Safety Announces Fourth Quarter Results 2008

 

Wednesday, Mar 11,2009, 11:46:49 PM   Click:

BUSINESS WIRE
Published: Sunday, March 08, 2009


A CarInsurance.com Customer Said:
Your customer service is fantastic!

Sharon M.
Jacksonville, FL
Safety Insurance Group, Inc.

Office of Investor Relations, 877-951-2522

InvestorRelations@SafetyInsurance.com

Safety Insurance Group, Inc. (NASDAQ: SAFT) today reported fourth quarter results 2008. Net income for the quarter ended December 31, 2008 was $ 11.9 million, or $ 0.74 per diluted share, compared to $ 16.9 million, or $ 1.05 per diluted share, for the same period 2007. Net income for the year ended December 31, 2008 was $ 70.3 million, or $ 4.36 per diluted share, compared to $ 87.4 million, or $ 5.43 per diluted share for the same period 2007. Security book per share increased to $ 37.17 at 31 December 2008, compared to $ 35.20 at December 31, 2007. Safety paid $ 0.40 per share in dividends to investors during the three months ended December 31, 2008 and 2007. Safety paid $ 1.60 per share in dividends to investors during the financial year ended 31 December 2008, compared to $ 1.30 per share during the comparable period in 2007.

Direct written premiums for the quarter ended December 31, 2008 decreased by $ 13.6 million, or 10.7%, to $ 114.0 million from $ 127.6 million for the same period in 2007. Direct written premiums for the year ended December 31, 2008 decreased by $ 46.4 million, or 7.5%, to $ 573.5 million from $ 619.9 million for the same period in 2007. The decline occurred mainly in 2008 in our personal and commercial automobile lines, which experienced a decline of 7.9% and 2.3%, respectively, in average written premium per exposure. The decrease in our car was in large part because of lower overall rate of 6.7% that we have filed under the system of competitive prices for the car market in Massachusetts starting on 1 April 2008.

Net written premiums for the quarter ended December 31, 2008 decreased by $ 13.6 million, or 11.2%, to $ 107.7 million from $ 121.3 million for the same period in 2007. Net written premiums for the year ended December 31, 2008 decreased by $ 47.7 million, or 7.9%, to $ 552.9 million from $ 600.6 million for the same period in 2007. These decreases are due to factors that decreased direct written premiums combined with decreases in premiums assumed from Commonwealth Automobile Reinsurers ( "CAR"), partly offset by a decrease in premiums ceded to CAR. Net premiums earned for the quarter ended December 31, 2008 decreased by $ 11.5 million, or 7.7%, to $ 137.6 million from $ 149.1 million for the same period in 2007. Net premiums earned for the year ended December 31, 2008 decreased by $ 32.6 million, or 5.4%, to $ 576.6 million from $ 609.2 million for the same period in 2007. These decreases are due to factors that decrease the direct and net premiums. The effect of assumed and net ceded premiums written and net premiums earned is presented in the attached tables.

Net investment income for the quarter ended December 31, 2008 was $ 11.3 million compared to $ 11.5 million for the same period in 2007. Net investment income for the year ended December 31, 2008 was $ 45.8 million compared to $ 44.3 million for the comparable period in 2007. Average cash and investment securities (at cost) increased by $ 58.2 million, or 5.8% to $ 1060.5 million for the year ended December 31, 2008 from $ 1002.3 million for the comparable period in 2007. Net effective yield on the investment portfolio was 4.3% during the year ended December 31, 2008, compared to 4.4% during the comparable period in 2007. Our duration decreased to 3.2 years to 31 December 2008 from 4.2 years at December 31, 2007.

As of December 31, 2008, our portfolio of fixed maturity investments was comprised entirely of investment grade securities. We continue to hold any mortgage debt. All mortgage securities are either U.S. Government or Agency guaranteed or are rated Aaa / AAA. We continue to believe that our current portfolio position and strong cash flows from underlying operations to provide sufficient liquidity to meet our needs. As of December 31, 2008, we maintained $ 143.4 million in short-term securities, cash and cash equivalents and we have no debt.

Loss, expense and combined ratios calculated in the United States generally accepted accounting principles (GAAP) for the quarter ended December 31, 2008 were 69.2%, 29.7% and 98.9% compared to 64.7%, 29.7% and 94.4% for the same period of 2007. Loss, expense and combined ratios calculated under GAAP for the year ended December 31, 2008 were 64.1%, 30.0% and 94.1%, compared to 61.5%, 28.0% and 89.5% for the same period of 2007. The loss ratio increased for the quarter and year ending 31 December 2008, mainly due to a decrease in our personal automobile earned premiums per exposure. In addition, for the quarter ended 31 December 2008, pre-tax net impact of catastrophes was estimated at 4.0 million in losses to New England ice storm in December 2008 compared to the absence of catastrophe losses for the period comparable 2007. Total prior year favorable development included in the profit before tax for the quarter and year ended December 31, 2008 was $ 13.0 million and $ 35.9 million, respectively, compared to the previous year favorable development of $ 11.5 million and $ 30.8 million, respectively, for the comparable 2007 periods.

On 17 February 2009, the Board of Directors has approved and declared a quarterly cash dividend of $ 0.40 per share on the issued and outstanding common stock, payable on 13 March 2009 to shareholders of record at the close of business March 2 2009.

About Safety: Safety Insurance Group, Inc. is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and the safety of property and Casualty Insurance Company, which are Boston, MA based on the authors of the insurance. Security is one of the main author of the personal auto 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 site web to the company www.SafetyInsurance.com. Safety filed its December 31, 2007 Form 10 - K with the SEC on March 14, 2008 and urges shareholders to refer to these documents for more complete information concerning the security of its financial results.

Cautionary statement under "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995:

This press release contains, in May and security of time to make written or oral "forward-looking statements" within the meaning of federal U.S. securities.

Forward-looking statements may include one or more of the following, among others:

- Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other elements;

- Descriptions of plans or objectives of management for future operations, products or services;

- Forecasts of future economic performance, liquidity, the need for funding and income;

- The description of the assumptions underlying or relating to any of these elements, and

- The future of the performance of credit markets.

Forward-looking statements may 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," "target," "projects" or words of the same 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 future circumstances, events, trends or results to differ significantly and / or materially from historical results or those projected in the forward looking. These factors include, but are not limited to the competitive nature of our industry and the possible adverse effects of this competition. Although a number of insurers that are much more important that we do not currently compete in a course in Massachusetts car market, if one or more of these companies decided to aggressively enter the market, it could have a negative effect on us. Other important factors include the conditions of operations and restrictive regulations in Massachusetts, the possibility of losses due to claims resulting from severe weather, the possibility that the future Commissioner May approve rule changes that alter the functioning of the residual our possible need and availability of additional funding, and our dependence on strategic relationships, among others, and other risks and factors described from time to time in our reports filed with the SEC, such as those are contained under the heading "Risk Factors" in our Form 10 - K for the year ended December 31, 2007 filed with the SEC on March 14 2008.

Some other factors such as market, operational, liquidity, interest rate, equity and other risks are described in our quarterly reports on Form 10-Q and our annual reports on Form 10 - K. Factors relating to the regulation and supervision of our company are also described or incorporated in our quarterly reports on Form 10-Q and our annual report on Form 10-K filed with the SEC on March 14 2008. There are other factors than those described or incorporated in this press release or in the reports on Form 10-Q and Form 10-K that could cause actual conditions, events or results to differ materially from those forward-looking statements . Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect events or circumstances occurring after the date of these forward-looking statements are made.

TABLE

Safety Insurance Group, Inc. and its affiliates

Consolidated Balance Sheets

(In thousands, except share data)

__ December 31 December 31

2008__ 2007

Active

Investment securities available for sale:

Fixed maturities, at fair value (amortized cost: $ 929,836 and $ 995,360) __ $ 1002028 $ 920171__

Securities, at fair value (cost: $ 8419 and $ 6794) __ 8040__ 6977

Short-term securities, at amortized cost, which approximates fair value__ 82928__ --

Total investment securities__ 1011139__ 1009005

Cash and equivalents__ 60,451 __ 46,311

Accounts receivable, net of allowance for doubtful accounts__ 138792__ 156343

Under investment income__ 9957 __ 10,972

Taxes recoverable__ 5300 __ --

Receivable from reinsurers related to paid loss and loss adjustment expenses__ 10835__ 13047

Receivable from reinsurers related to unpaid loss and loss adjustment expenses__ 76489__ 84290

Deferred premiums__ sold 21,620 __ 28,818

Deferred acquisition costs__ 46687__ 48652

Taxes__ revenue 18,986 __ 13,388

Equity and deposits in pools__ 23,578 __ 26,235

Other assets__ 13983 __ 9931

Total assets__ __ $ 1,437,817 $ 1,446,992

Liabilities

Loss and loss adjustment expenses reserves__ $ 477,720 $ 467559__

Provisions for unearned premiums reserves__ 289,695 __ 320,545

Accounts payable and accrued liabilities__ 51111__ 50023

Taxes payable__-__ 120

Payable reinsurers__ 8291 __ 10,662

Other liabilites__ 17,790 __ 17,922

Total liabilities__ 834,446 __ 876,992

Equity

Common stock: par value $ 0.01; 30000000 shares authorized, 16,464,530 and 16,242,213 share issued__ 165__ 162

Surplus capital__ 140,261 __ 134,224

Accumulated other comprehensive (loss) net taxes__ (6528) __ 4453

Reserves earnings__ 476,989 __ 432,746

Treasury stock, at cost: 232,013 and 48,124 shares__ (7516) __ (1585)

Total shareholders equity__ 603,371 __ 570,000

Total liabilities and shareholders equity__ $ 1446992 $ 1437817__

TABLE

Safety Insurance Group, Inc. and its affiliates

Consolidated Statements of Income

(In thousands, except per share data and share data)

Three months Twelve months ended Ended__

__ December 31 December 31

2008__ 2007__ 2008__ 2007

Net earned premiums__ $ 137555__ $ 149076__ $ 609,208 $ 576556__

Net Investment income__ 11326__ 11452__ 45771__ 44255

Net realized (losses) gains on investments__ (378) __ (19) __ 678__ (6)

Finance and other services income__ 4398__ 4441__ 17995__ 16623

Total revenue__ 152901__ 164950__ 641000__ 670080

The losses and loss adjustment expenses__ 95173__ 96446__ 369823__ 374493

Underwriting, operating and expenses__ 40918__ 44350__ 172987__ 170657

Interest expenses__ 22__ 20__ 81__ 83

Total expenses__ 136113__ 140816__ 542891__ 545233

Income before taxes__ 16788__ 24134__ 98109__ 124847

Income tax expense__ 4864__ 7208__ 27851__ 37434

Net income__ $ 11924__ $ 16926__ $ 87,413 $ 70258__

The weighted average profit per common share:

Basic__ $ 0.74__ $ 1.06__ $ 4.38__ $ 5.46

Diluted__ $ 0.74__ $ 1.05__ $ 4.36__ $ 5.43

Cash dividends paid by share__ $ 0.40__ $ 0.40__ $ 1.60__ $ 1.30

Weighted average shares outstanding:

Basic__ 16049398__ 16012526__ 16046937__ 16022074

Diluted__ 16120652__ 16096586__ 16114355__ 16095512

Safety Insurance Group, Inc. and its affiliates

Additional Information Premium

(Thousands of dollars)

Three months Twelve months ended Ended__

__ December 31 December 31

2008__ 2007__ 2008__ 2007

Premiums

Direct__ $ 113966__ $ 127610__ $ 619,848 $ 573509__

Assumed__ 6754 __ 9336 __ 37,439 __ 53,256

Ceded__ (12,975) __ (15,628) __ (58,044) __ (72,532)

Net written premiums__ $ 107745__ $ 121318__ $ 600,572 $ 552904__

Earned premiums

Direct__ $ 144306__ $ 154769__ $ 628,124 $ 595673__

Assumed__ 8608 __ 12,319 __ 46,125 __ 57,839

Ceded__ (15,359) __ (18,012) __ (65,242) __ (76,755)

Net earned premiums__ $ 137555__ $ 149076__ $ 609,208 $ 576556__

(c) 2009 Business Wire. Provided by ProQuest LLC. All rights reserved.