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Property and casualty insurer Safety Insurance Group (SAFT +0.00%) 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.
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Metric |
Q2 2019 |
Q2 2018 |
Year-Over-Year Change |
---|---|---|---|
Combined ratio |
93.3% |
90% |
330 basis points |
Net income |
$25.9 million |
$26.8 million |
(3.4%) |
Non-GAAP operating income per share |
$1.47 |
$1.81 |
(18.8%) |
Diluted EPS |
$1.68 |
$1.75 |
(4%) |
Book value per share |
$50.90 |
$45.56 |
11.7% |
Data source: Safety Insurance Group. GAAP = generally accepted accounting principles. EPS = earnings per share.
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:
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.