Safety reports improved Q4 combined ratio of 101.9%, misses estimates

By Isha Marathe

Feb 25 - (The Insurer) - Safety Insurance Group announced on Tuesday that its combined ratio improved by 4.6 percentage points year on year to 101.9% in 2024's fourth quarter.

• Combined ratio of 101.9% in Q4 2024 (Q4 2023: 106.5%)

• NWP increased 12.9% to $255.6mn in Q4 2024

• Non-GAAP operating income of $0.94 per diluted share in Q4 2024 missed estimates

• Net earned premiums increased 19% to $269.1 million in Q4 2024

Safety reported operating income of $0.94 per diluted share for the quarter, missing the $1.17 consensus estimate of one analyst as compiled by MarketWatch.

The Massachusetts-based company's net written premiums rose 12.9% to $255.6 million. Net income for the quarter was $8.1 million, or $0.55 per diluted share, compared to net income of $12.3 million, or $0.83 per diluted share, in Q4 2023.

The increases in direct written premiums and net written premiums were a result of new business production and rate increases, the company said.

The insurer's loss and expense ratios stood at 71.7% and 30.2% in the fourth quarter, respectively, compared to 76.1% and 30.4% in Q4 2023.

The improved loss and expense ratios were driven by the increase in earned premiums, while the loss ratio was favourably impacted by the moderation of loss severity in the private passenger automobile line, the company said.

Net earned premiums increased by 19% year on year to $269.1 million in 2024's fourth quarter. Net investment income for the quarter decreased by 0.7% year on year to $14.8 million.

For the quarter, losses and loss adjustment expenses incurred increased by 12.1% to $193 million. The increase in losses was driven by Safety's higher policy count and current market conditions, specifically inflationary impacts on the company's private passenger automobile book of business.

Prior year favourable development totalled $13 million in Q4 2024, compared to $12.4 million in the prior-year period.

For the full year, net written premiums increased by 18.2% to $1.09 billion from $925.3 million in 2023. The combined ratio for 2024 improved to 101.1% from 107.7% in 2023.

For the full year, Safety’s book value per share increased to $55.83 from $54.37 at year-end 2023, due to net income offset by dividends paid. The company paid $0.90 per share in dividends to investors during the fourth quarters of 2024 and 2023.