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                                                                    EXHIBIT 10.2

                                                        As of June 30, 2003

Selective Insurance Company of America
Selective Insurance Group, Inc.
40 Wantage Avenue
Branchville, NJ 07890-1000

         RE: Loan Facility

Ladies and Gentlemen:

         State Street Bank and Trust Company (the "Bank") has made available to
Selective Insurance Company of America, a corporation organized under the laws
of New Jersey (the "Company") and Selective Insurance Group, Inc., a corporation
organized under the laws of New Jersey (the "Parent") (collectively, the Company
and the Parent are hereinafter referred to as the "Borrower") an aggregate
$25,000,000 revolving line of credit (as decreased pursuant to the terms hereof,
the "Line of Credit") as described in a letter agreement dated March 3, 1997 (as
amended, the "Letter Agreement"). All obligations of the Borrower arising under
the Line of Credit are evidenced by a promissory note in the original principal
amount of $25,000,000 dated March 3, 1997 made by the Borrower to the order of
the Bank (as amended, the "Note").

         The Borrower has requested, and the Bank has agreed pursuant to the
terms hereof, to extend the Revolving Maturity Date, as defined in the Letter
Agreement, as set forth hereinbelow. The Borrower and the Bank have also agreed
to decrease the amount of the Line of Credit to $20,000,000 and to make certain
other amendments to the terms of the Letter Agreement and Note as set forth
hereinbelow. Therefore, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrower and the Bank hereby agree as follows:

         I.       Amendments to Letter Agreement

         1.       The Letter Agreement is hereby amended by deleting the
following wherever it may appear: "$25,000,000" and substituting, in each
instance, the following therefor: "$20,000,000".

         2.       Section 1 of the Letter Agreement is hereby amended by
deleting the following therefrom: "June 30, 2003" and substituting the following
therefor: "June 28, 2004". All references to "Revolving Maturity Date" in the
Letter Agreement or any related document shall hereafter be deemed to refer to
June 28, 2004.

         3.       Section 4 of the Letter Agreement is hereby amended by
restating the first sentence thereof to read in its entirety as follows:



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Selective Insurance Group, Inc.
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         "Principal on each outstanding Revolving Loan shall bear interest as
         selected by the applicable Borrower at either (a) a floating rate equal
         to the Bank's Prime Rate (Revolving Loans bearing interest at such
         rate, "Prime Rate Loans"), (b) the Adjusted Libor Rate plus 65 basis
         points (Revolving Loans bearing interest at such rate, "Libor Rate
         Loans") or (c) a money market rate quoted by the Bank for the amount
         and duration of the requested Revolving Loan plus 65 basis points (each
         such rate, a "Money Market Rate") (Revolving Loans bearing interest at
         such money market rate, "Money Market Loans")."

         4.       Section 8(a) of the Letter Agreement is hereby amended by
restating such Section 8(a) to read in its entirety as follows:

         "a)      To comply with the following financial covenants:

                  (i)      to maintain a ratio of Consolidated Indebtedness to
                           Capital of not more than 0.35 to 1.00 at all times;
                           and

                  (ii)     the Combined Statutory Capital and Surplus of the
                           Insurance Subsidiaries, as of the last day of any
                           fiscal quarter, will not be less than $365,000,000;"

         5.       Section 12 of the Letter Agreement is hereby amended by
replacing the notice address of the Bank with the following notice address:

         "State Street Bank and Trust Company, Lafayette Corporate Center, 2
         Avenue de Lafayette, LCC 2N, Boston, Massachusetts 02111 Attn: Edward
         M. Anderson, Vice President"

         6.       Section 14 of the Letter Agreement is hereby amended by
restating the definitions of "Capital" and "Indebtedness" in their entirety as
follows:

         ""Capital" shall mean, as of any date of determination, Consolidated
         Net Worth as of such date, plus Consolidated Indebtedness as of such
         date (but excluding therefrom the portion, if any, of the aggregate
         redemption value of Trust Preferred Securities that exceeds fifteen
         percent (15%) of Capital as of such date), plus the aggregate
         redemption value of Trust Preferred Securities."

         ""Indebtedness" shall mean, with respect to any person or entity
         (without duplication), (i) all indebtedness and obligations of such
         person or entity for borrowed money or in respect of loans or advances
         of any kind, (ii) all obligations of such person or entity


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         evidenced by notes, bonds, debentures or similar instruments, (iii) all
         reimbursement obligations of such person or entity with respect to
         surety bonds, letters of credit and bankers' acceptances (in each case,
         whether or not drawn or matured and in the stated amount thereof), (iv)
         all obligations of such person or entity to pay the deferred purchase
         price of property or services, (v) all indebtedness created or arising
         under any conditional sale or other title retention agreement with
         respect to property acquired by such person or entity, (vi) all
         obligations of such person or entity as lessee under leases that are or
         are required to be, in accordance with generally accepted accounting
         principles, recorded as capital leases, to the extent such obligations
         are required to be so recorded, (vii) all Disqualified Capital Stock
         issued by such person or entity, with the amount of Indebtedness
         represented by such Disqualified Capital Stock being equal to the
         greater of its voluntary or involuntary liquidation preference and its
         maximum fixed repurchase price, but excluding accrued dividends, if any
         (for purposes hereof, the "maximum fixed repurchase price" of any
         Disqualified Capital Stock that does not have a fixed repurchase price
         shall be calculated in accordance with the terms of such Disqualified
         Capital Stock as if such Disqualified Capital Stock were purchased on
         any date on which Indebtedness shall be required to be determined
         pursuant to this letter agreement, and if such price is based upon, or
         measured by, the fair market value of such Disqualified Capital Stock,
         such fair market value shall be determined reasonably and in good faith
         by the board of directors or other governing body of the issuer of such
         Disqualified Capital Stock), (viii) the net termination obligations of
         such person or entity under any interest or foreign currency rate swap,
         cap, collar, option, hedge, forward rate or other similar agreement or
         arrangement designed to protect against fluctuations in interest rates
         or currency exchange rates, calculated as of any date as if such
         agreement or arrangement were terminated as of such date, (ix) all
         Contingent Obligations of such person or entity and (x) all
         indebtedness referred to in clauses (i) through (ix) above secured by
         any lien on any property or asset owned or held by such person or
         entity regardless of whether the indebtedness secured thereby shall
         have been assumed by such person or entity or is nonrecourse to the
         credit of such person or entity."

         7.       Section 14 of the Letter Agreement is hereby further amended
by inserting the following new definitions of "Combined Statutory Capital and
Surplus", "Consolidated Indebtedness", "Consolidated Net Worth", "Contingent
Obligation", "Disqualified Capital Stock", "Insurance Subsidiary", and "Trust
Preferred Securities", in proper alphabetical order therein:

         ""Combined Statutory Capital and Surplus" shall mean, as to all
         Insurance Subsidiaries, as of any date, the aggregate of the amounts
         shown for each such Insurance Subsidiary on line 35, column 1, page 3
         of the Annual Statement of such Insurance Subsidiary, or the

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As of June 30, 2003
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         sum of amounts determined in a consistent manner for any date other
         than one as of which an Annual Statement is prepared."

         ""Consolidated Indebtedness" shall mean, as of any date of
         determination, the aggregate (without duplication) of all Indebtedness
         (whether or not reflected on the Parent's or any Subsidiary's balance
         sheet) of the Parent and its Subsidiaries as of such date, determined
         on a consolidated basis in accordance with generally accepted
         accounting principles, excluding reimbursement obligations in respect
         of letters of credit issued for the benefit of any Insurance Subsidiary
         or the Parent in the ordinary course of its business to support the
         payment of obligations arising under insurance and reinsurance
         contracts and similar swap agreements, but only in each case to the
         extent such letters of credit (i) are not drawn upon and (ii) are
         collateralized by cash or cash equivalents; provided, that the
         aggregate redemption value of all Trust Preferred Securities shall be
         included in Consolidated Indebtedness, without duplication, to the
         extent such aggregate redemption value exceeds fifteen percent (15%) of
         Capital."

         ""Consolidated Net Worth" shall mean, as of any date of determination,
         the net worth of the Parent and its Subsidiaries as of such date,
         determined on a consolidated basis in accordance with generally
         accepted accounting principles, excluding any Disqualified Capital
         Stock."

         ""Contingent Obligation" shall mean, with respect to any person or
         entity, any direct or indirect liability of such person or entity with
         respect to any Indebtedness, liability or other obligation (the
         "primary obligation") of another person or entity (the "primary
         obligor"), whether or not contingent, (a) to purchase, repurchase or
         otherwise acquire such primary obligation or any property constituting
         direct or indirect security therefor, (b) to advance or provide funds
         (i) for the payment or discharge of any such primary obligation or (ii)
         to maintain working capital or equity capital of the primary obligor or
         otherwise to maintain the net worth or solvency or any balance sheet
         item, level of income or financial condition of the primary obligor,
         (c) to purchase property, securities or services primarily for the
         purpose of assuring the owner of any such primary obligation of the
         ability of the primary obligor in respect thereof to make payment of
         such primary obligation or (d) otherwise to assure or hold harmless the
         owner of any such primary obligation against loss or failure or
         inability to perform in respect thereof; provided, however, that, with
         respect to the Parent and its Subsidiaries, the term Contingent
         Obligation shall not include endorsements for collection or deposit in
         the ordinary course of business."

         ""Disqualified Capital Stock" shall mean, with respect to any person or
         entity, any capital stock (or equivalent partnership, membership or
         other equity interests, units, rights,

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Selective Insurance Group, Inc.
As of June 30, 2003
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         options or equivalents) of such person or entity that, by its terms (or
         by the terms of any security into which it is convertible or for which
         it is exchangeable), or upon the happening of any event or otherwise,
         (i) matures or is mandatorily redeemable or subject to any mandatory
         repurchase requirement, pursuant to a sinking fund obligation or
         otherwise, (ii) is redeemable or subject to any mandatory repurchase
         requirement at the sole option of the holder thereof, or (iii) is
         convertible into or exchangeable for (whether at the option of the
         issuer or the holder thereof) (a) debt securities or (b) any capital
         stock (or such equivalent interest) referred to in (i) or (ii) above,
         in each case under (i), (ii) or (iii) above at any time on or prior to
         the Revolving Maturity Date; provided, however, that only the portion
         of such capital stock (or such equivalent interest) that so matures or
         is mandatorily redeemable, is so redeemable at the option of the holder
         thereof, or is so convertible or exchangeable on or prior to such date
         shall be deemed to be Disqualified Capital Stock."

         ""Insurance Subsidiary" shall mean any direct or indirect Subsidiary of
         the Parent the ability of which to pay dividends is regulated by an
         insurance regulatory authority or that is otherwise required to be
         regulated thereby in accordance with the applicable requirements of law
         of its jurisdiction of domicile, and shall mean and include, without
         limitation, the Company, Selective Way Insurance Company, Selective
         Insurance Company of South Carolina, Selective Insurance Company of the
         Southeast, and Selective Insurance Company of New York."

         ""Trust Preferred Securities" shall mean any preferred securities
         issued or hereafter issued by a Delaware statutory business trust of
         which the Parent is the grantor, the proceeds of which are or have been
         used principally to purchase debentures issued or hereafter issued by
         the Parent."

         II.      Amendments to Note

         The Note is hereby amended by deleting the following therefrom:
"$25,000,000" and "Twenty Five Million Dollars ($25,000,000)" and substituting
the following, respectively, therefor: "$20,000,000" and "Twenty Million Dollars
($20,000,000)".

         III.     Miscellaneous

            1.       As amended hereby, all terms and conditions of the Letter
Agreement and Note remain in full force and effect and are ratified and affirmed
as of the date hereof and extended to give effect to the terms hereof.

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         2.       Each Borrower represents and warrants to the Bank as follows:
(a) no Event of Default has occurred and is continuing on the date hereof under
the Letter Agreement or the Note; (b) each of the representations and warranties
of the Borrowers contained in Paragraph 9 of the Letter Agreement is true and
correct in all material respects on and as of the date of this letter amendment;
(c) the execution, delivery and performance of each of this letter amendment,
the Letter Agreement, as amended hereby, and the Note, as amended hereby
(collectively, the "Amended Documents") (i) are, and will be, within its
corporate power and authority, (ii) have been authorized by all necessary
corporate proceedings, (iii) do not, and will not, require any consents or
approvals including from any governmental authority other than those which have
been received, (iv) will not contravene any provision of, or exceed any
limitation contained in, the charter documents or by-laws or other
organizational documents of such Borrower or any law, rule or regulation
applicable to such Borrower, (v) do not constitute a default under any other
agreement, order or undertaking binding on such Borrower; (d) each of the
Amended Documents constitutes the legal, valid, binding and enforceable
obligation of such Borrower, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally and by general equitable principles; and (e) if
the proceeds of any Revolving Loan are utilized to finance the purchase of the
stock of the Parent, such use will be in compliance with Regulations U and X of
the Board of Governors of the Federal Reserve System.

         3.       This letter amendment shall constitute an agreement executed
under seal to be governed by the laws of The Commonwealth of Massachusetts.

         4.       This letter amendment may be executed in counterparts each of
which shall be deemed to be an original document.

                                        Sincerely,

                                        STATE STREET BANK AND TRUST COMPANY

                                        By: /s/ Edward M. Anderson
                                            ----------------------
                                            Edward M. Anderson
                                            Vice President

Acknowledged and accepted:

SELECTIVE INSURANCE COMPANY OF AMERICA

By: /s/ Gregory E. Murphy
    ---------------------
Name: Gregory E. Murphy
Title: Chairman, President and
       Chief Executive Officer

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Selective Insurance Group, Inc.
As of June 30, 2003
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By: /s/ Dale A. Thatcher
    --------------------
Name: Dale A. Thatcher
Title: Executive Vice President
       Chief Financial Officer and Treasurer

SELECTIVE INSURANCE GROUP, INC.

By: /s/ Gregory E. Murphy
    ----------------------
Name: Gregory E. Murphy
Title: Chairman, President and
       Chief Executive Officer

By: /s/ Dale A. Thatcher
    ---------------------
Name: Dale A. Thatcher
Title: Executive Vice President
       Chief Financial Officer and Treasurer

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