EX-99.1 2 saft_ex99-1.htm EX-99.1 saft_Ex99-1

Exhibit 99.1

Safety_logo_468x102_300dpi

 

SAFETY ANNOUNCES FOURTH QUARTER AND YEAR END 2016 RESULTS

 

Boston, Massachusetts, February 22, 2017.  Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported fourth quarter 2016 results. Net income for the quarter ended December 31, 2016 was $12.0 million, or $0.79 per diluted share, compared to net income of $10.3 million, or $0.69 per diluted share, for the comparable 2015 period. Net income for the year ended December 31,  2016 was $64.6 million, or $4.27 per diluted share, compared to a  net loss of $13.9 million, or $0.93 per diluted share, for the comparable 2015 period.  Safety’s book value per share increased to $44.27 at December 31, 2016 from $42.70 at December 31, 2015.  Safety paid $0.70 per share in dividends to investors during the quarters ended December 31, 2016 and December 31,  2015,  respectively. Safety paid $2.80 per share in dividends to investors during the years ended December 31, 2016 and December 31, 2015, respectively.

Direct written premiums for the quarter ended December 31,  2016 increased  by $7.7 million, or 4.4%, to $181.1 million from $173.4 million for the comparable 2015 period. Direct written premiums for the year ended December 31, 2016 increased by $25.9 million, or 3.3%, to $811.6 million from $785.7 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 of  7.4% and 7.5% respectively. Our private passenger automobile line of business has also experienced an increase of 3.1% in average written premium per exposure.

Net written premiums for the quarter ended December 31, 2016 increased by $5.8 million, or 3.6%, to $168.3 million from $162.5 million for the comparable 2015 period. Net written premiums for the year ended December 31, 2016 increased by $20.3 million, or 2.7%, to $766.5 million from $746.2 million for the comparable 2015 period. Net earned premiums for the quarter ended December 31, 2016 increased by $5.4 million, or 2.9%, to $192.0 million from $186.6 million for the comparable 2015 period. Net earned premiums for the year ended December 31, 2016 increased by $17.6 million, or 2.4%, to $755.8 million from $738.2 million for the comparable 2015 period. Net written and net earned premiums increased primarily due to increases in our homeowners  and commercial automobile business as discussed above.

For the quarter ended December 31, 2016, loss and loss adjustment expenses incurred decreased by $1.0 million, or 0.7%, to $127.3 million from $128.3 million for the comparable 2015 period. For the year ended December 31, 2016, loss and loss adjustment expenses incurred decreased by $119.2 million, or 19.4%, to $493.4 million from $612.6 million for the comparable 2015 period. 

Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended December 31, 2016 were 66.3%,  31.8%, and 98.1%, respectively, compared to 68.8%,  30.0%, and 98.8%, respectively, for the comparable 2015 period.  Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the year ended December 31, 2016 were 65.3%,  30.8%, and 96.1%, respectively, compared to 83.0%,  29.0%, and 112.0%, respectively, for the comparable 2015 period. Loss, expense and combined ratios for the year ended December 31,  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 December 31, 2016 was $11.8 million compared to $10.5 million for the

 

comparable 2015 period. Total prior year favorable development included in the pre-tax results for the year ended December 31, 2016 was $45.4 million compared to $30.3 million for the comparable 2015 period.

Net investment income for the quarter ended December 31, 2016 increased by $0.5 million, or 4.8%, to $10.2 million from $9.7 million for the comparable 2015 period.  Net investment income for the year ended December 31, 2016 decreased by $2.1 million, or 5.2%, to $38.4 million from $40.5 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 and increases in fixed maturity amortization. Net effective annualized yield on the investment portfolio for both the quarters ended December 31, 2016 and December 31, 2015 was 3.2%. Net effective annualized yield on the investment portfolio for the year ended December 31, 2016 was 3.1% compared to 3.3% for the comparable 2015 period. Our duration was 4.3 years at December 31, 2016 and  4.1 years at December 31, 2015, respectively.    

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 February 26,  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 February 26,  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)

 

 

 

 

 

 

 

 

 

 

 

    

December 31, 

    

December 31, 

 

 

2016

 

2015

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

Fixed maturities, at fair value (amortized cost: $1,142,663 and $1,063,971)

 

$
1,154,269

 

$
1,081,637

Equity securities, at fair value (cost: $92,326 and $102,541)

 

 
105,095

 

 
110,204

Other invested assets

 

 
21,142

 

 
17,602

Total investments

 

 
1,280,506

 

 
1,209,443

Cash and cash equivalents

 

 
20,052

 

 
47,494

Accounts receivable, net of allowance for doubtful accounts

 

 
187,696

 

 
178,567

Receivable for securities sold

 

 
7,098

 

 
260

Accrued investment income

 

 
8,858

 

 
8,922

Taxes recoverable

 

 

 —

 

 
15,497

Receivable from reinsurers related to paid loss and loss adjustment expenses

 

 
29,504

 

 
40,972

Receivable from reinsurers related to unpaid loss and loss adjustment expenses

 

 
83,724

 

 
68,261

Ceded unearned premiums

 

 
28,585

 

 
23,222

Deferred policy acquisition costs

 

 
70,996

 

 
68,937

Deferred income taxes

 

 
3,083

 

 
4,430

Equity and deposits in pools

 

 
24,675

 

 
23,558

Other assets

 

 
13,469

 

 
14,306

Total assets

 

$
1,758,246

 

$
1,703,869

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loss and loss adjustment expense reserves

 

$
560,321

 

$
553,977

Unearned premium reserves

 

 
418,033

 

 
401,961

Accounts payable and accrued liabilities

 

 
66,805

 

 
53,722

Payable for securities purchased

 

 
5,564

 

 
8,607

Payable to reinsurers

 

 
13,502

 

 
11,547

Taxes payable

 

 
1,110

 

 

 —

Other liabilities

 

 
22,185

 

 
29,556

Total liabilities

 

 
1,087,520

 

 
1,059,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Common stock:  $0.01 par value; 30,000,000 shares authorized; 17,430,189 and 17,373,643 shares issued

 

 
174

 

 
174

Additional paid-in capital

 

 
184,549

 

 
179,896

Accumulated other comprehensive income, net of taxes

 

 
15,843

 

 
16,464

Retained earnings

 

 
553,995

 

 
531,800

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

 

 
(83,835)

 

 
(83,835)

Total shareholders’ equity

 

 
670,726

 

 
644,499

Total liabilities and shareholders’ equity

 

$
1,758,246

 

$
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  December 31, 

    

Year Ended December 31, 

 

    

2016

    

2015

 

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$
192,001

 

$
186,571

 

$
755,760

 

$
738,164

Net investment income

 

 
10,178

 

 
9,710

 

 
38,413

 

 
40,534

Earnings from partnership investments

 

 
96

 

 
951

 

 
3,185

 

 
2,387

Net realized gains (losses) on investments

 

 
631

 

 
(397)

 

 
5,559

 

 
(469)

Net impairment losses on investments (a)

 

 
(369)

 

 
(362)

 

 
(798)

 

 
(796)

Finance and other service income

 

 
4,421

 

 
4,569

 

 
17,703

 

 
18,133

Total revenue

 

 
206,958

 

 
201,042

 

 
819,822

 

 
797,953

 

 

 

 

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 
127,349

 

 
128,288

 

 
493,433

 

 
612,569

Underwriting, operating and related expenses

 

 
61,141

 

 
56,020

 

 
233,017

 

 
213,939

Interest expense

 

 
23

 

 
23

 

 
90

 

 
90

Total expenses

 

 
188,513

 

 
184,331

 

 
726,540

 

 
826,598

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 
18,445

 

 
16,711

 

 
93,282

 

 
(28,645)

Income tax expense (credit)

 

 
6,492

 

 
6,421

 

 
28,697

 

 
(14,792)

Net income (loss)

 

$
11,953

 

$
10,290

 

$
64,585

 

$
(13,853)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per weighted average common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$
0.79

 

$
0.69

 

$
4.29

 

$
(0.93)

Diluted

 

$
0.79

 

$
0.69

 

$
4.27

 

$
(0.93)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$
0.70

 

$
0.70

 

$
2.80

 

$
2.80

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 
14,960,516

 

 
14,881,666

 

 
14,946,453

 

 
14,866,607

Diluted

 

 
15,074,377

 

 
14,902,596

 

 
15,032,263

 

 
14,866,607

(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  December 31, 

 

 

Year Ended December 31, 

 

 

    

2016

    

2015

    

2016

    

2015

 

Written Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$
181,051

 

$
173,370

 

$
811,559

 

$
785,730

 

Assumed

 

 
7,750

 

 
7,185

 

 
30,424

 

 
28,322

 

Ceded

 

 
(20,483)

 

 
(18,042)

 

 
(75,513)

 

 
(67,872)

 

Net written premiums

 

$
168,318

 

$
162,513

 

$
766,470

 

$
746,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned Premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

$
203,163

 

$
196,815

 

$
796,366

 

$
776,633

 

Assumed

 

 
7,337

 

 
6,789

 

 
29,544

 

 
25,819

 

Ceded

 

 
(18,499)

 

 
(17,033)

 

 
(70,150)

 

 
(64,288)

 

Net earned premiums

 

$
192,001

 

$
186,571

 

$
755,760

 

$
738,164