SAFETY INSURANCE GROUP INC
For the period ended Sep 30, 2024. Filed Nov 8, 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.
Sep 30, 2024 · Filed Nov 8, 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 2024-06-30; filed 2024-08-09.
0001172052-24-000035
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001172052-24-000040
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 138 previous paragraphs and 130 current paragraphs.
86 unchanged; 44 reworded; 0 added; 3 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 39 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.
Removed paragraphs (3)
Previous 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.
Previous 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.
Previous 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.
Reworded paragraphs (44)
Previous wording
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 wording
The table below shows the amount of direct written premiums written in each state during the three and nine months ended September 30, 2024 and 2023.
Previous 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.
Current wording
*Direct and Net Written Premiums.*For the three months ended September 30, 2024 direct written premium growth and net written premium growth were 19.1% and 16.5%, respectively. The increase in premium is driven by new business production and rate increases. For the nine months ended September 30, 2024, the Company achieved policy 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 policy 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.
Previous 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.
Current wording
Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended September 30, 2024 increased by $22,968, or 14.4%, to $182,489 from $159,521 for the comparable 2023 period. Losses and loss adjustment expenses incurred for the nine months ended September 30, 2024 increased by $53,433, or 11.4%, to $523,630 from $470,197 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 September 30, 2024 decreased to 70.6% from 74.4% for the comparable 2023 period. Our losses and loss adjustment expense ratio for the nine months ended September 30, 2024 decreased to 70.6% from 77.3%. The decrease in losses and loss adjustment expenses is due to the moderation of loss severity in Private Passenger Automobile, growth in earned premiums, and favorable prior year development including the FAIR Plan Development. Additionally, the prior year losses and loss adjustment expense ratio for the nine months ended September 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 $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
Current wording
Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, was $16,524 for the three months ended September 30, 2024 and $47,542 for the nine months ended September 30, 2024, respectively. Non-GAAP operating income was $8,673 for the three months ended September 30, 2023 and $7,870 for the nine months ended September 30, 2023, respectively. The increase in non-GAAP operating income for the three and nine months ended September 30, 2024 was primarily the result of favorable prior year loss development including the FAIR Plan Development. Non-GAAP operating income for the nine months ended September 30, 2023 was adversely impacted by a severe winter weather event. Non-GAAP operating income was $1.10 per diluted share for the three months ended September 30, 2024 and $3.21 per diluted share, for the nine months ended September 30, 2024, compared to non-GAAP operating income of $0.59 per diluted share for the three months ended September 30, 2023, and $0.54 per diluted share, for the nine months ended September 30, 2023, respectively.
Previous wording
The maximum number of shares of common stock between both the Amended 2018 Plan and 2002 Incentive Plan with respect to which awards may be granted is 3,200,000. No further grants will be allowed under the 2002 Incentive Plan. At June 30, 2024, there were 366,422 shares available for future grant.
Current wording
The maximum number of shares of common stock between both the Amended 2018 Plan and 2002 Incentive Plan with respect to which awards may be granted is 3,200,000. No further grants will be allowed under the 2002 Incentive Plan. At September 30, 2024, there were 364,912 shares available for future grant.
Previous wording
A summary of share based awards granted under the Incentive Plan during the six months ended June 30, 2024 is as follows:
Current wording
A summary of share based awards granted under the Incentive Plan during the nine months ended September 30, 2024 is as follows:
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.
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. 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.
Previous wording
At June 30, 2024, we had a $146,512 recoverable from CAR, which comprises loss adjustment expense reserves, unearned premiums and reinsurance recoverable.
Current wording
At September 30, 2024, we had a $142,531 recoverable from CAR, which comprises loss adjustment expense reserves, unearned premiums and reinsurance recoverable.
Previous wording
Three and Six Months Ended June 30, 2024 Compared to Three and Six Months Ended June 30, 2023
Current wording
Three and Nine Months Ended September 30, 2024 Compared to Three and Nine Months Ended September 30, 2023
Previous wording
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 wording
Direct Written Premiums. Direct written premiums for the three months ended September 30, 2024 increased by $51,058, or 19.1%, to $318,182 from $267,124 for the comparable 2023 period. Direct written premiums for the nine months ended September 30, 2024 increased by $155,899, or 20.9%, to $901,032 from $745,133 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 nine months ended September 30, 2024, the Company achieved policy 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 policy 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.
Previous 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.
Current wording
Net Written Premiums. Net written premiums for the three months ended September 30, 2024 increased by $41,525, or 16.5%, to $292,612 from $251,087 for the comparable 2023 period. Net written premiums for the nine months ended September 30, 2024 increased by $138,902, or 19.9%, to $837,842 from $698,940 for the comparable 2023 period. The increase was primarily due to the factors that increased direct written premiums.
Previous wording
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 wording
Net Earned Premiums. Net earned premiums for the three months ended September 30, 2024 increased by $44,232, or 20.6%, to $258,657 from $214,425 for the comparable 2023 period. Net earned premiums for the nine months ended September 30, 2024 increased by $133,269, or 21.9%, to $741,654 from $608,385 for the comparable 2023 period.
Previous 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.
Current wording
Net Investment Income. Net investment income for the three months ended September 30, 2024 decreased $1,795, or 12.8%, to $12,210 from $14,005 for the comparable 2023 period. Net investment income for the nine months ended September 30, 2024 decreased by $554, or 1.3%, to $40,941 from $41,495 for the comparable 2023 period. The decrease for the three months ended September 30, 2024 from the comparable 2023 period 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 three months September 30, 2024 compared to 4.0% for the comparable 2023 period. Net effective annualized yield on the investment portfolio was 3.9% for the nine months ended September 30, 2024 and 2023, respectively. 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.
Previous 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.
Current wording
Earnings from Partnership Investments. Earnings from partnership investments were $4,345 for the three months ended September 30, 2024 compared to $2,427 for the comparable 2023 period. Earnings from partnership investments were $8,597 for the nine months ended September 30, 2024 compared to $5,146 for the comparable 2023 period. The nine 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 $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.
Current wording
Net Realized Gains on Investments. Net realized gains on investments was $1,314 for the three months ended September 30, 2024 compared to $270 for the comparable 2023 period. Net realized gains on investments was $4,521 for the nine months ended September 30, 2024 compared to $1,111 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
(3)Our investment portfolio included 887 securities in an unrealized loss position at June 30, 2024.
Current wording
(3)Our investment portfolio includes 785 securities in an unrealized loss position at September 30, 2024.
Previous wording
(4)Other invested assets accounted for under the equity method which approximated fair value.
Current wording
(4)Other invested assets accounted for under the equity method which approximates fair value.
Previous 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.
Current wording
As of September 30, 2024 and December 31, 2023, the Company concluded that $1,545 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 September 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 $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.
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 $1,963 and $1,918 for the three months ended September 30, 2024 and 2023, respectively. Commission income was $5,798 and $5,159 for the nine months ended September 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 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.
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 September 30, 2024 increased by $1,159, or 22.8%, to $6,253 from $5,094 for the comparable 2023 period. Finance and other service income for the nine months ended September 30, 2024, increased by $3,278, or 23.5%, to $17,244 from $13,966 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
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 wording
Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended September 30, 2024 increased by $22,968, or 14.4%, to $182,489 from $159,521 for the comparable 2023 period. Losses and loss adjustment expenses incurred for the nine months ended September 30, 2024 increased by $53,433, or 11.4%, to $523,630 from $470,197 for the comparable 2023 period.
Previous wording
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 wording
Our GAAP loss ratio for the three months ended September 30, 2024 decreased to 70.6% from 74.4% for the comparable 2023 period. Our GAAP loss ratio for the nine months ended September 30, 2024 decreased to 70.6% from 77.3% for the comparable 2023 period. Our GAAP loss ratio excluding loss adjustment expenses for the three months ended September 30, 2024 was 62.7% compared to 65.7% for the comparable 2023 period. Our GAAP loss ratio excluding loss adjustment expenses for the nine months ended September 30, 2024 was 61.8% compared to 67.8% for the comparable 2023 period. Total prior year favorable development included in the pre-tax results for the three months ended September 30, 2024 was $8,563 compared to $13,476 for the comparable 2023 period. Total prior year favorable development included in the pre-tax results for the nine months ended September 30, 2024 was $38,938 compared to $34,997 for the comparable 2023 period. The increase in prior year favorable development in 2024 is primarily related to the FAIR Plan Development.
Previous 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.
Current wording
Underwriting, Operating and Related Expenses. Underwriting, operating and related expenses for the three months ended September 30, 2024 increased by $12,651, or 19.4%, to $77,868 from $65,217 for the comparable 2023 period. Underwriting, operating and related expenses for the nine months ended September 30, 2024 increased by $36,224, or 19.3%, to $224,056 from $187,832 for the comparable 2023 period. The increase in the three months and nine months ended September 30, 2024 is driven by an increase in base commissions resulting from the increase in written premiums. Our GAAP expense ratio for the three months ended September 30, 2024 decreased to 30.1% from 30.4% for the comparable 2023 period. Our GAAP expense ratio for the nine months ended September 30, 2024 decreased to 30.2% from 30.9% for the comparable 2023 period.
Previous 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.
Current wording
Interest Expense. Interest expense was $124 and $139 for the three months ended September 30, 2024 and 2023, respectively. Interest expense was $385 for the nine months ended September 30, 2024 compared to $697 for the comparable 2023 period. The credit facility commitment fee included in interest expense was $45 and $37 for the nine months ended September 30, 2024 and 2023, respectively.
Previous 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.
Current wording
Income Tax Expense. Our effective tax rate was 21.3% for the three months ended September 30, 2024 and 2023. The effective tax rate was 21.5% and 23.4% for the nine months ended September 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
*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 wording
*Net Income.*Net income for the three months ended September 30, 2024 was $25,889 compared to net income of $1,949 for the comparable 2023 period. Net income for the nine months ended September 30, 2024 was $62,603 compared to $6,613 for the comparable 2023 period.
Previous 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.
Current wording
Non-GAAP Operating Income. Non-GAAP operating income, as defined above, was $16,524 for the three months ended September 30, 2024 compared to $8,673 for the comparable 2023 period. Non-GAAP operating income was $47,542 for the nine months ended September 30, 2024 compared to $7,870 for the comparable 2023 period.
Previous 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.
Current wording
Net cash provided by operating activities was $78,269 and $17,063 during the nine 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 $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,
Current wording
Net cash used for investing activities was $13,730 and net cash provided by invested activities was $38,883 during the nine months ended September 30, 2024 and 2023, respectively. Fixed maturities, equity securities, short-term investments and other invested assets purchased were $237,338 for the nine months ended September 30, 2024 compared to $108,003 for the comparable prior year period. Proceeds from maturities, redemptions, calls and sales, of securities were $229,884 during the nine months ended September 30, 2024 compared to $148,288 for the comparable prior year period.
Previous 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.
Current wording
Net cash used for financing activities was $40,093 and $50,352 during the nine months ended September 30, 2024 and 2023, respectively. Net cash used for financing activities during the nine months ended September 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 six months ended June 30, 2024, Safety Insurance paid dividends to Safety of $26,044.
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 nine months ended September 30, 2024, Safety Insurance paid dividends to Safety of $38,828.
Previous wording
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 wording
No shares were purchased by the Company during the three and nine months ended September 30, 2024. The Company purchased 74,213 shares at a cost of $5,240 during the three and nine months ended September 30, 2023. As of September 30, 2024 and December 31, 2023, the Company had purchased 3,215,690 shares of common stock at a cost of $155,240.
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
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 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.
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 $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.
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 $474,609 to $540,008 as of September 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 $512,579 as of September 30, 2024.
Previous 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.
Current wording
At September 30, 2024, our total IBNR reserves for our private passenger automobile line of business was comprised of ($101,341) related to estimated ultimate decreases in the case reserves, including anticipated recoveries (i.e. salvage and subrogation), and $38,723 related to our estimation for not yet reported losses.
Previous wording
Our IBNR reserves consist of our estimate of the total loss reserves required less our case reserves. The IBNR reserves for CAR assumed commercial automobile business are 41.2% of our total reserves for CAR assumed commercial automobile business as of June 30, 2024, due to the reporting delays in the information we receive from CAR, as described further in the section onResidual Market Loss and Loss Adjustment Expense Reserves.
Current wording
Our IBNR reserves consist of our estimate of the total loss reserves required less our case reserves. The IBNR reserves for CAR assumed commercial automobile business are 38.6% of our total reserves for CAR assumed commercial automobile business as of September 30, 2024, due to the reporting delays in the information we receive from CAR, as described further in the section onResidual Market Loss and Loss Adjustment Expense Reserves.
Previous wording
We are a participant in CAR, the FAIR Plan and other various residual markets and assume a portion of losses and LAE on business ceded by the industry participants to the residual markets. We estimate reserves for assumed losses and LAE that have not yet been reported to us by the residual markets. Our estimations are based upon the same factors we use for our own reserves, plus additional factors due to the nature of and the information we receive.
Current wording
We are a participant in CAR and other various residual markets and assume a portion of losses and LAE on business ceded by the industry participants to the residual markets. We were a participant in FAIR Plan until the recent FAIR Plan Restructuring. We estimate reserves for assumed losses and LAE that have not yet been reported to us by the residual markets. Our estimations are based upon the same factors we use for our own reserves, plus additional factors due to the nature of and the information we receive.
Previous wording
Establishment of appropriate reserves is an inherently uncertain process. There can be no certainty that currently established reserves based on our key assumptions regarding frequency and severity in our lines of business, or our assumptions regarding our share of the CAR loss will prove adequate in light of subsequent actual experience. To the extent that reserves are inadequate and are strengthened, the amount of such increase is treated as a charge to earnings in the period that the deficiency is recognized. To the extent that reserves are redundant and are released, the amount of the release is a credit to earnings in the period the redundancy is recognized. For the six months ended June 30, 2024, a 1 percentage-point change in the loss and LAE ratio would result in a change in reserves of $4,830. Each 1 percentage-point change in the loss and loss expense ratio would have had a $3,816 effect on net income, or $0.26 per diluted share.
Current wording
Establishment of appropriate reserves is an inherently uncertain process. There can be no certainty that currently established reserves based on our key assumptions regarding frequency and severity in our lines of business, or our assumptions regarding our share of the CAR loss will prove adequate in light of subsequent actual experience. To the extent that reserves are inadequate and are strengthened, the amount of such increase is treated as a charge to earnings in the period that the deficiency is recognized. To the extent that reserves are redundant and are released, the amount of the release is a credit to earnings in the period the redundancy is recognized. For the nine months ended September 30, 2024, a 1 percentage-point change in the loss and LAE ratio would result in a change in reserves of $7,417. Each 1 percentage-point change in the loss and loss expense ratio would have had a $5,859 effect on net income, or $0.40 per diluted share.
Previous wording
Our assumptions consider that past experience, adjusted for the effects of current developments and anticipated trends, are an appropriate basis for establishing our reserves. Our individual key assumptions could each have a reasonable possible range of plus or minus 5 percentage-points for each estimation, although there is no guarantee that our assumptions will not have more than a 5 percentage point variation. The following sensitivity tables present information for each of our primary lines of business on the effect each 1 percentage-point change in each of our key assumptions on unpaid frequency and severity could have on our retained (i.e., direct minus ceded) loss and LAE reserves and net income for the six months ended June 30, 2024. In evaluating the information in the table, it should be noted that a 1 percentage-point change in a single assumption would change estimated reserves by 1 percentage-point.
Current wording
Our assumptions consider that past experience, adjusted for the effects of current developments and anticipated trends, are an appropriate basis for establishing our reserves. Our individual key assumptions could each have a reasonable possible range of plus or minus 5 percentage-points for each estimation, although there is no guarantee that our assumptions will not have more than a 5 percentage point variation. The following sensitivity tables present information for each of our primary lines of business on the effect each 1 percentage-point change in each of our key assumptions on unpaid frequency and severity could have on our retained (i.e., direct minus ceded) loss and LAE reserves and net income for the nine months ended September 30, 2024. In evaluating the information in the table, it should be noted that a 1 percentage-point change in a single assumption would change estimated reserves by 1 percentage-point. A 1 percentage-point change in both our key assumptions would change estimated reserves within a range of plus or minus 2 percentage-points.
Previous wording
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 wording
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 reserves and net income for the nine months ended September 30, 2024.
Showing the first 40 of 44 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (5)
Previous report — wording carried 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.
Previous report — wording carried elsewhere
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 report — wording carried 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.
Previous report — wording carried 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.
Previous report — wording carried elsewhere
A 1 percentage-point change in both our key assumptions would change estimated reserves within a range of plus or minus 2 percentage-points.