Improved Underwriting Drives Quarterly Profit Gain
Boston-based Safety Insurance reported improved first quarter 2025 results, with gains in net income, written premiums, and policy count growth across all major lines. The company also announced the declaration of its second quarter cash dividend.
“Safety’s first quarter combined ratio in 2025 improved to 99.4% compared to 101.9% in the first quarter of 2024, ” said George M. Murphy, Chairman of the Board of Directors, President and Chief Executive Officer in a company announcement. “The year-over-year change reflects the impact of our prior year growth in direct written premiums earning into top-line results and improvements in our private passenger automobile loss ratio. Positive trends in other revenue lines resulted in strong earnings per-share of $1.48 per-share and a $22.2 million increase in total shareholders’ equity.”
The following is a look at the numbers:
Financial Results Snapshot
- Net income: $21.9 million, or $1.48 per diluted share, up from $20.1 million, or $1.36 per diluted share, in Q1 2024.
- Non-GAAP operating income: $1.28 per diluted share, versus $0.93 in the same period last year.
- Book value per share: Increased to $57.12 as of March 31, 2025, from $55.83 at year-end 2024.
- Dividend: $0.90 per share declared for Q2, payable June 13, 2025, to shareholders of record as of June 2, 2025.
Premium Growth and Underwriting Improvement
Safety’s strong quarterly performance was driven by continued premium growth and underwriting improvement:
- Direct written premiums: Rose 11.8% to $299.0 million, up from $267.3 million in Q1 2024.
- Net written premiums: Increased 9.8% to $274.8 million.
- Net earned premiums: Climbed 15.5% to $272.7 million.
The increase in earned premiums reflects the impact of prior-year growth flowing into the current quarter. The company attributed premium gains to new business production, rate increases, and policy count growth:
- Policy count growth:
- Private Passenger Auto: +1.3%
- Commercial Auto: +2.5%
- Homeowners: +5.4%
- Average written premium per policy:
- Private Passenger Auto: +9.5%
- Commercial Auto: +8.4%
- Homeowners: +11.0%
Combined Ratio Down, Investment Income Slips
For Q1-2025, Safety reported:
- Loss ratio: 69.8% (vs. 71.3% in Q1 2024)
- Expense ratio: 29.6% (vs. 30.6%)
- Combined ratio: 99.4% (improved from 101.9%)
Loss and loss adjustment expenses increased by 13.0% to $190.3 million, reflecting higher policy counts. However, improved private passenger auto results helped offset the impact.
Favorable prior-year reserve development contributed $12.2 million to pre-tax results, up from $11.0 million in the year-earlier quarter.
On the investment side, net income declined slightly:
- Net investment income: $14.6 million, down from $15.2 million
- Annualized portfolio yield: 3.9%, compared to 4.3% in Q1 2024
- Portfolio duration: 3.6 years at March 31, 2025
The decline in investment income was attributed to lower earned interest from higher-yield bonds and variable-rate bank loans.
Use of Non-GAAP Measures
Safety reported non-GAAP operating income to adjust for changes in net realized investment gains, equity valuation changes, and credit loss expense. For Q1 2025, the company recognized a $0.3 million decrease in unrealized gains on equity investments, compared to a $7.7 million increase in Q1 2024.
