Safety Announces First Quarter 2009 Results and Declares Second Quarter 2009 Dividend

Business Wire, May 05, 2009

BOSTON -- Safety Insurance Group, Inc. (NASDAQ:SAFT) today reported first quarter 2009 results. Net income for the quarter ended March 31, 2009 was $11.8 million, or $0.73 per diluted share, compared to $19.0 million, or $1.17 per diluted share, for the comparable 2008 period. Safety’s book value per share increased to $38.03 at March 31, 2009 compared to $37.17 at December 31, 2008. Safety paid $0.40 per share in dividends to investors during both the quarters ended March 31, 2009 and 2008. Safety paid $1.60 per share in dividends to investors during the year ended December 31, 2008.

Direct written premiums for the quarter ended March 31, 2009 decreased by $22.8 million, or 13.6%, to $145.5 million from $168.3 million for the comparable 2008 period. The 2009 decrease occurred primarily in our personal and commercial automobile lines, which experienced decreases in average written premium per exposure of 9.6% and 6.5%, respectively. The decrease in our personal automobile line was primarily as a result of rate decreases totaling 6.7% which we filed under the competitive pricing system introduced to the private passenger automobile market in Massachusetts beginning April 1, 2008. Partially offsetting these decreases was an increase in average written premium per exposure in our homeowners line of 3.0%.

Net written premiums for the quarter ended March 31, 2009 decreased by $23.2 million, or 14.2%, to $141.0 million from $164.2 million for the comparable 2008 period. This decrease was due to the factors that decreased direct written premiums combined with decreases in premiums assumed from Commonwealth Automobile Reinsurers (“CAR”), and partially offset by decreases in premiums ceded to CAR. Net earned premiums for the quarter ended March 31, 2009 decreased by $15.3 million, or 10.2%, to $135.4 million from $150.7 million for the comparable 2008 period. This decrease was due to the factors that decreased direct and net written premiums. The effect of assumed and ceded premiums on net written and net earned premiums is presented in the attached tables.

Net investment income for the quarter ended March 31, 2009 was $10.4 million compared to $11.5 million for the comparable 2008 period. Average cash and investment securities (at cost) increased by $21.2 million, or 2.0%, to $1,066.5 million for the quarter ended March 31, 2009 from $1,045.3 million for the comparable 2008 period. Net effective annualized yield on the investment portfolio was 3.9% during quarter ended March 31, 2009, compared to 4.4% for the same period last year. Our duration decreased to 3.0 years at March 31, 2009, from 3.2 years at December 31, 2008.

We continue to hold no subprime mortgage debt securities. All of our mortgage-backed securities were either U.S. Government or Agency guaranteed or are rated Aaa/AAA. As of March 31, 2009, we maintained $98.6 million in short term securities, cash and cash equivalents and we have no outstanding debt.

Loss, expense and combined ratios calculated under U.S. generally accepted accounting principles (“GAAP”) for the quarter ended March 31, 2009 were 68.6%, 30.3% and 98.9% compared to 63.6%, 29.5% and 93.1% for the comparable 2008 period. The loss ratio for the quarter ended March 31, 2009 increased primarily as a result of a decrease in personal automobile average earned premiums per exposure. Total prior year favorable development included in the pre-tax results for the quarter ended March 31, 2009 was $8.5 million compared to prior year favorable development of $9.2 million for the comparable 2008 period.

On May 5, 2009, the Board of Directors approved and declared a quarterly cash dividend of $0.40 per share on the issued and outstanding common stock, payable on June 15, 2009 to shareholders of record at the close of business on June 1, 2009.

About Safety: Safety Insurance Group, Inc. is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company which are Boston, MA, based writers of property and casualty insurance. Safety is a leading writer of personal automobile insurance in Massachusetts.

Additional Information: Press releases, announcements, U. S. Securities and Exchange Commission (“SEC”) Filings and investor information are available under “About Safety”, “Investor Information” on our Company website located at www.SafetyInsurance.com. Safety filed its December 31, 2008 Form 10-K with the SEC on March 13, 2009 and urges shareholders to refer to those documents for more complete information concerning Safety’s financial results.