0001172052-18-000004.txt : 20180226 0001172052-18-000004.hdr.sgml : 20180226 20180226161619 ACCESSION NUMBER: 0001172052-18-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20180226 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180226 DATE AS OF CHANGE: 20180226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAFETY INSURANCE GROUP INC CENTRAL INDEX KEY: 0001172052 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 134181699 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50070 FILM NUMBER: 18640703 BUSINESS ADDRESS: STREET 1: 20 CUSTOM HOUSE STREET CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 617-951-0600 MAIL ADDRESS: STREET 1: 20 CUSTOM HOUSE STREET CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: SAFETY HOLDINGS INC DATE OF NAME CHANGE: 20020424 8-K 1 c052-20180226x8k.htm 8-K saft_Current folio_8K

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

 

February 26, 2018

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

(IRS 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)

 

Not Applicable

(Former name or former address, if changed since last report)

 

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:

 

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


 

Item 2.02 Results of Operations and Financial Condition.

 

In a press release dated February 26, 2018, Safety Insurance Group, Inc. (the “Registrant”) announced its fourth quarter 2017 results.  The Registrant’s press release dated February 26, 2018 is furnished herewith as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

 

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

 

 

 


 

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.

 

 

 

 

Date: February 26, 2018

Safety Insurance Group, Inc.  (Registrant)

 

 

 

 

 

By:

/s/ WILLIAM J. BEGLEY, JR

 

 

William J. Begley, Jr.

 

 

V.P., Chief Financial Officer and Secretary

 

 


EX-99.1 2 c052-20180226ex99148193e.htm EX-99.1 saft_Ex99-1

 Exhibit 99.1

Safety_logo_468x102_300dpi

 

SAFETY ANNOUNCES FOURTH QUARTER AND YEAR END 2017 RESULTS

Boston, Massachusetts, February 26, 2018.  Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported fourth quarter 2017 results. Net income for the quarter ended December 31, 2017 was $11.3 million, or $0.72 per diluted share, compared to net income of $12.0 million, or $0.79 per diluted share, for the comparable 2016 period. Net income for the year ended December 31, 2017 was $62.4 million, or $4.10 per diluted share, compared to net income of $64.6 million, or $4.27 per diluted share, for the comparable 2016 period. Safety’s book value per share increased to $46.06 at December 31, 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 December 31, 2017 and 2016,  respectively. Safety paid $3.00 per share in dividends to investors during the year ended December 31, 2017 compared to $2.80 per share during the comparable 2016 period.

Direct written premiums for the quarter ended December 31,  2017 increased  by $3.6 million, or 2.0%, to $184.7 million from $181.1 million for the comparable 2016 period. Direct written premiums for the year ended December 31, 2017 increased by $15.7 million, or 1.9%, to $827.3 million from $811.6 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  3.3%,  2.3% and 4.0% respectively. 

Net written premiums for the quarter ended December 31, 2017 increased by $3.6 million, or 2.1%, to $171.9 million from $168.3 million for the comparable 2016 period. Net written premiums for the year ended December 31, 2017 increased by $14.6 million, or 1.9%, to $781.1 million from $766.5 million for the comparable 2016 period. Net earned premiums for the quarter ended December 31, 2017 increased by $4.4 million, or 2.3%, to $196.4 million from $192.0 million for the comparable 2016 period.  Net earned premiums for the year ended December 31, 2017 increased by $18.6 million, or 2.5%, to $774.4 million from $755.8 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 December 31,  2017, loss and loss adjustment expenses incurred increased by $7.3 million, or  5.7%, to $134.6 million from $127.3 million for the comparable 2016 period.  The increase in losses during the quarter is a result of reinsurance arbitration resulting from the 2015 winter snow event.  On January 8, 2018 the Company received a final order from the panel of arbitrators in which the reinsurer would pay the Company $9.2 million for settlement of all paid and outstanding losses.  The amount of recoverable in dispute as of December 31, 2017, which was based on our total incurred loss, was $20.9 million.  As a result of the order, the remaining $11.7 million of recoverable was written off at December 31, 2017.  For the year ended December 31, 2017, loss and loss adjustment expenses incurred increased by $10.5 million, or 2.1%, to $503.9 million from $493.4 million for the comparable 2016 period.  

Total prior year favorable development, inclusive of the reinsurance recoverable loss, included in the pre-tax results for the quarter ended December 31, 2017 was $10.6 million compared to $11.8 million for the comparable 2016 period. Total prior year favorable development included in the pre-tax results for the year ended December 31, 2017 was $41.8 million compared to $45.4 million for the comparable 2016 period.

Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended December 31,  2017 were 68.6%,  33.0%, and 101.6%, respectively, compared to 66.3%,  31.8%, and 98.1%, respectively, for the comparable 2016 period. Loss, expense, and combined ratios calculated under


 

U.S. generally accepted accounting principles for the year ended December 31, 2017 were 65.1%,  32.1%, and 97.2%, respectively, compared to 65.3%,  30.8%, and 96.1%, respectively, for the comparable 2016 period.  The increase in the expense ratio is primarily attributable to increases in contingent commissions and nonrecurring legal fees related to reinsurance arbitration.

Net investment income for the quarter ended December 31, 2017 increased by $0.2 million, or 2.6%, to $10.4 million from $10.2 million for the comparable 2016 period.  Net investment income for the year ended December 31, 2017 increased by $0.4 million, or 0.9%, to $38.8 million from $38.4 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 was 3.2% for the quarters ended December 31, 2017 and December 31, 2016. Net effective annualized yield on the investment portfolio was 3.1% for the years ended December 31, 2017 and December 31, 2016. Our duration was 3.7 years at December 31, 2017 and  4.3 years at December 31, 2016, respectively.

On February 15, 2018, The Board of Directors approved a $0.80 per share quarterly cash dividend on its issued and outstanding common stock payable on March 15, 2018 to shareholders of record at the close of business on March 1, 2018.

 

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)

 

 

 

 

 

 

 

 

 

 

 

    

December 31, 

    

December 31, 

 

 

2017

 

2016

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

Fixed maturities, at fair value (amortized cost: $1,156,697 and $1,142,663)

 

$

1,172,026

 

$

1,154,269

Equity securities, at fair value (cost: $90,481 and $92,326)

 

 

111,867

 

 

105,095

Other invested assets

 

 

23,162

 

 

21,142

Total investments

 

 

1,307,055

 

 

1,280,506

Cash and cash equivalents

 

 

41,708

 

 

20,052

Accounts receivable, net of allowance for doubtful accounts

 

 

190,649

 

 

187,696

Receivable for securities sold

 

 

1,380

 

 

7,098

Accrued investment income

 

 

8,876

 

 

8,858

Taxes recoverable

 

 

908

 

 

 —

Receivable from reinsurers related to paid loss and loss adjustment expenses

 

 

24,776

 

 

29,504

Receivable from reinsurers related to unpaid loss and loss adjustment expenses

 

 

83,085

 

 

83,724

Ceded unearned premiums

 

 

32,175

 

 

28,585

Deferred policy acquisition costs

 

 

72,202

 

 

70,996

Deferred income taxes

 

 

 —

 

 

3,083

Equity and deposits in pools

 

 

28,246

 

 

24,675

Other assets

 

 

16,219

 

 

13,469

Total assets

 

$

1,807,279

 

$

1,758,246

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loss and loss adjustment expense reserves

 

$

574,054

 

$

560,321

Unearned premium reserves

 

 

428,257

 

 

418,033

Accounts payable and accrued liabilities

 

 

60,701

 

 

66,805

Payable for securities purchased

 

 

4,188

 

 

5,564

Payable to reinsurers

 

 

13,801

 

 

13,502

Deferred income taxes

 

 

2,917

 

 

 —

Taxes payable

 

 

 —

 

 

1,110

Other liabilities

 

 

22,345

 

 

22,185

Total liabilities

 

 

1,106,263

 

 

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

 

 

189,714

 

 

184,549

Accumulated other comprehensive income, net of taxes

 

 

24,269

 

 

15,843

Retained earnings

 

 

570,693

 

 

553,995

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

 

 

(83,835)

 

 

(83,835)

Total shareholders’ equity

 

 

701,016

 

 

670,726

Total liabilities and shareholders’ equity

 

$

1,807,279

 

$

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  December 31, 

    

Years Ended December 31,

 

    

2017

    

2016

 

2017

    

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

196,361

 

$

192,001

 

$

774,420

 

$

755,760

Net investment income

 

 

10,445

 

 

10,178

 

 

38,758

 

 

38,413

Earnings from partnership investments

 

 

849

 

 

96

 

 

2,082

 

 

3,185

Net realized gains on investments

 

 

1,210

 

 

631

 

 

6,036

 

 

5,559

Net impairment losses on investments (a)

 

 

 —

 

 

(369)

 

 

(256)

 

 

(798)

Finance and other service income

 

 

4,700

 

 

4,421

 

 

18,073

 

 

17,703

Total revenue

 

 

213,565

 

 

206,958

 

 

839,113

 

 

819,822

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

134,616

 

 

127,349

 

 

503,887

 

 

493,433

Underwriting, operating and related expenses

 

 

64,793

 

 

61,141

 

 

248,436

 

 

233,017

Interest expense

 

 

23

 

 

23

 

 

90

 

 

90

Total expenses

 

 

199,432

 

 

188,513

 

 

752,413

 

 

726,540

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

14,133

 

 

18,445

 

 

86,700

 

 

93,282

Income tax expense

 

 

2,824

 

 

6,492

 

 

24,313

 

 

28,697

Net income

 

$

11,309

 

$

11,953

 

$

62,387

 

$

64,585

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per weighted average common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.73

 

$

0.79

 

$

4.13

 

$

4.29

Diluted

 

$

0.72

 

$

0.79

 

$

4.10

 

$

4.27

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$

0.80

 

$

0.70

 

$

3.00

 

$

2.80

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

15,021,228

 

 

14,960,853

 

 

15,010,751

 

 

14,946,453

Diluted

 

 

15,170,518

 

 

15,074,714

 

 

15,135,348

 

 

15,032,263

(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  December 31, 

 

 

Years Ended December 31,

 

 

    

2017

    

2016

    

2017

    

2016

 

Written Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$

184,683

 

$

181,051

 

$

827,316

 

$

811,559

 

Assumed

 

 

8,888

 

 

7,750

 

 

34,214

 

 

30,424

 

Ceded

 

 

(21,670)

 

 

(20,483)

 

 

(80,476)

 

 

(75,513)

 

Net written premiums

 

$

171,901

 

$

168,318

 

$

781,054

 

$

766,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$

208,168

 

$

203,163

 

$

818,804

 

$

796,366

 

Assumed

 

 

8,265

 

 

7,337

 

 

32,502

 

 

29,544

 

Ceded

 

 

(20,072)

 

 

(18,499)

 

 

(76,886)

 

 

(70,150)

 

Net earned premiums

 

$

196,361

 

$

192,001

 

$

774,420

 

$

755,760

 

 


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