Safety Insurance Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net income for the quarter ended September 30, 2026, was $30.0 million ($2.05 per diluted share), compared to $28.3 million ($1.91 per diluted share) in the prior year period.
• Net income for the nine months ended September 30, 2026, was $50.2 million ($3.43 per diluted share), compared to $79.1 million ($5.33 per diluted share) in the prior year period.
• Non-GAAP operating income per diluted share was $1.95 for the quarter ended September 30, 2026, compared to $1.48 in the prior year period; for the nine months, it was $3.28 compared to $4.19.
• Net earned premiums increased 1.0% to $293.9 million for the quarter and 3.6% to $876.5 million for the nine months compared to the prior year periods.
• Direct written premiums decreased 4.3% to $319.7 million for the quarter and 1.8% to $961.3 million for the nine months compared to the prior year periods.
• Net written premiums decreased 4.2% to $296.2 million for the quarter and 2.0% to $885.1 million for the nine months compared to the prior year periods.
• Losses and loss adjustment expenses incurred decreased 3.6% to $197.6 million for the quarter but increased 8.6% to $640.2 million for the nine months compared to the prior year periods.
• The combined ratio improved to 96.3% for the quarter from 98.9% in the prior year period; for the nine months, it was 101.7% compared to 98.9%.
• Net investment income increased 15.0% to $17.9 million for the quarter and 12.3% to $51.5 million for the nine months compared to the prior year periods.
• Total prior year favorable development was $10.1 million for the quarter and $31.3 million for the nine months compared to $9.7 million and $33.2 million, respectively, in the prior year periods.
• Book value per share decreased to $58.29 at September 30, 2026, from $60.98 at December 31, 2025.
• Long-term debt remained constant at $50.0 million as of September 30, 2026, and December 31, 2025.

Guidance and Future Outlook:

• The pending all-cash acquisition by an affiliate of Mapfre S.A. valued at approximately $1.54 billion remains subject to regulatory approval following shareholder approval on November 3, 2026.
• Shareholders will receive $105 per common share in cash, representing a 44% premium on the stock price as of July 23, 2026.

Business Segments and Product Lines:

• Policy count declines were experienced in Private Passenger Automobile and Homeowners lines for the nine months ended September 30, 2026, partially offset by growth in Commercial Automobile policies.
• Average written premium per policy increased 2.0% in Private Passenger Automobile, 6.0% in Commercial Automobile, and 9.7% in Homeowners lines compared to the same period in 2025.
• The decrease in written premiums was attributed to a softening, more competitive market and the cancellation of certain underperforming agency relationships.
• The improvement in the quarterly combined ratio was driven by improved loss frequency in the private passenger automobile line and previous written premium growth earning into top-line revenue.

Market and Competitive Landscape:

• The market environment is characterized as softening and more competitive.
• The company operates exclusively in Massachusetts, New Hampshire, and Maine.

Risks and Challenges:

• Risks include the possibility that required regulatory approvals for the Mapfre merger are not obtained, are delayed, or are subject to unanticipated conditions.
• Severe weather events, specifically two winter storms in the first quarter of 2026, contributed to an 8.6% increase in losses for the nine-month period.
• Potential adverse effects from the competitive nature of the industry and restrictive regulations in Massachusetts.
• Risks related to inflation, changes in tariffs, and supply chain delays affecting loss severity.
• The possibility of future rule changes by the Commissioner of Insurance affecting the residual market.
• Risks associated with the termination of the merger agreement, including potential termination fees, litigation, and disruption to relationships with employees, agents, and policyholders.

Management Commentary and Tone:

• George M. Murphy, Chairman, President, and CEO, stated that the combined ratio improvement reflects improved underwriting results and the largest quarterly net investment income results in the Company's history.
• Management noted that the nine-month combined ratio increase was primarily driven by the impact of severe winter weather events.
• The tone indicates confidence in underwriting improvements and investment performance despite premium volume declines.

Other Key Points:

• The Board of Directors declared a quarterly cash dividend of $0.92 per share, payable on December 15, 2026, to shareholders of record at the close of business on December 1, 2026.
• Total dividends paid per share were $0.92 for the quarter ended September 30, 2026, and $3.64 for the full year ended December 31, 2025.
• Approximately $3.8 million of legal fees incurred in connection with the proposed Mapfre transaction were included in other expenses for the quarter and excluded from the expense ratio calculation.
• Net realized gains on investments were $10.4 million for the quarter and $18.4 million for the nine months.
• A decrease of $8.5 million in unrealized gains on equity securities was recognized in income before taxes for the quarter, compared to an increase of $6.3 million in the prior year period.