NU Online News Service, March 10, 3:27 p.m. EST
Safety Insurance Group reported 2009 fourth-quarter net income off by 13.4 percent compared with the 2008 period, after a settlement with Massachusetts for overcharging and a fall in net earned premiums.
The quarterly net income was $10.3 million, compared to $11.9 million in 2008. The decrease was the result of lower net earned premiums and a settlement with the Massachusetts Attorney General's Office.
Boston-based Safety Insurance Group is the parent of a group of property and casualty insurance companies and is the second-largest private passenger auto insurer in Massachusetts.
For the year, the company reported net income of $54.2 million, down 22.9 percent from 2008 net income of $70.3 million. Lower direct written premiums, particularly in commercial and personal auto lines, contributed to the decrease, Safety said.
In personal auto, Safety said the decline for the year was due to rate decreases of 6.7 percent, which the company filed for in response to the competitive pricing regulatory system introduced in Massachusetts in April 2008.
In total for the year, the company reported net written premiums of $532.6 million, down from $552.9 million in 2008. Net earned premiums dropped to $532 million in 2009 from $576.6 million in 2008.
In the fourth quarter, net written premiums increased to $113.5 million compared to the 2008 fourth-quarter total of $107.7 million. But net earned premiums fell to $132.3 million compared to 2008 fourth-quarter net earned premiums of $137.6 million.
Safety said the decline was due to prior quarter decreases and the lag between the time premium is written and earned.
Regarding Safety's January settlement with Massachusetts Attorney General Martha Coakley's office, the company agreed to return approximately $7.2 million to policyholders as a result of the way in which the company calculated motorcycle insurance premiums dating back to Jan. 2002. According to Ms. Coakley's office, Safety and other insurers used inflated motorcycle values to fix premium rates.
The company said the settlement was recorded as an increase to its underwriting expenses in 2009, resulting in an after-tax impact on 2009 fourth-quarter net income of $3.8 million.
For the full-year results, the settlement impacted net income by $4.9 million.
Safety's 2009 fourth-quarter combined ratio was 100.7, up from the 2008 fourth-quarter combined ratio of 98.9.
For the year, the combined ratio climbed to 97.3 compared to 94.1 in 2008.
Net investment income for the 2009 fourth quarter was $11.1 million, down slightly from 2008 fourth-quarter net investment income of $11.3 million.
Net realized gains on investments in the quarter were $170,000, compared to net realized losses of $378,000 in the comparable period in 2008.
For all of 2009, net investment income was $43.3 million, down from $45.8 million in 2008.
The company experienced net realized losses on investments of $167,000 for the year compared to net realized gains of $678,000 in 2008.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.