Rating agency cites underwriting pressure from loss severity, weather and new business growth
AM Best has revised its outlook to negative from stable for Safety Insurance Group, Inc. and its principal insurance subsidiaries while affirming the group’s existing financial strength and issuer credit ratings.
The rating agency affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) for Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, and Safety Northeast Insurance Company, collectively referred to as Safety Group.
At the same time, AM Best revised the outlook to negative from stable and affirmed the Long-Term Issuer Credit Rating of “bbb” (Good) for Boston-based Safety Insurance Group, Inc. (NASDAQ: SAFT), the publicly traded parent company.
According to AM Best, the ratings reflect Safety Group’s strong balance sheet strength, strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
Underwriting results drive outlook revision
AM Best said the outlook revision reflects pressure on the group’s operating performance over the past five years and through the first half of 2026.
According to the rating agency, underwriting results have been affected by “the effects of loss severity trends and weather-related events, and the influence of new business” during that period. AM Best noted that 2026 has been “particularly impacted by severe winter weather losses affecting the East Coast.”
As a result, the agency said Safety’s operating performance metrics “have aligned closer to an assessment level of adequate in recent years, particularly relative to the personal property composite.”
AM Best said management has responded with rate increases and additional underwriting initiatives intended to improve future results, but those measures “have yet to reach the same level of comparative strength as observed in older years.”
Capital position remains strong
Despite the revised outlook, AM Best said Safety Group’s balance sheet strength remains strong, supported by a strong level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), historically favorable reserve development, and sound liquidity.
The agency noted that surplus levels are affected by annual dividends paid to the parent company to fund shareholder dividends. However, it added that the insurance group benefits from its relationship with Safety Insurance Group, Inc., which has access to the public debt and equity markets if additional capital is needed.
Massachusetts market position unchanged
AM Best said its neutral business profile assessment reflects Safety Group’s consistent position as one of the top five insurers in Massachusetts’ personal auto, commercial auto and homeowners insurance markets.
The rating agency also reaffirmed its view that the group’s enterprise risk management remains appropriate, citing a formalized ERM program with a level of sophistication suited to the company’s risk profile.
