[First Quarter 2025 Results Overview](index=1&type=section&id=1.%20First%20Quarter%202025%20Results%20Overview) Safety Insurance Group reported improved Q1 2025 results with a lower combined ratio, increased net income, and consistent dividends [Key Financial Highlights](index=1&type=section&id=1.1.%20Key%20Financial%20Highlights) Safety Insurance Group reported improved Q1 2025 results with a lower combined ratio, increased net income, and higher EPS Q1 2025 vs Q1 2024 Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change | | :----------------------------------- | :------ | :------ | :----- | | Combined Ratio | 99.4% | 101.9% | -2.5 pp | | Net Income | $21.9M | $20.1M | +$1.8M | | Diluted EPS | $1.48 | $1.36 | +$0.12 | | Non-GAAP Operating Income per diluted share | $1.28 | $0.93 | +$0.35 | - Book value per share increased to **$57.12** at March 31, 2025, from **$55.83** at December 31, 2024, primarily due to net income and increases in the fixed maturity portfolio value[3](index=3&type=chunk) - Total shareholders' equity increased by **$22.2 million**[2](index=2&type=chunk) [Dividend Declaration](index=1&type=section&id=1.2.%20Dividend%20Declaration) The Board approved a **$0.90 per share** quarterly cash dividend for Q2 2025, consistent with prior payments - A **$0.90 per share** quarterly cash dividend was approved for Q2 2025, payable on June 13, 2025[4](index=4&type=chunk) - Safety paid **$0.90 per share** in dividends during Q1 2025 and Q1 2024[3](index=3&type=chunk) [Detailed Financial Performance Analysis](index=1&type=section&id=2.%20Detailed%20Financial%20Performance%20Analysis) Q1 2025 saw strong premium growth and improved underwriting, partially offset by a slight decrease in net investment income [Premium Performance](index=1&type=section&id=2.1.%20Premium%20Performance) Q1 2025 premium growth was significant, driven by new business, rate increases, and policy count expansion [Written and Earned Premiums](index=1&type=section&id=2.1.1.%20Written%20and%20Earned%20Premiums) Direct written premiums increased by 11.8% to $299.0 million, net written premiums by 9.8% to $274.8 million, and net earned premiums by 15.5% to $272.7 million in Q1 2025 compared to Q1 2024 Q1 2025 vs Q1 2024 Premium Performance | Metric | Q1 2025 ($M) | Q1 2024 ($M) | Change ($M) | Change (%) | | :-------------------- | :----------- | :----------- | :---------- | :--------- | | Direct Written Premiums | 299.0 | 267.3 | 31.7 | 11.8% | | Net Written Premiums | 274.8 | 250.3 | 24.5 | 9.8% | | Net Earned Premiums | 272.7 | 236.1 | 36.6 | 15.5% | [Drivers of Premium Growth](index=1&type=section&id=2.1.2.%20Drivers%20of%20Premium%20Growth) New business, rate increases, and increased policy counts and average premiums drove Q1 2025 premium growth - Increases in direct and net written premiums are a result of new business production and rate increases[6](index=6&type=chunk) Q1 2025 Policy Count Growth (YoY) | Line of Business | Policy Count Growth | | :----------------------- | :------------------ | | Private Passenger Automobile | 1.3% | | Commercial Automobile | 2.5% | | Homeowners | 5.4% | Q1 2025 Average Written Premium per Policy Increase (YoY) | Line of Business | Average Written Premium per Policy Increase | | :----------------------- | :---------------------------------------- | | Private Passenger Automobile | 9.5% | | Commercial Automobile | 8.4% | | Homeowners | 11.0% | [Underwriting Performance](index=1&type=section&id=2.2.%20Underwriting%20Performance) Underwriting ratios improved in Q1 2025, with the combined ratio decreasing to **99.4%** due to higher earned premiums and better auto loss experience [Loss and Loss Adjustment Expenses](index=1&type=section&id=2.2.1.%20Loss%20and%20Loss%20Adjustment%20Expenses) Loss and loss adjustment expenses increased **13.0%** to **$190.3 million** in Q1 2025, driven by policy counts but offset by improved auto results Q1 2025 vs Q1 2024 Loss and Loss Adjustment Expenses | Metric | Q1 2025 ($M) | Q1 2024 ($M) | Change ($M) | Change (%) | | :-------------------------------- | :----------- | :----------- | :---------- | :--------- | | Loss and Loss Adjustment Expenses | 190.3 | 168.4 | 21.9 | 13.0% | - The increase in loss and loss adjustment expenses is driven by larger policy counts, offset by improved results in the Private Passenger Automobile line[7](index=7&type=chunk) [Combined Ratio and Components](index=2&type=section&id=2.2.2.%20Combined%20Ratio%20and%20Components) The combined ratio improved to **99.4%** in Q1 2025 from **101.9%**, reflecting lower loss and expense ratios driven by higher earned premiums Q1 2025 vs Q1 2024 Underwriting Ratios | Ratio | Q1 2025 | Q1 2024 | Change (pp) | | :---------- | :------ | :------ | :---------- | | Loss Ratio | 69.8% | 71.3% | -1.5 | | Expense Ratio | 29.6% | 30.6% | -1.0 | | Combined Ratio | 99.4% | 101.9% | -2.5 | - The decrease in loss and expense ratios is driven by the increase in earned premiums[8](index=8&type=chunk) - Total prior year favorable development included in pre-tax results was **$12.2 million** for Q1 2025, up from **$11.0 million** in Q1 2024[8](index=8&type=chunk) [Investment Income](index=2&type=section&id=2.3.%20Investment%20Income) Net investment income decreased **4.3%** in Q1 2025, primarily due to lower earned interest from higher yield bonds and variable-rate loans Q1 2025 vs Q1 2024 Net Investment Income | Metric | Q1 2025 ($M) | Q1 2024 ($M) | Change ($M) | Change (%) | | :------------------ | :----------- | :----------- | :---------- | :--------- | | Net Investment Income | 14.6 | 15.2 | (0.6) | -4.3% | - The decrease in net investment income is primarily driven by lower earned interest from higher yield bonds and variable-rate secured and senior bank loans[9](index=9&type=chunk) - Net effective annualized yield on the investment portfolio was **3.9%** for Q1 2025, down from **4.3%** for Q1 2024[9](index=9&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=3.%20Non-GAAP%20Financial%20Measures) Non-GAAP measures clarify operational results by adjusting GAAP net income for specific non-recurring or non-cash items [Definition and Purpose](index=2&type=section&id=3.1.%20Definition%20and%20Purpose) Non-GAAP measures provide a comprehensive explanation of operational results and highlight business trends, supplementing but not replacing GAAP figures - Non-GAAP measures are included to better explain the Company's results of operations and allow for a more complete understanding of underlying business trends[10](index=10&type=chunk) - Non-GAAP operating income adjusts GAAP net income by excluding net realized gains on investments, changes in net unrealized gains on equity securities, credit loss expense, and related taxes[11](index=11&type=chunk) [Reconciliation to GAAP](index=2&type=section&id=3.2.%20Reconciliation%20to%20GAAP) Detailed reconciliation of GAAP net income and EPS to non-GAAP operating income and EPS is provided, outlining adjustments for investment and credit loss items Reconciliation of Net Income to Non-GAAP Operating Income (Q1 2025 vs Q1 2024) | Reconciliation Item | Q1 2025 ($K) | Q1 2024 ($K) | | :------------------------------------------ | :----------- | :----------- | | Net income (GAAP) | 21,896 | 20,078 | | Exclusions: | | | | Net realized gains on investments | (4,263) | (492) | | Change in net unrealized gains on equity securities | 271 | (7,665) | | Credit loss expense | 321 | 142 | | Income tax expense on exclusions | 771 | 1,683 | | Non-GAAP operating income | 18,996 | 13,746 | Reconciliation of Net Income per Diluted Share to Non-GAAP Operating Income per Diluted Share (Q1 2025 vs Q1 2024) | Reconciliation Item | Q1 2025 ($) | Q1 2024 ($) | | :------------------------------------------ | :---------- | :---------- | | Net income per diluted share (GAAP) | 1.48 | 1.36 | | Exclusions: | | | | Net realized gains on investments | (0.29) | (0.03) | | Change in net unrealized gains on equity securities | 0.02 | (0.52) | | Credit loss expense | 0.02 | 0.01 | | Income tax expense on exclusions | 0.05 | 0.11 | | Non-GAAP operating income per diluted share | 1.28 | 0.93 | [Company Information](index=2&type=section&id=4.%20Company%20Information) Safety Insurance Group, Inc. is a Boston-based property and casualty insurer operating in MA, NH, and ME, providing investor information [About Safety Insurance Group, Inc.](index=2&type=section&id=4.1.%20About%20Safety%20Insurance%20Group%2C%20Inc.) Safety Insurance Group, Inc. is a Boston-based parent company operating in MA, NH, and ME, specializing in property and casualty insurance - Safety Insurance Group, Inc. is based in Boston, MA, and is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, Safety Northeast Insurance Company, and Safety Northeast Insurance Agency, Inc[12](index=12&type=chunk) - The company operates exclusively in Massachusetts, New Hampshire, and Maine[12](index=12&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[12](index=12&type=chunk) [Investor Information and Contacts](index=2&type=section&id=4.2.%20Investor%20Information%20and%20Contacts) Investor information, SEC filings, and press releases are available on the company website, with direct contact details for inquiries - Press releases, announcements, SEC Filings, and investor information are available on the Company website at www.SafetyInsurance.com[13](index=13&type=chunk) - Safety filed its December 31, 2024 Form 10-K with the SEC on February 27, 2025[13](index=13&type=chunk) - Investor Relations can be contacted at **877-951-2522** or InvestorRelations@SafetyInsurance.com[14](index=14&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=3&type=section&id=5.%20Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) This section outlines forward-looking statements, emphasizing that future results may differ due to inherent risks and uncertainties [Nature of Forward-Looking Statements](index=3&type=section&id=5.1.%20Nature%20of%20Forward-Looking%20Statements) Forward-looking statements in this release are not guarantees of future performance, subject to inherent risks and uncertainties, identifiable by future-oriented language - Forward-looking statements do not relate strictly to historical or current facts and often include words such as 'believe,' 'expect,' 'anticipate,' 'intend,' 'plan,' 'estimate,' 'aim,' 'projects,' or future/conditional verbs[15](index=15&type=chunk) - All statements addressing expectations or projections about the future, including strategy for growth, product development, market position, expenditures, and financial results, are considered forward-looking statements[15](index=15&type=chunk) [Risks and Uncertainties](index=3&type=section&id=5.2.%20Risks%20and%20Uncertainties) Actual future results may differ significantly from forward-looking statements due to factors like competition, regulations, severe weather, inflation, and market conditions - Factors that could cause actual results to differ materially include the competitive nature of the industry, restrictive regulations in Massachusetts, and the possibility of losses due to claims from severe weather[17](index=17&type=chunk) - Other risks include the impact of inflation, changes in tariffs and supply chain delays on loss severity, potential future rule changes by the Commissioner of Insurance, and the impact of investment, economic, and underwriting market conditions[17](index=17&type=chunk) - The company is not obligated to update or alter its forward-looking statements[16](index=16&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=6.%20Consolidated%20Financial%20Statements) Consolidated financial statements present the company's balance sheets, statements of operations, and detailed premium information [Consolidated Balance Sheets](index=4&type=section&id=6.1.%20Consolidated%20Balance%20Sheets) The consolidated balance sheet shows increased total assets and shareholders' equity from December 2024 to March 2025, driven by fixed maturities and equity securities Consolidated Balance Sheet Highlights (March 31, 2025 vs December 31, 2024) | Metric | March 31, 2025 ($K) | December 31, 2024 ($K) | | :-------------------------------- | :------------------ | :------------------- | | Total Assets | 2,291,302 | 2,270,090 | | Total Liabilities | 1,440,635 | 1,441,626 | | Total Shareholders' Equity | 850,667 | 828,464 | | Fixed maturities, available for sale | 1,140,093 | 1,115,218 | | Equity securities | 222,516 | 221,422 | | Losses and loss adjustment expense reserves | 682,717 | 671,669 | | Unearned premium reserves | 622,146 | 619,916 | [Consolidated Statements of Operations](index=5&type=section&id=6.2.%20Consolidated%20Statements%20of%20Operations) Q1 2025 consolidated statements of operations show increased total revenue and net income, driven by higher net earned premiums and realized investment gains Consolidated Statements of Operations Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 ($K) | Q1 2024 ($K) | | :-------------------------------- | :----------- | :----------- | | Total revenue | 301,429 | 268,233 | | Total expenses | 273,199 | 242,626 | | Income before income taxes | 28,230 | 25,607 | | Net income | 21,896 | 20,078 | | Net earned premiums | 272,690 | 236,053 | | Losses and loss adjustment expenses | 190,290 | 168,399 | | Underwriting, operating and related expenses | 80,851 | 72,267 | [Additional Premium Information](index=6&type=section&id=6.3.%20Additional%20Premium%20Information) This section details direct, assumed, and ceded written and earned premiums for Q1 2025 and Q1 2024, reinforcing premium growth trends Additional Premium Information (Q1 2025 vs Q1 2024) | Metric | Q1 2025 ($K) | Q1 2024 ($K) | | :---------------- | :----------- | :----------- | | Direct Written Premiums | 298,970 | 267,339 | | Assumed Written Premiums | 6,805 | 9,438 | | Ceded Written Premiums | (30,995) | (26,482) | | Net Written Premiums | 274,780 | 250,295 | | Direct Earned Premiums | 296,819 | 251,884 | | Assumed Earned Premiums | 6,725 | 8,968 | | Ceded Earned Premiums | (30,854) | (24,799) | | Net Earned Premiums | 272,690 | 236,053 |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-50070 SAFETY INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 13-4181699 (State or other ...

```markdown [**Executive Summary**](index=1&type=section&id=1.%20Executive%20Summary) This section summarizes Safety Insurance Group's key financial and operational highlights for the full year and fourth quarter of 2024 [**Full Year 2024 Highlights**](index=1&type=section&id=1.1.%20Full%20Year%202024%20Highlights) Safety Insurance Group, Inc. achieved significant direct written premium growth, exceeding **$1 billion** for the first time, driven by increased policy counts and premium rate actions. The company also saw an improved combined ratio and substantial growth in net income and non-GAAP operating income for the full year 2024 - Direct written premium growth of **20.4%** for the year ended December 31, 2024, surpassing **$1 billion** for the first time[2](index=2&type=chunk) - Overall policy counts increased by **8.5%** and average premium per policy increased by **10.9%** across all lines of business[2](index=2&type=chunk) Full Year 2024 Key Financial Highlights | Metric | FY2024 | FY2023 | Change (YoY) | % Change (YoY) | | :-------------------------------- | :----- | :----- | :----------- | :------------- | | Direct Written Premiums (Millions) | $1,193.1 | $991.2 | +$201.9 | +20.4% | | Combined Ratio | 101.1% | 107.7% | -6.6 pp | -6.13% | | Net Income (Millions) | $70.7 | $18.9 | +$51.8 | +274.07% | | Diluted EPS | $4.78 | $1.28 | +$3.50 | +273.44% | | Non-GAAP Operating Income (Millions) | $61.5 | $12.3 | +$49.2 | +400.00% | | Non-GAAP Operating Income per Diluted Share | $4.16 | $0.84 | +$3.32 | +395.24% | | Book Value per Share | $55.83 | $54.37 | +$1.46 | +2.68% | [**Fourth Quarter 2024 Highlights**](index=1&type=section&id=1.2.%20Fourth%20Quarter%202024%20Highlights) For the fourth quarter of 2024, Safety Insurance reported an improved combined ratio and strong growth in direct written premiums, although net income saw a decrease compared to the prior year quarter Fourth Quarter 2024 Key Financial Highlights | Metric | Q4 2024 | Q4 2023 | Change (YoY) | % Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | :------------- | | Direct Written Premiums (Millions) | $292.0 | $246.1 | +$45.9 | +18.7% | | Combined Ratio | 101.9% | 106.5% | -4.6 pp | -4.32% | | Net Income (Millions) | $8.1 | $12.3 | -$4.2 | -34.15% | | Diluted EPS | $0.55 | $0.83 | -$0.28 | -33.73% | | Non-GAAP Operating Income (Millions) | $14.0 | $4.4 | +$9.6 | +218.18% | | Non-GAAP Operating Income per Diluted Share | $0.94 | $0.30 | +$0.64 | +213.33% | [**Financial Performance Analysis**](index=1&type=section&id=2.%20Financial%20Performance%20Analysis) This section analyzes Safety Insurance Group's premium growth, underwriting results, investment performance, and net income for the reported periods [**Premium Growth**](index=1&type=section&id=2.1.%20Premium%20Growth) Safety Insurance experienced robust premium growth in both the fourth quarter and full year 2024, driven by increases in direct written, net written, and net earned premiums. This growth was primarily attributed to new business production, rate increases, and higher policy counts across key lines of business [**Direct and Net Written Premiums**](index=1&type=section&id=2.1.1.%20Direct%20and%20Net%20Written%20Premiums) This section presents a detailed breakdown of direct and net written premiums for the reported periods Written Premiums (in millions) | Metric | Q4 2024 | Q4 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change | | :------------------ | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Direct Written Premiums | $292.0 | $246.1 | +18.7% | $1,193.1 | $991.2 | +20.4% | | Net Written Premiums | $255.6 | $226.3 | +12.9% | $1,093.4 | $925.3 | +18.2% | [**Net Earned Premiums**](index=2&type=section&id=2.1.2.%20Net%20Earned%20Premiums) This section details the net earned premiums for the reported periods Net Earned Premiums (in millions) | Metric | Q4 2024 | Q4 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change | | :--------------- | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Net Earned Premiums | $269.1 | $226.0 | +19.0% | $1,010.7 | $834.4 | +21.1% | [**Drivers of Premium Growth**](index=2&type=section&id=2.1.3.%20Drivers%20of%20Premium%20Growth) This section identifies the key factors contributing to premium growth, including policy counts and average premium per policy - Increases in direct and net written premiums were driven by new business production and rate increases[7](index=7&type=chunk) Policy Count and Average Premium Per Policy Growth (FY2024 vs FY2023) | Line of Business | Policy Count Growth | Average Written Premium Per Policy Growth | | :----------------------- | :------------------ | :---------------------------------------- | | Private Passenger Automobile | 10.0% | 14.1% | | Commercial Automobile | 4.5% | 10.7% | | Homeowners | 8.7% | 8.9% | [**Underwriting Results**](index=2&type=section&id=2.2.%20Underwriting%20Results) Safety Insurance demonstrated improved underwriting performance in 2024, with a lower combined ratio for both the quarter and the full year. This improvement was primarily due to increased earned premiums and moderation of loss severity in the Private Passenger Automobile line, despite an increase in total losses and loss adjustment expenses [**Losses and Loss Adjustment Expenses**](index=2&type=section&id=2.2.1.%20Losses%20and%20Loss%20Adjustment%20Expenses) This section outlines the incurred losses and loss adjustment expenses and their primary drivers Losses and Loss Adjustment Expenses Incurred (in millions) | Metric | Q4 2024 | Q4 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Losses and Loss Adjustment Expenses | $193.0 | $172.1 | +12.1% | $716.6 | $642.3 | +11.6% | - Increase in losses driven by larger policy counts and inflationary impacts on the Private Passenger Automobile book of business[9](index=9&type=chunk) [**Loss, Expense, and Combined Ratios**](index=2&type=section&id=2.2.2.%20Loss,%20Expense,%20and%20Combined%20Ratios) This section analyzes the company's loss, expense, and combined ratios, highlighting underwriting efficiency Underwriting Ratios | Ratio | Q4 2024 | Q4 2023 | YoY Change (pp) | FY 2024 | FY 2023 | YoY Change (pp) | | :---------- | :------ | :------ | :-------------- | :-------- | :-------- | :-------------- | | Loss Ratio | 71.7% | 76.1% | -4.4 | 70.9% | 77.0% | -6.1 | | Expense Ratio | 30.2% | 30.4% | -0.2 | 30.2% | 30.7% | -0.5 | | Combined Ratio | 101.9% | 106.5% | -4.6 | 101.1% | 107.7% | -6.6 | - Decrease in loss and expense ratios driven by the increase in earned premiums. The loss ratio was also favorably impacted by the moderation of loss severity in the Private Passenger Automobile line[10](index=10&type=chunk) - The prior year (FY2023) loss ratio was impacted by severe weather events totaling **$41.2 million** of losses[10](index=10&type=chunk) [**Prior Year Favorable Development**](index=2&type=section&id=2.2.3.%20Prior%20Year%20Favorable%20Development) This section details the favorable development from prior year loss reserves and related adjustments Total Prior Year Favorable Development (in millions) | Period | 2024 | 2023 | YoY Change | | :---------------- | :----- | :----- | :--------- | | Quarter Ended Dec 31 | $13.0 | $12.4 | +$0.6 | | Year Ended Dec 31 | $51.9 | $47.4 | +$4.5 | - Included within **2024** current and prior year development is **$10.1 million** related to the Massachusetts Property Insurance Underwriting Association ("FAIR Plan") due to a restructuring approved on April 1, **2024**[11](index=11&type=chunk) [**Investment Performance**](index=2&type=section&id=2.3.%20Investment%20Performance) Net investment income saw a slight decrease in 2024, both quarterly and annually, despite higher yield bonds and variable rate loans. The effective annualized yield on the investment portfolio also experienced a minor decline Net Investment Income (in millions) | Metric | Q4 2024 | Q4 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change | | :------------------ | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Net Investment Income | $14.8 | $14.9 | -0.7% | $55.7 | $56.4 | -1.2% | | Net Effective Annualized Yield | 4.0% | 4.2% | -0.2 pp | 3.9% | 4.0% | -0.1 pp | - The decrease in net investment income is attributed to earned interest from higher yield bonds and variable rate secured and senior bank loans[12](index=12&type=chunk) - The investment portfolio's duration on fixed maturities was **3.5 years** at December 31, **2024**, compared to **3.6 years** at December 31, **2023**[12](index=12&type=chunk) [**Net Income and Non-GAAP Operating Income**](index=1&type=section&id=2.4.%20Net%20Income%20and%20Non-GAAP%20Operating%20Income) Safety Insurance reported a significant increase in net income and non-GAAP operating income for the full year 2024, reflecting improved overall performance. While Q4 net income decreased, non-GAAP operating income for the quarter saw a substantial rise Net Income and Non-GAAP Operating Income (in millions, except per share data) | Metric | Q4 2024 | Q4 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Net Income | $8.1 | $12.3 | -34.1% | $70.7 | $18.9 | +274.1% | | Diluted EPS | $0.55 | $0.83 | -33.7% | $4.78 | $1.28 | +273.4% | | Non-GAAP Operating Income | $14.0 | $4.4 | +218.2% | $61.5 | $12.3 | +400.0% | | Non-GAAP Operating Income per Diluted Share | $0.94 | $0.30 | +213.3% | $4.16 | $0.84 | +395.2% | - Non-GAAP operating income adjusts GAAP net income by excluding net realized gains on investments, changes in net unrealized gains on equity securities, credit loss benefit (expense), and related taxes, providing a clearer view of underlying business trends[13](index=13&type=chunk)[14](index=14&type=chunk) [**Financial Position and Shareholder Returns**](index=1&type=section&id=3.%20Financial%20Position%20and%20Shareholder%20Returns) This section details Safety Insurance Group's book value per share and dividend distributions, reflecting its financial health and shareholder value initiatives [**Book Value Per Share**](index=1&type=section&id=3.1.%20Book%20Value%20Per%20Share) Safety Insurance's book value per share increased at year-end 2024, primarily driven by net income, partially offset by dividends paid Book Value Per Share | Metric | Dec 31, 2024 | Dec 31, 2023 | Change | | :--------------- | :----------- | :----------- | :----- | | Book Value per Share | $55.83 | $54.37 | +$1.46 | [**Dividends**](index=1&type=section&id=3.2.%20Dividends) The company maintained its quarterly cash dividend, with the Board of Directors approving the next payment for Q1 2025 Dividends Paid Per Common Share | Period | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :----------------------- | :------ | :------ | :------ | :------ | | Cash Dividends Paid per Share | $0.90 | $0.90 | $3.60 | $3.60 | - On February 14, **2025**, the Board of Directors approved a **$0.90** per share quarterly cash dividend payable on March 14, **2025**[5](index=5&type=chunk) [**Company Information**](index=3&type=section&id=4.%20Company%20Information) This section provides an overview of Safety Insurance Group, Inc., including its operations, subsidiaries, and investor information resources [**About Safety Insurance Group, Inc.**](index=3&type=section&id=4.1.%20About%20Safety%20Insurance%20Group,%20Inc.) Safety Insurance Group, Inc. is a Boston-based property and casualty insurer operating exclusively in Massachusetts, New Hampshire, and Maine, offering a range of insurance products through its subsidiaries - Safety Insurance Group, Inc. is headquartered in Boston, MA, and is the parent company of Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, Safety Northeast Insurance Company, and Safety Northeast Insurance Agency[15](index=15&type=chunk) - The company operates exclusively in Massachusetts, New Hampshire, and Maine[15](index=15&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[15](index=15&type=chunk) [**Additional Information**](index=3&type=section&id=4.2.%20Additional%20Information) Investors can access press releases, SEC filings, and other information on the company's website. Safety filed its 2023 Form 10-K on February 28, 2024 - Press releases, announcements, SEC Filings, and investor information are available on the Company website at www.SafetyInsurance.com[16](index=16&type=chunk) - Safety filed its December 31, **2023** Form **10-K** with the SEC on February 28, **2024**[16](index=16&type=chunk) [**Forward-Looking Statements and Risk Factors**](index=3&type=section&id=5.%20Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines cautionary statements regarding forward-looking information and identifies key risks impacting Safety Insurance Group's future performance [**Cautionary Statement**](index=3&type=section&id=5.1.%20Cautionary%20Statement) The press release contains forward-looking statements, which are not guarantees of future performance and are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are identified by words like "believe," "expect," "anticipate," "intend," "plan," "estimate," and indicate future events or trends[17](index=17&type=chunk) - These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, many beyond the company's control[18](index=18&type=chunk) - The company disclaims any obligation to update or alter forward-looking statements[19](index=19&type=chunk) [**Identified Risk Factors**](index=3&type=section&id=5.2.%20Identified%20Risk%20Factors) Key risk factors include competitive industry conditions, restrictive regulations, potential losses from severe weather, inflationary impacts on loss severity, and broader investment and economic market conditions - Competitive nature of the industry and possible adverse effects of competition[18](index=18&type=chunk) - Conditions for business operations and restrictive regulations in Massachusetts[18](index=18&type=chunk) - Possibility of losses due to claims resulting from severe weather[18](index=18&type=chunk) - Impact of inflation and supply chain delays on loss severity[20](index=20&type=chunk) - Impact of investment, economic, and underwriting market conditions, including interest rates and inflation[20](index=20&type=chunk) [**Consolidated Financial Statements**](index=5&type=section&id=6.%20Consolidated%20Financial%20Statements) This section presents Safety Insurance Group's consolidated balance sheets, statements of operations, and detailed premium information for the reported periods [**Consolidated Balance Sheets**](index=5&type=section&id=6.1.%20Consolidated%20Balance%20Sheets) The consolidated balance sheet shows an increase in total assets and total liabilities, with a modest increase in total shareholders' equity at year-end 2024 compared to 2023 Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | Change | | :------------------------------------ | :----------- | :----------- | :----- | | Total Investments | $1,513,059 | $1,424,113 | +$88,946 | | Cash and Cash Equivalents | $58,974 | $38,152 | +$20,822 | | Total Assets | $2,270,090 | $2,094,004 | +$176,086 | | Losses and Loss Adjustment Expense Reserves | $671,669 | $603,081 | +$68,588 | | Unearned Premium Reserves | $619,916 | $528,150 | +$91,766 | | Total Liabilities | $1,441,626 | $1,289,737 | +$151,889 | | Total Shareholders' Equity | $828,464 | $804,267 | +$24,197 | [**Consolidated Statements of Operations**](index=6&type=section&id=6.2.%20Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail the company's revenues, expenses, and net income for the fourth quarter and full year 2024, along with a reconciliation to non-GAAP operating income Consolidated Statements of Operations Highlights (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------ | :------ | :------ | :-------- | :-------- | | Net Earned Premiums | $269,050 | $226,029 | $1,010,704 | $834,414 | | Total Revenue | $286,719 | $258,396 | $1,120,017 | $930,956 | | Losses and Loss Adjustment Expenses | $193,007 | $172,105 | $716,637 | $642,302 | | Underwriting, Operating and Related Expenses | $81,266 | $68,748 | $305,322 | $256,580 | | Total Expenses | $276,600 | $242,612 | $1,030,151 | $906,536 | | Income Before Income Taxes | $10,119 | $15,784 | $89,866 | $24,420 | | Net Income | $8,131 | $12,262 | $70,734 | $18,875 | | Non-GAAP Operating Income | $13,964 | $4,449 | $61,507 | $12,319 | [**Additional Premium Information**](index=7&type=section&id=6.3.%20Additional%20Premium%20Information) This section provides a detailed breakdown of direct, assumed, ceded, net written, and net earned premiums for the reported periods Additional Premium Information (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------ | :------ | :------ | :-------- | :-------- | | Direct Written Premiums | $292,025 | $246,091 | $1,193,057 | $991,224 | | Assumed Written Premiums | $(2,606) | $7,620 | $20,279 | $30,850 | | Ceded Written Premiums | $(33,856) | $(27,356) | $(119,931) | $(96,779) | | Net Written Premiums | $255,563 | $226,355 | $1,093,405 | $925,295 | | Direct Earned Premiums | $301,987 | $243,513 | $1,102,695 | $897,598 | | Assumed Earned Premiums | $(2,810) | $7,345 | $18,874 | $29,702 | | Ceded Earned Premiums | $(30,127) | $(24,829) | $(110,865) | $(92,886) | | Net Earned Premiums | $269,050 | $226,029 | $1,010,704 | $834,414 | ```

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to ______ Commission File Number: 000-50070 SAFETY INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 13-41816 ...

Insurance Operations - The company operates as the third largest private passenger auto premium insurance carrier, the second largest commercial auto insurance carrier, and the third largest homeowner insurance carrier in Massachusetts[20]. - Direct written premiums for private passenger automobile insurance increased to $543,167, representing 54.7% of total premiums in 2023, up from $427,665 (52.0%) in 2022[26]. - The company achieved a total of $991,224 in direct written premiums for all product lines in 2023, compared to $823,318 in 2022, reflecting a significant growth[26]. - The commercial automobile insurance segment accounted for $157,101 in direct written premiums, or 15.9% of total premiums in 2023, up from $143,571 (17.4%) in 2022[26]. - Homeowners insurance premiums reached $242,346, making up 24.5% of total premiums in 2023, compared to $208,577 (25.3%) in 2022[26]. - The company plans to further penetrate the Massachusetts, New Hampshire, and Maine markets across all lines of business[27]. - In 2023, 64.5% of private passenger automobile exposures insured had an other than private passenger policy with the company, compared to 65.2% in 2022[48]. - The company distributes products exclusively through independent agents, with 97.1% of direct written premiums for automobile insurance obtained through voluntary agents in 2023[42]. Technology and Innovation - The company is focused on expanding technology to enhance the ease of doing business for independent agents, thereby strengthening relationships[27]. - The company introduced the Safety Commercial Express system in 2021, which was updated in 2022 to allow for agent processing of endorsements[69]. - The Innovation Lab conducted significant research on Generative AI in 2023, with results expected in 2024[71]. - The automated adjuster assignment system categorizes new claims by severity, improving claims management efficiency[73]. - The company has made substantial investments in information technology to enhance agent support and customer service[53]. - The company’s proprietary software applications facilitate real-time policy issuance and data imports from major agency management systems[60]. - The company’s cybersecurity strategy includes ongoing employee education and monitoring for emerging threats[70]. Financial Performance - The bad debt expense as a percentage of direct written premiums was 0.2% in 2023, compared to 0.1% in 2022[76]. - The total incurred losses and LAE for the year 2023 amounted to $642,302, compared to $491,979 in 2022, reflecting a significant increase[97]. - The company paid total losses and LAE of $608,048 in 2023, compared to $515,759 in 2022, showing an increase in claims payments[97]. - The cumulative amounts paid for claims one year later were $198,414 for 2023, indicating the company's ongoing claims management[99]. - The company decreased loss reserves related to prior years by $47,381 in 2023, $57,279 in 2022, and $53,673 in 2021, indicating a trend of releasing redundant reserves[100]. - The reserves for losses and LAE at the end of 2023 were $603,081, up from $549,598 at the end of 2022[99]. - Management believes that the provision for unpaid losses and LAE as of December 31, 2023, is adequate to cover the ultimate cost of losses and claims incurred[93]. Reinsurance Strategy - The company’s reinsurance strategy involves selective partnerships with financially stable reinsurers, most of which have an A.M. Best rating of "A+" or "A"[104]. - In 2023, the company purchased three layers of excess catastrophe reinsurance providing $590,000 of coverage for property losses in excess of $75,000 up to a maximum of $665,000[105]. - For 2024, the company has increased its reinsurance coverage to $615,000 for property losses in excess of $75,000 up to a maximum of $690,000[106]. Investment Portfolio - As of December 31, 2023, the company's investment portfolio was valued at $1,424,113, with 73.9% in fixed maturity securities[133]. - The company has a high-quality investment portfolio primarily consisting of investment grade corporate fixed maturity securities, U.S. government and agency securities, and asset-backed securities[130]. - The estimated fair value of U.S. Treasury securities and obligations of U.S. Government agencies was $247,237 million, representing 23.5% of the total portfolio[141]. - Total estimated fair value of fixed income securities was $1,052,145 million as of December 31, 2023, slightly up from $1,050,155 million in 2022[141]. - The portfolio of fixed maturity investments included 65.8% rated Category 1 and 18.8% rated Category 2 as of December 31, 2023[143]. - The company has a commitment to inclusiveness and actively seeks highly-qualified candidates from diverse backgrounds[120]. Employee and Management Information - The company employs 539 employees as of December 31, 2023, all located in the New England region[119]. - George M. Murphy has been with the Company for over 35 years and was elected Chairman of the Board on May 17, 2023[172]. - Christopher T. Whitford has served as Chief Financial Officer since March 2, 2020, and has over 11 years of experience with the Company[173]. - James D. Berry has been employed by the Company for over 41 years and has directed the Massachusetts Private Passenger line of business since 2001[176]. - Ann M. McKeown, Vice President of Insurance Operations, will retire effective March 1, 2024, after over 34 years with the Company[178]. - Brian S. Lam was appointed Vice President of Insurance Operations effective March 1, 2024, and has been with the Company since 2002[182]. - The Company has adopted a Code of Business Conduct and Ethics applicable to all employees and directors, available on its website[192]. Regulatory and Risk Management - The company is subject to comprehensive regulation by state insurance departments, with the most recent financial condition examination covering the five-year period ending December 31, 2018[152]. - The Company completed its Own Risk Solvency Assessment (ORSA) filing for the 2023 period, as required by the National Association of Insurance Commissioners[169]. - The Company has significant exposure to market risk primarily due to changes in interest rates, with fixed and variable rate debt as sources of financing[405]. - The Company holds a substantial amount of fixed maturity investments, including U.S. and foreign government bonds, which are sensitive to interest rate changes[406]. - The company does not plan to enter into any derivative financial instruments for trading or speculative purposes[405]. Financial Metrics - Total assets increased to $2,094,004 as of December 31, 2023, up from $1,972,569 in 2022, reflecting a growth of approximately 6.2%[430]. - Loss and loss adjustment expense reserves rose to $603,081 in 2023, compared to $549,598 in 2022, indicating an increase of about 9.7%[430]. - The company's total investments reached $1,424,113 as of December 31, 2023, compared to $1,403,160 in 2022, marking a growth of approximately 1.5%[430]. - Cash and cash equivalents increased to $38,152 in 2023 from $25,300 in 2022, representing a significant increase of about 50.9%[430]. - The allowance for expected credit losses for fixed maturities increased from $678 in 2022 to $1,208 in 2023, reflecting a rise of approximately 78.1%[430]. - Shareholders' equity decreased to $804,267 in 2023 from $811,999 in 2022, a decline of about 0.9%[430]. - Net investment income increased to $56,377 million in 2023, up 20.3% from $46,725 million in 2022[138]. - Net effective yield improved to 4.0% in 2023, compared to 3.2% in 2022, reflecting a 25% increase[138].

[Executive Summary](index=1&type=section&id=Executive%20Summary) Safety Insurance Group achieved record premium growth in 2023, but inflation and weather events led to an elevated combined ratio and decreased net income [Overall Performance and Strategic Context](index=1&type=section&id=Overall%20Performance%20and%20Strategic%20Context) Safety Insurance Group achieved record top-line growth in 2023, but inflationary pressures and weather events elevated the combined ratio - Safety Insurance achieved record top-line growth in 2023, with Direct Written Premiums increasing by **20.4%**[2](index=2&type=chunk) - Growth was driven by a **10.2%** increase in overall policy counts and a **10.9%** increase in average premium per policy[2](index=2&type=chunk) - Ongoing inflationary impacts and several weather events led to an elevated loss ratio, particularly in Private Passenger Automobile, resulting in a **107.7%** combined ratio for FY2023 and **106.5%** for Q4 2023[2](index=2&type=chunk) - The company is actively filing for rate increases across all major lines and is committed to maintaining underwriting discipline and leveraging investments in pricing and risk management[2](index=2&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Net income and non-GAAP operating income significantly decreased in 2023 due to increased losses, with book value per share also declining Net Income and EPS (GAAP) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net Income (in millions) | $12.3 | $24.6 | -50.0% | $18.9 | $46.6 | -59.5% | | Diluted EPS | $0.83 | $1.67 | -50.3% | $1.28 | $3.15 | -59.4% | Non-GAAP Operating Income per Diluted Share | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :------------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Non-GAAP Operating Income per Diluted Share | $0.30 | $0.98 | -69.4% | $0.84 | $5.05 | -83.4% | Book Value per Share | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :----------------- | :----------- | :----------- | :----- | | Book Value per Share | $54.37 | $54.88 | -0.9% | [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) The company achieved strong premium growth and increased investment income, but underwriting results deteriorated due to higher losses from inflation and weather events [Premium Growth Analysis](index=1&type=section&id=Premium%20Growth%20Analysis) Strong premium growth in 2023 was driven by new business, improved retention, and rate increases across all lines Written Premiums (in millions) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :--------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Direct Written Premiums | $246.1 | $201.4 | +22.2% | $991.2 | $823.3 | +20.4% | | Net Written Premiums | $226.4 | $187.5 | +20.7% | $925.3 | $773.7 | +19.6% | - Premium increases were a result of new business production, improved retention, and rate increases[8](index=8&type=chunk) Exposure Count Growth (FY 2023 YoY) | Line of Business | Growth | | :---------------------- | :----- | | Private Passenger Auto | +14.7% | | Commercial Automobile | +5.4% | | Homeowners | +11.2% | Average Written Premium per Exposure Increase (FY 2023 YoY) | Line of Business | Increase | | :---------------------- | :------- | | Private Passenger Auto | +10.8% | | Commercial Automobile | +3.8% | | Homeowners | +4.5% | Net Earned Premiums (in millions) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net Earned Premiums | $226.0 | $193.2 | +17.0% | $834.4 | $758.5 | +10.0% | [Underwriting Results and Ratios](index=2&type=section&id=Underwriting%20Results%20and%20Ratios) Underwriting results deteriorated in 2023 due to increased losses from inflation and weather, leading to higher loss and combined ratios Losses and Loss Adjustment Expenses Incurred (in millions) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :-------------------------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Losses and Loss Adjustment Expenses Incurred | $172.1 | $132.0 | +30.4% | $642.3 | $492.0 | +30.6% | - Increase in losses driven by current market conditions, specifically inflation, and weather events including multiple flood events, a high wind event in December, and a severe winter weather event in February[10](index=10&type=chunk) Key Underwriting Ratios | Ratio | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------- | :------ | :------ | :------ | :------ | | Loss Ratio | 76.1% | 68.4% | 77.0% | 64.9% | | Expense Ratio | 30.4% | 32.3% | 30.7% | 32.3% | | Combined Ratio | 106.5% | 100.7% | 107.7% | 97.2% | - The decrease in the expense ratio is primarily driven by a decrease in contingent commission expenses[11](index=11&type=chunk) [Investment Income and Portfolio Performance](index=2&type=section&id=Investment%20Income%20and%20Portfolio%20Performance) Net investment income increased significantly in 2023 due to higher interest rates, improving the portfolio's effective annualized yield Net Investment Income (in millions) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :------------------ | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net Investment Income | $14.9 | $13.4 | +11.2% | $56.4 | $46.7 | +20.7% | - The increase in net investment income is a result of increases in interest rates on the fixed maturity portfolio[13](index=13&type=chunk) Net Effective Annualized Yield on Investment Portfolio | Period | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :----- | :------ | :------ | :------ | :------ | | Yield | 4.2% | 3.7% | 4.0% | 3.2% | - Duration on fixed maturities was **3.6 years** at December 31, 2023, down from **3.8 years** at December 31, 2022[13](index=13&type=chunk) [Prior Year Loss Development](index=2&type=section&id=Prior%20Year%20Loss%20Development) Total prior year favorable loss development decreased in 2023, with the prior year including a significant COVID-19 reserve reversal Total Prior Year Favorable Development (in millions) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Total Prior Year Favorable Development | $12.4 | $14.1 | $47.4 | $57.3 | - The FY2022 figure included the reversal of a **$6.5 million** accrued reserve for legal defense costs associated with COVID-19 business interruption claims[12](index=12&type=chunk) [Financial Position and Capital Management](index=1&type=section&id=Financial%20Position%20and%20Capital%20Management) The balance sheet shows increased assets and liabilities, reflecting business growth and claims, while shareholder returns were maintained through dividends and share repurchases [Balance Sheet Overview](index=5&type=section&id=Balance%20Sheet%20Overview) Total assets and liabilities increased in 2023, driven by higher loss and unearned premium reserves, reflecting business growth and claims Selected Balance Sheet Items (in thousands) | Item | Dec 31, 2023 | Dec 31, 2022 | | :---------------------------------------- | :----------- | :----------- | | Total Assets | $2,094,004 | $1,972,569 | | Total Liabilities | $1,289,737 | $1,160,570 | | Loss and Loss Adjustment Expense Reserves | $603,081 | $549,598 | | Unearned Premium Reserves | $528,150 | $433,375 | | Total Shareholders' Equity | $804,267 | $811,999 | [Shareholder Returns](index=1&type=section&id=Shareholder%20Returns) The company maintained its commitment to shareholder returns through consistent quarterly dividends and share repurchases Dividends Paid per Common Share | Period | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :----- | :------ | :------ | :------ | :------ | | Dividend | $0.90 | $0.90 | $3.60 | $3.60 | - The Board of Directors approved a **$0.90 per share** quarterly cash dividend payable on March 15, 2024[5](index=5&type=chunk) - During FY2023, the Company purchased **74,213 shares** at a cost of **$5.2 million**[4](index=4&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP operating income is used to clarify underlying business trends by adjusting GAAP net income for specific non-operating items [Non-GAAP Operating Income Definition and Reconciliation](index=2&type=section&id=Non-GAAP%20Operating%20Income%20Definition%20and%20Reconciliation) Non-GAAP operating income adjusts GAAP net income for specific items to provide a clearer view of underlying business trends - Non-GAAP operating income adjusts GAAP net income by excluding net realized gains on investments, change in net unrealized gains on equity securities, credit loss benefit (expense), and related taxes[16](index=16&type=chunk) Change in Net Unrealized Gains on Equity Securities (in millions) | Period | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :----- | :------ | :------ | :------ | :------ | | Change | +$9.7 | +$11.9 | +$7.5 | -$44.4 | Non-GAAP Operating Income (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------------- | :------ | :------ | :------ | :------ | | Net Income | $12,262 | $24,630 | $18,875 | $46,561 | | Non-GAAP Operating Income | $4,449 | $14,601 | $12,319 | $74,355 | [Company Information and Risk Factors](index=3&type=section&id=Company%20Information%20and%20Risk%20Factors) Safety Insurance Group operates as a leading P&C insurer in specific New England states, facing risks from competition, regulation, weather, and economic conditions [About Safety Insurance Group](index=3&type=section&id=About%20Safety%20Insurance%20Group) Safety Insurance Group is a Boston-based P&C insurer operating in Massachusetts, New Hampshire, and Maine, offering diverse insurance products - Safety Insurance Group, Inc. is based in Boston, MA, and operates exclusively in Massachusetts, New Hampshire, and Maine[17](index=17&type=chunk) - The company 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) [Cautionary Statement and Risk Factors](index=3&type=section&id=Cautionary%20Statement%20and%20Risk%20Factors) Forward-looking statements are subject to risks including competition, regulations, weather events, inflation, and broader economic and market conditions - Forward-looking statements are subject to risks and uncertainties, and actual future conditions, events, results, or trends may differ significantly and/or materially from projections[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - Competitive nature of the industry[20](index=20&type=chunk)[22](index=22&type=chunk) - Conditions for business operations and restrictive regulations in Massachusetts[20](index=20&type=chunk)[22](index=22&type=chunk) - Possibility of losses due to claims resulting from severe weather[20](index=20&type=chunk)[22](index=22&type=chunk) - Impact of inflation and supply chain delays on loss severity[20](index=20&type=chunk)[22](index=22&type=chunk) - Impact of investment, economic, and underwriting market conditions, including interest rates and inflation[20](index=20&type=chunk)[22](index=22&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the consolidated balance sheets, statements of operations, and detailed premium information for 2023 and 2022 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets detail the company's financial position at year-end 2023 and 2022, showing assets, liabilities, and equity Consolidated Balance Sheets (Dollars in thousands) | Item | Dec 31, 2023 | Dec 31, 2022 | | :-------------------------------------------------------------------------------------------------- | :----------- | :----------- | | **Assets** | | | | Investments: Fixed maturities, available for sale, at fair value | $1,052,145 | $1,050,155 | | Equity securities, at fair value | $238,022 | $240,155 | | Other invested assets | $133,946 | $112,850 | | Total investments | $1,424,113 | $1,403,160 | | Cash and cash equivalents | $38,152 | $25,300 | | Accounts receivable, net | $256,687 | $192,542 | | Deferred policy acquisition costs | $91,917 | $75,582 | | Total assets | $2,094,004 | $1,972,569 | | **Liabilities** | | | | Loss and loss adjustment expense reserves | $603,081 | $549,598 | | Unearned Premium Reserves | $528,150 | $433,375 | | Accounts payable and accrued liabilities | $64,235 | $73,875 | | Debt | $30,000 | $35,000 | | Total liabilities | $1,289,737 | $1,160,570 | | **Shareholders' equity** | | | | Retained earnings | $781,192 | $815,309 | | Treasury stock, at cost | $(150,293) | $(145,000) | | Total shareholders' equity | $804,267 | $811,999 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations detail revenues, expenses, and net income for 2023 and 2022, showing increased premiums offset by higher losses Consolidated Statements of Operations (Dollars in thousands) | Item | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net earned premiums | $226,029 | $193,153 | $834,414 | $758,505 | | Net investment income | $14,882 | $13,388 | $56,377 | $46,725 | | Total revenue | $258,396 | $226,603 | $930,956 | $797,559 | | Losses and loss adjustment expenses | $172,105 | $132,029 | $642,302 | $491,979 | | Underwriting, operating and related expenses | $68,748 | $62,306 | $256,580 | $245,145 | | Total expenses | $242,612 | $194,797 | $906,536 | $737,978 | | Income before income taxes | $15,784 | $31,806 | $24,420 | $59,581 | | Income tax expense | $3,522 | $7,176 | $5,545 | $13,020 | | Net income | $12,262 | $24,630 | $18,875 | $46,561 | | Diluted EPS | $0.83 | $1.67 | $1.28 | $3.15 | [Additional Premium Information](index=7&type=section&id=Additional%20Premium%20Information) This section details written and earned premiums, including direct, assumed, and ceded components, for 2023 and 2022 Written Premiums (Dollars in thousands) | Item | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------- | :--------- | :--------- | :--------- | :--------- | | Direct | $246,091 | $201,371 | $991,224 | $823,318 | | Assumed | $7,620 | $7,667 | $30,850 | $28,835 | | Ceded | $(27,356) | $(21,507) | $(96,779) | $(78,418) | | Net written premiums | $226,355 | $187,531 | $925,295 | $773,735 | Earned Premiums (Dollars in thousands) | Item | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :---------------- | :--------- | :--------- | :--------- | :--------- | | Direct | $243,513 | $205,627 | $897,598 | $803,289 | | Assumed | $7,345 | $7,141 | $29,702 | $28,976 | | Ceded | $(24,829) | $(19,615) | $(92,886) | $(73,760) | | Net earned premiums | $226,029 | $193,153 | $834,414 | $758,505 |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number: 000-50070 SAFETY INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 13-4181699 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 20 Custom House Street, Boston, Massachusetts 02110 (Address of principal executive offices including zip code) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from ______to ______ Commission File Number: 000-50070 SAFETY INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 13-4181699 Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to ______ Commission File Number: 000-50070 SAFETY INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 13-41816 ...

Company Overview - The company operates as the fifth largest private passenger auto premium insurance carrier, the second largest commercial auto insurance carrier, and the third largest homeowner insurance carrier in Massachusetts[20]. - The company is the second largest writer of commercial automobile insurance in Massachusetts with a market share of 12.6% in 2022[119]. - The company is the third largest writer of homeowners insurance in Massachusetts, holding a market share of 6.5% in 2021[120]. Financial Performance - In 2022, direct written premiums totaled $823.3 million, with private passenger automobile insurance contributing 52.0%, commercial automobile 17.4%, and homeowners 25.3%[26]. - The combined ratio is typically maintained below industry averages, indicating effective cost management and underwriting practices[20]. - In 2022, the bad debt expense as a percentage of direct written premiums was 0.1%, indicating effective credit management[74]. - The total incurred losses and LAE for the current year 2022 amounted to $491,979, compared to $461,727 in 2021, reflecting an increase of approximately 6.5%[99]. - The statutory surplus of Safety Insurance was $782,200, with a net income of $66,197 for 2022, allowing for a maximum of $78,220 in dividends without prior approval[159]. Market Strategy - The company aims to further penetrate the Massachusetts, New Hampshire, and Maine markets across all lines of business[27]. - The company focuses on developing interdependent relationships with agents in Massachusetts, New Hampshire, and Maine to increase market share[50]. - Competitive commissions and incentives are offered to agents, with a focus on attracting profitable new business[52]. Technology and Innovation - The investment in technology aims to provide agents with advanced tools, enhancing the ease of doing business[20]. - The Innovation Lab has been active in 2022, conducting research and developing new technologies to enhance customer experience and competitiveness[71]. - The company introduced the Safety Commercial Express system in 2021, which was updated in 2022 to improve agent processing capabilities[70]. Claims Management - The claims department utilizes stringent settlement procedures, with approximately 58% of bodily injury claims in 2022 being soft tissue injuries[82]. - The company employs automated systems for claims processing, which streamline operations and improve customer service[87]. - Reserves for unpaid losses are reviewed quarterly, with annual certification required from a qualified actuary to ensure reasonableness[92]. Investment Portfolio - As of December 31, 2022, the company's investment portfolio was valued at $1,403,160, with 74.9% in fixed maturity securities and 17.1% in equity securities[137]. - The company’s fixed maturity investments primarily consist of investment grade corporate securities, U.S. government securities, and asset-backed securities[134]. - The estimated fair value of asset-backed securities was $443,164, representing 42.3% of the total fixed income security portfolio[149]. Risk Management - The Company has adopted a comprehensive risk management approach to assess its current and prospective solvency positions under various stress scenarios[173]. - The Company has significant exposure to interest rate risk due to its holdings of fixed rate investments, with estimated fair values of $1,092,151, $1,261,399, and changes in fair value of $41,996 and $43,120 for the years ending December 31, 2022, and 2021 respectively[394]. - The Company manages equity price risk through diversification and asset allocation techniques, with plans to purchase additional equity securities in the future[396]. Corporate Governance - The Company has a Code of Business Conduct and Ethics that applies to all employees and directors, ensuring compliance and ethical standards[192]. - The Company’s executive officers have extensive experience, with the President and CEO, George M. Murphy, having over 34 years in the industry[176]. - The Company’s Vice President of Claims, Paul J. Narciso, has 36 years of claims experience, contributing to the Company’s operational expertise[181]. Audit and Compliance - The Company reported a fair presentation of its financial position as of December 31, 2022, and 2021, in accordance with generally accepted accounting principles[400]. - The Company maintained effective internal control over financial reporting as of December 31, 2022[400]. - The audit procedures included testing the effectiveness of controls related to loss reserves and evaluating the methods and assumptions used in estimating these reserves[411].