Safety Insurance Group, Inc. in Massachusetts reported net income for 2005 was $95.2 million, or $5.97 per diluted share, compared to $45.0 million, or $2.90 per diluted share, for 2004. Safety’s book value per share increased to $24.57 at December 31, 2005 after paying $0.60 per share in dividends to investors during 2005, compared to $19.70 at December 31, 2004 after paying $0.44 per share in dividends to investors during 2004.
Fourth quarter 2005 net income was $27 million, or $1.69 per diluted share, compared to $13.2 million, or $0.84 per diluted share, for the comparable 2004 period.
Direct written premiums for the quarter ended December 31, 2005 increased by $3.3 million, or 2.5%, to $134.7 million from $131.4 million for the comparable 2004 period. Direct written premiums for the year ended December 31, 2005 increased by $20.8 million, or 3.3%, to $649.1 million from $628.3 million for 2004. The 2005 increase occurred primarily in the personal automobile line, which experienced a 0.1% increase in average written premium and a 2.4% increase in written exposures.
In addition, its commercial automobile line’s average written premium decreased by 0.3%, which was more than offset by a 7.6% increase in written exposures, and the homeowners line’s average written premium increased by 7.3%, which was partly offset by a 2.9% decrease in written exposures.
Net written premiums for the quarter ended December 31, 2005 decreased by $8.8 million, or 6.7%, to $121.6 million from $130.4 million for the comparable 2004 period primarily due to a decrease in premiums assumed from Commonwealth Automobile Reinsurers. Net written premiums for the year ended December 31, 2005 increased by $13.9 million, or 2.2%, to $632.8 million from $618.9 million for 2004.
Net earned premiums for the quarter ended December 31, 2005 increased by $0.1 million to $152.4 million from $152.3 million for the comparable 2004 period. Net earned premiums for the year ended December 31, 2005 increased by $30.5 million, or 5.1%, to $622.8 million from $592.3 million for 2004. These increases were primarily due to the factors that increased direct written premiums combined with a decrease in premiums ceded to CAR.
Net investment income for the quarter ended December 31, 2005 was $8.5 million compared to $6.9 million for the comparable 2004 period. Net investment income for the year ended December 31, 2005 was $31.6 million compared to $27.2 million for 2004. Average cash and investment securities (at cost) increased by $102.6 million, or 14.0%, to $837.2 million for the year ended December 31, 2005 from $734.6 million for the year ended December 31, 2004 due primarily to a $72.9 million increase in average cash and cash equivalents. Net effective annualized yield on the investment portfolio increased to 3.8% during 2005 from 3.7% during 2004. The duration decreased to 3.2 years at December 31, 2005 from 3.4 years at December 31, 2004. Net realized gains on investments decreased to $0.3 million for the year ended December 31, 2005 from $1.3 million for 2004.
Loss, expense and combined ratios calculated for the year ended December 31, 2005 were 61.9%, 23.5% and 85.4% compared to 71.8%, 24.5% and 96.3% for 2004.
Loss, expense and combined ratios for the quarter ended December 31, 2005 were 60.3%, 21.9% and 82.2% compared to 68.8%, 25.2% and 94.0% for the comparable 2004 period.
The loss ratio improved as a result of favorable loss development in CAR prior year results, a decrease in personal and commercial automobile bodily injury claim frequency, and favorable loss development in personal automobile line prior year results. Total prior year favorable development included in the pre-tax results for the quarter and year ended December 31, 2005 was $12.1 million and $39.6 million, respectively, compared to prior year favorable development for the quarter and year ended December 31, 2004 of $4.6 million and $6.8 million, respectively.
On February 16, 2006, the Board of Directors approved and declared a $0.18 per share quarterly cash dividend on the issued and outstanding common stock, payable on March 15, 2006 to shareholders of record at the close of business on March 1, 2006.
Safety Insurance Group, Inc. is the parent of Safety Insurance Company and Safety Indemnity Insurance Company, which are Boston, Mass., based writers of property and casualty insurance. Safety is a leading writer of personal automobile insurance in Massachusetts.
Topics Profit Loss
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