SAFETY INSURANCE GROUP INC
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
SAFT$104.27-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001172052-24-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001172052-24-000035
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 126 previous paragraphs and 138 current paragraphs.
70 unchanged; 49 reworded; 10 added; 3 removed; 4 previous and 9 current paragraphs rearranged.
Tables are not compared: 38 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Since 1998, the Company has been a member company of the Massachusetts Property Insurance Underwriting Association (“FAIR Plan”). The FAIR Plan is a residual market insurance association in which all companies writing basic property insurance in the Commonwealth of Massachusetts are required to participate with profits and losses shared among member companies on a written premium basis. On April 1, 2024, the Massachusetts Division of Insurance approved a restructuring of the FAIR Plan transforming it from a partnership that shares profits and losses with member companies to a stand-alone, risk bearing entity, and distributing the accumulated members’ equity.
Current report
The Company carried a net asset of $13,254 as of June 30, 2024, representing its estimated share of members’ equity based on the estimated profitability of the FAIR Plan. As an element of the restructuring, the FAIR Plan calculated each member company’s equity balance and notified the Company that our net asset balance was $22,975 as of June 30, 2024. As a result, the Company recognized an increase in our asset and an underwriting gain of $9,721 through the release of prior year loss reserves, (“FAIR Plan Development”). Additionally, the restructuring required the Company to establish assets as of June 30, 2024, including an Investment in FAIR Plan Trust of $14,929 and a receivable of $8,046, of which $6,437 was paid on July 2, 2024 and the remaining receivable is expected to be paid by November 1, 2024. Going forward, the Company’s investment in FAIR Plan Trust will be adjusted to its current fair value on a quarterly basis with changes recognized through earnings.
Current report
winter weather event. Non-GAAP operating income was $1.18 per diluted share for the three months ended June 30, 2024 and $2.09 per diluted share, for the six months ended June 30, 2024, compared to non-GAAP operating income of $0.80 per diluted share for the three months ended June 30, 2023, and a non-GAAP operating loss of $0.07 per diluted share, for the six months ended June 30, 2023.
Current report
Net Earned Premiums. Net earned premiums for the three months ended June 30, 2024 increased by $44,719, or 22.1%, to $246,944 from $202,225 for the comparable 2023 period. Net earned premiums for the six months ended June 30, 2024 increased by $89,037, or 22.6%, to $482,997 from $393,960 for the comparable 2023 period.
Current report
deferred compensation plan.
Current report
Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended June 30, 2024 increased by $29,219, or 20.4%, to $172,742 from $143,523 for the comparable 2023 period. Losses and loss adjustment expenses incurred for the six months ended June 30, 2024 increased by $30,465, or 9.8%, to $341,141 from $310,676 for the comparable 2023 period.
Current report
*Net Income.*Net income for the three months ended June 30, 2024 was $16,636 compared to net income of $17,001 for the comparable 2023 period. Net income for the six months ended June 30, 2024 was $36,714 compared to $4,664 for the comparable 2023 period.
Current report
Investment Impairments
Current report
The Company uses a systematic methodology to evaluate declines in fair values below cost or amortized cost of our investments. Some of the factors considered in assessing impairment of fixed maturities due to credit losses include the extent to which the fair value is less than amortized cost, the financial condition of and the near and long-term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, changes to the rating of the security by a rating agency, the historical volatility of the fair value of the security and whether it is more like than not that the Company will be required to sell the investment prior to an anticipated recovery in value. This methodology ensures that we evaluate available evidence concerning any declines in a disciplined manner.
Current report
For fixed maturities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the expected credit loss component of the impairment from the amount related to all other factors. The expected credit loss component is recognized as an allowance for expected credit losses. The allowance is adjusted for any additional credit losses and subsequent recoveries, which are booked in income as either credit loss expense or credit loss benefit, respectively. Upon recognizing a credit loss, the cost basis is not adjusted. The impairment related to all other factors (non-credit factors) is reported in other comprehensive income.
Removed paragraphs (3)
Previous report
Net Earned Premiums. Net earned premiums for the three months ended March 31, 2024 increased by $44,318, or 23.1%, to $236,053 from $191,735 for the comparable 2023 period.
Previous report
Losses and Loss Adjustment Expenses. Loss and loss adjustment expenses incurred for the three months ended March 31, 2024 increased by $1,246, or 0.7%, to $168,399 from $167,153 for the comparable 2023 period. The slight increase is driven by larger policy counts offset by improved results in our homeowners lines.
Previous report
Net Income (Loss). Net income for the three months ended March 31, 2024 was $20,078 compared to net loss of $12,337 for the comparable 2023 period.
Reworded paragraphs (49)
Previous wording
In this discussion, “Safety” refers to Safety Insurance Group, Inc. and “our Company,” “we,” “us” and “our” refer to Safety Insurance Group, Inc. and its consolidated subsidiaries. Our subsidiaries consist of Safety Insurance Company (“Safety Insurance”), Safety Indemnity Insurance Company (“Safety Indemnity”), Safety Property and Casualty Insurance Company (“Safety P&C”), Safety Northeast Insurance Company (“Safety Northeast”), Safety Northeast Insurance Agency, Inc. (“SNIA”), and Safety Management Corporation (“SMC”), which is SNIA’s holding company.
Current wording
In this discussion, “Safety” refers to Safety Insurance Group, Inc. and “our Company,” “the Company,” “we,” “us” and “our” refer to Safety Insurance Group, Inc. and its consolidated subsidiaries. Our subsidiaries consist of Safety Insurance Company (“Safety Insurance”), Safety Indemnity Insurance Company (“Safety Indemnity”), Safety Property and Casualty Insurance Company (“Safety P&C”), Safety Northeast Insurance Company (“Safety Northeast”), Safety Northeast Insurance Agency, Inc. (“SNIA”), and Safety Management Corporation (“SMC”), which is SNIA’s holding company.
Previous wording
We are a leading provider of private passenger automobile, commercial automobile, homeowners and commercial other-than-auto insurance in Massachusetts. In addition to private passenger automobile insurance (which represented 59.3% of our direct written premiums in 2023), we offer a portfolio of other insurance products, including commercial automobile (16.0% of 2023 direct written premiums), homeowners (19.8% of 2023 direct written premiums) and dwelling fire, umbrella and business owner policies (totaling 4.9% of 2023 direct written premiums). Operating exclusively in Massachusetts, New Hampshire, and Maine through our insurance company subsidiaries, Safety Insurance, Safety Indemnity, Safety P&C, and Safety Northeast (together referred to as the “Insurance Subsidiaries”), we have established strong relationships with independent insurance agents, who numbered 834 in 1,090 locations throughout these three states at December 31, 2023. We have used these relationships and our extensive knowledge of the Massachusetts market to become the third largest private passenger automobile carrier and the second largest commercial automobile insurance carrier in Massachusetts, capturing an approximate 8.7% and 12.7% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2023 according to statistics compiled by the Commonwealth Automobile Reinsurers (“CAR”) based on automobile exposures. We are also the fourth largest homeowners insurance carrier in Massachusetts with a 6.2% share of the Massachusetts homeowners insurance market.
Current wording
We are a leading provider of private passenger automobile, commercial automobile, homeowners and commercial other-than-auto insurance in Massachusetts. In addition to private passenger automobile insurance (which represented 54.7% of our direct written premiums in 2023), we offer a portfolio of other insurance products, including commercial automobile (15.9% of 2023 direct written premiums), homeowners (24.5% of 2023 direct written premiums) and dwelling fire, umbrella and business owner policies (totaling 4.9% of 2023 direct written premiums). Operating exclusively in Massachusetts, New Hampshire, and Maine through our insurance company subsidiaries, Safety Insurance, Safety Indemnity, Safety P&C and Safety Northeast (together referred to as the “Insurance Subsidiaries”), we have established strong relationships with independent insurance agents, who numbered 834 in 1,090 locations throughout these three states at December 31, 2023. We have used these relationships and our extensive knowledge of the Massachusetts market to become the third largest private passenger automobile carrier and the second largest commercial automobile insurance carrier in Massachusetts, capturing an approximate 8.7% and 12.7% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2023 according to statistics compiled by the Commonwealth Automobile Reinsurers (“CAR”) based on automobile exposures. We are also the third largest homeowners insurance carrier in Massachusetts with a 6.2% share of the Massachusetts homeowners insurance market.
Previous wording
Our Insurance Subsidiaries began writing insurance in New Hampshire during 2008 and in Maine in 2016. In November 2020, we formed a fourth insurance subsidiary, Safety Northeast, which became licensed to write insurance products in Massachusetts. The table below shows the amount of direct written premiums written in each state during the three months ended March 31, 2024 and 2023.
Current wording
Our Insurance Subsidiaries began writing insurance in New Hampshire during 2008 and in Maine in 2016. In November 2020, we formed a fourth insurance subsidiary, Safety Northeast, which became licensed to write insurance products in Massachusetts.
Previous wording
Direct and Net Written Premiums. For the three months ended March 31, 2024, the Company achieved its sixth consecutive quarter of double-digit growth in direct and net written premiums. For the three months ended March 31, 2024, direct written premium growth and net written premium growth were 22.7% and 23.4%, respectively. The increase in premium is driven by 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.
Current wording
*Direct and Net Written Premiums.*For the three months ended June 30, 2024 direct written premium growth and net written premium growth were 21.3% and 22.1%, respectively. The increase in premium is driven by new business production and rate increases. For the six months ended June 30, 2024, the Company achieved policy count growth across all lines of business, including 11.9%, 4.9% and 10.3% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. Additionally, for the six months ended June 30, 2024, average written premium per policy increased 12.4%, 8.5% and 8.8% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023.
Previous wording
Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended March 31, 2024 increased by $1,246 or 0.7%, to $168,399 from $167,153 for the comparable period. The slight increase is driven by larger policy counts offset by improved results in our homeowners lines. Our losses and loss adjustment expenses ratio for the three months ended March 31, 2024 improved to 71.3% from 87.2% from the comparable 2023 period. The prior year losses and loss adjustment expenses ratio was impacted by a severe weather event, totaling $32,100 of losses and loss adjustment expenses for the three months ended March 31, 2023.
Current wording
Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended June 30, 2024 increased by $29,219, or 20.4%, to $172,742 from $143,523 for the comparable 2023 period. Losses and loss adjustment expenses incurred for the six months ended June 30, 2024 increased by $30,465, or 9.8%, to $341,141 from $310,676 for the comparable 2023 period. The increase in losses and loss adjustment expenses is primarily driven by larger policy counts. Our losses and loss adjustment expenses ratio for the three months ended June 30, 2024 decreased to 70.0% from 71.0% for the comparable 2023 period. Our losses and loss adjustment expense ratio for the six months ended June 30, 2024 decreased to 70.6% from 78.9%. The decrease in losses and loss adjustment expenses is primarily due to favorable prior year development including the FAIR Plan Development. Additionally, the prior year losses and loss adjustment expense ratio for the six months ended June 30, 2023 was impacted by a severe weather event, totaling $32,100 of losses and loss adjustment expenses.
Previous wording
Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, was $13,746 for the three months ended March 31, 2024, compared to non-GAAP operating loss of $12,796 for the comparable 2023 period. The increase in Non-GAAP operating income was primarily the result of an increase in net earned premiums compared to the prior period. Non-GAAP operating income 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.
Current wording
Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, was $17,272 for the three months ended June 30, 2024 and $31,018 for the six months ended June 30, 2024, respectively. Non-GAAP operating income was $11,993 for the three months ended June 30, 2023, compared to non-GAAP operating loss of $803 for the six months ended June 30, 2023, respectively. The increase in non-GAAP operating income for the three and six months ended June 30, 2024 was primarily the result of favorable prior year loss development including the FAIR Plan Development. Non-GAAP operating income for the six months ended June 30, 2023 was adversely impacted by a severe
Previous wording
The following rate changes have been filed and approved by the insurance regulators of Massachusetts, New Hampshire and Maine in 2024 and 2023. Our Massachusetts private passenger automobile rates include a 13% commission rate for agents.
Current wording
The following rate changes have been filed and approved by the insurance regulators of Massachusetts, New Hampshire and Maine in 2024 and 2023.
Previous wording
A summary of share based awards granted under the Incentive Plan during the three months ended March 31, 2024 is as follows:
Current wording
A summary of share based awards granted under the Incentive Plan during the six months ended June 30, 2024 is as follows:
Previous wording
We reinsure with other insurance companies a portion of our potential liability under the policies we have underwritten, thereby protecting us against an unexpectedly large loss or a catastrophic occurrence that could produce large losses, primarily in our homeowners line of business. We are selective in choosing our reinsurers, seeking only those companies that we consider to be financially stable and adequately capitalized. In an effort to minimize exposure to the insolvency of a reinsurer, we continually evaluate and review the financial condition of our reinsurers. Most of our other reinsurers have an A.M. Best rating of “A+” (Superior) or “A” (Excellent).
Current wording
We reinsure with other insurance companies a portion of our potential liability under the policies we have underwritten, thereby protecting us against an unexpectedly large loss or a catastrophic occurrence that could produce large losses, primarily in our homeowners line of business. We are selective in choosing our reinsurers, seeking only those companies that we consider to be financially stable and adequately capitalized. In an effort to minimize exposure to the insolvency of a reinsurer, we continually evaluate and review the financial condition of our reinsurers. Most of our reinsurers have an A.M. Best rating of “A+” (Superior) or “A” (Excellent).
Previous wording
We maintain reinsurance coverage to help lessen the effect of losses from catastrophic events, maintaining coverage during 2024 that protects us in the event of a "124-year storm" (that is, a storm of a severity expected to occur once in a 124-year period). We use various software products to measure our exposure to catastrophe losses and the probable maximum loss to us for catastrophe losses such as hurricanes. The models include estimates for our share of the catastrophe losses generated in the residual market for property insurance by the Massachusetts Property Insurance Underwriting Association ("FAIR Plan").
Current wording
We maintain reinsurance coverage to help lessen the effect of losses from catastrophic events, maintaining coverage during 2024 that protects us in the event of a "124-year storm" (that is, a storm of a severity expected to occur once in a 124-year period). We use various software products to measure our exposure to catastrophe losses and the probable maximum loss to us for catastrophe losses such as hurricanes. The models include estimates for our share of the catastrophe losses generated in the residual market for property insurance by the FAIR Plan.
Previous wording
We are a participant in CAR, a state-established body that runs the residual market reinsurance programs for commercial automobile insurance in Massachusetts under which premiums, expenses, losses and loss adjustment expenses on ceded business are shared by all insurers writing automobile insurance in Massachusetts. We also participate in the FAIR Plan in which premiums, expenses, losses and loss adjustment expenses on homeowners business that cannot be placed in the voluntary market are shared by all insurers writing homeowners insurance in Massachusetts. As a response to the exposure to catastrophe losses, on July 1, 2023, the FAIR Plan purchased $1,600,000 of catastrophe reinsurance for property losses with retention of $100,000.
Current wording
We are a participant in CAR, a state-established body that runs the residual market reinsurance programs for commercial automobile insurance in Massachusetts under which premiums, expenses, losses and loss adjustment expenses on ceded business are shared by all insurers writing automobile insurance in Massachusetts. We also participate in the FAIR Plan in which premiums, expenses, losses and loss adjustment expenses on homeowners business that cannot be placed in the voluntary market are shared by all insurers writing homeowners insurance in Massachusetts.
Previous wording
At March 31, 2024, we had $144,560 recoverable from CAR comprised of loss adjustment expense reserves, unearned premiums and reinsurance recoverable.
Current wording
At June 30, 2024, we had a $146,512 recoverable from CAR, which comprises loss adjustment expense reserves, unearned premiums and reinsurance recoverable.
Previous wording
Non-GAAP operating income and non-GAAP operating income per diluted share consist of our GAAP net income adjusted by the net realized gains (losses) on investments, changes in net unrealized gains on equity securities, credit loss benefit (expense) and taxes related thereto. Net income (loss) and earnings (loss) per diluted share are the GAAP financial measures that are most directly comparable to non-GAAP operating income and non-GAAP operating
Current wording
Non-GAAP operating income and non-GAAP operating income per diluted share consist of our GAAP net income adjusted by the net realized gains (losses) on investments, changes in net unrealized gains on equity securities, credit loss benefit (expense) and taxes related thereto. 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.
Previous wording
Three Months Ended March 31, 2024 compared to Three Months Ended March 31, 2023
Current wording
Three and Six Months Ended June 30, 2024 Compared to Three and Six Months Ended June 30, 2023
Previous wording
Net Written Premiums. Net written premiums for the three months ended March 31, 2024 increased by $47,411, or 23.4%, to $250,295 from $202,884 for the comparable 2023 period. The increase was primarily due to the factors that increased direct written premiums.
Current wording
Net Written Premiums. Net written premiums for the three months ended June 30, 2024 increased by $49,966, or 20.4%, to $294,935 from $244,969 for the comparable 2023 period. Net written premiums for the six months ended June 30, 2024 increased by $97,377, or 21.7%, to $545,230 from $447,853 for the comparable 2023 period. The increase was primarily due to the factors that increased direct written premiums.
Previous wording
Net Investment Income. Net investment income for the three months ended March 31, 2024 increased by $1,577, or 11.5%, to $15,231 from $13,654 for the comparable 2023 period. The increase is a result of increases in interest rates on our fixed maturity portfolio as compared to the prior year. Net effective annualized yield on the investment portfolio was 4.3% for the three months ended March 31, 2024 compared to 3.8% for the three months ended March 31, 2023. The investment portfolio’s duration was 3.5 years at March 31, 2024 and 3.6 years at December 31, 2023, respectively.
Current wording
Net Investment Income. Net investment income for the three months ended June 30, 2024 decreased $336, or 2.4%, to $13,500 from $13,836 for the comparable 2023 period. Net investment income for the six months ended June 30, 2024 increased by $1,241, or 4.5%, to $28,731 from $27,490 for the comparable 2023 period. The decrease for the three months ended June 30, 2024 from the comparable 2023 period is due to the timing of interest and cash payments from our variable rate secured and senior bank loans and high yield bonds. The increase for the six months ended June 30, 2024 from the comparable 2023 period is a result of increases in interest rates on our fixed maturity portfolio as compared to the prior year. Net effective annualized yield on the investment portfolio was 3.9% for the three months June 30, 2024 and 2023, respectively. Net effective annualized yield on the investment portfolio was 4.1% for the six months ended June 30, 2024 compared to 3.9% for the comparable 2023 period. The investment portfolio’s duration on fixed maturities was 3.5 years at June 30, 2024 compared to 3.6 years at December 31, 2023.
Previous wording
Earnings from Partnership Investments. Earnings from partnership investments was $1,772 for the three months ended March 31, 2024 compared to $2,166 for the comparable 2023 period. The three month earnings reflect a decrease in investment appreciation and timing of cash proceeds received compared to the prior year. Timing and generation of these returns on capital can vary based on the results and transactions of the underlying partnerships.
Current wording
Earnings from Partnership Investments. Earnings from partnership investments were $2,480 for the three months ended June 30, 2024 compared to $553 for the comparable 2023 period. Earnings from partnership investments were $4,252 for the six months ended June 30, 2024 compared to $2,719 for the comparable 2023 period. The six months 2024 earnings reflect an increase in investment appreciation and timing of cash proceeds received compared to the prior year. Timing and generation of these returns on capital can vary based on the results and transactions of the underlying partnerships.
Previous wording
Net Realized Gains on Investments. Net realized gains on investments was $492 for the three months ended March 31, 2024 compared to $733 for the comparable 2023 period. The decrease in net realized gains is driven by an increase in realized losses.
Current wording
Net Realized Gains on Investments. Net realized gains on investments was $2,715 for the three months ended June 30, 2024 compared to $108 for the comparable 2023 period. Net realized gains on investments was $3,207 for the six months ended June 30, 2024 compared to $841 for the comparable 2023 period. The increase in net realized gains is driven primarily by the sale of equity securities in a gain position.
Previous wording
(1)Residential mortgage-backed securities consists primarily of obligations of U.S. Government agencies including collateralized mortgage obligations issued, guaranteed and/or insured by the following issuers: Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB).
Current wording
(1)Residential mortgage-backed securities consist primarily of obligations of U.S. Government agencies including collateralized mortgage obligations issued, guaranteed and/or insured by the following issuers: Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB).
Previous wording
(2)Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive deferred compensation plan.
Current wording
(2)Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive
Previous wording
(3)Our investment portfolio included 855 securities in an unrealized loss position at March 31, 2024.
Current wording
(3)Our investment portfolio included 887 securities in an unrealized loss position at June 30, 2024.
Previous wording
(4)Other invested asset accounted for under the equity method which approximated fair value.
Current wording
(4)Other invested assets accounted for under the equity method which approximated fair value.
Previous wording
As of March 31, 2024 and December 31, 2023, the Company concluded that $1,349 and $1,208, respectively, of unrealized losses were due to credit factors and were recorded as an allowance for expected credit losses expense. The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at March 31, 2024 and December 31, 2023 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities. Based upon the analysis performed, the Company’s decision to hold these securities, the Company’s current level of liquidity and our history of positive operating cash flows, management believes it is more likely than not that it will not be required to sell any of its securities before the anticipated recovery in the fair value to its amortized cost basis.
Current wording
As of June 30, 2024 and December 31, 2023, the Company concluded that $1,387 and $1,208, respectively, of unrealized losses were due to credit factors and were recorded as an allowance for expected credit losses expense. The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at June 30, 2024 and December 31, 2023 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities. Based upon the analysis performed, the Company’s decision to hold these securities, the Company’s current level of liquidity and our history of positive cash flows, management believes it is more likely than not that it will not be required to sell any of its securities before the anticipated recovery in the fair value to its amortized cost basis.
Previous wording
*Commission Income:*Commission income includes revenues from new and renewal commissions paid by insurance carriers, which we recognize when earned. Commission income was $1,808 and $1,483 for the three months ended March 31, 2024 and 2023, respectively.
Current wording
*Commission Income:*Commission income includes revenues from new and renewal commissions paid by insurance carriers, which we recognize when earned. Commission income was $2,027 and $1,758 for the three months ended June 30, 2024 and 2023, respectively. Commission income was $3,835 and $3,241 for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Finance and Other Service Income. Finance and other service income includes revenues from premium installment charges, which we recognize when earned, and other miscellaneous income and fees. Finance and other service income for the three months ended March 31, 2024 increased by $1,214, or 29.3%, to $5,354 from $4,140 for the comparable 2023 period. The increase is primarily driven by the increase in policy counts and changes to our fee assessment policies.
Current wording
Finance and Other Service Income. Finance and other service income includes revenues from premium installment charges, which we recognize when earned, and other miscellaneous income and fees. Finance and other service income for the three months ended June 30, 2024 increased by $905, or 19.1%, to $5,637 from $4,732 for the comparable 2023 period. Finance and other service income for the six months ended June 30, 2024, increased by $2,119, or 23.9%, to $10,991 from $8,872 for the comparable 2023 period. The increase is primarily driven by the increase in policy counts and changes to our fee assessment policies.
Previous wording
Our GAAP loss ratio for the three months ended March 31, 2024 decreased to 71.3% from 87.2% for the comparable 2023 period. Our GAAP loss ratio excluding loss adjustment expenses for the three months ended March 31, 2024 was 62.2% compared to 76.2% for the comparable 2023 period. Total prior year favorable development included in the pre-tax results for the three months ended March 31, 2024 was $10,958 compared to $11,533 for the comparable 2023 period.
Current wording
Our GAAP loss ratio for the three months ended June 30, 2024 decreased to 70.0% from 71.0% for the comparable 2023 period. Our GAAP loss ratio for the six months ended June 30, 2024 decreased to 70.6% from 78.9% for the comparable 2023 period. Our GAAP loss ratio excluding loss adjustment expenses for the three months ended June 30, 2024 was 60.6% compared to 76.2% for the comparable 2023 period. Our GAAP loss ratio excluding loss
Previous wording
Underwriting, Operating and Related Expenses. Underwriting, operating and related expenses for the three months ended March 31, 2024 increased by $12,234, or 20.4%, to $72,267 from $60,033 for the comparable 2023 period. Our GAAP expense ratio for the three months ended March 31, 2024 decreased to 30.6% from 31.3% for the comparable 2023 period. The increase is driven by an increase in contingent commission expenses.
Current wording
Underwriting, Operating and Related Expenses. Underwriting, operating and related expenses for the three months ended June 30, 2024 increased by $11,339, or 18.1%, to $73,921 from $62,582 for the comparable 2023 period. Underwriting, operating and related expenses for the six months ended June 30, 2024 increased by $23,573, or 19.2%, to $146,188 from $122,615 for the comparable 2023 period. The increase in the three months and six months ended June 30, 2023 is driven by an increase in base commissions resulting from the increase in written premiums, offset by a decrease in contingent commission expenses. Our GAAP expense ratio for the three months ended June 30, 2024 decreased to 29.9% from 30.9% for the comparable 2023 period. Our GAAP expense ratio for the six months ended June 30, 2024 decreased to 30.3% from 31.1% for the comparable 2023 period.
Previous wording
Interest Expense. Interest expense was $123 and $210 for the three months ended March 31, 2024 and 2023. The credit facility commitment fee included in interest expense was $15 and $19 for the three months ended March 31, 2024 and 2023*,*respectively.
Current wording
Interest Expense. Interest expense was $138 and $348 for the three months ended June 30, 2024 and 2023, respectively. Interest expense was $261 for the six months ended June 30, 2024 compared to $558 for the comparable 2023 period. The credit facility commitment fee included in interest expense was $31 and $37 for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Income Tax Expense. Our effective tax rate was 21.6% and 19.4% for the quarters ended March 31, 2024 and 2023, respectively. The effective tax rate for the quarter ended March 31, 2024 was higher than the statutory rate primarily due to the effects of the change in unrealized gains on equity securities. The effective tax rate for the quarter ended March 31, 2023 was lower than the statutory rate primarily due to the effects of the change in unrealized gains on equity securities and the impact of stock-based compensation.
Current wording
Income Tax Expense. Our effective tax rate was 21.7% and 20.8% for the three months ended June 30, 2024 and 2023, respectively. The effective tax rate was 21.6% and 24.3% for the six months ended June 30, 2024 and 2023, respectively. The effective tax rate in 2024 was higher than the statutory rate primarily due to the effects of stock-based compensation and permanent differences regarding executive compensation.
Previous wording
Non-GAAP Operating Income. Non-GAAP operating income as defined above was $13,746 for the three months ended March 31, 2024 compared to non-GAAP operating loss of $12,796 for the comparable 2023 period. The increase in Non-GAAP operating income was primarily the result of an increase in net earned premiums compared to the prior year.
Current wording
Non-GAAP Operating Income. Non-GAAP operating income, as defined above, was $17,272 for the three months ended June 30, 2024 compared to $11,993 for the comparable 2023 period. Non-GAAP operating income was $31,018 for the six months ended June 30, 2024 compared to Non-GAAP operating loss of $803 for the comparable 2023 period.
Previous wording
Net cash used for operating activities was $21,135 and $12,892 during the three months ended March 31, 2024 and 2023, respectively. Our operations typically generate positive cash flows from operations as most premiums are received in advance of the time when claim and benefit payments are required. Positive operating cash flows are expected in the future to meet our liquidity requirements.
Current wording
Net cash provided by operating activities was $4,454 and net cash used for operating activities $13,438 during the six months ended 2024 and 2023, respectively. Our operations typically generate positive cash flows from operations as most premiums are received in advance of the time when claim and benefit payments are required. Positive operating cash flows are expected in the future to meet our liquidity requirements.
Previous wording
Net cash provided by investing activities was $27,399 and $6,655 during the three months ended March 31, 2024 and 2023, respectively. Fixed maturities, equity securities, and other invested assets purchased were $50,199 for the three months ended March 31, 2024 compared to $43,292 for the comparable prior year period. Proceeds from maturities, redemptions, calls and sales, of securities were $81,665 during the three months ended March 31, 2024 compared to $50,561 for the comparable prior year period.
Current wording
Net cash provided by investing activities was $28,821 and $45,694 during the six months ended June 30, 2024 and 2023, respectively. Fixed maturities, equity securities, and other invested assets purchased were $102,580 for the six months ended June 30, 2024 compared to $64,290 for the comparable prior year period. Proceeds from maturities,
Previous wording
Net cash used for financing activities was $13,615 and $3,747 during the three months ended March 31, 2024 and 2023, respectively. The net cash used for financing activities during the three months ended March 31, 2024 consisted of dividend payments to shareholders.
Current wording
Net cash used for financing activities was $26,848 and $32,168 during the six months ended June 30, 2024 and 2023, respectively. Net cash used for financing activities during the six months ended June 30, 2024 consisted of dividend payments to shareholders.
Previous wording
Our Insurance Subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of the Commissioner of the Division of Insurance of Massachusetts (the “Commissioner”). The Massachusetts statute limits the dividends an insurer may pay in any twelve-month period, without the prior permission of the Commissioner, to the greater of (i) 10% of the insurer’s surplus as of the preceding December 31 or (ii) the insurer’s net income for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting practices. Our insurance company subsidiaries may not declare an “extraordinary dividend” (defined as any dividend or distribution that, together with other distributions made within the preceding twelve months, exceeds the limits established by Massachusetts statute) until thirty days after the Commissioner has received notice of the intended dividend and has not objected. As historically administered by the Commissioner, this provision requires the Commissioner’s prior approval of an extraordinary dividend. Under Massachusetts law, an insurer may pay cash dividends only from its unassigned funds, also known as earned surplus, and the insurer’s remaining surplus must be both reasonable in relation to its outstanding liabilities and adequate to its financial needs. At December 31, 2023, the statutory surplus of Safety Insurance was $744,904, and its statutory net income for 2023 was $4,022. As a result, a maximum of $74,490 is available in 2024 for such dividends without prior approval of the Commissioner. As a result of this Massachusetts statute, the Insurance Subsidiaries had restricted net assets in the amount of $670,414 at December 31, 2023. During the three months ended March 31, 2024, Safety Insurance paid dividends to Safety of $12,610.
Current wording
Our Insurance Subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of the Commissioner of the Division of Insurance of Massachusetts (the “Commissioner”). The Massachusetts statute limits the dividends an insurer may pay in any twelve-month period, without the prior permission of the Commissioner, to the greater of (i) 10% of the insurer’s surplus as of the preceding December 31 or (ii) the insurer’s net income for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting practices. Our insurance company subsidiaries may not declare an “extraordinary dividend” (defined as any dividend or distribution that, together with other distributions made within the preceding twelve months, exceeds the limits established by Massachusetts statute) until thirty days after the Commissioner has received notice of the intended dividend and has not objected. As historically administered by the Commissioner, this provision requires the Commissioner’s prior approval of an extraordinary dividend. Under Massachusetts law, an insurer may pay cash dividends only from its unassigned funds, also known as earned surplus, and the insurer’s remaining surplus must be both reasonable in relation to its outstanding liabilities and adequate to its financial needs. At December 31, 2023, the statutory surplus of Safety Insurance was $744,904, and its statutory net income for 2023 was $4,022. As a result, a maximum of $74,490 is available in 2024 for such dividends without prior approval of the Commissioner. As a result of this Massachusetts statute, the Insurance Subsidiaries had restricted net assets in the amount of $670,414 at December 31, 2023. During the six months ended June 30, 2024, Safety Insurance paid dividends to Safety of $26,044.
Previous wording
On May 8, 2024, our Board approved and declared a quarterly cash dividend of $0.90 per share which will be paid on June 14, 2024 to shareholders of record on June 3, 2024. We plan to continue to declare and pay quarterly cash dividends in 2024, depending on our financial position and the regularity of our cash flows.
Current wording
On August 7, 2024, our Board approved and declared a quarterly cash dividend of $0.90 per share which will be paid on September 13, 2024 to shareholders of record on September 3, 2024. We plan to continue to declare and pay quarterly cash dividends, depending on our financial position and the regularity of our cash flows.
Previous wording
On February 23, 2022, the Board of Directors approved a share repurchase program of up to $50,000 of the Company’s outstanding common shares. As of March 31, 2024, the Board of Directors has cumulatively authorized increases to the existing share repurchase program of up to $200,000 of its outstanding common shares. Under the program, the Company may repurchase shares of its common stock for cash in public or private transactions, in the open market or otherwise. The timing of such repurchases and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable regulatory and corporate requirements. The program does not require us to repurchase any specific number of shares and may be modified, suspended or terminated at any time without prior notice. No share repurchases were made by the Company under the program during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, the Company had purchased 3,215,690 shares of common stock at a cost of $155,240.
Current wording
On February 23, 2022, the Board of Directors approved a share repurchase program of up to$50,000 of the Company’s outstanding common shares. As of June 30, 2024, the Board of Directors has cumulatively authorized increases to the existing share repurchase program of up to $200,000 of its outstanding common shares. Under the program, the Company may repurchase shares of its common stock for cash in public or private transactions, in the open market or otherwise. The timing of such repurchases and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable regulatory and corporate requirements. The program does not require us to repurchase any specific number of shares and may be modified, suspended or terminated at any time without prior notice.
Previous wording
We have no material obligations under a guarantee contract meeting the characteristics identified in Accounting Standards Codification (“ASC”) 460,Guarantees. We have no material retained or contingent interests in assets transferred to an unconsolidated entity. We have no material obligations, including contingent obligations, under contracts that would be accounted for as derivative instruments. We have no obligations, including contingent obligations, arising out of a variable interest in an unconsolidated entity held by, and material to, us, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us. We have no direct investments in real estate and no holdings of mortgages secured by commercial real estate. Accordingly, we have no material off-balance sheet arrangements.
Current wording
We have no material obligations under a guarantee contract meeting the characteristics identified in Accounting Standards Codification (“ASC”) 460,*Guarantees.*We have no material retained or contingent interests in assets transferred to an unconsolidated entity. We have no material obligations, including contingent obligations, under contracts that would be accounted for as derivative instruments. We have no obligations, including contingent obligations, arising out of a variable interest in an unconsolidated entity held by, and material to, us, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and
Previous wording
Our key factors and resulting assumptions are the ultimate frequency and severity of claims, based upon the most recent ten years of claims reported to the Company, and the data CAR reports to us to calculate our share of the residual market, as of the date of the applicable balance sheet. For each accident year and each coverage within a line of business our actuaries calculate the ultimate losses incurred. Our total reserves are the difference between the ultimate losses incurred and the cumulative loss and loss adjustment payments made to date. Our IBNR reserves are calculated as the difference between our total reserves and the outstanding case reserves at the end of the accounting period. To determine ultimate losses, our actuaries calculate a range of indications and select a point estimation using such actuarial techniques as:
Current wording
Management determines our loss and LAE reserves estimate based upon the analysis of our actuaries. A reasonable estimate is derived by selecting a point estimate within a range of indications as calculated by our actuaries using generally accepted actuarial techniques. The key assumption in most actuarial analysis is that past patterns of frequency and severity will repeat in the future, unless a significant change in the factors described above takes place. Our key factors and resulting assumptions are the ultimate frequency and severity of claims, based upon the most recent ten years of claims reported to the Company, and the data CAR reports to us to calculate our share of the residual market, as of the date of the applicable balance sheet. For each accident year and each coverage within a line of business our actuaries calculate the ultimate losses incurred. Our total reserves are the difference between the ultimate losses incurred and the cumulative loss and loss adjustment payments made to date. Our IBNR reserves are calculated as the difference between our total reserves and the outstanding case reserves at the end of the accounting period. To determine ultimate losses, our actuaries calculate a range of indications and select a point estimation using such actuarial techniques as:
Previous wording
Such techniques assume that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting our ultimate losses, total reserves, and resulting IBNR reserves. It is possible that the final outcome may fall above or below these amounts as a result of a number of factors, including immature data, sparse data, or significant growth in a line of business. Using these methodologies our actuaries established a range of reasonably possible estimations for net reserves of approximately $443,575 to $502,699 as of March 31, 2024. In general, the low and high values of the ranges represent reasonable minimum and maximum values of the indications based on the techniques described above. Our selected point estimate of net loss and LAE reserves based upon the analysis of our actuaries was $482,292 as of March 31, 2024.
Current wording
Such techniques assume that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting our ultimate losses, total reserves, and resulting IBNR reserves. It is possible that the final outcome may fall above or below these amounts as a result of a number of factors, including immature data, sparse data, or significant growth in a line of business. Using these methodologies our actuaries established a range of reasonably possible estimations for net reserves of approximately $461,619 to $515,766 as of June 30, 2024. In general, the low and high values of the ranges represent reasonable minimum and maximum values of the indications based on the techniques described above. Our selected point estimate of net loss and LAE reserves based upon the analysis of our actuaries was $494,890 as of June 30, 2024.
Previous wording
At March 31, 2024, our total IBNR reserves for our private passenger automobile line of business was comprised of ($101,892) related to estimated ultimate decreases in the case reserves, including anticipated recoveries (i.e. salvage and subrogation), and $34,995 related to our estimation for not yet reported losses.
Current wording
At June 30, 2024, our total IBNR reserves for our private passenger automobile line of business was comprised of ($102,276) related to estimated ultimate decreases in the case reserves, including anticipated recoveries (i.e. salvage and subrogation), and $37,644 related to our estimation for not yet reported losses.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
The table below shows the amount of direct written premiums written in each state during the three and six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
As a response to the exposure to catastrophe losses, on July 1, 2023, the FAIR Plan purchased $1,600,000 of catastrophe reinsurance for property losses with retention of $100,000.
Current report — wording carried from elsewhere
Direct Written Premiums. Direct written premiums for the three months ended June 30, 2024 increased by $55,354, or 21.3%, to $315,511 from $260,157 for the comparable 2023 period. Direct written premiums for the six months ended June 30, 2024 increased by $104,841, or 21.9%, to $582,850 from $478,009 for the comparable 2023 period. The increases in direct written premium and net written premium are a result of new business production and rate increases. For the six months ended June 30, 2024, the Company achieved policy count growth across all lines of business, including 11.9%, 4.9% and 10.3% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. Additionally, for the six months ended June 30, 2024, average written premium per policy increased 12.4%, 8.5% and 8.8% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023.
Current report — wording carried from elsewhere
adjustment expenses for the six months ended June 30, 2024 was 61.4% compared to 69.0% for the comparable 2023 period. Total prior year favorable development included in the pre-tax results for the three months ended June 30, 2024 was $19,417 compared to $9,988 for the comparable 2023 period. Total prior year favorable development included in the pre-tax results for the six months ended June 30, 2024 was $30,375 compared to $21,521 for the comparable 2023 period. The increase in prior year favorable development in 2024 is primarily related to the FAIR Plan Development of $9,721.
Current report — wording carried from elsewhere
redemptions, calls and sales, of securities were $136,009 during the six months ended June 30, 2024 compared to $110,615 for the comparable prior year period.
Current report — wording carried from elsewhere
No shares were purchased by the Company during the three and six months ended June 30, 2024. The Company purchased 74,213 shares at a cost of $5,240 during the three and six months ended June 30, 2023. As of June 30, 2024 and December 31, 2023, the Company had purchased 3,215,690 shares of common stock at a cost of $155,240.
Current report — wording carried from elsewhere
development services with us. We have no direct investments in real estate and no holdings of mortgages secured by commercial real estate. Accordingly, we have no material off-balance sheet arrangements.
Current report — wording carried from elsewhere
The following sensitivity table presents information of the effect each 1 percentage-point change in our assumptions on our share of reserves for CAR and other residual markets could have on our assumed loss and LAE
Current report — wording carried from elsewhere
For further information, see “Results of Operations*.”*
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
income per diluted share, respectively. A reconciliation of the GAAP financial measures to these non-GAAP measures is included in the financial highlights below.
Previous report — wording carried elsewhere
Direct Written Premiums. Direct written premiums for the three months ended March 31, 2024 increased by $49,487, or 22.7%, to $267,339 from $217,852 for the comparable 2023 period. The increase in direct written premium is the result of new business production and rate increases.
Previous report — wording carried elsewhere
Under the program, Safety may repurchase shares of its common stock for cash in public or private transactions, in the open market or otherwise, at management’s discretion. The timing of such repurchases and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable regulatory and corporate requirements. The program does not require Safety to repurchase any specific number of shares and may be modified, suspended or terminated at any time without prior notices.
Previous report — wording carried elsewhere
Management determines our loss and LAE reserves estimate based upon the analysis of our actuaries. A reasonable estimate is derived by selecting a point estimate within a range of indications as calculated by our actuaries using generally accepted actuarial techniques. The key assumption in most actuarial analysis is that past patterns of frequency and severity will repeat in the future unless a significant change in the factors described above takes place.