit
Pension and Post-Retirement Plans 		 
Net Unrealized (Losses) Gains on Investment Securities Total AOCI
($ in thousands)
Credit Loss Related1
HTM
Related 		All
Other 		Investments
Subtotal
Balance, December 31, 2020 $ (2,546) 6  307,790  305,250  (85,064) 220,186 
OCI before reclassifications (2,906) —  (81,402) (84,308) —  (84,308)
Amounts reclassified from AOCI 3,207  (3) (501) 2,703  1,643  4,346 
Net current period OCI 301  (3) (81,903) (81,605) 1,643  (79,962)
Balance, September 30, 2021 $ (2,245) 3  225,887  223,645  (83,421) 140,224 
1Represents change in unrealized loss on securities with credit loss recognized in earnings.




22
The reclassifications out of AOCI were as follows:
Quarter ended September 30, Nine Months ended September 30, Affected Line Item in the Unaudited Consolidated Statements of Income
($ in thousands) 2021 2020 2021 2020
HTM related
Unrealized (gains) losses on HTM disposals $ (1) 4  $ (1) 5  Net realized and unrealized investment gains (losses)
Amortization of net unrealized losses (gains) on HTM securities 2  (5) (3) (12) Net investment income earned
1  (1) (4) (7) Income before federal income tax
—  1  1  2  Total federal income tax expense
1  —  (3) (5) Net income
Net realized (gains) losses on disposals and intent-to-sell AFS securities
Net realized (gains) losses on disposals and intent-to-sell AFS securities (1,296) (515) (634) 9,126  Net realized and unrealized investment gains (losses)
(1,296) (515) (634) 9,126  Income before federal income tax
272  109  133  (1,916) Total federal income tax expense
(1,024) (406) (501) 7,210  Net income
Credit loss related
Credit loss expense (benefit) 1,334  (2,853) 4,059  8,010  Net realized and unrealized investment gains (losses)
1,334  (2,853) 4,059  8,010  Income before federal income tax
(280) 599  (852) (1,682) Total federal income tax expense
1,054  (2,254) 3,207  6,328  Net income
Defined benefit pension and post-retirement life plans
Net actuarial loss 159  162  478  486  Loss and loss expense incurred
534  592  1,601  1,775  Other insurance expenses
Total defined benefit pension and post-retirement life 693  754  2,079  2,261  Income before federal income tax
(145) (158) (436) (474) Total federal income tax expense
548  596  1,643  1,787  Net income
Total reclassifications for the period $ 579  (2,064) $ 4,346  15,320  Net income

NOTE 12. Equity
On December 2, 2020, we announced that our Board of Directors authorized a $100 million share repurchase program, which has no set expiration or termination date. Our repurchase program does not obligate us to acquire any particular amount of our common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. The timing and amount of any share repurchases under the authorization will be determined by management at its discretion based on market conditions and other considerations. As of September 30, 2021, 52,781 shares were repurchased under the share repurchase program at a total cost of $3.4 million. These repurchases were all completed in the first quarter of 2021, and we did not repurchase any shares under our share repurchase program in the second or third quarters of 2021. We have $96.6 million of remaining capacity under our share repurchase program.

NOTE 13. Litigation
As of September 30, 2021, we do not believe we are involved in any legal action that could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

In the ordinary course of conducting business, we are parties in various legal actions. Most are claims litigation involving our Insurance Subsidiaries as (i) liability insurers defending or providing indemnity for third-party claims brought against our customers, (ii) insurers defending first-party coverage claims brought against them, or (iii) liability insurers seeking declaratory judgment on our insurance coverage obligations. We account for such activity through the establishment of unpaid loss and loss expense reserves. In ordinary course claims litigation, we expect that any potential ultimate liability, after consideration of provisions made for potential losses and costs of defense, will not be material to our consolidated financial condition, results of operations, or cash flows.

All of our commercial property and businessowners' policies require direct physical loss of or damage to property by a covered cause of loss. It also is our practice to include in, or attach to, all standard lines commercial property and businessowners' policies an exclusion that states that all loss or property damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease is not a covered cause of loss ("Virus Exclusion"). Whether COVID-19-related contamination, the existence of the COVID-19 pandemic, and the resulting
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COVID-19-related government shutdown orders cause physical loss of or damage to property is the subject of much public debate and first-party coverage litigation against some insurers, including us. The Virus Exclusion also is the subject of first-party coverage litigation against some insurers, including us. We cannot predict the outcome of litigation over these two coverage issues, including interpretation of provisions similar or identical to those in our insurance policies.

From time to time, our Insurance Subsidiaries also are named as defendants in other legal actions, some of which assert claims for substantial amounts. Plaintiffs may style these actions as putative class actions and seek judicial certification of a state or national class for allegations involving our business practices, such as improper reimbursement of medical providers paid under workers compensation and personal and commercial automobile insurance policies or improper reimbursement for automobile parts. Similarly, our Insurance Subsidiaries can be named in individual actions seeking extra-contractual damages, punitive damages, or penalties, often alleging bad faith in the handling of insurance claims. We believe that we have valid defenses to these allegations and we account for such activity through the establishment of unpaid loss and loss expense reserves. In these other legal actions, we expect that any potential ultimate liability, after consideration of provisions made for estimated losses, will not be material to our consolidated financial condition. Nonetheless, litigation outcomes are inherently unpredictable and, because the amounts sought in certain of these actions are large or indeterminate, it is possible that any adverse outcomes could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements
The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent"), and its subsidiaries, except as expressly indicated or the context otherwise requires. In this Quarterly Report on Form 10-Q, we discuss and make statements about our intentions, beliefs, current expectations, and projections for our future operations and performance. Such statements are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements often are identified by words such as “anticipates,” “believes,” “expects,” “will,” “should,” and “intends” and their negatives. We caution prospective investors that forward-looking statements are not guarantees of future performance. Risks and uncertainties are inherent in our future performance. Factors that could cause actual results to differ materially from those indicated in forward-looking statements include, without limitation, those discussed in Item 1A. “Risk Factors.” in Part II. “Other Information” of this Form 10-Q. Our stated risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We can neither predict such new risk factors nor can we assess the impact, if any, such new risk factors may have on our businesses or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied in any forward-looking statement. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this report might not occur. We make forward-looking statements based on currently available information and assume no obligation, other than as may be required under the federal securities laws, to publicly update or revise any forward-looking statements for any reason.

Introduction
We classify our business into four reportable segments:

•Standard Commercial Lines;
•Standard Personal Lines;
•Excess and surplus ("E&S Lines"); and
•Investments.

For more details about these segments, refer to Note 9. "Segment Information" in Item 1. "Financial Statements." of this Form 10-Q and Note 12. "Segment Information" in Item 8. "Financial Statements and Supplementary Data." of our Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 Annual Report").

We write our Standard Commercial and Standard Personal Lines products and services through nine of our insurance subsidiaries, some of which participate in the federal government's National Flood Insurance Program's ("NFIP") Write Your Own Program ("WYO"). We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance Company, which provides us with a nationally-authorized non-admitted platform for customers who generally cannot obtain coverage in the standard marketplace. Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries."
The following is Management’s Discussion and Analysis (“MD&A”) of the consolidated results of operations and financial condition, as well as known trends and uncertainties, that may have a material impact in future periods. Investors should read the MD&A in conjunction with Item 1. "Financial Statements." of this Form 10-Q and the consolidated financial statements in our 2020 Annual Report filed with the U.S. Securities and Exchange Commission.
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In the MD&A, we will discuss and analyze the following:

•Critical Accounting Policies and Estimates;
•Financial Highlights of Results for the third quarters ended September 30, 2021 (“Third Quarter 2021”) and September 30, 2020 (“Third Quarter 2020”) and the nine-month periods ended September 30, 2021 (“Nine Months 2021”) and September 30, 2020 (“Nine Months 2020”);
•Results of Operations and Related Information by Segment;
•Federal Income Taxes;
•Financial Condition, Liquidity, and Capital Resources;
•Ratings;
•Off-Balance Sheet Arrangements; and
•Contractual Obligations, Contingent Liabilities, and Commitments.

Critical Accounting Policies and Estimates
Our unaudited interim consolidated financial statements include amounts for which we have made informed estimates and judgments for transactions not yet completed. Such estimates and judgments affect the reported amounts in the consolidated financial statements. As outlined in our 2020 Annual Report, those estimates and judgments most critical to the preparation of the consolidated financial statements involved the following: (i) reserves for loss and loss expense; (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities; (iii) reinsurance; (iv) allowance for credit losses on premiums receivable, and (v) the accrual for auditable premium. These estimates and judgments require the use of assumptions about matters that are highly uncertain, and therefore are subject to change as facts and circumstances develop. If different estimates and judgments had been applied, materially different amounts might have been reported in the financial statements.

We have made no material changes in the critical accounting policies disclosed on pages 37 through 46 of our 2020 Annual Report.

The following estimates materially changed in Nine Months 2021:
•Investment valuation and the allowance for credit losses on AFS fixed income securities - See Note 4. "Investments" and Note 5. "Fair Value Measurements" in Item 1. "Financial Statements." of this Form 10-Q;
•Reserves for loss and loss expense - See Note 8. "Reserve for Loss and Loss Expense" in Item 1. "Financial Statements." of this Form 10-Q;
•Reinsurance - See Note 7. "Reinsurance" in Item 1. "Financial Statements." of this Form 10-Q;
•Allowance for credit losses on premiums receivable - See Note 6. "Allowance for Credit Losses on Premiums Receivable" in Item 1. "Financial Statements." of this Form 10-Q; and
•Accrual for auditable premium - In the first quarter of 2020, we recorded a $75 million return audit and mid-term endorsement premium accrual in response to the COVID-19 pandemic and the anticipated decline in payroll and sales exposures on the workers compensation and general liability lines of business. The remaining accrual was $24.8 million as of December 31, 2020. During 2021, we applied premium adjustments for audits, fully exhausting this accrual as of June 30, 2021. Since April 2020, through active engagement among our underwriters, insureds, and distribution partners, we have established exposure levels to reflect our best estimate of how the current environment may impact our policies. As a result, we did not have material accruals for additional or return premium as of September 30, 2021.



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Financial Highlights of Results for Third Quarter and Nine Months 2021 and Third Quarter and Nine Months 20201
($ and shares in thousands, except per share amounts) Quarter ended September 30, Change
% or Points 		Nine Months ended September 30, Change
% or Points
2021 2020   2021 2020
Financial Data:
Revenues $ 865,044  776,566  11  % $ 2,509,469  2,123,842  18  %
After-tax net investment income 74,690  55,131  35    198,474  129,156  54   
After-tax underwriting income 8,642  16,619  (48) 129,984  41,291  215 
Net income before federal income tax 92,636  85,257  9  381,466  143,947  165 
Net income 73,705  69,875  5  304,858  119,294  156 
Net income available to common stockholders 71,405  69,875  2  297,805  119,294  150 
Key Metrics:
Combined ratio 98.6  % 97.0  1.6  pts 92.6  % 97.4  (4.8) pts
Invested assets per dollar of common stockholders' equity $ 2.89  3.04  (5) % $ 2.89  3.04  (5) %
Annualized return on common equity ("ROE") 10.6  11.9  (1.3) pts 15.1  6.9  8.2  pts
Statutory premiums to surplus ratio 1.35  x 1.39  (0.04) 1.35  x 1.39  (0.04)
Per Common Share Amounts:
Diluted net income per share $ 1.18  1.16  2  % $ 4.92  1.98  148  %
Book value per share 45.27  40.00  13  45.27  40.00  13 
Dividends declared per share to common stockholders 0.25  0.23  9  0.75  0.69  9 
Non-GAAP Information:
Non-GAAP operating income2
$ 71,265  63,776  12  % $ 285,676  138,488  106  %
Diluted non-GAAP operating income per common share2
1.18  1.06  11  4.72  2.30  105 
Annualized non-GAAP operating ROE2
10.6  % 10.9  (0.3) pts 14.5  % 8.0  6.5  pts
1Refer to the Glossary of Terms attached to our 2020 Annual Report as Exhibit 99.1 for definitions of terms used of this Form 10-Q.
2    Non-GAAP operating income, non-GAAP operating income per diluted common share, and annualized non-GAAP operating ROE are measures comparable to net income available to common stockholders, net income available to common stockholders per diluted common share, and annualized ROE, respectively, but exclude after-tax net realized and unrealized gains and losses on investments. They are used as important financial measures by us, analysts, and investors because the timing of realized investment gains and losses on sales of securities in any given period is largely discretionary. In addition, net realized and unrealized investment gains and losses on investments that are charged to earnings could distort the analysis of trends.

Reconciliations of net income available to common stockholders, net income available to common stockholders per diluted common share, and annualized ROE to non-GAAP operating income, non-GAAP operating income per diluted common share, and annualized non-GAAP operating ROE, respectively, are provided in the tables below:
Reconciliation of net income available to common stockholders to non-GAAP operating income Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Net income available to common stockholders $ 71,405  69,875  $ 297,805  119,294 
Net realized and unrealized (gains) losses, before tax (177) (7,721) (15,353) 24,296 
Tax on reconciling items 37  1,622  3,224  (5,102)
Non-GAAP operating income $ 71,265  63,776  $ 285,676  138,488 

Reconciliation of net income available to common stockholders per diluted common share to non-GAAP operating income per diluted common share Quarter ended September 30, Nine Months ended September 30,
2021 2020 2021 2020
Net income available to common stockholders per diluted common share $ 1.18  1.16  $ 4.92  1.98 
Net realized and unrealized (gains) losses, before tax —  (0.13) (0.25) 0.40 
Tax on reconciling items —  0.03  0.05  (0.08)
Non-GAAP operating income per diluted common share $ 1.18  1.06  $ 4.72  2.30 

Reconciliation of annualized ROE to annualized non-GAAP operating ROE Quarter ended September 30, Nine Months ended September 30,
2021 2020 2021 2020
Annualized ROE 10.6  % 11.9  15.1  % 6.9 
Net realized and unrealized (gains) losses, before tax —  (1.3) (0.8) 1.4 
Tax on reconciling items —  0.3  0.2  (0.3)
Annualized non-GAAP operating ROE 10.6  % 10.9  14.5  % 8.0 

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The components of our annualized ROE and non-GAAP operating ROE are as follows:
Annualized ROE and non-GAAP operating ROE Components Quarter ended September 30, Change Points Nine Months ended September 30, Change Points
2021 2020 2021 2020
Standard Commercial Lines Segment 2.1  % 5.7  (3.6) 6.2  % 3.5  2.7 
Standard Personal Lines Segment (1.3) (1.9) 0.6  0.1  (0.9) 1.0 
E&S Lines Segment 0.5  (1.0) 1.5  0.3  (0.2) 0.5 
Total insurance operations 1.3  2.8  (1.5) 6.6  2.4  4.2 
Investment income 11.0  9.4  1.6  10.1  7.5  2.6 
Net realized and unrealized investment gains (losses) —  1.0  (1.0) 0.6  (1.1) 1.7 
Total investments segment 11.0  10.4  0.6  10.7  6.4  4.3 
Other (1.7) (1.3) (0.4) (2.2) (1.9) (0.3)
Annualized ROE 10.6  % 11.9  (1.3) 15.1  % 6.9  8.2 
Net realized and unrealized (gains) losses, after tax —  (1.0) 1.0  (0.6) 1.1  (1.7)
Annualized Non-GAAP Operating ROE 10.6  % 10.9  (0.3) 14.5  % 8.0  6.5 

Our Nine Months 2021 annualized non-GAAP operating ROE of 14.5% was above our full-year 2021 target of 11% and our Nine Months 2020 annualized non-GAAP operating ROE of 8.0%, driven by strong investment and underwriting income. Non-GAAP operating income per diluted common share increased (i) $0.12 in Third Quarter 2021 compared to Third Quarter 2020, and (ii) $2.42 in Nine Months 2021 compared to Nine Months 2020.

The increase in non-GAAP operating income per diluted common share in Third Quarter and Nine Months 2021 compared to Third Quarter and Nine Months 2020 was primarily driven by:
•Net catastrophe losses (lower by $0.14 in Third Quarter 2021 and $1.20 in Nine Months 2021) driven by industry-wide U.S. catastrophe loss activity in 2020 that significantly exceeded the 10-year historical median; and
•Investment income (higher by $0.32 in Third Quarter 2021 and $1.14 in Nine Months 2021) driven by alternative investments in our other investments portfolio. These results principally reflect unrealized gains on our private equity holdings that benefited from the upward movement in private market valuations in the three and nine-month periods ending June 30, 2021, as our results on these holdings are recorded on a one-quarter lag.

Partially offsetting the increase in non-GAAP operating income per diluted common share in Third Quarter 2021 was the following:
•Non-catastrophe property loss and loss expenses that increased by $0.09 in Third Quarter 2021 compared to Third Quarter 2020; and
•Favorable prior year casualty reserve development that was less in Third Quarter 2021 by $0.18 compared to Third Quarter 2020.

Outlook
We entered 2021 in the strongest financial position in our Company's long history and were well positioned to continue generating disciplined and profitable growth. Through Nine Months 2021 we have generated 17% growth in NPW and a 14.5% annualized Non-GAAP Operating ROE. For the remainder of the year and looking ahead to 2022, we continue to focus on several areas to position us for ongoing success:

•Delivering on our strategy for continued disciplined growth by (i) continuing to expand our Standard Commercial Lines market share by increasing our share of wallet with existing agents and strategically appointing new agents, (ii) investing in geographic expansion, with a plan to commence writing Standard Commercial Lines business in the states of Vermont, Alabama, and Idaho, subject to regulatory approval, in the near-term, and other states over time, (iii) increasing customer retention by delivering a superior omnichannel experience and offering value-added technologies and services, and (iv) shifting our focus towards the mass affluent market within our Standard Personal Lines segment, which is a customer base that derives greater value from coverage and service.
•Continuing to achieve written renewal pure price increases that meet or exceed expected loss trend, while delivering on our strategy for continued disciplined growth. We achieved overall renewal pure price increases of 4.9% in Third Quarter 2021 and 5.1% in Nine Months 2021, which is at or above our expected loss trend.
•Continuing to build on a culture centered on the values of diversity, equity, and inclusion that fosters innovation, idea generation, and development of a group of specially trained leaders who can guide us successfully into the future.

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For more details about our major areas of strategic focus, refer to the "Outlook" section in "Financial Highlights of Results for Years Ended December 31, 2020, 2019, and 2018" within Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." of our 2020 Annual Report.

For 2021, our current full-year guidance is as follows:

•A GAAP combined ratio, excluding net catastrophe losses, of 88% (prior guidance 89%) that assumes no fourth quarter prior-year casualty reserve development;
•Net catastrophe losses of 5.0 points (prior guidance 4.0 points) on the combined ratio;
•After-tax net investment income of $240 million (prior guidance $220 million) that includes $75 million (prior guidance $55 million) in after-tax net investment income from our alternative investments;
•An overall effective tax rate of approximately 20.5%, that includes an effective tax rate of 19.5% (prior guidance 19.0%) for net investment income and 21.0% for all other items; and
•Weighted average shares of 60.5 million on a diluted basis.

Results of Operations and Related Information by Segment

Insurance Operations
The following table provides quantitative information for analyzing the combined ratio:
All Lines Quarter ended September 30, Change % or Points Nine Months ended September 30, Change % or Points
($ in thousands) 2021 2020   2021 2020
Insurance Operations Results:      
Net premiums written ("NPW") $ 812,906  719,508  13  % $ 2,444,289  2,091,587  17  %
Net premiums earned (“NPE”) 767,247  694,541  10    2,232,725  1,976,915  13   
Less:        
Loss and loss expense incurred 505,269  447,802  13    1,340,293  1,252,075  7   
Net underwriting expenses incurred 250,033  225,103  11  724,484  670,531  8 
Dividends to policyholders 1,006  599  68    3,411  2,042  67   
Underwriting income $ 10,939  21,037  (48) % $ 164,537  52,267  215  %
Combined Ratios:        
Loss and loss expense ratio 65.9  % 64.5  1.4  pts  60.0  % 63.4  (3.4) pts 
Underwriting expense ratio 32.6  32.4  0.2  32.4  33.9  (1.5)
Dividends to policyholders ratio 0.1  0.1  —    0.2  0.1  0.1   
Combined ratio 98.6  97.0  1.6    92.6  97.4  (4.8)  

The NPW growth in Third Quarter and Nine Months 2021 compared to the prior year periods reflects our strong relationships with best-in-class distribution partners, sophisticated underwriting and pricing tools, and excellent customer servicing capabilities. This solid growth included (i) overall renewal pure price increases, and (ii) new business growth, as shown in the following table:

Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in millions) 2021 2020 2021 2020
Direct new business $ 168.3  140.8  20  % $ 497.3  443.6  12  %
Renewal pure price increases 4.9  % 4.4  0.5  pts 5.1  % 4.1  1.0  pts

The NPW growth in Nine Months 2021 was further impacted by the 2020 COVID-19-related $75 million estimate of return audit and mid-term endorsement premium and $19.7 million of premium credits to our personal and commercial automobile customers, which reduced NPW by $94.7 million in Nine Months 2020. The $94.7 million reduction in NPW in Nine Months 2020 from COVID-19-related adjustments had the impact of increasing Nine Months 2021 NPW growth by 5 percentage points.

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Loss and Loss Expenses
The loss and loss expense ratio increased 1.4 points in Third Quarter 2021 and decreased 3.4 points in Nine Months 2021 compared to Third Quarter and Nine Months 2020, respectively, primarily due to the following:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 76.3  10.0  pts $ 79.5  11.4  pts (1.4) pts
(Favorable) prior year casualty reserve development (14.0) (1.8) (25.0) (3.6) 1.8 
Non-catastrophe property loss and loss expenses 123.7  16.1  105.6  15.2  0.9 
Total $ 186.0  24.3  $ 160.1  23.0  1.3 
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 128.9  5.8  pts $ 195.9  9.9  pts (4.1) pts
(Favorable) prior year casualty reserve development (66.0) (3.0) (50.0) (2.5) (0.5)
Non-catastrophe property loss and loss expenses 346.6  15.5  295.5  14.9  0.6 
Total $ 409.5  18.3  $ 441.4  22.3  (4.0)

Third Quarter 2021 and Third Quarter 2020 included elevated levels of net catastrophe losses with 10.0 points this year, including 5.6 percentage points from Hurricane Ida, and 11.4 points last year. Both years compare unfavorably to our longer-term net catastrophe loss averages. Catastrophe losses in Third Quarter 2021 include $54 million of gross losses from Hurricane Ida, and $43 million of net losses, after factoring in the retention benefit from our Property Catastrophe Excess of Loss Treaty, which attaches at $40 million. The structure of our Property Catastrophe Excess of Loss Treaty is detailed in the “Reinsurance” section of Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2020 Annual Report. The majority of the loss was attributable to property losses, including personal and commercial automobiles, in New Jersey and the surrounding states. Losses in Third Quarter 2020 were driven by the derecho in the Midwestern states of our footprint, as well as Hurricane Isaias. Net catastrophe losses were lower in Nine Months 2021 compared to Nine Months 2020, as the first half of 2020 was also affected by a tornado and subsequent hail event that impacted Tennessee in March, two large storms in April, and claims related to civil unrest in June 2020.

Details of the prior year casualty reserve development were as follows:
(Favorable)/Unfavorable Prior Year Casualty Reserve Development Quarter ended September 30, Nine Months ended September 30,
($ in millions) 2021 2020 2021 2020
General liability $ (4.0) (10.0) $ (29.0) (20.0)
Commercial automobile —  —  —  10.0 
Workers compensation (8.0) (15.0) (28.0) (40.0)
Businessowners' policies (2.0) —  (2.0) — 
   Total Standard Commercial Lines (14.0) (25.0) (59.0) (50.0)
E&S —  —  (7.0) — 
Total (favorable) prior year casualty reserve development $ (14.0) (25.0) $ (66.0) (50.0)
(Favorable) impact on loss ratio (1.8) pts (3.6) (3.0) (2.5)

For additional qualitative reserve development discussion, please refer to the insurance segment sections below in "Results of Operations and Related Information by Segment."

Underwriting Expenses
The underwriting expense ratio decreased 1.5 points in Nine Months 2021 compared to Nine Months 2020. The underwriting expense ratio in Nine Months 2020 was elevated by 1.5 points for COVID-19-related items. The decrease in the underwriting expense ratio in Nine Months 2021 reflects the absence of these COVID-19-related impacts.

The COVID-19-related items included in 2020 results were as follows: (i) lower NPE from the estimate of return audit and mid-term endorsement premium recorded in the first quarter of 2020 and premium credits given to our personal and commercial
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automobile customer during the second quarter of 2020; and (ii) a $13.5 million increase to our allowance for credit losses on premiums receivable in Nine Months 2020.

Standard Commercial Lines Segment
  Quarter ended September 30, Change
% or
Points 		  Nine Months ended September 30, Change
% or
Points
($ in thousands) 2021 2020   2021 2020
Insurance Segments Results:        
NPW $ 652,603  577,752  13  % $ 1,995,297  1,679,526  19  %
NPE 619,571  558,085  11    1,808,466  1,575,669  15   
Less:            
Loss and loss expense incurred 393,503  331,045  19    1,048,170  950,240  10   
Net underwriting expenses incurred 207,649  183,723  13    602,035  546,813  10   
Dividends to policyholders 1,006  599  68    3,411  2,042  67   
Underwriting income $ 17,413  42,718  (59) % $ 154,850  76,574  102  %
Combined Ratios:            
Loss and loss expense ratio 63.5  % 59.3  4.2  pts 57.9  % 60.3  (2.4) pts
Underwriting expense ratio 33.5  32.9  0.6    33.3  34.7  (1.4)  
Dividends to policyholders ratio 0.2  0.1  0.1    0.2  0.1  0.1   
Combined ratio 97.2  92.3  4.9    91.4  95.1  (3.7)  

NPW growth was up 13% in Third Quarter 2021 and 19% in Nine Months 2021 compared to the same prior-year periods, reflecting (i) renewal pure price increases, (ii) stable retention, and (iii) direct new business increases, as shown in the following table:
Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in millions) 2021 2020 2021 2020
Direct new business $ 122.3  99.0  24  % $ 365.6  324.3  13  %
Retention 86  % 86  —  pts 85  % 85  —  pts
Renewal pure price increases 5.3  4.6  0.7  5.5  4.2  1.3 

Consistent with our overall insurance operations, Nine Months 2021 NPW growth was positively impacted by approximately six points from the following 2020 COVID-19-related items which did not recur in Nine Months 2021:

•A $75 million estimate of return audit and mid-term endorsement premium that reduced Nine Months 2020 NPW.
•A $15.4 million premium credit to our commercial automobile customers that reduced Nine Months 2020 NPW.

The loss and loss expense ratio increased 4.2 points in Third Quarter 2021 and decreased 2.4 points in Nine Months 2021 compared to the same prior-year periods, principally driven by the following:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 50.0  8.1  pts $ 39.3  7.0  pts 1.1  pts
Non-catastrophe property loss and loss expenses 90.1  14.5  75.3  13.5  1.0 
(Favorable) prior year casualty reserve development (14.0) (2.3) (25.0) (4.5) 2.2 
Total 126.1  20.3  89.6  16.0  4.3 
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 77.3  4.3  pts $ 110.7  7.0  pts (2.7) pts
Non-catastrophe property loss and loss expenses 248.4  13.7  215.7  13.7  — 
(Favorable) prior year casualty reserve development (59.0) (3.3) (50.0) (3.2) (0.1)
Total 266.7  14.7  276.4  17.5  (2.8)

Third Quarter 2021 and Third Quarter 2020 included elevated levels of net catastrophe losses with 8.1 points this year and 7.0 points last year. Both years compared unfavorably to our longer-term net catastrophe loss average for this segment. Net catastrophe losses for this segment are consistent with the discussion in the Insurance Operations section above.

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The current year loss and loss expense ratio was 0.5 points higher in Nine Months 2021 compared to Nine Months 2020, primarily driven by increased claim frequencies. Last year experienced lower claims frequencies in the commercial auto line reflecting reductions in miles driven due to the COVID-19-related governmental directives. Lower claims frequencies and lower non-catastrophe property losses provided an offset to the $15.4 million premium credit to customers in 2020.

For quantitative information on the favorable prior year casualty reserve development by line of business, see the "Insurance Operations" section above, and for qualitative information about the significant drivers of this development, see the line of business discussions below.

The underwriting expense ratio decreased 1.4 points in Nine Months 2021 compared to Nine Months 2020. The underwriting expense ratio in Nine Months 2020 was elevated by 1.6 points for COVID-19-related items, as discussed in "Insurance Operations" above. The decrease in the underwriting expense ratio in Nine Months 2021 reflects the absence of these COVID-19-related impacts.

The following is a discussion of our most significant Standard Commercial Lines of business:
General Liability
  Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in thousands) 2021 2020 2021 2020
NPW $ 216,897  186,929  16  % $ 664,462  538,640  23  %
  Direct new business 38,376  28,010  37  109,803  95,364  15 
  Retention 86  % 86  —  pts 85  % 86  (1) pts
  Renewal pure price increases 4.4  4.1  0.3  4.5  3.9  0.6 
NPE $ 205,904  181,459  13  % $ 596,717  509,312  17  %
Underwriting income 29,993  32,182  (7) 97,611  70,364  39 
Combined ratio 85.4  % 82.3  3.1  pts 83.6  % 86.2  % (2.6) pts
% of total Standard Commercial Lines NPW 33  32    33  32 

NPW grew 16% in Third Quarter 2021 and 23% in Nine Months 2021 compared to the same prior-year periods due to renewal pure price increases, strong retention, and direct new business growth. NPW growth in Nine Months 2021 also included a 10-point benefit from the 2020 COVID-19-related $46 million estimate of return audit and mid-term endorsement premium recorded on this line in the first quarter of 2020, which did not recur in Nine Months 2021.

The fluctuations in the combined ratios illustrated in the table above included the following:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
(Favorable) prior year casualty reserve development $ (4.0) (1.9) pts $ (10.0) (5.5) pts 3.6  pts
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
(Favorable) prior year casualty reserve development $ (29.0) (4.9) pts $ (20.0) (3.9) pts (1.0) pts

The favorable prior year casualty reserve development in Third Quarter and Nine Months 2021 was primarily attributable to lower loss severities in accident years 2018 and prior. The Third Quarter and Nine Months 2020 reserve development was primarily attributable to favorable reserve development on loss severities in accident years 2017 and prior.

In addition to the items above, the combined ratio was favorably impacted by a decrease in the underwriting expense ratio of 1.4 points in Nine Months 2021 compared to Nine Months 2020, the drivers of which are consistent with the items discussed in the Standard Commercial Lines Segment above.

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Commercial Automobile
  Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in thousands) 2021 2020 2021 2020
NPW $ 197,459  169,885  16  % $ 594,011  498,892  19  %
  Direct new business 28,968  26,808  8  91,120  87,808  4 
  Retention 87  % 87  —  pts 86  % 86  —  pts
  Renewal pure price increases 7.9  8.4  (0.5) 8.6  7.8  0.8 
NPE $ 185,610  160,937  15  % $ 535,519  449,162  19  %
Underwriting income (loss) (12,547) 2,603  (582) (5,514) (5,877) 6 
Combined ratio 106.8  % 98.4  8.4  pts 101.0  % 101.3  (0.3) pts
% of total Standard Commercial Lines NPW 30  29    30  30   

NPW growth benefited from renewal pure price increases, strong retention, and growth in direct new business, as shown in the table above. Additionally, NPW growth included a 4-point benefit in Nine Months 2021 due to the $15.4 million premium credit given to our commercial automobile customers as a result of the 2020 COVID-19 pandemic in the second quarter of 2020, as discussed in the Standard Commercial Lines discussion above, which did not recur in Nine Months 2021.

The fluctuations in the combined ratios illustrated in the table above included the following:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
Net catastrophe losses $ 8.3  4.4  pts $ 1.6  1.0  pts 3.4  pts
Non-catastrophe property loss and loss expenses 35.2  18.9  23.7  14.7  4.2 
Total $ 43.5  23.3  $ 25.3  15.7  7.6 

Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
Net catastrophe losses $ 8.9  1.7  pts $ 3.0  0.7  pts 1.0  pts
Non-catastrophe property loss and loss expenses 90.8  16.9  63.8  14.2  2.7 
Unfavorable prior year casualty reserve development —  —  10.0  2.2  (2.2)
Total $ 99.7  18.6  $ 76.8  17.1  1.5 

Third Quarter and Nine Months 2021 experienced significant net catastrophe losses, predominately due to Hurricane Ida.

The Nine Months 2020 prior year casualty reserve development was primarily attributable to unfavorable reserve development on loss severities in accident years 2016 through 2019, and higher than expected claim frequencies in accident year 2019.

In addition to the items in the tables above, the combined ratio variances included the following:
•A 0.6-point increase in the current year loss and loss expense ratio in Third Quarter and Nine Months 2021 compared to the same prior-year periods, primarily driven by increased claim frequencies in 2021. Last year experienced lower claim frequencies reflecting reductions in miles driven due to the COVID-19-related governmental directives impacting this line of business. Lower claim frequencies and lower non-catastrophe property losses provided an offset to the $15.4 million of premium credits to customers in 2020.

•A 2.4-point decrease in the underwriting expense ratio in Nine Months 2021 compared to Nine Months 2020, the drivers of which are consistent with the items discussed in the Standard Commercial Lines Segment above.


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Workers Compensation
  Quarter ended September 30, Change
 % or
Points 		Nine Months ended September 30, Change
 % or
Points
($ in thousands) 2021 2020 2021 2020
NPW $ 76,317  73,009  5  % $ 249,099  199,189  25  %
Direct new business 15,408  11,477  34  47,355  39,446  20 
Retention 86  % 85  1  pts 86  % 84  2  pts
Renewal pure price (decreases) increases —  (2.0) 2.0  —  (2.5) 2.5 
NPE $ 78,318  75,595  4  % $ 230,845  204,207  13  %
Underwriting income 15,527  21,567  (28) 44,631  48,322  (8)
Combined ratio 80.2  % 71.5  8.7  pts 80.7  % 76.3  4.4  pts
% of total Standard Commercial Lines NPW 12  13    12  12 

NPW increased 5% in Third Quarter 2021 and 25% in Nine Months 2021 compared to the same prior-year periods due to higher retention and increased direct new business. Additionally, NPW growth in Nine Months 2021 included a 16-point benefit due to the 2020 COVID-19-related $29 million estimate of return audit and mid-term endorsement premium recorded on this line in the first quarter of 2020, which did not recur in Nine Months 2021.

The increase in the combined ratio in Third Quarter and Nine Months 2021 compared to the same prior-year periods was driven by lower favorable prior year casualty reserve development, as follows:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
(Favorable) prior year casualty reserve development $ (8.0) (10.2) pts $ (15.0) (19.8) pts 9.6  pts
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
(Favorable) prior year casualty reserve development $ (28.0) (12.1) pts $ (40.0) (19.6) pts 7.5  pts
The favorable prior year casualty reserve development in Third Quarter and Nine Months 2021 was primarily due to lower severities in accident years 2018 and prior, and the development in Third Quarter and Nine Months 2020 was primarily due to lower severities in accident years 2017 and prior.

In addition, the combined ratio was favorably impacted by a decrease in the underwriting expense ratio of 1.8 points in Nine Months 2021 compared to Nine Months 2020, the drivers of which are consistent with the items discussed in the Standard Commercial Lines Segment above.

Commercial Property
  Quarter ended September 30, Change
 % or
Points 		Nine Months ended September 30, Change
 % or
Points
($ in thousands) 2021 2020 2021 2020
NPW $ 124,725  106,219  17  % $ 357,248  313,405  14  %
  Direct new business 28,024  22,515  24  82,237  70,958  16 
  Retention 85  % 84  1  pts 84  % 84  —  pts
Renewal pure price increases
6.4  4.4  2.0  6.0  4.2  1.8 
NPE $ 111,981  97,997  14  % $ 320,904  287,279  12  %
Underwriting income (loss) (12,137) (11,903) (2) 11,449  (34,794) 133 
Combined ratio 110.8  % 112.1  (1.3) pts 96.4  % 112.1  (15.7) pts
% of total Standard Commercial Lines NPW 19  18    18  19 

NPW grew 17% in Third Quarter 2021 and 14% in Nine Months 2021 compared to the same prior-year periods due to renewal pure price increases, strong retention, and direct new business growth.
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The decrease in the combined ratio in Third Quarter and Nine Months 2021 compared to the same prior-year periods was driven by the following:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
Net catastrophe losses $ 32.8  29.3  pts 28.5  29.1  pts 0.2  pts
Non-catastrophe property loss and loss expenses 48.8  43.6  44.0  44.9  (1.3)
Total $ 81.6  72.9  72.5  74.0  (1.1)
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
Net catastrophe losses $ 55.7  17.3  pts 83.4  29.0  pts (11.7) pts
Non-catastrophe property loss and loss expenses 133.7  41.7  127.9  44.5  (2.8)
Total $ 189.4  59.0  211.3  73.5  (14.5)

Third Quarter and Nine Months 2021 and 2020 experienced significant net catastrophe losses driven by the events discussed in the "Insurance Operations" section above.

Standard Personal Lines Segment
Quarter ended September 30, Change
% or
Points 		  Nine Months ended September 30, Change
% or
Points
($ in thousands) 2021 2020   2021 2020
Insurance Segments Results:        
NPW $ 78,247  79,697  (2) % $ 221,883  225,511  (2) %
NPE 73,362  75,976  (3)   220,476  223,737  (1)  
Less:        
Loss and loss expense incurred 65,123  69,667  (7)   160,273  182,150  (12)  
Net underwriting expenses incurred 19,385  20,713  (6) 58,010  61,929  (6)
Underwriting income (loss) $ (11,146) (14,404) 23  % $ 2,193  (20,342) 111  %
Combined Ratios:        
Loss and loss expense ratio 88.8  % 91.7  (2.9) pts 72.7  % 81.4  (8.7) pts
Underwriting expense ratio 26.4  27.3  (0.9) 26.3  27.7  (1.4)
Combined ratio 115.2  119.0  (3.8)   99.0  109.1  (10.1)  

NPW decreased 2% in both Third Quarter and Nine Months 2021 compared to the same prior-year periods, primarily driven by direct new business that was not sufficient to compensate for the policies lost at renewal due to the challenging competitive environment in the personal auto line of business. Offsetting this decrease in Nine Months 2021 was the impact of the COVID-19-related premium credits to our personal automobile customers, which reduced NPW by $4.3 million in Nine Months 2020, and added two points of growth in Nine Months 2021 compared to Nine Months 2020, as these premium credits did not recur in Nine Months 2021.

Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in millions) 2021 2020 2021 2020
Direct new business1
$ 10.2  12.1  (15) % $ 31.0  33.8  (8) %
Retention 84  % 83  1  pts 83  % 83  —  pts
Renewal pure price increases 1.2  1.8  (0.6) 1.0  2.9  (1.9)
1Excludes our Flood direct premiums written which is 100% ceded to the NFIP and therefore, has no impact on our NPW.


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The loss and loss expense ratio decreased 2.9 points in Third Quarter 2021 compared to Third Quarter 2020 and 8.7 points in Nine Months 2021 compared to Nine Months 2020 driven by the following:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 19.5  26.7  pts 28.4  37.4  pts (10.7) pts
Non-catastrophe property loss and loss expenses 28.7  39.1  22.4  29.5  9.6 
Flood claims handling fee reimbursement (2.9) (4.0) (1.4) (1.8) (2.2)
Total $ 45.3  61.8  49.4  65.1  (3.3)
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 30.1  13.7  pts 66.4  29.7  pts (16.0) pts
Non-catastrophe property loss and loss expenses 76.7  34.8  60.5  27.1  7.7 
Flood claims handling fee reimbursement (4.5) (2.0) (2.9) (1.3) (0.7)
Total $ 102.3  46.5  124.0  55.5  (9.0)

Our Third Quarter 2021 losses were impacted by 18 events that were designated as catastrophes by Property Claims Services ("PCS"), a statistical reporting company, including Hurricane Ida in late August 2021 and early September 2021, which had the most significant impact on results. Partially offsetting these losses were $1.5 million of increased claims handling fee reimbursement, which is a benefit to loss and loss expenses incurred, on our flood book of business in Third Quarter 2021 compared to Third Quarter 2020, predominately related to Hurricane Ida. Nine Months 2021 results were also impacted by two severe thunderstorms, accompanied by wind and hail, occurring in March and June 2021. Third Quarter 2020 was impacted by 13 events that were designated as catastrophes by PCS, which included the derecho in the Midwestern states of our footprint, and Hurricane Isaias. Nine Months 2020 was affected by a March tornado in Tennessee and two severe April storms with damaging winds and tornadoes that impacted parts of the Midwestern and Eastern United States.

The underwriting expense ratio decreased 0.9 points in Third Quarter 2021 compared to Third Quarter 2020, driven mainly by a decrease of 0.5 points in profit-based compensation. The underwriting expense ratio decreased 1.4 points in Nine Months 2021 compared to Nine Months 2020. The underwriting expense ratio was elevated by 1.4 points in Nine Months 2020 for COVID-19-related items, as discussed in "Insurance Operations" above. The decrease in the underwriting expense ratio in Nine Months 2021 reflects the absence of these COVID-19-related impacts.

E&S Lines Segment
  Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in thousands) 2021 2020 2021 2020
Insurance Segments Results:      
NPW $ 82,056  62,057  32  % $ 227,109  186,550  22  %
NPE 74,314  60,480  23    203,783  177,509  15   
Less:                
Loss and loss expense incurred 46,643  47,090  (1)   131,850  119,685  10   
Net underwriting expenses incurred 22,999  20,667  11    64,439  61,789  4   
Underwriting income (loss) $ 4,672  (7,277) 164  % $ 7,494  (3,965) 289  %
Combined Ratios:                
Loss and loss expense ratio 62.8  % 77.8  (15.0) pts 64.7  % 67.4  (2.7) pts
Underwriting expense ratio 30.9  34.2  (3.3) 31.6  34.8  (3.2)
Combined ratio 93.7  112.0  (18.3)   96.3  102.2  (5.9)  

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NPW grew 32% in Third Quarter 2021 and 22% in Nine Months 2021 compared to the same prior-year periods reflecting (i) renewal pure price increases, and (ii) direct new business increases, as shown in the following table:

Quarter ended September 30, Change
% or
Points 		Nine Months ended September 30, Change
% or
Points
($ in millions) 2021 2020 2021 2020
Direct new business $ 35.7  29.7  20  % $ 100.7  85.5  18  %
Renewal pure price increases 5.6  7.0  (1.4) 6.5  5.8  0.7 

The loss and loss expense ratio decreased 15.0 points in Third Quarter 2021 and 2.7 points in Nine Months 2021 compared to the same prior-year periods, primarily driven by the items outlined in the table below:
Third Quarter 2021 Third Quarter 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 6.8  9.2  pts $ 11.8  19.5  pts (10.3) pts
Non-catastrophe property loss and loss expenses 4.8  6.5  8.0  13.2  (6.7)
Total $ 11.6  15.7  $ 19.8  32.7  (17.0)
Nine Months 2021 Nine Months 2020
($ in millions) Loss and Loss Expense Incurred Impact on
Loss and Loss Expense Ratio 		Loss and Loss
Expense
Incurred 		Impact on
Loss and Loss Expense Ratio 		Change in Ratio
Net catastrophe losses $ 21.5  10.5  pts $ 18.8  10.6  pts (0.1) pts
Non-catastrophe property loss and loss expenses 21.5  10.5  19.3  10.9  (0.4)
(Favorable) prior year casualty reserve development (7.0) (3.4) —  —  (3.4)
Total $ 36.0  17.6  $ 38.1  21.5  (3.9)

Both Third Quarter 2021, driven by Hurricane Ida, and Third Quarter 2020, driven by Hurricane Laura, experienced elevated net catastrophe losses that exceeded our longer-term historical average. Nine Months 2021 was also impacted by a series of large storms that significantly impacted Texas and other Southern and Midwestern states. Nine Months 2020 included losses related to the civil unrest that occurred throughout the country in June of that year.

The favorable prior year casualty reserve development in Nine Months 2021 was primarily attributable to lower loss severities in accident years 2016 through 2018. There was no prior year casualty reserve development in Third Quarter 2021 or in Third Quarter and Nine Months 2020.

The underwriting expense ratio decreased 3.3 points in Third Quarter 2021 compared to Third Quarter 2020 and 3.2 points in Nine Months 2021 compared to Nine Months 2020. The primary drivers were (i) decreased labor expenses of 1.6 points in the quarter and 1.4 points in the year-to-date period, and (ii) decreased compensation to our distribution partners of 1.1 points in the quarter and 0.8 points in the year-to-date period as a result of the mix of premiums and corresponding commission rates. In addition, the underwriting expense ratio in Nine Months 2020 was elevated by 0.8 points for COVID-19-related increases in our allowance for credit losses on premiums receivable as discussed in "Insurance Operations" above. The decrease in the underwriting expense ratio in Nine Months 2021 reflects the absence of this COVID-19-related impact.

Reinsurance
We successfully completed negotiations of our July 1, 2021 excess of loss treaties, which provide coverage for our Standard Commercial Lines, Standard Personal Lines, and E&S Lines. The Casualty Excess of Loss (“Casualty Treaty”) was renewed with the same structure as the expiring treaty. The fiscal year 2022 treaty ceded deposit premium increased $9.5 million, or 16%, reflecting a slight rate increase coupled with higher projected subject earned premium.

The Property Excess of Loss (“Property Treaty”) was renewed with an increase in the retention on the first layer to $3.0 million from $2.0 million, thereby decreasing the coverage in excess of retention to $7.0 million from $8.0 million. The subsequent layers remained the same. The fiscal year 2022 treaty deposit premium increased $0.5 million, or 1%, reflecting a risk-adjusted rate increase along with an increase in projected subject premium, which was driven by growth in total insured values, insured locations, and rate increases. The increase was offset by the premium reduction benefit of the first layer retention increase.

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The following table summarizes the Property Treaty and the Casualty Treaty arrangements covering our Insurance Subsidiaries:
Treaty Name Reinsurance Coverage Terrorism Coverage
Property Excess of Loss (covers all insurance operations)
$57 million above $3 million retention covering 100% in three layers. Losses other than TRIPRA certified losses are subject to the following reinstatements and annual aggregate limits:

- $7 million in excess of $3 million layer provides unlimited
        reinstatements;
- $30 million in excess of $10 million layer provides three
        reinstatements, $120 million in aggregate limits; and
- $20 million in excess of $40 million layer provides three
        reinstatements, $80 million in aggregate limits.
All NBCR losses are excluded regardless of whether or not they are certified under TRIPRA. For non-NBCR losses, the treaty distinguishes between acts committed on behalf of foreign persons or foreign interests ("Foreign Terrorism") and those that are not. The treaty provides annual aggregate limits for Foreign Terrorism (other than NBCR) acts of $21 million for the first layer, $60 million for the second layer, and $40 million for the third layer. Non-foreign terrorism losses (other than NBCR) are covered to the same extent as non-terrorism losses.
Casualty Excess of Loss (covers all insurance operations)
There are six layers covering 100% of $88 million in excess of $2 million. Losses other than terrorism losses are subject to the following:

- $3 million in excess of $2 million layer provides 33
      reinstatements, $102 million annual aggregate limit;
- $7 million in excess of $5 million layer provides six
      reinstatements, $49 million annual aggregate limit;
- $9 million in excess of $12 million layer provides three
      reinstatements, $36 million annual aggregate limit;
- $9 million in excess of $21 million layer provides one
      reinstatement, $18 million annual aggregate limit;
- $20 million in excess of $30 million layer provides one
      reinstatement, $40 million annual aggregate limit; and
- $40 million in excess of $50 million layer provides one
     reinstatement, $80 million annual aggregate limit.
All NBCR losses are excluded. All other losses stemming from the acts of terrorism are subject to the following:

- $3 million in excess of $2 million layer with $15 million net
       annual terrorism aggregate limit;
- $7 million in excess of $5 million layer with $28 million net
      annual terrorism aggregate limit;
- $9 million in excess of $12 million layer with $27 million net
      annual terrorism aggregate limit;
- $9 million in excess of $21 million layer with $18 million net
      annual terrorism aggregate limit;
- $20 million in excess of $30 million layer with $40 million
      net annual terrorism aggregate limit; and
 - $40 million in excess of $50 million layer with $80 million
      net annual terrorism aggregate limit.

Investments
The primary objective of the investment portfolio is to maximize after-tax net investment income and overall total return while maintaining a high credit quality core fixed income securities portfolio and managing our duration risk profile. The effective duration of our fixed income and short-term investments was 4.0 years as of September 30, 2021, compared to the Insurance Subsidiaries' net Reserve for loss and loss expense duration of approximately 3.7 years at December 31, 2020. The effective duration of the investment portfolio is monitored and managed to maximize yield while managing interest rate risk at an acceptable level. We maintain a well-diversified portfolio across sectors, with credit quality and maturities that provide ample liquidity. Purchases and sales are intended to maximize investment returns in the current market environment while balancing capital preservation.

Our fixed income and short-term investments represented 91% of our invested asset fair value at September 30, 2021, and 92% at December 31, 2020. At September 30, 2021, these investments had a weighted average credit rating of "A+" compared to “AA-” as of December 31, 2020, with a 96% allocation to investment grade holdings at both September 30, 2021 and December 31, 2020. The decline in the weighted average credit rating reflects a meaningful reduction in our sector allocation to agency residential mortgage-backed securities over the past year as lower interest rates accelerated prepayments as we had expected. Given the very low reinvestment rates for this asset class, we have reallocated these non-sale disposal cash flows into other high-quality fixed income sectors, including corporate securities and other asset-backed security classes that do not carry a "AAA" rating, but in our view currently offer a better risk and reward trade-off.

Total Invested Assets
($ in thousands) September 30, 2021 December 31, 2020 Change
Total invested assets $ 7,859,226  7,505,599  5  %
Invested assets per dollar of common stockholders' equity 2.89  2.96  (2)
Unrealized gain – before tax1
307,740  395,207  (22)
Unrealized gain – after tax1
243,115  312,214  (22)
1Includes unrealized gains on fixed income and equity securities.

Invested assets increased as of September 30, 2021, compared to December 31, 2020, reflecting operating cash flows during Nine Months 2021 of $543.3 million that were 22% of NPW, partially offset by a decrease in pre-tax unrealized gains of $87.5 million. The decrease in gross unrealized gains during Nine Months 2021 was driven by an increase in longer-dated benchmark United States Treasury rates, partially offset by tightening credit spreads.

For further details on the composition, credit quality, and various risks to which our portfolio is subject, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.” of our 2020 Annual Report.

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Net Investment Income
The components of net investment income earned were as follows:
  Quarter ended September 30, Change
% or Points 		Nine Months ended September 30, Change
% or Points
($ in thousands) 2021 2020 2021 2020
Fixed income securities $ 51,683  51,285  1  % $ 157,114  152,617  3  %
Commercial mortgage loans ("CMLs") 683  245  179  1,892  463  309 
Equity securities 2,955  1,948  52  8,425  5,523  53 
Short-term investments 64  244  (74) 204  1,830  (89)
Other investments 42,865  18,671  130  93,158  9,167  916 
Investment expenses (5,218) (4,208) 24  (14,314) (11,004) 30 
Net investment income earned – before tax 93,032  68,185  36  246,479  158,596  55 
Net investment income tax expense (18,342) (13,054) 41  (48,005) (29,440) 63 
Net investment income earned – after tax $ 74,690  55,131  35  $ 198,474  129,156  54 
Effective tax rate 19.7  % 19.1  0.6  pts 19.5  % 18.6  0.9  pts
Annualized after-tax yield on fixed income investments 2.5  2.6  (0.1) 2.6  2.6  — 
Annualized after-tax yield on investment portfolio 3.8  3.1  0.7  3.4  2.5  0.9 

The increase in after-tax net investment income in Third Quarter and Nine Months 2021 compared to Third Quarter and Nine Months 2020 was driven by higher returns from alternative investments, which are included within other investments, and generated $42.8 million of income in Third Quarter 2021 and $92.9 million in Nine Months 2021, compared to income of $18.7 million and $8.9 million in the same prior-year periods, respectively. These results principally reflect unrealized gains on our private equity holdings that benefited from the upward movement in private market valuations in the three and nine-month periods ending June 30, 2021, as our results on these holdings are recorded on a one-quarter lag.

Realized and Unrealized Gains and Losses
Our general investment philosophy for sales of securities is to (i) reduce our exposure to securities and sectors that we have evaluated and determined have deteriorated economic fundamentals, or (ii) determine appropriate timing for an opportunistic trade for other securities or sectors with better economic-return characteristics. Net realized and unrealized gains and losses for the indicated periods were as follows:
  Quarter ended September 30, Change % Nine Months ended September 30, Change %
($ in thousands) 2021 2020 2021 2020
Net realized gains on disposals $ 4,646  573  711  % $ 4,119  7,288  (43) %
Net unrealized (losses) gains equity securities (3,111) 4,338  (172) 15,830  (7,098) (323)
Net credit loss (expense) benefit on fixed income securities, AFS (1,334) 2,853  (147) (4,059) (8,011) (49)
Net credit loss benefit (expense) on fixed income securities, held-to-maturity 6  3  100  (54) 4  (1,450)
Net credit loss benefit (expense) on CMLs —  (2) (100) —  (220) (100)
Losses on securities for which we have the intent to sell (30) (44) (32) (483) (16,259) (97)
Total net realized and unrealized gains (losses) $ 177  7,721  (98) $ 15,353  (24,296) (163)

The improvement in net realized and unrealized gains in Nine Months 2021 compared to Nine Months 2020 was primarily driven by (i) unrealized gains on our equity securities this year compared to unrealized losses last year, which were driven by COVID-19-related market disruption last year, and (ii) lower intent-to-sell losses this year as we provided our investment managers significant trading flexibility last year given market conditions.

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Federal Income Taxes
The following table provides information about federal income taxes and reconciles federal income tax at the corporate rate to the effective tax rate:
Quarter ended September 30, Nine Months ended September 30,
($ in thousands) 2021 2020 2021 2020
Tax at statutory rate $ 19,454  17,904  $ 80,108  30,229 
Tax-advantaged interest (1,114) (1,184) (3,432) (3,569)
Dividends received deduction (101) (94) (377) (314)
Executive compensation 566  607  1,536  1,322 
Stock-based compensation (29) 2  (652) (1,828)
Other 155  (1,853) (575) (1,187)
Federal income tax expense 18,931  15,382  76,608  24,653 
Income before federal income tax, less preferred stock dividends 90,336  85,257  374,413  143,947 
Effective tax rate 21.0  % 18.0  20.5  17.1 

Financial Condition, Liquidity, and Capital Resources
Capital resources and liquidity reflect our ability to generate cash flows from business operations, borrow funds at competitive rates, and raise new capital to meet operating and growth needs.

Liquidity
We manage liquidity by focusing on generating sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.

Sources of Liquidity
Sources of cash for the Parent historically have consisted of dividends from the Insurance Subsidiaries, the investment portfolio held by the Parent, borrowings under third-party lines of credit, loan agreements with certain Insurance Subsidiaries, and the issuance of equity and debt securities. We continue to monitor these sources, giving consideration to our long-term liquidity and capital preservation strategies.

The Parent's investment portfolio includes (i) short-term investments that are generally maintained in “AAA” rated money market funds approved by the National Association of Insurance Commissioners, (ii) high-quality, highly liquid government and corporate fixed income securities; (iii) equity securities; (iv) other investments, and (v) a cash balance. In the aggregate, Parent cash and total investments amounted to $515 million at September 30, 2021, and $490 million at December 31, 2020.

The composition of the Parent's investment portfolio may change over time based upon various factors, including the amount and availability of dividends from our Insurance Subsidiaries, investment income, expenses, other Parent cash needs, such as dividends payable to shareholders, asset allocation investment decisions, inorganic growth opportunities, retirement of debt, and share repurchases. Our target for the Parent is to maintain highly liquid investments matching at least twice its expected annual needs, which is currently estimated at $180 million.

Insurance Subsidiary Dividends
The Insurance Subsidiaries generate liquidity through insurance float, which is created by collecting premiums and earning investment income before claims are paid. The period of float can extend over many years. Our investment portfolio consists of maturity dates that continually provide a source of cash flow for claims payments in the ordinary course of business. As protection for the capital resources at the Insurance Subsidiaries, we purchase reinsurance coverage for any significantly large claims or catastrophes that may occur.

The Insurance Subsidiaries paid $105 million in total dividends to the Parent during Nine Months 2021. As of December 31, 2020, our allowable ordinary maximum dividend was $241 million for 2021. All Insurance Subsidiary dividends to the Parent are (i) subject to the approval and/or review of its domiciliary state insurance regulator, and (ii) generally payable only from earned surplus reported in its statutory annual statements as of the preceding December 31. Although domiciliary state insurance regulators historically have approved dividends, there is no assurance they will approve future Insurance Subsidiary dividends.

New Jersey corporate law also limits the maximum amount of dividends the Parent can pay our shareholders if either (i) the Parent would be unable to pay its debts as they became due in the usual course of business, or (ii) the Parent’s total assets would be less than its total liabilities. The Parent’s ability to pay dividends to shareholders is also impacted by (i) covenants in its credit agreement (discussed below under "Line of Credit") that obligate it, among other things, to maintain a minimum consolidated net worth and a maximum ratio of consolidated debt to total capitalization, and (ii) the terms of our preferred stock
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that prohibit dividends to be declared or paid on our common stock if dividends are not declared and paid, or made payable, on all outstanding preferred stock for the latest completed dividend period.

For additional information regarding dividend restrictions and financial covenants, where applicable, see Note 11. "Indebtedness", Note 17. "Preferred Stock", and Note 22. “Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds” in Item 8. “Financial Statements and Supplementary Data.” of our 2020 Annual Report.

Line of Credit
On December 20, 2019, the Parent entered into a Credit Agreement with the lenders named therein (the “Lenders”) and the Bank of Montreal, Chicago Branch, as Administrative Agent ("Line of Credit"). Under the Line of Credit, the Lenders have agreed to provide the Parent with a $50 million revolving credit facility that can be increased to $125 million with the Lenders' consent. The Line of Credit will mature on December 20, 2022, and has a variable interest rate based on, among other factors, the Parent’s debt ratings.

For additional information regarding the Line of Credit and corresponding representations, warranties, and covenants, refer to Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report. We met all covenants under our Line of Credit as of September 30, 2021.

Several Insurance Subsidiaries are members of Federal Home Loan Bank branches, as shown in the following table. Membership requires the ownership of branch stock and includes the right to borrow and gain access to liquidity. All FHLBI and FHLBNY borrowings are required to be secured by investments pledged as collateral. For additional information regarding collateral outstanding, refer to Note 4. "Investments" in Item 1. "Financial Statements." of this Form 10-Q:
Branch Insurance Subsidiary Member
FHLBI
Selective Insurance Company of South Carolina ("SICSC")1
Selective Insurance Company of the Southeast ("SICSE")1
FHLBNY Selective Insurance Company of America ("SICA")
Selective Insurance Company of New York ("SICNY")
1These subsidiaries are jointly referred to as the "Indiana Subsidiaries" as they are domiciled in Indiana.

The Line of Credit permits aggregate borrowings from the FHLBI and the FHLBNY up to 10% of the respective member company’s admitted assets for the previous year. Additionally, as SICNY is domiciled in New York, its FHLBNY borrowings are limited by New York insurance regulations to the lower of 5% of admitted assets for the most recently completed fiscal quarter, or 10% of admitted assets for the previous year-end. As of September 30, 2021, we had remaining capacity of $389 million for Federal Home Loan Bank borrowings, with a $14.5 million additional stock purchase requirement to allow the member companies to borrow their full remaining capacity amounts.

Short-term Borrowings
We did not make any short-term borrowings during Nine Months 2021.

Intercompany Loan Agreements
The Parent has lending agreements with the Indiana Subsidiaries approved by the Indiana Department of Insurance that provide it additional liquidity. Similar to the Line of Credit, these lending agreements limit the Parent's borrowings from the Indiana Subsidiaries to 10% of the admitted assets of the respective Indiana Subsidiary. The outstanding balance on these intercompany loans was $40.0 million as of both September 30, 2021, and December 31, 2020. The remaining capacity under these intercompany loan agreements was $97.1 million as of both September 30, 2021, and December 31, 2020.

Capital Market Activities
The Parent had no private or public issuances of stock during Nine Months 2021. In the fourth quarter of 2020, we enhanced our capital structure flexibility at the Parent by issuing $200 million of 4.60% non-cumulative perpetual preferred stock. Net proceeds after issuance costs were approximately $195 million. The Parent is using these proceeds for general corporate purposes, which may include the repurchase of common stock under a $100 million share repurchase program authorized by our Board in conjunction with the preferred stock offering. During Nine Months 2021, we repurchased 52,781 shares of our common stock under this authorization at a cost of approximately $3.4 million, with a $64.49 average price per share, with all share repurchases made in the first quarter of 2021. We have $96.6 million of remaining capacity under our share repurchase program.

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Uses of Liquidity
The Parent's liquidity generated from the sources discussed above is used, among other things, to pay dividends to our shareholders. Dividends on shares of the Parent's common and preferred stock are declared and paid at the discretion of the Board of Directors based on our operating results, financial condition, capital requirements, contractual restrictions, and other relevant factors. On October 27, 2021, our Board of Directors declared:

•A cash dividend of $0.28 per common share that is payable December 1, 2021 to holders of record as of November 15, 2021; and
•A cash dividend of $287.50 per share on our 4.60% Non-Cumulative Preferred Stock, Series B (equivalent to $0.28750 per depository share) that is payable on December 15, 2021 to holders of record as of November 30, 2021.

Our ability to meet our interest and principal repayment obligations on our debt, as well as our ability to continue to pay dividends to our stockholders, is dependent on (i) liquidity at the Parent, (ii) the ability of the Insurance Subsidiaries to pay dividends, if necessary, and/or (iii) the availability of other sources of liquidity to the Parent. In Third Quarter 2021, we repaid our (i) $25 million 1.61% borrowing, and (ii) $25 million 1.56% borrowing from the FHLBNY. These repayments increased our remaining Federal Home Loan Bank borrowing capacity to $389 million, from $339 million, and increased the related additional stock purchase requirement to $14.5 million, from $12.2 million, for the member companies to borrow their full remaining capacity amounts. Our next Federal Home Loan borrowing principal repayment is $60 million to FHLBI due on December 16, 2026.

Restrictions on the ability of the Insurance Subsidiaries to declare and pay dividends, without alternative liquidity options, could materially affect our ability to service debt and pay dividends on common and preferred stock.

Capital Resources
Capital resources ensure we can pay policyholder claims, furnish the financial strength to support the business of underwriting insurance risks, and facilitate continued business growth. At September 30, 2021, we had GAAP stockholders' equity of $2.9 billion and statutory surplus of $2.3 billion. With total debt of $500.9 million at September 30, 2021, our debt-to-capital ratio was 14.6%. For additional information on our statutory surplus, see Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report.

Our cash requirements include, without limitation, principal and interest payments on various notes payable, dividends to stockholders, payment of claims, payment of commitments under limited partnership agreements, capital expenditures, and other operating expenses, including commissions to our distribution partners, labor costs, premium taxes, general and administrative expenses, and income taxes. For further details regarding our cash requirements, refer to the section below entitled, “Contractual Obligations, Contingent Liabilities, and Commitments.”

We continually monitor our cash requirements and the amount of capital resources we maintain at the holding company and operating subsidiary levels. As part of our long-term capital strategy, we strive to maintain capital metrics that support our targeted financial strength relative to the macroeconomic environment. Based on our analysis and market conditions, we may take a variety of actions, including, without limitation, contributing capital to the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing existing debt, repurchasing shares of the Parent’s common stock, and increasing common stockholders’ dividends.

Our capital management strategy is intended to protect the interests of the policyholders of the Insurance Subsidiaries and our stockholders, while enhancing our financial strength and underwriting capacity. We have an attractive book of business and solid capital base, positioning us well to take advantage of market opportunities that may arise.

Book value per common share increased 7% to $45.27 as of September 30, 2021, from $42.38 as of December 31, 2020, driven by $4.92 in net income per share, and partially offset by $1.36 of lower unrealized gains on our fixed income securities portfolio and $0.75 in dividends to our common stockholders.

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Ratings
Our ratings remain the same as reported in our "Overview" section of Item 1. "Business." of our 2020 Annual Report and are as follows:
NRSRO Financial Strength Rating Outlook
AM Best Company A Positive
Moody's Investors Services ("Moody's") A2 Stable
Fitch Ratings ("Fitch") A+ Stable
Standard & Poor's Global Ratings ("S&P Global") A Stable

On April 2, 2021, Fitch reaffirmed our "A+" rating with a "stable" outlook. In taking this rating action, Fitch cited our strong capitalization, financial performance, stable underwriting results, and return metrics that have remained favorable compared to peers.

On May 6, 2021, Moody’s reaffirmed our "A2" rating with a "stable" outlook. In taking this action, Moody’s cited our (i) strong underwriting profitability, financial leverage, and coverage metrics, (ii) conservative investment portfolio, and (iii) strong regional franchise presence and established independent agency support.

On October 15, 2021, S&P Global reaffirmed our “A” rating with a “stable” outlook. In taking this action, S&P cited our strong financial and business risk profiles, driven by strong capital adequacy and operating performance.

Off-Balance Sheet Arrangements
At September 30, 2021, and December 31, 2020, we had no material relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Consequently, we are not exposed to any material financing, liquidity, market, or credit risk related to off-balance sheet arrangements.

Contractual Obligations, Contingent Liabilities, and Commitments
Our future cash payments associated with (i) loss and loss expense reserves, (ii) contractual obligations pursuant to operating and financing leases for office space and equipment, and (iii) notes payable have not materially changed since December 31, 2020. At September 30, 2021, we had certain contractual obligations that may require us to invest additional amounts in our investment portfolio as follows:
($ in millions) Amount of Obligation Year of Expiration of Obligation
Alternative and other investments $ 219.2  2036
Non-publicly traded collateralized loan obligations in our fixed income securities portfolio 38.3  2030
Non-publicly traded common stock within our equity portfolio 5.3  2027
CMLs 5.3  2023
Privately-placed corporate securities 9.5  Less than a year
Total $ 277.6 

There is no certainty that any such additional investment will be required. We expect to have the capacity to repay and/or refinance these obligations as they come due.

We have issued no material guarantees on behalf of others and have no trading activities involving non-exchange traded contracts accounted for at fair value. For additional details on transactions with related parties, see Note 18. "Related Party Transactions" in Item 8. "Financial Statements and Supplementary Data." of our 2020 Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in the information about market risk set forth in our 2020 Annual Report. While not reflective of a material shift in the overall risk/return characteristics of our fixed income and short-term investments, the aggregate weighted average credit rating of these portfolios decreased to "A+" in 2021, from “AA-” as of December 31, 2020. The decline in the weighted average credit rating reflects a meaningful reduction in our sector allocation to agency residential mortgage-backed securities over the past year as lower interest rates accelerated prepayments, as we had expected. Given the very low reinvestment rates for this asset class, we have reallocated these non-sale disposal cash flows into other high-quality fixed income sectors, including corporate securities and other asset-backed security classes that do not carry a "AAA" rating, but in our view currently offer a better risk and reward trade-off.

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ITEM 4. CONTROLS AND PROCEDURES.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. In performing this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework ("COSO Framework") in 2013. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of such period are (i) effective in recording, processing, summarizing, and reporting information on a timely basis that we are required to disclose in the reports that we file or submit under the Exchange Act, and (ii) effective in ensuring that information that we are required to disclose in the reports that we file or submit under the Exchange Act is appropriately accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions about required disclosure. No changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during Third Quarter 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Incidental to our insurance operations, we are engaged in ordinary routine legal proceedings that, because litigation outcomes are inherently unpredictable, could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods. For additional information regarding our legal risks, refer to Note 13. "Litigation" in Item 1. "Financial Statements." of this Form 10-Q and Item 1A. “Risk Factors.” below in Part II. “Other Information.” As of September 30, 2021, we have no material pending legal proceedings that could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

ITEM 1A. RISK FACTORS.

Certain risk factors can significantly impact our business, liquidity, capital resources, results of operations, financial condition, and debt ratings. These risk factors might affect, alter, or change actions we might take executing our long-term capital strategy. Examples include, without limitation, contributing capital to any or all of the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing our existing debt and/or equity securities, or increasing or decreasing stockholders' dividends. We operate in a continually changing business environment and new risk factors emerge from time to time. Consequently, we can neither predict such new risk factors nor assess the potential future impact, if any, they might have on our business. Except as discussed below, there have been no material changes from the risk factors disclosed in Item 1A. “Risk Factors.” in our 2020 Annual Report.

During 2021, the risk of broad economic inflation has emerged as a heightened risk relative to the risk factor discussed in our 2020 Annual Report. Inflation levels accelerated in 2021 with the overall consumer price index ("CPI"), the Core CPI, and the Producer Price Index all showing elevated levels compared to last year. As discussed in more detail in our 2020 Annual Report, inflation has significant potential impacts to our claims severity across multiple lines of business and could also cause higher levels of reserve development. Additionally, if heightened levels of economic inflation are tied to higher interest rate yields on fixed income securities, it could increase unrealized losses on our fixed income securities and lower total returns from our other invested assets.

In addition, to varying degrees, the effect, lifting, or lapsing of COVID-19-related governmental directives in 2021 have disrupted supply chains and caused shortages of products, services, and labor. These shortages may impact our ability to attract and retain labor, including increasing attrition rates, wages, and the cost and difficulty of obtaining third-party non-U.S.-based resources.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table provides information about our purchases of our common stock in Third Quarter 2021:
Period
Total Number of
Shares Purchased1
Average Price
Paid per Share 		Total Number of
Shares Purchased
as Part of Publicly
Announced Programs
Approximate Dollar Value of
Shares that May Yet
Be Purchased Under the Announced Programs
(in millions)2
July 1 – 31, 2021 514  $ 78.56  —  $ 96.6 
August 1 – 31, 2021 —  —  —  96.6 
September 1 – 30, 2021 229  77.38  —  96.6 
Total 743  $ 78.20  —  $ 96.6 
1We purchased these shares from employees to satisfy tax withholding obligations associated with the vesting of their restricted stock units.
2On December 2, 2020, we announced that our Board of Directors authorized a $100 million share repurchase program, which has no set expiration or termination date. Our repurchase program does not obligate us to acquire any particular amount of our common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. The timing and amount of any share repurchases under the authorization will be determined by management at its discretion and based on market conditions and other considerations.

ITEM 6. EXHIBITS.
Exhibit No.    
Employment Agreement between Selective Insurance Company of America and Brenda M. Hall, dated as of September 30, 2019.
Employment Agreement between Selective Insurance Company of America and Paul Kush, dated as of December 5, 2019.
Employment Agreement between Selective Insurance Company of America and Vincent M. Senia, dated as of June 6, 2017.
*11
Statement Re: Computation of Per Share Earnings.
Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.
*101
The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.
*104
The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in iXBRL.
 * Filed herewith.
** Furnished and not filed herewith.
+ Management compensation plan or arrangement.





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Table of Contents
SIGNATURES

Pursuant to the requirements 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 
Date: October 28, 2021 By: /s/ John J. Marchioni
  John J. Marchioni
  President and Chief Executive Officer
(principal executive officer)
Date: October 28, 2021 By: /s/ Mark A. Wilcox
Mark A. Wilcox
Executive Vice President and Chief Financial Officer
(principal financial officer)

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Exhibit 10.1
EMPLOYMENT AGREEMENT

This Employment Agreement, (the “Agreement”) is made as of the 30th day of September 2019, between Selective Insurance Company of America, a New Jersey corporation with a principal place of business at 40 Wantage Avenue, Branchville, New Jersey 07890 (the “Company”) and Brenda M. Hall, an individual residing at [ADDRESS REDACTED] (the “Executive”).

SECTION 1.DEFINITIONS.
1.1Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
“Agreement” has the meaning given to such term in the Preamble hereto.
“Board” means the Board of Directors of the Company’s Parent.
“Cause” means any one or more of the following:
(i)the Executive shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony under, or within the meaning of, applicable United States federal or state law;
(ii)the Executive shall have breached in any respect any one or more of the material provisions of this Agreement, including, without limitation, any failure to comply with the Code of Conduct, and, to the extent such breach may be cured, such breach shall have continued for a period of thirty (30) days after written notice by the Company’s Chief Executive Officer to the Executive specifying such breach; or
(iii)the Executive shall have engaged in acts of insubordination, gross negligence or willful misconduct in the performance of the Executive’s duties and obligations to the Company.
For purposes of clauses (ii) and (iii) of this definition of “Cause”, no act, or failure to act, on the part of the Executive shall be considered grounds for “Cause” under such clauses if such act, or such failure to act, was done or omitted to be done based upon authority or express direction given by the Chief Executive Officer or based upon the advice of counsel for the Company.
“Change in Control” means the occurrence of an event of a nature that would be required to be reported by the Company’s Parent in response to Item 5.01 of a Current Report on Form 8-K, as in effect on the date thereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act; provided, however, that a Change in Control shall, in any event, conclusively be deemed to have occurred upon the first to occur of any one of the following events:
(i)The acquisition by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act or any successor provisions to either of the foregoing), including, without limitation, any current shareholder or shareholders of the Company’s Parent, of securities of the Company’s Parent resulting in such person or group being a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act) of twenty-five percent (25%) or more of any class of Voting Securities of the Company’s Parent;
(ii)The acquisition by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act or any successor provisions to either of the foregoing), including, without limitation, any current shareholder or shareholders of the Company’s Parent, of securities of the Company’s Parent resulting in such person or group being a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act) of twenty percent (20%) or more, but less than twenty-five percent (25%), of any class of Voting Securities of the Company’s Parent, if the Board adopts a resolution that such acquisition constitutes a Change in Control;


(iii)The sale or disposition of all or substantially all of the Company’s Parent’s assets, defined as more than seventy-five (75%) percent, on a consolidated basis, as shown in the Company’s Parent’s then most recent audited consolidated balance sheet;
(iv)The reorganization, recapitalization, merger, consolidation or other business combination involving the Company’s Parent the result of which is the ownership by the shareholders of the Company’s Parent of less than eighty percent (80%) of those Voting Securities of the resulting or acquiring Person having the power to vote in the elections of the board of directors of such Person; or
(v)A change in the membership in the Board which, taken in conjunction with any other prior or concurrent changes, results in fifty percent (50%) or more of the Board’s membership being persons not nominated by the Company’s Parent’s management or the Board as set forth in the Company’s Parent’s then most recent proxy statement, excluding changes resulting from substitutions by the Board because of retirement or death of a director or directors, removal of a director or directors by the Board or resignation of a director or directors due to demonstrated disability or incapacity.
Anything in this definition of Change in Control to the contrary notwithstanding, no Change in Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, Voting Securities of the Company’s Parent.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Code of Conduct” has the meaning given to such term in Section 2.3(a) hereof.
“Commencement Date” has the meaning given to such term in Section 2.2 hereof.
“Company” has the meaning given to such term in the Preamble hereto and includes any Person which shall succeed to or assume the obligations of the Company hereunder pursuant to Section 5.6 hereof.
“Company’s Parent” means Selective Insurance Group, Inc., a publicly traded New Jersey corporation with a principal office at 40 Wantage Avenue, Branchville, New Jersey 07890.
“Covered Employee” means a covered employee, within the meaning of Section 162(m)(3) of the Code, of the Company.
“Disability” shall mean: (i) a long-term disability entitling the Executive to receive benefits under the Company’s long-term disability plan as then in effect; or (ii) if no such plan is then in effect or the plan does not apply to the Executive, the inability of the Executive, as determined by the Board or its designee, to perform the essential functions of her regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months. At the request of the Executive or her personal representative, determination by the Board or its designee that the Disability of the Executive has occurred shall be certified by two physicians mutually agreed upon by the Executive, or her personal representative, and the Company. Without such independent certification (if so requested by the Executive), the Executive’s termination shall be deemed a termination by the Company without Cause and not a termination by reason of her Disability.
“Early Termination” has the meaning given to such term in Section 3.2 hereof.
“Executive” has the meaning given to such term in the Preamble hereto.
“Good Reason” means the occurrence of any one or more of the following conditions; provided, however, that no such condition shall be deemed to constitute “Good Reason” unless the Executive provides notice of such condition to the Company within ninety (90) days of its initial existence, and the Company shall have failed to remedy the condition within thirty (30) days of its receipt of such notice:
(i) any material diminution in the Executive’s Salary below the annualized rate in effect on the date on which a Change in Control shall have occurred, unless such reduction is implemented for the senior executive staff generally, provided, however that such reduction shall constitute Good Reason even if implemented for senior executive staff generally if such reduction occurs within two years after a Change in Control;
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(ii)any material negative change in the aggregate benefits the Executive receives, other than as a result of the normal expiration of any Plan as to other eligible employees in accordance with its terms as in effect on the date preceding the date on which a Change in Control shall have occurred, or unless such change affects all participants of such Plan generally;
(iii)without the Executive’s express prior written consent, a material diminution of the Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change in Control, or any material diminution in the Executive’s responsibilities as an executive of the Company as compared with those she had as an executive of the Company immediately prior to a Change in Control, or any material negative change in the Executive’s titles or office as in effect immediately prior to a Change in Control, except in connection with the termination of the Executive’s employment for Cause, Disability or Retirement or as a result of the Executive’s death, or by her termination of her employment other than for Good Reason;
(iv)without the Executive’s express prior written consent, the Company’s imposition of a requirement within two (2) years of a Change in Control that the Executive be based at any location that increases the Executive’s regular commute fifty (50) miles or more from the date preceding the Change in Control.
(v)the failure by the Company’s Parent to obtain from any Person with which it may merge or consolidate or to which it may sell all or substantially all of its assets, the agreement of such Person as set forth in the proviso in Section 5.6 hereof; provided that such merger, consolidation or sale constitutes a Change in Control; or
(vi)within two years after a Change in Control shall have occurred, any action or inaction that constitutes a material breach by the Company of any of the terms and conditions of this Agreement.
“Notice of Termination” means a written notice which shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and, (iii) specify the date of termination in accordance with this Agreement (other than for a termination for Cause).
“Person” means an individual, partnership, corporation, association, limited liability company, trust, joint venture, unincorporated organization, and any government, governmental department or agency or political subdivision thereof.
“Plans” has the meaning given to such term in Section 2.4(b) hereof.
“Rabbi Trust” has the meaning given to such term in Section 3.4(d) hereof.
“Release” has the meaning given to such term in Section 3.5 hereof.
“Restrictive Covenants” has the meaning given to such term in Section 3.5 hereof.
“Retirement” means a termination of the Executive’s employment by the Company or the Executive (i) at such age as shall be established by the Company’s Board for mandatory or normal retirement of Company executives in general (which age shall be, if the determination of Retirement is made after the occurrence of a Change in Control, the age established by the Company’s Board prior to a Change in Control), which shall not be less than age 65, or (ii) at any other retirement age set by mutual agreement of the Company and the Executive and approved by the Company’s Board.
“Salary” has the meaning given to such term in Section 2.4(a) hereof.
“Section 409A” means Section 409A of the Code and the regulations of the Treasury and other applicable guidance promulgated thereunder.
“Section 409A Tax” has the meaning given to such term in Section 3.6 hereof.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Term” has the meaning given to such term in Section 2.2 hereof.
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“Termination Date” means the date of the Executive’s termination of employment with the Company and its affiliates. If the Executive’s employment is to be terminated by the Company for Disability, the Executive’s employment shall terminate thirty (30) days after a Notice of Termination is given; provided, that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period.
“Triggering Event” has the meaning given to such term in Section 3.4(d) hereof.
“Trustee” has the meaning given to such term in Section 3.4(d) hereof.
“Voting Securities” means, with respect to a specified Person, any security of such Person that has, or may have upon an event of default or in respect to any transaction, a right to vote on any matter upon which the holder of any class of common stock of such Person would have a right to vote.
1.2.    Terms Generally. Unless the context of this Agreement requires otherwise, words importing the singular number shall include the plural and vice versa, and any pronoun shall include the corresponding masculine, feminine and neuter forms.
1.3.    Cross-References. Unless otherwise specified, references in this Agreement to any Paragraph or Section are references to such Paragraph or Section of this Agreement.
SECTION 2.EMPLOYMENT AND COMPENSATION. The following terms and conditions will govern the Executive’s employment with the Company throughout the term.
2.1.    Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, on the terms and conditions set forth herein.
2.2.    Term. The term of employment of the Executive under this Agreement shall commence as of the 30th day of September, 2019 (the “Commencement Date”) and, subject to Section 3.1 hereof, shall terminate on the third anniversary of the Commencement Date, and shall automatically be extended for additional one (1) year periods thereafter (any such renewal periods, together with the initial period, being referred to as the “Term”) unless terminated by either party by written notice to the other party
2.3.    Duties. (a) The Executive agrees to serve as Executive Vice President, Commercial Lines Chief Operating Officer of the Company during the Term. In such capacities, the Executive shall have the responsibilities and duties customary for such office(s) and such other executive responsibilities and duties as are assigned by the Company’s Chief Executive Officer and/or President and Chief Operating Officer that are consistent with the Executive’s position(s). The Executive agrees to devote substantially all her business time, attention and services to the business and affairs of the Company and its affiliates and to perform her duties to the best of her ability. At all times during the performance of this Agreement, the Executive will adhere to the Code of Conduct of the Company (the “Code of Conduct”) that has been or may hereafter be established and communicated by the Company to the Executive for the conduct of the position or positions held by the Executive. The Executive may not accept directorships on the board of directors of for-profit corporations without the prior written consent of the Chief Executive Officer and/or President and Chief Operating Officer. The Executive may accept directorships on the board of directors of not-for-profit corporations without the Chief Executive Officer and/or President and Chief Operating Officer’s prior written consent so long as (a) such directorships do not interfere with Executive’s ability to carry out her responsibilities under this Agreement, and (b) Executive promptly notifies the Chief Executive Officer and/or President and Chief Operating Officer in writing of the fact that she has accepted such a non-profit directorship.
(b)    If the Company and the Executive do not agree in writing to renew the Term pursuant to Section 2.2, the Executive shall continue to be employed under this Agreement only until the expiration of the then current Term (unless earlier terminated pursuant to Section 3.1 hereof), shall cooperate fully with the Chief Executive Officer and/or President and Chief Operating Officer and shall perform such duties not inconsistent with the provisions hereof as she shall be assigned by the Chief Executive Officer and/or President and Chief Operating Officer.
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2.4.    Compensation.
(a)Salary. For all services rendered by the Executive under this Agreement, the Company shall pay the Executive a salary during the Term at a rate of not less than FOUR HUNDRED TWENTY-FIVE THOUSAND ($425,000.00) per year, which may be increased but not decreased unless decreased for the senior executive staff generally (the “Salary”), payable in installments in accordance with the Company’s policy from time to time in effect for payment of salary to executives. The Salary shall be reviewed no less than annually by the Chief Executive Officer and/or President and Chief Operating Officer and nothing contained herein shall prevent the Board from at any time increasing the Salary or other benefits herein provided to be paid, or provided to, the Executive or from providing additional or contingent benefits to the Executive as it deems appropriate.
Executive’s position remains subject to stock ownership requirements adopted by the Board of Directors of Selective Insurance Group, Inc. and contained in the Corporate Governance Guidelines found in the Corporate Governance section of www.selective.com. Under these guidelines, as an Executive Vice President first appointed to such officer position as of September 30, 2019, Executive must own 2.5 times her base salary then in effect in Selective Insurance Group, Inc. common stock on or before September 30, 2025. Shares calculated for ownership include common stock currently owned by Executive, awards of restricted stock units (including related dividend equivalent units not yet vested), and shares held in the Selective Insurance Retirement Savings Plan.
(b)Benefits. During the Term, the Company shall permit the Executive to participate in or receive benefits under the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan, the Selective Insurance Group, Inc. Cash Incentive Plan, the Selective Insurance Retirement Savings Plan (“401(k) Plan”), the Selective Insurance Company of America Deferred Compensation Plan, and in any other incentive compensation, stock option, stock appreciation right, stock bonus, pension, group insurance, retirement, profit sharing, medical, disability, accident, life insurance plan, relocation plan or policy, or any other plan, program, policy or arrangement of the Company intended to benefit similarly situated employees of the Company generally, if any, in accordance with the respective provisions thereof, from time to time in effect (collectively, the “Plans”).
(c)Vacations and Reimbursements. During the Term, the Executive shall be entitled to vacation time off and reimbursements for ordinary and necessary travel and entertainment expenses in accordance with the Company’s policies on such matters from time to time in effect. Executive will receive a total of twenty-seven (27) days of paid time off each calendar year until increased in accordance with the Company’s bank day policy.
(d)Perquisites. During the Term, the Company shall provide the Executive with suitable offices, secretarial and other services, and other perquisites to which other executives of the Company generally are (or become) entitled, to the extent as are suitable to the character of the Executive’s position with the Company, subject to such specific limits on such perquisites as may from time to time be imposed by the Company’s Board and Chief Executive Officer.
(e)Taxable Reimbursements and Perquisites. Any taxable reimbursement of business or other expenses, or any provision of taxable in-kind perquisites or other benefits to the Executive, as specified under this Agreement, shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
SECTION 3.TERMINATION AND SEVERANCE.
3.1.Termination. The Executive’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Term, except that the employment of the Executive hereunder shall earlier terminate:
(a)Death. Upon the Executive’s death.
(b)Disability. At the option of the Company, upon the Disability of the Executive.
(c)For Cause. At the option of the Company, for Cause.
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(d)Resignation. At any time at the option of the Executive, by resignation (other than a resignation for Good Reason).
(e)Without Cause. At any time at the option of the Company, without Cause; provided, that a termination of the Executive’s employment hereunder by the Company based on Retirement, Death, or Disability shall not be deemed to be a termination without Cause.
(f)Relocation. At the option of the Executive at any time prior to a Change in Control and within two years of the Company first imposing a requirement without the consent of the Executive that the Executive be based at any location that increases the Executive’s regular commute fifty (50) miles or more.
(g)For Good Reason. At any time at the option of the Executive for Good Reason, provided that such termination occurs (i) within two (2) years following the occurrence of a Change in Control, and (ii) within two (2) years following the initial existence of the condition constituting Good Reason.
3.2.Procedure For Termination. Any termination of the Executive’s employment by the Company or by the Executive prior to the expiration of the Term (an “Early Termination”) shall be communicated by delivery of a Notice of Termination to the other party hereto given in accordance with Section 5.12 hereof. Any Early Termination shall become effective as of the applicable Termination Date.
3.3.Rights and Remedies on Termination. The Executive will be entitled to receive the payments and benefits specified below if there is an Early Termination.
(a) Accrued Salary. If the Executive’s employment is terminated pursuant to any of the Paragraphs set forth in Section 3.1 hereof, then the Executive (or her legal representative, as applicable) shall only be entitled to receive her accrued and unpaid Salary through the Termination Date.
(b) Severance Payments.
(i)If the Executive’s employment is terminated pursuant to Paragraphs (a) or (b) in Section 3.1 hereof, then the Executive (or her legal representative, as applicable) shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (A) 1.5 times (B) the Executive’s Salary plus an amount (if any) equal to the average of the three (or fewer) most recent annual cash incentive payments (each an “ACIP”), if any, made to the Executive; provided that each payment of any such severance payment shall be reduced, on a pro rata basis, by the amount of payments the Executive receives under any life or disability insurance policies with respect to which the premiums were paid by the Company.
(ii)If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, then the Executive shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (A) 1.5 times (B) the Executive’s Salary plus an amount (if any) equal to the average of the three (or fewer) most recent ACIP payments (if any) made to the Executive.
(iii)The severance payment required to be paid by the Company to the Executive pursuant to Paragraph (b)(i) or (b)(ii) above, shall, subject to Section 3.6, be paid in equal monthly installments over the twelve (12) month period following the Termination Date; provided, however, that the first such installment shall be made upon the sixtieth (60th) day following the Termination Date, and shall include all amounts that would have been paid between the Termination Date and such date.
Notwithstanding the foregoing, the Executive shall not be entitled to any ACIP for the year in which the Termination Date occurs.
(c) Severance Benefits.
(i)If the Executive’s employment is terminated pursuant to any of the Paragraphs set forth in Section 3.1 hereof, then the Executive (or her legal representative, as applicable) shall be entitled to receive the benefits which the Executive has accrued or earned or which have become payable under the Plans as of the Termination Date, but which have not yet been paid to the Executive. Payment of any such benefits shall be made in accordance with the terms of such Plans.
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(ii)If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, and if the Executive is eligible for and timely elects continuation coverage pursuant to Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended, Section 4980B of the Code or similar state continuation coverage law (together, “COBRA”) under any insured or self-insured medical, dental or vision plan maintained by the Company (other than any health and/or dependent care flexible spending account plan or employee assistance plan), then, for a period of eighteen (18) months following the Termination Date, or until the Executive is no longer eligible for COBRA coverage under the particular plan, the Company will reimburse the Executive, on a taxable basis, for the cost of such COBRA coverage less the amount that the Executive would be required to contribute toward health coverage if he had remained an active employee of the Company. Such reimbursement payments will commence on the first payroll date of the month following the Termination Date and will be paid on the first payroll date of each subsequent month. The Executive shall not be entitled to reimbursement for the cost of any COBRA coverage elected separately by her current or former spouse or dependent child. Notwithstanding the foregoing, in the event that any such plan is fully insured, any such reimbursement requirement shall apply to the extent permitted by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Care Law”).
Any portion of the continued or replacement welfare benefits coverage provided for under this Section 3.3(c)(ii) which constitutes deferred compensation subject to Section 409A shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year (except with respect to annual, lifetime or similar limits under arrangements providing for the reimbursement of medical expenses under Section 105(b) of the Code); (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(d) Rights Under Plans. If the Executive’s employment is terminated pursuant to Paragraphs (a), (b), (e), or (f) in Section 3.1 hereof, then, subject to the provisions of Section 3.5, the Executive shall be entitled to the following rights with respect to any stock options, stock appreciation rights, restricted stock grants, restricted stock units, cash incentive units, or stock bonuses theretofore granted by the Company or the Company’s Parent to the Executive under any Plan, whether or not provided for in any agreement with the Company or the Company’s Parent; (i) all unvested stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall be vested in full on the Termination Date, notwithstanding any provision to the contrary or any provision requiring any act or acts by the Executive in any agreement with the Company or the Company’s Parent or any Plan; (ii) to the extent that any such stock options or stock appreciation rights shall require by their terms the exercise thereof by the Executive, the last date to exercise the same shall, notwithstanding any provision to the contrary in any agreement or any Plan, be the earliest of (A) the fifth anniversary of the Termination Date and (B) the original expiration date had the Executive’s employment not so terminated; provided, however, that no such extension of the period in which an incentive stock option, within the meaning of Section 422(b) of the Code, may be exercised shall occur without the consent of the Executive if such extension would result in such incentive stock option failing to continue to qualify for the federal income tax treatment afforded incentive stock options under Section 421 of the Code; and (iii) if the vesting or exercise pursuant hereto of any such stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall have the effect of subjecting the Executive to liability under Section 16(b) of the Securities Exchange Act or any similar provision of law, the vesting date thereof shall be deemed to be the first day after the Termination Date on which such vesting may occur without subjecting the Executive to such liability.
(e)    No Double Dipping.
(i)The severance payments and severance benefits the Executive may be entitled to receive pursuant to this Section 3.3 shall be in lieu of any of the payments and benefits the Executive may be entitled to receive pursuant to any other agreement, plan or arrangement providing for the payment of severance payments or benefits.
(ii)The Executive expressly disclaims any interest she may have in the Selective Insurance Company of America Severance Plan.
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3.4.Rights and Remedies on Termination After Change in Control. The Executive will be entitled to receive the severance payments and severance benefits specified below in the event there shall occur a termination of the Executive’s employment pursuant to Paragraph (e) or (g) of Section 3.1 hereof within two (2) years following the occurrence of a Change in Control. The severance payments and benefits the Executive may be entitled to receive pursuant to this Section 3.4 shall be in lieu of, and not in addition to, any of the payments and benefits the Executive may be entitled to receive pursuant to Section 3.3 hereof.
(a) Severance Payments. The Executive shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (i) 1.5; and the sum of the Executive’s Salary in effect as of the Termination Date plus the Executive’s average ACIP (if any) for the three (or fewer) calendar years prior to the calendar year in which the Termination Date occurs.
Notwithstanding the foregoing, the Executive shall not be entitled to any ACIP for the year in which the Termination Date occurs.
Such payment shall be made, subject to Section 3.6, sixty (60) business days following the Termination Date, provided that the Executive has executed and delivered a Release pursuant to Section 3.5 hereof and such Release has become effective and irrevocable; and further provided that, if and to the extent any portion of the payments under this Section 3.4 constitutes deferred compensation subject to Section 409A, then, unless the Change in Control qualifies as a change in the ownership of the Company’s Parent, a change in effective control of the Company’s Parent, or a change in the ownership of a substantial portion of the assets of the Company’s Parent, as described in Treasury Regulations Section 1.409A-3(i)(5), such portion of the payments shall be paid at the times specified in Section 3.3(b)(iii) of the Employment Agreement for payment of such portion.
(b) Severance Benefits. If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, and if the Executive is eligible for and timely elects continuation coverage pursuant to COBRA under any insured or self-insured medical, dental or vision plan maintained by the Company (other than any health and/or dependent care flexible spending account plan or employee assistance plan), then the Company, for a period of eighteen (18) months following the Termination Date, or until the Executive is no longer eligible for COBRA coverage under the particular plan will reimburse the Executive, on a taxable basis, for the cost of such COBRA coverage less the amount that the Executive would be required to contribute toward health coverage if she had remained an active employee of the Company. Such reimbursement payments will commence on the first payroll date of the month following the Termination Date and will be paid on the first payroll date of each subsequent month. The Executive shall not be entitled to reimbursement for the cost of any COBRA coverage elected separately by her current or former spouse or dependent child. Notwithstanding the foregoing, if any such plan is fully insured, any such reimbursement requirement shall apply to the extent permitted by the Health Care Law.
(c) Rights Under Plans. Subject to the provisions of Section 3.5, the Executive shall be entitled to the following rights with respect to any stock options, stock appreciation rights, restricted stock grants, restricted stock units, cash incentive units, or stock bonuses theretofore granted by the Company or the Company’s Parent to the Executive under any Plan, whether or not provided for in any agreement with the Company or the Company’s Parent (i) all unvested stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall be vested in full on the Termination Date, notwithstanding any provision to the contrary or any provision requiring any act or acts by the Executive in any agreement with the Company or the Company’s Parent or any Plan; (ii) to the extent that any such stock options or stock appreciation rights shall require by their terms the exercise thereof by the Executive, the last date to exercise the same shall, notwithstanding any provision to the contrary in any agreement or any Plan, be the earliest of (A) the fifth (5th) anniversary of the Termination Date and (B) the original expiration date had the Executive’s employment not so terminated; provided, however, that no such extension of the period in which an incentive stock option, within the meaning of Section 422(b) of the Code, may be exercised shall occur without the consent of the Executive if such extension would result in such incentive stock option failing to continue to qualify for the federal income tax treatment afforded incentive stock options under Section 421 of the Code; and (iii) if the vesting or exercise pursuant hereto of any such stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses shall have the effect of subjecting the Executive to liability under Section 16(b) of the Securities Exchange Act or any similar provision
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of law, the vesting date thereof shall be deemed to be the first day after the Termination Date on which such vesting may occur without subjecting the Executive to such liability.
(d) Rabbi Trust. The Company shall maintain a trust intended to be a grantor trust within the meaning of subpart E, Part I, subchapter J, chapter 1, subtitle A of the Code (the “Rabbi Trust”). Coincident with the occurrence of a Change in Control, the Company shall promptly deliver to a bank as trustee of the Rabbi Trust (the “Trustee”), an amount of cash or certificates of deposit, treasury bills or irrevocable letters of credit adequate to fully fund the payment obligations of the Company under this Section 3.4. The Company and Trustee shall enter into a trust agreement that shall provide that barring the insolvency of the Company, amounts payable to the Executive under this Section 3.4 (subject to Section 3.6) shall be paid by the Trustee to the Executive ten (10) days after written demand therefore by the Executive to the Trustee, with a copy to the Company, certifying that such amounts are due and payable under this Section 3.4 because the Executive’s employment has been terminated pursuant to Paragraph (e) or (g) in Section 3.1 hereof at a time which is within two (2) years following the occurrence of a Change in Control (a “Triggering Event”). Such trust agreement shall also provide that if the Company shall, prior to payment by the Trustee, object in writing to the Trustee, with a copy to the Executive, as to the payment of any amounts demanded by the Executive under this Section 3.4, certifying that such amounts are not due and payable to the Executive because a Triggering Event has not occurred, such dispute shall be resolved by binding arbitration as set forth in Section 5.8 hereof.
3.5.Conditions to Severance Payments and Benefits.
(a)The Executive’s right to receive the severance payments and benefits pursuant to Sections 3.3 and 3.4 hereof, is expressly conditioned upon (a) receipt by the Company of a written release (a “Release”) executed by the Executive in the form of Exhibit A hereto, on or before the fiftieth (50th) day following the Termination Date and the expiration of the revocation period described therein without such Release having been revoked, and (b) the compliance by the Executive with the covenants, terms or provisions of Sections 4.1, 4.2 and 4.3 hereof (the “Restrictive Covenants”). If the Executive shall fail to deliver a Release in accordance with the terms of this Section 3.5 or shall breach any of the Restrictive Covenants, the Company’s obligation to make the severance payments and to provide the severance benefits pursuant to Sections 3.3 and 3.4 hereof shall immediately and irrevocably terminate.
(b)Except where the Executive’s employment is terminated pursuant to Section 3.1(a) or (b), during any calendar year in which the Executive is a Covered Employee, if any stock-based or cash incentive unit awards of the Executive are intended to qualify as “performance based compensation” within the meaning of Section 162(m) of the Code, then the Executive’s entitlement, if any, to accelerated vesting of her stock-based and cash incentive unit awards pursuant to Section 3.3 or 3.4 of this Agreement shall apply only to the accelerated lapse of any service requirement, and the Executive shall be entitled to such stock-based awards, or to the vesting thereof, only if and to the extent that the applicable performance criteria applicable to such awards are satisfied.
3.6.Section 409A Tax. Notwithstanding anything herein to the contrary, to the extent any payment or provision of benefits under this Agreement upon the Executive’s “separation from service” is subject to Section 409A of the Code, no such payment shall be made, and Executive shall be responsible for the full cost of such benefits, for six (6) months following the Executive's "separation from service" if the Executive is a "specified employee" of the Company on the date of such separation from service. On the expiration of such six (6) month period, any payments delayed, and an amount sufficient to reimburse the Executive for the cost of benefits met by the Executive, during such period shall be aggregated (the “Make-Up Amount”) and paid in full to the Executive, and any succeeding payments and benefits shall continue as scheduled hereunder. The Company shall credit the Make-Up Amount with interest at no less than the interest rate it pays for short-term borrowed funds, such interest to accrue from the date on which payments would have been made, or benefits would have been provided, by the Company to the Executive absent the six-month delay. The terms "separation from service" and "specified employee" shall have the meanings set forth under Section 409A and the regulations and rulings issued thereunder. Furthermore, the Company shall not be required to make, and the Executive shall not be required to receive, any severance or other payment or benefit under Sections 3.3 or 3.4 hereof if the making of such payment or the provision of such benefit or the receipt thereof shall result in a tax to the Executive arising under Section 409A of the Code (a “Section 409A Tax”). For purposes of Section 409A, any right to a series of installment payments or provision of benefits in installments under Sections 3.3 and 3.4 of this Agreement shall be treated as a right to a
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series of separate payments. For purposes of and if and to the extent necessary to comply with Section 409A, any reference in this Agreement to the Executive’s “termination of employment” or words of similar import shall mean the Executive’s “separation from service” from the Company, and the Executive’s Termination Date shall mean the date of her “separation from service” from the Company.
SECTION 4.RESTRICTIVE COVENANTS.
4.1Confidentiality. The Executive agrees that she will not, either during the Term or at any time after the expiration or termination of the Term, disclose to any other Person any confidential or proprietary information of the Company, the Company’s Parent, or their subsidiaries, except for (a) disclosures to directors, officers, key employees, independent accountants and counsel of the Company, the Company’s Parent and their subsidiaries as may be necessary or appropriate in the performance of the Executive’s duties hereunder, (b) disclosures which do not have a material adverse effect on the business or operations of the Company, the Company’s Parent and their subsidiaries, taken as a whole, (c) disclosures which the Executive is required to make by law or by any court, arbitrator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order the Executive to disclose or make accessible any information, (d) disclosures with respect to any other litigation, arbitration or mediation involving this Agreement, and (e) disclosures of any such confidential or proprietary information that is, at the time of such disclosure, generally known to and available for use by the public otherwise than by the Executive’s wrongful act or omission. The Executive agrees not to take with her upon leaving the employ of the company any comment or paper relating to any confidential information or trade secret of the Company, the Company’s Parent and their subsidiaries, except that Executive shall be entitled to retain (i) papers and other materials of a personal nature, including but limited to, photographs, correspondence, personal diaries, calendars and Rolodexes (so long as such Rolodexes do not contain the Company’s only copy of business contact information), personal files and phone books, (ii) information showing her compensation or relating to her reimbursement of expenses, (iii) information that she reasonably believes may be needed for tax purposes, and (iv) copies of plans, programs and agreements relating to her employment, or termination thereof, with the Company.
Except as otherwise permitted below, if Executive believes that she may be required to disclose any such confidential or proprietary information pursuant to applicable law, court order or subpoena, she shall immediately notify Selective in writing by overnight delivery, directed to Selective’s General Counsel at 40 Wantage Avenue, Branchville, NJ 07890, of any such perceived requirement so that Selective may seek an appropriate protective order or other appropriate remedy or waive compliance with this confidentiality requirement. Executive shall also reasonably cooperate with Selective to obtain such a protective order or other remedy.
This Agreement does not prohibit Executive from making any disclosure required by law, communicating with, making a report to, or otherwise participating in any investigation or proceeding that may be conducted by SICA’s designated legal, compliance or human resources personnel, the Securities and Exchange Commission (“SEC”) and/or its Office of the Whistleblower, the Equal Employment Opportunity Commission (“EEOC”), the Occupational Safety and Health Administration (“OSHA”), the National Labor Relations Board (“NLRB”), or other federal, state or local government agencies or entities. Executive is not prohibited from disclosing this Agreement or its contents, or from providing documents or other information, to the SEC and/or the Office of the Whistleblower, EEOC, OSHA, NLRB or any other such federal, state or local governmental entity. Executive does not need to provide notice to or obtain the prior authorization of Selective’s General Counsel to make any such report or disclosure and Executive is not required to notify Selective that Executive has made such reports or disclosures.
Notice Under Defend Trade Secrets Act: Notwithstanding the requirements contained in this Agreement, in accordance with the Defend Trade Secrets Act, Executive will not be held criminally or civilly liable under any federal or state trade secret law if Executive disclose a Trade Secret in confidence to federal, state or local government officials, to Executive’s attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed complaint or other document filed in a lawsuit or other proceeding. Further, if Executive files a lawsuit alleging retaliation by Selective for reporting a suspected violation of law, Executive may disclose the Trade Secret to her attorney and use the Trade Secret information in the court proceeding if Executive: (i) files the document containing the Trade Secret in a sealed court document; and (ii) does not disclose the Trade Secret, except pursuant to court order. However, if Executive engages in conduct otherwise prohibited by law, such
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as, but not limited to, accessing Trade Secrets unlawfully or by unauthorized means, no immunity shall apply and Selective reserves the right to pursue all available remedies.
Notwithstanding anything to the contrary in this Release, and for the avoidance of any doubt, Executive has the right to:
a.Report, respond to or cooperate with an investigation into possible violations of state or federal laws or regulations involving a governmental agency or entity including the Congress, the Department of Justice, the SEC and/or its Office of the Whistleblower (www.sec.gov/whistleblower); Office of the Whistleblower Hotline (202) 551-4790, the EEOC, the OSHA, the NLRB, and any other such federal, state or local agency. This includes reporting violations of the federal securities laws or regulations;
b.Make disclosures that are protected by federal, state or local whistleblower laws;
c.Cooperate in an investigation, respond to an inquiry, or provide testimony before the SEC or any other federal, state or local regulatory or law enforcement authority; and
d.Make reports or disclosures to law enforcement or regulatory authorities without authorization from Selective, without notifying Selective that a report or disclosure will be or was made, and without revealing the substance of the report or disclosure to Selective.
e.Executive will not be retaliated against for reporting to Selective or to any governmental agency or entity, including the SEC, information that Executive reasonably believes relates to a possible violation of securities laws or for reporting misconduct. Retaliation under such circumstances is prohibited by law.
This Agreement does not prevent, interfere with or limit Executive’s ability to file a charge or complaint with, report conduct to, provide information to or participate in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administrative, the Securities and Exchange Commission or any other federal, state or local government agency or commission. Executive agrees that if such a charge or complaint is made, or investigation or proceeding is initiated against any Company Party (as such term is defined in Exhibit A to this Agreement) Executive will not accept, be entitled to, receive, or recover any monetary damages or any other form of relief or remedy to the fullest extent permitted by law EXCEPT THAT THIS AGREEMENT DOES NOT WAIVE OR LIMIT EXECUTIVE’S RIGHT TO RECEIVE A MONETARY AWARD FOR INFORMATION PROVIDED TO THE SEC AS AN SEC WHISTLEBLOWER OR TO RECEIVE A MONETARY AWARD FROM ANY OTHER FEDERAL OR STATE AGENCY PURSUANT TO A SIMILAR WHISTLEBLOWER PROGRAM.
4.2Non-Solicitation of Employees. The Executive agrees that, except in the course of performing her duties hereunder, she will not, either during the Term and for a period of two (2) years after the expiration or termination of the Term, directly or indirectly, solicit or induce or attempt to solicit or induce or cause any of the employees of the Company, the Company’s Parent or their subsidiaries to leave the employ of the Company, the Company’s Parent or any of their subsidiaries.
4.3Intellectual Property & Company Creations.
(a)Definitions. Included Activity means at the relevant time of determination, any activity conducted by, for or under the Company’s direction, whether or not conducted at the Company’s facilities, during working hours or using the Company’s resources, or which relates directly or indirectly to (i) the Company’s business as then operated or under consideration or development or (ii) any method, program, computer software, apparatus, design, plan, model, specification, formulation, technique, product, process (including, without limitation, any business processes and any operational processes) or device, then purchased, sold, leased, used or under consideration or development by the Company. Development means any idea, discovery, improvement, invention (including without limitation any discovery of new technology and any improvement to existing technology), Confidential Information, know-how, innovation, writing, work of authorship, compilation and other development or improvement, whether or not patented or patentable, copyrightable, or reduced to practice or writing. The Company Creation means any Development that arises out of any Included Activity.
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(b)Assignment. Executive hereby sells, transfers and assigns to (and the following shall be the exclusive property of) the Company, or its designee(s), the entire right, title and interest of Executive in and to all Company Creations made, discovered, invented, authored, created, developed, originated or conceived by Executive, solely or jointly, (i) during the term of Executive’s employment with the Company or (ii) on or before the first anniversary of the date of termination of Executive’s employment with the Company. Executive acknowledges that all copyrightable materials developed or produced by Executive within the scope of Executive's employment by the Company constitute works made for hire, as that term is defined in the United States Copyright Act 17 U.S.C. § 101. Executive shall bear the burden to prove that any Development did not arise out of an Included Activity.
(c)Disclosure & Cooperation. Executive shall communicate promptly and disclose to the Company, in such form as the Company may reasonably request, all information, details and data pertaining to any Company Creations, and Executive shall execute and deliver to the Company or its designee(s) such formal transfers and assignments and such other papers and documents and shall give such testimony as may be deemed necessary or required of Executive by the Company or its designee to develop, preserve or extend the Company's rights relating to any Company Creations and to permit the Company or its designee to file and prosecute patent applications and, as to copyrightable material, to obtain copyright registrations thereof. Executive hereby appoints the Company as Executive's attorney-in-fact to execute on Executive's behalf any assignments or other documents deemed necessary by the Company to protect or perfect its rights to any Creations.
(d)Exclusion. If any Company Creation fully qualifies under any applicable state or federal law that (i) restricts the enforcement of the provisions of Sections 4.3(b) or 4.3(c) by the Company against any Company employee and (ii) prohibits the waiver of such employee rights by contract, then as to such qualifying Company Creations, the provisions of Sections 4.3(b) and 4.3(c) shall only apply to the extent, if any, not prohibited by such law.
SECTION 5.MISCELLANEOUS PROVISIONS.
5.1.No Mitigation; Offsets. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise and no future income earned by the Executive from employment or otherwise shall in any way reduce or offset any payments due to the Executive hereunder. Assuming a payment or otherwise is due Executive under this Agreement, the Company may offset against any amount due Executive under this Agreement only those amounts due Company in respect of any undisputed, liquidated obligation of Executive to the Company.
5.2.Governing Law. The provisions of this Agreement will be construed and interpreted under the laws of the State of New Jersey, without regard to principles of conflicts of law.
5.3.Injunctive Relief and Additional Remedy. The Executive acknowledges that the injury that would be suffered by the Company, the Company’s Parent, or their subsidiaries as a result of a breach of the provisions of Sections 4.1, 4.2 and 4.3 hereof would be irreparable and that an award of monetary damages to the Company, the Company’s Parent, or their subsidiaries for such a breach would be an inadequate remedy. Consequently, the Company, the Company’s Parent, or their subsidiaries will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Company, the Company’s Parent, or their subsidiaries will not be obligated to post bond or other security in seeking such relief. Each of the parties hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts of the State of New Jersey for the purpose of injunctive relief.
5.4.Representations and Warranties by Executive. The Executive represents and warrants to the best of her knowledge that the execution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive’s obligations hereunder will not, with or without the giving of notice or the passage of time, or both: (a) violate any judgment, writ, injunction, or order of any court, arbitrator or governmental agency applicable to the Executive or (b) conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any agreement to which the Executive is a party or by which the Executive is or may be bound.
5.5.Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by either party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such
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right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (b) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.
5.6.Assignment. No right or benefit under this Agreement shall be assigned, transferred, pledged or encumbered (a) by the Executive except by a beneficiary designation made by will or the laws of descent and distribution or (b) by the Company except that the Company may assign this Agreement and all of its rights hereunder to any Person with which it may merge or consolidate or to which it may sell all or substantially all of its assets; provided that such Person shall, by agreement in form and substance satisfactory to the Executive, expressly assume and agree to perform this Agreement for the remainder of the Term in the same manner and to the same extent that the Company would be required to perform it if no such merger, consolidation or sale had taken place. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Company’s Parent and each of their successors and assigns, and the Executive, his heirs, legal representatives and any beneficiary or beneficiaries designated hereunder.
5.7.Entire Agreement; Amendments. This Agreement contains the entire agreement between the Company (and the Company’s Parent) and Executive with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the Company (and the Company’s Parent) and Executive with respect to the subject matter hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by the parties hereto.
5.8.Arbitration. Any dispute which may arise between the Executive and the Company with respect to the construction, interpretation or application of any of the terms, provisions, covenants or conditions of this Agreement or any claim arising from or relating to this Agreement will be submitted to final and binding arbitration by three (3) arbitrators in Newark, New Jersey, under the expedited rules of the American Arbitration Association then obtaining. One such arbitrator shall be selected by each of the Company and the Executive, and the two arbitrators so selected shall select the third arbitrator. Selection of all three arbitrators shall be made within thirty (30) days after the date the dispute arose. The written decision of the arbitrators shall be rendered within ninety (90) days after selection of the third arbitrator. The decision of the arbitrators shall be final and binding on the Company and the Executive and may be entered by either party in any New Jersey federal or state court having jurisdiction.
5.9.Severability. In the case that any one or more of the provisions contained in this Agreement shall, for any reason, be held invalid or unenforceable, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.
5.10.Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement may be executed via facsimile.
5.11.Headings; Interpretation. The various headings contained herein are for reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement. It is the intent of the parties that this Agreement not be construed more strictly with regard to one party than with regard to any other party.
5.12.Notices. (a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and sent as follows:
If to the Company, to:
Selective Insurance Company of America
40 Wantage Avenue
Branchville, New Jersey 07890
Attn: General Counsel
Fax: (973) 948-0282
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If to the Executive, to:
Brenda M. Hall
[ADDRESS REDACTED]
(b)All notices and other communications required or permitted under this Agreement which are addressed as provided in Paragraph (a) of this Section 5.12, (i) if delivered personally against proper receipt shall be effective upon delivery, (ii) if sent by facsimile transmission (with evidence supplied by the sender of the facsimile’s receipt at a facsimile number designated for receipt by the other party hereunder, which other party shall be obligated to provide such a facsimile number) shall be effective upon dispatch, and (iii) if sent (A) by certified or registered mail with postage prepaid or (B) by Federal Express or similar courier service with courier fees paid by the sender, shall be effective upon receipt. The parties hereto may from time to time change their respective addresses and/or facsimile numbers for the purpose of notices to that party by a similar notice specifying a new address and/or facsimile number, but no such change shall be deemed to have been given unless it is sent and received in accordance with this Section 5.12.
5.13Withholding. All amounts payable by the Company to the Executive hereunder (including, but not limited to, the Salary or any amounts payable pursuant to Sections 3.3 and/or 3.4 hereof) shall be reduced prior to the delivery of such payment to the Executive by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the Commencement Date.

SELECTIVE INSURANCE COMPANY OF
AMERICA
By: /s/ John J. Marchioni
John J. Marchioni
President and Chief Operating Officer
EXECUTIVE
 /s/ Brenda M. Hall
Brenda M. Hall
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EXHIBIT A

FORM OF RELEASE

Reference is hereby made to the Employment Agreement, dated as of September 30, 2019 (the “Employment Agreement”), by and between Brenda M. Hall (the “Executive”) and Selective Insurance Company of America, a New Jersey corporation (the “Company”). Capitalized terms used but not defined herein shall have the meanings specified in the Employment Agreement.
Pursuant to the terms of the Employment Agreement and in consideration of the payments to be made to the Executive by the Company, which Executive acknowledges are in excess of what Executive would otherwise be entitled to receive, the Executive hereby releases and forever discharges and holds the Company, the Company’s Parent and their subsidiaries (collectively, the “Company Parties” and each a “Company Party”), and the respective officers, directors, employees, partners, stockholders, members, agents, affiliates, successors and assigns and insurers of each Company Party, and any legal and personal representatives of each of the foregoing, harmless from all claims or suits, of any nature whatsoever (whether known or unknown), past, present or future, including those arising from the law, being directly or indirectly related to the Executive’s employment by or the termination of such employment by any Company Party, including, without limiting the foregoing, any claims for notice, pay in lieu of notice, wrongful dismissal, severance pay, bonus, overtime pay, incentive compensation, interest or vacation pay for the Executive’s service as an officer or director to any Company Party through the date hereof. The Executive also hereby agrees not to file a lawsuit asserting any such claims. This release (this “Release”) includes, but is not limited to, claims growing out of any legal restriction on any Company Party’s right to terminate its employees and claims or rights under federal, state, and local laws prohibiting employment discrimination (including, but not limited to, claims or rights under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Uniformed Services Employment and Reemployment Rights Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act of 1990, and the laws of the State of New Jersey against discrimination, or any other federal or state statutes prohibiting discrimination on the basis of age, sex, race, color, handicap, religion, national origin, and sexual orientation, or any other federal, state or local employment law, regulation or other requirement) which arose before the date this Release is signed, excepting only claims in the nature of workers’ compensation, claims for vested benefits, and claims to enforce this agreement.
Even though the above paragraph means that Executive is giving up certain claims that she may have against the Selective Releasees, this Release does not prevent, interfere with or limit her ability to file a charge or complaint with, report conduct to, provide information to or participate in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local government agency or commission. Executive agrees that if such a charge or complaint is made, or investigation or proceeding is initiated against the Selective Releasees, he will not accept, be entitled to, receive, or recover any monetary damages or any other form of relief or remedy to the fullest extent permitted by law EXCEPT THAT THIS AGREEMENT DOES NOT WAIVE OR LIMIT EXECUTIVE’S RIGHT TO RECEIVE A MONETARY AWARD FOR INFORMATION PROVIDED TO THE SEC AS AN SEC WHISTLEBLOWER OR TO RECEIVE A MONETARY AWARD FROM ANY OTHER FEDERAL OR STATE AGENCY PURSUANT TO A SIMILAR WHISTLEBLOWER PROGRAM.
Executive acknowledges and understands that the release of claims under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. Sections 621-634, is subject to special waiver protections under 29 U.S.C. Section 626(f). In accordance with that section, Executive specifically agrees that she is knowingly and voluntarily releasing and waiving any rights or claims of discrimination under the ADEA. In particular, Executive acknowledges that she understands that:

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(i)Executive is not waiving any claims for age discrimination under the ADEA that may arise after the date Executive signs this Release and she is not waiving vested benefits, if any;
(ii)Executive is waiving rights or claims for age discrimination under the ADEA in exchange for payments described above, which are in addition to anything of value to which she is already entitled; and
(iii)Executive is advised to consult with and has had an opportunity to consult with an attorney before signing this Release.
This Agreement does not prohibit Executive from making any disclosure required by law, communicating with, making a report to, or otherwise participating in any investigation or proceeding that may be conducted by SICA’s designated legal, compliance or human resources personnel, the Securities and Exchange Commission (“SEC”) and/or its Office of the Whistleblower, the Equal Employment Opportunity Commission (“EEOC”), the Occupational Safety and Health Administration (“OSHA”), the National Labor Relations Board (“NLRB”), or other federal, state or local government agencies or entities. Executive is not prohibited from disclosing this Agreement or its contents, or from providing documents or other information, to the SEC and/or the Office of the Whistleblower, EEOC, OSHA, NLRB or any other such federal, state or local governmental entity. Executive does not need to provide notice to or obtain the prior authorization of Selective’s General Counsel to make any such report or disclosure and Executive is not required to notify Selective that Executive has made such reports or disclosures.
Notice Under Defend Trade Secrets Act: Notwithstanding the requirements contained in this Agreement, in accordance with the Defend Trade Secrets Act, Executive will not be held criminally or civilly liable under any federal or state trade secret law if Executive disclose a Trade Secret in confidence to federal, state or local government officials, to Executive’s attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed complaint or other document filed in a lawsuit or other proceeding. Further, if Executive files a lawsuit alleging retaliation by Selective for reporting a suspected violation of law, Executive may disclose the Trade Secret to her attorney and use the Trade Secret information in the court proceeding if Executive: (i) files the document containing the Trade Secret in a sealed court document; and (ii) does not disclose the Trade Secret, except pursuant to court order. However, if Executive engages in conduct otherwise prohibited by law, such as, but not limited to, accessing Trade Secrets unlawfully or by unauthorized means, no immunity shall apply and Selective reserves the right to pursue all available remedies.
Notwithstanding anything to the contrary in this Release, and for the avoidance of any doubt, Executive has the right to:
f.Report, respond to or cooperate with an investigation into possible violations of state or federal laws or regulations involving a governmental agency or entity including the Congress, the Department of Justice, the SEC and/or its Office of the Whistleblower (www.sec.gov/whistleblower); Office of the Whistleblower Hotline (202) 551-4790, the EEOC, the OSHA, the NLRB, and any other such federal, state or local agency. This includes reporting violations of the federal securities laws or regulations;
g.Make disclosures that are protected by federal, state or local whistleblower laws;
h.Cooperate in an investigation, respond to an inquiry, or provide testimony before the SEC or any other federal, state or local regulatory or law enforcement authority; and
i.Make reports or disclosures to law enforcement or regulatory authorities without authorization from Selective, without notifying Selective that a report or disclosure will be or was made, and without revealing the substance of the report or disclosure to Selective.
j.Executive will not be retaliated against for reporting to Selective or to any governmental agency or entity, including the SEC, information that Executive reasonably believes relates to a possible violation of securities laws or for reporting misconduct. Retaliation under such circumstances is prohibited by law.
The Executive acknowledges that because this Release contains a release of claims and is an important legal document, she has been advised to consult with counsel before executing it, that she may take up to [twenty-one
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(21)]1 [forty-five (45)]2 days to decide whether to execute it, and that she may revoke this Release by delivering or mailing a signed notice of revocation to the Company at its offices within seven (7) days after executing it. If Executive executes this Release and does not subsequently revoke the release within seven (7) days after executing it, then this Release shall take effect as a legally binding agreement between Executive and the Company.
[INCLUDE OWBPA DEMOGRAPHIC DATA LANGUAGE FOR A PROGRAM AS APPLICABLE]
If Executive does not deliver to the Company an original signed copy of this Release by [DATE], or if Executive signs and revokes this Release within seven (7) days as set forth above, the Company will assume that Executive rejects the Release and Executive will not receive the payments referred to herein.
The Executive acknowledges that there is a risk that after signing this Release he may discover losses or claims that are released under this Release, but that are presently unknown to her. The Executive assumes this risk and understands that this Release shall apply to any such losses and claims.
The Executive understands that this Release includes a full and final release covering all known and unknown, injuries, debts, claims or damages which have arisen or may have arisen from Executive’s employment by or the termination of such employment by any Company Party. The Executive acknowledges that by accepting the benefits and payments set forth in the Employment Agreement, she assumes and waives the risks that the facts and the law may be other than as she believes.
Notwithstanding the foregoing, this Release does not release, and the Executive continues to be entitled to, (i) any rights to exculpation or indemnification that the Executive has under contract or law with respect to her service as an officer or director of any Company Party and (ii) receive the payments to be made to her by the Company pursuant to Section 3.3 and/or 3.4 of the Employment Agreement (including any plan, agreement or other arrangement that is referenced in or the subject of the applicable Section), subject to the conditions set forth in Section 3.5 of the Employment Agreement, (iii) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against her as a result of any act or failure to act for which she and any Company Party are jointly liable, and (iv) any claim in respect of any insurance policy with any Company Party entered into outside of the employment relationship. This Release constitutes the release referenced in Section 3.5 of the Employment Agreement.
The undersigned Executive, having had the time to reflect, freely accepts and agrees to the above Release. The Executive acknowledges and agrees that no Company Party representative has made any representation to or agreement with the Executive relating to this Release which is not contained in the express terms of this Release. The Executive acknowledges and agrees that the execution and delivery of this Release is based upon the Executive’s independent review of this Release, and the Executive hereby expressly waives any and all claims or defenses by the Executive against the enforcement of this Release which are based upon allegations or `representations, projections, estimates, understandings or agreements by any Company Party or any of their representatives or any assumptions by the Executive that are not contained in the express terms of this Release.
1 Delete brackets and use text enclosed therewith if 45 days is not otherwise required by Section 7(f)(1)(F) of the Age Discrimination in Employment Act and/or 29 C.F.R. Part 1625. If 45 days is so required, delete bracketed text in its entirety.
2 Delete brackets and use text enclosed therewith if 45 days is required by Section 7(f)(1)(F) of the Age Discrimination in Employment Act and/or 29 C.F.R. Part 1625. If 45 days is not so required, delete bracketed text in its entirety.
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Date:
Brenda M. Hall
STATE OF :
ss.:
COUNTY OF :




On this _____ day of _______________, 20__, before me, the undersigned officer, personally appeared _________________, personally known to me (or satisfactorily proven to be the same person whose name is subscribed in the foregoing instrument), who acknowledged that she executed the foregoing instrument for the purposes therein contained as her free act and deed.


In witness whereof I hereunto set my hand.


Notary Public
My Commission Expires:

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Attachment to Form of Release


[Attach disclosures required by the Older Workers Benefit Protection Act, if required]
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Exhibit 10.2
EMPLOYMENT AGREEMENT

This Employment Agreement, (the “Agreement”) is made as of the 5th day of December 2019, between Selective Insurance Company of America, a New Jersey corporation with a principal place of business at 40 Wantage Avenue, Branchville, New Jersey 07890 (the “Company”) and Paul Kush, an individual residing at [ADDRESS REDACTED] (the “Executive”).

SECTION 1.DEFINITIONS.
1.1.    Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
“Agreement” has the meaning given to such term in the Preamble hereto.
“Board” means the Board of Directors of the Company’s Parent.
“Cause” means any one or more of the following:
(i)the Executive shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony under, or within the meaning of, applicable United States federal or state law;
(ii)the Executive shall have breached in any respect any one or more of the material provisions of this Agreement, including, without limitation, any failure to comply with the Code of Conduct, and, to the extent such breach may be cured, such breach shall have continued for a period of thirty (30) days after written notice by the Company’s Chief Executive Officer to the Executive specifying such breach; or
(iii)the Executive shall have engaged in acts of insubordination, gross negligence or willful misconduct in the performance of the Executive’s duties and obligations to the Company.
For purposes of clauses (ii) and (iii) of this definition of “Cause”, no act, or failure to act, on the part of the Executive shall be considered grounds for “Cause” under such clauses if such act, or such failure to act, was done or omitted to be done based upon authority or express direction given by the Chief Executive Officer or based upon the advice of counsel for the Company.
“Change in Control” means the occurrence of an event of a nature that would be required to be reported by the Company’s Parent in response to Item 5.01 of a Current Report on Form 8-K, as in effect on the date thereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act; provided, however, that a Change in Control shall, in any event, conclusively be deemed to have occurred upon the first to occur of any one of the following events:
(i)The acquisition by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act or any successor provisions to either of the foregoing), including, without limitation, any current shareholder or shareholders of the Company’s Parent, of securities of the Company’s Parent resulting in such person or group being a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act) of twenty-five percent (25%) or more of any class of Voting Securities of the Company’s Parent;
(ii)The acquisition by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act or any successor provisions to either of the foregoing), including, without limitation, any current shareholder or shareholders of the Company’s Parent, of securities of the Company’s Parent resulting in such person or group being a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act) of twenty percent (20%) or more, but less than twenty-five percent (25%), of any class of Voting Securities of the Company’s Parent, if the Board adopts a resolution that such acquisition constitutes a Change in Control;
(iii)The sale or disposition of all or substantially all of the Company’s Parent’s assets, defined as more than seventy-five (75%) percent, on a consolidated basis, as shown in the Company’s Parent’s then most recent audited consolidated balance sheet;


(iv)The reorganization, recapitalization, merger, consolidation or other business combination involving the Company’s Parent the result of which is the ownership by the shareholders of the Company’s Parent of less than eighty percent (80%) of those Voting Securities of the resulting or acquiring Person having the power to vote in the elections of the board of directors of such Person; or
(v)A change in the membership in the Board which, taken in conjunction with any other prior or concurrent changes, results in fifty percent (50%) or more of the Board’s membership being persons not nominated by the Company’s Parent’s management or the Board as set forth in the Company’s Parent’s then most recent proxy statement, excluding changes resulting from substitutions by the Board because of retirement or death of a director or directors, removal of a director or directors by the Board or resignation of a director or directors due to demonstrated disability or incapacity.
Anything in this definition of Change in Control to the contrary notwithstanding, no Change in Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, Voting Securities of the Company’s Parent.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Code of Conduct” has the meaning given to such term in Section 2.3(a) hereof.
“Commencement Date” has the meaning given to such term in Section 2.2 hereof.
“Company” has the meaning given to such term in the Preamble hereto and includes any Person which shall succeed to or assume the obligations of the Company hereunder pursuant to Section 5.6 hereof.
“Company’s Parent” means Selective Insurance Group, Inc., a publicly traded New Jersey corporation with a principal office at 40 Wantage Avenue, Branchville, New Jersey 07890.
“Covered Employee” means a covered employee, within the meaning of Section 162(m)(3) of the Code, of the Company.
“Disability” shall mean: (i) a long-term disability entitling the Executive to receive benefits under the Company’s long-term disability plan as then in effect; or (ii) if no such plan is then in effect or the plan does not apply to the Executive, the inability of the Executive, as determined by the Board or its designee, to perform the essential functions of his regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months. At the request of the Executive or his personal representative, determination by the Board or its designee that the Disability of the Executive has occurred shall be certified by two physicians mutually agreed upon by the Executive, or his personal representative, and the Company. Without such independent certification (if so requested by the Executive), the Executive’s termination shall be deemed a termination by the Company without Cause and not a termination by reason of his Disability.
“Early Termination” has the meaning given to such term in Section 3.2 hereof.
“Executive” has the meaning given to such term in the Preamble hereto.
“Good Reason” means the occurrence of any one or more of the following conditions; provided, however, that no such condition shall be deemed to constitute “Good Reason” unless the Executive provides notice of such condition to the Company within ninety (90) days of its initial existence, and the Company shall have failed to remedy the condition within thirty (30) days of its receipt of such notice:
(i) any material diminution in the Executive’s Salary below the annualized rate in effect on the date on which a Change in Control shall have occurred, unless such reduction is implemented for the senior executive staff generally, provided, however that such reduction shall constitute Good Reason even if implemented for senior executive staff generally if such reduction occurs within two years after a Change in Control;
(ii)any material negative change in the aggregate benefits the Executive receives, other than as a result of the normal expiration of any Plan as to other eligible employees in accordance with its terms as
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in effect on the date preceding the date on which a Change in Control shall have occurred, or unless such change affects all participants of such Plan generally;
(iii)without the Executive’s express prior written consent, a material diminution of the Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change in Control, or any material diminution in the Executive’s responsibilities as an executive of the Company as compared with those he had as an executive of the Company immediately prior to a Change in Control, or any material negative change in the Executive’s titles or office as in effect immediately prior to a Change in Control, except in connection with the termination of the Executive’s employment for Cause, Disability or Retirement or as a result of the Executive’s death, or by his termination of his employment other than for Good Reason;
(iv)without the Executive’s express prior written consent, the Company’s imposition of a requirement within two (2) years of a Change in Control that the Executive be based at any location that increases the Executive’s regular commute fifty (50) miles or more from the date preceding the Change in Control.
(v)the failure by the Company’s Parent to obtain from any Person with which it may merge or consolidate or to which it may sell all or substantially all of its assets, the agreement of such Person as set forth in the proviso in Section 5.6 hereof; provided that such merger, consolidation or sale constitutes a Change in Control; or
(vi)within two years after a Change in Control shall have occurred, any action or inaction that constitutes a material breach by the Company of any of the terms and conditions of this Agreement.
“Notice of Termination” means a written notice which shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and, (iii) specify the date of termination in accordance with this Agreement (other than for a termination for Cause).
“Person” means an individual, partnership, corporation, association, limited liability company, trust, joint venture, unincorporated organization, and any government, governmental department or agency or political subdivision thereof.
“Plans” has the meaning given to such term in Section 2.4(b) hereof.
“Rabbi Trust” has the meaning given to such term in Section 3.4(d) hereof.
“Release” has the meaning given to such term in Section 3.5 hereof.
“Restrictive Covenants” has the meaning given to such term in Section 3.5 hereof.
“Retirement” means a termination of the Executive’s employment by the Company or the Executive (i) at such age as shall be established by the Company’s Board for mandatory or normal retirement of Company executives in general (which age shall be, if the determination of Retirement is made after the occurrence of a Change in Control, the age established by the Company’s Board prior to a Change in Control), which shall not be less than age 65, or (ii) at any other retirement age set by mutual agreement of the Company and the Executive and approved by the Company’s Board.
“Salary” has the meaning given to such term in Section 2.4(a) hereof.
“Section 409A” means Section 409A of the Code and the regulations of the Treasury and other applicable guidance promulgated thereunder.
“Section 409A Tax” has the meaning given to such term in Section 3.6 hereof.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Term” has the meaning given to such term in Section 2.2 hereof.
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“Termination Date” means the date of the Executive’s termination of employment with the Company and its affiliates. If the Executive’s employment is to be terminated by the Company for Disability, the Executive’s employment shall terminate thirty (30) days after a Notice of Termination is given; provided, that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period.
“Triggering Event” has the meaning given to such term in Section 3.4(d) hereof.
“Trustee” has the meaning given to such term in Section 3.4(d) hereof.
“Voting Securities” means, with respect to a specified Person, any security of such Person that has, or may have upon an event of default or in respect to any transaction, a right to vote on any matter upon which the holder of any class of common stock of such Person would have a right to vote.
1.2.    Terms Generally. Unless the context of this Agreement requires otherwise, words importing the singular number shall include the plural and vice versa, and any pronoun shall include the corresponding masculine, feminine and neuter forms.
1.3.    Cross-References. Unless otherwise specified, references in this Agreement to any Paragraph or Section are references to such Paragraph or Section of this Agreement.
SECTION 2.EMPLOYMENT AND COMPENSATION. The following terms and conditions will govern the Executive’s employment with the Company throughout the Term.
2.1.Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, on the terms and conditions set forth herein.
2.2.Term. The term of employment of the Executive under this Agreement shall commence as of the 5th day of December, 2019 (the “Commencement Date”) and, subject to Section 3.1 hereof, shall terminate on the third anniversary of the Commencement Date, and shall automatically be extended for additional one (1) year periods thereafter (any such renewal periods, together with the initial period, being referred to as the “Term”) unless terminated by either party by written notice to the other party
2.3.Duties. (a) The Executive agrees to serve as Executive Vice President, Chief Claims Officer of the Company during the Term. In such capacities, the Executive shall have the responsibilities and duties customary for such office(s) and such other executive responsibilities and duties as are assigned by the Company’s President and/or Chief Executive Officer that are consistent with the Executive’s position(s). The Executive agrees to devote substantially all his business time, attention and services to the business and affairs of the Company and its affiliates and to perform his duties to the best of his ability. At all times during the performance of this Agreement, the Executive will adhere to the Code of Conduct of the Company (the “Code of Conduct”) that has been or may hereafter be established and communicated by the Company to the Executive for the conduct of the position or positions held by the Executive. The Executive may not accept directorships on the board of directors of for-profit corporations without the prior written consent of the President and/or Chief Executive Officer. The Executive may accept directorships on the board of directors of not-for-profit corporations without the President’s and/or Chief Executive Officer’s prior written consent so long as (a) such directorships do not interfere with Executive’s ability to carry out his responsibilities under this Agreement, and (b) Executive promptly notifies the President and/or Chief Executive Officer in writing of the fact that he has accepted such a non-profit directorship.
(b)    If the Company and the Executive do not agree in writing to renew the Term pursuant to Section 2.2, the Executive shall continue to be employed under this Agreement only until the expiration of the then current Term (unless earlier terminated pursuant to Section 3.1 hereof), shall cooperate fully with the President and/or Chief Executive Officer and shall perform such duties not inconsistent with the provisions hereof as he shall be assigned by the President and/or Chief Executive Officer.
2.4.Compensation.
(a)Salary. For all services rendered by the Executive under this Agreement, the Company shall pay the Executive a salary during the Term at a rate of not less than FOUR HUNDRED THOUSAND DOLLARS ($400,000.00) per year, which may be increased but not decreased unless decreased for the senior executive staff generally (the “Salary”), payable in installments in accordance with the Company’s policy from time
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to time in effect for payment of salary to executives. The Salary shall be reviewed no less than annually by the President and/or Chief Executive Officer and nothing contained herein shall prevent the Board from at any time increasing the Salary or other benefits herein provided to be paid, or provided to, the Executive or from providing additional or contingent benefits to the Executive as it deems appropriate.
(b)Sign-On Bonus. The Company will provide Executive with a lump sum sign-on bonus in the amount of Two Hundred Thousand Dollars ($200,000) (less all applicable payroll taxes), payable in February 2020 contemporaneously with the Company’s normal payout process of the Annual Cash Incentive Program (ACIP). Executive agrees to reimburse the Company on a prorated basis for the above-noted cash payment if Executive voluntarily terminates employment or Executive’s employment is terminated involuntarily for a violation of Selective’s Code of Conduct within 24 months after the bonus is paid.
(c)Restricted Stock Unit Grant. On the fifth business day after the Commencement Date, the Company will provide Executive with a grant of time-based restricted stock units (RSUs) under the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan as amended, having an initial monetized value on the date of grant of Three Hundred Thousand Dollars ($300,00). Provided the Executive remains employed by the Company, these RSUs will vest three (3) years from the date of the grant.
Executive’s position is subject to stock ownership requirements adopted by the Board of Directors of Selective Insurance Group, Inc. and contained in the Corporate Governance Guidelines found in the Corporate Governance section of www.selective.com. Under these guidelines, Executive must own 2.5 times his base salary then in effect in Selective Insurance Group, Inc. common stock within 5 years from the Commencement Date. Shares calculated for ownership include common stock currently owned by Executive, and awards of restricted stock units (including related dividend equivalent units not yet vested).
(d)Annual Cash Incentive. The Executive will also be eligible, commencing with the 2020 performance year, to participate in the Annual Cash Incentive Program (“ACIP”). This ACIP will provide the Executive with the opportunity to earn cash based upon the level of Executive’s individual performance and the achievement of annual Company targets. The payment range of the annual cash incentive for employees at the Executive’s grade level is 0% to 150% of the Executive’s annual base pay with a target of 85%. Any cash incentive awards will be based on the ACIP design then in effect and Executive’s individual performance and Selective’s strategic and financial performance for the award period.
(e)Benefits. During the Term, the Company shall permit the Executive to participate in or receive benefits under the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan, the Selective Insurance Group, Inc. Cash Incentive Plan, the Selective Insurance Retirement Savings Plan (“401(k) Plan”), the Selective Insurance Company of America Deferred Compensation Plan, and in any other incentive compensation, stock option, stock appreciation right, stock bonus, pension, group insurance, retirement, profit sharing, medical, disability, life insurance plan, relocation plan or policy, or any other plan, program, policy or arrangement of the Company intended to benefit similarly situated employees of the Company generally, if any, in accordance with the respective provisions thereof, from time to time in effect (collectively, the “Plans”). Executive will be eligible to participate in the Company’s Selections Benefits Program effective the first day of the month following the Commencement Date, which program includes medical, dental, vision, prescription drug, life insurance and flexible spending accounts.
Participation in the Company’s 401k plan is set to automatically begin 45 days after Executive’s first full payroll period. Initially, 6% (subject to IRS limits) of the Executive’s eligible compensation on a pre-tax basis will be automatically invested in the age-appropriate target date fund unless Executive elects to opt out of the plan, chooses to contribute a higher or lower percentage, or chooses to contribute to other or additional funds within 45 days following Executive’s first full payroll period.
(f)Vacations and Reimbursements. During the Term, the Executive shall be entitled to vacation time off and reimbursements for ordinary and necessary travel and entertainment expenses in accordance with the Company’s policies on such matters from time to time in effect. Executive will receive a total of twenty-four (24) days of paid time off each calendar year (which total shall be reduced on a pro-rated basis for 2019 based on Executive’s date of hire in 2019) and each year therafter until increased in accordance with the Company’s bank day policy.
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(g)Relocation Assistance. Executive shall be eligible for relocation assistance under Selective’s corporate relocation assistance program (administered by Cartus). In consideration of receiving this relocation assistance Executive agrees to reimburse Selective, on a pro-rated basis, if Executive voluntarily terminates his employment, or Executive’s employment is terminated involuntarily for a violation of Selective’s Code of Conduct, within twenty-four (24) months after payment or reimbursement has been made to or on Executive’s behalf under this program.
(h)Perquisites. During the Term, the Company shall provide the Executive with suitable offices, secretarial and other services, and other perquisites to which other executives of the Company generally are (or become) entitled, to the extent as are suitable to the character of the Executive’s position with the Company, subject to such specific limits on such perquisites as may from time to time be imposed by the Company’s Board and Chief Executive Officer.
(i)Taxable Reimbursements and Perquisites. Any taxable reimbursement of business or other expenses, or any provision of taxable in-kind perquisites or other benefits to the Executive, as specified under this Agreement, shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
SECTION 3.TERMINATION AND SEVERANCE.
3.1.Termination. The Executive’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Term, except that the employment of the Executive hereunder shall earlier terminate:
(a)Death. Upon the Executive’s death.
(b)Disability. At the option of the Company, upon the Disability of the Executive.
(c)For Cause. At the option of the Company, for Cause.
(d)Resignation. At any time at the option of the Executive, by resignation (other than a resignation for Good Reason).
(e)Without Cause. At any time at the option of the Company, without Cause; provided, that a termination of the Executive’s employment hereunder by the Company based on Retirement, Death, or Disability shall not be deemed to be a termination without Cause.
(f)Relocation. At the option of the Executive at any time prior to a Change in Control and within two years of the Company first imposing a requirement without the consent of the Executive that the Executive be based at any location that increases the Executive’s regular commute fifty (50) miles or more.
(g)For Good Reason. At any time at the option of the Executive for Good Reason, provided that such termination occurs (i) within two (2) years following the occurrence of a Change in Control, and (ii) within two (2) years following the initial existence of the condition constituting Good Reason.
3.2.Procedure For Termination. Any termination of the Executive’s employment by the Company or by the Executive prior to the expiration of the Term (an “Early Termination”) shall be communicated by delivery of a Notice of Termination to the other party hereto given in accordance with Section 5.12 hereof. Any Early Termination shall become effective as of the applicable Termination Date.
3.3.Rights and Remedies on Termination. The Executive will be entitled to receive the payments and benefits specified below if there is an Early Termination.
(a) Accrued Salary. If the Executive’s employment is terminated pursuant to any of the Paragraphs set forth in Section 3.1 hereof, then the Executive (or his legal representative, as applicable) shall only be entitled to receive his accrued and unpaid Salary through the Termination Date.
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(b) Severance Payments.
(i)If the Executive’s employment is terminated pursuant to Paragraphs (a) or (b) in Section 3.1 hereof, then the Executive (or his legal representative, as applicable) shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (A) 1.5 times (B) the Executive’s Salary plus an amount (if any) equal to the average of the three (or fewer) most recent annual cash incentive payments (each an “ACIP”), if any, made to the Executive; provided that each payment of any such severance payment shall be reduced, on a pro rata basis, by the amount of payments the Executive receives under any life or disability insurance policies with respect to which the premiums were paid by the Company.
(ii)If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, then the Executive shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (A) 1.5 times (B) the Executive’s Salary plus an amount (if any) equal to the average of the three (or fewer) most recent ACIP payments (if any) made to the Executive.
(iii)The severance payment required to be paid by the Company to the Executive pursuant to Paragraph (b)(i) or (b)(ii) above, shall, subject to Section 3.6, be paid in equal monthly installments over the twelve (12) month period following the Termination Date; provided, however, that the first such installment shall be made upon the sixtieth (60th) day following the Termination Date, and shall include all amounts that would have been paid between the Termination Date and such date.
Notwithstanding the foregoing, the Executive shall not be entitled to any ACIP for the year in which the Termination Date occurs.
(c) Severance Benefits.
(i)If the Executive’s employment is terminated pursuant to any of the Paragraphs set forth in Section 3.1 hereof, then the Executive (or his legal representative, as applicable) shall be entitled to receive the benefits which the Executive has accrued or earned or which have become payable under the Plans as of the Termination Date, but which have not yet been paid to the Executive. Payment of any such benefits shall be made in accordance with the terms of such Plans.
(ii)If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, and if the Executive is eligible for and timely elects continuation coverage pursuant to Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended, Section 4980B of the Code or similar state continuation coverage law (together, “COBRA”) under any insured or self-insured medical, dental or vision plan maintained by the Company (other than any health and/or dependent care flexible spending account plan or employee assistance plan), then, for a period of eighteen (18) months following the Termination Date, or until the Executive is no longer eligible for COBRA coverage under the particular plan, the Company will reimburse the Executive, on a taxable basis, for the cost of such COBRA coverage less the amount that the Executive would be required to contribute toward health coverage if he had remained an active employee of the Company. Such reimbursement payments will commence on the first payroll date of the month following the Termination Date and will be paid on the first payroll date of each subsequent month. The Executive shall not be entitled to reimbursement for the cost of any COBRA coverage elected separately by his current or former spouse or dependent child. Notwithstanding the foregoing, in the event that any such plan is fully insured, any such reimbursement requirement shall apply to the extent permitted by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Care Law”).
Any portion of the continued or replacement welfare benefits coverage provided for under this Section 3.3(c)(ii) which constitutes deferred compensation subject to Section 409A shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year (except with respect to annual, lifetime or similar limits under arrangements providing for the reimbursement of medical expenses under Section 105(b) of the Code); (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
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(d) Rights Under Plans. If the Executive’s employment is terminated pursuant to Paragraphs (a), (b), (e), or (f) in Section 3.1 hereof, then, subject to the provisions of Section 3.5, the Executive shall be entitled to the following rights with respect to any stock options, stock appreciation rights, restricted stock grants, restricted stock units, cash incentive units, or stock bonuses theretofore granted by the Company or the Company’s Parent to the Executive under any Plan, whether or not provided for in any agreement with the Company or the Company’s Parent; (i) all unvested stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall be vested in full on the Termination Date, notwithstanding any provision to the contrary or any provision requiring any act or acts by the Executive in any agreement with the Company or the Company’s Parent or any Plan; (ii) to the extent that any such stock options or stock appreciation rights shall require by their terms the exercise thereof by the Executive, the last date to exercise the same shall, notwithstanding any provision to the contrary in any agreement or any Plan, be the earliest of (A) the fifth anniversary of the Termination Date and (B) the original expiration date had the Executive’s employment not so terminated; provided, however, that no such extension of the period in which an incentive stock option, within the meaning of Section 422(b) of the Code, may be exercised shall occur without the consent of the Executive if such extension would result in such incentive stock option failing to continue to qualify for the federal income tax treatment afforded incentive stock options under Section 421 of the Code; and (iii) if the vesting or exercise pursuant hereto of any such stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall have the effect of subjecting the Executive to liability under Section 16(b) of the Securities Exchange Act or any similar provision of law, the vesting date thereof shall be deemed to be the first day after the Termination Date on which such vesting may occur without subjecting the Executive to such liability.
(e)    No Double Dipping.
(i)The severance payments and severance benefits the Executive may be entitled to receive pursuant to this Section 3.3 shall be in lieu of any of the payments and benefits the Executive may be entitled to receive pursuant to any other agreement, plan or arrangement providing for the payment of severance payments or benefits.
(ii)The Executive expressly disclaims any interest he may have in the Selective Insurance Company of America Severance Plan.
3.4.Rights and Remedies on Termination After Change in Control. The Executive will be entitled to receive the severance payments and severance benefits specified below in the event there shall occur a termination of the Executive’s employment pursuant to Paragraph (e) or (g) of Section 3.1 hereof within two (2) years following the occurrence of a Change in Control. The severance payments and benefits the Executive may be entitled to receive pursuant to this Section 3.4 shall be in lieu of, and not in addition to, any of the payments and benefits the Executive may be entitled to receive pursuant to Section 3.3 hereof.
(a) Severance Payments. The Executive shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (i) 1.5; and the sum of the Executive’s Salary in effect as of the Termination Date plus the Executive’s average ACIP (if any) for the three (or fewer) calendar years prior to the calendar year in which the Termination Date occurs.
Notwithstanding the foregoing, the Executive shall not be entitled to any ACIP for the year in which the Termination Date occurs.
Such payment shall be made, subject to Section 3.6, sixty (60) business days following the Termination Date, provided that the Executive has executed and delivered a Release pursuant to Section 3.5 hereof and such Release has become effective and irrevocable; and further provided that, if and to the extent any portion of the payments under this Section 3.4 constitutes deferred compensation subject to Section 409A, then, unless the Change in Control qualifies as a change in the ownership of the Company’s Parent, a change in effective control of the Company’s Parent, or a change in the ownership of a substantial portion of the assets of the Company’s Parent, as described in Treasury Regulations Section 1.409A-3(i)(5), such portion of the payments shall be paid at the times specified in Section 3.3(b)(iii) of the Employment Agreement for payment of such portion.
(b) Severance Benefits. If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, and if the Executive is eligible for and timely elects continuation coverage pursuant to COBRA under any insured or self-insured medical, dental or vision plan maintained by the Company (other than
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any health and/or dependent care flexible spending account plan or employee assistance plan), then the Company, for a period of eighteen (18) months following the Termination Date, or until the Executive is no longer eligible for COBRA coverage under the particular plan will reimburse the Executive, on a taxable basis, for the cost of such COBRA coverage less the amount that the Executive would be required to contribute toward health coverage if he had remained an active employee of the Company. Such reimbursement payments will commence on the first payroll date of the month following the Termination Date and will be paid on the first payroll date of each subsequent month. The Executive shall not be entitled to reimbursement for the cost of any COBRA coverage elected separately by his current or former spouse or dependent child. Notwithstanding the foregoing, if any such plan is fully insured, any such reimbursement requirement shall apply to the extent permitted by the Health Care Law.
(c) Rights Under Plans. Subject to the provisions of Section 3.5, the Executive shall be entitled to the following rights with respect to any stock options, stock appreciation rights, restricted stock grants, restricted stock units, cash incentive units, or stock bonuses theretofore granted by the Company or the Company’s Parent to the Executive under any Plan, whether or not provided for in any agreement with the Company or the Company’s Parent (i) all unvested stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall be vested in full on the Termination Date, notwithstanding any provision to the contrary or any provision requiring any act or acts by the Executive in any agreement with the Company or the Company’s Parent or any Plan; (ii) to the extent that any such stock options or stock appreciation rights shall require by their terms the exercise thereof by the Executive, the last date to exercise the same shall, notwithstanding any provision to the contrary in any agreement or any Plan, be the earliest of (A) the fifth (5th) anniversary of the Termination Date and (B) the original expiration date had the Executive’s employment not so terminated; provided, however, that no such extension of the period in which an incentive stock option, within the meaning of Section 422(b) of the Code, may be exercised shall occur without the consent of the Executive if such extension would result in such incentive stock option failing to continue to qualify for the federal income tax treatment afforded incentive stock options under Section 421 of the Code; and (iii) if the vesting or exercise pursuant hereto of any such stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses shall have the effect of subjecting the Executive to liability under Section 16(b) of the Securities Exchange Act or any similar provision of law, the vesting date thereof shall be deemed to be the first day after the Termination Date on which such vesting may occur without subjecting the Executive to such liability.
(d) Rabbi Trust. The Company shall maintain a trust intended to be a grantor trust within the meaning of subpart E, Part I, subchapter J, chapter 1, subtitle A of the Code (the “Rabbi Trust”). Coincident with the occurrence of a Change in Control, the Company shall promptly deliver to a bank as trustee of the Rabbi Trust (the “Trustee”), an amount of cash or certificates of deposit, treasury bills or irrevocable letters of credit adequate to fully fund the payment obligations of the Company under this Section 3.4. The Company and Trustee shall enter into a trust agreement that shall provide that barring the insolvency of the Company, amounts payable to the Executive under this Section 3.4 (subject to Section 3.6) shall be paid by the Trustee to the Executive ten (10) days after written demand therefore by the Executive to the Trustee, with a copy to the Company, certifying that such amounts are due and payable under this Section 3.4 because the Executive’s employment has been terminated pursuant to Paragraph (e) or (g) in Section 3.1 hereof at a time which is within two (2) years following the occurrence of a Change in Control (a “Triggering Event”). Such trust agreement shall also provide that if the Company shall, prior to payment by the Trustee, object in writing to the Trustee, with a copy to the Executive, as to the payment of any amounts demanded by the Executive under this Section 3.4, certifying that such amounts are not due and payable to the Executive because a Triggering Event has not occurred, such dispute shall be resolved by binding arbitration as set forth in Section 5.8 hereof.
3.5.Conditions to Severance Payments and Benefits.
(a)The Executive’s right to receive the severance payments and benefits pursuant to Sections 3.3 and 3.4 hereof, is expressly conditioned upon (a) receipt by the Company of a written release (a “Release”) executed by the Executive in the form of Exhibit A hereto, on or before the fiftieth (50th) day following the Termination Date and the expiration of the revocation period described therein without such Release having been revoked, and (b) the compliance by the Executive with the covenants, terms or provisions of Sections 4.1, 4.2 and 4.3 hereof (the “Restrictive Covenants”). If the Executive shall fail to deliver a Release in accordance with the terms of this Section 3.5 or shall breach any of the Restrictive Covenants, the Company’s obligation to make the
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severance payments and to provide the severance benefits pursuant to Sections 3.3 and 3.4 hereof shall immediately and irrevocably terminate.
(b)Except where the Executive’s employment is terminated pursuant to Section 3.1(a) or (b), during any calendar year in which the Executive is a Covered Employee, if any stock-based or cash incentive unit awards of the Executive are intended to qualify as “performance based compensation” within the meaning of Section 162(m) of the Code, then the Executive’s entitlement, if any, to accelerated vesting of his stock-based and cash incentive unit awards pursuant to Section 3.3 or 3.4 of this Agreement shall apply only to the accelerated lapse of any service requirement, and the Executive shall be entitled to such stock-based awards, or to the vesting thereof, only if and to the extent that the applicable performance criteria applicable to such awards are satisfied.
3.6.Section 409A Tax. Notwithstanding anything herein to the contrary, to the extent any payment or provision of benefits under this Agreement upon the Executive’s “separation from service” is subject to Section 409A of the Code, no such payment shall be made, and Executive shall be responsible for the full cost of such benefits, for six (6) months following the Executive's "separation from service" if the Executive is a "specified employee" of the Company on the date of such separation from service. On the expiration of such six (6) month period, any payments delayed, and an amount sufficient to reimburse the Executive for the cost of benefits met by the Executive, during such period shall be aggregated (the “Make-Up Amount”) and paid in full to the Executive, and any succeeding payments and benefits shall continue as scheduled hereunder. The Company shall credit the Make-Up Amount with interest at no less than the interest rate it pays for short-term borrowed funds, such interest to accrue from the date on which payments would have been made, or benefits would have been provided, by the Company to the Executive absent the six-month delay. The terms "separation from service" and "specified employee" shall have the meanings set forth under Section 409A and the regulations and rulings issued thereunder. Furthermore, the Company shall not be required to make, and the Executive shall not be required to receive, any severance or other payment or benefit under Sections 3.3 or 3.4 hereof if the making of such payment or the provision of such benefit or the receipt thereof shall result in a tax to the Executive arising under Section 409A of the Code (a “Section 409A Tax”). For purposes of Section 409A, any right to a series of installment payments or provision of benefits in installments under Sections 3.3 and 3.4 of this Agreement shall be treated as a right to a series of separate payments. For purposes of and if and to the extent necessary to comply with Section 409A, any reference in this Agreement to the Executive’s “termination of employment” or words of similar import shall mean the Executive’s “separation from service” from the Company, and the Executive’s Termination Date shall mean the date of his “separation from service” from the Company.
SECTION 4.RESTRICTIVE COVENANTS.
4.1Confidentiality. The Executive agrees that he will not, either during the Term or at any time after the expiration or termination of the Term, disclose to any other Person any confidential or proprietary information of the Company, the Company’s Parent, or their subsidiaries, except for (a) disclosures to directors, officers, key employees, independent accountants and counsel of the Company, the Company’s Parent and their subsidiaries as may be necessary or appropriate in the performance of the Executive’s duties hereunder, (b) disclosures which do not have a material adverse effect on the business or operations of the Company, the Company’s Parent and their subsidiaries, taken as a whole, (c) disclosures which the Executive is required to make by law or by any court, arbitrator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order the Executive to disclose or make accessible any information, (d) disclosures with respect to any other litigation, arbitration or mediation involving this Agreement, and (e) disclosures of any such confidential or proprietary information that is, at the time of such disclosure, generally known to and available for use by the public otherwise than by the Executive’s wrongful act or omission. The Executive agrees not to take with him upon leaving the employ of the Company any document or paper relating to any confidential information or trade secret of the Company, the Company’s Parent and their subsidiaries, except that Executive shall be entitled to retain (i) papers and other materials of a personal nature, including but limited to, photographs, correspondence, personal diaries, calendars and Rolodexes (so long as such Rolodexes do not contain the Company’s only copy of business contact information), personal files and phone books, (ii) information showing his compensation or relating to his reimbursement of expenses, (iii) information that he reasonably believes may be needed for tax purposes, and (iv) copies of plans, programs and agreements relating to his employment, or termination thereof, with the Company.
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Except as otherwise permitted below, if Executive believes that he may be required to disclose any such confidential or proprietary information pursuant to applicable law, court order or subpoena, he shall immediately notify Selective in writing by overnight delivery, directed to Selective’s General Counsel at 40 Wantage Avenue, Branchville, NJ 07890, of any such perceived requirement so that Selective may seek an appropriate protective order or other appropriate remedy or waive compliance with this confidentiality requirement. Executive shall also reasonably cooperate with Selective to obtain such a protective order or other remedy.
This Agreement does not prohibit Executive from making any disclosure required by law, communicating with, making a report to, or otherwise participating in any investigation or proceeding that may be conducted by SICA’s designated legal, compliance or human resources personnel, the Securities and Exchange Commission (“SEC”) and/or its Office of the Whistleblower, the Equal Employment Opportunity Commission (“EEOC”), the Occupational Safety and Health Administration (“OSHA”), the National Labor Relations Board (“NLRB”), or other federal, state or local government agencies or entities. Executive is not prohibited from disclosing this Agreement or its contents, or from providing documents or other information, to the SEC and/or the Office of the Whistleblower, EEOC, OSHA, NLRB or any other such federal, state or local governmental entity. Executive does not need to provide notice to or obtain the prior authorization of Selective’s General Counsel to make any such report or disclosure and Executive is not required to notify Selective that Executive has made such reports or disclosures.
Notice Under Defend Trade Secrets Act: Notwithstanding the requirements contained in this Agreement, in accordance with the Defend Trade Secrets Act, Executive will not be held criminally or civilly liable under any federal or state trade secret law if Executive disclose a Trade Secret in confidence to federal, state or local government officials, to Executive’s attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed complaint or other document filed in a lawsuit or other proceeding. Further, if Executive files a lawsuit alleging retaliation by Selective for reporting a suspected violation of law, Executive may disclose the Trade Secret to his attorney and use the Trade Secret information in the court proceeding if Executive: (i) files the document containing the Trade Secret in a sealed court document; and (ii) does not disclose the Trade Secret, except pursuant to court order. However, if Executive engages in conduct otherwise prohibited by law, such as, but not limited to, accessing Trade Secrets unlawfully or by unauthorized means, no immunity shall apply and Selective reserves the right to pursue all available remedies.
Notwithstanding anything to the contrary in this Release, and for the avoidance of any doubt, Executive has the right to:
a.Report, respond to or cooperate with an investigation into possible violations of state or federal laws or regulations involving a governmental agency or entity including the Congress, the Department of Justice, the SEC and/or its Office of the Whistleblower (www.sec.gov/whistleblower); Office of the Whistleblower Hotline (202) 551-4790, the EEOC, the OSHA, the NLRB, and any other such federal, state or local agency. This includes reporting violations of the federal securities laws or regulations;
b.Make disclosures that are protected by federal, state or local whistleblower laws;
c.Cooperate in an investigation, respond to an inquiry, or provide testimony before the SEC or any other federal, state or local regulatory or law enforcement authority; and
d.Make reports or disclosures to law enforcement or regulatory authorities without authorization from Selective, without notifying Selective that a report or disclosure will be or was made, and without revealing the substance of the report or disclosure to Selective.
e.Executive will not be retaliated against for reporting to Selective or to any governmental agency or entity, including the SEC, information that Executive reasonably believes relates to a possible violation of securities laws or for reporting misconduct. Retaliation under such circumstances is prohibited by law.
This Agreement does not prevent, interfere with or limit Executive’s ability to file a charge or complaint with, report conduct to, provide information to or participate in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and
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Health Administrative, the Securities and Exchange Commission or any other federal, state or local government agency or commission. Executive agrees that if such a charge or complaint is made, or investigation or proceeding is initiated against any Company Party (as such term is defined in Exhibit A to this Agreement) Executive will not accept, be entitled to, receive, or recover any monetary damages or any other form of relief or remedy to the fullest extent permitted by law EXCEPT THAT THIS AGREEMENT DOES NOT WAIVE OR LIMIT EXECUTIVE’S RIGHT TO RECEIVE A MONETARY AWARD FOR INFORMATION PROVIDED TO THE SEC AS AN SEC WHISTLEBLOWER OR TO RECEIVE A MONETARY AWARD FROM ANY OTHER FEDERAL OR STATE AGENCY PURSUANT TO A SIMILAR WHISTLEBLOWER PROGRAM.
4.2.    Non-Solicitation of Employees. The Executive agrees that, except in the course of performing his duties hereunder, he will not, either during the Term and for a period of two (2) years after the expiration or termination of the Term, directly or indirectly, solicit or induce or attempt to solicit or induce or cause any of the employees of the Company, the Company’s Parent or their subsidiaries to leave the employ of the Company, the Company’s Parent or any of their subsidiaries.
4.3. Intellectual Property & Company Creations.
(a)Definitions. Included Activity means at the relevant time of determination, any activity conducted by, for or under the Company’s direction, whether or not conducted at the Company’s facilities, during working hours or using the Company’s resources, or which relates directly or indirectly to (i) the Company’s business as then operated or under consideration or development or (ii) any method, program, computer software, apparatus, design, plan, model, specification, formulation, technique, product, process (including, without limitation, any business processes and any operational processes) or device, then purchased, sold, leased, used or under consideration or development by the Company. Development means any idea, discovery, improvement, invention (including without limitation any discovery of new technology and any improvement to existing technology), Confidential Information, know-how, innovation, writing, work of authorship, compilation and other development or improvement, whether or not patented or patentable, copyrightable, or reduced to practice or writing. The Company Creation means any Development that arises out of any Included Activity.
(b)Assignment. Executive hereby sells, transfers and assigns to (and the following shall be the exclusive property of) the Company, or its designee(s), the entire right, title and interest of Executive in and to all Company Creations made, discovered, invented, authored, created, developed, originated or conceived by Executive, solely or jointly, (i) during the term of Executive’s employment with the Company or (ii) on or before the first anniversary of the date of termination of Executive’s employment with the Company. Executive acknowledges that all copyrightable materials developed or produced by Executive within the scope of Executive's employment by the Company constitute works made for hire, as that term is defined in the United States Copyright Act 17 U.S.C. § 101. Executive shall bear the burden to prove that any Development did not arise out of an Included Activity.
(c)Disclosure & Cooperation. Executive shall communicate promptly and disclose to the Company, in such form as the Company may reasonably request, all information, details and data pertaining to any Company Creations, and Executive shall execute and deliver to the Company or its designee(s) such formal transfers and assignments and such other papers and documents and shall give such testimony as may be deemed necessary or required of Executive by the Company or its designee to develop, preserve or extend the Company's rights relating to any Company Creations and to permit the Company or its designee to file and prosecute patent applications and, as to copyrightable material, to obtain copyright registrations thereof. Executive hereby appoints the Company as Executive's attorney-in-fact to execute on Executive's behalf any assignments or other documents deemed necessary by the Company to protect or perfect its rights to any Creations.
(d)Exclusion. If any Company Creation fully qualifies under any applicable state or federal law that (i) restricts the enforcement of the provisions of Sections 4.3(b) or 4.3(c) by the Company against any Company employee and (ii) prohibits the waiver of such employee rights by contract, then as to such qualifying Company Creations, the provisions of Sections 4.3(b) and 4.3(c) shall only apply to the extent, if any, not prohibited by such law.
SECTION 5.MISCELLANEOUS PROVISIONS.
5.1.    No Mitigation; Offsets. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise and no future income
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earned by the Executive from employment or otherwise shall in any way reduce or offset any payments due to the Executive hereunder. Assuming a payment or otherwise is due Executive under this Agreement, the Company may offset against any amount due Executive under this Agreement only those amounts due Company in respect of any undisputed, liquidated obligation of Executive to the Company.
5.2.    Governing Law. The provisions of this Agreement will be construed and interpreted under the laws of the State of New Jersey, without regard to principles of conflicts of law.
5.3.    Injunctive Relief and Additional Remedy. The Executive acknowledges that the injury that would be suffered by the Company, the Company’s Parent, or their subsidiaries as a result of a breach of the provisions of Sections 4.1, 4.2 and 4.3 hereof would be irreparable and that an award of monetary damages to the Company, the Company’s Parent, or their subsidiaries for such a breach would be an inadequate remedy. Consequently, the Company, the Company’s Parent, or their subsidiaries will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Company, the Company’s Parent, or their subsidiaries will not be obligated to post bond or other security in seeking such relief. Each of the parties hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts of the State of New Jersey for the purpose of injunctive relief.
5.4.    Representations and Warranties by Executive. The Executive represents and warrants to the best of his knowledge that the execution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive’s obligations hereunder will not, with or without the giving of notice or the passage of time, or both: (a) violate any judgment, writ, injunction, or order of any court, arbitrator or governmental agency applicable to the Executive or (b) conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any agreement to which the Executive is a party or by which the Executive is or may be bound.
5.5.    Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by either party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (b) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.
5.6.    Assignment. No right or benefit under this Agreement shall be assigned, transferred, pledged or encumbered (a) by the Executive except by a beneficiary designation made by will or the laws of descent and distribution or (b) by the Company except that the Company may assign this Agreement and all of its rights hereunder to any Person with which it may merge or consolidate or to which it may sell all or substantially all of its assets; provided that such Person shall, by agreement in form and substance satisfactory to the Executive, expressly assume and agree to perform this Agreement for the remainder of the Term in the same manner and to the same extent that the Company would be required to perform it if no such merger, consolidation or sale had taken place. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Company’s Parent and each of their successors and assigns, and the Executive, his heirs, legal representatives and any beneficiary or beneficiaries designated hereunder.
5.7.    Entire Agreement; Amendments. This Agreement contains the entire agreement between the Company (and the Company’s Parent) and Executive with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the Company (and the Company’s Parent) and Executive with respect to the subject matter hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by the parties hereto.
5.8.    Arbitration. Any dispute which may arise between the Executive and the Company with respect to the construction, interpretation or application of any of the terms, provisions, covenants or conditions of this Agreement or any claim arising from or relating to this Agreement will be submitted to final and binding arbitration by three (3) arbitrators in Newark, New Jersey, under the expedited rules of the American Arbitration Association then obtaining. One such arbitrator shall be selected by each of the Company and the Executive, and the two
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arbitrators so selected shall select the third arbitrator. Selection of all three arbitrators shall be made within thirty (30) days after the date the dispute arose. The written decision of the arbitrators shall be rendered within ninety (90) days after selection of the third arbitrator. The decision of the arbitrators shall be final and binding on the Company and the Executive and may be entered by either party in any New Jersey federal or state court having jurisdiction.
5.9.    Severability. In the case that any one or more of the provisions contained in this Agreement shall, for any reason, be held invalid or unenforceable, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.
5.10.    Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement may be executed via facsimile.
5.11.    Headings; Interpretation. The various headings contained herein are for reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement. It is the intent of the parties that this Agreement not be construed more strictly with regard to one party than with regard to any other party.
5.12.    Notices. (a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and sent as follows:
If to the Company, to:
Selective Insurance Company of America
40 Wantage Avenue
Branchville, New Jersey 07890
Attn: General Counsel
Fax: (973) 948-0282
If to the Executive, to:
Paul Kush
[ADDRESS REDACTED]
(b)All notices and other communications required or permitted under this Agreement which are addressed as provided in Paragraph (a) of this Section 5.12, (i) if delivered personally against proper receipt shall be effective upon delivery, (ii) if sent by facsimile transmission (with evidence supplied by the sender of the facsimile’s receipt at a facsimile number designated for receipt by the other party hereunder, which other party shall be obligated to provide such a facsimile number) shall be effective upon dispatch, and (iii) if sent (A) by certified or registered mail with postage prepaid or (B) by Federal Express or similar courier service with courier fees paid by the sender, shall be effective upon receipt. The parties hereto may from time to time change their respective addresses and/or facsimile numbers for the purpose of notices to that party by a similar notice specifying a new address and/or facsimile number, but no such change shall be deemed to have been given unless it is sent and received in accordance with this Section 5.12.
5.13.    Withholding. All amounts payable by the Company to the Executive hereunder (including, but not limited to, the Salary or any amounts payable pursuant to Sections 3.3 and/or 3.4 hereof) shall be reduced prior to the delivery of such payment to the Executive by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the Commencement Date.
SELECTIVE INSURANCE COMPANY OF
AMERICA
By: /s/ John J. Marchioni
John J. Marchioni
President and Chief Operating Officer
EXECUTIVE
/s/ Paul Kush
Paul Kush

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EXHIBIT A

FORM OF RELEASE

Reference is hereby made to the Employment Agreement, dated as of December 5, 2019 (the “Employment Agreement”), by and between Paul Kush (the “Executive”) and Selective Insurance Company of America, a New Jersey corporation (the “Company”). Capitalized terms used but not defined herein shall have the meanings specified in the Employment Agreement.
Pursuant to the terms of the Employment Agreement and in consideration of the payments to be made to the Executive by the Company, which Executive acknowledges are in excess of what Executive would otherwise be entitled to receive, the Executive hereby releases and forever discharges and holds the Company, the Company’s Parent and their subsidiaries (collectively, the “Company Parties” and each a “Company Party”), and the respective officers, directors, employees, partners, stockholders, members, agents, affiliates, successors and assigns and insurers of each Company Party, and any legal and personal representatives of each of the foregoing, harmless from all claims or suits, of any nature whatsoever (whether known or unknown), past, present or future, including those arising from the law, being directly or indirectly related to the Executive’s employment by or the termination of such employment by any Company Party, including, without limiting the foregoing, any claims for notice, pay in lieu of notice, wrongful dismissal, severance pay, bonus, overtime pay, incentive compensation, interest or vacation pay for the Executive’s service as an officer or director to any Company Party through the date hereof. The Executive also hereby agrees not to file a lawsuit asserting any such claims. This release (this “Release”) includes, but is not limited to, claims growing out of any legal restriction on any Company Party’s right to terminate its employees and claims or rights under federal, state, and local laws prohibiting employment discrimination (including, but not limited to, claims or rights under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Uniformed Services Employment and Reemployment Rights Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act of 1990, and the laws of the State of New Jersey against discrimination, or any other federal or state statutes prohibiting discrimination on the basis of age, sex, race, color, handicap, religion, national origin, and sexual orientation, or any other federal, state or local employment law, regulation or other requirement) which arose before the date this Release is signed, excepting only claims in the nature of workers’ compensation, claims for vested benefits, and claims to enforce this agreement.
Even though the above paragraph means that Executive is giving up certain claims that he may have against the Selective Releasees, this Release does not prevent, interfere with or limit his ability to file a charge or complaint with, report conduct to, provide information to or participate in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local government agency or commission. Executive agrees that if such a charge or complaint is made, or investigation or proceeding is initiated against the Selective Releasees, he will not accept, be entitled to, receive, or recover any monetary damages or any other form of relief or remedy to the fullest extent permitted by law EXCEPT THAT THIS AGREEMENT DOES NOT WAIVE OR LIMIT EXECUTIVE’S RIGHT TO RECEIVE A MONETARY AWARD FOR INFORMATION PROVIDED TO THE SEC AS AN SEC WHISTLEBLOWER OR TO RECEIVE A MONETARY AWARD FROM ANY OTHER FEDERAL OR STATE AGENCY PURSUANT TO A SIMILAR WHISTLEBLOWER PROGRAM.
Executive acknowledges and understands that the release of claims under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. Sections 621-634, is subject to special waiver protections under 29 U.S.C. Section 626(f). In accordance with that section, Executive specifically agrees that he is knowingly and voluntarily releasing and waiving any rights or claims of discrimination under the ADEA. In particular, Executive acknowledges that he understands that:

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(i)Executive is not waiving any claims for age discrimination under the ADEA that may arise after the date Executive signs this Release and he is not waiving vested benefits, if any;
(ii)Executive is waiving rights or claims for age discrimination under the ADEA in exchange for payments described above, which are in addition to anything of value to which he is already entitled; and
(iii)Executive is advised to consult with and has had an opportunity to consult with an attorney before signing this Release.
This Agreement does not prohibit Executive from making any disclosure required by law, communicating with, making a report to, or otherwise participating in any investigation or proceeding that may be conducted by SICA’s designated legal, compliance or human resources personnel, the Securities and Exchange Commission (“SEC”) and/or its Office of the Whistleblower, the Equal Employment Opportunity Commission (“EEOC”), the Occupational Safety and Health Administration (“OSHA”), the National Labor Relations Board (“NLRB”), or other federal, state or local government agencies or entities. Executive is not prohibited from disclosing this Agreement or its contents, or from providing documents or other information, to the SEC and/or the Office of the Whistleblower, EEOC, OSHA, NLRB or any other such federal, state or local governmental entity. Executive does not need to provide notice to or obtain the prior authorization of Selective’s General Counsel to make any such report or disclosure and Executive is not required to notify Selective that Executive has made such reports or disclosures.
Notice Under Defend Trade Secrets Act: Notwithstanding the requirements contained in this Agreement, in accordance with the Defend Trade Secrets Act, Executive will not be held criminally or civilly liable under any federal or state trade secret law if Executive disclose a Trade Secret in confidence to federal, state or local government officials, to Executive’s attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed complaint or other document filed in a lawsuit or other proceeding. Further, if Executive files a lawsuit alleging retaliation by Selective for reporting a suspected violation of law, Executive may disclose the Trade Secret to his attorney and use the Trade Secret information in the court proceeding if Executive: (i) files the document containing the Trade Secret in a sealed court document; and (ii) does not disclose the Trade Secret, except pursuant to court order. However, if Executive engages in conduct otherwise prohibited by law, such as, but not limited to, accessing Trade Secrets unlawfully or by unauthorized means, no immunity shall apply and Selective reserves the right to pursue all available remedies.
Notwithstanding anything to the contrary in this Release, and for the avoidance of any doubt, Executive has the right to:
f.Report, respond to or cooperate with an investigation into possible violations of state or federal laws or regulations involving a governmental agency or entity including the Congress, the Department of Justice, the SEC and/or its Office of the Whistleblower (www.sec.gov/whistleblower); Office of the Whistleblower Hotline (202) 551-4790, the EEOC, the OSHA, the NLRB, and any other such federal, state or local agency. This includes reporting violations of the federal securities laws or regulations;
g.Make disclosures that are protected by federal, state or local whistleblower laws;
h.Cooperate in an investigation, respond to an inquiry, or provide testimony before the SEC or any other federal, state or local regulatory or law enforcement authority; and
i.Make reports or disclosures to law enforcement or regulatory authorities without authorization from Selective, without notifying Selective that a report or disclosure will be or was made, and without revealing the substance of the report or disclosure to Selective.
j.Executive will not be retaliated against for reporting to Selective or to any governmental agency or entity, including the SEC, information that Executive reasonably believes relates to a possible violation of securities laws or for reporting misconduct. Retaliation under such circumstances is prohibited by law.
The Executive acknowledges that because this Release contains a release of claims and is an important legal document, he has been advised to consult with counsel before executing it, that he may take up to [twenty-one
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(21)]1 [forty-five (45)]2 days to decide whether to execute it, and that he may revoke this Release by delivering or mailing a signed notice of revocation to the Company at its offices within seven (7) days after executing it. If Executive executes this Release and does not subsequently revoke the release within seven (7) days after executing it, then this Release shall take effect as a legally binding agreement between Executive and the Company.
[INCLUDE OWBPA DEMOGRAPHIC DATA LANGUAGE FOR A PROGRAM AS APPLICABLE]
If Executive does not deliver to the Company an original signed copy of this Release by [DATE], or if Executive signs and revokes this Release within seven (7) days as set forth above, the Company will assume that Executive rejects the Release and Executive will not receive the payments referred to herein.
The Executive acknowledges that there is a risk that after signing this Release he may discover losses or claims that are released under this Release, but that are presently unknown to him. The Executive assumes this risk and understands that this Release shall apply to any such losses and claims.
The Executive understands that this Release includes a full and final release covering all known and unknown, injuries, debts, claims or damages which have arisen or may have arisen from Executive’s employment by or the termination of such employment by any Company Party. The Executive acknowledges that by accepting the benefits and payments set forth in the Employment Agreement, he assumes and waives the risks that the facts and the law may be other than as he believes.
Notwithstanding the foregoing, this Release does not release, and the Executive continues to be entitled to, (i) any rights to exculpation or indemnification that the Executive has under contract or law with respect to his service as an officer or director of any Company Party and (ii) receive the payments to be made to him by the Company pursuant to Section 3.3 and/or 3.4 of the Employment Agreement (including any plan, agreement or other arrangement that is referenced in or the subject of the applicable Section), subject to the conditions set forth in Section 3.5 of the Employment Agreement, (iii) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against him as a result of any act or failure to act for which he and any Company Party are jointly liable, and (iv) any claim in respect of any insurance policy with any Company Party entered into outside of the employment relationship. This Release constitutes the release referenced in Section 3.5 of the Employment Agreement.
The undersigned Executive, having had the time to reflect, freely accepts and agrees to the above Release. The Executive acknowledges and agrees that no Company Party representative has made any representation to or agreement with the Executive relating to this Release which is not contained in the express terms of this Release. The Executive acknowledges and agrees that the execution and delivery of this Release is based upon the Executive’s independent review of this Release, and the Executive hereby expressly waives any and all claims or defenses by the Executive against the enforcement of this Release which are based upon allegations or representations, projections, estimates, understandings or agreements by any Company Party or any of their representatives or any assumptions by the Executive that are not contained in the express terms of this Release.
1 Delete brackets and use text enclosed therewith if 45 days is not otherwise required by Section 7(f)(1)(F) of the Age Discrimination in Employment Act and/or 29 C.F.R. Part 1625. If 45 days is so required, delete bracketed text in its entirety.
2 Delete brackets and use text enclosed therewith if 45 days is required by Section 7(f)(1)(F) of the Age Discrimination in Employment Act and/or 29 C.F.R. Part 1625. If 45 days is not so required, delete bracketed text in its entirety.
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Date:
Paul Kush
STATE OF :
ss.:
COUNTY OF :




On this _____ day of _______________, 20__, before me, the undersigned officer, personally appeared _________________, personally known to me (or satisfactorily proven to be the same person whose name is subscribed in the foregoing instrument), who acknowledged that he executed the foregoing instrument for the purposes therein contained as his free act and deed.


In witness whereof I hereunto set my hand.


Notary Public
My Commission Expires:

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Attachment to Form of Release


[Attach disclosures required by the Older Workers Benefit Protection Act, if required]
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Exhibit 10.3
EMPLOYMENT AGREEMENT

This Employment Agreement, (the “Agreement”) is made as of the 6th day of June 2017, between Selective Insurance Company of America, a New Jersey corporation with a principal place of business at 40 Wantage Avenue, Branchville, New Jersey 07890 (the “Company”) and Vincent M. Senia, an individual residing at [ADDRESS REDACTED] (the “Executive”).

SECTION 1.DEFINITIONS.
1.1.    Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
“Agreement” has the meaning given to such term in the Preamble hereto.
“Board” means the Board of Directors of the Company’s Parent.
“Cause” means any one or more of the following:
(i)the Executive shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony under, or within the meaning of, applicable United States federal or state law;
(ii)the Executive shall have breached in any respect any one or more of the material provisions of this Agreement, including, without limitation, any failure to comply with the Code of Conduct, and, to the extent such breach may be cured, such breach shall have continued for a period of thirty (30) days after written notice by the Company’s Chief Executive Officer or, alternatively, the President and Chief Operating Officer, to the Executive specifying such breach; or
(iii)the Executive shall have engaged in acts of insubordination, gross negligence or willful misconduct in the performance of the Executive’s duties and obligations to the Company.
For purposes of clauses (ii) and (iii) of this definition of “Cause”, no act, or failure to act, on the part of the Executive shall be considered grounds for “Cause” under such clauses if such act, or such failure to act, was done or omitted to be done based upon authority or express direction given by the Chief Executive Officer , the President and Chief Operating Officer, or based upon the advice of counsel for the Company.
“Change in Control” means the occurrence of an event of a nature that would be required to be reported by the Company’s Parent in response to Item 5.01 of a Current Report on Form 8-K, as in effect on the date thereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act; provided, however, that a Change in Control shall, in any event, conclusively be deemed to have occurred upon the first to occur of any one of the following events:
(i)The acquisition by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act or any successor provisions to either of the foregoing), including, without limitation, any current shareholder or shareholders of the Company’s Parent, of securities of the Company’s Parent resulting in such person or group being a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act) of twenty-five percent (25%) or more of any class of Voting Securities of the Company’s Parent;
(ii)The acquisition by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act or any successor provisions to either of the foregoing), including, without limitation, any current shareholder or shareholders of the Company’s Parent, of securities of the Company’s Parent resulting in such person or group being a “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act) of twenty percent (20%) or more, but less than twenty-five percent (25%), of any class of Voting Securities of the Company’s Parent, if the Board adopts a resolution that such acquisition constitutes a Change in Control;


(iii)The sale or disposition of all or substantially all of the Company’s Parent’s assets, defined as more than seventy-five (75%) percent, on a consolidated basis, as shown in the Company’s Parent’s then most recent audited consolidated balance sheet;
(iv)The reorganization, recapitalization, merger, consolidation or other business combination involving the Company’s Parent the result of which is the ownership by the shareholders of the Company’s Parent of less than eighty percent (80%) of those Voting Securities of the resulting or acquiring Person having the power to vote in the elections of the board of directors of such Person; or
(v)A change in the membership in the Board which, taken in conjunction with any other prior or concurrent changes, results in fifty percent (50%) or more of the Board’s membership being persons not nominated by the Company’s Parent’s management or the Board as set forth in the Company’s Parent’s then most recent proxy statement, excluding changes resulting from substitutions by the Board because of retirement or death of a director or directors, removal of a director or directors by the Board or resignation of a director or directors due to demonstrated disability or incapacity.
Anything in this definition of Change in Control to the contrary notwithstanding, no Change in Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of Persons which includes the Executive, acquiring, directly or indirectly, Voting Securities of the Company’s Parent.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Code of Conduct” has the meaning given to such term in Section 2.3(a) hereof.
“Commencement Date” has the meaning given to such term in Section 2.2 hereof.
“Company” has the meaning given to such term in the Preamble hereto and includes any Person which shall succeed to or assume the obligations of the Company hereunder pursuant to Section 5.6 hereof.
“Company’s Parent” means Selective Insurance Group, Inc., a publicly traded New Jersey corporation with a principal office at 40 Wantage Avenue, Branchville, New Jersey 07890.
“Covered Employee” means a covered employee, within the meaning of Section 162(m)(3) of the Code, of the Company.
“Disability” shall mean: (i) a long-term disability entitling the Executive to receive benefits under the Company’s long-term disability plan as then in effect; or (ii) if no such plan is then in effect or the plan does not apply to the Executive, the inability of the Executive, as determined by the Board or its designee, to perform the essential functions of his regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months. At the request of the Executive or his personal representative, determination by the Board or its designee that the Disability of the Executive has occurred shall be certified by two physicians mutually agreed upon by the Executive, or his personal representative, and the Company. Without such independent certification (if so requested by the Executive), the Executive’s termination shall be deemed a termination by the Company without Cause and not a termination by reason of his Disability.
“Early Termination” has the meaning given to such term in Section 3.2 hereof.
“Executive” has the meaning given to such term in the Preamble hereto.
“Extended Benefit Period” has the meaning given to such term in Section 3.3(c) hereof.
“Good Reason” means the occurrence of any one or more of the following conditions; provided, however, that no such condition shall be deemed to constitute “Good Reason” unless the Executive provides notice of such condition to the Company within ninety (90) days of its initial existence, and the Company shall have failed to remedy the condition within thirty (30) days of its receipt of such notice:
(i) any material diminution in the Executive’s Salary below the annualized rate in effect on the date on which a Change in Control shall have occurred, unless such reduction is implemented for the senior executive staff generally, provided, however that such reduction shall constitute Good Reason even
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if implemented for senior executive staff generally if such reduction occurs within two years after a Change in Control;
(ii)any material negative change in the aggregate benefits the Executive receives, other than as a result of the normal expiration of any Plan as to other eligible employees in accordance with its terms as in effect on the date preceding the date on which a Change in Control shall have occurred, or unless such change affects all participants of such Plan generally;
(iii)without the Executive’s express prior written consent, a material diminution of the Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change in Control, or any material diminution in the Executive’s responsibilities as an executive of the Company as compared with those he had as an executive of the Company immediately prior to a Change in Control, or any material negative change in the Executive’s titles or office as in effect immediately prior to a Change in Control, except in connection with the termination of the Executive’s employment for Cause, Disability or Retirement or as a result of the Executive’s death, or by his termination of his employment other than for Good Reason;
(iv)without the Executive’s express prior written consent, the Company’s imposition of a requirement within two (2) years of a Change in Control that the Executive be based at any location that increases the Executive’s regular commute fifty (50) miles or more from the date preceding the Change in Control.
(v)the failure by the Company’s Parent to obtain from any Person with which it may merge or consolidate or to which it may sell all or substantially all of its assets, the agreement of such Person as set forth in the proviso in Section 5.6 hereof; provided that such merger, consolidation or sale constitutes a Change in Control; or
(vi)within two years after a Change in Control shall have occurred, any action or inaction that constitutes a material breach by the Company of any of the terms and conditions of this Agreement.
“Notice of Termination” means a written notice which shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and, (iii) specify the date of termination in accordance with this Agreement (other than for a termination for Cause).
“Person” means an individual, partnership, corporation, association, limited liability company, trust, joint venture, unincorporated organization, and any government, governmental department or agency or political subdivision thereof.
“Plans” has the meaning given to such term in Section 2.4(b) hereof.
“Rabbi Trust” has the meaning given to such term in Section 3.4(d) hereof.
“Release” has the meaning given to such term in Section 3.5 hereof.
“Restrictive Covenants” has the meaning given to such term in Section 3.5 hereof.
“Retirement” means a termination of the Executive’s employment by the Company or the Executive (i) at such age as shall be established by the Company’s Board for mandatory or normal retirement of Company executives in general (which age shall be, if the determination of Retirement is made after the occurrence of a Change in Control, the age established by the Company’s Board prior to a Change in Control), which shall not be less than age 65, or (ii) at any other retirement age set by mutual agreement of the Company and the Executive and approved by the Company’s Board.
“Salary” has the meaning given to such term in Section 2.4(a) hereof.
“Section 409A” means Section 409A of the Code and the regulations of the Treasury and other applicable guidance promulgated thereunder.
“Section 409A Tax” has the meaning given to such term in Section 3.6 hereof.
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“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Term” has the meaning given to such term in Section 2.2 hereof.
“Termination Date” means the date of the Executive’s termination of employment with the Company and its affiliates. If the Executive’s employment is to be terminated by the Company for Disability, the Executive’s employment shall terminate thirty (30) days after a Notice of Termination is given; provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such thirty (30) day period.
“Triggering Event” has the meaning given to such term in Section 3.4(d) hereof.
“Trustee” has the meaning given to such term in Section 3.4(d) hereof.
“Voting Securities” means, with respect to a specified Person, any security of such Person that has, or may have upon an event of default or in respect to any transaction, a right to vote on any matter upon which the holder of any class of common stock of such Person would have a right to vote.
1.2.    Terms Generally. Unless the context of this Agreement requires otherwise, words importing the singular number shall include the plural and vice versa, and any pronoun shall include the corresponding masculine, feminine and neuter forms.
1.3.    Cross-References. Unless otherwise specified, references in this Agreement to any Paragraph or Section are references to such Paragraph or Section of this Agreement.
SECTION 2.EMPLOYMENT AND COMPENSATION. The following terms and conditions will govern the Executive’s employment with the Company throughout the Term.
2.1.Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, on the terms and conditions set forth herein.
2.2.The term of employment of the Executive under this Agreement shall commence as of June 12, 2017 (the “Commencement Date”) and, subject to Section 3.1 hereof, shall terminate on the third anniversary of the Commencement Date, and shall automatically be extended for additional one (1) year periods thereafter (any such renewal periods, together with the initial period, being referred to as the “Term”) unless terminated by either party by written notice to the other party.
2.3.Duties. (a) The Executive agrees to serve as Executive Vice President, Chief Actuary, of the Company during the Term. In such capacity, the Executive shall have the responsibilities and duties customary for such office(s) and such other executive responsibilities and duties as are assigned by the Company’s President and Chief Operating Officer or, alternatively, the Chief Executive Officer that are consistent with the Executive’s position(s). The Executive agrees to devote substantially all his business time, attention and services to the business and affairs of the Company and its affiliates and to perform his duties to the best of his ability. At all times during the performance of this Agreement, the Executive will adhere to the Code of Conduct of the Company (the “Code of Conduct”) that has been or may hereafter be established and communicated by the Company to the Executive for the conduct of the position or positions held by the Executive. The Executive may not accept directorships on the board of directors of for-profit corporations without the prior written consent of the President and Chief Operating Officer or, alternatively, the Chief Executive Officer. The Executive may accept directorships on the board of directors of not-for-profit corporations without the President and Chief Operating Officer or, alternatively, the Chief Executive Officer’s prior written consent so long as (a) such directorships do not interfere with Executive’s ability to carry out his responsibilities under this Agreement, and (b) Executive promptly notifies the President and Chief Operating Officer or, alternatively, Chief Executive Officer in writing of the fact that he has accepted such a non-profit directorship.
(b)If the Company and the Executive do not agree in writing to renew the Term pursuant to Section 2.2, the Executive shall continue to be employed under this Agreement only until the expiration of the then current Term (unless earlier terminated pursuant to Section 3.1 hereof), shall cooperate fully with the President and Chief Operating Officer or, alternatively, the Chief Executive Officer and shall perform such duties not inconsistent
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with the provisions hereof as he shall be assigned by the President and Chief Operating Officer or, alternatively, the Chief Executive Officer.
2.4.Compensation.
(a)Salary. For all services rendered by the Executive under this Agreement, the Company shall pay the Executive a salary during the Term at a rate of not less than Three Hundred Seventy Five Thousand Dollars ($375,000) per year, which may be increased but not decreased unless decreased for the senior executive staff generally (the “Salary”), payable in installments in accordance with the Company’s policy from time to time in effect for payment of salary to executives. The Salary shall be reviewed no less than annually by the Chief Executive Officer or, alternatively, the President and Chief Operating Officer, and nothing contained herein shall prevent the Board from at any time increasing the Salary or other benefits herein provided to be paid or provided to the Executive or from providing additional or contingent benefits to the Executive as it deems appropriate.
(b)Annual Cash Incentive. The Executive will also continue to be eligible to participate in the Annual Cash Incentive Program (“ACIP”). This ACIP will provide the Executive with the opportunity to earn an annual cash award based upon the level of Executive’s individual performance and the achievement of annual Company targets. The payment range of the annual cash incentive for employees at the Executive’s grade level is 0% to 150% of the Executive’s annual base pay.
(c)Benefits.
(i)Standard Benefits: During the Term, the Company shall continue to permit the Executive to participate in or receive benefits under the Selective Insurance Group, Inc. 2014 Omnibus Stock Plan, the Selective Insurance Group, Inc. Cash Incentive Plan, the Selective Insurance Retirement Savings Plan, the Selective Insurance Company of America Deferred Compensation Plan, and in any other incentive compensation, stock option, stock appreciation right, stock bonus, pension, group insurance, retirement, profit sharing, medical, disability, accident, life insurance plan, relocation plan or policy, or any other plan, program, policy or arrangement of the Company intended to benefit similarly situated employees of the Company generally, if any, in accordance with the respective provisions thereof, from time to time in effect (collectively, the “Plans”).
Pursuant to the Selective Insurance Group, Inc. Corporate Governance Guidelines (the “Corporate Governance Guidelines”) established by the Board of Directors of the Company’s Parent that are applicable to designated senior officers of the Company, Executive shall be required to meet established stock ownership and retention levels in the stock of the Company’s Parent, as may be in effect from time-to-time. Currently, these guidelines generally require the Executive, as an Executive Vice President, to achieve, within six years of the effective date of this Agreement, ownership of shares of the common stock of the Company’s Parent having a monetary value equal to two and one half (2.5) times the Executive’s then current base salary. Executive will be required to retain direct ownership of at least 75% of the shares acquired under an equity award granted under any Company equity compensation plan, or other written compensatory arrangement, net of taxes and transaction costs, unless and until the Executive meets his applicable stock ownership requirement as set forth above. For additional detail on stock ownership matters, please refer to Section XIX of the Corporate Governance Guidelines.
Executive will continue to be eligible to participate in the Company’s Selections Benefits Program, which includes medical, dental, vision, prescription drug, life, and accidental death & dismemberment insurance, and flexible spending accounts.
Long Term Incentive Plan Award (“LTIP”). Subject to the Executive’s continued employment with the Company, the Company has agreed, that as soon as administratively feasible following the effective date of Executive’s designation hereunder as Executive Vice President and Chief Actuary, to provide the Executive with a Long Term Incentive Plan grant consisting of service-based Restricted Stock Units (“RSUs) awarded under the Selective Insurance Group Inc. 2014 Omnibus Stock Plan having an initial monetized value on date of grant of One Hundred Fifty Thousand Dollars ($150,000). Provided the Executive remains employed with the Company, these RSUs will vest three (3) years from the date of the grant. Any future LTIP awards will be based on the plans or programs then in effect and the Executive’s performance.
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(d)Vacations and Reimbursements. During the Term, the Executive shall be entitled to vacation time off and reimbursements for ordinary and necessary travel and entertainment expenses in accordance with the Company’s policies on such matters from time to time in effect. Executive will receive a total of 24 days of paid time off each calendar year which may be increased in accordance with the Company’s bank day policy.
(e)Perquisites. During the Term, the Company shall provide the Executive with suitable offices, secretarial and other services, and other perquisites to which other executives of the Company generally are (or become) entitled, to the extent as are suitable to the character of the Executive’s position with the Company, subject to such specific limits on such perquisites as may from time to time be imposed by the Company’s Board, the Chief Executive Officer, or the President and Chief Operating Officer.
(g)Taxable Reimbursements and Perquisites. Any taxable reimbursement of business or other expenses, or any provision of taxable in-kind perquisites or other benefits to the Executive, as specified under this Agreement, shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
SECTION 3.TERMINATION AND SEVERANCE.
3.1.Termination. The Executive’s employment hereunder shall commence on the Commencement Date and continue until the expiration of the Term, except that the employment of the Executive hereunder shall earlier terminate:
(a)Death. Upon the Executive’s death.
(b)Disability. At the option of the Company, upon the Disability of the Executive.
(c)For Cause. At the option of the Company, for Cause.
(d)Resignation. At any time at the option of the Executive, by resignation (other than a resignation for Good Reason).
(e)Without Cause. At any time at the option of the Company, without Cause; provided, that a termination of the Executive’s employment hereunder by the Company based on Retirement, Death, or Disability shall not be deemed to be a termination without Cause.
(f)Relocation. At the option of the Executive at any time prior to a Change in Control and within two years of the Company first imposing a requirement without the consent of the Executive that the Executive be based at any location that increases the Executive’s regular commute fifty (50) miles or more.
(g)For Good Reason. At any time at the option of the Executive for Good Reason, provided that such termination occurs (i) within two (2) years following the occurrence of a Change in Control, and (ii) within two (2) years following the initial existence of the condition constituting Good Reason.
3.2.Procedure For Termination. Any termination of the Executive’s employment by the Company or by the Executive prior to the expiration of the Term (an “Early Termination”) shall be communicated by delivery of a Notice of Termination to the other party hereto given in accordance with Section 5.12 hereof. Any Early Termination shall become effective as of the applicable Termination Date.
3.3.Rights and Remedies on Termination. The Executive will be entitled to receive the payments and benefits specified below if there is an Early Termination.
(a) Accrued Salary. If the Executive’s employment is terminated pursuant to any of the Paragraphs set forth in Section 3.1 hereof, then the Executive (or his legal representative, as applicable) shall only be entitled to receive his accrued and unpaid Salary through the Termination Date.
(b) Severance Payments.
(i)If the Executive’s employment is terminated pursuant to Paragraphs (a) or (b) in Section 3.1 hereof, then the Executive (or his legal representative, as applicable) shall be entitled to receive a
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severance payment from the Company in an aggregate amount equal to the product of (A) 1.5 times (B) the Executive’s Salary plus an amount (if any) equal to the average of the three (or fewer) most recent annual cash incentive payments (each an “ACIP”), if any, made to the Executive; provided that each payment of any such severance payment shall be reduced, on a pro rata basis, by the amount of payments the Executive receives under any life or disability insurance policies with respect to which the premiums were paid by the Company.
(ii)If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, then the Executive shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (A) 1.5 times (B) the Executive’s Salary plus an amount (if any) equal to the average of the three (or fewer) most recent ACIP payments (if any) made to the Executive.
(iii)The severance payment required to be paid by the Company to the Executive pursuant to Paragraph (b)(i) or (b)(ii) above, shall, subject to Section 3.6, be paid in equal monthly installments over the twelve (12) month period following the Termination Date; provided, however, that the first such installment shall be made upon the sixtieth (60th) day following the Termination Date, and shall include all amounts that would have been paid between the Termination Date and such date.
Notwithstanding the foregoing, the Executive shall not be entitled to any ACIP for the year in which the Termination Date occurs.
(c) Severance Benefits.
(i)If the Executive’s employment is terminated pursuant to any of the Paragraphs set forth in Section 3.1 hereof, then the Executive (or his legal representative, as applicable) shall be entitled to receive the benefits which the Executive has accrued or earned or which have become payable under the Plans as of the Termination Date, but which have not yet been paid to the Executive. Payment of any such benefits shall be made in accordance with the terms of such Plans.
(ii)If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, and if the Executive is eligible for and timely elects continuation coverage pursuant to Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended, Section 4980B of the Code or similar state continuation coverage law (together, “COBRA”) under any insured or self-insured medical, dental or vision plan maintained by the Company (other than any health and/or dependent care flexible spending account plan or employee assistance plan), then, for a period of eighteen (18) months following the Termination Date, or until the Executive is no longer eligible for COBRA coverage under the particular plan, the Company will reimburse the Executive, on a taxable basis, for the cost of such COBRA coverage less the amount that the Executive would be required to contribute toward health coverage if he had remained an active employee of the Company. Such reimbursement payments will commence on the first payroll date of the month following the Termination Date and will be paid on the first payroll date of each subsequent month. The Executive shall not be entitled to reimbursement for the cost of any COBRA coverage elected separately by his current or former spouse or dependent child. Notwithstanding the foregoing, in the event that any such plan is fully insured, any such reimbursement requirement shall apply to the extent permitted by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Care Law”).
Any portion of the continued or replacement welfare benefits coverage provided for under this Section 3.3(c)(ii) which constitutes deferred compensation subject to Section 409A shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year (except with respect to annual, lifetime or similar limits under arrangements providing for the reimbursement of medical expenses under Section 105(b) of the Code); (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(d) Rights Under Plans. If the Executive’s employment is terminated pursuant to Paragraphs (a), (b), (e), or (f) in Section 3.1 hereof, then, subject to the provisions of Section 3.5, the Executive shall be
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entitled to the following rights with respect to any stock options, stock appreciation rights, restricted stock grants, restricted stock units, cash incentive units, or stock bonuses theretofore granted by the Company or the Company’s Parent to the Executive under any Plan, whether or not provided for in any agreement with the Company or the Company’s Parent; (i) all unvested stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall be vested in full on the Termination Date, notwithstanding any provision to the contrary or any provision requiring any act or acts by the Executive in any agreement with the Company or the Company’s Parent or any Plan; (ii) to the extent that any such stock options or stock appreciation rights shall require by their terms the exercise thereof by the Executive, the last date to exercise the same shall, notwithstanding any provision to the contrary in any agreement or any Plan, be the earliest of (A) the fifth anniversary of the Termination Date and (B) the original expiration date had the Executive’s employment not so terminated; provided, however, that no such extension of the period in which an incentive stock option, within the meaning of Section 422(b) of the Code, may be exercised shall occur without the consent of the Executive if such extension would result in such incentive stock option failing to continue to qualify for the federal income tax treatment afforded incentive stock options under Section 421 of the Code; and (iii) if the vesting or exercise pursuant hereto of any such stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall have the effect of subjecting the Executive to liability under Section 16(b) of the Securities Exchange Act or any similar provision of law, the vesting date thereof shall be deemed to be the first day after the Termination Date on which such vesting may occur without subjecting the Executive to such liability.
(e)    No Double Dipping.
(i)The severance payments and severance benefits the Executive may be entitled to receive pursuant to this Section 3.3 shall be in lieu of any of the payments and benefits the Executive may be entitled to receive pursuant to any other agreement, plan or arrangement providing for the payment of severance payments or benefits.
(ii)The Executive expressly disclaims any interest he may have in the Selective Insurance Company of America Severance Plan.
3.4.Rights and Remedies on Termination After Change in Control. The Executive will be entitled to receive the severance payments and severance benefits specified below in the event there shall occur a termination of the Executive’s employment pursuant to Paragraph (e) or (g) of Section 3.1 hereof within two (2) years following the occurrence of a Change in Control. The severance payments and benefits the Executive may be entitled to receive pursuant to this Section 3.4 shall be in lieu of, and not in addition to, any of the payments and benefits the Executive may be entitled to receive pursuant to Section 3.3 hereof.
(a) Severance Payments. The Executive shall be entitled to receive a severance payment from the Company in an aggregate amount equal to the product of (i) 1.5; and the sum of the Executive’s Salary in effect as of the Termination Date plus the Executive’s average ACIP (if any) for the three (or fewer) calendar years prior to the calendar year in which the Termination Date occurs.
Notwithstanding the foregoing, the Executive shall not be entitled to any ACIP for the year in which the Termination Date occurs.
Such payment shall be made, subject to Section 3.6, sixty (60) business days following the Termination Date, provided that the Executive has executed and delivered a Release pursuant to Section 3.5 hereof and such Release has become effective and irrevocable; and further provided that, if and to the extent any portion of the payments under this Section 3.4 constitutes deferred compensation subject to Section 409A, then, unless the Change in Control qualifies as a change in the ownership of the Company’s Parent, a change in effective control of the Company’s Parent, or a change in the ownership of a substantial portion of the assets of the Company’s Parent, as described in Treasury Regulations Section 1.409A-3(i)(5), such portion of the payments shall be paid at the times specified in Section 3.3(b)(iii) of the Employment Agreement for payment of such portion.
(b) Severance Benefits. If the Executive’s employment is terminated pursuant to Paragraph (e) or (f) in Section 3.1 hereof, and if the Executive is eligible for and timely elects continuation coverage pursuant to COBRA under any insured or self-insured medical, dental or vision plan maintained by the Company (other than any health and/or dependent care flexible spending account plan or employee assistance plan), then the Company, for a period of eighteen (18) months following the Termination Date, or until the Executive is no longer eligible for
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COBRA coverage under the particular plan will reimburse the Executive, on a taxable basis, for the cost of such COBRA coverage less the amount that the Executive would be required to contribute toward health coverage if he had remained an active employee of the Company. Such reimbursement payments will commence on the first payroll date of the month following the Termination Date and will be paid on the first payroll date of each subsequent month. The Executive shall not be entitled to reimbursement for the cost of any COBRA coverage elected separately by his current or former spouse or dependent child. Notwithstanding the foregoing, if any such plan is fully insured, any such reimbursement requirement shall apply to the extent permitted by the Health Care Law.
(c) Rights Under Plans. Subject to the provisions of Section 3.5, the Executive shall be entitled to the following rights with respect to any stock options, stock appreciation rights, restricted stock grants, restricted stock units, cash incentive units, or stock bonuses theretofore granted by the Company or the Company’s Parent to the Executive under any Plan, whether or not provided for in any agreement with the Company or the Company’s Parent (i) all unvested stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses, shall be vested in full on the Termination Date, notwithstanding any provision to the contrary or any provision requiring any act or acts by the Executive in any agreement with the Company or the Company’s Parent or any Plan; (ii) to the extent that any such stock options or stock appreciation rights shall require by their terms the exercise thereof by the Executive, the last date to exercise the same shall, notwithstanding any provision to the contrary in any agreement or any Plan, be the earliest of (A) the fifth (5th) anniversary of the Termination Date and (B) the original expiration date had the Executive’s employment not so terminated; provided, however, that no such extension of the period in which an incentive stock option, within the meaning of Section 422(b) of the Code, may be exercised shall occur without the consent of the Executive if such extension would result in such incentive stock option failing to continue to qualify for the federal income tax treatment afforded incentive stock options under Section 421 of the Code; and (iii) if the vesting or exercise pursuant hereto of any such stock options, stock appreciation rights, restricted stock grants, restricted stock units, or stock bonuses shall have the effect of subjecting the Executive to liability under Section 16(b) of the Securities Exchange Act or any similar provision of law, the vesting date thereof shall be deemed to be the first day after the Termination Date on which such vesting may occur without subjecting the Executive to such liability.
(d) Rabbi Trust. The Company shall maintain a trust intended to be a grantor trust within the meaning of subpart E, Part I, subchapter J, chapter 1, subtitle A of the Code (the “Rabbi Trust”). Coincident with the occurrence of a Change in Control, the Company shall promptly deliver to a bank as trustee of the Rabbi Trust (the “Trustee”), an amount of cash or certificates of deposit, treasury bills or irrevocable letters of credit adequate to fully fund the payment obligations of the Company under this Section 3.4. The Company and Trustee shall enter into a trust agreement that shall provide that barring the insolvency of the Company, amounts payable to the Executive under this Section 3.4 (subject to Section 3.6) shall be paid by the Trustee to the Executive ten (10) days after written demand therefore by the Executive to the Trustee, with a copy to the Company, certifying that such amounts are due and payable under this Section 3.4 because the Executive’s employment has been terminated pursuant to Paragraph (e) or (g) in Section 3.1 hereof at a time which is within two (2) years following the occurrence of a Change in Control (a “Triggering Event”). Such trust agreement shall also provide that if the Company shall, prior to payment by the Trustee, object in writing to the Trustee, with a copy to the Executive, as to the payment of any amounts demanded by the Executive under this Section 3.4, certifying that such amounts are not due and payable to the Executive because a Triggering Event has not occurred, such dispute shall be resolved by binding arbitration as set forth in Section 5.8 hereof.
3.5.Conditions to Severance Payments and Benefits.
(a)The Executive’s right to receive the severance payments and benefits pursuant to Sections 3.3 and 3.4 hereof, is expressly conditioned upon (a) receipt by the Company of a written release (a “Release”) executed by the Executive in the form of Exhibit A hereto, on or before the fiftieth (50th) day following the Termination Date and the expiration of the revocation period described therein without such Release having been revoked, and (b) the compliance by the Executive with the covenants, terms or provisions of Sections 4.1, 4.2 and 4.3 hereof (the “Restrictive Covenants”). If the Executive shall fail to deliver a Release in accordance with the terms of this Section 3.5 or shall breach any of the Restrictive Covenants, the Company’s obligation to make the severance payments and to provide the severance benefits pursuant to Sections 3.3 and 3.4 hereof shall immediately and irrevocably terminate.
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(b)Except where the Executive’s employment is terminated pursuant to Section 3.1(a) or (b), during any calendar year in which the Executive is a Covered Employee, if any stock-based or cash incentive unit awards of the Executive are intended to qualify as “performance based compensation” within the meaning of Section 162(m) of the Code, then the Executive’s entitlement, if any, to accelerated vesting of his stock-based and cash incentive unit awards pursuant to Section 3.3 or 3.4 of this Agreement shall apply only to the accelerated lapse of any service requirement, and the Executive shall be entitled to such stock-based awards, or to the vesting thereof, only if and to the extent that the applicable performance criteria applicable to such awards are satisfied.
3.6.Section 409A Tax. Notwithstanding anything herein to the contrary, to the extent any payment or provision of benefits under this Agreement upon the Executive’s “separation from service” is subject to Section 409A of the Code, no such payment shall be made, and Executive shall be responsible for the full cost of such benefits, for six (6) months following the Executive's "separation from service" if the Executive is a "specified employee" of the Company on the date of such separation from service. On the expiration of such six (6) month period, any payments delayed, and an amount sufficient to reimburse the Executive for the cost of benefits met by the Executive, during such period shall be aggregated (the “Make-Up Amount”) and paid in full to the Executive, and any succeeding payments and benefits shall continue as scheduled hereunder. The Company shall credit the Make-Up Amount with interest at no less than the interest rate it pays for short-term borrowed funds, such interest to accrue from the date on which payments would have been made, or benefits would have been provided, by the Company to the Executive absent the six-month delay. The terms "separation from service" and "specified employee" shall have the meanings set forth under Section 409A and the regulations and rulings issued thereunder. Furthermore, the Company shall not be required to make, and the Executive shall not be required to receive, any severance or other payment or benefit under Sections 3.3 or 3.4 hereof if the making of such payment or the provision of such benefit or the receipt thereof shall result in a tax to the Executive arising under Section 409A of the Code (a “Section 409A Tax”). For purposes of Section 409A, any right to a series of installment payments or provision of benefits in installments under Sections 3.3 and 3.4 of this Agreement shall be treated as a right to a series of separate payments. For purposes of and if and to the extent necessary to comply with Section 409A, any reference in this Agreement to the Executive’s “termination of employment” or words of similar import shall mean the Executive’s “separation from service” from the Company, and the Executive’s Termination Date shall mean the date of his “separation from service” from the Company.
SECTION 4.RESTRICTIVE COVENANTS.
4.1.    Confidentiality. The Executive agrees that he will not, either during the Term or at any time after the expiration or termination of the Term, disclose to any other Person any confidential or proprietary information of the Company, the Company’s Parent, or their subsidiaries, except for (a) disclosures to directors, officers, key employees, independent accountants and counsel of the Company, the Company’s Parent and their subsidiaries as may be necessary or appropriate in the performance of the Executive’s duties hereunder, (b) disclosures which do not have a material adverse effect on the business or operations of the Company, the Company’s Parent and their subsidiaries, taken as a whole, (c) disclosures which the Executive is required to make by law or by any court, arbitrator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order the Executive to disclose or make accessible any information, (d) disclosures with respect to any other litigation, arbitration or mediation involving this Agreement, and (e) disclosures of any such confidential or proprietary information that is, at the time of such disclosure, generally known to and available for use by the public otherwise than by the Executive’s wrongful act or omission. The Executive agrees not to take with him upon leaving the employ of the Company any document or paper relating to any confidential information or trade secret of the Company, the Company’s Parent and their subsidiaries, except that Executive shall be entitled to retain (i) papers and other materials of a personal nature, including but limited to, photographs, correspondence, personal diaries, calendars and Rolodexes (so long as such Rolodexes do not contain the Company’s only copy of business contact information), personal files and phone books, (ii) information showing his compensation or relating to his reimbursement of expenses, (iii) information that he reasonably believes may be needed for tax purposes, and (iv) copies of plans, programs and agreements relating to his employment, or termination thereof, with the Company.
4.2.    Non-Solicitation of Employees. The Executive agrees that, except in the course of performing his duties hereunder, he will not, either during the Term and for a period of two (2) years after the expiration or termination of the Term, directly or indirectly, solicit or induce or attempt to solicit or induce or cause any of the
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employees of the Company, the Company’s Parent or their subsidiaries to leave the employ of the Company, the Company’s Parent or any of their subsidiaries.
4.3. Intellectual Property & Company Creations.
(a)Definitions. Included Activity means at the relevant time of determination, any activity conducted by, for or under the Company’s direction, whether or not conducted at the Company’s facilities, during working hours or using the Company’s resources, or which relates directly or indirectly to (i) the Company’s business as then operated or under consideration or development or (ii) any method, program, computer software, apparatus, design, plan, model, specification, formulation, technique, product, process (including, without limitation, any business processes and any operational processes) or device, then purchased, sold, leased, used or under consideration or development by the Company. Development means any idea, discovery, improvement, invention (including without limitation any discovery of new technology and any improvement to existing technology), Confidential Information, know-how, innovation, writing, work of authorship, compilation and other development or improvement, whether or not patented or patentable, copyrightable, or reduced to practice or writing. The Company Creation means any Development that arises out of any Included Activity.
(b)Assignment. Executive hereby sells, transfers and assigns to (and the following shall be the exclusive property of) the Company, or its designee(s), the entire right, title and interest of Executive in and to all Company Creations made, discovered, invented, authored, created, developed, originated or conceived by Executive, solely or jointly, (i) during the term of Executive’s employment with the Company or (ii) on or before the first anniversary of the date of termination of Executive’s employment with the Company. Executive acknowledges that all copyrightable materials developed or produced by Executive within the scope of Executive's employment by the Company constitute works made for hire, as that term is defined in the United States Copyright Act 17 U.S.C. § 101. Executive shall bear the burden to prove that any Development did not arise out of an Included Activity.
(c)Disclosure & Cooperation. Executive shall communicate promptly and disclose to the Company, in such form as the Company may reasonably request, all information, details and data pertaining to any Company Creations, and Executive shall execute and deliver to the Company or its designee(s) such formal transfers and assignments and such other papers and documents and shall give such testimony as may be deemed necessary or required of Executive by the Company or its designee to develop, preserve or extend the Company's rights relating to any Company Creations and to permit the Company or its designee to file and prosecute patent applications and, as to copyrightable material, to obtain copyright registrations thereof. Executive hereby appoints the Company as Executive's attorney-in-fact to execute on Executive's behalf any assignments or other documents deemed necessary by the Company to protect or perfect its rights to any Creations.
(d)Exclusion. If any Company Creation fully qualifies under any applicable state or federal law that (i) restricts the enforcement of the provisions of Sections 4.3(b) or 4.3(c) by the Company against any Company employee and (ii) prohibits the waiver of such employee rights by contract, then as to such qualifying Company Creations, the provisions of Sections 4.3(b) and 4.3(c) shall only apply to the extent, if any, not prohibited by such law.
SECTION 5.MISCELLANEOUS PROVISIONS.
5.1.    No Mitigation; Offsets. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise and no future income earned by the Executive from employment or otherwise shall in any way reduce or offset any payments due to the Executive hereunder. Assuming a payment or otherwise is due Executive under this Agreement, the Company may offset against any amount due Executive under this Agreement only those amounts due Company in respect of any undisputed, liquidated obligation of Executive to the Company.
5.2.    Governing Law. The provisions of this Agreement will be construed and interpreted under the laws of the State of New Jersey, without regard to principles of conflicts of law.
5.3.    Injunctive Relief and Additional Remedy. The Executive acknowledges that the injury that would be suffered by the Company, the Company’s Parent, or their subsidiaries as a result of a breach of the provisions of Sections 4.1, 4.2 and 4.3 hereof would be irreparable and that an award of monetary damages to the Company, the Company’s Parent, or their subsidiaries for such a breach would be an inadequate remedy. Consequently, the
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Company, the Company’s Parent, or their subsidiaries will have the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Company, the Company’s Parent, or their subsidiaries will not be obligated to post bond or other security in seeking such relief. Each of the parties hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts of the State of New Jersey for the purpose of injunctive relief.
5.4.    Representations and Warranties by Executive. The Executive represents and warrants to the best of his knowledge that the execution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive’s obligations hereunder will not, with or without the giving of notice or the passage of time, or both: (a) violate any judgment, writ, injunction, or order of any court, arbitrator or governmental agency applicable to the Executive or (b) conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any agreement to which the Executive is a party or by which the Executive is or may be bound.
5.5.    Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by either party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (b) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.
5.6.    Assignment. No right or benefit under this Agreement shall be assigned, transferred, pledged or encumbered (a) by the Executive except by a beneficiary designation made by will or the laws of descent and distribution or (b) by the Company except that the Company may assign this Agreement and all of its rights hereunder to any Person with which it may merge or consolidate or to which it may sell all or substantially all of its assets; provided that such Person shall, by agreement in form and substance satisfactory to the Executive, expressly assume and agree to perform this Agreement for the remainder of the Term in the same manner and to the same extent that the Company would be required to perform it if no such merger, consolidation or sale had taken place. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Company’s Parent and each of their successors and assigns, and the Executive, his heirs, legal representatives and any beneficiary or beneficiaries designated hereunder.
5.7.    Entire Agreement; Amendments. This Agreement contains the entire agreement between the Company (and the Company’s Parent) and Executive with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the Company (and the Company’s Parent) and Executive with respect to the subject matter hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by the parties hereto.
5.8.    Arbitration. Any dispute which may arise between the Executive and the Company with respect to the construction, interpretation or application of any of the terms, provisions, covenants or conditions of this Agreement or any claim arising from or relating to this Agreement will be submitted to final and binding arbitration by three (3) arbitrators in Newark, New Jersey, under the expedited rules of the American Arbitration Association then obtaining. One such arbitrator shall be selected by each of the Company and the Executive, and the two arbitrators so selected shall select the third arbitrator. Selection of all three arbitrators shall be made within thirty (30) days after the date the dispute arose. The written decision of the arbitrators shall be rendered within ninety (90) days after selection of the third arbitrator. The decision of the arbitrators shall be final and binding on the Company and the Executive and may be entered by either party in any New Jersey federal or state court having jurisdiction.
5.9.    Severability. In the case that any one or more of the provisions contained in this Agreement shall, for any reason, be held invalid or unenforceable, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.
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5.10.    Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement may be executed via facsimile.
5.11.    Headings; Interpretation. The various headings contained herein are for reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement. It is the intent of the parties that this Agreement not be construed more strictly with regard to one party than with regard to any other party.
5.12.    Notices. (a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and sent as follows:
If to the Company, to:
Selective Insurance Company of America
40 Wantage Avenue
Branchville, New Jersey 07890
Attn: General Counsel
Fax: (973) 948-0282
If to the Executive, to:
Vincent M. Senia
[ADDRESS REDACTED]
(b)All notices and other communications required or permitted under this Agreement which are addressed as provided in Paragraph (a) of this Section 5.12, (i) if delivered personally against proper receipt shall be effective upon delivery, (ii) if sent by facsimile transmission (with evidence supplied by the sender of the facsimile’s receipt at a facsimile number designated for receipt by the other party hereunder, which other party shall be obligated to provide such a facsimile number) shall be effective upon dispatch, and (iii) if sent (A) by certified or registered mail with postage prepaid or (B) by Federal Express or similar courier service with courier fees paid by the sender, shall be effective upon receipt. The parties hereto may from time to time change their respective addresses and/or facsimile numbers for the purpose of notices to that party by a similar notice specifying a new address and/or facsimile number, but no such change shall be deemed to have been given unless it is sent and received in accordance with this Section 5.12.
5.13Withholding. All amounts payable by the Company to the Executive hereunder (including, but not limited to, the Salary or any amounts payable pursuant to Sections 3.3 and/or 3.4 hereof) shall be reduced prior to the delivery of such payment to the Executive by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.

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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the Commencement Date.

SELECTIVE INSURANCE COMPANY OF
AMERICA
By: /s/ Angelique Carbo
Angelique Carbo
Executive Vice President, Chief Human Resources
Officer
EXECUTIVE
By: /s/ Vincent M. Senia
       Vincent M. Senia

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EXHIBIT A


FORM OF RELEASE

Reference is hereby made to the Employment Agreement, dated as of _______ __, 2017 (the “Employment Agreement”), by and between Vincent M. Senia (the “Executive”) and Selective Insurance Company of America, a New Jersey corporation (the “Company”). Capitalized terms used but not defined herein shall have the meanings specified in the Employment Agreement.
Pursuant to the terms of the Employment Agreement and in consideration of the payments to be made to the Executive by the Company, which Executive acknowledges are in excess of what Executive would otherwise be entitled to receive, the Executive hereby releases and forever discharges and holds the Company, the Company’s Parent and their subsidiaries (collectively, the “Company Parties” and each a “Company Party”), and the respective officers, directors, employees, partners, stockholders, members, agents, affiliates, successors and assigns and insurers of each Company Party, and any legal and personal representatives of each of the foregoing, harmless from all claims or suits, of any nature whatsoever (whether known or unknown), past, present or future, including those arising from the law, being directly or indirectly related to the Executive’s employment by or the termination of such employment by any Company Party, including, without limiting the foregoing, any claims for notice, pay in lieu of notice, wrongful dismissal, severance pay, bonus, overtime pay, incentive compensation, interest or vacation pay for the Executive’s service as an officer or director to any Company Party through the date hereof. The Executive also hereby agrees not to file a lawsuit asserting any such claims. This release (this “Release”) includes, but is not limited to, claims growing out of any legal restriction on any Company Party’s right to terminate its employees and claims or rights under federal, state, and local laws prohibiting employment discrimination (including, but not limited to, claims or rights under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Uniformed Services Employment and Reemployment Rights Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act of 1990, and the laws of the State of New Jersey against discrimination, or any other federal or state statutes prohibiting discrimination on the basis of age, sex, race, color, handicap, religion, national origin, and sexual orientation, or any other federal, state or local employment law, regulation or other requirement) which arose before the date this Release is signed, excepting only claims in the nature of workers’ compensation, claims for vested benefits, and claims to enforce this agreement. The Executive acknowledges that because this Release contains a release of claims and is an important legal document, he has been advised to consult with counsel before executing it, that he may take up to [twenty-one (21)]1 [forty-five (45)]2 days to decide whether to execute it, and that he may revoke this Release by delivering or mailing a signed notice of revocation to the Company at its offices within seven (7) days after executing it. If Executive executes this Release and does not subsequently revoke the release within seven (7) days after executing it, then this Release shall take effect as a legally binding agreement between Executive and the Company.
If Executive does not deliver to the Company an original signed copy of this Release by [insert date], or if Executive signs and revokes this Release within seven (7) days as set forth above, the Company will assume that Executive rejects the Release and Executive will not receive the payments referred to herein.
The Executive acknowledges that there is a risk that after signing this Release he may discover losses or claims that are released under this Release, but that are presently unknown to him. The Executive assumes this risk and understands that this Release shall apply to any such losses and claims.
The Executive understands that this Release includes a full and final release covering all known and unknown, injuries, debts, claims or damages which have arisen or may have arisen from Executive’s employment by
1 Delete brackets and use text enclosed therewith if 45 days is not otherwise required by Section 7(f)(1)(F) of the Age Discrimination in Employment Act and/or 29 C.F.R. Part 1625. If 45 days is so required, delete bracketed text in its entirety.
2 Delete brackets and use text enclosed therewith if 45 days is required by Section 7(f)(1)(F) of the Age Discrimination in Employment Act and/or 29 C.F.R. Part 1625. If 45 days is not so required, delete bracketed text in its entirety.
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or the termination of such employment by any Company Party. The Executive acknowledges that by accepting the benefits and payments set forth in the Employment Agreement, he assumes and waives the risks that the facts and the law may be other than as he believes.
Notwithstanding the foregoing, this Release does not release, and the Executive continues to be entitled to, (i) any rights to exculpation or indemnification that the Executive has under contract or law with respect to his service as an officer or director of any Company Party and (ii) receive the payments to be made to him by the Company pursuant to Section 3.3 and/or 3.4 of the Employment Agreement (including any plan, agreement or other arrangement that is referenced in or the subject of the applicable Section), subject to the conditions set forth in Section 3.5 of the Employment Agreement, (iii) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against him as a result of any act or failure to act for which he and any Company Party are jointly liable, and (iv) any claim in respect of any insurance policy with any Company Party entered into outside of the employment relationship.
This Release constitutes the release referenced in Section 3.5 of the Employment Agreement.
The undersigned Executive, having had the time to reflect, freely accepts and agrees to the above Release. The Executive acknowledges and agrees that no Company Party representative has made any representation to or agreement with the Executive relating to this Release which is not contained in the express terms of this Release. The Executive acknowledges and agrees that the execution and delivery of this Release is based upon the Executive’s independent review of this Release, and the Executive hereby expressly waives any and all claims or defenses by the Executive against the enforcement of this Release which are based upon allegations or representations, projections, estimates, understandings or agreements by any Company Party or any of their representatives or any assumptions by the Executive that are not contained in the express terms of this Release.



Date:
Vincent M. Senia
STATE OF :
ss.:
COUNTY OF :

On this _____ day of _______________, 20__, before me, the undersigned officer, personally appeared Vincent M. Senia, personally known to me (or satisfactorily proven to be the same person whose name is subscribed in the foregoing instrument), who acknowledged that he executed the foregoing instrument for the purposes therein contained as his free act and deed.


In witness whereof I hereunto set my hand.


Notary Public
My Commission Expires:

16

Attachment to Form of Release


[Attach disclosures required by the Older Workers Benefit Protection Act, if required]
17

Exhibit 11

SELECTIVE INSURANCE GROUP, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE

Third Quarter 2021 Income
(Numerator) 		Shares
(Denominator) 		Per Share
Amount
(in thousands, except per share amounts)
Basic Earnings Per Common Share ("EPS"):
Net income available to common stockholders $ 71,405  60,231  $ 1.19 
Effect of dilutive securities:
Stock compensation plans —  355 
Diluted EPS:
Net income available to common stockholders $ 71,405  60,586  $ 1.18 
Third Quarter 2020 Income
(Numerator) 		Shares
(Denominator) 		Per Share
Amount
(in thousands, except per share amounts)
Basic EPS:
Net income available to common stockholders $ 69,875  59,934  $ 1.17 
Effect of dilutive securities:
Stock compensation plans —  420 
Diluted EPS:
Net income available to common stockholders $ 69,875  60,354  $ 1.16 
Nine Months 2021 Income
(Numerator) 		Shares
(Denominator) 		Per Share
Amount
(in thousands, except per share amounts)
Basic EPS:
Net income available to common stockholders $ 297,805  60,161  $ 4.95 
Effect of dilutive securities:
Stock compensation plans —  348 
Diluted EPS:
Net income available to common stockholders $ 297,805  60,509  $ 4.92 
Nine Months 2020 Income
(Numerator) 		Shares
(Denominator) 		Per Share
Amount
(in thousands, except per share amounts)
Basic EPS:
Net income available to common stockholders $ 119,294  59,831  $ 1.99 
Effect of dilutive securities:
Stock compensation plans —  428 
Diluted EPS:
Net income available to common stockholders $ 119,294  60,259  $ 1.98 








Exhibit 31.1
  
Certification pursuant to Rule 13a-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
  
I, JOHN J. MARCHIONI, President and Chief Executive Officer of Selective Insurance Group, Inc. (the “Company”), certify, that:
 
1. I have reviewed this quarterly report on Form 10-Q of the Company;
 
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, comprehensive income and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: October 28, 2021 By: /s/ John J. Marchioni
  John J. Marchioni
  President and Chief Executive Officer
 



Exhibit 31.2
  
Certification pursuant to Rule 13a-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
  
I, MARK A. WILCOX, Executive Vice President and Chief Financial Officer of Selective Insurance Group, Inc. (the “Company”), certify, that:
 
1. I have reviewed this quarterly report on Form 10-Q of the Company;
 
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations, comprehensive income and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: October 28, 2021 By: /s/ Mark A. Wilcox
  Mark A. Wilcox
  Executive Vice President and Chief Financial Officer



Exhibit 32.1
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

 
I, JOHN J. MARCHIONI , President and Chief Executive Officer of Selective Insurance Group, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report on Form 10-Q of the Company for the quarterly period ended September 30, 2021 (the “Form 10-Q”), which this certification accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 28, 2021 By: /s/ John J. Marchioni
  John J. Marchioni
  President and Chief Executive Officer



Exhibit 32.2
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

 
I, MARK A. WILCOX, Executive Vice President and Chief Financial Officer of Selective Insurance Group, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report on Form 10-Q of the Company for the quarterly period ended September 30, 2021 (the “Form 10-Q”), which this certification accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 28, 2021 By: /s/ Mark A. Wilcox
  Mark A. Wilcox
  Executive Vice President and Chief Financial Officer