I’m one of the very few Seeking Alpha analysts still covering Safety Insurance ( SAFT ). Most of my peers don’t bother - and I respect that.The CrickAnt is an actuary for an insurance company utilizing his work experience to do analysis on insurance and reinsurance companies. He is a contributing author to the investing group Cash Flow Club where along with Darren McCammon and Jonathan Weber, they focus on company cash flows and their access to capital. Core features of the Cash Flow Club include: access to ...

Core Viewpoint - The article highlights the limited coverage of Safety Insurance (SAFT) by analysts, indicating a niche focus within the investment community [1]. Group 1: Analyst Background - The CrickAnt is an actuary with experience in insurance and reinsurance analysis, contributing to the Cash Flow Club, which emphasizes company cash flows and capital access [2]. Group 2: Cash Flow Club Features - The Cash Flow Club offers access to a leader's personal income portfolio targeting yields of over 6%, community chat, a "Best Opportunities" List, performance transparency, and coverage of various sectors including energy midstream, commercial mREITs, BDCs, and shipping [2].

Core Insights - The article discusses the current investment landscape, emphasizing the appeal of low-volatility stocks that offer high dividend yields amidst market uncertainty [3][4][5]. Group 1: Low Volatility Stocks - Low beta stocks, which are less volatile than the market, are currently undervalued, making them attractive for investors seeking stability [4][5]. - Safety Insurance Group (SAFT) offers a 5.2% yield and has low betas of 0.47 (1-year) and 0.26 (5-year), indicating its stability despite recent lackluster underwriting results [7][9][10]. - Universal Corp. (UVV) provides a 6.4% yield and operates as a tobacco supplier rather than a manufacturer, with betas of 0.33 (1-year) and 0.67 (5-year), reflecting its counter-market trends [11][13]. - LTC Properties (LTC) is a REIT with a 6.4% yield and low betas of 0.62 (5-year) and 0.23 (1-year), showing steady performance and a shift towards more operational exposure [14][15]. - Flowers Foods (FLO) has an 8.2% yield but faces challenges from import tariffs and high debt, with betas of 0.16 (1-year) and 0.31 (5-year) [15][17]. - Apple Hospitality REIT (APLE) offers an 8.6% yield and has betas of 0.94 (1-year) and 0.85 (5-year), indicating moderate volatility, with a diversified hotel portfolio [18][19][20]. Group 2: Market Conditions and Investment Strategy - The current bull market may be nearing a peak, prompting investors to consider low-volatility stocks as a defensive strategy [3][6]. - The article suggests that investors should prepare their portfolios for potential market downturns by focusing on stable, high-yield investments [3][6].

Premiums and Revenue - Direct written premiums for the three months ended September 30, 2025, increased by 5.0% to $334,181, compared to $318,182 in the same period of 2024[127]. - For the nine months ended September 30, 2025, direct written premiums rose to $978,980, a 8.6% increase from $901,032 in 2024[127]. - Net written premiums for Q3 2025 rose by $16,603, or 5.7%, to $309,215 from $292,612 in Q3 2024[154]. - Net earned premiums for Q3 2025 increased by $32,364, or 12.5%, to $291,021 compared to $258,657 in Q3 2024[155]. - Total revenue for the nine months ended September 30, 2025 was $944,397, up from $833,298 in the same period of 2024[152]. Losses and Expenses - Losses and loss adjustment expenses for the three months ended September 30, 2025, increased by $22,493, or 12.3%, to $204,982 from $182,489 in 2024[129]. - The loss ratio for the three months ended September 30, 2025, decreased to 70.4% from 70.6% in 2024, while the expense ratio improved to 28.5% from 30.1%[136]. - Underwriting, operating, and related expenses for the three months ended September 30, 2025 increased by $5,159, or 6.6%, to $83,027 from $77,868 in the comparable 2024 period[175]. - Losses and loss adjustment expenses for Q3 2025 were $204,982, compared to $182,489 in Q3 2024[152]. Income and Profitability - Non-GAAP operating income for the three months ended September 30, 2025, was $21,883, up from $16,524 in the same period of 2024, representing a 32.5% increase[130]. - Net income for the three months ended September 30, 2025 was $28,310, compared to $25,889 for the same period in 2024, reflecting a year-over-year increase of 9.3%[178]. - Non-GAAP operating income for Q3 2025 was $21,883, compared to $16,524 in Q3 2024, reflecting a significant increase[152]. Investment Performance - Net investment income for Q3 2025 grew by $3,325, or 27.2%, to $15,535 from $12,210 in Q3 2024[157]. - The net effective annualized yield on the investment portfolio was 4.0% for both Q3 2025 and the nine months ended September 30, 2025, compared to 3.4% and 3.9% respectively in the comparable periods of 2024[157]. - The company uses a systematic methodology to evaluate declines in fair values of investments, considering factors such as issuer financial condition and historical volatility[234]. Market Position and Ratings - The company has established a strong market position, being the third largest private passenger automobile carrier with a 9.7% market share in Massachusetts[123]. - A.M. Best reaffirmed the company's "A (Excellent)" rating on June 20, 2025[124]. Reserves and Capital - The total net reserves for losses and loss adjustment expenses (LAE) were estimated at $577,917 as of September 30, 2025, with a range of estimations between $537,736 and $603,892[208]. - The company’s total net reserves for losses and LAE include retained reserves of $544,632 and assumed reserves of $33,285 as of September 30, 2025[217]. - The company reported total capital of $758,789 as of December 31, 2024, exceeding the minimum statutory capital requirement of $236,219[196]. Dividends and Share Repurchase - The maximum dividend available for 2025 without prior approval of the Commissioner was $75,879, based on a statutory surplus of $758,789 as of December 31, 2024[190]. - The company paid quarterly dividends of $0.90 per share for the first two quarters of 2025, increasing to $0.92 per share in the third quarter, totaling $13,370, $13,384, and $13,641 in dividends paid and accrued respectively[193]. - As of September 30, 2025, the company had authorized a cumulative share repurchase program of up to $200,000, with no shares repurchased during the three and nine months ended September 30, 2025[194]. Forward-Looking Statements and Risks - Forward-looking statements regarding the company’s strategy for growth and financial results are subject to risks and uncertainties that could materially affect actual outcomes[238]. - The company does not undertake any obligation to update forward-looking statements after their initial date[240].

Group 1 - The article provides a market analysis covering several companies including Safety Insurance Group Inc, LTC Properties Inc, Universal Corporation, and Flowers Foods Inc [1] - The analysis aims to identify potential investment opportunities and risks associated with these companies [1] - The report is available on Investing.com, indicating a focus on providing insights for investors [1] Group 2 - Safety Insurance Group Inc is highlighted for its performance metrics and market positioning [1] - LTC Properties Inc is analyzed in terms of its investment potential and market trends [1] - Universal Corporation and Flowers Foods Inc are also discussed, focusing on their respective market dynamics and financial health [1]

Financial Performance - Net income for the quarter was $28.3 million, or $1.91 per diluted share, up from $25.9 million, or $1.73 per diluted share, in the comparable 2024 period[5] - Net earned premium increased by 12.5% to $291.0 million for the quarter ended September 30, 2025, compared to $258.7 million for the same period in 2024[9] - Net earned premiums for Q3 2025 increased to $291,021,000, up 12.5% from $258,657,000 in Q3 2024[25] - Net written premiums for Q3 2025 were $309,215,000, a 5.7% increase from $292,612,000 in Q3 2024[28] - Non-GAAP operating income for the quarter was $1.48 per diluted share, compared to $1.10 per diluted share for the comparable 2024 period[5] - The company reported a non-GAAP operating income of $21,883,000 for Q3 2025, up 32.4% from $16,524,000 in Q3 2024[26] - Basic earnings per share for Q3 2025 were $1.91, compared to $1.74 for Q3 2024, reflecting a 9.8% increase[25] Premiums and Ratios - For the quarter ended September 30, 2025, the combined ratio improved to 98.9% from 100.7% in the same period last year, reflecting growth in policy counts and rate increases[2] - Direct written premiums for the quarter increased by 5.0% to $334.2 million from $318.2 million for the comparable 2024 period[7] Investment and Assets - Net investment income increased by 27.2% to $15.5 million for the quarter, driven by higher interest rates on the fixed maturity portfolio[13] - Total assets as of September 30, 2025, were $2,449,840,000, an increase from $2,270,090,000 at the end of 2024[24] Losses and Expenses - Losses and loss adjustment expenses incurred increased by 12.3% to $205.0 million for the quarter, driven by larger policy counts and inflationary impacts[10] - Losses and loss adjustment expense reserves rose to $719,812,000 as of September 30, 2025, compared to $671,669,000 at the end of 2024[24] Dividends and Share Repurchases - A quarterly cash dividend of $0.92 per share was approved, payable on December 15, 2025[4] - The company declared cash dividends of $0.92 per common share for Q3 2025, up from $0.90 in Q3 2024[25] - The company plans to recommence share repurchases, with $44.76 million remaining under the previously authorized $200 million[3] Revenue Growth - Total revenue for the nine months ended September 30, 2025, reached $944,397,000, a 13.3% increase compared to $833,298,000 for the same period in 2024[25]

Group 1 - Safety Insurance Group (NASDAQ: SAFT) is the third largest provider of homeowners insurance in Massachusetts, holding a 6.3% market share [1] - The company generates approximately 95% of its premiums from Massachusetts, indicating a strong regional focus [1] Group 2 - The investment group European Small Cap Ideas offers exclusive access to actionable research on appealing Europe-focused investment opportunities [1] - The focus of the investment group is on high-quality ideas in the small-cap space, emphasizing capital gains and dividend income for continuous cash flow [1] - Features of the investment group include two model portfolios, weekly updates, educational content, and an active chat room for discussions [1]

Part I. Financial Information This part details the Company's financial performance, condition, and related disclosures for the reporting period [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Safety Insurance Group, Inc. and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024, along with detailed notes explaining accounting policies, financial performance, and specific financial items [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section presents the Company's financial position, including assets, liabilities, and equity at specific dates Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total Assets | $2,364,208 | $2,270,090 | | Total Liabilities | $1,490,944 | $1,441,626 | | Total Shareholders' Equity | $873,264 | $828,464 | | Losses and loss adjustment expense reserves | $685,941 | $671,669 | | Unearned premium reserves | $659,464 | $619,916 | | Fixed maturities, available for sale, at fair value | $1,188,337 | $1,115,218 | | Equity securities, at fair value | $235,352 | $221,422 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the Company's revenues, expenses, and net income over specific periods Consolidated Statements of Operations Highlights (Dollars in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net earned premiums | $282,113 | $246,944 | $554,803 | $482,997 | | Total revenue | $316,344 | $269,783 | $617,773 | $538,016 | | Net income | $28,937 | $16,636 | $50,833 | $36,714 | | Basic EPS | $1.95 | $1.13 | $3.44 | $2.49 | | Diluted EPS | $1.95 | $1.13 | $3.43 | $2.48 | | Cash dividends paid per common share | $0.90 | $0.90 | $1.80 | $1.80 | - Net earned premiums **increased by** **14.2%** for the three months ended June 30, 2025, and by **14.9%** for the six months ended June 30, 2025, compared to the prior year periods[10](index=10&type=chunk) - Net income **increased by** **73.9%** for the three months ended June 30, 2025, and by **38.4%** for the six months ended June 30, 2025, compared to the prior year periods[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section reports net income and other comprehensive income (loss) components for the periods presented Consolidated Statements of Comprehensive Income (Loss) Highlights (Dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $28,937 | $16,636 | $50,833 | $36,714 | | Other comprehensive income (loss), net of tax | $5,917 | ($1,217) | $18,193 | ($6,652) | | Comprehensive income | $34,854 | $15,419 | $69,026 | $30,062 | - Comprehensive income **increased by** **126.0%** for the three months ended June 30, 2025, and by **129.6%** for the six months ended June 30, 2025, **primarily due to** positive unrealized holding gains on investments[13](index=13&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section outlines changes in shareholders' equity, including net income, dividends, and other comprehensive income Shareholders' Equity Changes (Dollars in thousands) | Metric | Balance at Dec 31, 2024 | Net Income (Jan 1 - Jun 30, 2025) | Unrealized Gains on Securities (Jan 1 - Jun 30, 2025) | Dividends Paid (Jan 1 - Jun 30, 2025) | Balance at Jun 30, 2025 | | :--------------------------------------- | :---------------------- | :-------------------------------- | :---------------------------------------------------- | :------------------------------------ | :---------------------- | | Total Shareholders' Equity | $828,464 | $50,833 | $18,193 | ($26,754) | $873,264 | - **Total shareholders' equity increased from** **$828,464 thousand** at December 31, 2024, to **$873,264 thousand** at June 30, 2025, driven by net income and unrealized gains on available-for-sale securities, partially offset by dividends[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $35,496 | $4,454 | | Net cash (used for) provided by investing activities | ($18,217) | $28,821 | | Net cash used for financing activities | ($26,844) | ($26,848) | | Net increase (decrease) in cash and cash equivalents | ($9,565) | $6,427 | | Cash and cash equivalents at end of period | $49,409 | $44,579 | - Net cash **provided by operating activities significantly increased to** **$35,496 thousand** in H1 2025 from **$4,454 thousand** in H1 2024[17](index=17&type=chunk) - Investing activities **shifted from** **providing** **$28,821 thousand** in cash in H1 2024 to **using** **$18,217 thousand** in H1 2025[17](index=17&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [Note 1. Basis of Presentation](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the Company's business, accounting principles, and the basis for financial statement preparation - The Company is a **leading provider** of property and casualty insurance, **primarily focused on** the Massachusetts market, with automobile insurance as its principal product line[24](index=24&type=chunk) - The Massachusetts Property Insurance Underwriting Association (FAIR Plan) **restructured on** April 1, 2024, transitioning from a profit/loss sharing partnership to a stand-alone entity[25](index=25&type=chunk) [Note 2. Recent Accounting Pronouncements](index=8&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) This note discusses the impact of newly adopted and upcoming accounting standards on the Company's financials - ASU 2023-07 (Segment Reporting) became effective for interim periods starting January 1, 2025, with **no material impact** on the Company's financial position, results of operations, or cash flows[26](index=26&type=chunk)[27](index=27&type=chunk) - The Company operates with **one reportable operating segment**: property and casualty insurance operations[28](index=28&type=chunk) - ASU 2023-09 (Income Taxes) and ASU 2024-03 (Income Statement Expense Disaggregation) are effective for fiscal years starting January 1, 2025, and January 1, 2027, respectively, and are **not expected to impact** financial position, results, or cash flows, though disclosure impacts are being evaluated[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 3. Earnings per Weighted Average Common Share](index=9&type=section&id=Note%203.%20Earnings%20per%20Weighted%20Average%20Common%20Share) This note provides details on the calculation of basic and diluted earnings per share Earnings per Weighted Average Common Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $1.95 | $1.13 | $3.44 | $2.49 | | Diluted EPS | $1.95 | $1.13 | $3.43 | $2.48 | | Cash dividends paid per common share | $0.90 | $0.90 | $1.80 | $1.80 | [Note 4. Share-Based Compensation](index=10&type=section&id=Note%204.%20Share-Based%20Compensation) This note outlines the Company's share-based incentive plans and related compensation expenses - The Amended 2018 Long-Term Incentive Plan has a **pool of** **700,000 shares** of common stock available for issuance, with **236,326 shares remaining available** for future grants as of June 30, 2025[36](index=36&type=chunk)[38](index=38&type=chunk) - Unrecognized compensation expense for non-vested restricted stock awards **totaled** **$7,786 thousand** as of June 30, 2025, expected to be recognized over a **weighted average period of** **1.7 years**[46](index=46&type=chunk) Restricted Stock Activity (Six Months Ended June 30, 2025) | Metric | Shares Under Restriction | Weighted Average Fair Value | | :--------------------------------------- | :----------------------- | :-------------------------- | | Outstanding at beginning of year | 63,522 | $83.60 | | Granted | 41,178 | $79.67 | | Vested and unrestricted | (35,188) | $84.77 | | Forfeited | (291) | $82.53 | | Outstanding at end of period | 69,221 | $82.85 | [Note 5. Investments](index=12&type=section&id=Note%205.%20Investments) This note details the composition, fair value, and performance of the Company's investment portfolio Investment Portfolio Summary (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total investments | $1,580,108 | $1,513,059 | | Gross Unrealized Gains | $44,266 | $33,002 | | Gross Unrealized Losses | ($58,766) | ($77,455) | | Net Investment Income (3 months) | $15,724 | $13,500 | | Net Investment Income (6 months) | $30,298 | $28,731 | - The Company's investment portfolio included **795 securities** in an unrealized loss position at June 30, 2025[49](index=49&type=chunk) - The **Allowance for Expected Credit Losses was** **$1,453 thousand** at June 30, 2025, up from **$1,198 thousand** at December 31, 2024[48](index=48&type=chunk)[65](index=65&type=chunk) - The Company held **one Level 3 security** at June 30, 2025, and December 31, 2024, with no transfers between Level 1 and Level 2 during the periods[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 6. Allowance for Expected Credit Losses](index=18&type=section&id=Note%206.%20Allowance%20for%20Expected%20Credit%20Losses) This note explains the Company's allowance for credit losses on financial assets, including accounts receivable Allowance for Expected Credit Losses on Accounts Receivable (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Allowance for Expected Credit Losses | $827 | $918 | - **No expected credit losses were identified** for reinsurance recoverables at June 30, 2025, or December 31, 2024, due to strong reinsurer ratings and collateralization[87](index=87&type=chunk) - The **majority of the Company's reinsurance recoverable** (**96%** at June 30, 2025) is from the CAR Commercial Automobile Program[87](index=87&type=chunk) [Note 7. Loss and Loss Adjustment Expense Reserves](index=20&type=section&id=Note%207.%20Loss%20and%20Loss%20Adjustment%20Expense%20Reserves) This note provides information on the Company's reserves for unpaid losses and related adjustment expenses Loss and Loss Adjustment Expense Reserves (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Reserves for losses and LAE at end of period | $685,941 | $671,669 | - Prior year reserves **decreased by** **$23,473 thousand** for the six months ended June 30, 2025, **primarily due to** re-estimations in retained automobile and homeowners lines[90](index=90&type=chunk) [Note 8. Commitments and Contingencies](index=20&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note discloses the Company's contractual commitments and potential liabilities from legal matters - The Company has **committed** **$170,000 thousand** to limited partnerships, with **$32,163 thousand remaining callable** as of June 30, 2025[92](index=92&type=chunk) - Management believes that the ultimate resolution of pending claims and future assessments from the Massachusetts Insurers Insolvency Fund will **not have a material adverse effect** on the consolidated financial statements[93](index=93&type=chunk)[94](index=94&type=chunk) [Note 9. Debt](index=21&type=section&id=Note%209.%20Debt) This note describes the Company's debt instruments, credit facilities, and associated interest expenses - The Company **extended its Revolving Credit Agreement** with Citizens Bank, N.A. to August 10, 2028, **providing** a **$30,000 thousand** revolving credit facility[96](index=96&type=chunk) - The Company **borrowed** **$30,000 thousand** under the Citizens Bank Credit Agreement on March 27, 2025, with this amount **outstanding at** June 30, 2025[98](index=98&type=chunk) Interest Expense (Dollars in thousands) | Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Citizens Bank Credit Agreement | $443 | $15 | | FHLB-Boston borrowing | $0 | $125 | [Note 10. Income Taxes](index=22&type=section&id=Note%2010.%20Income%20Taxes) This note presents information on the Company's income tax expense, effective tax rate, and deferred taxes Effective Tax Rate | Period | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Three Months Ended June 30 | 21.4% | 21.7% | | Six Months Ended June 30 | 21.9% | 21.6% | - The 'One Big Beautiful Bill Act,' signed on July 4, 2025, is **not currently expected to have a material impact** on the Company's financial position or results of operations[107](index=107&type=chunk) [Note 11. Share Repurchase Program](index=22&type=section&id=Note%2011.%20Share%20Repurchase%20Program) This note details the Company's share repurchase authorizations and activity during the period - The Board of Directors has **cumulatively authorized increases** to the share repurchase program up to **$200,000 thousand** of outstanding common shares[109](index=109&type=chunk) - **No share purchases were made** under the program during the three and six months ended June 30, 2025[110](index=110&type=chunk) - As of June 30, 2025, the Company had **purchased** **3,215,690 shares** at a cost of **$155,240 thousand** under the program[110](index=110&type=chunk) [Note 12. Leases](index=22&type=section&id=Note%2012.%20Leases) This note provides information on the Company's operating and finance leases, including lease costs and terms Operating Lease Costs (Dollars in thousands) | Period | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Three Months Ended June 30 | $904 | $1,006 | | Six Months Ended June 30 | $1,809 | $2,019 | - The **weighted average remaining lease term** for operating leases was **3.45 years**, with a **weighted average discount rate of** **2.46%** as of June 30, 2025[113](index=113&type=chunk) [Note 13. Subsequent Events](index=23&type=section&id=Note%2013.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date but before financial statement issuance - **No subsequent events requiring recognition or disclosure** have occurred, other than the 'One Big Beautiful Bill Act' mentioned in Note 10[114](index=114&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, analyzing key performance indicators, recent trends... [Executive Summary and Overview](index=24&type=section&id=Executive%20Summary%20and%20Overview) This section provides a high-level summary of the Company's business, market position, and financial highlights - Safety Insurance Group, Inc. is a **leading provider** of private passenger automobile, commercial automobile, homeowners, and commercial other-than-auto insurance, primarily in Massachusetts[121](index=121&type=chunk) - The Company holds **significant market shares** in Massachusetts: third largest private passenger automobile carrier (**9.7%**), second largest commercial automobile carrier (**12.9%**), and third largest homeowners insurance carrier (**6.3%**) in 2024[121](index=121&type=chunk) - A.M. Best **reaffirmed Safety Insurance's 'A (Excellent)' rating** on June 20, 2025[122](index=122&type=chunk) Direct Written Premiums by State (Dollars in thousands) | State | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Massachusetts | $326,925 | $299,411 | $610,204 | $553,762 | | New Hampshire | $14,731 | $13,325 | $27,154 | $24,084 | | Maine | $4,173 | $2,775 | $7,441 | $5,004 | | Total | $345,829 | $315,511 | $644,799 | $582,850 | [Recent Trends and Events](index=25&type=section&id=Recent%20Trends%20and%20Events) This section discusses key operational and market trends, as well as significant events impacting the Company - **Direct written premium growth was** **9.6%** for the three months ended June 30, 2025, and **10.6%** for the six months ended June 30, 2025, driven by new business production and rate increases[126](index=126&type=chunk)[151](index=151&type=chunk) - **Losses and loss adjustment expenses incurred increased by** **12.4%** for the three months and **12.7%** for the six months ended June 30, 2025, **primarily due to** increased loss severity[127](index=127&type=chunk)[151](index=151&type=chunk) - The **losses and loss adjustment expenses ratio decreased to** **68.8%** (Q2 2025) from **70.0%** (Q2 2024) and to **69.3%** (H1 2025) from **70.6%** (H1 2024), due to earned premium **growth** offsetting increased loss severity[127](index=127&type=chunk) Approved Rate Changes in 2025 and 2024 | Line of Business | Effective Date | Rate Change | | :--------------------------------------- | :------------- | :---------- | | Massachusetts Homeowners | August 1, 2025 | 4.2% | | Massachusetts Private Passenger Automobile | July 1, 2025 | 5.1% | | Massachusetts Commercial Automobile | May 1, 2025 | 5.2% | | Massachusetts Private Passenger Automobile | January 1, 2025 | 5.3% | [Insurance Ratios](index=26&type=section&id=Insurance%20Ratios) This section analyzes key insurance profitability and efficiency ratios, such as loss, expense, and combined ratios GAAP Insurance Ratios | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss ratio | 68.8% | 70.0% | 69.3% | 70.6% | | Expense ratio | 29.3% | 29.9% | 29.5% | 30.3% | | Combined ratio | 98.1% | 99.9% | 98.8% | 100.9% | - The **combined ratio improved to** **98.1%** for the three months ended June 30, 2025, and to **98.8%** for the six months ended June 30, 2025, indicating enhanced underwriting profitability[133](index=133&type=chunk) [Share-Based Compensation](index=26&type=section&id=Share-Based%20Compensation) This note outlines the Company's share-based incentive plans and related compensation expenses - The Amended 2018 Long-Term Incentive Plan has a **pool of** **700,000 shares** of common stock available for issuance, with **236,326 shares available for future grants** as of June 30, 2025[135](index=135&type=chunk)[136](index=136&type=chunk) - **Awards granted in H1 2025 included** **35,178 service-based restricted shares** (3-year vesting), **29,105 performance-based restricted shares** (3-year cliff vesting), and **6,000 restricted shares** for directors (no vesting period)[137](index=137&type=chunk) [Reinsurance](index=27&type=section&id=Reinsurance) This section describes the Company's reinsurance arrangements and their impact on risk management - The Company **maintains three layers of excess catastrophe reinsurance**, **providing** **$675,000 thousand** of coverage for property losses exceeding **$75,000 thousand** up to **$750,000 thousand** for 2025[142](index=142&type=chunk) - Casualty excess of loss reinsurance covers losses exceeding **$2,000 thousand** up to **$10,000 thousand**, and property excess of loss reinsurance covers losses exceeding **$3,000 thousand** up to **$25,000 thousand**[143](index=143&type=chunk) - As of June 30, 2025, **$171,516 thousand was recoverable from** Commonwealth Automobile Reinsurers (CAR)[144](index=144&type=chunk) - The Massachusetts Property Insurance Underwriting Association (FAIR Plan) **restructured on** April 1, 2024, transforming into a stand-alone, risk-bearing entity[145](index=145&type=chunk) [Non-GAAP Measures](index=27&type=section&id=Non-GAAP%20Measures) This section defines and reconciles non-GAAP financial measures used by management to assess performance - **Non-GAAP operating income is defined as** GAAP net income adjusted for net realized gains/losses on investments, changes in net unrealized gains on equity securities, credit loss benefit/expense, and related taxes[147](index=147&type=chunk) Non-GAAP Operating Income (Dollars in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP Operating income | $21,518 | $17,272 | $40,514 | $31,018 | | Non-GAAP Operating income per diluted share | $1.45 | $1.18 | $2.74 | $2.09 | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's revenues, expenses, and net income for the periods Key Financial Results (Dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Direct written premiums | $345,829 | $315,511 | $644,799 | $582,850 | | Net written premiums | $319,475 | $294,935 | $594,255 | $545,230 | | Net earned premiums | $282,113 | $246,944 | $554,803 | $482,997 | | Net investment income | $15,724 | $13,500 | $30,298 | $28,731 | | Net realized gains on investments | $2,131 | $2,715 | $6,394 | $3,207 | | Losses and loss adjustment expenses | $194,232 | $172,742 | $384,522 | $341,141 | | Underwriting, operating and related expenses | $82,796 | $73,921 | $163,647 | $146,188 | | Net income | $28,937 | $16,636 | $50,833 | $36,714 | - **Net effective annualized yield on the investment portfolio increased to** **4.2%** for Q2 2025 from **3.9%** for Q2 2024, driven by higher earned interest from bond purchases[155](index=155&type=chunk) - **Total prior year favorable development decreased to** **$23,473 thousand** for H1 2025 from **$30,375 thousand** for H1 2024, **primarily due to** the inclusion of FAIR Plan development in the prior year[171](index=171&type=chunk) - Interest expense **significantly increased to** **$442 thousand** for Q2 2025 from **$138 thousand** for Q2 2024, mainly due to a new loan agreement with Citizens Bank[173](index=173&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash flows, financial flexibility, and capital management strategies Cash Flow Summary (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $35,496 | $4,454 | | Net cash used for investing activities | ($18,217) | $28,821 | | Net cash used for financing activities | ($26,844) | ($26,848) | - Safety Insurance **paid dividends of** **$25,750 thousand** to Safety during the six months ended June 30, 2025[187](index=187&type=chunk) - The Board **approved an increase in the quarterly cash dividend from** **$0.90** to **$0.92** per share, payable on September 15, 2025[189](index=189&type=chunk) - The Insurance Subsidiaries' **total capital was** **$758,789 thousand** at December 31, 2024, **exceeding minimum risk-based capital requirements**[192](index=192&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Of%20-Balance%20Sheet%20Arrangements) This section discloses any material off-balance sheet obligations or arrangements of the Company - The Company has **no material obligations** under guarantee contracts, retained or contingent interests in unconsolidated entities, derivative instruments, or variable interests in unconsolidated entities[194](index=194&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights accounting policies requiring significant judgment and the impact of estimates - The **selected point estimate for net loss and LAE reserves was** **$550,315 thousand** as of June 30, 2025, **within a reasonably possible range of** **$510,482 thousand** to **$579,378 thousand**[204](index=204&type=chunk) - A **1 percentage-point change in the loss and LAE ratio would result in a** **$5,549 thousand change in reserves and a** **$4,384 thousand effect on net income** (**$0.30** per diluted share) for the six months ended June 30, 2025[217](index=217&type=chunk) - **Prior year reserves decreased by** **$23,473 thousand** during the six months ended June 30, 2025, **primarily due to reductions in** private passenger automobile, commercial automobile, homeowners, and other lines reserves[226](index=226&type=chunk) Net Loss and LAE Reserves by Line of Business (June 30, 2025, Dollars in thousands) | Line of Business | Low Estimate | Recorded Estimate | High Estimate | | :--------------------------------------- | :----------- | :---------------- | :------------ | | Private passenger automobile | $253,835 | $270,205 | $279,924 | | Commercial automobile | $102,659 | $115,251 | $127,123 | | Homeowners | $96,281 | $100,905 | $103,516 | | All other | $57,707 | $63,954 | $68,815 | | Total | $510,482 | $550,315 | $579,378 | [Forward-Looking Statements](index=41&type=section&id=Forward-Looking%20Statements) This section cautions readers about inherent risks and uncertainties that may affect future results - Forward-looking statements are **subject to risks and uncertainties**, including competition, regulatory changes, severe weather, inflation, and economic conditions, which could cause actual results to differ materially from projections[234](index=234&type=chunk)[243](index=243&type=chunk) [Item 3. Quantitative and Qualitative Information about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Information%20about%20Market%20Risk) This section details the Company's exposure to market risk, primarily from interest rate fluctuations affecting its fixed-rate investments and floating-rate debt, and equity risk from its holdings. It includes a sensitivity analysis for interest rate changes - The Company's **primary market risk exposure is to changes in interest rates**, **affecting its significant holdings** of fixed-rate investments and financing activities[237](index=237&type=chunk)[238](index=238&type=chunk) Interest Rate Sensitivity Analysis (As of June 30, 2025, Dollars in thousands) | Interest Rate Change | Estimated Fair Value | Estimated Increase (Decrease) in Fair Value | | :--------------------------------------- | :------------------- | :------------------------------------------ | | -100 Basis Point Change | $1,237,363 | $49,026 | | No Change | $1,188,337 | $0 | | +100 Basis Point Change | $1,140,494 | ($47,843) | - A **2.0%** increase in the prevailing interest rate on the Company's **$30,000 thousand** variable rate debt would **increase interest expense by approximately** **$600 thousand** for 2025[244](index=244&type=chunk) - **Equity risk is managed through** industry and issuer diversification and asset allocation techniques[246](index=246&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the last fiscal quarter - The CEO and CFO concluded that the Company's **disclosure controls and procedures were adequate and effective** as of June 30, 2025[247](index=247&type=chunk) - There have been **no material changes in internal control over financial reporting** during the last fiscal quarter[248](index=248&type=chunk) Part II. Other Information This part covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8, Commitments and Contingencies, for details on legal proceedings, which management believes will not have a material adverse effect on the Company's consolidated financial statements - **Refer to Item 1—Financial Statements, Note 8, Commitments and Contingencies, for information on legal proceedings**[250](index=250&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The Company states that there have been no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - **No subsequent material changes from the risk factors previously disclosed** in the Company's 2024 Annual Report on Form 10-K[250](index=250&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reiterates the Board-approved share repurchase program, cumulatively authorized up to $200,000 thousand, and confirms that no shares were repurchased during the three and six months ended June 30, 2025 - The Board of Directors has **cumulatively authorized increases** to the existing share repurchase program of up to **$200,000 thousand**[251](index=251&type=chunk) - **No shares were repurchased** under the program during the three and six months ended June 30, 2025[251](index=251&type=chunk) - As of June 30, 2025, **703,971 shares may yet be purchased** under the plans or programs[252](index=252&type=chunk) [Item 3. Defaults upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - None[253](index=253&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures - None[253](index=253&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The Company reported that no officers or directors adopted, terminated, or modified any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - **No officers or directors adopted, terminated, or modified any Rule 10b5-1 trading arrangements** during the three months ended June 30, 2025[254](index=254&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including CEO and CFO certifications, XBRL documents, and the cover page - **Exhibits include CEO and CFO certifications** (**31.1**, **31.2**, **32.1**, **32.2**) and Inline XBRL documents (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**, **104**)[257](index=257&type=chunk)

Executive Summary & Recent Developments [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) Safety Insurance Group, Inc. reported improved Q2 2025 results, with the combined ratio improving to 98.1% from 99.9% due to rate increases and policy growth - Combined ratio improved to **98.1%** in Q2 2025 compared to **99.9%** in Q2 2024, reflecting policy count growth and rate increases[2](index=2&type=chunk)[3](index=3&type=chunk) - Net earned premium increased by **14.2%** for the quarter ended June 30, 2025[3](index=3&type=chunk) [Dividend Announcement](index=1&type=section&id=Dividend%20Announcement) The Board of Directors approved an increase in the quarterly cash dividend for the third quarter of 2025 - The quarterly cash dividend was increased from **$0.90 to $0.92 per share**[4](index=4&type=chunk) - The increased dividend is payable on September 15, 2025, to shareholders of record on September 2, 2025[4](index=4&type=chunk) Detailed Financial Performance Analysis [Net Income and Earnings Per Share](index=1&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share) The company reported significant increases in both GAAP net income and non-GAAP operating income per diluted share for Q2 and YTD 2025 Net Income and Diluted EPS (GAAP) | Period | 2025 (Net Income) | 2024 (Net Income) | YoY Change | 2025 (Diluted EPS) | 2024 (Diluted EPS) | YoY Change | | :----- | :---------------- | :---------------- | :--------- | :----------------- | :----------------- | :--------- | | Q2 | $28.9 million | $16.6 million | +74.1% | $1.95 | $1.13 | +72.6% | | YTD | $50.8 million | $36.7 million | +38.4% | $3.43 | $2.48 | +38.3% | Non-GAAP Operating Income Per Diluted Share | Period | 2025 (Non-GAAP EPS) | 2024 (Non-GAAP EPS) | YoY Change | | :----- | :------------------ | :------------------ | :--------- | | Q2 | $1.45 | $1.18 | +22.9% | | YTD | $2.74 | $2.09 | +31.1% | [Book Value and Shareholder Equity](index=1&type=section&id=Book%20Value%20and%20Shareholder%20Equity) Book value per share increased from year-end 2024, contributing to a rise in total shareholders' equity due to net income and investment gains - Book value per share increased to **$58.63** at June 30, 2025, from **$55.83** at December 31, 2024[6](index=6&type=chunk) - Total shareholders' equity increased by **$44.8 million** in Q2 2025[3](index=3&type=chunk) [Premium Growth](index=1&type=section&id=Premium%20Growth) The company experienced robust growth in direct, net written, and net earned premiums, driven by rate increases and policy count growth Direct Written Premiums | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $345.8 | $315.5 | +9.6% | | YTD | $644.8 | $582.9 | +10.6% | Net Written Premiums | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $319.5 | $294.9 | +8.3% | | YTD | $594.3 | $545.3 | +9.0% | Net Earned Premiums | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $282.1 | $246.9 | +14.2% | | YTD | $554.8 | $483.0 | +14.9% | - For the six months ended June 30, 2025, average written premium per policy increased by **9.0%** in Private Passenger Automobile, **7.2%** in Commercial Automobile, and **10.6%** in Homeowners lines[8](index=8&type=chunk) - Policy count growth for the six months ended June 30, 2025, included **0.4%** in Private Passenger Automobile, **2.8%** in Commercial Automobile, and **3.9%** in Homeowners lines[8](index=8&type=chunk) [Underwriting Results](index=2&type=section&id=Underwriting%20Results) Underwriting performance improved in Q2 and YTD 2025, with lower loss, expense, and combined ratios despite increased losses Losses and Loss Adjustment Expenses Incurred | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $194.2 | $172.7 | +12.4% | | YTD | $384.5 | $341.1 | +12.7% | Underwriting Ratios | Period | Ratio | 2025 | 2024 | Change (pp) | | :----- | :---- | :--- | :--- | :---------- | | Q2 | Loss | 68.8% | 70.0% | -1.2 | | | Expense | 29.3% | 29.9% | -0.6 | | | Combined | 98.1% | 99.9% | -1.8 | | YTD | Loss | 69.3% | 70.6% | -1.3 | | | Expense | 29.5% | 30.3% | -0.8 | | | Combined | 98.8% | 100.9% | -2.1 | Prior Year Favorable Development (Pre-tax) | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $11.2 | $19.4 | -42.3% | | YTD | $23.5 | $30.4 | -22.7% | [Investment Income](index=2&type=section&id=Investment%20Income) Net investment income increased due to higher interest rates, leading to an improved effective annualized yield on the investment portfolio Net Investment Income | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $15.7 | $13.5 | +16.5% | | YTD | $30.3 | $28.7 | +5.5% | Net Effective Annualized Yield on Investment Portfolio | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | 4.2% | 3.9% | | YTD | 4.0% | 3.9% | - The investment portfolio's duration on fixed maturities was **3.6 years** at June 30, 2025, compared to **3.5 years** at December 31, 2024[13](index=13&type=chunk) Non-GAAP Financial Measures [Definition and Reconciliation](index=2&type=section&id=Definition%20and%20Reconciliation) Non-GAAP operating income adjusts GAAP net income by excluding net realized gains, unrealized gains on equity, credit loss, and related taxes - Non-GAAP operating income and non-GAAP operating income per diluted share consist of GAAP net income adjusted by net realized gains on investments, change in net unrealized gains on equity securities, credit loss benefit (expense), and related taxes[15](index=15&type=chunk)[16](index=16&type=chunk) Reconciliation of Net Income to Non-GAAP Operating Income | Item | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :-------------------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net income | $28,937 | $16,636 | $50,833 | $36,714 | | Exclusions: | | | | | | Net realized gains on investments | (2,131) | (2,715) | (6,394) | (3,207) | | Change in net unrealized gains on equity securities | (7,194) | 3,483 | (6,923) | (4,182) | | Credit loss expense | (66) | 37 | 255 | 179 | | Income tax benefit | 1,972 | (169) | 2,743 | 1,514 | | **Non-GAAP operating income** | **$21,518** | **$17,272** | **$40,514** | **$31,018** | Company Overview [About Safety Insurance Group, Inc.](index=3&type=section&id=About%20Safety%20Insurance%20Group%2C%20Inc.) Safety Insurance Group, Inc. is a Boston-based property and casualty insurer operating exclusively in MA, NH, and ME - Safety Insurance Group, Inc. is based in Boston, MA, and is the parent of several insurance companies and an agency[17](index=17&type=chunk) - The company operates exclusively in **Massachusetts, New Hampshire, and Maine**[17](index=17&type=chunk) - 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[17](index=17&type=chunk) [Investor Resources](index=3&type=section&id=Investor%20Resources) Investors can access additional company information, press releases, SEC filings, and investor contacts through the company's website - Press releases, announcements, SEC Filings, and investor information are available on the Company website at www.SafetyInsurance.com under 'About Safety,' 'Investor Information'[18](index=18&type=chunk) - Shareholders are urged to refer to the December 31, 2024 Form 10-K filed with the SEC on February 27, 2025, for more complete financial information[18](index=18&type=chunk) - Investor Relations can be contacted at **877-951-2522** or InvestorRelations@SafetyInsurance.com[19](index=19&type=chunk) Forward-Looking Statements & Risk Factors [Cautionary Statement](index=3&type=section&id=Cautionary%20Statement) The press release contains forward-looking statements, which are not guarantees of future performance and are subject to various risks - Forward-looking statements are identified by words such as 'believe,' 'expect,' 'anticipate,' 'intend,' 'plan,' 'estimate,' 'aim,' 'projects,' or similar expressions indicating future events and trends[19](index=19&type=chunk) - Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially[20](index=20&type=chunk) - The Company is not under any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise[21](index=21&type=chunk) [Key Risk Factors](index=3&type=section&id=Key%20Risk%20Factors) Factors that could materially affect future results include industry competition, restrictive regulations, severe weather, and inflation - Key risk factors include the competitive nature of the industry, restrictive regulations in Massachusetts, and the possibility of losses due to claims from severe weather[20](index=20&type=chunk) - Other risks include the impact of inflation, changes in tariffs and supply chain delays on loss severity, and potential future rule changes by the Commissioner of Insurance affecting the residual market[20](index=20&type=chunk) - Additional factors are the impact of investment, economic and underwriting market conditions (including interest rates and inflation), the possible need for and availability of additional financing, and other risks identified in SEC filings[22](index=22&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows an increase in total assets and shareholders' equity from December 31, 2024, to June 30, 2025 Consolidated Balance Sheet Highlights | Item | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change (Thousands) | | :-------------------------- | :------------------------ | :-------------------------- | :----------------- | | Total assets | $2,364,208 | $2,270,090 | +$94,118 | | Total liabilities | $1,490,944 | $1,441,626 | +$49,318 | | Total shareholders' equity | $873,264 | $828,464 | +$44,800 | - Fixed maturities, available for sale, at fair value increased to **$1,188,337 thousand** at June 30, 2025, from **$1,115,218 thousand** at December 31, 2024[24](index=24&type=chunk) - Losses and loss adjustment expense reserves increased to **$685,941 thousand** at June 30, 2025, from **$671,669 thousand** at December 31, 2024[24](index=24&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations reflect significant growth in total revenue and net income for Q2 and YTD 2025 despite increased expenses Consolidated Statements of Operations Highlights | Item | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :-------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Total revenue | $316,344 | $269,783 | $617,773 | $538,016 | | Total expenses | $279,517 | $248,548 | $552,716 | $491,174 | | Net income | $28,937 | $16,636 | $50,833 | $36,714 | - Income before income taxes for Q2 2025 was **$36,827 thousand**, up from **$21,235 thousand** for Q2 2024[25](index=25&type=chunk) [Additional Premium Information](index=7&type=section&id=Additional%20Premium%20Information) Detailed premium data shows increases across direct, assumed, and net written and earned premiums for Q2 and YTD 2025 Written Premiums (Direct, Assumed, Ceded, Net) | Type | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :--- | :----- | :--------------- | :--------------- | :--------- | | Direct | Q2 | $345,829 | $315,511 | +9.6% | | | YTD | $644,799 | $582,850 | +10.6% | | Assumed | Q2 | $5,675 | $8,325 | -31.9% | | | YTD | $12,480 | $17,763 | -29.7% | | Ceded | Q2 | $(32,029) | $(28,901) | +10.8% | | | YTD | $(63,024) | $(55,383) | +13.8% | | Net | Q2 | $319,475 | $294,935 | +8.3% | | | YTD | $594,255 | $545,230 | +9.0% | Earned Premiums (Direct, Assumed, Ceded, Net) | Type | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :--- | :----- | :--------------- | :--------------- | :--------- | | Direct | Q2 | $308,901 | $265,908 | +16.2% | | | YTD | $605,720 | $517,792 | +16.9% | | Assumed | Q2 | $5,286 | $7,997 | -33.9% | | | YTD | $12,011 | $16,965 | -29.2% | | Ceded | Q2 | $(32,074) | $(26,961) | +18.9% | | | YTD | $(62,928) | $(51,760) | +21.6% | | Net | Q2 | $282,113 | $246,944 | +14.2% | | | YTD | $554,803 | $482,997 | +14.9% |

Premium Growth - For the three months ended March 31, 2025, direct written premiums increased by 11.8% to $298,970,000 compared to $267,339,000 in the same period of 2024[122]. - The company achieved a net written premium growth of 9.8% for the same period, driven by rate increases, improved retention, and new business production[122]. - Direct written premiums increased by $31,631, or 11.8%, to $298,970 for the three months ended March 31, 2025, compared to $267,339 for the same period in 2024[148]. - Net written premiums rose by $24,485, or 9.8%, to $274,780 for the three months ended March 31, 2025, from $250,295 in the comparable 2024 period[149]. - Net earned premiums increased by $36,637, or 15.5%, to $272,690 for the three months ended March 31, 2025, compared to $236,053 for the same period in 2024[150]. - Average written premium per policy increased by 9.5%, 8.4%, and 11.0% in Private Passenger Automobile, Commercial Automobile, and Homeowners lines, respectively[122]. Financial Performance - Non-GAAP operating income for the quarter was $18,996,000, up from $13,746,000 in the prior year, translating to $1.28 per diluted share compared to a loss of $0.93 per diluted share in 2024[124]. - The combined ratio improved to 99.4% from 101.9% year-over-year, indicating enhanced underwriting profitability[131]. - Net income for Q1 2025 was $21,896, up from $20,078 in Q1 2024, reflecting a year-over-year increase[170]. - Non-GAAP operating income rose to $18,996 in Q1 2025 from $13,746 in Q1 2024, primarily due to an increase in net earned premiums[171]. - Net cash provided by operating activities was $3,173 in Q1 2025, compared to net cash used of $21,135 in Q1 2024[175]. - Net cash provided by investing activities was $16,129 in Q1 2025, down from $27,399 in Q1 2024; purchases of invested assets increased to $59,383 from $50,199[176]. Losses and Reserves - Losses and loss adjustment expenses rose by 13.0% to $190,290,000, with a loss ratio improvement to 69.8% from 71.3% year-over-year[123][131]. - As of March 31, 2025, the total net reserves for losses and LAE are estimated at $546,207, with a range of reasonably possible estimations between $500,469 and $572,420[202]. - The recorded reserves for the private passenger automobile line of business are $261,070, with low and high estimations of $240,015 and $267,198 respectively[204]. - The total net reserves for the commercial automobile line of business are recorded at $117,747, with retained reserves of $83,271[210]. - The homeowners line of business has recorded reserves of $102,031, with a low estimation of $95,939 and a high estimation of $104,844[204]. - The company experienced a decrease in prior year reserves of $12,238 during the three months ended March 31, 2025[223]. Investment Performance - Net investment income decreased by $657, or 4.3%, to $14,574 for the three months ended March 31, 2025, from $15,231 in the comparable 2024 period[152]. - Earnings from partnership investments increased to $2,112 for the three months ended March 31, 2025, compared to $1,772 for the same period in 2024[153]. - Net realized gains on investments surged to $4,263 for the three months ended March 31, 2025, compared to $492 for the comparable 2024 period[154]. Strategic Initiatives - The company plans to focus on strategic growth initiatives, including product development and market expansion, to enhance its competitive position[232]. - The company emphasizes the importance of monitoring external factors such as inflation and supply chain delays that could affect loss severity and overall financial results[233]. - The forward-looking statements highlight potential risks including market competition, regulatory changes, and economic conditions that could impact future performance[231][233]. Market Position - The company maintained a strong market position, being the third largest private passenger automobile carrier in Massachusetts with a 9.7% market share[119]. - The company has established relationships with 828 independent insurance agents across Massachusetts, New Hampshire, and Maine[119]. Tax and Dividends - The effective tax rate for Q1 2025 was 22.4%, up from 21.6% in Q1 2024, primarily due to executive compensation expenses[170]. - Safety Insurance paid dividends of $12,875 to Safety in Q1 2025, with a maximum of $75,879 available for dividends in 2025 without prior approval[183]. - The company has authorized a share repurchase program of up to $200,000, with no shares repurchased during Q1 2025[186].