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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Safety Insurance Group Inc | NASDAQ:SAFT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.93 | -1.16% | 79.33 | 79.01 | 82.37 | 80.21 | 79.35 | 80.01 | 39,788 | 22:30:00 |
Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported second quarter 2019 results. Net income for the quarter ended June 30, 2019 was $25.9 million, or $1.68 per diluted share, compared to net income of $26.8 million, or $1.75 per diluted share, for the comparable 2018 period. Net income for the six months ended June 30, 2019 was $55.9 million, or $3.63 per diluted share, compared to net income of $35.9 million, or $2.35 per diluted share, for the comparable 2018 period. Non-generally accepted accounting principles (“non-GAAP”) operating income, as defined below, for the quarter ended June 30, 2019 was $1.47 per diluted share, compared to $1.81 per diluted share, for the comparable 2018 period. Non-GAAP operating income for the six months ended June 30, 2019 was $2.83 per diluted share, compared to $2.52 per diluted share, for the comparable 2018 period. Safety’s book value per share increased to $50.90 at June 30, 2019 from $47.01 at December 31, 2018. Safety paid $0.80 per share in dividends to investors during each of the quarters ended June 30, 2019 and 2018, respectively. Safety paid $3.20 per share in dividends to investors during the year ended December 31, 2018.
Today, our Board of Directors approved and declared an increase in the quarterly cash dividend from $0.80 to $0.90 per share on the issued and outstanding common stock payable on September 13, 2019 to shareholders of record at the close of business on September 3, 2019.
Direct written premiums for the quarter ended June 30, 2019 increased by $0.5 million, or 0.2%, to $233.6 million from $233.1 million for the comparable 2018 period. Direct written premiums for the six months ended June 30, 2019 increased by $0.2 million to $437.0 million from $436.8 million for the comparable 2018 period. The 2019 increase occurred primarily in our commercial automobile and homeowners lines of business.
Net written premiums for the quarter ended June 30, 2019 increased by $1.8 million, or 0.8%, to $217.3 million from $215.5 million for the comparable 2018 period. Net written premiums for the six months ended June 30, 2019 increased by $1.7 million, or 0.4%, to $407.2 million from $405.5 million for the comparable 2018 period. Net earned premiums for the quarter ended June 30, 2019 increased by $2.3 million, or 1.2%, to $196.4 million from $194.1 million for the comparable 2018 period. Net earned premiums for the six months ended June 30, 2019 increased by $4.8 million, or 1.2%, to $390.9 million from $386.1 million for the comparable 2018 period.
For the quarter ended June 30, 2019, loss and loss adjustment expenses incurred increased by $9.2 million, or 8.1%, to $122.4 million from $113.2 million for the comparable 2018 period. For the six months ended June 30, 2019, loss and loss adjustment expenses incurred decreased by $2.5 million, or 1.0%, to $248.4 million from $250.9 million for the comparable 2018 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the quarter ended June 30, 2019 were 62.3%, 31.0%, and 93.3%, respectively, compared to 58.3%, 31.7%, and 90.0%, respectively, for the comparable 2018 period. Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the six months ended June 30, 2019 were 63.5%, 31.0%, and 94.5%, respectively, compared to 65.0%, 31.7%, and 96.7%, respectively, for the comparable 2018 period. Total prior year favorable development included in the pre-tax results for the quarter ended June 30, 2019 was $10.4 million compared to $12.1 million for the comparable 2018 period. Total prior year favorable development included in the pre-tax results for the six months ended June 30, 2019 was $22.3 million compared to $26.3 million for the comparable 2018 period.
Net investment income for the quarter ended June 30, 2019 increased by $0.4 million, or 3.8%, to $10.6 million from $10.2 million for the comparable 2018 period. Net investment income for the six months ended June 30, 2019 increased by $1.6 million, or 7.8%, to $22.3 million from $20.7 million for the comparable 2018 period. The increase is a result of an increase in the average invested asset balance and improved investment income yields compared to the prior year. Net effective annualized yield on the investment portfolio was 3.2% for the three months ended June 30, 2019 and 2018. Net effective annualized yield on the investment portfolio for the six months ended June 30, 2019 was 3.3% compared to 3.2% for the comparable 2018 period. Our duration on fixed maturities was 3.0 years at June 30, 2019 and 3.6 years at December 31, 2018, respectively.
Non-GAAP Measures
Management has included certain non-GAAP financial measures in presenting the Company’s results. Management believes that these non-GAAP measures better explain the Company’s results of operations and allow for a more complete understanding of the underlying trends in the Company’s business. These measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“GAAP”). In addition, our definitions of these items may not be comparable to the definitions used by other companies.
Non-GAAP operating income and operating income per diluted share consist of our GAAP net income adjusted by the net realized gains, net impairment losses on investments, change in net unrealized gains on equity securities and taxes related thereto. For the quarter ended June 30, 2019 an increase of $3.8 million for the change in unrealized gains was recognized within income before income taxes, compared to a decrease of $2.7 million recognized in the comparable 2018 period. For the six months ended June 30, 2019, an increase of $15.6 million for the change in unrealized gains was recognized in income before income taxes, compared to a decrease of $6.2 million recognized in the comparable 2018 period. Net income and earnings per diluted share are the GAAP financial measures that are most directly comparable to non-GAAP operating income and non-GAAP operating income per diluted share, respectively. A reconciliation of the GAAP financial measures to these non-GAAP measures is included in the financial highlights below.
About Safety: Safety Insurance Group, Inc., based in Boston, MA, is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company. Operating exclusively in Massachusetts, New Hampshire, and Maine, Safety is a leading writer of property and casualty insurance products, including private passenger automobile, commercial automobile, homeowners, dwelling fire, umbrella and business owner policies.
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, 2018 Form 10-K with the SEC on February 28, 2019 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, 2018 filed with the SEC on February 28, 2019.
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,
2019
2018
(Unaudited)
Assets
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: $1,150,224 and $1,175,413)
$
1,178,251
$
1,161,862
Equity securities, at fair value (cost: $145,041 and $142,948)
165,659
148,011
Other invested assets
30,124
23,481
Total investments
1,374,034
1,333,354
Cash and cash equivalents
37,968
37,582
Accounts receivable, net of allowance for doubtful accounts
209,658
190,062
Receivable for securities sold
964
1,039
Accrued investment income
8,304
8,420
Taxes recoverable
1,671
—
Receivable from reinsurers related to paid loss and loss adjustment expenses
28,819
13,691
Receivable from reinsurers related to unpaid loss and loss adjustment expenses
112,228
108,398
Ceded unearned premiums
35,900
33,974
Deferred policy acquisition costs
75,670
73,355
Deferred income taxes
—
8,749
Equity and deposits in pools
28,492
28,094
Operating lease right-of-use-assets
36,116
—
Other assets
23,290
19,522
Total assets
$
1,973,114
$
1,856,240
Liabilities
Loss and loss adjustment expense reserves
$
589,123
$
584,719
Unearned premium reserves
453,612
435,380
Accounts payable and accrued liabilities
56,799
71,896
Payable for securities purchased
7,684
5,156
Payable to reinsurers
21,240
12,220
Deferred income taxes
1,221
—
Taxes payable
—
6,090
Operating lease liabilities
36,116
—
Other liabilities
24,270
22,135
Total liabilities
1,190,065
1,137,596
Shareholders’ equity
Common stock: $0.01 par value; 30,000,000 shares authorized; 17,663,364 and 17,566,180 shares issued
177
176
Additional paid-in capital
199,644
196,292
Accumulated other comprehensive income (loss), net of taxes
22,141
(10,706
)
Retained earnings
644,922
616,717
Treasury stock, at cost: 2,279,570 shares
(83,835
)
(83,835
)
Total shareholders’ equity
783,049
718,644
Total liabilities and shareholders’ equity
$
1,973,114
$
1,856,240
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,
2019
2018
2019
2018
Net earned premiums
$
196,426
$
194,125
$
390,917
$
386,158
Net investment income
10,574
10,188
22,325
20,719
Earnings from partnership investments
735
487
1,570
5,351
Net realized gains on investments
483
1,589
319
2,895
Change in net unrealized gains on equity investments
3,754
(2,711)
15,555
(6,193)
Net impairment losses on investments (a)
(54)
—
(274)
—
Finance and other service income
4,084
4,292
8,169
8,759
Total revenue
216,002
207,970
438,581
417,689
Losses and loss adjustment expenses
122,393
113,227
248,420
250,871
Underwriting, operating and related expenses
60,908
61,573
121,342
122,429
Interest expense
23
23
45
45
Total expenses
183,324
174,823
369,807
373,345
Income before income taxes
32,678
33,147
68,774
44,344
Income tax expense
6,744
6,331
12,894
8,403
Net income
$
25,934
$
26,816
$
55,880
$
35,941
Earnings per weighted average common share:
Basic
$
1.70
$
1.77
$
3.66
$
2.37
Diluted
$
1.68
$
1.75
$
3.63
$
2.35
Cash dividends paid per common share
$
0.80
$
0.80
$
1.60
$
1.60
Number of shares used in computing earnings per share:
Basic
15,220,822
15,090,435
15,181,034
15,068,321
Diluted
15,346,234
15,213,414
15,326,121
15,202,338
(a) No portion of the other-than-temporary impairments recognized in the period indicated were included in Other Comprehensive Income.
Reconciliation of Net Income to Non-GAAP Operating Income
Net income
$
25,934
$
26,816
$
55,880
$
35,941
Exclusions from net income:
Net realized gains on investments
(483)
(1,589)
(319)
(2,895)
Change in net unrealized gains on equity investments
(3,754)
2,711
(15,555)
6,193
Net impairment losses on investments
54
-
274
-
Income tax expense (benefit) on exclusions from net income
878
(236)
3,276
(693)
Non-GAAP operating income
$
22,629
$
27,702
$
43,556
$
38,546
Net income per diluted share
$
1.68
$
1.75
$
3.63
$
2.35
Exclusions from net income:
Net realized gains on investments
(0.03)
(0.10)
(0.02)
(0.19)
Change in net unrealized gains on equity investments
(0.24)
0.18
(1.01)
0.41
Net impairment losses on investments
-
-
0.02
-
Income tax expense (benefit) on exclusions from net income
0.06
(0.02)
0.21
(0.05)
Non-GAAP operating income per diluted share
$
1.47
$
1.81
$
2.83
$
2.52
Safety Insurance Group, Inc. and Subsidiaries Additional Premium Information (Unaudited) (Dollars in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Written Premiums
Direct
$
233,595
$
233,050
$
436,982
$
436,783
Assumed
8,175
8,297
16,420
16,245
Ceded
(24,485
)
(25,832
)
(46,179
)
(47,500
)
Net written premiums
$
217,285
$
215,515
$
407,223
$
405,528
Earned Premiums
Direct
$
210,334
$
208,297
$
417,642
$
412,116
Assumed
8,213
7,880
17,528
16,767
Ceded
(22,121
)
(22,052
)
(44,253
)
(42,725
)
Net earned premiums
$
196,426
$
194,125
$
390,917
$
386,158
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731005972/en/
Safety Insurance Group, Inc. Office of Investor Relations 877-951-2522 InvestorRelations@SafetyInsurance.com
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