Safety Announces Second Quarter 2013 Results and Declares Third Quarter 2013 Dividend

Safety Announces Second Quarter 2013 Results and Declares Third Quarter 2013 Dividend

BOSTON--(BUSINESS WIRE)-- Safety Insurance Group, Inc. (NAS: SAFT) today reported second quarter 2013 results. Net income for the quarter ended June 30, 2013 was $18.0 million, or $1.17 per diluted share, compared to net income of $17.0 million, or $1.11 per diluted share, for the comparable 2012 period. Net income for the six months ended June 30, 2013 was $32.0 million, or $2.08 per diluted share, compared to $34.2 million, or $2.24 per diluted share, for the comparable 2012 period. Safety's book value per share decreased to $44.49 at June 30, 2013 from $45.31 at December 31, 2012 primarily due to a decrease in net unrealized investment gains. Safety paid $0.60 per share in dividends to investors during the quarter ended June 30, 2013, compared to $0.50 per share during the comparable 2012 period. Safety paid $2.20 per share in dividends to investors during the year ended December 31, 2012.

Direct written premiums for the quarter ended June 30, 2013 increased by $13.0 million, or 7.0%, to $198.8 million from $185.8 million for the comparable 2012 period. Direct written premiums for the six months ended June 30, 2013 increased by $22.3 million, or 6.2%, to $384.4 million from $362.1 million for the comparable 2012 period. The 2013 increases occurred primarily in our personal automobile and homeowners business lines, which experienced increases of 3.9% and 5.7%, respectively, in average written premium per exposure. Written exposures decreased slightly in our personal automobile line by 0.4% and increased by 5.4% in our homeowners business line.


Net written premiums for the quarter ended June 30, 2013 increased by $12.8 million, or 7.3%, to $189.8 million from $177.0 million for the comparable 2012 period. Net written premiums for the six months ended June 30, 2013 increased by $22.2 million, or 6.4%, to $368.5 million from $346.3 million for the comparable 2012 period. Net earned premiums for the quarter ended June 30, 2013 increased by $10.5 million, or 6.6%, to $169.6 million from $159.1 million for the comparable 2012 period. Net earned premiums for the six months ended June 30, 2013 increased by $21.4 million, or 6.8%, to $336.0 million from $314.6 million for the comparable 2012 period. Net written and net earned premiums increased primarily due to increases in our personal automobile and homeowners business lines as discussed above.

Net investment income for the quarter ended June 30, 2013 decreased by $0.8 million, or 7.4%, to $9.7 million from $10.5 million for the comparable 2012 period. Net investment income for the six months ended June 30, 2013 decreased by $0.3 million, or 1.4%, to $20.1 million from $20.4 million for the comparable 2012 period. Net effective annualized yield on the investment portfolio decreased to 3.4% and 3.5%, respectively, for the quarter and six months ended June 30, 2013 from 3.8% and 3.7%, respectively, for the comparable 2012 periods. Our duration was 3.8 years at June 30, 2013, up from 3.6 years at December 31, 2012.

For the quarter ended June 30, 2013, loss and loss adjustment expenses incurred increased by $4.3 million, or 4.2%, to $107.0 million from $102.7 million for the comparable 2012 period. For the six months ended June 30, 2013, loss and loss adjustment expenses incurred increased by $18.4 million, or 9.2%, to $219.1 million from $200.7 million for the comparable 2012 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended June 30, 2013 were 63.1%, 30.4%, and 93.5%, respectively, compared to 64.6%, 30.2%, and 94.8%, respectively, for the comparable 2012 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the six months ended June 30, 2013 were 65.2%, 30.2%, and 95.4%, respectively, compared to 63.8%, 30.7%, and 94.5%, respectively, for the comparable 2012 period. Total prior year favorable development included in the pre-tax results for the quarter and six months ended June 30, 2013 was $7.0 million and $14.4 million, respectively, compared to $3.6 million and $7.6 million, respectively, for the comparable 2012 periods.

Today, our Board of Directors approved and declared a quarterly cash dividend of $0.60 per share on the issued and outstanding common stock, payable on September 13, 2013 to shareholders of record at the close of business on September 3, 2013.

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, 2012 Form 10-K with the SEC on March 18, 2013 and urges shareholders to refer to this document for more complete information concerning Safety's financial results.

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, 2012 filed with the SEC on March 18, 2013.

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,
 2013  2012 
(Unaudited)
Assets
Investments:
Securities available for sale:
Fixed maturities, at fair value (amortized cost: $1,091,210 and $1,100,414)$1,118,028$1,165,553
Equity securities, at fair value (cost: $42,798 and $21,237) 46,511  22,800 
Total investments1,164,5391,188,353
Cash and cash equivalents35,78835,383
Accounts receivable, net of allowance for doubtful accounts189,256165,750
Receivable for securities sold250835
Accrued investment income10,36610,587
Taxes recoverable1255,529
Receivable from reinsurers related to paid loss and loss adjustment expenses12,1836,610
Receivable from reinsurers related to unpaid loss and loss adjustment expenses57,45952,185
Ceded unearned premiums17,75016,206
Deferred policy acquisition costs65,75160,665
Deferred income taxes4,232-
Equity and deposits in pools18,87216,965
Other assets 15,875  15,278 
Total assets$1,592,446 $1,574,346 
 
Liabilities
Loss and loss adjustment expense reserves$432,596$423,842
Unearned premium reserves387,311353,219
Accounts payable and accrued liabilities48,51565,458
Payable for securities purchased5,3972,630
Payable to reinsurers12,0207,056
Deferred income taxes-8,202
Other liabilities 22,249  19,580 
Total liabilities 908,088  879,987 
 
Shareholders' equity

Common stock: $0.01 par value; 30,000,000 shares authorized; 17,200,461 and 17,052,034 shares issued

172170
Additional paid-in capital167,757163,041
Accumulated other comprehensive income, net of taxes19,84543,356
Retained earnings556,952543,361
Treasury stock, at cost: 1,819,547 and 1,728,645 shares (60,368) (55,569)
Total shareholders' equity 684,358  694,359 
Total liabilities and shareholders' equity$1,592,446 $1,574,346 
 
 
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,
2013201220132012
Net earned premiums$169,550$159,070$335,989$314,606
Net investment income9,72710,50020,11420,409
Net realized gains on investments1406175421,073
Finance and other service income 4,584  4,521  9,152  9,026 
Total revenue 184,001  174,708  365,797  345,114 
 
Losses and loss adjustment expenses106,976102,695219,121200,739
Underwriting, operating and related expenses51,46748,010101,56596,548
Interest expense 21  22  43  44 
Total expenses 158,464  150,727  320,729  297,331 
 
Income before income taxes25,53723,98145,06847,783
Income tax expense 7,478  7,025  13,025  13,618 
Net income$18,059 $16,956 $32,043 $34,165 
 
Earnings per weighted average common share:
Basic$1.17 $1.11 $2.09 $2.24 
Diluted$1.17 $1.11 $2.08 $2.24 
 
Cash dividends paid per common share$0.60 $0.50 $1.20 $1.00 
 
Number of shares used in computing earningsper share:
 
Basic 15,380,053  15,302,801  15,359,983  15,260,080 
Diluted 15,421,300  15,309,012  15,389,236  15,267,434 
 
Safety Insurance Group, Inc. and Subsidiaries
Additional Premium Information
(Unaudited)
(Dollars in thousands)
 
Three Months Ended June 30,Six Months Ended June 30,
2013201220132012
Written Premiums
Direct$198,875$185,830$384,429$362,083
Assumed5,2274,00611,2638,729
Ceded (14,253) (12,843) (27,155) (24,521)
Net written premiums$189,849 $176,993 $368,537 $346,291 
 
Earned Premiums
Direct$178,146$166,868$351,835$329,274
Assumed4,4414,1549,7658,421
Ceded (13,037) (11,952) (25,611) (23,089)
Net earned premiums$169,550 $159,070 $ Read Full Story

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