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

August 3, 2016

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))

Item 2.02 Results of Operations and Financial Condition.

In a press release datedAugust 3, 2016, Safety Insurance Group, Inc. (the “Registrant”) announced its secondquarter 2016 results.  The Registrant’s press release dated August 3, 2016 is furnished herewith as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

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

Exhibit NumberDescription

99.1Text of press release issued by the Registrant dated August 3, 2016.

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: August 3, 2016Safety Insurance Group, Inc.(Registrant)

By:  /s/ WILLIAM J. BEGLEY, JR

William J. Begley, Jr.
V.P., Chief Financial Officer and Secretary

EX-99.1

Exhibit 99.1

SAFETY ANNOUNCES SECONDQUARTER 2016RESULTS AND
DECLARES THIRD QUARTER2016 DIVIDEND

Boston, Massachusetts, August 3, 2016.  Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported second quarter 2016 results.  Net income for the quarter ended June 30,2016 was $21.4million, or $1.41 per diluted share, compared to net loss of $1.1 million, or $0.07 per diluted share, for the comparable 2015 period.  Net income for the six months endedJune 30,  2016 was $34.0 million, or $ 2.25 per diluted share, compared to net loss of $36.1 million, or $2.43 per diluted share, for the comparable 2015 period.  Safety’s book value per share increased to $44.86 at June 30,2016 from $42.70 at December 31,2015.  Safety paid $0.70 per share in dividends to investors during the quarters ended June 30,2016 andJune 30,  2015respectively. Safety paid $2.80 per share in dividends to investors during the year endedDecember 31,  2015.

Direct written premiums for the quarter ended June 30,  2016increased  by$8.1 million, or 3.8%, to $221.3 million from$213.2 million for the comparable 2015 period. Direct written premiums for the six months endedJune 30,2016 increased by $9.3 million, or 2.3%, to $417.3 million from $408.0 million for the comparable 2015 period.The 2016 increase occurred primarily in our homeowners and commercial automobile lines of business, which experienced increases in average written premium per exposure of8.4%and 7.4%respectively.

Net written premiums for the quarter ended June 30,2016increasedby $3.7 million, or 1.8%, to $207.9 million from $204.2 million for the comparable 2015 period. Net written premiums for the six months ended June 30, 2016 increased by $4.1 million, or 1.1%, to $393.6 million from $389.5 million for the comparable 2015 period.Net earned premiums for the quarter ended June 30,2016increased by $4.9 million, or 2.7%, to $187.3 million from $182.4 million for the comparable 2015 period.Net earned premiums for the six months endedJune 30,2016 increased by $8.0 million, or 2.2%, to $373.0 million from $365.0 million for the comparable 2015 period.Net written and net earned premiums increased primarily due to the factors that increased direct written premiums.

For the quarter ended June 30,  2016, loss and loss adjustment expenses incurred decreased by $31.9 million, or 21.7%, to $115.1 million from $147.0 million for the comparable 2015 period. For thesix months ended June 30,2016, loss and loss adjustment expenses incurred decreased by $114.2 million, or 32.1%, to $241.1 million from $355.3 million for the comparable 2015 period.

Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended June 30,  2016 were 61.4%,  30.7%, and 92.1%, respectively, compared to 80.6%,  28.6%, and 109.2%, respectively, for the comparable 2015 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the six months endedJune 30,2016 were 64.6%,  30.4%, and 95.0%, respectively, compared to 97.4%,  28.6%, and 126.0%, respectively, for the comparable 2015 period.Loss, expense and combined ratios for the six months ended June 30,  2015 were impacted by the highest recorded snowfall totals in Massachusetts history. Total prior year favorable development included in the pre-tax results for the quarter ended June 30,  2016 was $11.8 million compared to $7.9 million for the comparable 2015 period. Total prior year favorable development included in the pre-tax results for the six months endedJune 30,2016 was $21.9 million compared to $12.0 million for the comparable 2015 period.

Net investment income for the quarter ended June 30,2016decreased by $0.7 million, or 6.6%, to $9.6 million from $10.3 million for the comparable2015 period. Net investment income for the six months endedJune 30,2016 decreased by $1.6 million, or 7.7%, to $19.3 million from $20.9 million for the comparable 2015 period.The decrease is a result of changes in the average invested asset balance as a result of investment proceeds used in the payment of claims resulting from the 2015 winter events.  Net effective annualized yield on the investment portfolio for the quarter endedJune 30,2016 was 3.2% compared to 3.4%for the comparable 2015 period. Net effective annualized yield on the investment portfolio for the six months endedJune 30,2016 was 3.2% compared to 3.4% for the comparable 2015 period.Our duration was 4.0 years at June 30,2016 and  4.1 atDecember 31,2015, respectively.

Today, our Board of Directors approved and declared a quarterly cash dividend of $0.70 per share on the issued and outstanding common stock, payable on September 15, 2016 to shareholders of record at the close of business on September 1, 2016.

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,  2015 Form 10-K with the SEC on February26,  2016 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,  2015 filed with the SEC on February26,  2016.

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)

	June 30,		December 31,
	2016		2015
	(Unaudited)
Assets
Investments:
Securities available for sale:
Fixed maturities, at fair value (amortized cost: $1,068,806 and $1,063,971)	$	1,112,277	$	1,081,637
Equity securities, at fair value (cost: $103,898 and $102,541)		116,961		110,204
Other invested assets		19,304		17,602
Total investments		1,248,542		1,209,443
Cash and cash equivalents		44,053		47,494
Accounts receivable, net of allowance for doubtful accounts		195,509		178,567
Receivable for securities sold		518		260
Accrued investment income		8,469		8,922
Taxes recoverable		17,037		15,497
Receivable from reinsurers related to paid loss and loss adjustment expenses		26,444		40,972
Receivable from reinsurers related to unpaid loss and loss adjustment expenses		78,043		68,261
Ceded unearned premiums		28,886		23,222
Deferred policy acquisition costs		72,386		68,937
Deferred income taxes		—		4,430
Equity and deposits in pools		27,695		23,558
Other assets		16,917		14,306
Total assets	$	1,764,499	$	1,703,869
Liabilities
Loss and loss adjustment expense reserves	$	544,082	$	553,977
Unearned premium reserves		428,135		401,961
Accounts payable and accrued liabilities		51,762		53,722
Payable for securities purchased		7,093		8,607
Payable to reinsurers		23,177		11,547
Deferred income taxes		7,117		—
Other liabilities		23,098		29,556
Total liabilities		1,084,464		1,059,370
Shareholders’ equity
Common stock:  $0.01 par value; 30,000,000 shares authorized; 17,437,644 and 17,373,643 shares issued		174		174
Additional paid-in capital		182,278		179,896
Accumulated other comprehensive income, net of taxes		36,746		16,464
Retained earnings		544,672		531,800
Treasury stock, at cost: 2,279,570 shares		(83,835)		(83,835)
Total shareholders’ equity		680,035		644,499
Total liabilities and shareholders’ equity	$	1,764,499	$	1,703,869

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

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

	Three Months Ended  June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net earned premiums	$	187,393	$	182,447	$	373,047	$	365,011
Net investment income		9,641		10,317		19,268		20,874
Earnings from partnership investments		1,409		577		2,287		577
Net realized (losses) gains on investments		360		(173)		37		238
Net impairment losses on investments (a)		(137)		—		(429)		—
Finance and other service income		4,284		4,434		8,569		8,941
Total revenue		202,950		197,602		402,779		395,641
Losses and loss adjustment expenses		115,144		147,026		241,123		355,350
Underwriting, operating and related expenses		57,513		52,198		113,470		104,295
Interest expense		23		23		45		45
Total expenses		172,680		199,247		354,638		459,690
Income (loss) before income taxes		30,270		(1,645)		48,141		(64,049)
Income tax expense (credit)		8,905		(592)		14,106		(27,925)
Net income (loss)	$	21,365	$	(1,053)	$	34,035	$	(36,124)
Earnings (loss) per weighted average common share:
Basic	$	1.42	$	(0.07)	$	2.26	$	(2.43)
Diluted	$	1.41	$	(0.07)	$	2.25	$	(2.43)
Cash dividends paid per common share	$	0.70	$	0.70	$	1.40	$	1.40
Number of shares used in computing earnings (loss) per share:
Basic		14,960,516		14,879,047		14,932,237		14,851,742
Diluted		15,041,077		14,879,047		14,988,546		14,851,742

(a) No portion of the other-than-temporary impairments recognized in the period indicated were included in comprehensive income

Safety Insurance Group, Inc. and Subsidiaries

Additional Premium Information

(Unaudited)

(Dollars in thousands)

	Three Months Ended  June 30,					Six Months Ended June 30,
	2016		2015		2016		2015
Written Premiums
Direct	$	221,359	$	213,246	$	417,311	$	407,979
Assumed		8,414		6,640		15,554		13,932
Ceded		(21,867)		(15,709)		(39,307)		(32,444)
Net written premiums	$	207,906	$	204,177	$	393,558	$	389,467
Earned Premiums
Direct	$	197,090	$	192,574	$	391,385	$	383,285
Assumed		7,631		5,762		15,306		12,600
Ceded		(17,328)		(15,889)		(33,644)		(30,874)
Net earned premiums	$	187,393	$	182,447	$	373,047	$	365,011