Earnings, Revs Rise at Safty Insurance - Analyst Blog

Safty Insurance Group, Inc. SAFT reported fourth-quarter 2013 net earnings of 76 cents per share. The number improved 22.6% year over year as a solid revenue performance made up for the cost increase.

Operational Update

Net written premiums of Safty Insurance totaled $151.3 million, increasing 3.7% from the prior-year quarter. The improvement was owing to higher direct written premiums in Safty Insurance's homeowners and commercial automobile business lines.

Total revenue grossed $191.8 million during the quarter, up 5.8% year over year. The top line improved on the back of higher net earned premiums as well as higher net investment income. Net premiums earned increased 5% year over year to $173.6 million while net investment income moved up 25.2% to $12.9 million during the quarter. Net investment income augmented on account of diversified investments into equity securities.

Safty Insurance's total expenses rose 3.6% year over year to $174.7 million. The rise in expenses was attributable to higher losses and loss adjustment expenses and increased underwriting, operating and related expenses.

Combined ratio of Safty Insurance improved 140 basis points year over year to 100.6% at the end of the fourth quarter.

Full-Year 2013 Highlights

Safty Insurance's full-year 2013 net earnings came in at $3.98 per share, up 4.7% from the 2012 number. The result improved on the back of increased revenues of the company.

Revenues of Safty Insurance totaled $745.3 million, increasing 5.9% year over year on higher net earned premiums and net investment income.

Financial Update

Safty Insurance's cash balance stood at $55.9 million at the end of 2013 compared with $35.4 million as of 2012-end.

Total assets was $1.62 billion at the end of 2013, comparing favorably with $1.57 billion as of 2012-end.

Total shareholder's equity of Safty Insurance was $695.2 million compared with $694.4 million as of Dec 31, 2012.

Dividend Update

During 2013, Safty Insurance paid annualized dividend of $2.40 per share, up from $2.20 per share paid in 2012. Additionally, in Feb 2014, Safty Insurance declared first-quarter 2014 quarterly dividend of 60 cents a share, which will be paid on Mar 14, 2014 to shareholders of the record as of Mar 3.

Zacks Rank

Some other stocks worth considering in the property and casualty insurance industry include Alleghany Corp. Y, Navigators Group Inc. NAVG and Fidelity National Financial, Inc. FNF. All these stocks sport a Zacks Rank #1 (Strong Buy).