SAFETY INSURANCE GROUP INC
For the period ended Mar 31, 2025. Filed May 9, 2025.
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.
Mar 31, 2025 · Filed May 9, 2025
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 2024-09-30; filed 2024-11-08.
0001172052-24-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001172052-25-000019
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 130 previous paragraphs and 132 current paragraphs.
62 unchanged; 54 reworded; 7 added; 11 removed; 3 previous and 9 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.
Added paragraphs (7)
Current report
Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended March 31, 2025 increased by $21,891 or 13.0%, to $190,290 from $168,399 for the comparable period. The increase is driven by larger policy counts. Our losses and loss adjustment expenses ratio for the three months ended March 31, 2025 improved to 69.8% from 71.3% for the comparable 2024 period.
Current report
Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, was $18,996 for the three months ended March 31, 2025, compared to $13,746 for the comparable 2024 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, 2025 was $1.28 per diluted share, compared to non-GAAP operating loss of $0.93 per diluted share for the comparable 2024 period.
Current report
The Company previously participated in the Massachusetts Property Insurance Underwriting Association (“FAIR Plan”), in which premiums, expenses, losses and loss adjustment expenses on homeowners business that could not be placed in the voluntary market were shared by all insurers writing homeowners business in Massachusetts. On April 1, 2024, the Division approved a restructuring of the FAIR Plan (“FAIR Plan Restructuring”), transforming it from a partnership that shares profit and losses with member companies to a stand-alone, risk bearing entity, and distributing the accumulated members’ equity.
Current report
Direct Written Premiums. Direct written premiums for the three months ended March 31, 2025 increased by $31,631, or 11.8%, to $298,970 from $267,339 for the comparable 2024 period. The increase in direct written premiums is the result of rate increases, improved retention, and new business production.
Current report
Losses and Loss Adjustment Expenses. Loss and loss adjustment expenses incurred for the three months ended March 31, 2025 increased by $21,891, or 13.0%, to $190,290 from $168,399 for the comparable 2024 period. The increase is driven by larger policy counts.
Current report
Net cash used for financing activities was $13,568 and $13,615 during the three months ended March 31, 2025 and 2024, respectively. On March 27, 2025, the Company borrowed $30,000 under its revolving credit facility with Citizens Bank, bearing interest at SOFR plus 1.25%. Interest is payable monthly and the principal is due upon the maturity of the Credit Agreement. Principal may be repaid at any time without penalty. The proceeds from this borrowing were offset by the repayment of principal on the FHLB-Boston loan of $30,000 which was paid at maturity on March 17, 2025, in addition to dividend payments to shareholders.
Current report
For information regarding Recent Accounting Pronouncements, please refer to Item 1—Financial Statements, Note 2, Recent Accounting Pronouncements, of this Form 10-Q.
Removed paragraphs (11)
Previous report
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 report
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 report
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 report
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 report
deferred compensation plan.
Previous report
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 report
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 report
There are no recent accounting pronouncements that are applicable to the Company.
Previous report
Investment Impairments
Previous 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.
Previous 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.
Reworded paragraphs (54)
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 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.
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 55.8% of our direct written premiums in 2024), we offer a portfolio of other insurance products, including commercial automobile (15.2% of 2024 direct written premiums), homeowners (24.3% of 2024 direct written premiums) and dwelling fire, umbrella and business owner policies (totaling 4.7% of 2024 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 828 in 1,079 locations throughout these three states at December 31, 2024. 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 9.7% and 12.9% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2024, 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 6.3% 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.
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. The table below shows the amount of direct written premiums written in each state during the three months ended March 31, 2025 and 2024.
Previous 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.
Current wording
Direct and Net Written Premiums. For the three months ended March 31, 2025, the Company achieved its tenth consecutive quarter of double-digit growth in direct written premiums. For the three months ended March 31, 2025, direct written premium growth and net written premium growth were 11.8% and 9.8%, respectively. The increase in premium is driven by rate increases, improved retention, and new business production. For the three months ended March 31, 2025, the Company achieved policy count growth across most lines of business, including 1.3%, 2.5% and 5.4% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2024. Additionally, for the three months ended March 31, 2025, average written premium per policy increased 9.5%, 8.4% and 11.0% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2024.
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.
Current wording
The following rate changes have been filed and approved by the insurance regulators of Massachusetts, New Hampshire and Maine in 2025 and 2024. Our Massachusetts private passenger automobile rates include a 13% commission rate for agents.
Previous wording
The property and casualty insurance industry uses the combined ratio as a measure of underwriting profitability. The combined ratio is the sum of the loss ratio (losses and loss adjustment expenses incurred as a percent of net earned premiums) plus the expense ratio (underwriting and other expenses as a percent of net earned premiums, calculated on a Generally Accepted Accounting Principles (“GAAP”) basis). The combined ratio reflects only underwriting results and does not include income from investments or finance and other service income. Underwriting profitability is subject to significant fluctuations due to competition, catastrophic events, weather, economic and social conditions, and other factors.
Current wording
The property and casualty insurance industry uses the combined ratio as a measure of underwriting profitability. The combined ratio is the sum of the loss ratio (losses and loss adjustment expenses incurred as a percent of net earned premiums) plus the expense ratio (underwriting and other expenses as a percent of net earned premiums, calculated on a
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 September 30, 2024, there were 364,912 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 March 31, 2025, there were 236,326 shares available for future grant.
Previous wording
A summary of share based awards granted under the Incentive Plan during the nine months ended September 30, 2024 is as follows:
Current wording
A summary of share based awards granted under the Incentive Plan during the three months ended March 31, 2025 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 reinsurers have an A.M. Best rating of “A+” (Superior) or “A” (Excellent).
Current wording
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).
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 FAIR Plan.
Current wording
We maintain reinsurance coverage to help lessen the effect of losses from catastrophic events, maintaining coverage during 2025 that protects us in the event of a "138-year storm" (that is, a storm of a severity expected to occur once in a 138-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.
Previous wording
For 2024, we have purchased three layers of excess catastrophe reinsurance providing $615,000 of coverage for property losses in excess of $75,000 up to a maximum of $690,000. Our reinsurers’ co-participation is 80.0% of $75,000 for the 1st layer, 80.0% of $250,000 for the 2nd layer and 80.0% of $290,000 for the 3rd layer.
Current wording
For 2025, we have purchased three layers of excess catastrophe reinsurance providing $675,000 of coverage for property losses in excess of $75,000 up to a maximum of $750,000. Our reinsurers’ co-participation is 85.0% of $75,000 for the 1st layer, 85.0% of 250,000 for the 2nd layer and 85.0% of $350,000 for the 3rd layer.
Previous wording
We also have casualty excess of loss reinsurance for large casualty losses occurring in our automobile, homeowners, dwelling fire, and business owner lines of business in excess of $2,000 up to a maximum of $10,000. We have property excess of loss reinsurance coverage for large property losses, with coverage in excess of $2,500 up to a maximum of $25,000, for our homeowners, and business owners. In addition, we have liability excess of loss reinsurance for umbrella large losses in excess of $1,000 up to a maximum of $10,000. We also have various reinsurance agreements with Hartford Steam Boiler Inspection and Insurance Company, of which the primary contract is a quota share agreement under which we cede 100% of the premiums and losses for the equipment breakdown coverage under our business owner policies and commercial package policies.
Current wording
We also have casualty excess of loss reinsurance for large casualty losses occurring in our automobile, homeowners, dwelling fire, and business owner lines of business in excess of $2,000 up to a maximum of $10,000. We have property excess of loss reinsurance coverage for large property losses, with coverage in excess of $3,000 up to a maximum of $25,000, for our homeowners, and business owners. In addition, we have liability excess of loss reinsurance for umbrella large losses in excess of $1,000 up to a maximum of $10,000. We also have various reinsurance agreements with Hartford Steam Boiler Inspection and Insurance Company, of which the primary contract is a quota share agreement under which we cede 100% of the premiums and losses for the equipment breakdown coverage under our business owner policies.
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.
Previous wording
At September 30, 2024, we had a $142,531 recoverable from CAR, which comprises loss adjustment expense reserves, unearned premiums and reinsurance recoverable.
Current wording
At March 31, 2025, we had $167,649 recoverable from CAR comprised of 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 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.
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 (loss) and earnings (loss) per diluted share are the GAAP financial measures that are most directly comparable to non-GAAP operating income (loss) and non-GAAP operating income (loss) 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 and Nine Months Ended September 30, 2024 Compared to Three and Nine Months Ended September 30, 2023
Current wording
Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024
Previous 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.
Current wording
Net Written Premiums. Net written premiums for the three months ended March 31, 2025 increased by $24,485, or 9.8%, to $274,780 from $250,295 for the comparable 2024 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 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.
Current wording
Net Investment Income. Net investment income for the three months ended March 31, 2025 decreased by $657, or 4.3%, to $14,574 from $15,231 for the comparable 2024 period. The decrease is primarily driven by lower earned interest from our higher yield bonds and variable-rate secured and senior bank loans. Net effective annualized yield on the investment portfolio was 3.9% for the three months ended March 31, 2025 compared to 4.3% for the three months ended March 31, 2024. The investment portfolio’s duration was 3.6 years at March 31, 2025 compared to 3.5 years at December 31, 2024.
Previous 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.
Current wording
Earnings from Partnership Investments. Earnings from partnership investments was $2,112 for the three months ended March 31, 2025 compared to $1,772 for the comparable 2024 period. The three-month earnings reflect an increase in investment appreciation and distribution of investment returns 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 $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.
Current wording
Net Realized Gains on Investments. Net realized gains on investments was $4,263 for the three months ended March 31, 2025 compared to $492 for the comparable 2024 period. The increase is driven by higher realized gains from the sale of equity securities compared to prior years.
Previous wording
The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, short term investments, equity securities, including interests in mutual funds, and other invested assets were as follows for the periods indicated:
Current wording
The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, equity securities, including interests in mutual funds, and other invested assets were as follows for the periods indicated:
Previous 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).
Current 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).
Previous wording
(2)Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive
Current 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.
Previous wording
(3)Our investment portfolio includes 785 securities in an unrealized loss position at September 30, 2024.
Current wording
(3)Our investment portfolio included 938 securities in an unrealized loss position at March 31, 2025.
Previous wording
(4)Other invested assets accounted for under the equity method which approximates fair value.
Current wording
(4)Other invested assets are generally accounted for under the equity method which approximated fair value.
Previous 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.
Current wording
As of March 31, 2025 and December 31, 2024, the Company concluded that $1,519 and $1,198, 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, 2025 and December 31, 2024 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.
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 $1,963 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.
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 $2,095 and $1,808 for the three months ended March 31, 2025 and 2024, 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 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.
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 March 31, 2025 increased by $933, or 17.4%, to $6,287 from $5,354 for the comparable 2024 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 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.
Current wording
Our GAAP loss ratio for the three months ended March 31, 2025 decreased to 69.8% from 71.3% for the comparable 2024 period. Our GAAP loss ratio excluding loss adjustment expenses for the three months ended March 31, 2025 was 61.4% compared to 62.2% for the comparable 2024 period. Total prior year favorable development included in the pre-tax results for the three months ended March 31, 2025 was $12,238 compared to $10,958 for the comparable 2024 period.
Previous 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.
Current wording
Underwriting, Operating and Related Expenses. Underwriting, operating and related expenses for the three months ended March 31, 2025 increased by $8,584, or 11.9%, to $80,851 from $72,267 for the comparable 2024 period. The increase is due to an increase in base commissions resulting from the increase in written premiums. Our GAAP expense ratio for the three months ended March 31, 2025 decreased to 29.6% from 30.6% for the comparable 2024 period.
Previous 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.
Current wording
Interest Expense. Interest expense was $104 and $123 for the three months ended March 31, 2025 and 2024. The credit facility commitment fee included in interest expense was $15 for the three months ended March 31, 2025 and 2024.
Previous 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.
Current wording
Income Tax Expense. Our effective tax rate was 22.4% and 21.6% for the quarters ended March 31, 2025 and 2024, respectively. The effective tax rate for the quarter ended March 31, 2025 and 2024 were higher than the statutory rate primarily due to the effects of executive compensation expense.
Previous 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.
Current wording
Net Income. Net income for the three months ended March 31, 2025 was $21,896 compared to net income of $20,078 for the comparable 2024 period.
Previous 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.
Current wording
Non-GAAP Operating Income. Non-GAAP operating income as defined above was $18,996 for the three months ended March 31, 2025 compared to $13,746 for the comparable 2024 period. The increase in Non-GAAP operating income was primarily the result of an increase in net earned premiums compared to the prior year.
Previous 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.
Current wording
Net cash provided by operating activities was $3,173 during the three months ended March 31, 2025 compared to net cash used for operating activities of $21,135 during the three months ended March 31, 2024. 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. Net cash used for operating activities during the three months ended March 31, 2024 was the result of the timing of expense payments and changes in other liabilities which is driven by the reclassification of cash to offset outstanding claims checks. Positive operating cash flows are expected in the future to meet our liquidity requirements.
Previous 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.
Current wording
Net cash provided by investing activities was $16,129 and $27,399 during the three months ended March 31, 2025 and 2024, respectively. Fixed maturities, equity securities, and other invested assets purchased were $59,383 for the three months ended March 31, 2025 compared to $50,199 for the comparable prior year period. Proceeds from maturities, redemptions, calls and sales, of securities were $75,844 during the three months ended March 31, 2025 compared to $81,665 for the comparable prior year period.
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 nine months ended September 30, 2024, Safety Insurance paid dividends to Safety of $38,828.
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, 2024, the statutory surplus of Safety Insurance was $758,789, and its statutory net income for 2024 was $43,387. As a result, a maximum of $75,879 is available in 2025
Previous wording
On November 5, 2024, our Board approved and declared a quarterly cash dividend of $0.90 per share which will be paid on December 13, 2024 to shareholders of record on December 2, 2024. We plan to continue to declare and pay quarterly cash dividends, depending on our financial position and the regularity of our cash flows.
Current wording
On May 7, 2025, our Board of Directors approved and declared a quarterly cash dividend of $0.90 per share which will be paid on June 13, 2025 to shareholders of record on June 2, 2025. We plan to continue to declare and pay quarterly cash dividends in 2025, 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 September 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.
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 March 31, 2025, 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, 2025. As of March 31, 2025 and December 31, 2024, the Company had purchased 3,215,690 shares of common stock at a cost of $155,240.
Previous wording
The NAIC has adopted a formula and model law to implement risk-based capital requirements for most property and casualty insurance companies, which are designed to determine minimum capital requirements and to raise the level of protection that statutory surplus provides for policyholder obligations. Under Massachusetts law, insurers having less total adjusted capital than that required by the risk-based capital calculation will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. The risk-based capital law provides for four levels of regulatory action. The extent of regulatory intervention and action increases as the level of total adjusted capital to risk-based capital falls. As of December 31, 2023, the Insurance Subsidiaries had total capital of $744,904, which is in excess of amounts requiring company or regulatory action at any prescribed risk-based capital action level. Minimum statutory capital and surplus, or company action level risk-based capital, was $231,882 at December 31, 2023.
Current wording
The NAIC has adopted a formula and model law to implement risk-based capital requirements for most property and casualty insurance companies, which are designed to determine minimum capital requirements and to raise the level of protection that statutory surplus provides for policyholder obligations. Under Massachusetts law, insurers having less total adjusted capital than that required by the risk-based capital calculation will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. The risk-based capital law provides for four levels of regulatory action. The extent of regulatory intervention and action increases as the level of total adjusted
Previous 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:
Current 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:
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Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
Generally Accepted Accounting Principles (“GAAP”) basis). The combined ratio reflects only underwriting results and does not include income from investments or finance and other service income. Underwriting profitability is subject to significant fluctuations due to competition, catastrophic events, weather, economic and social conditions, and other factors.
Current report — wording carried from elsewhere
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
Current report — wording carried from elsewhere
Net Earned Premiums. Net earned premiums for the three months ended March 31, 2025 increased by $36,637, or 15.5%, to $272,690 from $236,053 for the comparable 2024 period. The increase was primarily due to the factors that increased direct written premiums.
Current report — wording carried from elsewhere
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 $682,910 at December 31, 2024. During the three months ended March 31, 2025, Safety Insurance paid dividends to Safety of $12,875.
Current report — wording carried from 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.
Current report — wording carried from elsewhere
capital to risk-based capital falls. As of December 31, 2024, the Insurance Subsidiaries had total capital of $758,789, which is in excess of amounts requiring company or regulatory action at any prescribed risk-based capital action level. Minimum statutory capital and surplus, or company action level risk-based capital, was $236,219 at December 31, 2024.
Current report — wording carried from 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
Current report — wording carried from elsewhere
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.
Current report — wording carried from 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.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
For further information, see “Results of Operations*.”*