8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

November 5, 2007

Date of Report (Date of earliest event reported)

SAFETY INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-50070	13-4181699
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

20 Custom House Street, Boston, Massachusetts 02110

(Address of principal executive offices including zip code)

(617) 951-0600

(Registrant’s telephone number, including area code)

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

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

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

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

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

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

(a) In a press release dated November 5, 2007, Safety Insurance Group, Inc. (the “Registrant”) announced its third quarter 2007 results. The registrant’s press release dated November 5, 2007 is furnished herewith as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

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

Exhibit Number	Description
99.1	Text of press release issued by the Registrant dated November 5, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			Safety Insurance Group, Inc.
			(Registrant)
Date:	November 5, 2007.
		By:	/s/ WILLIAM J. BEGLEY, JR.
			William J. Begley, Jr.
			V.P., Chief Financial Officer and Secretary

2

EX-99.1

Exhibit 99.1

	Contact:	Office of Investor Relations
	e-Mail:	InvestorRelations@SafetyInsurance.com
	Telephone:	877-951-2522

SAFETY ANNOUNCES THIRD QUARTER 2007 RESULTS AND DECLARES FOURTH QUARTER 2007 DIVIDEND

Boston, Massachusetts, November 5, 2007. Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported third quarter 2007 results. Net income for the quarter ended September 30, 2007 was $22.9 million, or $1.42 per diluted share, compared to $29.1 million, or $1.81 per diluted share, for the comparable 2006 period. Net income for the nine months ended September 30, 2007 was $70.5 million, or $4.38 per diluted share, compared to $89.0 million, or $5.57 per diluted share, for the comparable 2006 period. Safety’s book value per share increased to $34.19 at September 30, 2007 compared to $30.84 at December 31, 2006. Safety paid $0.40 per share in dividends to investors during the quarter ended September 30, 2007 compared to $0.25 per share during the comparable 2006 period. Safety paid $0.86 per share in dividends to investors during the year ended December 31, 2006.

Direct written premiums for the quarter ended September 30, 2007 decreased by $4.1 million, or 2.6%, to $152.2 million from $156.3 million for the comparable 2006 period. Direct written premiums for the nine months ended September 30, 2007 decreased by $4.7 million, or 0.9%, to $492.2 million from $496.9 million for the comparable 2006 period. The 2007 decrease occurred primarily in our personal and commercial automobile lines, which experienced decreases in average written premium of 4.7% and 2.6%, respectively. Partially offsetting these decreases was an increase in average written premium in our homeowners line of 6.3%.

Net written premiums for the quarter ended September 30, 2007 decreased by $7.1 million, or 4.5%, to $148.7 million from $155.8 million for the comparable 2006 period. Net written premiums for the nine months ended September 30, 2007 decreased by $12.1 million, or 2.5%, to $479.3 million from $491.4 million for the comparable 2006 period. These decreases were due to the factors that decreased direct written premiums combined with decreases in premiums assumed from Commonwealth Automobile Reinsurers (“CAR”), and partially offset by decreases in premiums ceded to CAR. Net earned premiums for the quarter ended September 30, 2007 decreased by $4.1 million, or 2.6%, to $152.6 million from $156.7 million for the comparable 2006 period. Net earned premiums for the nine months ended September 30, 2007 decreased by $10.7 million, or 2.3%, to $460.1 million from $470.8 million for the comparable 2006 period. These decreases were primarily as a result of decreases in premiums assumed from CAR. The effect of assumed and ceded premiums on net written and net earned premiums is presented in the attached tables.

Net investment income for the quarter ended September 30, 2007 was $11.0 million compared to $10.3 million for the comparable 2006 period. Net investment income for the nine months ended September 30, 2007 was $32.8 million compared to $29.6 million for the comparable 2006 period. Average cash and investment securities (at cost) increased by $85.0 million, or 9.4%, to $990.8 million for the quarter ended September 30, 2007 from $905.8 million for the comparable 2006 period. Net effective annualized yield on the investment portfolio was 4.4% during the nine months ended September 30, 2007, the same as during the comparable 2006 period. Our duration decreased to 4.4 years at September 30, 2007 from 4.6 years at December 31, 2006.

As of September 30, 2007, our portfolio of fixed maturity investments was comprised entirely of investment grade securities. We hold no subprime mortgage debt securities. All of our mortgage-backed securities are either U.S. Government or Agency guaranteed or are rated Aaa/AAA. We expect the recent subprime mortgage market deterioration to have little or no effect on our portfolio.

Loss, expense and combined ratios calculated under U.S. generally accepted accounting principles (“GAAP”) for the quarter ended September 30, 2007 were 60.8%, 27.9% and 88.7% compared to 56.7%, 25.1% and 81.8% for the

comparable 2006 period. Loss, expense and combined ratios calculated under GAAP for the nine months ended September 30, 2007 were 60.4%, 27.5% and 87.9% compared to 55.1%, 25.8% and 80.9% for the comparable 2006 period. The loss ratio increased primarily as a result of decreases in favorable loss development in our personal and commercial automobile lines. Total prior year favorable development included in the pre-tax results for the quarter and nine months ended September 30, 2007 was $4.6 million and $19.3 million, respectively, compared to prior year favorable development of $10.1 million and $35.5 million, respectively, for the comparable 2006 periods.

The Board of Directors today approved and declared a quarterly cash dividend of $0.40 per share on the issued and outstanding common stock, payable on December 14, 2007 to shareholders of record at the close of business on December 3, 2007.

About Safety:  Safety Insurance Group, Inc. is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company which are Boston, MA, based writers of property and casualty insurance. Safety is a leading writer of personal automobile insurance in Massachusetts.

Additional Information:  Press releases, announcements, U. S. Securities and Exchange Commission (“SEC”) Filings and investor information are available under “About Safety”, “Investor Information” on our Company website located at www.SafetyInsurance.com. Safety filed its December 31, 2006 Form 10-K with the SEC on March 1, 2007 and urges shareholders to refer to those documents for more complete information concerning Safety’s financial results.

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

This press release contains, and Safety may from time to time make, written or oral “forward-looking statements” within the meaning of the U.S. federal securities laws.

Forward-looking statements might include one or more of the following, among others:

•Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items;

•Descriptions of plans or objectives of management for future operations, products or services;

•Forecasts of future economic performance, liquidity, need for funding and income; and

•Descriptions of assumptions underlying or relating to any of the foregoing.

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

Forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. There are a number of factors, many of which are beyond our control, that could cause actual future conditions, events, results or trends to differ significantly and/or materially from historical results or those projected in the forward-looking statements. These factors include but are not limited to the competitive nature of our industry and the possible adverse effects of such competition. Although a number of national insurers that are much larger than we are do not currently compete in a material way in the Massachusetts private passenger automobile market, if one or more of these companies decided to aggressively enter the market it could have a material adverse effect on us. Other significant factors include conditions for business operations and restrictive regulations in Massachusetts, the possibility of losses due to claims resulting from severe weather, the possibility that the Commissioner may approve future Rule changes that change the operation of the residual market, our possible need for and availability of additional financing, and our dependence on strategic relationships, among others, and other risks and factors identified from time to time in our reports filed with the SEC, such as those set forth under the caption “Risk Factors” in our Form 10-K for the year ended December 31, 2006 filed with the SEC on March 1, 2007.

Some other factors, such as market, operational, liquidity, interest rate, equity and other risks, are described elsewhere in our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K. Factors relating to the regulation and supervision of our Company are also described or incorporated in our Quarterly Reports on Form 10-Q and our Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2007. There are other factors besides those described or incorporated in this release or in the reports on Form 10-Q and Form 10-K that could cause actual conditions, events or results to differ from those in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands, except share data)

	September 30,			December 31,
	2007			2006
Assets
Investment securities available for sale:
Fixed maturities, at fair value (amortized cost: $981,449 and $936,534)	$	980,043		$	936,280
Equity securities, at fair value (cost: $6,649 and $4,038)	6,938			4,325
Total investment securities	986,981			940,605
Cash and cash equivalents	33,892			26,283
Accounts receivable, net of allowance for doubtful accounts	172,843			158,190
Accrued investment income	10,709			9,776
Taxes recoverable	—			1,781
Receivable from reinsurers related to paid loss and loss adjustment expenses	25,395			13,282
Receivable from reinsurers related to unpaid loss and loss adjustment expenses	81,429			78,464
Ceded unearned premiums	31,202			33,042
Deferred policy acquisition costs	52,742			47,404
Deferred income taxes	17,170			16,868
Equity and deposits in pools	34,765			26,166
Other assets	9,725			3,887
Total assets	$	1,456,853		$	1,355,748
Liabilities
Loss and loss adjustment expense reserves	$	468,058		$	449,444
Unearned premium reserves	350,688			333,404
Accounts payable and accrued liabilities	33,341			48,666
Taxes payable	3,405			—
Outstanding claims drafts	16,666			16,279
Payable to reinsurers	31,308			11,568
Capital lease obligations	—			39
Total liabilities	903,466			859,400
Shareholders’ equity
Common stock: $0.01 par value; 30,000,000 shares authorized; 16,233,163 and 16,096,004 shares issued	162			161
Additional paid-in capital	133,244			129,785
Accumulated other comprehensive (loss) income, net of taxes	(726		)	21
Retained earnings	422,292			366,381
Treasury stock, at cost; 48,124 shares	(1,585		)	—
Total shareholders’ equity	553,387			496,348
Total liabilities and shareholders’ equity	$	1,456,853		$	1,355,748

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except per share and share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
Net earned premiums	$	152,617	$	156,748	$	460,132	$	470,787
Net investment income	10,984		10,344		32,803		29,556
Net realized gains (losses) on investments	104		—		13		(261		)
Finance and other service income	4,194		3,737		12,182		11,316
Total revenue	167,899		170,829		505,130		511,398
Losses and loss adjustment expenses	92,720		88,829		278,047		259,184
Underwriting, operating and related expenses	42,588		39,422		126,307		121,574
Interest expenses	22		21		63		65
Total expenses	135,330		128,272		404,417		380,823
Income before income taxes	32,569		42,557		100,713		130,575
Income tax expense	9,647		13,452		30,226		41,529
Net income	$	22,922	$	29,105	$	70,487	$	89,046
Earnings per weighted average common share:
Basic	$	1.43	$	1.83	$	4.40	$	5.63
Diluted	$	1.42	$	1.81	$	4.38	$	5.57
Cash dividends paid per common share	$	0.40	$	0.25	$	0.90	$	0.61
Weighted average number of common shares outstanding:
Basic	16,030,811		15,887,574		16,025,292		15,809,047
Diluted	16,096,505		16,051,606		16,096,646		15,978,096

Safety Insurance Group, Inc. and Subsidiaries

Additional Premium Information

(Unaudited)

(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Written Premiums
Direct	$	152,196		$	156,325		$	492,238		$	496,853
Assumed	13,429			17,604			43,920			54,053
Ceded	(16,898		)	(18,174		)	(56,904		)	(59,507		)
Net written premiums	$	148,727		$	155,755		$	479,254		$	491,399
Earned Premiums
Direct	$	157,493		$	159,785		$	473,355		$	479,000
Assumed	13,953			17,155			45,520			53,634
Ceded	(18,829		)	(20,192		)	(58,743		)	(61,847		)
Net earned premiums	$	152,617		$	156,748		$	460,132		$	470,787