Q1 Results: Safety Ins. Overcomes $32.1M Weather Loss with 13.9% Premium Growth
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Q1-2023 Results: Safety Insurance
Safety Insurance Group has reported its first quarter results for 2023, revealing a challenging period largely due to a severe winter weather event in February. George M. Murphy, President and CEO, provided insights into the factors that affected the company’s performance during the quarter.
The winter weather event resulted in 783 burst pipe claims, causing $32.1 million in incurred water damage and adding 17.0 percentage points to the company’s combined ratio, bringing it to 118.5%.
Increased catastrophe reinsurance costs and inflationary pressure on private passenger auto severity impacted the underlying business.
Favorable loss reserve development helped offset losses.
Despite challenges, the company is focused on appropriate pricing for products and anticipates continued rate increases in 2023.
Safety Insurance experienced a 13.9% growth in net written premium compared to the previous year, attributed to new business production, improved retention, and rate increases.
Key Highlights:
Financial Results:
Q1 2023 net loss: $12.3 million, or $0.84 per diluted share, compared to a net income of $7.8 million, or $0.53 per diluted share in Q1 2022.
Non-GAAP operating loss for Q1 2023: $0.87 per diluted share, compared to non-GAAP operating income of $0.99 per diluted share in Q1 2022.
Book value per share decreased to $54.01 at the end of Q1 2023, down from $54.88 at the end of 2022.
A quarterly cash dividend of $0.90 per share was approved and declared, payable on June 15, 2023, to shareholders of record on June 1, 2023.
Direct and Net Written Premiums:
Direct written premiums for Q1 2023 increased by $28.4 million (15.0%) to $217.9 million, compared to $189.5 million for Q1 2022.
Net written premiums for Q1 2023 increased by $24.8 million (13.9%) to $202.9 million, compared to $178.1 million for Q1 2022.
Loss and Loss Adjustment Expenses:
For Q1 2023, loss and loss adjustment expenses incurred increased by $44.0 million (35.7%) to $167.2 million, compared to $123.2 million for Q1 2022.
Ratios:
Loss, expense, and combined ratios for Q1 2023 were 87.2%, 31.3%, and 118.5%, respectively, compared to 65.8%, 32.9%, and 98.7%, respectively, for Q1 2022.
Net Investment Income:
Net investment income for Q1 2023 increased by $3.1 million (28.9%) to $13.7 million, compared to $10.6 million for Q1 2022, primarily driven by the company’s bond portfolio.
Per CEO Murphy, Safety Insurance Group remains focused on its relationships with independent agent partners and shared customers and managing a well-diversified investment portfolio to generate cash and income for the business.
About Owen Gallagher
Owen Gallagher is an experienced insurance litigator as well as a certified mediator and arbitrator who specializes in insurance industry disputes. His interest and affinity for insurance began at a young age working the counter at his father’s assigned risk agency in Roxbury. Over the course of his career, Owen has argued a number of cases in the Massachusetts Supreme Judicial Court and has helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth. Owen can be reached here.
