Annual Report 2024 PDF

2024

ANNUAL

REPORT

Safety Insurancewas founded in 1979 with a belief that we would succeed as a company if customers were given the best possible service. As we've grown and expanded our product line to include a full portfolio of property and casualty insurance products, staying committed to that belief has meant even more. At Safety, we do everything possible to make it easy for our agents and policyholders to do business with us.

Today, Safety is the third largest private passenger automobile carrier, the second largest commercial automobile carrier, and the third largest homeowners carrier in Massachusetts. We support our network of independent agents with state-of-the-art tools that make the ease and convenience of doing business with Safety second to none.

Together with our agents, Safety Insurance remains a premier provider of property and casualty insurance in Massachusetts, New Hampshire, and Maine. We'll continue this tradition into the future.

Dear Fellow Stockholders:

In 2024, Safety Insurance Groupcontinued to achieve significant direct writtenpremium growth, which increased 20.4% over the prior year, driving our top-line revenue above $1 billion for thefirst time in the company's history. Our strong top-line growth was a result of an 8.5% increase in overall policycounts and a 10.9% increase in average premium per policy, blended across all lines of business.

Along with the increased policy counts, premium rate actions are earning into our results and contributing to improvements in our loss ratios. For the year ended December 31, 2024, Safety Insurance posted a 101.1% combined ratio compared to 107.7% in the prior year. In addition, positive trends in other revenue lines contributedto stronger earnings per share and an increase in book value of 8.4%. While Safety achieved positive trends in all major revenue streams, ongoing inflationary impacts contributed to an elevated loss ratio specific to our Private Passenger Automobile book of business.

The increases to direct written premiums and net written premiums were focused in our key areas of business,including policy count growth of 10.0%, 4.5% and 8.7% in Private Passenger Automobile, Commercial Automobileand Homeowners lines, respectively, compared to the same period in 2023. Average written premium per exposureincreased 14.1%, 10.7% and 8.9% in Private Passenger Automobile, Commercial Automobile and Homeowners lines,respectively, compared to the same period in 2023.

The long-term commitment to strong underwriting results and enhanced investment returns, remains unchanged. As always, we focus on pricing our products appropriately for the risks we are insuring while generating the capital to grow our business. We continue to work with our agency partners toward our goal of maintaining underwriting discipline, while leveraging investments in our pricing and risk management areas to ensure rate adequacy.

Our investment objective focuses on maximizing total returns while investing conservatively. Net effective annual yield on our investment portfolio was 3.9% with net investment income of $55.7 million for the year endedDecember 31, 2024. We additionally generated $10.3 million on our partnership investments and $7.7 million inrealized gains in 2024. The total income of $73.7 million in these three income sources represents a 16.6% increaseas compared to the prior year. We believe that our current portfolio position and strong underlying operating cashflow provides sufficient liquidity to meet our needs.

Our long-standing strategy remains consistent as we look to maintain and develop strong independent agentrelationships. In contrast to some of our competitors,

Safety distributes its products exclusively through

TotoaulrRexvteennuseivse network of agents throughout

Total Direct Written Premiums

(Excluding Changes in Unrealized Gains on Equity Investments)

Massachusetts, New Hampshire, and Maine. We

(Dollars in Millions)

1,193,057

support them with a full suite of insurance products$1,116.10and information technology services, which enables

991,224

$835.70

$923.40them to better serve their customers and more easily transact business with us.

$868.80

798,712

802,139

823,318

$842.00

2020

2021

2022

2023

2024

Safety Insurance 2024 Annual Report1

Safety is proud of our history as an independent agency company and remains committed to the agency channel. Our ownership of Safety - Northeast Insurance Agency, allows us to leverage the benefits and offerings of the operation into our own internal Service Center. The agency also provides us the opportunity to develop new product and service offerings from our agency partner's perspective. In 2024, we saw a 14.5% increase in commission income and pre-tax net income of $2.6 million when removing intercompany and depreciation expenses.

We continue to invest in technology enhancements for our core systems that are aimed at providing our independent agents and consumers with useful tools to enhance the user experience. During 2024, the Innovation Lab saw twoof its successful proof of concepts make it into production in the claims area. The first, an electronic claims paymentsystem was implemented to allow claim payments to be made electronically thus reducing cycle times and improving the customer

Total Revenueshas enabled Safety to establish strong relationships with agency partners and to capture a larger share of the total business written by each agent. We position ourselves as the preferr(DeodllainrssiunrMainllicones)carrier for those agents and are ranked

Tot

(Excluding Changes in Unrealized Gains on Equity Investments)

$109.50

first or second in over 70% of their agencies based on direct written premium. We have translated our competitive$128.69advantage and extensive knowledge of the market to become the second largest commercial automobile carrier, the third

$141.40

$1,116.10

$835.70

$868.80

$923.40

7

$842.00

largest private passenger automobile carrier and the third largest homeowners carrier in Massachusetts.

Our insurance subsidia$r4i4e.3s0''A'' (Ex$c5e2l.l1e1nt) Financial Strength Rating was reaffirmed by A.M. Best on June 18, 2024. In reaffirming the rating, A.M. Best recognized our solid risk-adjusted capitalization, historically strong operating income,favorable loss reserve development, our market position as a leading property and casualty insurance writer in the NewEngland region, and appropriate enterprise risk management. A.M. Best also noted our low investment leverage anddisciplined underwriting approach as important strengths.

2020

2021

2022

2023

2024

2020

2021

2022

2023

2024

We have a robust and formal Enterprise Risk Management Program that continuously evaluates risks in an ever-changingworld. Through this program, our senior leadership team oversees the management and risk mitigation process andworks with the Board of Directors to evolve our strategy and initiatives.

ToCtasl hExFplowsusrfersom Operations

ToTtoatlaAlsRsevtsenues

T

(Dollars in Millions)

(Do(EllxacrsluidniBniglliCohnsa)nges in Unrealized Gains on Equity Investments)

(Dollars in Millions)

675,377 $109.50

$141.40 653,584

728,379

799,537 $128.69

$21.,21716.10

648,497

$2.05 $835.70

$2.12 $868.80

$1.97 $842.00

$2.09 $923.40

$52.11

$44.30

2Safety Insurance 2024 Annual Report

For the third consecutive year, we were named to the Ward's 50 group of top performing property and casualty insurance companies. Ward Group analyzed the financial performance of nearly 3,000 property-casualty insurance companies based in the United States and identified the top performances based on objective data and subjective quality measures. Each company must pass primary safety and consistency tests and are measured and scored along five-year average returns on equity, assets, total revenue, growth in revenue, growth in surplus, and combined ratio.

Safety's book value per share increased to $55.83 at December 31, 2024 from $54.37 at December 31, 2023 resulting from net income offset by dividends paid. Safety paid $3.60 per share in dividends to investors during the year ended December 31, 2024 and 2023, respectively. Our dividend yield ranks in the top three of our Performance Peer Group and remains a priority of the Board of Directors and management team.

We believe that Safety Insurance has a responsibility to both its

stakeholders and the environment in which it operates. To that end, Safety Insurance is committed to developing conscious solutions for our employees, our community, our investors and our independent agency partners and policyholders.

Our employees give both their time and their financial resources to charities of all types, and the company promotes corporate citizenshipthrough charitable donations and company-sponsored volunteer

activities. Safety is committed to making a positive impact on the comCmausnhitFieloswshferroemouOrpeemraptlioyneses live and work throughour matching gift program, corporate giving and employee volunteerism. The Safety Insurance Charitable Foundation financially supports a wide array of charities in areas such as community service, veterans benefits, education, job training,$141.40

(Dollars in Millions)

homelessness, arts/culture, food banks, youth programs, healthcare, medical research and disaster relief.

$128.69

$109.50

With the support of an experienced, knowledgeable and dedicated senior management team, we continue to achievefinancial success. The ongoing commitment of our employees, allows us to continually provide the best service possible

$52.11to our independent agent partners and policyholders. This has resulted in a history of strong returns and enduring value

$44.30

for our stockholders. We appreciate your long-term participation as a s2t0o2c0kholder2o02f1Safety In2s02u2rance G2ro02u3p.

2024

Sincerely,

George M. Murphy

President and Chief Executive Officer

Total Revenues

TotTaoltEaxl pDoirseucrteWs ritten Premiums

(Excluding Changes in Unrealized Gains on Equity Investments)

(Dollars in Millions)

$1,116.10

69

991,224728,379

1,193,057 799,537

$835.70

$868.80

$923.40

6757,39787,712

$842.00

802,139 653,584

823,318 648,497

4

Safety Insurance 2024 Annual Report3

used for business purposes, insuring individual vehicles as well as commercial fleets,which represented 15.2% of our direct wri$t4t8e,n43p8remium in 2024. We are the third

$42,021

largest private passenger automobile carrier and the second largest commercial automobile carrier in Massachusetts, capturing approximately 9.7% and 12.9% of the respective markets.

$37,266

$37,928 $38,713

2020

2021

2022

2023

2024

4Safety Insurance 2024 Annual Report

38

We write policies on homes, condominiums, and apartments and offer a broad selection of coverage forms for qualified policyholders. We are the thirdlargest homeowner carrier in Massachusetts, representing 24.3% of our total direct written premium.

24

Safety Insurance 2024 Annual Report5

We serve eligible small- and medium-sized commercial accounts with a program that covers apartments and residential condominiums; mercantile establishments,including restaurants; offices; processing and services businesses; special tradecontractors; and wholesaling businesses. Commercial property products make up 4.7% of our total direct written premium.

6Safety Insurance 2024 Annual Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

Or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-50070

SAFETY INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

13-4181699

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

20 Custom House Street, Boston, Massachusetts 02110(Address of principal executive offices including zip code)

(617) 951-0600

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Shares, $0.01 par value per share	SAFT	The Nasdaq Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒No☐Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes☐No☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer☐
Non-accelerated filer	☐	Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes☐No☒

The aggregate market value of the registrant's voting and non-voting common equity (based on the closing sales price on NASDAQ) held by non-affiliates of the registrant as of June 30, 2024, was approximately $1,092,939,051.

As of February 14, 2025 there were 14,838,007 Common Shares with a par value of $0.01 per share outstanding.

Documents Incorporated by Reference

Portions of the registrant's definitive proxy statement for its Annual Meeting of Shareholders, which Safety Insurance Group, Inc. ("Safety", the "Company", "we", "our", "us") intends to file within 120 days after its December 31, 2024 year-end, are incorporated by reference into Part II and Part III hereof.

SAFETY INSURANCE GROUP, INC.

Table of Contents

PART I.	Page
Item 1.	Business	1
Item 1A.	Risk Factors	26
Item 1B.	Unresolved Staff Comments	33
Item 1C.	Cybersecurity	33
Item 2.	Properties	35
Item 3.	Legal Proceedings	35
Item 4.	Mine Safety Disclosures	35
PART II.
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer	36
Purchases of Equity Securities
Item 6.	[Reserved]	39
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	99
Item 9A.	Controls and Procedures	99
Item 9B.	Other Information	100
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	101
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	102
Item 11.	Executive Compensation	102
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters	102
Item 13.	Certain Relationships and Related Transactions, and Director Independence	102
Item 14.	Principal Accounting Fees and Services	102
PART IV.
Item 15.	Exhibits, Financial Statement Schedules	102
Item 16	Form 10-K Summary	115
SIGNATURES	116

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Safety Insurance Group Inc. published this content on April 01, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 01, 2025 at 18:21 UTC.