AM Best, a leading credit rating agency specializing in the insurance industry, announced on June 15 that it had affirmed the “A” rating of Safety Insurance Group, Inc. (“Safety”), the publicly traded parent company of Safety Insurance, in Boston. The announcement highlighted Safety’s strong financial position, solid operating performance, and commitment to effective risk management.
Safety Insurance Group’s Ratings affirmed:
AM Best affirmed both Safety Insurance Group’s Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) for its subsidiaries, including Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, and Safety Northeast Insurance Company. Additionally, the rating company affirmed the Long-Term ICR (“Issuers Credit Rating”) of “bbb+” (Good) of Safety Insurance Group, Inc. itself. These ratings reflected AM Best’s opinion of Safety’s strong balance sheet, robust operating performance, neutral business profile, and appropriate enterprise risk management.
Financial Strength and Balance Sheet:
AM Best found Safety Insurance Group boasts a very strong level of risk-adjusted capitalization, which is a key indicator of its financial stability. The company maintains conservative underwriting leverage and sound liquidity, further enhancing its balance sheet strength. Additionally, Safety’s historically favorable loss reserve development trends demonstrate its prudent approach to managing risk. The financial flexibility provided by its publicly traded parent company adds an extra layer of support to its overall financial position.
Operating Performance and Business Profile:
AM Best also advised that Safety Insurance Group has a proven track record of strong operating performance. The company writes most of its business in Massachusetts. Its ability to effectively manage the Massachusetts market conditions has contributed to its success. Furthermore, Safety’s leading market position and diverse product offerings underscored, to the rating company, its competitiveness in the insurance industry. However, AM Best noted that Safety’s concentration in Massachusetts might expose the company to unique economic, regulatory, legislative, and weather-related risks.
Safety Insurance had a successful year ending December 31, 2022, with a combined ratio of 97.2%, GAAP earnings per diluted share of $3.15, and non-GAAP earnings per diluted share of $3.20.
Enterprise Risk Management:
AM Best considered the Safety Insurance Group’s enterprise risk management (ERM) practices appropriate for its operations and scope. The company manages catastrophe tail risk closely through stringent underwriting guidelines, rate actions, and a comprehensive reinsurance program. This proactive approach ensures that Safety is well-prepared to handle potential catastrophic events effectively.
About AM Best
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
