Boston-based Safety Insurance touted a combined ratio of 92.1 and a win in a COVID-19 business interruption court case as highlights for its second quarter.
However, second quarter net income was $7.9 million compared to $37.7 million for the comparable 2021 period.
For the quarter, losses and loss adjustment expenses incurred increased by $2.5 million, or 2.3%, to $112.7 million. The company said the increase in losses is due to a “return of pre-pandemic frequency” in its private passenger automobile line of business and “current market conditions including inflation and supply chain delays.”
Direct written premiums for the quarter decreased by $2.6 million, or 1.2%, to $214.6 million, primarily as a result of a drop in policy counts in its private passenger automobile line.
Net investment income for the quarter increased by $1.8 million, or 19.0%, to $11.6 million.
“The insurance industry continues to experience strong headwinds as operating results are adversely impacted by economic and inflationary trends coupled with rising interest rates that negatively impact our investment portfolio,” commented George M. Murphy, president and chief executive officer.
Murphy said the combined ratio of 92.1 demonstrates the insurer’s “strong underwriting discipline and focus on expense management.” The decrease in net income is largely due to the change in net unrealized gains on equity securities.
Massachusetts: First State Top Court Gives Industry a Win in Covid-19 Claims Case
During the quarter, the insurer also reduced a COVID-19 related legal expense reserve of $6.5 million based on a Massachusetts Supreme Judicial Court decision. The company had been named in a lawsuit alleging that commercial insureds were improperly denied coverage for loss of business income resulting from the COVID-19 pandemic. But on April 21, the state’s high court (Verveine Corp. v. Strathmore) dismissed the insureds’ claims on the grounds that the presence of the coronavirus on the insure premises did not constitute “direct physical loss of or damage to” property. Shortly after SJC’s ruling, the claim against the company closed and the accrued reserve of $6.5 million for legal defense costs was reversed.
Safety operates exclusively in Massachusetts, New Hampshire, and Maine offering private passenger automobile, commercial automobile, homeowners, dwelling fire, umbrella and business owner policies.
Topics COVID-19
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