EX-99.1 2 c052-20171101ex991aa2761.htm EX-99.1 saft_Ex99-1

 Exhibit 99.1

Safety_logo_468x102_300dpi

 

SAFETY ANNOUNCES THIRD QUARTER 2017 RESULTS AND DECLARES FOURTH QUARTER 2017 DIVIDEND

Boston, Massachusetts, November 1, 2017.  Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported third quarter 2017 results. Net income for the quarter ended September 30, 2017 was $18.0 million, or $1.18 per diluted share, compared to net income of $18.6 million, or $1.23 per diluted share, for the comparable 2016 period. Net income for the nine months ended September 30, 2017 was $51.1 million, or $3.36 per diluted share, compared to net income of $52.6 million, or $3.48 per diluted share, for the comparable 2016 period. Safety’s book value per share increased to $46.18 at September 30, 2017 from $44.27 at December 31, 2016.  Safety paid $0.80 and $0.70 per share in dividends to investors during the quarters ended September 30, 2017 and 2016,  respectively. Safety paid $2.80 per share in dividends to investors during the year ended December 31, 2016.

Direct written premiums for the quarter ended September 30,  2017 increased  by $2.7 million, or 1.3%, to $215.9 million from $213.2 million for the comparable 2016 period. Direct written premiums for the nine months ended September 30, 2017 increased by $12.1 million, or 1.9%, to $642.6 million from $630.5 million for the comparable 2016 period. The 2017 increase occurred in our private passenger automobile, commercial passenger automobile and homeowner lines of business, which experienced increases in average written premium per exposure of  3.5%,  2.6% and 4.1% respectively. 

Net written premiums for the quarter ended September 30, 2017 decreased by $0.1 million, or 0.1%, to $204.5 million from $204.6 million for the comparable 2016 period.  The decrease during the quarter is due to additional commercial automobile premiums ceded to the residual market.  Net written premiums for the nine months ended September 30, 2017 increased by $11.0 million, or 1.8%, to $609.2 million from $598.2 million for the comparable 2016 period. Net earned premiums for the quarter ended September 30, 2017 increased by $4.8 million, or 2.5%, to $195.5 million from $190.7 million for the comparable 2016 period.  Net earned premiums for the nine months ended September 30, 2017 increased by $14.3 million, or 2.5%, to $578.1 million from $563.8 million for the comparable 2016 period. Net earned premiums increased primarily due to increases in our automobile and homeowners business as discussed above.

For the quarter ended September 30,  2017, loss and loss adjustment expenses incurred decreased by $1.2 million, or 0.9%, to $123.8 million from $125.0 million for the comparable 2016 period. For the nine months ended September 30, 2017, loss and loss adjustment expenses incurred increased by $3.2 million, or 0.9%, to $369.3 million from $366.1 million for the comparable 2016 period.  Total prior year favorable development included in the pre-tax results for the quarter ended September 30, 2017 was $10.8 million compared to $11.7 million for the comparable 2016 period. Total prior year favorable development included in the pre-tax results for the nine months ended September 30, 2017 was $31.2 million compared to $33.6 million for the comparable 2016 period.

Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended September 30,  2017 were 63.3%,  32.2%, and 95.5%, respectively, compared to 65.5%,  30.6%, and 96.1%, respectively, for the comparable 2016 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the nine months ended September 30, 2017 were 63.9%,  31.8%, and 95.7%, respectively, compared to 64.9%,  30.5%, and 95.4%, respectively, for the comparable 2016

 

period.  The increase in the expense ratio is attributable to increases in nonrecurring legal fees related to reinsurance arbitration, contingent commissions and restricted stock compensation.

Net investment income for the quarter ended September 30, 2017 increased by $0.5 million, or 6.0%, to $9.5 million from $9.0 million for the comparable 2016 period.  Net investment income for the nine months ended September 30, 2017 increased by $0.1 million, or 0.3%, to $28.3 million from $28.2 million for the comparable 2016 period. The increase is a result of an increase in the average invested asset balance compared to the prior year.    Net effective annualized yield on the investment portfolio for the quarter ended September 30, 2017 was 3.0% compared to 2.9% for the comparable 2016 period. Net effective annualized yield on the investment portfolio for the nine months ended September 30, 2017 was 3.0% compared to 3.1% for the comparable 2016 period. Our duration was 3.8 years at September 30, 2017 and  4.3 years at December 31, 2016.

Today, our Board of Directors approved and declared a quarterly cash dividend of $0.80 per share on the issued and outstanding common stock, payable on December 15, 2017 to shareholders of record at the close of business on December 1, 2017.

About Safety:  Safety Insurance Group, Inc., based in Boston, MA, is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company.  Operating exclusively in Massachusetts, New Hampshire, and Maine, Safety is a leading writer of property and casualty insurance products, including private passenger automobile, commercial automobile, homeowners, dwelling fire, umbrella and business owner policies. 

Additional Information:  Press releases, announcements, U. S. Securities and Exchange Commission (“SEC”) Filings and investor information are available under “About Safety,” “Investor Information” on our Company website located at www.SafetyInsurance.com.  Safety filed its December 31,  2016 Form 10-K with the SEC on February 24,  2017 and urges shareholders to refer to this document for more complete information concerning Safety’s financial results.

Contacts:

Safety Insurance Group, Inc.

Office of Investor Relations

877-951-2522

 

InvestorRelations@SafetyInsurance.com 

 

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

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

Forward-looking statements are not guarantees of future performance.  By their nature, forward-looking statements are subject to risks and uncertainties.  There are a number of factors, many of which are beyond our control, that could cause actual future conditions, events, results or trends to differ significantly and/or materially from historical results or those projected in the forward-looking statements.  These factors include but are not limited to the competitive nature of our industry and the possible adverse effects of such competition.  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 of Insurance 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,  2016 filed with the SEC on February 24,  2017.

We are not under any obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise.  You should carefully consider the possibility that actual results may differ materially from our forward-looking statements.

 

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

 

2017

 

2016

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

Fixed maturities, at fair value (amortized cost: $1,155,466 and $1,142,663)

 

$

1,177,631

 

$

1,154,269

Equity securities, at fair value (cost: $87,580 and $92,326)

 

 

105,987

 

 

105,095

Other invested assets

 

 

27,893

 

 

21,142

Total investments

 

 

1,311,511

 

 

1,280,506

Cash and cash equivalents

 

 

31,934

 

 

20,052

Accounts receivable, net of allowance for doubtful accounts

 

 

205,835

 

 

187,696

Receivable for securities sold

 

 

2,495

 

 

7,098

Accrued investment income

 

 

9,674

 

 

8,858

Taxes recoverable

 

 

3,849

 

 

 —

Receivable from reinsurers related to paid loss and loss adjustment expenses

 

 

42,865

 

 

29,504

Receivable from reinsurers related to unpaid loss and loss adjustment expenses

 

 

92,942

 

 

83,724

Ceded unearned premiums

 

 

30,578

 

 

28,585

Deferred policy acquisition costs

 

 

76,458

 

 

70,996

Deferred income taxes

 

 

 —

 

 

3,083

Equity and deposits in pools

 

 

30,934

 

 

24,675

Other assets

 

 

15,535

 

 

13,469

Total assets

 

$

1,854,610

 

$

1,758,246

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loss and loss adjustment expense reserves

 

$

577,637

 

$

560,321

Unearned premium reserves

 

 

451,119

 

 

418,033

Accounts payable and accrued liabilities

 

 

51,290

 

 

66,805

Payable for securities purchased

 

 

14,860

 

 

5,564

Payable to reinsurers

 

 

29,013

 

 

13,502

Deferred income taxes

 

 

6,412

 

 

 —

Taxes payable

 

 

 —

 

 

1,110

Other liabilities

 

 

21,440

 

 

22,185

Total liabilities

 

 

1,151,771

 

 

1,087,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Common stock:  $0.01 par value; 30,000,000 shares authorized; 17,499,544 and 17,430,189 shares issued

 

 

175

 

 

174

Additional paid-in capital

 

 

188,576

 

 

184,549

Accumulated other comprehensive income, net of taxes

 

 

26,371

 

 

15,843

Retained earnings

 

 

571,552

 

 

553,995

Treasury stock, at cost: 2,279,570 shares

 

 

(83,835)

 

 

(83,835)

Total shareholders’ equity

 

 

702,839

 

 

670,726

Total liabilities and shareholders’ equity

 

$

1,854,610

 

$

1,758,246

 

 

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  September 30, 

    

Nine Months Ended September 30, 

 

    

2017

    

2016

 

2017

    

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

195,524

 

$

190,712

 

$

578,059

 

$

563,759

Net investment income

 

 

9,503

 

 

8,967

 

 

28,313

 

 

28,235

Earnings from partnership investments

 

 

351

 

 

802

 

 

1,233

 

 

3,089

Net realized gains on investments

 

 

2,717

 

 

4,891

 

 

4,826

 

 

4,928

Net impairment losses on investments (a)

 

 

(256)

 

 

 —

 

 

(256)

 

 

(429)

Finance and other service income

 

 

4,690

 

 

4,713

 

 

13,373

 

 

13,282

Total revenue

 

 

212,529

 

 

210,085

 

 

625,548

 

 

612,864

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

123,792

 

 

124,961

 

 

369,271

 

 

366,084

Underwriting, operating and related expenses

 

 

62,994

 

 

58,406

 

 

183,643

 

 

171,876

Interest expense

 

 

22

 

 

22

 

 

67

 

 

67

Total expenses

 

 

186,808

 

 

183,389

 

 

552,981

 

 

538,027

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

25,721

 

 

26,696

 

 

72,567

 

 

74,837

Income tax expense

 

 

7,767

 

 

8,099

 

 

21,489

 

 

22,205

Net income

 

$

17,954

 

$

18,597

 

$

51,078

 

$

52,632

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per weighted average common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.19

 

$

1.24

 

$

3.38

 

$

3.50

Diluted

 

$

1.18

 

$

1.23

 

$

3.36

 

$

3.48

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$

0.80

 

$

0.70

 

$

2.20

 

$

2.10

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

15,021,189

 

 

14,960,516

 

 

15,007,221

 

 

14,941,732

Diluted

 

 

15,161,962

 

 

15,076,635

 

 

15,124,044

 

 

15,018,124

(a)

No portion of the other-than-temporary impairments recognized in the period indicated were included in Other Comprehensive Income

Safety Insurance Group, Inc. and Subsidiaries

Additional Premium Information

(Unaudited)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  September 30, 

 

 

Nine Months Ended September 30, 

 

 

    

2017

    

2016

    

2017

    

2016

 

Written Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$

215,919

 

$

213,197

 

$

642,633

 

$

630,508

 

Assumed

 

 

8,291

 

 

7,120

 

 

25,326

 

 

22,674

 

Ceded

 

 

(19,743)

 

 

(15,723)

 

 

(58,806)

 

 

(55,030)

 

Net written premiums

 

$

204,467

 

$

204,594

 

$

609,153

 

$

598,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$

207,597

 

$

201,818

 

$

610,636

 

$

593,203

 

Assumed

 

 

7,525

 

 

6,901

 

 

24,237

 

 

22,207

 

Ceded

 

 

(19,598)

 

 

(18,007)

 

 

(56,814)

 

 

(51,651)

 

Net earned premiums

 

$

195,524

 

$

190,712

 

$

578,059

 

$

563,759