Safety Insurance Group, Inc. – Value Analysis (NASDAQ:SAFT) : September 13, 2017

Capitalcube gives Safety Insurance Group, Inc. a score of 68.

Our analysis is based on comparing Safety Insurance Group, Inc. with the following peers – Progressive Corporation, Allstate Corporation, Mercury General Corporation, Infinity Property and Casualty Corporation and American International Group, Inc. (PGR-US, ALL-US, MCY-US, IPCC-US and AIG-US).

Fundamental Overview

Safety Insurance Group, Inc. has a fundamental score of 68 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.59 is about median in its peer group.
  • SAFT-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • SAFT-US‘s relatively high profit margins are burdened by capital inefficiency.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • Over the last five years, SAFT-US‘s return on equity has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • SAFT-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s equity capital investment seems appropriate for a business with peer median returns.
  • SAFT-US currently does not have any debt.

Drivers of Margin

  • Margins suggest relatively better discipline in both writing policies and controlling operating costs.
  • The company’s comparatively high underwriting margin (i.e. premiums earned minus insurance losses, expressed as a percentage of premiums earned) of 34.95% versus a peer median of 26.02% suggests that SAFT-US follows either a differentiated strategy with pricing advantages and/or a disciplined strategy in writing policies versus peers. Further, SAFT-US‘s pre-tax margins are above the peer median (pre-tax margin of 11.11% compared to 5.81%) suggesting relatively tight control on operating costs.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

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.