Selective Insurance Group has reported a net income of $20.5 million for the first quarter of 2008, compared to net income of $37.3 million for the same period in 2007.

Operating income for the quarter was $19.5 million, or $0.36 per diluted share, a decrease when compared with $29.9 million and $0.50 per diluted share for the same period in 2007.

For the period, investment income, after-tax, declined to $29.4 million from $31.2 million registered in the corresponding quarter of 2007. Investment income in 2008 was impacted by the company’s decision to hold a larger average cash balance of $236 million due to the turmoil in the financial markets.

At March 31, 2008, Selective’s assets reached $5 billion, including $3.7 billion in the company’s investment portfolio.

Gregory Murphy, chairman, president and CEO of Selective Insurance, said: Our first quarter results were reduced by several factors, some of an unusual nature, such as the restructuring charge announced in February, and lower investment income due to our higher short-term cash position taken to safeguard against significant financial market turmoil.