On Feb. 26, Massachussetts-based auto insurer Safety Insurance Group
- 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 |
|
---|---|---|---|
$154,146 |
$152,380 |
1.2% |
|
Investment Income |
$10,737 |
$8,522 |
26.0% |
Net Income |
$22,896 |
$26,959 |
(15.1%) |
EPS |
$1.42 |
$1.69 |
(16.0%) |
Get back to basics with a look at an insurer's income statement.
Ratio Checkup
Q4 2006 |
Q4 2005 |
*Change |
|
---|---|---|---|
Loss Ratio |
61.4% |
60.3% |
1.10 |
Expense Ratio |
26.4% |
21.9% |
4.50 |
87.8% |
82.2% |
5.60 |
|
Net Investment Yield |
4.4% |
3.8% |
0.60 |
What do these ratios mean?
Balance Sheet Highlights
Assets |
Q4 2006 |
Q4 2005 |
% Change |
---|---|---|---|
Investments |
$940,605 |
$714,543 |
31.6% |
Cash and Equivalent |
$26,283 |
$163,027 |
(83.9%) |
Liabilities |
|||
---|---|---|---|
$449,444 |
$450,716 |
(0.3%) |
|
Unearned Premiums |
$333,404 |
$341,562 |
(2.4%) |
Learn your way around an insurer's balance sheet.
Related Foolishness:
- Insurance Industry Basics: Loss Reserve
- A Closer Look at Insurance Stocks
- Getting to Know the Insurance Industry
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.