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8-K - 8-K - SAFETY INSURANCE GROUP INCf8-k.htm

Exhibit 99.1

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SAFETY ANNOUNCES FIRST QUARTER 2017 RESULTS AND DECLARES SECOND QUARTER 2017 DIVIDEND

Boston, Massachusetts, May 3, 2017.  Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported first quarter 2017 results. Net income for the quarter ended March 31, 2017 was $12.0 million, or $0.79 per diluted share, compared to net income of $12.7 million, or $0.84 per diluted share, for the comparable 2016 period. Safety’s book value per share increased to $44.54 at March 31, 2017 from $44.27 at December 31, 2016.  Safety paid $0.70 per share in dividends to investors during the quarters ended March 31, 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 March 31,  2017 increased  by $3.7 million, or 1.9%, to $199.7 million from $196.0 million for the comparable 2016 period. The 2017 increase occurred primarily in our homeowners and private passenger automobile lines of business, which experienced increases in average written premium per exposure of  4.3% and 4.1% respectively. Our commercial passenger automobile line of business has also experienced an increase of 2.3% in average written premium per exposure.

Net written premiums for the March 31,  2017 increased by $5.2 million, or 2.8%, to $190.9 million from $185.7 million for the comparable 2016 period. Net earned premiums for the quarter ended March 31, 2017 increased by $4.0 million, or 2.2%, to $189.7 million from $185.7 million for the comparable 2016 period.  Net written and net earned premiums increased primarily due to increases in our homeowners and automobile business as discussed above.

For the quarter ended March 31, 2017, loss and loss adjustment expenses incurred increased by $2.4 million, or 1.9%, to $128.4 million from $126.0 million for the comparable 2016 period.  Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended March 31, 2017 were 67.7%,  31.5%, and 99.2%, respectively, compared to 67.9%,  30.1%, and 98.0%, respectively, for the comparable 2016 period. Total prior year favorable development included in the pre-tax results for the quarter ended March 31, 2017 was $10.4 million compared to $10.1 million for the comparable 2016 period. 

Net investment income for the quarter ended March 31, 2017 decreased by $0.5 million, or 5.5%, to $9.1 million from $9.6 million for the comparable 2016 period.  The decrease is a result of fixed maturity amortization related to prepayment activities.    Net effective annualized yield on the investment portfolio for the quarter ended March 31, 2017 was 2.9% compared to 3.2% for the comparable 2016 period. Our duration was 4.1 years at March 31, 2017 and  4.3 years at December 31, 2016, 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 June 15, 2017 to shareholders of record at the close of business on June 1, 2017.

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,  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)

 

 

 

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

2017

 

2016

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

Fixed maturities, at fair value (amortized cost: $1,124,243 and $1,142,663)

 

$

1,139,788

 

$

1,154,269

Equity securities, at fair value (cost: $92,744 and $92,326)

 

 

108,120

 

 

105,095

Other invested assets

 

 

24,025

 

 

21,142

Total investments

 

 

1,271,933

 

 

1,280,506

Cash and cash equivalents

 

 

32,241

 

 

20,052

Accounts receivable, net of allowance for doubtful accounts

 

 

183,945

 

 

187,696

Receivable for securities sold

 

 

4,850

 

 

7,098

Accrued investment income

 

 

9,559

 

 

8,858

Taxes recoverable

 

 

 —

 

 

 —

Receivable from reinsurers related to paid loss and loss adjustment expenses

 

 

31,572

 

 

29,504

Receivable from reinsurers related to unpaid loss and loss adjustment expenses

 

 

87,246

 

 

83,724

Ceded unearned premiums

 

 

27,704

 

 

28,585

Deferred policy acquisition costs

 

 

70,568

 

 

70,996

Deferred income taxes

 

 

309

 

 

3,083

Equity and deposits in pools

 

 

25,295

 

 

24,675

Other assets

 

 

15,808

 

 

13,469

Total assets

 

$

1,761,030

 

$

1,758,246

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Loss and loss adjustment expense reserves

 

$

569,549

 

$

560,321

Unearned premium reserves

 

 

418,311

 

 

418,033

Accounts payable and accrued liabilities

 

 

49,051

 

 

66,805

Payable for securities purchased

 

 

11,288

 

 

5,564

Payable to reinsurers

 

 

5,825

 

 

13,502

Taxes payable

 

 

1,537

 

 

1,110

Other liabilities

 

 

27,620

 

 

22,185

Total liabilities

 

 

1,083,181

 

 

1,087,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Common stock:  $0.01 par value; 30,000,000 shares authorized; 17,498,644 and 17,430,189 shares issued

 

 

175

 

 

174

Additional paid-in capital

 

 

186,071

 

 

184,549

Accumulated other comprehensive income, net of taxes

 

 

20,098

 

 

15,843

Retained earnings

 

 

555,340

 

 

553,995

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

 

 

(83,835)

 

 

(83,835)

Total shareholders’ equity

 

 

677,849

 

 

670,726

Total liabilities and shareholders’ equity

 

$

1,761,030

 

$

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  March 31, 

    

 

    

2017

    

2016

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

189,711

 

$

185,654

 

Net investment income

 

 

9,095

 

 

9,627

 

Earnings from partnership investments

 

 

113

 

 

878

 

Net realized gains (losses) on investments

 

 

1,542

 

 

(323)

 

Net impairment losses on investments (a)

 

 

 —

 

 

(292)

 

Finance and other service income

 

 

4,309

 

 

4,285

 

Total revenue

 

 

204,770

 

 

199,829

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

128,430

 

 

125,979

 

Underwriting, operating and related expenses

 

 

59,670

 

 

55,957

 

Interest expense

 

 

22

 

 

22

 

Total expenses

 

 

188,122

 

 

181,958

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

16,648

 

 

17,871

 

Income tax expense

 

 

4,629

 

 

5,201

 

Net income

 

$

12,019

 

$

12,670

 

 

 

 

 

 

 

 

 

Earnings per weighted average common share:

 

 

 

 

 

 

 

Basic

 

$

0.80

 

$

0.84

 

Diluted

 

$

0.79

 

$

0.84

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$

0.70

 

$

0.70

 

 

 

 

 

 

 

 

 

Number of shares used in computing earnings per share:

 

 

 

 

 

 

 

Basic

 

 

14,980,005

 

 

14,903,958

 

Diluted

 

 

15,096,728

 

 

14,936,017

 

(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 March 31, 

 

 

    

2017

    

2016

 

Written Premiums

 

 

 

 

 

 

 

Direct

 

$

199,666

 

$

195,952

 

Assumed

 

 

8,592

 

 

7,140

 

Ceded

 

 

(17,388)

 

 

(17,440)

 

Net written premiums

 

$

190,870

 

$

185,652

 

 

 

 

 

 

 

 

 

Earned Premiums

 

 

 

 

 

 

 

Direct

 

$

199,254

 

$

194,295

 

Assumed

 

 

8,726

 

 

7,675

 

Ceded

 

 

(18,269)

 

 

(16,316)

 

Net earned premiums

 

$

189,711

 

$

185,654