Property and casualty insurer Safety Insurance Group (NASDAQ:SAFT) just reported its second-quarter earnings, and to sum it up, the results are a mixed bag. Although book value increased and the company wrote more premiums than a year ago, higher insurance losses caused profits to take a hit.

With that in mind, here's a rundown of the key numbers investors should know, followed by some of the most important takeaways.

Man on phone in front of cars in a fender bender.

Image source: Getty Images.

Safety Insurance Group's second-quarter results: By the numbers


Q2 2019

Q2 2018

Year-Over-Year Change

Combined ratio



330 basis points

Net income

$25.9 million

$26.8 million


Non-GAAP operating income per share




Diluted EPS




Book value per share




Data source: Safety Insurance Group. GAAP = generally accepted accounting principles. EPS = earnings per share. 

What happened with Safety Insurance Group this quarter?

First and foremost, as you can see, Safety Insurance Group's second-quarter results were generally worse than they were in the same quarter a year ago. So before we get into a rundown of some of the important points in Safety's earnings report, there are a few important things to know.

For starters, Safety Insurance had an exceptionally strong second quarter in 2018 when it rebounded from awful first-quarter winter weather. Furthermore, when compared with the first quarter of 2019, Safety's results show considerable improvement. The company's combined ratio (the best indicator of an insurer's underwriting profit) dropped by 260 basis points on a quarter-over-quarter basis, and its non-GAAP EPS increased by 8.1%.

With that in mind, here are some of the other key highlights of Safety's second-quarter earnings report:

  • Direct written premiums increased slightly (by 0.2%) as compared with the second quarter of 2018, and net written premiums increased by 0.8%. So despite the lower earnings in the chart, Safety's business grew.
  • Safety's combined ratio of 93.3% breaks down into a loss ratio of 62.3% and an expense ratio of 31%, as compared with 58.3% and 31.7%, respectively, in the second quarter of 2018. In other words, the lower underwriting profit in the second quarter of 2019 was driven by higher insurance claims. Operating expenses actually fell on a year-over-year basis.
  • Safety's net investment income for the second quarter increased 3.8% year over year thanks to a combination of more money to invest and higher average yields on the company's investments.
  • Safety Insurance Group's investors are getting a raise. The company announced that its dividend will increase from $0.80 per quarter to $0.90 starting with the September 13, 2019 dividend payment. Based on the share price as of this writing, this translates to a 3.6% annualized yield.

Looking forward

The second and third quarters are generally the most profitable for Safety. Since the company primarily writes auto insurance policies in Massachusetts, it is especially susceptible to the potential of increased claims resulting from harsh winter weather.

While the company's earnings declined on a year-over-year basis, it's important to note that the company's business grew and expenses were slightly lower. If Safety can run a better underwriting profit in the third quarter, its bottom-line earnings should look considerably better.

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