OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the issuer credit rating (ICR) of “bbb+” of Safety Group’s (Safety) publicly traded holding company, Safety Insurance Group, Inc. (Delaware) (NASDAQ/GS: SAFT). Concurrently, A.M. Best has affirmed the financial strength rating of A (Excellent) and the ICRs of “a+” of the subsidiaries of Safety Insurance Group, Inc.: Safety Insurance Company, Safety Indemnity Insurance Company and Safety Property and Casualty Insurance Company, collectively known as Safety. The outlook for all ratings is stable. All companies are domiciled in Boston, MA, except where specified.
The ratings of Safety reflect its solid-risk-adjusted capitalization primarily driven by conservative investment risk, favorable loss reserve development trends and controlled premium growth. In addition, Safety has historically reported strong operating income. These positive rating factors are derived from management’s disciplined underwriting approach and history of successfully dealing with the challenges in Massachusetts, where it writes the majority of its business. Furthermore, Safety’s publicly traded parent, Safety Insurance Group, Inc. affords some financial flexibility.
These positive rating factors are partially offset by Safety’s concentration of business in Massachusetts that exposes it to regulatory and legislative actions, in addition to the property catastrophe risk that has increased over several years and is anticipated to continue in the future. In an effort to mitigate the exposure to property loss, Safety closely manages its catastrophe risks though stringent underwriting guidelines, a formal enterprise risk management program and a comprehensive reinsurance program.
Key drivers that could lead to future positive rating actions would be Safety producing a strong operating performance over several years that consistently outperforms the industry composite. However, negative rating pressure may occur if frequent and severe weather events have a material impact on Safety’s exposures, which are concentrated in a limited geographical location, or other market disruptions cause underwriting losses that have a substantial adverse impact on risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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