SAFT Safety Insurance Group Inc

Safety Insurance Group, Inc. (NASDAQ:SAFT) (“Safety” or the “Company”) today reported third quarter 2024 results.

George M. Murphy, Chairman of the Board of Directors, President and Chief Executive Officer, commented: “The direct written premium growth that Safety has experienced is impacting our top-line revenue, which increased by 21.9% for the nine months ended September 30, 2024 over the prior year. We continue to see increased policy counts and premium rate actions that are earning into our results and contributing to improvements in our loss ratios. While private passenger automobile loss severity trends remain higher than historical averages, we are seeing moderation during the current quarter. Our combined ratio for the quarter improved to 100.7% from 104.8% in the prior year. In addition, ongoing increases in other revenue lines contribute to stronger quarterly earnings per share and an increase in book value of 5.5%.”

Net income for the quarter ended September 30, 2024 was $25.9 million, or $1.73 per diluted share, compared to net income of $1.9 million, or $0.13 per diluted share, for the comparable 2023 period. Net income for the nine months ended September 30, 2024 was $62.6 million, or $4.24 per diluted share, compared to net income of $6.6 million, or $0.45 per diluted share, for the comparable 2023 period. Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, for the quarter ended September 30, 2024 was $1.10 per diluted share, compared to $0.59 per diluted share, for the comparable 2023 period. Non-GAAP operating income for the nine months ended September 30, 2024 was $3.21 per diluted share, compared to $0.54 per diluted share, for the comparable 2023 period.

Safety’s book value per share increased to $57.38 at September 30, 2024 from $54.37 at December 31, 2023 resulting from net income offset by dividends paid. Safety paid $0.90 per share in dividends to investors during the quarters ended September 30, 2024 and 2023. Safety paid $3.60 per share in dividends to investors during the year ended December 31, 2023.

Today, our Board of Directors approved a $0.90 per share quarterly cash dividend on our issued and outstanding common stock payable on December 13, 2024 to shareholders of record at the close of business on December 2, 2024.

Direct written premiums for the quarter ended September 30, 2024 increased by $51.1 million, or 19.1%, to $318.2 million from $267.1 million for the comparable 2023 period. Direct written premiums for the nine months ended September 30, 2024 increased by $155.9 million, or 20.9%, to $901.0 million from $745.1 million for the comparable 2023 period. Net written premiums for the quarter ended September 30, 2024 increased by $41.5 million, or 16.5%, to $292.6 million from $251.1 million for the comparable 2023 period. Net written premiums for the nine months ended September 30, 2024 increased by $138.9 million, or 19.9%, to $837.8 million from $698.9 million for the comparable 2023 period.

The increases in direct written premiums and net written premiums are a result of new business production, and rate increases. For the nine months ended September 30, 2024, the Company achieved exposure count growth across all lines of business, including 10.7%, 5.2% and 9.4% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. Additionally, for the nine months ended September 30, 2024, average written premium per exposure increased 11.6%, 9.7% and 8.8% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023.

Net earned premiums for the quarter ended September 30, 2024 increased by $44.3 million, or 20.6%, to $258.7 million from $214.4 million for the comparable 2023 period. Net earned premiums for the nine months ended September 30, 2024 increased by $133.3 million, or 21.9%, to $741.7 million from $608.4 million for the comparable 2023 period.

For the quarter ended September 30, 2024, losses and loss adjustment expenses incurred increased by $23.0 million, or 14.4%, to $182.5 million from $159.5 million for the comparable 2023 period. For the nine months ended September 30, 2024, losses and loss adjustment expenses incurred increased by $53.4 million, or 11.4%, to $523.6 million from $470.2 million for the comparable 2023 period. The increase in losses is driven by our larger policy counts and current market conditions, specifically inflationary impacts on our Private Passenger Automobile book of business.

Loss, expense, and combined ratios calculated for the quarter ended September 30, 2024, were 70.6%, 30.1%, and 100.7%, respectively, compared to 74.4%, 30.4%, and 104.8%, respectively, for the comparable 2023 period. The decrease in loss and expense ratios is due to is driven by the increase in earned premiums. The loss ratio is also favorably impacted by the moderation of loss severity in the Private Passenger Automobile line. Loss, expense, and combined ratios calculated for the nine months ended September 30, 2024 were 70.6%, 30.2%, and 100.8%, respectively, compared to 77.3%, 30.9%, and 108.2%, respectively, for the comparable 2023 period. The decrease in current year loss ratio is also impacted by favorable development of $10.1 million related to the Massachusetts Property Insurance Underwriting Association. The prior year loss ratio was impacted by a severe weather event, totaling $32.1 million of losses.

Total prior year favorable development included in the pre-tax results for the quarter ended September 30, 2024 was $8.6 million compared to $13.5 million for the comparable 2023 period. Total prior year favorable development included pre-tax results for the nine months ended September 30, 2024 was $38.9 million compared to $35.0 million for the comparable 2023 period.

Net investment income for the quarter ended September 30, 2024 decreased by $1.8 million, or 12.8% to $12.2 million from $14.0 million for the comparable 2023 period. Net investment income for the nine months ended September 30, 2024 decreased by $0.6 million, or 1.3%, to $40.9 million from $41.5 million for the comparable 2023 period. The decrease is due to the earned interest from our higher yield bonds and variable rate secured and senior bank loans. Net effective annualized yield on the investment portfolio was 3.4% for the quarter ended September 30, 2024 compared to 4.0% for comparable 2023 period. Net effective annualized yield on the investment portfolio was 3.9% for both the nine months ended September 30, 2024 and 2023. The investment portfolio’s duration on fixed maturities was 3.4 years at September 30, 2024 compared to 3.6 years at December 31, 2023.

Non-GAAP Measures

Management has included certain non-GAAP financial measures in presenting the Company’s results. Management believes that these non-GAAP measures are useful to explain the Company’s results of operations and allow for a more complete understanding of the underlying trends in the Company’s business. These measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“GAAP”). In addition, our definitions of these items may not be comparable to the definitions used by other companies.

Non-GAAP operating income and non-GAAP operating income per diluted share consist of our GAAP net income adjusted by the net realized gains on investments, change in net unrealized gains on equity securities, credit loss benefit (expense) and taxes related thereto. For the three months ended September 30, 2024, an increase of $10.7 million for the change in unrealized gains on equity securities was recognized within income before income taxes, compared to a decrease of $9.2 million recognized in the comparable 2023 period. For the nine months ended September 30, 2024, an increase of $14.9 million for the change in unrealized gains on equity securities was recognized in income before income taxes, compared to a decrease of $2.1 million recognized in the comparable 2023 period. Net income and earnings per diluted share are the GAAP financial measures that are most directly comparable to non-GAAP operating income and non-GAAP operating income per diluted share, respectively. A reconciliation of the GAAP financial measures to these non-GAAP measures is included in the financial highlights below.

About Safety: Safety Insurance Group, Inc., based in Boston, MA, is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, Safety Northeast Insurance Company, and Safety Northeast Insurance Agency. Operating exclusively in Massachusetts, New Hampshire, and Maine, Safety is a leading writer of property and casualty insurance products, including private passenger automobile, commercial automobile, homeowners, dwelling fire, umbrella and business owner policies.

Additional Information: Press releases, announcements, U. S. Securities and Exchange Commission (“SEC”) Filings and investor information are available under “About Safety,” “Investor Information” on our Company website located at www.SafetyInsurance.com. Safety filed its December 31, 2023 Form 10-K with the SEC on February 28, 2024 and urges shareholders to refer to this document for more complete information concerning Safety’s financial results.

Cautionary Statement under "Safe Harbor" Provision of the Private Securities Litigation Reform Act of 1995:

This press release contains, and Safety may from time to time make, written or oral "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “aim,” “projects,” or words of similar meaning and expressions that indicate future events and trends, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may”. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements.

Forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. There are a number of factors, many of which are beyond our control, that could cause actual future conditions, events, results or trends to differ significantly and/or materially from historical results or those projected in the forward-looking statements. These factors include but are not limited to:

• The competitive nature of our industry and the possible adverse effects of such competition;
• Conditions for business operations and restrictive regulations in Massachusetts;
• The possibility of losses due to claims resulting from severe weather;
• The impact of inflation and supply chain delays on loss severity;
• The possibility that the Commissioner of Insurance may approve future rule changes that change the operation of the residual market;
• The possibility that existing insurance-related laws and regulations will become further restrictive in the future;
• The impact of investment, economic and underwriting market conditions, including interest rates and inflation;
• Our possible need for and availability of additional financing, and our dependence on strategic relationships, among others; and
• Other risks and factors identified from time to time in our reports filed with the SEC, such as those set forth under the caption “Risk Factors” in our Form 10-K for the year ended December 31, 2023 filed with the SEC on February 28, 2024.

We are not under any obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise. You should carefully consider the possibility that actual results may differ materially from our forward-looking statements.

Safety Insurance Group, Inc. and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2024

 

2023

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

Fixed maturities, available for sale, at fair value (amortized cost: $1,141,326 and $1,120,682, allowance for expected credit losses of $1,545 and $1,208)

 

$

1,098,984

 

 

$

1,052,145

 

Short term investments, at fair value (cost: $19,729 and $0)

 

 

19,729

 

 

 

—

 

Equity securities, at fair value (cost: $195,247 and $221,809)

 

 

226,340

 

 

 

238,022

 

Other invested assets

 

 

157,883

 

 

 

133,946

 

Total investments

 

 

1,502,936

 

 

 

1,424,113

 

Cash and cash equivalents

 

 

62,598

 

 

 

38,152

 

Accounts receivable, net of allowance for expected credit losses of $701 and $1,053

 

 

311,443

 

 

 

256,687

 

Receivable for securities sold

 

 

2

 

 

 

124

 

Accrued investment income

 

 

7,646

 

 

 

7,261

 

Taxes recoverable

 

 

2,233

 

 

 

623

 

Receivable from reinsurers related to paid loss and loss adjustment expenses

 

 

26,880

 

 

 

13,129

 

Receivable from reinsurers related to unpaid loss and loss adjustment expenses

 

 

131,596

 

 

 

112,623

 

Ceded unearned premiums

 

 

37,682

 

 

 

32,346

 

Deferred policy acquisition costs

 

 

106,517

 

 

 

91,917

 

Deferred income taxes

 

 

4,837

 

 

 

12,150

 

Equity and deposits in pools

 

 

9,691

 

 

 

35,247

 

Operating lease right-of-use-assets

 

 

16,845

 

 

 

19,756

 

Goodwill

 

 

17,093

 

 

 

17,093

 

Intangible assets

 

 

7,967

 

 

 

7,551

 

Other assets

 

 

24,672

 

 

 

25,232

 

Total assets

 

$

2,270,638

 

 

$

2,094,004

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loss and loss adjustment expense reserves

 

$

644,175

 

 

$

603,081

 

Unearned premium reserves

 

 

621,975

 

 

 

528,150

 

Accounts payable and accrued liabilities

 

 

69,039

 

 

 

64,235

 

Payable for securities purchased

 

 

6,867

 

 

 

1,863

 

Payable to reinsurers

 

 

30,296

 

 

 

15,941

 

Short-term debt

 

 

30,000

 

 

 

—

 

Long-term debt

 

 

—

 

 

 

30,000

 

Operating lease liabilities

 

 

16,845

 

 

 

19,756

 

Other liabilities

 

 

—

 

 

 

26,711

 

Total liabilities

 

 

1,419,197

 

 

 

1,289,737

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Common stock: $0.01 par value; 30,000,000 shares authorized; 17,995,584 and 17,949,484 shares issued

 

 

180

 

 

 

179

 

Additional paid-in capital

 

 

229,891

 

 

 

226,380

 

Accumulated other comprehensive loss, net of taxes

 

 

(32,230

)

 

 

(53,191

)

Retained earnings

 

 

803,893

 

 

 

781,192

 

Treasury stock, at cost: 3,157,577 shares

 

 

(150,293

)

 

 

(150,293

)

Total shareholders’ equity

 

 

851,441

 

 

 

804,267

 

Total liabilities and shareholders’ equity

 

$

2,270,638

 

 

$

2,094,004

 

Safety Insurance Group, Inc. and Subsidiaries Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

258,657

 

 

$

214,425

 

 

$

741,654

 

 

$

608,385

 

Net investment income

 

 

12,210

 

 

 

14,005

 

 

 

40,941

 

 

 

41,495

 

Earnings from partnership investments

 

 

4,345

 

 

 

2,427

 

 

 

8,597

 

 

 

5,146

 

Net realized gains on investments

 

 

1,314

 

 

 

270

 

 

 

4,521

 

 

 

1,111

 

Change in net unrealized gains on equity securities

 

 

10,698

 

 

 

(9,184

)

 

 

14,880

 

 

 

(2,148

)

Credit loss expense

 

 

(158

)

 

 

403

 

 

 

(337

)

 

 

(554

)

Commission income

 

 

1,963

 

 

 

1,918

 

 

 

5,798

 

 

 

5,159

 

Finance and other service income

 

 

6,253

 

 

 

5,094

 

 

 

17,244

 

 

 

13,966

 

Total revenue

 

 

295,282

 

 

 

229,358

 

 

 

833,298

 

 

 

672,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

182,489

 

 

 

159,521

 

 

 

523,630

 

 

 

470,197

 

Underwriting, operating and related expenses

 

 

77,868

 

 

 

65,217

 

 

 

224,056

 

 

 

187,832

 

Other expense

 

 

1,896

 

 

 

2,005

 

 

 

5,480

 

 

 

5,198

 

Interest expense

 

 

124

 

 

 

139

 

 

 

385

 

 

 

697

 

Total expenses

 

 

262,377

 

 

 

226,882

 

 

 

753,551

 

 

 

663,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

32,905

 

 

 

2,476

 

 

 

79,747

 

 

 

8,636

 

Income tax expense

 

 

7,016

 

 

 

527

 

 

 

17,144

 

 

 

2,023

 

Net income

 

$

25,889

 

 

$

1,949

 

 

$

62,603

 

 

$

6,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per weighted average common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.74

 

 

$

0.13

 

 

$

4.24

 

 

$

0.45

 

Diluted

 

$

1.73

 

 

$

0.13

 

 

$

4.24

 

 

$

0.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$

0.90

 

 

$

0.90

 

 

$

2.70

 

 

$

2.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,838,584

 

 

 

14,645,988

 

 

 

14,689,025

 

 

 

14,669,709

 

Diluted

 

 

14,865,211

 

 

 

14,682,082

 

 

 

14,715,494

 

 

 

14,721,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

25,889

 

 

$

1,949

 

 

$

62,603

 

 

$

6,613

 

Exclusions from net income:

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gains on investments

 

 

(1,314

)

 

 

(270

)

 

 

(4,521

)

 

 

(1,111

)

Change in net unrealized gains on equity securities

 

 

(10,698

)

 

 

9,184

 

 

 

(14,880

)

 

 

2,148

 

Credit loss expense

 

 

158

 

 

 

(403

)

 

 

337

 

 

 

554

 

Income tax expense (benefit) on exclusions from net income

 

 

2,489

 

 

 

(1,787

)

 

 

4,003

 

 

 

(334

)

Non-GAAP operating income

 

$

16,524

 

 

$

8,673

 

 

$

47,542

 

 

$

7,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share

 

$

1.73

 

 

$

0.13

 

 

$

4.24

 

 

$

0.45

 

Exclusions from net income:

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gains on investments

 

 

(0.09

)

 

 

(0.02

)

 

 

(0.31

)

 

 

(0.08

)

Change in net unrealized gains on equity securities

 

 

(0.72

)

 

 

0.63

 

 

 

(1.01

)

 

 

0.15

 

Credit loss expense

 

 

0.01

 

 

 

(0.03

)

 

 

0.02

 

 

 

0.04

 

Income tax expense (benefit) on exclusions from net income

 

 

0.17

 

 

 

(0.12

)

 

 

0.27

 

 

 

(0.02

)

Non-GAAP operating income per diluted share

 

$

1.10

 

 

$

0.59

 

 

$

3.21

 

 

$

0.54

 

Safety Insurance Group, Inc. and Subsidiaries Additional Premium Information (Unaudited) (Dollars in thousands)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Written Premiums

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$

318,182

 

 

$

267,124

 

 

$

901,032

 

 

$

745,133

 

Assumed

 

 

5,122

 

 

 

7,472

 

 

 

22,885

 

 

 

23,230

 

Ceded

 

 

(30,692

)

 

 

(23,509

)

 

 

(86,075

)

 

 

(69,423

)

Net written premiums

 

$

292,612

 

 

$

251,087

 

 

$

837,842

 

 

$

698,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned Premiums

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$

282,916

 

 

$

231,249

 

 

$

800,708

 

 

$

654,085

 

Assumed

 

 

4,719

 

 

 

6,839

 

 

 

21,684

 

 

 

22,357

 

Ceded

 

 

(28,978

)

 

 

(23,663

)

 

 

(80,738

)

 

 

(68,057

)

Net earned premiums

 

$

258,657

 

 

$

214,425

 

 

$

741,654

 

 

$

608,385

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241105412757/en/

Safety Insurance Group, Inc. Office of Investor Relations 877-951-2522 InvestorRelations@SafetyInsurance.com