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What changed in SAFETY INSURANCE GROUP INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SAFETY INSURANCE GROUP INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+118 added−123 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in SAFETY INSURANCE GROUP INC's 2024 10-K

118 paragraphs added · 123 removed · 113 edited across 5 sections

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe program's strategy aligns to the National Institute of Standards and Technology Cybersecurity Control Framework, where controls are implemented throughout our environment to achieve five categorical objectives of a cybersecurity program, including identification, protection, detection, response, and recovery. ​ Our cybersecurity program is regularly assessed to ensure it meets the ever-changing cyber risk environment.
Biggest changeThe program's strategy aligns to the National Institute of Standards and 33 Table of Contents Technology Cybersecurity Control Framework, where controls are implemented throughout our environment to achieve five categorical objectives of a cybersecurity program, including identification, protection, detection, response, and recovery. ​ Our cybersecurity program is regularly assessed to ensure it meets the ever-changing cyber risk environment.
He has served in his current role since 2014 and has held several senior-level information technology roles in his 31-year tenure with the Company. In his various roles, he has been responsible for providing senior leadership in the areas of information security, IT governance risk & compliance, business continuity, and disaster recovery. ​ ​
He has served in his current role since 2014 and has held several senior-level information technology roles in his 32-year tenure with the Company. In his various roles, he has been responsible for providing senior leadership in the areas of information security, IT governance risk & compliance, business continuity, and disaster recovery. ​ ​
This is accomplished via monthly risk assessment meetings performed by our technical cybersecurity 33 Table of Contents committee, periodic risk assessments and audits performed by internal audit, and cyber tests and assessments performed by contracted consultants. ​ Our cybersecurity program includes several methods to protect against intrusion by a bad actor, including such techniques as reputational filtering, anti-virus scans, intrusion prevention, multi-factor authentication, and account isolation among others.
This is accomplished via monthly risk assessment meetings performed by our technical cybersecurity committee, periodic risk assessments and audits performed by internal audit, and cyber tests and assessments performed by contracted consultants. ​ Our cybersecurity program includes several methods to protect against intrusion by a bad actor, including such techniques as reputational filtering, anti-virus scans, intrusion prevention, multi-factor authentication, and account isolation among others.
The Board is also provided with an annual cybersecurity technology risk and control update. ​ 34 Table of Contents A management level risk committee exists and oversees the management of the Company’s highest-level risks, including cybersecurity. This committee consists of representatives from the Risk, Financial, Underwriting, Information Technology and Legal Departments.
The Board is also provided with an annual cybersecurity technology risk and control update. ​ A management level risk committee exists and oversees the management of the Company’s highest-level risks, including cybersecurity. This committee consists of representatives from the Risk, Financial, Underwriting, Information Technology and Legal Departments.
The Board has delegated oversight of cybersecurity risk management to the Audit Committee of the Board of Directors. ​ The Audit Committee meets on a quarterly basis. A set agenda of risk matters includes detailed updates of the Company’s preparedness and significant cybersecurity activities.
The Board has delegated oversight of cybersecurity risk management to the Audit Committee of the Board of Directors. ​ 34 Table of Contents The Audit Committee meets on a quarterly basis. A set agenda of risk matters includes detailed updates of the Company’s preparedness and significant cybersecurity activities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe plaintiffs have since filed a motion to amend the complaint, seeking to address the concerns raised by the Superior Court in denying their motion for class certification; Safety has opposed the motion to amend the complaint, which has yet to be heard or ruled on by the Superior Court.
Biggest changeThe plaintiffs had filed a motion to amend the complaint, seeking to address the concerns raised by the Superior Court in denying their motion for class certification, which Safety had opposed. The motion was denied, thus at this point, there will not be a renewed motion for class certification.
Based on the SJC’s rulings, at this time the Company does not expect any claims for IDV damages to be material, and therefore has not accrued for a specific loss contingency. ​ ​ ITEM 4. MINE SAFETY DISCLOSURES ​ Not Applicable ​ 35 Table of Contents PART II.
Safety has not accrued for a specific loss contingency. ​ ​ ITEM 4. MINE SAFETY DISCLOSURES ​ Not Applicable ​ 35 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph shows the change in value of an initial one hundred dollar investment over the period indicated, assuming re-investment of all dividends. 36 Table of Contents Comparative Cumulative Total Returns since December 31, 2018 Among Safety Insurance Group, Inc., Property & Casualty Insurance Peer Group and the NASDAQ Stock Market Index ​ ​ The foregoing performance graph and data shall not be deemed "filed" as part of this Form 10-K for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and should not be deemed incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into such filing. ​ ​ 37 Table of Contents ​ ​ ​ ISSUER PURCHASES OF EQUITY SECURITIES On February 23, 2022, the Board of Directors approved an additional share repurchase of up to $50,000 of the Company’s outstanding common shares.
Biggest changeThe graph shows the change in value of an initial one-hundred-dollar investment over the period indicated, assuming re-investment of all dividends. 36 Table of Contents Comparative Cumulative Total Returns since December 31, 2019 Among Safety Insurance Group, Inc., Property & Casualty Insurance Peer Group and the NASDAQ Stock Market Index ​ ​ The foregoing performance graph and data shall not be deemed "filed" as part of this Form 10-K for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and should not be deemed incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into such filing. ​ ​ ​ ​ ​ ​ ​ ​ 37 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES On February 23, 2022, the Board of Directors approved an additional share repurchase of up to $50,000 of the Company’s outstanding common shares.
No shares were repurchased during the three months ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number Average ​ Total number of shares purchased as part of Maximum number of ​ ​ of Shares ​ price paid ​ publicly announced ​ shares that may yet be purchased under the Period ​ purchase ​ per share ​ plans or programs ​ plans or programs October 1-31, 2023 — ​ ​ — ​ — ​ ​ 703,971 November 1-30, 2023 — ​ $ — ​ — ​ ​ 703,971 December 1-31, 2023 — ​ ​ — ​ — ​ ​ 703,971 Total — ​ $ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 38 Table of Contents ​ ​ ITEM 6. [RESERVED] ​ ​
No shares were repurchased during the three months ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number Average ​ Total number of shares purchased as part of Maximum number of ​ ​ of Shares ​ price paid ​ publicly announced ​ shares that may yet be purchased under the Period ​ purchase ​ per share ​ plans or programs ​ plans or programs October 1-31, 2024 — ​ ​ — ​ — ​ ​ 703,971 November 1-30, 2024 — ​ ​ — ​ — ​ ​ 703,971 December 1-31, 2024 — ​ ​ — ​ — ​ ​ 703,971 Total — ​ ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 38 Table of Contents ​ ​ ITEM 6. [RESERVED] ​ ​
Securities and Exchange Commission within 120 days after December 31, 2023 (the Company's fiscal year end), and such information is incorporated herein by reference. For information regarding our share repurchase program, refer to Item 8—Financial Statements and Supplementary Data, Note 14, Share Repurchase Program, of this Form 10-K.
Securities and Exchange Commission within 120 days after December 31, 2024 (the Company's fiscal year end), and such information is incorporated herein by reference. For information regarding our share repurchase program, refer to Item 8—Financial Statements and Supplementary Data, Note 14, Share Repurchase Program, of this Form 10-K.
COMMON STOCK PERFORMANCE GRAPH Set forth below is a line graph comparing the dollar change in the cumulative total shareholder return on the Company's Common Stock, for the period beginning on December 31, 2018 and ending on December 31, 2023 with the cumulative total return of the NASDAQ Stock Market Index and a peer group comprised of seven selected property & casualty insurance companies over the same period.
COMMON STOCK PERFORMANCE GRAPH Set forth below is a line graph comparing the dollar change in the cumulative total shareholder return on the Company's Common Stock, for the period beginning on December 31, 2019 and ending on December 31, 2024 with the cumulative total return of the NASDAQ Stock Market Index and a peer group comprised of seven selected property & casualty insurance companies over the same period.
The Company’s common stock trades on the NASDAQ stock exchange under the symbol SAFT. During 2023 and 2022, the Company’s Board declared four quarterly cash dividends to shareholders, which were paid and accrued in the amounts of $52,992 and $52,995, respectively.
The Company’s common stock trades on the NASDAQ stock exchange under the symbol SAFT. During 2024 and 2023, the Company’s Board declared four quarterly cash dividends to shareholders, which were paid and accrued in the amounts of $53,166 and $52,992, respectively.
On February 21, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.90 per share to shareholders of record on March 1, 2024 payable on March 15, 2024. The Company plans to continue to declare and pay quarterly cash dividends in 2024, depending on the Company's financial position and the regularity of its cash flows.
On February 25, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.90 per share to shareholders of record on March 3, 2025 payable on March 14, 2025. The Company plans to continue to declare and pay quarterly cash dividends in 2025, depending on the Company's financial position and the regularity of its cash flows.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES As of February 13, 2024, there were 22 holders of record of the Company's common stock, par value $0.01 per share, and we estimate another 17,519 held in "Street Name." The closing price of the Company's common stock on February 13, 2024 was $83.25 per share.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES As of February 14, 2025, there were 7 holders of record of the Company's common stock, par value $0.01 per share, and we estimate another 19,346 held in "Street Name." The closing price of the Company's common stock on February 14, 2025 was $77.96 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGrants outstanding under the plans as of December 31, 2023, were comprised of 145,920 restricted shares. ​ Grants made under the Incentive Plan during the years 2021 through 2023 were as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Number of ​ Fair Equity ​ ​ ​ Awards ​ ​ Value per ​ ​ Awarded Effective Date Granted ​ Share (1) ​ Vesting Terms RS - Service February 24, 2021 33,840 $ 79.27 ​ 3 years, 30%-30%-40% RS - Performance February 24, 2021 29,422 $ 79.27 ​ 3 years, cliff vesting (3) RS February 24, 2021 6,000 $ 79.27 ​ No vesting period (2) RS - Performance February 24, 2021 20,038 $ 79.27 ​ No vesting period (4) RS - Service February 23, 2022 31,864 $ 84.98 ​ 3 years, 30%-30%-40% RS - Performance February 23, 2022 26,037 $ 84.98 ​ 3 years, cliff vesting (3) RS February 23, 2022 5,000 $ 84.98 ​ No vesting period (2) RS March 24, 2022 2,000 $ 89.63 ​ No vesting period (2) RS - Performance February 23, 2022 5,791 $ 84.98 ​ No vesting period (4) RS - Service February 23, 2023 33,101 $ 80.24 ​ 3 years, 30%-30%-40% RS - Performance February 23, 2023 25,990 $ 80.24 ​ 3 years, cliff vesting (3) RS - Performance February 23, 2023 4,703 $ 80.24 ​ 3 years, cliff vesting (4) RS February 23, 2023 6,000 $ 80.24 ​ No vesting period (2) RS May 17, 2023 1,000 $ 71.78 ​ No vesting period (2) ​ (1) The fair value per share of the restricted stock grant is equal to the closing price of our common stock on the grant date.
Biggest changeGrants outstanding under the plans as of December 31, 2024, were comprised of 136,754 restricted shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 42 Table of Contents Grants made under the Incentive Plan during the years 2022 through 2024 were as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Number of ​ Fair Equity ​ ​ ​ Awards ​ ​ Value per ​ ​ Awarded Effective Date Granted ​ Share (1) ​ Vesting Terms RS - Service February 23, 2022 31,864 $ 84.98 ​ 3 years, 30%-30%-40% RS - Performance February 23, 2022 26,037 $ 84.98 ​ 3 years, cliff vesting (3) RS February 23, 2022 5,000 $ 84.98 ​ No vesting period (2) RS March 24, 2022 2,000 $ 89.63 ​ No vesting period (2) RS - Performance February 23, 2022 5,791 $ 84.98 ​ No vesting period (4) RS - Service February 23, 2023 33,101 $ 80.24 ​ 3 years, 30%-30%-40% RS - Performance February 23, 2023 25,990 $ 80.24 ​ 3 years, cliff vesting (3) RS - Performance February 23, 2023 4,703 $ 80.24 ​ 3 years, cliff vesting (4) RS February 23, 2023 6,000 $ 80.24 ​ No vesting period (2) RS May 17, 2023 1,000 $ 71.78 ​ No vesting period (2) RS - Service February 27, 2024 31,221 $ 85.61 ​ 3 years, 30%-30%-40% RS - Performance February 27, 2024 25,390 $ 85.61 ​ 3 years, cliff vesting (3) RS February 27, 2024 7,000 $ 85.61 ​ No vesting period (2) RS - Service July 01, 2024 1,196 $ 75.24 ​ 3 years, 30%-30%-40% RS - Service September 03, 2024 314 $ 86.00 ​ 3 years, 30%-30%-40% RS - Performance ​ July 01, 2024 ​ 1,327 ​ $ 75.24 ​ 3 years, cliff vesting (3) RS - Performance ​ September 03, 2024 ​ 365 ​ $ 86.00 ​ 3 years, cliff vesting (3) ​ (1) The fair value per share of the restricted stock grant is equal to the closing price of our common stock on the grant date.
Qualitative analysis considered such factors as the financial condition and the near term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, changes to the rating of the security by a rating agency and the historical volatility of the fair value of the security. ​ The majority of unrealized losses recorded on the investment portfolio at December 31, 2023 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities.
Qualitative analysis considered such factors as the financial condition and the near term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, changes to the rating of the security by a rating agency and the historical volatility of the fair value of the security. ​ The majority of unrealized losses recorded on the investment portfolio at December 31, 2024 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities.
The effective rates for the year ended December 31, 2023 and 2022 were higher than the statutory rate primary due to the impact of stock-based and executive compensation. ​ The comparison of results for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in the Company’s 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023. ​ ​ Liquidity and Capital Resources As a holding company, Safety’s assets consist primarily of the stock of our direct and indirect subsidiaries.
The effective rates for the year ended December 31, 2024 and 2023 were higher than the statutory rate primary due to the impact of stock-based and executive compensation. ​ The comparison of results for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on February 28, 2024. ​ ​ Liquidity and Capital Resources As a holding company, Safety’s assets consist primarily of the stock of our direct and indirect subsidiaries.
However, there can be no assurance that unforeseen business needs or other items will not occur causing us to have to sell securities before their values fully recover; thereby causing us to recognize additional impairment charges in that time period. ​ Credit Facility ​ For information regarding our Credit Facility, please refer to Item 8—Financial Statements and Supplementary Data, Note 10, Debt, of this Form 10-K. ​ Recent Accounting Pronouncements ​ For information regarding Recent Accounting Pronouncements, please refer to Item 8—Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, of this Form 10-K. ​ Regulatory Matters Our insurance company’s subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of the Commissioner.
However, there can be no assurance that unforeseen business needs or other items will not occur causing us to have to sell securities before their values fully recover; thereby causing us to recognize additional impairment charges in that time period. ​ ​ 48 Table of Contents Credit Facility ​ For information regarding our Credit Facility, please refer to Item 8—Financial Statements and Supplementary Data, Note 10, Debt, of this Form 10-K. ​ Recent Accounting Pronouncements ​ For information regarding Recent Accounting Pronouncements, please refer to Item 8—Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, of this Form 10-K. ​ Regulatory Matters Our insurance company’s subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of the Commissioner.
Each of our assumptions could have a reasonably possible range of plus or minus 5 percentage-points for each estimation. ​ The following sensitivity table presents information of the effect each 1 percentage-point change in our assumptions on our share of reserves for CAR and other residual markets could have on our assumed loss and LAE reserves and net income for the year ended December 31, 2023.
Each of our assumptions could have a reasonably possible range of plus or minus 5 percentage-points for each estimation. ​ The following sensitivity table presents information of the effect each 1 percentage-point change in our assumptions on our share of reserves for CAR and other residual markets could have on our assumed loss and LAE reserves and net income for the year ended December 31, 2024.
The following sensitivity tables present information for each of our primary lines of business on the effect each 1 percentage-point change in each of our key assumptions on unpaid frequency and severity could have on our retained (i.e., direct minus ceded) loss and LAE reserves and net income for the twelve months ended December 31, 2023.
The following sensitivity tables present information for each of our primary lines of business on the effect each 1 percentage-point change in each of our key assumptions on unpaid frequency and severity could have on our retained (i.e., direct minus ceded) loss and LAE reserves and net income for the twelve months ended December 31, 2024.
The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2023 and 2022 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities.
The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2024 and 2023 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities.
Specifically, under GAAP: ● Policy acquisition costs such as commissions, premium taxes and other variable costs incurred which are directly related to the successful acquisition of a new or renewal insurance contract are capitalized and amortized on a pro rata basis over the period in which the related premiums are earned, rather than expensed as incurred, as required by SAP. ​ 41 Table of Contents ● Certain assets are included in the consolidated balance sheets whereas, under SAP, such assets are designated as "nonadmitted assets," and charged directly against statutory surplus.
Specifically, under GAAP: ● Policy acquisition costs such as commissions, premium taxes and other variable costs incurred which are directly related to the successful acquisition of a new or renewal insurance contract are capitalized and amortized on a pro rata basis over the period in which the related premiums are earned, rather than expensed as incurred, as required by SAP. ​ ● Certain assets are included in the consolidated balance sheets whereas, under SAP, such assets are designated as "nonadmitted assets," and charged directly against statutory surplus.
(4) Other invested assets are accounted for under the equity method which approximated fair value. ​ The composition of our fixed income security portfolio by rating was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ Estimated ​ ​ Fair Value ​ Percent U.S. Treasury securities and obligations of U.S.
(4) Other invested assets are accounted for under the equity method which approximated fair value. ​ The composition of our fixed income security portfolio by rating was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ Estimated ​ ​ Fair Value ​ Percent U.S. Treasury securities and obligations of U.S.
As a result of the changes to the models, our catastrophe reinsurance in 2023 protects us in the event of a “121-year storm” (that is, a storm of a severity expected to occur once in a 121-year period). Most of our reinsurers have an A.M.
As a result of the changes to the models, our catastrophe reinsurance in 2024 protects us in the event of a “121-year storm” (that is, a storm of a severity expected to occur once in a 121-year period). Most of our reinsurers have an A.M.
The decreases in prior year reserves in 2023 resulted from re-estimations of prior year’s ultimate loss and LAE liabilities and are primarily composed of reductions of $15,451 in our retained automobile reserves and $29,782 in our retained other than auto and homeowner’s reserves.
The decreases in prior year reserves in 2023 resulted from re-estimations of prior year’s ultimate loss and LAE liabilities and are primarily composed of reductions of $15,451 in our retained automobile reserves and $29,782 in our retained other than auto and homeowner reserves.
There are other factors besides those described or incorporated in this report that could cause actual conditions, events or results to differ from those in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.
There are other factors besides those described or incorporated in this report that could cause actual conditions, events or results to differ from those in the forward-looking statements. ​ ​ 57 Table of Contents Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.
The estimate reflects the informed judgment of such personnel based on general insurance reserving practices and on the experience and knowledge of the claims professional. During the loss adjustment period, these estimates are revised as deemed necessary by our claims department based on subsequent developments and periodic reviews of the cases.
The estimate reflects the informed 50 Table of Contents judgment of such personnel based on general insurance reserving practices and on the experience and knowledge of the claims professional. During the loss adjustment period, these estimates are revised as deemed necessary by our claims department based on subsequent developments and periodic reviews of the cases.
Our retained other than auto and homeowners line of business prior year reserves decreased, due primarily to fewer IBNR claims than previously estimated. 57 Table of Contents ​ In estimating all our loss reserves, we follow the guidance prescribed by ASC 944, Financial Services-Insurance.
Our retained other than auto and homeowners line of business prior year reserves decreased, due primarily to fewer IBNR claims than previously estimated. ​ In estimating all our loss reserves, we follow the guidance prescribed by ASC 944, Financial Services-Insurance.
Management believes that these non-GAAP measures better explain the Company’s results of operations and allow for a more complete understanding of the underlying trends in the Company’s business. These measures should not be viewed as a substitute for those determined in accordance with GAAP.
Management believes that these non-GAAP measures better explain the 43 Table of Contents Company’s results of operations and allow for a more complete understanding of the underlying trends in the Company’s business. These measures should not be viewed as a substitute for those determined in accordance with GAAP.
We have used these relationships and our extensive knowledge of the market to become the third largest private passenger automobile carrier and the second largest commercial automobile carrier in Massachusetts, capturing an approximate 8.7% and 12.7% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2023, according to statistics compiled by the Commonwealth Automobile Reinsurers (“CAR”) based on automobile exposures.
We have used these relationships and our extensive knowledge of the market to become the third largest private passenger automobile carrier and the second largest commercial automobile carrier in Massachusetts, capturing an approximate 9.7% and 12.9% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2024, according to statistics compiled by the Commonwealth Automobile Reinsurers (“CAR”) based on automobile exposures.
Under GAAP reporting, a valuation allowance may be recorded against the deferred tax asset and reflected as an expense. ​ Insurance Ratios ​ The property and casualty insurance industry uses the combined ratio as a measure of underwriting profitability.
Under GAAP reporting, a valuation allowance may be recorded against the deferred tax asset and reflected as an expense. ​ 41 Table of Contents Insurance Ratios ​ The property and casualty insurance industry uses the combined ratio as a measure of underwriting profitability.
To determine ultimate losses, our actuaries calculate a range of indications and select a point estimation using such actuarial techniques as: 51 Table of Contents ● Paid Loss Indications: This method projects ultimate loss estimates based upon extrapolations of historic paid loss trends.
To determine ultimate losses, our actuaries calculate a range of indications and select a point estimation using such actuarial techniques as: ● Paid Loss Indications: This method projects ultimate loss estimates based upon extrapolations of historic paid loss trends.
Underwriting profitability is subject to significant fluctuations due to competition, catastrophic events, weather, economic and social conditions, and other factors. ​ Our GAAP insurance ratios are presented in the following table for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2023 ​ 2022 2021 GAAP ratios: ​ ​ ​ ​ ​ ​ ​ Loss ratio 77.0 % 64.9 % 59.6 % Expense ratio 30.7 ​ 32.3 ​ 33.4 ​ Combined ratio 107.7 % 97.2 % 93.0 % ​ Share-Based Compensation ​ On March 24, 2022, the Company’s Board of Directors adopted the Amended and Restated Safety Insurance Group, Inc. 2018 Long-Term Incentive Plan (the “Amended 2018 Plan”), which was subsequently approved by our shareholders at the 2022 Annual Meeting of Shareholders.
Underwriting profitability is subject to significant fluctuations due to competition, catastrophic events, weather, economic and social conditions, and other factors. ​ Our GAAP insurance ratios are presented in the following table for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2024 ​ 2023 2022 GAAP ratios: ​ ​ ​ ​ ​ ​ ​ Loss ratio 70.9 % 77.0 % 64.9 % Expense ratio 30.2 ​ 30.7 ​ 32.3 ​ Combined ratio 101.1 % 107.7 % 97.2 % ​ Share-Based Compensation ​ On March 24, 2022, the Company’s Board of Directors adopted the Amended and Restated Safety Insurance Group, Inc. 2018 Long-Term Incentive Plan (the “Amended 2018 Plan”), which was subsequently approved by our shareholders at the 2022 Annual Meeting of Shareholders.
Interest expense primarily relates to the borrowing from the FHLB as noted within Item 8 – Financial Statements and Supplementary Data, Note 10, Debt, of this Form 10-K. The credit facility commitment fee included in interest expense was $75 for each of the years ended December 31, 2023 and 2022. Income Tax Expense.
Interest expense primarily relates to the borrowing from the FHLB as noted within Item 8 – Financial Statements and Supplementary Data, Note 10, Debt, of this Form 10-K. The credit facility commitment fee included in interest expense was $60 and $75 for the years ended December 31, 2024 and 2023, respectively. Income Tax Expense.
(2) Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive deferred compensation plan. (3) Our investment portfolio included 861 securities in an unrealized loss position at December 31, 2023.
(2) Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive deferred compensation plan. (3) Our investment portfolio included 884 securities in an unrealized loss position at December 31, 2024.
The table also presents the length of time that they have been in a continuous unrealized loss position of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ Less than 12 Months ​ 12 Months or More ​ Total ​ Estimated Unrealized Estimated Unrealized Estimated Unrealized ​ ​ Fair Value ​ Losses ​ Fair Value ​ Losses ​ Fair Value ​ Losses U.S.
The table also presents the length of time that they have been in a continuous unrealized loss position of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 46 Table of Contents ​ ​ As of December 31, 2024 ​ ​ Less than 12 Months ​ 12 Months or More ​ Total ​ Estimated Unrealized Estimated Unrealized Estimated Unrealized ​ ​ Fair Value ​ Losses ​ Fair Value ​ Losses ​ Fair Value ​ Losses U.S.
Ratings in the table are as of the date indicated. 46 Table of Contents ​ As of December 31, 2023, our portfolio of fixed maturity investments was principally comprised of investment grade corporate fixed maturity securities, U.S. government and agency securities, and asset-backed securities.
Ratings in the table are as of the date indicated. ​ As of December 31, 2024, our portfolio of fixed maturity investments was principally comprised of investment grade corporate fixed maturity securities, U.S. government and agency securities, and asset-backed securities.
We plan to continue to declare and pay quarterly cash dividends in 2024, depending on our financial position and the regularity of our cash flows. ​ On February 23, 2022, the Board approved a share repurchase program of up to $50,000 of the Company’s outstanding common shares.
We plan to continue to declare and pay quarterly cash dividends in 2025, depending on our financial position and the regularity of our cash flows. ​ ​ 49 Table of Contents On February 23, 2022, the Board approved a share repurchase program of up to $50,000 of the Company’s outstanding common shares.
Operating exclusively in Massachusetts, New Hampshire and Maine through our insurance company subsidiaries, Safety Insurance, Safety Indemnity, Safety P&C, and Safety Northeast (together referred to as the “Insurance Subsidiaries”), we have established strong relationships with independent insurance agents, who numbered 834 in 1,090 locations throughout these three states during 2023.
Operating exclusively in Massachusetts, New Hampshire and Maine through our insurance company subsidiaries, Safety Insurance, Safety Indemnity, Safety P&C, and Safety Northeast (together referred to as the “Insurance Subsidiaries”), we have established strong relationships with independent insurance agents, who numbered 828 in 1,079 locations throughout these three states during 2024.
In evaluating the information in the table, it should be noted that a 1 percentage-point change in a single assumption would change estimated reserves by 1 percentage-point.
In evaluating the information in the table, it should be noted that a 1 percentage-point change in a single assumption would change estimated reserves by 1 53 Table of Contents percentage-point.
In general, the low and high values of the ranges represent reasonable minimum and maximum values of the indications based on the techniques described above. Our selected point estimate of net loss and loss adjustment expense reserves based upon the analysis of our actuaries was $490,458 as of December 31, 2023 compared to $456,204 as of December 31, 2022.
In general, the low and high values of the ranges represent reasonable minimum and maximum values of the indications based on the techniques described above. Our selected point estimate of net loss and loss adjustment expense reserves based upon the analysis of our actuaries was $540,877 as of December 31, 2024 compared to $490,458 as of December 31, 2023.
In addition to these coverages, we offer a portfolio of other insurance products, including dwelling fire, umbrella and business owner policies (totaling 4.9% of 2023 direct written premiums).
In addition to these coverages, we offer a portfolio of other insurance products, including dwelling fire, umbrella and business owner policies (totaling 4.7% of 2024 direct written premiums).
The 2023 decrease in the expense ratios in both periods is primarily driven by a decrease in contingent commission expense. ​ We define a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1,000 and involves multiple first-party policyholders, or an event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event.
The 2024 decrease in the expense ratios in both periods is primarily driven by the increase in net earned premium. ​ We define a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1,000 and involves multiple first-party policyholders, or an event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event.
We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. ​ 58 Table of Contents ​
We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. ​ ​
We continue to manage and model our exposure and adjust our reinsurance programs as a result of the changes to the models. As of January 1, 2023, we purchased three layers of excess catastrophe reinsurance providing $590,000 of coverage for property losses in excess of $75,000 up to a maximum of $665,000.
We continue to manage and model our exposure and adjust our reinsurance programs as a result of the changes to the models. As of January 1, 2024, we purchased three layers of excess catastrophe reinsurance providing $615,000 of coverage for property losses in excess of $75,000 up to a maximum of $690,000.
Safety Insurance’s principal uses of cash are the payment of claims, operating expenses and taxes, the purchase of investments and payment of dividends to Safety. Net cash provided by operating activities was $52,114, $44,326, and $141,394 during the years ended December 31, 2023, 2022, and 2021, respectively.
Safety Insurance’s principal uses of cash are the payment of claims, operating expenses and taxes, the purchase of investments and payment of dividends to Safety. Net cash provided by operating activities was $128,688, $52,114, and $44,326 during the years ended December 31, 2024, 2023, and 2022, respectively.
Our reinsurers’ co-participation is 75.0% of $75,000 for the 1st layer, 75.0% of $250,000 for the 2nd layer, and 75.0% of $265,000 for the 3rd layer.
Our reinsurers’ co-participation is 80.0% of $75,000 for the 1st layer, 80.0% of $250,000 for the 2nd layer, and 80.0% of $290,000 for the 3rd layer.
Our prior year reserves decreased by $47,381, $57,279 and $53,673 during the years ended December 31, 2023, 2022, and 2021, respectively. The following table presents a comparison of prior year development of our net reserves for losses and LAE for the years ended December 31, 2023, 2022 and 2021, respectively.
Our prior year reserves decreased by $51,894, $47,381 and $57,279 during the years ended December 31, 2024, 2023, and 2022, respectively. The following table presents a comparison of prior year development of our net reserves for losses and LAE for the years ended December 31, 2024, 2023 and 2022, respectively.
Projected ultimate bodily injury claims are then segregated into expected claims by type of injury (e.g. soft tissue injury vs. hard tissue injury) based on past experience. An ultimate severity, or average paid loss amounts, is estimated based upon extrapolating historic trends. Projected ultimate loss estimates using this method are the aggregate of estimated losses by injury type.
Projected ultimate bodily injury claims are then segregated into expected claims by type of injury (e.g. soft tissue injury vs. hard tissue injury) based on past experience. An ultimate severity, or average paid loss amounts, is estimated based upon extrapolating historic trends.
We are the fourth largest homeowners insurance carrier in Massachusetts, with a market share of 6.2% in 2022. ​ A.M. Best, which rates insurance companies based on factors of concern to policyholders, currently assigns Safety Insurance an “A (Excellent)” rating. Our “A” rating was reaffirmed by A.M. Best on June 15, 2023.
We are the third largest homeowners insurance carrier in Massachusetts, with a market share of 6.3% in 2023. ​ A.M. Best, which rates insurance companies based on factors of concern to policyholders, currently assigns Safety Insurance an “A (Excellent)” rating. Our “A” rating was reaffirmed by A.M. Best on June 18, 2024.
As of December 31, 2023, the remaining committed capital that could be called is $42,043, which includes potential recallable capital distributions. 50 Table of Contents ​ ​ ​ ​ ​ Critical Accounting Policies and Estimates ​ Loss and Loss Adjustment Expense Reserves Significant periods of time can elapse between the occurrence of an insured loss, the reporting to us of that loss and our final payment of that loss.
As of December 31, 2024, the remaining committed capital that could be called is $34,033, which includes potential recallable capital distributions. ​ ​ Critical Accounting Policies and Estimates ​ Loss and Loss Adjustment Expense Reserves Significant periods of time can elapse between the occurrence of an insured loss, the reporting to us of that loss and our final payment of that loss.
Our GAAP expense ratio for the year ended December 31, 2023 decreased to 30.7% from 32.3% for the comparable 2022 period. ​ Other Expense: Other expense includes the operating and related expenses associated with SNIA. ​ Interest Expense. Interest expense was $818 and $524 for the years ended December 31, 2023 and 2022, respectively.
Our GAAP expense ratio for the year ended December 31, 2024 decreased to 30.2% from 30.7% for the comparable 2023 period. ​ Other Expense: Other expense includes the operating and related expenses associated with SNIA. ​ Interest Expense. Interest expense was $509 and $818 for the years ended December 31, 2024 and 2023, respectively.
The Board of Directors and the Compensation Committee intend to issue awards under the Amended 2018 Plan in the future. ​ ​ ​ 42 Table of Contents ​ The maximum number of shares of common stock between both the 2018 Amended Plan and 2002 Incentive Plan with respect to which awards may be granted is 3,200,000.
The Board of Directors and the Compensation Committee intend to issue awards under the Amended 2018 Plan in the future. ​ The maximum number of shares of common stock between both the 2018 Amended Plan and 2002 Incentive Plan with respect to which awards may be granted is 3,200,000. No further grants will be allowed under the 2002 Incentive Plan.
Our effective tax rates were 22.7% and 21.9% for the years ended December 31, 2023 and 2022, respectively.
Our effective tax rates were 21.3% and 22.7% for the years ended December 31, 2024 and 2023, respectively.
As part of the Company’s investment activity, we have committed $170,000 to investments in limited partnerships. The Company has contributed $133,330 to these commitments as of December 31, 2023.
As part of the Company’s investment activity, we have committed $170,000 to investments in limited partnerships. The Company has contributed $144,682 to these commitments as of December 31, 2024.
In evaluating the information in the table, it should be noted that a 1 percentage-point change in our assumptions would change estimated reserves by 1 percentage-point. 55 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent +1 Percent ​ ​ Change in ​ Change in ​ ​ Estimation ​ Estimation CAR assumed commercial automobile ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ $ (307) ​ $ 307 Estimated increase (decrease) in net income ​ ​ 243 ​ ​ (243) FAIR Plan assumed homeowners ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (107) ​ ​ 107 Estimated increase (decrease) in net income ​ ​ 84 ​ ​ (84) ​ Reserve Development Summary The changes we have recorded in our reserves in the past illustrate the uncertainty of estimating reserves.
In evaluating the information in the table, it should be noted that a 1 percentage-point change in our assumptions would change estimated reserves by 1 percentage-point. 54 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent +1 Percent ​ ​ Change in ​ Change in ​ ​ Estimation ​ Estimation CAR assumed commercial automobile ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ $ (337) ​ $ 337 Estimated increase (decrease) in net income ​ ​ 266 ​ ​ (266) ​ ​ ​ ​ ​ ​ ​ ​ Reserve Development Summary The changes we have recorded in our reserves in the past illustrate the uncertainty of estimating reserves.
Commission Income was $6,932 and $566 for the years ended December 31, 2023 and 2022, respectively. ​ Finance and Other Service Income. Finance and other service income includes revenues from premium 47 Table of Contents installment charges, which we recognize when earned, and other miscellaneous income and fees.
Commission income was $7,942 and $6,932 for the years ended December 31, 2024 and 2023, respectively. ​ Finance and Other Service Income. Finance and other service income includes revenues from premium installment charges, which we recognize when earned, and other miscellaneous income and fees.
As of December 31, 2022, the Company had purchased 3,141,477 shares on the open market at a cost of $150,000. ​ Management believes that the current level of cash flow from operations provides us with sufficient liquidity to meet our operating needs over the next 12 months.
As of December 31, 2024 and 2023, the Company had purchased 3,215,690 shares on the open market at a cost of $155,240. ​ Management believes that the current level of cash flow from operations provides us with sufficient liquidity to meet our operating needs over the next 12 months.
For the three months ended December 31, 2023, direct written premium growth and net written premium growth were 22.2% and 20.7%, respectively. For the year ended December 31, 2023, direct written premium growth and net written premium growth were 20.4% and 19.6%, respectively. The increase in premium is driven by new business production, improved retention, and rate increases.
For the year ended December 31, 2024, direct written premium growth and net written premium growth were 20.4% and 18.2%, respectively. The increase in premium is driven by new business production, improved retention, and rate increases.
For the year ended December 31, 2023, the Company achieved exposure count growth across all lines of business, including 14.7%, 5.4% and 11.2% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2022.
For the year ended December 31, 2024, the Company achieved policy count growth across all lines of business, including 10.0%, 4.5% and 8.7% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023.
For the year ended December 31, 2023, the Company achieved exposure count growth across all lines of business, including 14.7%, 5.4% and 11.2% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2022.
For the year ended December 31, 2024, the Company achieved policy count growth across all lines of business, including 10.0%, 4.5% and 8.7% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023.
Direct written premiums for the year ended December 31, 2023 increased by $167,906, or 20.4%, to $991,224 from $823,318 for the comparable 2022 period. The increase in direct written premium is the result of new business production, improved retention, and rate increases.
Direct written premiums for the year ended December 31, 2024 increased by $201,833, or 20.4%, to $1,193,057 from $991,224 for the comparable 2023 period. The increase in direct written premium is the result of new business production, improved retention, and rate increases.
Finance and other service income increased by $4,933, or 34.1%, to $19,394 for the year ended December 31, 2023 from $14,461 for the comparable 2022 period. The increase is primarily driven by the increase in policy counts and changes to our fee assessment policies. Losses and Loss Adjustment Expenses.
Finance and other service income increased by $4,306, or 22.2%, to $23,700 for the year ended December 31, 2024 from $19,394 for the comparable 2023 period. The increase is primarily driven by the increase in policy counts and changes to our fee assessment policies. Losses and Loss Adjustment Expenses.
Net effective annual yield on the investment portfolio was 45 Table of Contents 4.0% for the year ended December 31, 2023, compared to 3.2% for comparable 2022 period. Our duration was 3.6 years at December 31, 2023, compared to 3.8 years at December 31, 2022. Earnings from Partnership Investments.
Net effective annual yield on the investment portfolio was 3.9% for the year ended December 31, 2024, compared to 4.0% for comparable 2023 period. Our duration was 3.5 years at December 31, 2024, compared to 3.6 years at December 31, 2023. Earnings from Partnership Investments.
Quarterly dividends paid during 2023 and 2022 were as follows: ​ 49 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Declaration ​ Record ​ Payment ​ Dividend per ​ Dividends Paid Date ​ Date ​ Date ​ Common Share ​ and Accrued February 15, 2022 March 5, 2022 March 15, 2022 $ 0.90 $ 13,248 May 6, 2022 June 1, 2022 June 15, 2022 $ 0.90 $ 13,278 August 3, 2022 September 1, 2022 September 15, 2022 $ 0.90 $ 13,262 November 2, 2022 ​ December 1, 2022 ​ December 15, 2022 ​ $ 0.90 $ 13,207 February 15, 2023 March 1, 2023 March 15, 2023 $ 0.90 $ 13,247 May 3, 2023 ​ June 1, 2023 ​ June 15, 2023 ​ $ 0.90 ​ $ 13,283 August 2, 2023 ​ September 1, 2023 ​ September 15, 2023 ​ $ 0.90 ​ $ 13,223 November 3, 2023 ​ December 1, 2023 ​ December 15, 2023 ​ $ 0.90 ​ $ 13,239 ​ On February 15, 2024, our Board approved and declared a quarterly cash dividend on our common stock of $0.90 per share to be paid on March 15, 2024 to shareholders of record on March 1, 2024.
Quarterly dividends paid during 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Declaration ​ Record ​ Payment ​ Dividend per ​ Dividends Paid Date ​ Date ​ Date ​ Common Share ​ and Accrued February 15, 2023 March 1, 2023 March 15, 2023 $ 0.90 $ 13,247 May 3, 2023 ​ June 1, 2023 ​ June 15, 2023 ​ $ 0.90 ​ $ 13,283 August 2, 2023 ​ September 1, 2023 ​ September 15, 2023 ​ $ 0.90 ​ $ 13,223 November 3, 2023 ​ December 1, 2023 ​ December 15, 2023 ​ $ 0.90 ​ $ 13,239 February 15, 2024 ​ March 1, 2024 ​ March 15, 2024 ​ $ 0.90 ​ $ 13,280 May 8, 2024 ​ June 1, 2024 ​ June 15, 2024 ​ $ 0.90 ​ $ 13,308 August 7, 2024 ​ September 3, 2024 ​ September 13, 2024 ​ $ 0.90 ​ $ 13,314 November 5, 2024 ​ December 2, 2024 ​ December 13, 2024 ​ $ 0.90 ​ $ 13,264 ​ ​ On February 14, 2025, our Board approved and declared a quarterly cash dividend on our common stock of $0.90 per share to be paid on March 14, 2025 to shareholders of record on March 3, 2025.
Our prior year reserves decreased by $47,381, $57,279, and $53,673 for the years ended 2023, 2022, and 2021, respectively.
Our prior year reserves decreased by $51,894, $47,381, and $57,279 for the years ended 2024, 2023, and 2022, respectively.
To the extent that reserves are inadequate and are strengthened, the amount of such increase is treated as a charge to 53 Table of Contents earnings in the period that the deficiency is recognized.
To the extent that reserves are inadequate and are strengthened, the amount of such increase is treated as a charge to earnings in the period that the deficiency is recognized. To the extent that reserves are redundant and are released, the amount of the release is a credit to earnings in the period the redundancy is recognized.
Additionally, for the year ended December 31, 2023, average written premium per exposure increased 10.8%, 3.8% and 4.5% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2022. ​ Net Written Premiums.
Additionally, for the year ended December 31, 2024, average written premium per policy increased 14.1%, 10.7% and 8.9% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. ​ Net Written Premiums.
As a result of this Massachusetts statute, the Insurance Subsidiaries had restricted net assets in the amount of $670,414 at December 31, 2023. During the twelve months ended December 31, 2023, Safety Insurance recorded dividends to Safety of $56,329.
As a result of this Massachusetts statute, the Insurance Subsidiaries had restricted net assets in the amount of $682,910 at December 31, 2024. During the twelve months ended December 31, 2024, Safety Insurance recorded dividends to Safety of $51,123.
Using these methodologies our actuaries established a range of reasonably possible estimations for net reserves of approximately $449,272 to $511,724 as of December 31, 2023 compared to a range of $423,452 to $481,902 as of December 31, 2022.
Using these methodologies our actuaries established a range of reasonably possible estimations for net reserves of approximately $497,512 to $566,772 as of December 31, 2024 compared to a range of $449,272 to $511,724 as of December 31, 2023.
We do not anticipate the need to sell these securities to meet the Insurance Subsidiaries cash requirements. We expect the Insurance Subsidiaries to generate sufficient operating cash to meet all short-term and long-term cash requirements.
We expect the Insurance Subsidiaries to generate sufficient operating cash to meet all short-term and long-term cash requirements.
A reconciliation of the GAAP financial measures to these non-GAAP measures is included in the financial highlights below. ​ ​ ​ ​ ​ ​ Results of Operations The following table shows certain of our selected financial results. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 ​ 2022 ​ ​ 2021 Direct written premiums ​ ​ $ 991,224 ​ $ 823,318 ​ $ 802,139 Net written premiums ​ ​ $ 925,295 ​ $ 773,735 ​ $ 764,526 Net earned premiums ​ ​ $ 834,414 ​ $ 758,505 ​ $ 774,328 Net investment income ​ ​ 56,377 ​ 46,725 ​ ​ 44,135 Earnings from partnership investments ​ ​ ​ 5,540 ​ ​ 12,484 ​ ​ 19,829 Net realized gains on investments ​ ​ ​ 1,327 ​ ​ 9,190 ​ ​ 14,885 Change in net unrealized (losses) gains on equity investments ​ ​ 7,502 ​ (44,386) ​ ​ 16,130 Credit loss (expense) benefit ​ ​ (530) ​ 14 ​ ​ 363 Commission income ​ ​ 6,932 ​ 566 ​ ​ — Finance and other service income ​ ​ 19,394 ​ 14,461 ​ ​ 15,241 Total revenue ​ ​ 930,956 ​ 797,559 ​ ​ 884,911 Loss and loss adjustment expenses ​ ​ 642,302 ​ 491,979 ​ ​ 461,727 Underwriting, operating and related expenses ​ ​ 256,580 ​ 245,145 ​ ​ 258,392 Other expense ​ ​ 6,836 ​ 330 ​ ​ — Interest expense ​ ​ 818 ​ 524 ​ ​ 522 Total expenses ​ ​ 906,536 ​ 737,978 ​ ​ 720,641 Income before income taxes ​ ​ 24,420 ​ 59,581 ​ ​ 164,270 Income tax expense ​ ​ 5,545 ​ 13,020 ​ ​ 33,560 Net income ​ ​ $ 18,875 ​ $ 46,561 ​ $ 130,710 Earnings per weighted average common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ 1.28 ​ $ 3.17 ​ $ 8.85 Diluted ​ ​ $ 1.28 ​ $ 3.15 ​ $ 8.80 Cash dividends paid per common share ​ ​ $ 3.60 ​ $ 3.60 ​ $ 3.60 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 44 Table of Contents Reconciliation of Net Income to Non-GAAP Operating Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ $ 18,875 ​ $ 46,561 ​ $ 130,710 Exclusions from net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net realized gains on investments ​ ​ ​ (1,327) ​ ​ (9,190) ​ ​ (14,885) Change in net unrealized (losses) gains on equity investments ​ ​ ​ (7,502) ​ ​ 44,386 ​ ​ (16,130) Credit loss expense (benefit) ​ ​ ​ 530 ​ ​ (14) ​ ​ (363) Income tax benefit ​ ​ ​ 1,743 ​ ​ (7,388) ​ ​ 6,589 Non-GAAP Operating income ​ ​ $ 12,319 ​ $ 74,355 ​ $ 105,921 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per diluted share ​ ​ $ 1.28 ​ $ 3.15 ​ $ 8.80 Exclusions from net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net realized gains on investments ​ ​ ​ (0.09) ​ ​ (0.62) ​ ​ (1.00) Change in net unrealized losses (gains) on equity investments ​ ​ ​ (0.51) ​ ​ 3.02 ​ ​ (1.08) Credit loss expense (benefit) ​ ​ ​ 0.04 ​ ​ - ​ ​ (0.02) Income tax benefit ​ ​ ​ 0.12 ​ ​ (0.50) ​ ​ 0.44 Non-GAAP Operating income per diluted share ​ ​ $ 0.84 ​ $ 5.05 ​ $ 7.14 ​ ​ YEAR ENDED DECEMBER 31, 2023 COMPARED TO YEAR ENDED DECEMBER 31, 2022 ​ Direct Written Premiums.
A reconciliation of the GAAP financial measures to these non-GAAP measures is included in the financial highlights below. ​ ​ Results of Operations ​ The following table shows certain of our selected financial results. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 ​ 2023 ​ 2022 Direct written premiums ​ ​ $ 1,193,057 ​ $ 991,224 ​ $ 823,318 Net written premiums ​ ​ $ 1,093,405 ​ $ 925,295 ​ $ 773,735 Net earned premiums ​ ​ $ 1,010,704 ​ $ 834,414 ​ $ 758,505 Net investment income ​ ​ 55,720 ​ 56,377 ​ ​ 46,725 Earnings from partnership investments ​ ​ ​ 10,271 ​ ​ 5,540 ​ ​ 12,484 Net realized gains on investments ​ ​ ​ 7,720 ​ ​ 1,327 ​ ​ 9,190 Change in net unrealized gains on equity securities ​ ​ 3,951 ​ 7,502 ​ ​ (44,386) Credit loss benefit (expense) ​ ​ 9 ​ (530) ​ ​ 14 Commission income ​ ​ 7,942 ​ 6,932 ​ ​ 566 Finance and other service income ​ ​ 23,700 ​ 19,394 ​ ​ 14,461 Total revenue ​ ​ 1,120,017 ​ 930,956 ​ ​ 797,559 Losses and loss adjustment expenses ​ ​ 716,637 ​ 642,302 ​ ​ 491,979 Underwriting, operating and related expenses ​ ​ 305,322 ​ 256,580 ​ ​ 245,145 Other expense ​ ​ 7,683 ​ 6,836 ​ ​ 330 Interest expense ​ ​ 509 ​ 818 ​ ​ 524 Total expenses ​ ​ 1,030,151 ​ 906,536 ​ ​ 737,978 Income before income taxes ​ ​ 89,866 ​ 24,420 ​ ​ 59,581 Income tax expense ​ ​ 19,132 ​ 5,545 ​ ​ 13,020 Net income ​ ​ $ 70,734 ​ $ 18,875 ​ $ 46,561 Earnings per weighted average common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ 4.79 ​ $ 1.28 ​ $ 3.17 Diluted ​ ​ $ 4.78 ​ $ 1.28 ​ $ 3.15 Cash dividends paid per common share ​ ​ $ 3.60 ​ $ 3.60 ​ $ 3.60 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of Net Income to Non-GAAP Operating Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ $ 70,734 ​ $ 18,875 ​ $ 46,561 Exclusions from net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net realized gains on investments ​ ​ ​ (7,720) ​ ​ (1,327) ​ ​ (9,190) Change in net unrealized (gains) on equity securities ​ ​ ​ (3,951) ​ ​ (7,502) ​ ​ 44,386 Credit loss (benefit) expense ​ ​ ​ (9) ​ ​ 530 ​ ​ (14) Income tax benefit (expense) ​ ​ ​ 2,453 ​ ​ 1,743 ​ ​ (7,388) Non-GAAP Operating income ​ ​ $ 61,507 ​ $ 12,319 ​ $ 74,355 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per diluted share ​ ​ $ 4.78 ​ $ 1.28 ​ $ 3.15 Exclusions from net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net realized gains on investments ​ ​ ​ (0.52) ​ ​ (0.09) ​ ​ (0.62) Change in net unrealized (gains) on equity securities ​ ​ ​ (0.27) ​ ​ (0.51) ​ ​ 3.02 Credit loss (benefit) expense ​ ​ ​ - ​ ​ 0.04 ​ ​ - Income tax benefit (expense) ​ ​ ​ 0.17 ​ ​ 0.12 ​ ​ (0.50) Non-GAAP Operating income per diluted share ​ ​ $ 4.16 ​ $ 0.84 ​ $ 5.05 ​ 44 Table of Contents ​ YEAR ENDED DECEMBER 31, 2024 COMPARED TO YEAR ENDED DECEMBER 31, 2023 ​ Direct Written Premiums.
We estimate reserves for assumed losses and LAE that have not yet been reported to us by the residual markets.
We were a participant in the FAIR Plan until the recent FAIR Plan Restructuring. We estimate reserves for assumed losses and LAE that have not yet been reported to us by the residual markets.
Our GAAP loss ratio excluding loss adjustment expenses was 67.9% and 56.0% for the years ended December 31, 2023 and 2022, respectively. Total prior year favorable development included in the pre-tax results for the year ended December 31, 2023 was $47,381, compared to $57,279, for the comparable 2022 period.
Our GAAP loss ratio excluding loss adjustment expenses was 62.6% and 67.9% for the years ended December 31, 2024 and 2023, respectively. Total prior year favorable development included in the pre-tax results for the year ended December 31, 2024 was $51,894, compared to $47,381 for the comparable 2023 period. ​ 47 Table of Contents Underwriting, Operating and Related Expenses.
Contractual Obligations We have obligations to make future payments under contracts and credit-related financial instruments and commitments. As of December 31, 2023, the Company had loss and LAE reserves of $603,081, unpaid reinsurance recoverables of $112,623 and net loss and LAE reserves of $490,458.
Contractual Obligations We have obligations to make future payments under contracts and credit-related financial instruments and commitments. As of December 31, 2024, the Company had loss and LAE reserves of $671,669, unpaid reinsurance recoverables of $130,792 and net loss and LAE reserves of $540,877.
Net cash used for financing activities during the year ended December 31, 2023 comprised dividend payments to shareholders and the acquisition of treasury stock. ​ The Insurance Subsidiaries maintain a high degree of liquidity within their respective investment portfolios in fixed maturity and short-term investments.
Net cash used for financing activities during the year ended December 31, 2024 consisted of dividend payments to shareholders. ​ The Insurance Subsidiaries maintain a high degree of liquidity within their respective investment portfolios in fixed maturity and short-term investments. We do not anticipate the need to sell these securities to meet the Insurance Subsidiaries cash requirements.
Net realized gains on investments were $1,327 for the year ended December 31, 2023 compared to $9,190 for the comparable 2022 period. ​ The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, equity securities, including interests in mutual funds, and other invested assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost or Allowance for Gross Unrealized Estimated ​ ​ Amortized ​ Expected Credit ​ ​ ​ ​ ​ Fair ​ ​ Cost ​ Losses ​ Gains ​ Losses (3) ​ Value U.S.
The increase is driven by higher realized gains from the sale of equity securities compared to prior years. ​ The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, equity securities, including interests in mutual funds, and other invested assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 45 Table of Contents ​ ​ As of December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost or Allowance for Gross Unrealized Estimated ​ ​ Amortized ​ Expected Credit ​ ​ ​ ​ ​ Fair ​ ​ Cost ​ Losses ​ Gains ​ Losses (3) ​ Value U.S.
We are a leading provider of private passenger automobile (54.7% of our direct written premiums in 2023), commercial automobile, (15.9% of 2023 direct written premiums), and homeowners (24.5% of 2023 direct written premiums) insurance.
We are a leading provider of private passenger automobile (55.8% of our direct written premiums in 2024), commercial automobile, (15.2% of 2024 direct written premiums), and homeowners (24.3% of 2024 direct written premiums) insurance.
No share purchases were made by the Company during the three months ended December 31, 2023. During the year ended December 31, 2023, the Company purchased 74,213 shares at a cost of $5,240. As of December 31, 2023, the Company had purchased 3,215,690 shares on the open market at a cost $155,240.
No share purchases were made by the Company during the year ended December 31, 2024. During the year ended December 31, 2023, the Company purchased 74,213 shares at a cost of $5,240.
Our financial statements reflect the aggregate results of the current and all prior accident years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Accident Year 2023 2022 ​ 2021 2013 & prior ​ $ (1,403) ​ $ (1,303) ​ $ (1,803) 2014 ​ ​ (996) ​ ​ (521) ​ ​ (1,534) 2015 ​ ​ (1,982) ​ ​ (2,057) ​ ​ (2,757) 2016 ​ ​ (1,484) ​ ​ (1,662) ​ ​ (1,096) 2017 ​ ​ (3,836) ​ ​ (3,749) ​ ​ (4,682) 2018 ​ ​ (3,892) ​ ​ (7,233) ​ ​ (10,190) 2019 ​ ​ (7,451) ​ ​ (12,520) ​ ​ (16,810) 2020 ​ ​ (10,212) ​ ​ (18,985) ​ ​ (14,801) 2021 ​ ​ (7,246) ​ ​ (9,249) ​ ​ — 2022 ​ ​ (8,879) ​ ​ — ​ ​ — All prior years $ (47,381) $ (57,279) ​ $ (53,673) ​ At the end of each period, the reserves were re-estimated for all prior accident years.
Our financial statements reflect the aggregate results of the current and all prior accident years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Accident Year 2024 2023 ​ 2022 2014 & prior ​ $ (1,689) ​ $ (2,399) ​ $ (1,824) 2015 ​ ​ (1,840) ​ ​ (1,982) ​ ​ (2,057) 2016 ​ ​ (1,335) ​ ​ (1,484) ​ ​ (1,662) 2017 ​ ​ (1,476) ​ ​ (3,836) ​ ​ (3,749) 2018 ​ ​ (2,563) ​ ​ (3,892) ​ ​ (7,233) 2019 ​ ​ (3,704) ​ ​ (7,451) ​ ​ (12,520) 2020 ​ ​ (3,484) ​ ​ (10,212) ​ ​ (18,985) 2021 ​ ​ (7,031) ​ ​ (7,246) ​ ​ (9,249) 2022 ​ ​ (5,079) ​ ​ (8,879) ​ ​ — 2023 ​ ​ (23,693) ​ ​ — ​ ​ — All prior years $ (51,894) $ (47,381) ​ $ (57,279) ​ At the end of each period, the reserves were re-estimated for all prior accident years.
Such techniques assume that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting our ultimate losses, total reserves and resulting IBNR reserves.
Projected ultimate loss estimates using this method are the aggregate of estimated losses by injury type. 51 Table of Contents Such techniques assume that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting our ultimate losses, total reserves and resulting IBNR reserves.
The decreases in prior year reserves in 2022 resulted from re-estimations of prior year’s ultimate loss and LAE liabilities and are primarily composed of reductions of $20,241 in our retained automobile reserves and $32,963 in our retained other than auto and homeowner reserves.
The decreases in prior year reserves in 2024 resulted from re-estimations of prior years’ ultimate loss and LAE liabilities and are primarily composed of reductions of $12,742 in our retained automobile reserves and $29,286 in our retained other than auto and homeowner’s reserves.
The decrease in prior year reserves during 2021 are primarily composed of reductions of $22,313 in our retained automobile reserves and $26,220 in our retained homeowners reserves.
The decrease in prior year reserves during 2022 are primarily composed of reductions of $20,241 in our retained automobile reserves and $32,963 in our retained homeowners reserves.
At year-end 2023, the statutory surplus of Safety Insurance was $744,904, and its net loss for 2023 was $4,022. As a result, a maximum of $74,490 is available in 2023 for such dividends without prior approval of the Commissioner.
At year-end 2024, the statutory surplus of Safety Insurance was $758,789, and its net income for 2024 was $43,387. As a result, a maximum of $75,879 is available in 2024 for such dividends without prior approval of the Commissioner.
Best rating of “A+” (Superior) or “A” (Excellent). ​ We are a participant in CAR, a state-established body that runs the residual market reinsurance programs for commercial automobile insurance in Massachusetts under which premiums, expenses, losses and loss adjustment expenses on ceded business are shared by all insurers writing commercial automobile insurance in Massachusetts.
Best rating of “A+” (Superior) or “A” (Excellent). ​ We are a participant in CAR, a state-established body that runs the residual market reinsurance programs for commercial automobile insurance in Massachusetts under which premiums, expenses, losses and loss adjustment expenses on ceded business are shared by all insurers writing commercial automobile insurance in Massachusetts. ​ We also had $168,538 due from CAR comprising of loss and loss adjustment expense reserves, unearned premiums and reinsurance recoverables. ​ Non-GAAP Measures ​ Management has included certain non-generally accepted accounting principles (“non-GAAP”) financial measures in presenting the Company’s results.
Additionally, for the year ended December 31, 2023, average written premium per exposure increased 10.8%, 3.8% and 4.5% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2022. ​ The following rate changes have been filed and approved by the insurance regulators of Massachusetts, New Hampshire and Maine in 2024, 2023 and 2022. ​ ​ ​ ​ ​ ​ Line of Business Effective Date Rate Change New Hampshire Private Passenger Automobile ​ April 1, 2024 ​ 3.4% Massachusetts Private Passenger Automobile ​ January 1, 2024 ​ 3.5% New Hampshire Commercial Automobile ​ November 1, 2023 ​ 7.9% New Hampshire Homeowners ​ October 1, 2023 ​ 6.0% Maine Private Passenger Automobile ​ October 1, 2023 ​ 7.3% New Hampshire Private Passenger Automobile ​ September 1, 2023 ​ 6.5% Massachusetts Homeowners ​ August 1, 2023 ​ 3.9% Massachusetts Private Passenger Automobile ​ July 1, 2023 ​ 4.3% Massachusetts Commercial Automobile ​ May 1, 2023 ​ 4.0% Massachusetts Private Passenger Automobile ​ December 1, 2022 ​ 3.5% New Hampshire Commercial Automobile ​ September 1, 2022 ​ 5.8% New Hampshire Homeowners ​ September 1, 2022 ​ 3.5% New Hampshire Private Passenger Automobile ​ September 1, 2022 ​ 2.8% Massachusetts Homeowners ​ July 1, 2022 ​ 2.6% ​ Statutory Accounting Principles Our results are reported in accordance with generally accepted accounting principles (“GAAP”), which differ from amounts reported in accordance with statutory accounting principles ("SAP") as prescribed by insurance regulatory authorities, which in general reflect a liquidating, rather than going concern concept of accounting.
Additionally, for the year ended December 31, 2024, average written premium per policy increased 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 following rate changes have been filed and approved by the insurance regulators of Massachusetts, New Hampshire and Maine in 2025, 2024 and 2023. ​ ​ ​ ​ ​ ​ Line of Business Effective Date Rate Change Massachusetts Private Passenger Automobile ​ January 1, 2025 ​ 5.3% New Hampshire Commercial Automobile ​ November 1, 2024 ​ 9.5% New Hampshire Private Passenger Automobile ​ October 1, 2024 ​ 4.4% New Hampshire Homeowners ​ October 1, 2024 ​ 7.4% Maine Private Passenger Automobile ​ September 1, 2024 ​ 4.4% Massachusetts Homeowners ​ August 1, 2024 ​ 5.9% Massachusetts Private Passenger Automobile ​ July 1, 2024 ​ 4.8% Massachusetts Commercial Automobile ​ May 1, 2024 ​ 6.3% New Hampshire Private Passenger Automobile ​ April 1, 2024 ​ 3.4% Massachusetts Private Passenger Automobile ​ January 1, 2024 ​ 3.5% New Hampshire Commercial Automobile ​ November 1, 2023 ​ 7.9% New Hampshire Homeowners ​ October 1, 2023 ​ 6.0% Maine Private Passenger Automobile ​ October 1, 2023 ​ 7.3% New Hampshire Private Passenger Automobile ​ September 1, 2023 ​ 6.5% Massachusetts Homeowners ​ August 1, 2023 ​ 3.9% Massachusetts Private Passenger Automobile ​ July 1, 2023 ​ 4.3% Massachusetts Commercial Automobile ​ May 1, 2023 ​ 4.0% ​ ​ Losses and Loss Adjustment Expenses.
Net written premiums for the year ended December 31, 2023 increased by $151,560, or 19.6%, to $925,295 from $773,735 for the comparable 2022 period. T he 2023 increase was primarily due to the factors that increased direct written premiums. ​ Net Earned Premiums.
Net written premiums for the year ended December 31, 2024 increased by $168,110, or 18.2%, to $1,093,405 from $925,295 for the comparable 2023 period. The 2024 increase was primarily due to the factors that increased direct written premiums. ​ Net Earned Premiums.
Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the year ended December 31, 2023 were 77.0%, 30.7%, and 107.7%, respectively, compared to 64.9%, 32.3%, and 97.2%, respectively, for the comparable 2022 period. The 2023 increase in loss ratio is primarily due to the factors that increased losses and loss adjustment expenses.
Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the year ended December 31, 2024 were 70.9%, 30.2%, and 101.1%, respectively, compared to 77.0%, 30.7%, and 107.7%, respectively, for the comparable 2023 period.
We use various software products to measure our exposure to catastrophe losses and the probable maximum loss to us for catastrophe losses such as hurricanes. The models include estimates for our share of the catastrophe losses generated in the residual market for property insurance by the FAIR Plan.
We use various software products to measure our exposure to catastrophe losses and the probable maximum loss to us for catastrophe losses such as hurricanes.
Earnings from partnership investments were $5,540 for the year ended December 31, 2023 compared to $12,484 for the year ended December 31, 2022. The 2023 earnings reflect a decrease in investment appreciation and timing of cash proceeds received compared to the prior year.
Earnings from partnership investments were $10,271 for the year ended December 31, 2024 compared to $5,540 for the year ended December 31, 2023. The 2024 earnings reflect an increase in investment appreciation and distribution of investment returns compared to the prior year.
Our IBNR reserves for FAIR Plan assumed homeowners are 57.5% of our total reserves for FAIR Plan assumed homeowners at December 31, 2023 due to similar reporting delays in the information we receive from FAIR Plan. ​ The following table presents information by line of business for our total net reserves and the corresponding retained (i.e. direct less ceded) reserves and assumed reserves as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 Line of Business ​ Retained ​ Assumed ​ Net Private passenger automobile $ 212,619 ​ ​ ​ ​ ​ ​ CAR assumed private passenger automobile ​ ​ ​ $ 9 ​ ​ ​ Net private passenger automobile ​ ​ ​ ​ ​ ​ $ 212,628 Commercial automobile ​ ​ 74,614 ​ ​ ​ ​ ​ ​ CAR assumed commercial automobile ​ ​ ​ ​ ​ 30,721 ​ ​ ​ Net commercial automobile ​ ​ ​ ​ ​ ​ ​ ​ 105,335 Homeowners ​ ​ 88,470 ​ ​ ​ ​ ​ ​ FAIR Plan assumed homeowners ​ ​ ​ ​ ​ 10,690 ​ ​ ​ Net homeowners ​ ​ ​ ​ ​ ​ ​ ​ 99,160 All other ​ ​ 73,335 ​ ​ — ​ ​ 73,335 Total net reserves for losses and LAE $ 449,038 $ 41,420 $ 490,458 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residual Market Loss and Loss Adjustment Expense Reserves ​ We are a participant in CAR, the FAIR Plan and other various residual markets and assume a portion of losses and LAE on business ceded by the industry participants to the residual markets.
The IBNR reserves for CAR assumed commercial automobile business are 37.9% of our total reserves for CAR assumed commercial automobile business as of December 31, 2024 due to the reporting delays in the information we receive from CAR, as described further in the section on Residual Market Loss and Loss Adjustment Expense Reserves. ​ The following table presents information by line of business for our total net reserves and the corresponding retained (i.e. direct less ceded) reserves and assumed reserves as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 52 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 Line of Business ​ Retained ​ Assumed ​ Net Private passenger automobile $ 264,828 ​ ​ ​ ​ ​ ​ CAR assumed private passenger automobile ​ ​ ​ $ 9 ​ ​ ​ Net private passenger automobile ​ ​ ​ ​ ​ ​ $ 264,837 Commercial automobile ​ ​ 82,556 ​ ​ ​ ​ ​ ​ CAR assumed commercial automobile ​ ​ ​ ​ ​ 33,721 ​ ​ ​ Net commercial automobile ​ ​ ​ ​ ​ ​ ​ ​ 116,277 Homeowners ​ ​ 94,577 ​ ​ ​ ​ ​ ​ FAIR Plan assumed homeowners ​ ​ ​ ​ ​ — ​ ​ ​ Net homeowners ​ ​ ​ ​ ​ ​ ​ ​ 94,577 All other ​ ​ 65,186 ​ ​ — ​ ​ 65,186 Total net reserves for losses and LAE $ 507,147 $ 33,730 $ 540,877 ​ ​ Residual Market Loss and Loss Adjustment Expense Reserves ​ We are a participant in CAR and other various residual markets and assume a portion of losses and LAE on business ceded by the industry participants to the residual markets.
Timing and generation of these returns on capital can vary based on the results and transactions of the underlying partnerships. ​ Net Realized Gains on Investments.
Timing and generation of these returns on capital can vary based on the results and transactions of the underlying partnerships. ​ Net Realized Gains on Investments. Net realized gains on investments were $7,720 for the year ended December 31, 2024 compared to $1,327 for the comparable 2023 period.
A 1 percentage-point change in both our key assumptions would change estimated reserves within a range of plus or minus 2 percentage-points. 54 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent No +1 Percent ​ ​ Change in ​ Change in ​ Change in ​ ​ Frequency ​ Frequency ​ Frequency Private passenger automobile retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves $ (4,252) $ (2,126) $ — Estimated increase in net income ​ ​ 3,359 ​ ​ 1,680 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (2,126) ​ ​ — ​ ​ 2,126 Estimated increase (decrease) in net income ​ ​ 1,680 ​ ​ — ​ ​ (1,680) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 2,126 ​ ​ 4,252 Estimated decrease in net income ​ ​ — ​ ​ (1,680) ​ ​ (3,359) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial automobile retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves ​ ​ (1,492) ​ ​ (746) ​ ​ — Estimated increase in net income ​ ​ 1,179 ​ ​ 589 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (746) ​ ​ — ​ ​ 746 Estimated increase (decrease) in net income ​ ​ 589 ​ ​ — ​ ​ (589) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 746 ​ ​ 1,492 Estimated decrease in net income ​ ​ — ​ ​ (589) ​ ​ (1,179) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Homeowners retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves ​ ​ (1,769) ​ ​ (885) ​ ​ — Estimated increase in net income ​ ​ 1,398 ​ ​ 699 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (885) ​ ​ — ​ ​ 885 Estimated increase (decrease) in net income ​ ​ 699 ​ ​ — ​ ​ (699) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 885 ​ ​ 1,769 Estimated decrease in net income ​ ​ — ​ ​ (699) ​ ​ (1,398) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All other retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves ​ ​ (1,467) ​ ​ (733) ​ ​ — Estimated increase in net income ​ ​ 1,159 ​ ​ 579 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (733) ​ ​ — ​ ​ 733 Estimated increase (decrease) in net income ​ ​ 579 ​ ​ — ​ ​ (579) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 733 ​ ​ 1,467 Estimated decrease in net income ​ ​ — ​ ​ (579) ​ ​ (1,159) ​ Our estimated share of CAR loss and LAE reserves is based on assumptions about our Participation Ratio, the size of CAR, and the resulting deficit (similar assumptions apply with respect to the FAIR Plan).
A 1 percentage-point change in both our key assumptions would change estimated reserves within a range of plus or minus 2 percentage-points. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent No +1 Percent ​ ​ Change in ​ Change in ​ Change in ​ ​ Frequency ​ Frequency ​ Frequency Private passenger automobile retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves $ (5,297) $ (2,648) $ — Estimated increase in net income ​ ​ 4,185 ​ ​ 2,092 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (2,648) ​ ​ — ​ ​ 2,648 Estimated increase (decrease) in net income ​ ​ 2,092 ​ ​ — ​ ​ (2,092) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 2,648 ​ ​ 5,297 Estimated decrease in net income ​ ​ — ​ ​ (2,092) ​ ​ (4,185) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial automobile retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves ​ ​ (1,651) ​ ​ (826) ​ ​ — Estimated increase in net income ​ ​ 1,304 ​ ​ 653 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (826) ​ ​ — ​ ​ 826 Estimated increase (decrease) in net income ​ ​ 653 ​ ​ — ​ ​ (653) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 826 ​ ​ 1,651 Estimated decrease in net income ​ ​ — ​ ​ (653) ​ ​ (1,304) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Homeowners retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves ​ ​ (1,892) ​ ​ (946) ​ ​ — Estimated increase in net income ​ ​ 1,495 ​ ​ 747 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (946) ​ ​ — ​ ​ 946 Estimated increase (decrease) in net income ​ ​ 747 ​ ​ — ​ ​ (747) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 946 ​ ​ 1,892 Estimated decrease in net income ​ ​ — ​ ​ (747) ​ ​ (1,495) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All other retained loss and LAE reserves ​ ​ ​ ​ ​ ​ ​ ​ ​ -1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated decrease in reserves ​ ​ (1,304) ​ ​ (652) ​ ​ — Estimated increase in net income ​ ​ 1,030 ​ ​ 515 ​ ​ — No Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated (decrease) increase in reserves ​ ​ (652) ​ ​ — ​ ​ 652 Estimated increase (decrease) in net income ​ ​ 515 ​ ​ — ​ ​ (515) +1 Percent Change in Severity ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated increase in reserves ​ ​ — ​ ​ 652 ​ ​ 1,304 Estimated decrease in net income ​ ​ — ​ ​ (515) ​ ​ (1,030) ​ ​ Our estimated share of CAR loss and LAE reserves is based on assumptions about our Participation Ratio, the size of CAR, and the resulting deficit.
Losses and loss adjustment expenses incurred for the year ended December 31, 2023 increased by $150,323, or 30.6%, to $642,302 from $491,979 for the comparable 2022 period.
Losses and loss adjustment expenses incurred for the three months ended December 31, 2024 increased by $20,902, or 12.1%, to $193,007 from $172,105 for the comparable 2023 period. Losses and loss adjustment expenses incurred for the year ended December 31, 2024 increased by $74,335, or 11.6%, to $716,637 from $642,302 for the comparable 2023 period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased upon the results of interest rate sensitivity analysis, the following table shows the interest rate risk of our investments in fixed maturities, measured in terms of fair value (which is equal to the carrying value for all our fixed maturity securities). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ -100 Basis ​ ​ +100 Basis ​ ​ ​ Point Change ​ ​ No Change ​ ​ Point Change As of December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated fair value $ 1,091,365 $ 1,052,145 $ 1,012,316 Estimated increase (decrease) in fair value $ 39,220 $ — $ (39,829) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With respect to floating rate debt, we are exposed to the effects of changes in prevailing interest rates.
Biggest changeBased upon the results of interest rate sensitivity analysis, the following table shows the interest rate risk of our investments in fixed maturities, measured in terms of fair value (which is equal to the carrying value for all our fixed maturity securities). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ -100 Basis ​ ​ +100 Basis ​ ​ ​ Point Change ​ ​ No Change ​ ​ Point Change As of December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated fair value $ 1,160,184 $ 1,115,218 $ 1,071,548 Estimated increase (decrease) in fair value $ 44,966 $ — $ (43,670) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With respect to floating rate debt, we are exposed to the effects of changes in prevailing interest rates.
At December 31, 2023, we had no debt outstanding under our credit facility. Assuming the full utilization of our current available credit facility, a 2.0% increase in the prevailing interest rate on our variable rate debt would result in interest expense increasing approximately $600 for 2023, assuming that all of such debt is outstanding for the entire year.
At December 31, 2024, we had no debt outstanding under our credit facility. Assuming the full utilization of our current available credit facility, a 2.0% increase in the prevailing interest rate on our variable rate debt would result in interest expense increasing approximately $600 for 2024, assuming that all of such debt is outstanding for the entire year.
We continuously evaluate market conditions and we expect in the future to purchase additional equity securities. We principally manage equity price risk through industry and issuer diversification and asset allocation techniques. ​ ​ 59 Table of Contents
We continuously evaluate market conditions and we expect in the future to purchase additional equity securities. We principally manage equity price risk through industry and issuer diversification and asset allocation techniques. ​ ​ 58 Table of Contents

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