0001172052false00011720522024-05-082024-05-08

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

May 8, 2024

Date of Report (Date of earliest event reported)

SAFETY INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

000-50070

13-4181699

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

20 Custom House Street, Boston, Massachusetts 02110

(Address of principal executive offices including zip code)

(617) 951-0600

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

SAFT

The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.

Item 2.02 Results of Operations and Financial Condition.

In a press release dated May 8, 2024, Safety Insurance Group, Inc. (the “Registrant”) announced its first quarter 2024 results. The Registrant’s press release dated May 8, 2024 is furnished herewith as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits. The following exhibit is furnished herewith:

Exhibit Number

Description

99.1

Text of press release issued by the Registrant dated May 8, 2024

104The cover page from this Current Report on form 8-K, formatted in Inline XBRL

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 hereunto duly authorized.

Safety Insurance Group, Inc.

(Registrant)

Date: May 8, 2024

By:  

/s/ CHRISTOPHER T. WHITFORD

Christopher T. Whitford

V.P., Chief Financial Officer and Secretary

Exhibit 99.1

Graphic

SAFETY INSURANCE GROUP, INC. ANNOUNCES FIRST QUARTER 2024 RESULTS AND DECLARES SECOND QUARTER 2024 DIVIDEND

Boston, Massachusetts, May 8, 2024. Safety Insurance Group, Inc. (NASDAQ:SAFT) (“the Company” or “Safety”) today reported first quarter 2024 results.

George M. Murphy, Chairman of the Board of Directors, President and Chief Executive Officer, commented: “We are beginning to see the financial impact of our prior year growth with net earned premium increasing for the quarter by 23.1%. As a result, our first quarter combined ratio in 2024 improved to 101.9% compared to 118.5% in the first quarter of 2023, which was impacted by a Winter Freeze event. While severity trends in our Private Passenger Automobile book of business are showing signs of stabilization, the losses and loss adjustment expenses in 2024 are still being impacted by continued inflationary pressure. We continue to see positive trends in all revenue line items and have been approved for additional rate increases across multiple lines of business. We remain confident in our pricing and underwriting strategies.”

Net income for the quarter ended March 31, 2024 was $20.1 million, or $1.36 per diluted share, compared to net loss of $12.3 million, or $0.84 per diluted share, for the comparable 2023 period. Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, for the quarter ended March 31, 2024 was $0.93 per diluted share, compared to non-GAAP operating loss of $0.87 per diluted share, for the comparable 2023 period.

Safety’s book value per share increased to $54.40 at March 31, 2024 from $54.37 at December 31, 2023 resulting from the net income offset by dividends paid. Safety paid $0.90 per share in dividends to investors during the quarters ended March 31, 2024 and 2023, respectively. Safety paid $3.60 per share in dividends to investors during the year ended December 31, 2023.

Today, our Board of Directors approved and declared a $0.90 per share quarterly cash dividend on its issued and outstanding common stock, payable on June 14, 2024 to shareholders of record at the close of business on June 3, 2024.

Direct written premiums for the quarter ended March 31, 2024 increased by $49.4 million, or 22.7%, to $267.3 million from $217.9 million for the comparable 2023 period. Net written premiums for the quarter ended March 31, 2024 increased by $47.4 million, or 23.4%, to $250.3 million from $202.9 million for the comparable 2023 period. Net earned premiums for the quarter ended March 31, 2024 increased by $44.4 million, or 23.1%, to $236.1 million from $191.7 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 three months ended March 31, 2024, the Company achieved policy count growth across all lines of business, including 12.4%, 2.3% and 10.9% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. Additionally, for the


three months ended March 31, 2024, average written premium per policy increased 13.5%, 6.4%, and 7.4% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023.

For the quarter ended March 31, 2024, loss and loss adjustment expenses incurred increased by $1.2 million, or 0.7%, to $168.4 million from $167.2 million for the comparable 2023 period. The slight increase is driven by larger policy counts offset by improved results in our homeowners lines.

Loss, expense, and combined ratios for the quarter ended March 31, 2024 were 71.3%, 30.6%, and 101.9%, respectively, compared to 87.2%, 31.3%, and 118.5%, respectively, for the comparable 2023 period. Total prior year favorable development included in the pre-tax results for the quarter ended March 31, 2024 was $11.0 million compared to $11.5 million for the comparable 2023 period. The prior year loss ratio was impacted by a severe weather event, totaling $32.1 million of losses for the quarter ended March 31, 2023.

Net investment income for the quarter ended March 31, 2024 increased by $1.5 million, or 11.5%, to $15.2 million from $13.7 million for the comparable 2023 period. The increase is a result of increases in interest rates on our fixed maturity portfolio compared to the prior year. Net effective annualized yield on the portfolio was 4.3% for the three months ended March 31, 2024 compared to 3.8% for the comparable 2023 period. Our duration on fixed maturities was 3.5 years at March 31, 2024 and 3.6 years at December 31, 2023, respectively.

Non-GAAP Measures

Management has included certain non-GAAP financial measures in presenting the Company’s results. Management believes that these non-GAAP measures better 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 loss 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 expense and taxes related thereto. For the quarter ended March 31, 2024, an increase of $7.7 million for the change in unrealized gains on equity investments was recognized within loss before income taxes, compared to an increase of $0.8 million for the change in unrealized gains on equity investments 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, Inc.  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.


Contacts:

Safety Insurance Group, Inc.

Office of Investor Relations

877-951-2522

InvestorRelations@SafetyInsurance.com

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;
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)

    

March 31, 

    

December 31, 

2024

2023

(Unaudited)

Assets

Investments:

Fixed maturities, available for sale, at fair value (amortized cost: $1,119,116 and $1,120,682, allowance for expected credit losses of $1,349 and $1,208)

$

1,043,556

$

1,052,145

Equity securities, at fair value (cost: $192,721 and $221,809)

 

216,598

 

238,022

Other invested assets

 

138,270

 

133,946

Total investments

 

1,398,424

 

1,424,113

Cash and cash equivalents

 

30,801

 

38,152

Accounts receivable, net of allowance for expected credit losses of $824 and $1,053

 

269,491

 

256,687

Receivable for securities sold

 

322

 

124

Accrued investment income

 

8,012

 

7,261

Taxes recoverable

 

 

623

Receivable from reinsurers related to paid loss and loss adjustment expenses

 

15,359

 

13,129

Receivable from reinsurers related to unpaid loss and loss adjustment expenses

 

121,504

 

112,623

Ceded unearned premiums

 

34,029

 

32,346

Deferred policy acquisition costs

 

93,711

 

91,917

Deferred income taxes

 

14,667

 

12,150

Equity and deposits in pools

 

36,410

 

35,247

Operating lease right-of-use-assets

19,078

 

19,756

Goodwill

17,093

17,093

Intangible assets

7,340

7,551

Other assets

 

27,198

 

25,232

Total assets

$

2,093,439

$

2,094,004

Liabilities

Loss and loss adjustment expense reserves

$

603,796

$

603,081

Unearned premium reserves

 

544,075

 

528,150

Accounts payable and accrued liabilities

 

60,615

 

64,235

Payable for securities purchased

 

6,434

 

1,863

Payable to reinsurers

 

12,496

 

15,941

Taxes payable

780

Short-term debt

30,000

Long-term debt

30,000

Operating lease liabilities

19,078

19,756

Other liabilities

 

9,094

 

26,711

Total liabilities

 

1,286,368

 

1,289,737

Shareholders’ equity

Common stock: $0.01 par value; 30,000,000 shares authorized; 17,994,242 and 17,949,484 shares issued

180

179

Additional paid-in capital

 

227,820

 

226,380

Accumulated other comprehensive loss, net of taxes

 

(58,626)

 

(53,191)

Retained earnings

 

787,990

 

781,192

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

 

(150,293)

 

(150,293)

Total shareholders’ equity

 

807,071

 

804,267

Total liabilities and shareholders’ equity

$

2,093,439

$

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 March 31, 

    

    

2024

    

2023

 

Net earned premiums

$

236,053

$

191,735

Net investment income

 

15,231

 

13,654

Earnings from partnership investments

 

1,772

 

2,166

Net realized gains on investments

 

492

 

733

Change in net unrealized gains on equity securities

7,665

770

Credit loss expense

(142)

(922)

Commission income

1,808

1,483

Finance and other service income

 

5,354

 

4,140

Total revenue

 

268,233

 

213,759

Losses and loss adjustment expenses

 

168,399

 

167,153

Underwriting, operating and related expenses

 

72,267

 

60,033

Other expense

 

1,837

 

1,670

Interest expense

 

123

 

210

Total expenses

 

242,626

 

229,066

Income (loss) before income taxes

 

25,607

 

(15,307)

Income tax expense (benefit)

 

5,529

 

(2,970)

Net income (loss)

$

20,078

$

(12,337)

Earnings (loss) per weighted average common share:

Basic

$

1.36

$

(0.84)

Diluted

$

1.36

$

(0.84)

Cash dividends paid per common share

$

0.90

$

0.90

Number of shares used in computing earnings per share:

Basic

 

14,667,107

 

14,682,507

Diluted

 

14,696,590

 

14,761,861

Reconciliation of Net Income (Loss) to Non-GAAP Operating Income (Loss)

Net income (loss)

$

20,078

$

(12,337)

Exclusions from net income:

Net realized gains on investments

(492)

(733)

Change in net unrealized gains on equity securities

(7,665)

(770)

Credit loss expense

142

922

Income tax expense on exclusions from net income

1,683

122

Non-GAAP operating income (loss)

$

13,746

$

(12,796)

Net income per diluted share

$

1.36

$

(0.84)

Exclusions from net income:

Net realized gains on investments

(0.03)

(0.05)

Change in net unrealized gains on equity securities

(0.52)

(0.05)

Credit loss (benefit) expense

0.01

0.06

Income tax expense on exclusions from net income

0.11

0.01

Non-GAAP operating income (loss) per diluted share

$

0.93

$

(0.87)


Safety Insurance Group, Inc. and Subsidiaries

Additional Premium Information

(Unaudited)

(Dollars in thousands)

Three Months Ended March 31, 

    

2024

    

2023

    

Written Premiums

Direct

$

267,339

$

217,852

Assumed

 

9,438

 

7,230

Ceded

 

(26,482)

 

(22,198)

Net written premiums

$

250,295

$

202,884

Earned Premiums

Direct

$

251,884

$

205,555

Assumed

 

8,968

 

7,913

Ceded

 

(24,799)

 

(21,733)

Net earned premiums

$

236,053

$

191,735


v3.24.1.u1
Document and Entity Information
May 08, 2024
Document and Entity Information [Abstract]  
Document Type 8-K
Document Period End Date May 08, 2024
Securities Act File Number 000-50070
Entity Registrant Name SAFETY INSURANCE GROUP, INC.
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 13-4181699
Entity Address, Address Line One 20 Custom House Street
Entity Address, State or Province MA
Entity Address, City or Town Boston
Entity Address, Postal Zip Code 02110
City Area Code (617)
Local Phone Number 951-0600
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol SAFT
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001172052
Amendment Flag false
v3.24.1.u1
N-2
May 08, 2024
Cover [Abstract]  
Entity Central Index Key 0001172052
Amendment Flag false
Securities Act File Number 000-50070
Document Type 8-K
Entity Registrant Name SAFETY INSURANCE GROUP, INC.
Entity Address, Address Line One 20 Custom House Street
Entity Address, City or Town Boston
Entity Address, State or Province MA
Entity Address, Postal Zip Code 02110
City Area Code (617)
Local Phone Number 951-0600
Entity Emerging Growth Company false

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