Safety Insurance Group, Inc. :SAFT-US: Earnings Analysis: 2016 By the Numbers : February 24, 2017

Safety Insurance Group, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Safety Insurance Group, Inc. – Allstate Corporation and Mercury General Corporation (ALL-US and MCY-US) that have also reported for this period.

Highlights

  • Earnings growth from operating margin improvements as well as from unusual items

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 817.44 795.44 777.23 745.14 703.87
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 64.59 -13.85 59.35 61.35 58.07
Earnings Growth (YOY) 566.22 -123.34 -3.26 5.65 323.81
Net Margin 7.9 -1.74 7.64 8.23 8.25
EPS 4.27 -0.93 3.91 3.98 3.8
Return on Equity 9.82 -2.05 8.46 8.83 8.6
Return on Assets 3.69 -0.8 3.51 3.74 3.71

Access our Ratings and Scores for Safety Insurance Group, Inc.

Earnings Growth Analysis

Insurance companies sometimes tradeoff for improvements in premiums earned by relaxing standards in underwriting policies. A quick way to check against such activity is to compare the changes in loan loss provisions as well any chnages in the level of policy claims. If either of these checks point to a decline in the underwriting standards, it is quite possible that the company’s performance is a result of underwriting policy changes that could have a longer term impact compared to the shorter term pop in premiums earned.

Premiums Earned Percent History
Loss Ratio History

The company’s premiums earned as a percent of total revenues showed no year-on-year improvement and went from 92.80% to 92.46%. In spite of this, the company’s earnings went up – influenced primarily by the improvement in loss ratio from 82.99% to 65.29%. For comparison, premiums earned as a percent of revenues were 92.80% and the loss ratio 82.99% in the immediate last period.

Premiums Earned Percent Versus Loss Ratio

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins after interest from -3.91% to 11.13% and (2) One-time items. The company’s pretax margins are now 11.41% compared to -3.60% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Safety Insurance Group, Inc.

Company Profile

Safety Insurance Group, Inc. engages in the management and provision of insurance services. It offers property and casualty insurance products which include commercial vehicles and fleets. The company was founded in 1979 and is headquartered in Boston, MA.

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