Safety Insurance Group (NASDAQ:SAFT) posted its first quarterly profit in 2015 as the property and casualty insurer reported normalizing losses after a massive snowstorm earlier this year.

By the numbers
Safety's net income and book value per share fell year over year, but the company's combined ratio normalized as direct written premiums grew about 4% over the same quarter last year.


Q3 2015

Q3 2014

Direct written premium

$204.4 million

$197.4 million

Net income

$12 million ($0.80 per share)

$15.4 million ($1.03 per share)

Combined ratio



Book value per share



Source: Safety Insurance Group investor relations.

What happened this quarter?
Safety Insurance is coming off a brutal winter during which several feet of snowfall blanketed its core Massachusetts market, resulting in high catastrophe losses in the first two quarters of 2015.

  • The company's loss rate normalized to 69.1% of premiums in the third quarter, an increase of less than 3 percentage points from the year-ago period.
  • Book value per share was down sharply year over year, as the company's earnings simply haven't kept pace with its dividends to shareholders. Through the first three quarters, Safety recorded a net loss of $24.1 million, primarily due to first-quarter losses of $35.1 million. (For perspective, Safety reported net income of $59.4 million for the full 2014 year.)
  • Importantly, Safety continues to see increases in written premium per exposure in commercial auto and homeowners lines, which grew 5.6% and 2.4%, respectively. Data for its largest line, personal autos, isn't disclosed in its press release.

Looking ahead
Safety has asked for two important pricing increases that have been approved by regulators. The company was approved for a 3.8% increase in Massachusetts private passenger rates that was effective on June 1, 2015. It also received approval for a 9.1% increase in homeowners insurance rates in the state, which will be effective on Dec. 1, 2015.

Private passenger rate increases are the most important for Safety, which derived nearly 62% of its direct written premiums from passenger auto insurance in 2014. Shareholders can look forward to the dividend they have come to expect. In the release, the company announced a $0.70 dividend payable on Dec. 15, 2015.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Safety Insurance Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.