The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

Safety Announces Second Quarter 2012 Results and Raises Third Quarter 2012 Dividend

Wednesday, August 01, 2012

Safety Announces Second Quarter 2012 Results and Raises Third Quarter 2012 Dividend16:10 EDT Wednesday, August 01, 2012 BOSTON (Business Wire) -- Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported second quarter 2012 results. Net income for the quarter ended June 30, 2012 was $17.0 million, or $1.11 per diluted share, compared to net income of $4.1 million, or $0.27 per diluted share, for the comparable 2011 period. Net income for the six months ended June 30, 2012 was $34.2 million, or $2.24 per diluted share, compared to $0.1 million, or $0.01 per diluted share, for the comparable 2011 period. Safety's book value per share increased to $44.52 at June 30, 2012 from $43.22 at December 31, 2011. Safety paid $0.50 per share in dividends to investors during each of the quarters ended June 30, 2012 and 2011. Safety paid $2.00 per share in dividends to investors during the year ended December 31, 2011. Today, our Board of Directors approved and declared an increase in the quarterly cash dividend from $0.50 to $0.60 per share on the issued and outstanding common stock, payable on September 14, 2012 to shareholders of record at the close of business on September 4, 2012. Direct written premiums for the quarter ended June 30, 2012 increased by $12.7 million, or 7.3%, to $185.8 million from $173.1 million for the comparable 2011 period. Direct written premiums for the six months ended June 30, 2012 increased by $24.9 million, or 7.4%, to $362.1 million from $337.2 million for the comparable 2011 period. The 2012 increases occurred primarily in our personal automobile, commercial automobile, and homeowners business lines, which experienced increases of 4.9%, 1.0%, and 4.4%, respectively, in average written premium per exposure. Written exposures decreased slightly in our personal automobile line by 0.4% and increased by 14.5% and 8.9%, respectively, in our commercial automobile and homeowners business lines. Net written premiums for the quarter ended June 30, 2012 increased by $9.2 million, or 5.5%, to $177.0 million from $167.8 million for the comparable 2011 period. Net written premiums for the six months ended June 30, 2012 increased by $21.0 million, or 6.4%, to $346.3 million from $325.3 million for the comparable 2011 period. Net earned premiums for the quarter ended June 30, 2012 increased by $10.4 million, or 7.0%, to $159.1 million from $148.7 million for the comparable 2011 period. Net earned premiums for the six months ended June 30, 2012 increased by $21.3 million, or 7.2%, to $314.6 million from $293.3 million for the comparable 2011 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, 2012 increased by $1.0 million, or 10.9%, to $10.5 million from $9.5 million for the comparable 2011 period. Net investment income for the six months ended June 30, 2012 increased by $0.8 million, or 3.9%, to $20.4 million from $19.6 million for the comparable 2011 period. Net effective annualized yield on the investment portfolio increased to 3.8% and 3.7%, respectively, for the quarter and six months ended June 30, 2012 from 3.5% and 3.6%, respectively, for the comparable 2011 periods. Our duration was 3.6 years at June 30, 2012, down from 3.7 years at December 31, 2011. For the quarter ended June 30, 2012, loss and loss adjustment expenses incurred decreased by $11.5 million, or 10.1%, to $102.7 million from $114.2 million for the comparable 2011 period. For the six months ended June 30, 2012, loss and loss adjustment expenses incurred decreased by $35.1 million, or 14.9%, to $200.7 million from $235.8 million for the comparable 2011 period. The decrease was primarily due to the absence of catastrophe losses during the quarter and six months ended June 30, 2012, compared to $22.1 million and $41.0 million, respectively, in pre-tax catastrophic weather event losses during the comparable 2011 periods. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended June 30, 2012 were 64.6%, 30.2%, and 94.8%, respectively, compared to 76.8%, 29.6%, and 106.4%, respectively, for the comparable 2011 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the six months ended June 30, 2012 were 63.8%, 30.7%, and 94.5%, respectively, compared to 80.4%, 29.6%, and 110.0%, respectively, for the comparable 2011 period. Total prior year favorable development included in the pre-tax results for the quarter and six months ended June 30, 2012 was $3.6 million and $7.6 million, respectively, compared to $9.1 million and $18.8 million, respectively, for the comparable 2011 periods. 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, 2011 Form 10-K with the SEC on March 13, 2012 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, 2011 filed with the SEC on March 13, 2012.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 SubsidiariesConsolidated Balance Sheets(Dollars in thousands, except share data)           June 30,December 31,   2012     2011   (Unaudited)Assets Investments: Securities available for sale: Fixed maturities, at fair value (amortized cost: $1,057,108 and $1,032,660) $1,115,507 $ 1,086,813 Equity securities, at fair value (cost: $21,037 and $20,431)   22,303     21,080   Total investments 1,137,810 1,107,893 Cash and cash equivalents 87,991 37,890 Accounts receivable, net of allowance for doubtful accounts 175,996 154,143 Receivable for securities sold 41 - Accrued investment income 10,657 10,169 Taxes recoverable 1,814 8,406 Receivable from reinsurers related to paid loss and loss adjustment expenses 8,606 3,526 Receivable from reinsurers related to unpaid loss and loss adjustment expenses 51,820 51,774 Ceded unearned premiums 15,455 14,022 Deferred policy acquisition costs 62,026 56,716 Equity and deposits in pools 14,511 14,507 Other assets   15,516     13,448   Total assets$1,582,243   $ 1,472,494     Liabilities Loss and loss adjustment expense reserves $403,459 $ 403,872 Unearned premium reserves 362,679 329,562 Accounts payable and accrued liabilities 47,831 52,032 Payable for securities purchased 52,620 - Payable to reinsurers 10,335 5,338 Deferred income taxes 5,194 3,014 Other liabilities   18,786     22,363   Total liabilities   900,904     816,181     Shareholders' equity Common stock: $0.01 par value; 30,000,000 shares authorized; 17,032,693 and 16,915,432 shares issued 170 169 Additional paid-in capital 160,116 157,167 Accumulated other comprehensive income, net of taxes 38,782 35,621 Retained earnings 537,840 518,925 Treasury stock, at cost: 1,728,645 shares   (55,569)   (55,569 ) Total shareholders' equity   681,339     656,313   Total liabilities and shareholders' equity$1,582,243   $ 1,472,494     Safety Insurance Group, Inc. and SubsidiariesConsolidated Statements of Operations(Unaudited)(Dollars in thousands, except share and per share data)               Three Months Ended June 30,Six Months Ended June 30,   2012   2011   2012   2011 Net earned premiums $159,070 $ 148,720 $314,606 $ 293,366 Net investment income 10,500 9,470 20,409 19,635 Net realized gains on investments 617 1,277 1,073 858 Finance and other service income   4,521   4,470   9,026   8,875 Total revenue   174,708   163,937   345,114   322,734   Losses and loss adjustment expenses 102,695 114,184 200,739 235,814 Underwriting, operating and related expenses 48,010 44,071 96,548 86,700 Interest expense   22   21   44   43 Total expenses   150,727   158,276   297,331   322,557   Income before income taxes 23,981 5,661 47,783 177 Income tax expense   7,025   1,576   13,618   45 Net income$16,956 $ 4,085 $34,165 $ 132   Earnings per weighted average common share: Basic $1.11 $ 0.27 $2.24 $ 0.01 Diluted $1.11 $ 0.27 $2.24 $ 0.01   Cash dividends paid per common share$0.50 $ 0.50 $1.00 $ 1.00   Number of shares used in computing earnings per share: Basic   15,302,801   15,184,605   15,260,080   15,142,682 Diluted   15,309,012   15,198,804   15,267,434   15,159,513   Safety Insurance Group, Inc. and SubsidiariesAdditional Premium Information(Unaudited)(Dollars in thousands)           Three Months Ended June 30,Six Months Ended June 30,   2012     2011     2012     2011   Written Premiums Direct $185,830 $ 173,130 $362,083 $ 337,214 Assumed 4,006 4,530 8,729 8,697 Ceded   (12,843)   (9,835 )   (24,521)   (20,567 ) Net written premiums $176,993   $ 167,825   $346,291   $ 325,344     Earned Premiums Direct $166,868 $ 155,481 $329,274 $ 306,952 Assumed 4,154 4,000 8,421 7,890 Ceded   (11,952)   (10,761 )   (23,089)   (21,476 ) Net earned premiums $159,070   $ 148,720   $314,606   $ 293,366   Safety Insurance Group, Inc.Office of Investor Relations877-951-2522InvestorRelations@SafetyInsurance.com