On Feb. 26, Massachussetts-based auto insurer Safety Insurance Group (NASDAQ:SAFT) released fourth-quarter earnings for the period ended Dec. 31.

  • Net income fell 15% to $22.9 million from $27.0 million in Q4 2005.
  • For the year, book value per share showed robust 25% growth to $30.84 from $24.57.
  • The quarter's combined ratio increased 560 basis points over the prior-year period to 87.8%. About 450 basis points of the increase was due to an increase in the expense ratio -- the company cited higher agent's commissions as the culprit.
  • Auto insurers have seen premium growth come under pricing pressure, although combined ratios have stayed low. Shares of competitors Progressive (NYSE:PGR), Mercury General (NYSE:MCY), and Allstate (NYSE:ALL) have largely languished over the past year.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

% Change

Premiums Earned




Investment Income




Net Income








Get back to basics with a look at an insurer's income statement.

Ratio Checkup

Q4 2006

Q4 2005


Loss Ratio




Expense Ratio




Combined Ratio




Net Investment Yield




*Expressed in percentage points.

What do these ratios mean?

Balance Sheet Highlights


Q4 2006

Q4 2005

% Change





Cash and Equivalent





Loss Reserve




Unearned Premiums




Learn your way around an insurer's balance sheet.

Related Foolishness:

Safety Insurance is a Stock Advisor recommendation. Mercury General is a Motley Fool Income Investor recommendation. Try any one of our investing services free for 30 days.

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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.

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