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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number: 000-50070

SAFETY INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware		13-4181699
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

20 Custom House Street, Boston, Massachusetts 02110

(Address of principal executive offices including zip code)

(617) 951-0600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SAFT	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ◻ No ☒

As of November 3, 2025 there were 14,894,054 shares of common stock with a par value of $0.01 per share outstanding.

Table of Contents

SAFETY INSURANCE GROUP, INC.

TABLE OF CONTENTS

		Page No.
Part I. Financial Information
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statements of Changes in Shareholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Information about Market Risk	43
Item 4.	Controls and Procedures	44
Part II. Other Information
Item 1	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
EXHIBIT INDEX		47
SIGNATURE		48

Table of Contents

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)


	September 30,		December 31,
	2025		2024
	(Unaudited)
Assets
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: $1,285,926 and $1,181,038, allowance for expected credit losses of $966 and $1,198)	$	1,256,620	$	1,115,218
Short-term investments, at fair value (cost: $0 and $19,970)		—		19,975
Equity securities, at fair value (cost: $209,944 and $201,258)		243,341		221,422
Other invested assets		152,884		156,444
Total investments		1,652,845		1,513,059
Cash and cash equivalents		56,233		58,974
Accounts receivable, net of allowance for expected credit losses of $878 and $918		333,178		306,465
Receivable for securities sold		1,927		568
Accrued investment income		9,434		7,426
Receivable from reinsurers related to paid loss and loss adjustment expenses		30,777		26,386
Receivable from reinsurers related to unpaid loss and loss adjustment expenses		141,895		130,792
Ceded unearned premiums		39,716		41,413
Deferred policy acquisition costs		115,735		105,474
Deferred income taxes		4,828		11,200
Equity and deposits in pools		8,772		3,740
Operating lease right-of-use-assets		12,626		15,733
Goodwill		17,093		17,093
Intangible assets		7,019		7,730
Other assets		17,762		24,037
Total assets	$	2,449,840	$	2,270,090

Liabilities
Losses and loss adjustment expense reserves	$	719,812	$	671,669
Unearned premium reserves		675,865		619,916
Accounts payable and accrued liabilities		73,122		77,276
Payable for securities purchased		8,623		6,949
Payable to reinsurers		29,053		19,074
Taxes payable		1,185		1,009
Short-term debt		—		30,000
Long-term debt		30,000		—
Operating lease liabilities		12,626		15,733
Total liabilities		1,550,286		1,441,626

Commitments and contingencies (Note 8)

Shareholders’ equity
Common stock: $0.01 par value; 30,000,000 shares authorized; 18,051,631 and 17,995,584 shares issued		181		180
Additional paid-in capital		234,547		230,864
Accumulated other comprehensive loss, net of taxes		(22,389)		(51,047)
Retained earnings		837,508		798,760
Treasury stock, at cost: 3,157,577 shares		(150,293)		(150,293)
Total shareholders’ equity		899,554		828,464
Total liabilities and shareholders’ equity	$	2,449,840	$	2,270,090

The accompanying notes are an integral part of these financial statements.

Table of Contents

Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024

Net earned premiums	$	291,021	$	258,657	$	845,824	$	741,654
Net investment income		15,535		12,210		45,833		40,941
Earnings from partnership investments		2,929		4,345		5,387		8,597
Net realized gains on investments		1,338		1,314		7,732		4,521
Change in net unrealized gains on equity securities		6,310		10,698		13,233		14,880
Credit loss benefit (expense)		487		(158)		232		(337)
Commission income		2,415		1,963		6,795		5,798
Finance and other service income		6,589		6,253		19,361		17,244
Total revenue		326,624		295,282		944,397		833,298

Losses and loss adjustment expenses		204,982		182,489		589,504		523,630
Underwriting, operating and related expenses		83,027		77,868		246,674		224,056
Other expense		1,979		1,896		5,980		5,480
Interest expense		426		124		972		385
Total expenses		290,414		262,377		843,130		753,551

Income before income taxes		36,210		32,905		101,267		79,747
Income tax expense		7,900		7,016		22,124		17,144
Net income	$	28,310	$	25,889	$	79,143	$	62,603

Earnings per weighted average common share:
Basic	$	1.91	$	1.74	$	5.35	$	4.24
Diluted	$	1.91	$	1.73	$	5.33	$	4.24

Cash dividends paid per common share	$	0.92	$	0.90	$	2.72	$	2.70

Number of shares used in computing earnings per share:
Basic		14,745,008		14,838,584		14,736,279		14,689,025
Diluted		14,778,416		14,865,211		14,768,558		14,715,494

The accompanying notes are an integral part of these financial statements.

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Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollars in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income	$	28,310	$	25,889	$	79,143	$	62,603

Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) during the period, net of income tax expense (benefit) of $3,063, $7,616, $9,241 and $6,520.		11,522		28,651		34,766		24,533
Reclassification adjustment for net realized gains on investments included in net income, net of income tax benefit of ($281), ($276), ($1,624) and ($950).		(1,057)		(1,038)		(6,108)		(3,572)
Other comprehensive income (loss), net of tax:		10,465		27,613		28,658		20,961

Comprehensive income	$	38,775	$	53,502	$	107,801	$	83,564

The accompanying notes are an integral part of these financial statements.

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Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(Dollars in thousands)


					Accumulated
					Other
			Additional		Comprehensive						Total
	Common		Paid-in		Loss,		Retained		Treasury		Shareholders’
	Stock		Capital		Net of Taxes		Earnings		Stock		Equity
Balance at December 31, 2023	$	179	$	226,380	$	(53,191)	$	781,192	$	(150,293)	$	804,267
Net income, January 1 to March 31, 2024		—		—		—		20,078		—		20,078
Unrealized gains and losses on securities available for sale, net of deferred federal income taxes		—		—		(5,435)		—		—		(5,435)
Restricted share awards issued		—		599		—		—		—		599
Recognition of employee share-based compensation, net of deferred federal income taxes		1		841		—		—		—		842
Dividends paid and accrued		—		—		—		(13,280)		—		(13,280)
Balance at March 31, 2024		180		227,820		(58,626)		787,990		(150,293)		807,071
Net income, April 1 to June 30, 2024		—		—		—		16,636		—		16,636
Unrealized gains and losses on securities available for sale, net of deferred federal income taxes		—		—		(1,217)		—		—		(1,217)
Recognition of employee share-based compensation, net of deferred federal income taxes		—		997		—		—		—		997
Dividends paid and accrued		—		—		—		(13,308)		—		(13,308)
Balance at June 30, 2024		180		228,817		(59,843)		791,318		(150,293)		810,179
Net income, July 1 to September 30, 2024		—		—		—		25,889		—		25,889
Unrealized gains and losses on securities available for sale, net of deferred federal income taxes		—		—		27,613		—		—		27,613
Recognition of employee share-based compensation, net of deferred federal income taxes		—		1,074		—		—		—		1,074
Dividends paid and accrued		—		—		—		(13,314)		—		(13,314)
Balance at September 30, 2024	$	180	$	229,891	$	(32,230)	$	803,893	$	(150,293)	$	851,441


					Accumulated
					Other
			Additional		Comprehensive						Total
	Common		Paid-in		Loss,		Retained		Treasury		Shareholders’
	Stock		Capital		Net of Taxes		Earnings		Stock		Equity
Balance at December 31, 2024	$	180	$	230,864	$	(51,047)	$	798,760	$	(150,293)	$	828,464
Net income, January 1 to March 31, 2025		—		—		—		21,896		—		21,896
Unrealized gains and losses on securities available for sale, net of deferred federal income taxes		—		—		12,276		—		—		12,276
Restricted share awards issued		—		477		—		—		—		477
Recognition of employee share-based compensation, net of deferred federal income taxes		1		923		—		—		—		924
Dividends paid and accrued		—		—		—		(13,370)		—		(13,370)
Balance at March 31, 2025		181		232,264		(38,771)		807,286		(150,293)		850,667
Net income, April 1 to June 30, 2025		—		—		—		28,937		—		28,937
Unrealized gains and losses on securities available for sale, net of deferred federal income taxes		—		—		5,917		—		—		5,917
Recognition of employee share-based compensation, net of deferred federal income taxes		—		1,127		—		—		—		1,127
Dividends paid and accrued		—		—		—		(13,384)		—		(13,384)
Balance at June 30, 2025		181		233,391		(32,854)		822,839		(150,293)		873,264
Net income, July 1 to September 30, 2025		—		—		—		28,310		—		28,310
Unrealized gains and losses on securities available for sale, net of deferred federal income taxes		—		—		10,465		—		—		10,465
Recognition of employee share-based compensation, net of deferred federal income taxes		—		1,156		—		—		—		1,156
Dividends paid and accrued		—		—		—		(13,641)		—		(13,641)
Balance at September 30, 2025	$	181	$	234,547	$	(22,389)	$	837,508	$	(150,293)	$	899,554

The accompanying notes are an integral part of these financial statements.

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Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


	Nine Months Ended September 30,
	2025		2024
Cash flows from operating activities:
Net income	$	79,143	$	62,603
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Investment amortization, net		(1,117)		638
Fixed asset depreciation, net		5,400		7,008
Stock based compensation		3,683		3,511
Credit for deferred income taxes		(1,246)		1,741
Net realized gains on investments		(7,732)		(4,521)
Credit loss (benefit) expense		(232)		337
Earnings from partnership investments		1,996		(6,354)
Change in net unrealized gains on equity securities		(13,233)		(14,880)
Changes in assets and liabilities:
Accounts receivable, net		(26,713)		(54,756)
Accrued investment income		(2,008)		(385)
Receivable from reinsurers		(15,494)		(32,724)
Ceded unearned premiums		1,697		(5,336)
Deferred policy acquisition costs		(10,261)		(14,600)
Taxes payable		176		(1,610)
Other assets		(3,046)		9,039
Losses and loss adjustment expense reserves		48,143		41,094
Unearned premium reserves		55,949		93,825
Accounts payable and accrued liabilities		(4,136)		4,995
Payable to reinsurers		9,979		14,355
Other liabilities		—		(25,711)
Net cash provided by operating activities		120,948		78,269

Cash flows from investing activities:
Fixed maturities purchased		(289,008)		(168,094)
Short-term investments purchased		—		(19,729)
Equity securities purchased		(54,194)		(39,719)
Other invested assets purchased		(6,073)		(9,796)
Proceeds from sales and paydowns of fixed maturities		128,523		105,264
Proceeds from maturities, redemptions, and calls of fixed maturities		55,478		45,978
Proceeds from maturities of short-term investments		20,000		—
Proceed from sales of equity securities		54,981		71,574
Proceeds from other invested assets redeemed		7,417		7,068
Acquisition, net of cash received		—		(2,065)
Fixed assets purchased		(400)		(4,211)
Net cash used for investing activities		(83,276)		(13,730)

Cash flows from financing activities:
Proceeds from Citizens loan		30,000		—
Proceeds from FHLB loan		—		15,000
Payments on FHLB loan		(30,000)		(15,000)
Dividends paid to shareholders		(40,413)		(40,093)
Net cash used for financing activities		(40,413)		(40,093)

Net (decrease) increase in cash and cash equivalents		(2,741)		24,446
Cash and cash equivalents at beginning of year		58,974		38,152
Cash and cash equivalents at end of period	$	56,233	$	62,598

The accompanying notes are an integral part of these financial statements.

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In this Form 10-Q, Notes to the Unaudited Consolidated Financial Statements, dollar amounts are presented in thousands, except per share data.

1. Basis of Presentation

The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

The consolidated financial statements include Safety Insurance Group, Inc. and its subsidiaries (the “Company”). The subsidiaries consist of Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, Safety Northeast Insurance Company, Safety Northeast Insurance Agency, Inc. (“SNIA”), and Safety Management Corporation (“SMC”), which is SNIA’s holding company. All intercompany commission transactions, including commission income and other expense, have been eliminated. Eliminated commission income totaled $304 and $866 for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, fiduciary assets held by SNIA were immaterial and less than $160.

The financial information for the three and nine months ended September 30, 2025 and 2024 is unaudited; however, in the opinion of the Company, the information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial condition, results of operations, and cash flows for the periods. The financial information as of December 31, 2024 is derived from the audited consolidated financial statements included in the Company’s 2024 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on February 27, 2025.

These unaudited interim consolidated financial statements may not be indicative of financial results for the full year and should be read in conjunction with the audited consolidated financial statements included in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on February 27, 2025.

The Company is a leading provider of property and casualty insurance focused primarily on the Massachusetts market. The Company’s principal product line is automobile insurance. The Company primarily operates through its insurance company subsidiaries, Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, and Safety Northeast Insurance Company (together referred to as the “Insurance Subsidiaries”).

Since 1998, the Company had been a member of the Massachusetts Property Insurance Underwriting Association (“FAIR Plan”). The FAIR Plan was a residual market insurance association in which all companies writing basic property insurance in the Commonwealth of Massachusetts were required to participate, with profits and losses shared among member companies on a written premium basis. On April 1, 2024, the Massachusetts Division of Insurance approved a restructuring of the FAIR Plan (“FAIR Plan Restructuring”), transforming it from a partnership that shares profit and losses with member companies to a stand-alone, risk bearing entity, and distributing the accumulated members’ equity. As a result of the FAIR Plan Restructuring, during the year ended December 31, 2024, the Company recognized an underwriting gain through the release of prior year loss reserves, and established a new invested asset, (“Investment in FAIR Plan Trust”).

2. Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updated reportable segment disclosures primarily through enhanced disclosures about significant segment expenses. This ASU does not change how a Company identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. This ASU was effective for fiscal years starting January

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1, 2024, and for interim periods starting January 1, 2025, and was applied on a retrospective basis. The effect of implementing this guidance was not material to the Company’s consolidated financial position, results of operations or cash flows.

The Company has one reportable operating segment, property and casualty insurance operations. Property and casualty insurance operations accounted for substantially all of the Company’s operations. The Company’s business is organized around private passenger automobile insurance in Massachusetts sold exclusively through independent agents and offers other personal and commercial insurance as complementary products. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The CODM assesses performance for the property and casualty insurance operations segment and decides how to allocate resources based on consolidated net income, which is reported in the consolidated statements of operations. The significant segment expenses regularly provided and reviewed by the CODM are the consolidated expenses as reported in the consolidated statements of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets. The CODM uses consolidated net income in deciding whether to reinvest profits into the property and casualty insurance operations or into other parts of the entity, such as for acquisitions or to pay dividends.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU updated the required income tax disclosures to include disclosure of income taxes paid disaggregated by jurisdiction and greater disaggregation of information in the required rate reconciliation. This ASU is effective for fiscal years starting January 1, 2025, and will be applied on a prospective basis. The Company is evaluating the disclosure impact of this new guidance; however, it will not have an impact on the consolidated financial position, results of operations, or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting of Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires disaggregated disclosure of income statement expenses. This ASU does not change how a Company presents expense captions on the face of the income statement; however, it requires disaggregation of certain expense captions into specified categories in disclosures in the footnotes to the financial statements. This ASU is effective for fiscal years starting January 1, 2027, and for interim periods starting January 1, 2028 and will be applied on a prospective basis. The Company is evaluating the disclosure impact of this new guidance; however, it will not have an impact on the consolidated financial position, results of operations, or cash flows.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. Under the new guidance, costs associated with software developed for internal use will now be capitalized when management authorizes a project and when it is probable the project will be completed and used to perform the function intended, rather than when a project reaches the application development stage under existing guidance. The guidance is effective beginning January 1, 2028, with early adoption permitted, and can be applied prospectively, retrospectively, or on a modified retrospective basis. The Company has not yet determined the transition method or timing for adoption; however the adoption of this guidance is not expected to have a significant impact on the consolidated financial position, results of operations, or cash flows.

3. Earnings per Weighted Average Common Share

Basic earnings per weighted average common share (“EPS”) are calculated by dividing net income by the weighted average number of basic common shares outstanding during the period. Diluted earnings per share amounts are based on the weighted average number of common shares including non-vested performance stock grants.

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The following table sets forth the computation of basic and diluted EPS for the periods indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Earnings attributable to common shareholders - basic and diluted:
Net income from continuing operations	$	28,310	$	25,889	$	79,143	$	62,603
Allocation of income for participating shares		(133)		(111)		(364)		(275)
Net income from continuing operations attributed to common shareholders	$	28,177	$	25,778	$	78,779	$	62,328
Earnings per share denominator - basic and diluted
Total weighted average common shares outstanding, including participating shares		14,815,205		14,902,079		14,804,318		14,753,224
Less: weighted average participating shares		(70,197)		(63,495)		(68,039)		(64,199)
Basic earnings per share denominator		14,745,008		14,838,584		14,736,279		14,689,025
Common equivalent shares- non-vested performance stock grants		33,408		26,627		32,279		26,469
Diluted earnings per share denominator		14,778,416		14,865,211		14,768,558		14,715,494

Basic earnings per share	$	1.91	$	1.74	$	5.35	$	4.24
Diluted earnings per share	$	1.91	$	1.73	$	5.33	$	4.24

Undistributed earnings attributable to common shareholders - basic and diluted:
Net income from continuing operations attributable to common shareholders -Basic	$	1.91	$	1.74	$	5.35	$	4.24
Dividends declared		(0.92)		(0.90)		(2.72)		(2.70)
Undistributed earnings	$	0.99	$	0.84	$	2.63	$	1.54

Net income from continuing operations attributable to common shareholders -Diluted	$	1.91	$	1.73	$	5.33	$	4.24
Dividends declared		(0.92)		(0.90)		(2.72)		(2.70)
Undistributed earnings	$	0.99	$	0.83	$	2.61	$	1.54

Diluted EPS excludes non-vested performance stock grants with exercise prices and exercise tax benefits greater than the average market price of the Company’s common stock during the period because their inclusion would be anti-dilutive. There were no anti-dilutive shares related to non-vested stock grants for the three and nine months ended September 30, 2025 and 2024, respectively.

4. Share-Based Compensation

2018 Long Term Incentive Plan

On March 24, 2022, the Company’s Board of Directors adopted the Amended and Restated Safety Insurance Group, Inc. 2018 Long-Term Incentive Plan (“the Amended 2018 Plan”), which was subsequently approved by our shareholders at the 2022 Annual Meeting of Shareholders. The Amended 2018 Plan increased the share pool limit by adding 350,000 common shares to the previously adopted Safety Insurance Group, Inc., 2018 Long-Term Incentive Plan. The Amended 2018 Plan enables the grant of stock awards, performance shares, cash-based performance units, other stock-based awards, stock options, stock appreciation rights, and stock unit awards, each of which may be granted separately or in tandem with other awards. Eligibility to participate includes officers, directors, employees and other individuals who provide bona fide services to the Company. The Amended 2018 Plan supersedes the Company’s 2002 Management Omnibus Incentive Plan (“the 2002 Incentive Plan”).

The Amended 2018 Plan establishes a pool of 700,000 shares of common stock available for issuance to our employees and other eligible participants. The Board of Directors and the Compensation Committee intend to issue awards under the Amended 2018 Plan in the future.

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The maximum number of shares of common stock between both the Amended 2018 Plan and 2002 Incentive Plan with respect to which awards may be granted is 3,200,000. No further grants will be allowed under the 2002 Incentive Plan. At September 30, 2025, there were 235,663 shares available for future grant.

Accounting and Reporting for Stock-Based Awards

The Company measures and recognizes the cost of employee services received in exchange for an award of equity instruments. Under the provisions of Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant).

Restricted Stock

Service-based restricted stock awarded in the form of unvested shares is recorded at the market value of the Company’s common stock on the grant date and amortized ratably as compensation expense over the requisite service period. Service-based restricted stock awards generally vest over a three-year period and vest 30% on the first and second anniversaries of the grant date and 40% on the third anniversary of the grant date, except for non-executive employees’ restricted stock awards granted prior to 2018 which vest ratably over a five-year service period and independent directors’ stock awards which vest immediately. Our independent directors are subject to stock ownership guidelines, which require them to have a value four times their annual cash retainer.

In addition to service-based awards, the Company grants performance-based restricted shares to certain employees. These performance shares cliff vest after a three-year performance period provided certain performance measures are attained. A portion of these awards, which contain a market condition, vest according to the level of total shareholder return achieved by the Company compared to its property-casualty insurance peers over a three-year period. The remainder, which contain a performance condition, vest according to the level of Company’s combined ratio results compared to a target based on its property-casualty insurance peers.

Actual payouts can range from 0% to 200% of target shares awarded depending upon the level of achievement of the respective market and performance conditions during a three calendar-year performance period. Compensation expense for share awards with a performance condition is based on the probable number of awards expected to vest using the performance level most likely to be achieved at the end of the performance period.

Performance-based awards with market conditions are accounted for and measured differently from awards that have a performance or service condition. The effect of a market condition is reflected in the award’s fair value on the grant date. That fair value is recognized as compensation cost over the requisite service period regardless of whether the market-based performance objective has been satisfied.

All of the Company’s restricted stock awards are issued as incentive compensation and are equity classified.

The following table summarizes restricted stock activity under the Amended 2018 Plan during the nine months ended September 30, 2025 assuming a target payout for the 2025 performance-based shares.


	Shares	Weighted		Performance-based		Weighted
	Under	Average		Shares Under		Average
	Restriction	Fair Value		Restriction		Fair Value
Outstanding at beginning of year	63,522	$	83.60	73,232		$	83.53
Granted	41,489		79.61	29,457	(1)		79.58
Vested and unrestricted	(35,312)		84.77	(8,541)			84.98
Forfeited	(410)		81.70	(14,489)			84.99
Outstanding at end of period	69,289	$	82.80	79,659		$	83.80

(1)	Includes an update of previously awarded performance-based restricted share awards. The updated shares were calculated based on the attainment of pre-established performance objectives and granted under the Amended 2018 Plan.

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As of September 30, 2025, there was $6,698 of unrecognized compensation expense related to non-vested restricted stock awards that is expected to be recognized over a weighted average period of 1.6 years. The total fair value of the shares that were vested and unrestricted during the nine months ended September 30, 2025 and 2024 was $3,719 and $4,487, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded compensation expense related to restricted stock of $2,910 and $2,774, net of income tax benefits of $773 and $737, respectively, within Underwriting, operating and related expenses on the Consolidated Statements of Operations.

5. Investments

The gross unrealized gains and losses on investments in fixed maturity securities, including redeemable preferred stocks that have characteristics of fixed maturities, short-term investments, equity securities, including interests in mutual funds, and other invested assets were as follows for the periods indicated.

As of September 30, 2025

Cost or

Allowance for

Gross Unrealized

Estimated

Amortized

Expected Credit

Fair

Cost

Losses

Gains

Losses (3)

Value

U.S. Treasury securities

2,402

—

(38)

2,381

Obligations of states and political subdivisions

39,226

—

469

(1,808)

37,887

Residential mortgage-backed securities (1)

367,722

—

4,166

(17,100)

354,788

Commercial mortgage-backed securities

160,539

—

693

(7,009)

154,223

Other asset-backed securities

67,727

—

329

(1,307)

66,749

Corporate and other securities

648,310

(966)

7,505

(14,257)

640,592

Subtotal, fixed maturity securities

1,285,926

(966)

13,179

(41,519)

1,256,620

Equity securities (2)

209,944

—

41,958

(8,561)

243,341

Other invested assets (4)

152,884

—

152,884

Totals

1,648,754

(966)

55,137

(50,080)

1,652,845


	As of December 31, 2024

	Cost or		Allowance for		Gross Unrealized				Estimated
	Amortized		Expected Credit						Fair
	Cost		Losses		Gains		Losses (3)		Value
U.S. Treasury securities	$	2,418	$	—	$	2	$	(77)	$	2,343
Obligations of states and political subdivisions		38,581		—		170		(2,585)		36,166
Residential mortgage-backed securities (1)		327,161		—		601		(26,535)		301,227
Commercial mortgage-backed securities		140,124		—		91		(10,840)		129,375
Other asset-backed securities		65,456		—		155		(1,894)		63,717
Corporate and other securities		607,298		(1,198)		2,734		(26,444)		582,390
Subtotal, fixed maturity securities		1,181,038		(1,198)		3,753		(68,375)		1,115,218
Short-term investments		19,970		—		5		—		19,975
Equity securities (2)		201,258		—		29,244		(9,080)		221,422
Other invested assets (4)		156,444		—		—		—		156,444
Totals	$	1,558,710	$	(1,198)	$	33,002	$	(77,455)	$	1,513,059

(1)

Residential mortgage-backed securities consist primarily of obligations of U.S. Government agencies including collateralized mortgage obligations issued, guaranteed and/or insured by the following issuers: Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB).

(2)	Equity securities include common stock, preferred stock, mutual funds and interests in mutual funds held to fund the Company’s executive deferred compensation plan.

(3)	The Company’s investment portfolio includes 706 and 884 securities in an unrealized loss position at September 30, 2025 and December 31, 2024, respectively.

(4)	Other invested assets are generally accounted for under the equity method which approximated fair value.

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The amortized cost and the estimated fair value of fixed maturity securities, by maturity, are shown below for the period indicated. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	As of September 30, 2025
	Amortized		Estimated
	Cost		Fair Value
Due in one year or less	$	27,017	$	25,936
Due after one year through five years		331,135		325,991
Due after five years through ten years		308,435		305,469
Due after ten years through twenty years		21,872		21,969
Due after twenty years		1,479		1,495
Asset-backed securities		595,988		575,760
Totals	$	1,285,926	$	1,256,620

The gross realized gains and losses on sales of investments were as follows for the periods indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Gross realized gains
Fixed maturity securities	$	327	$	213	$	640	$	519
Equity securities		3,871		2,855		12,142		9,117
Gross realized losses
Fixed maturity securities		(2,210)		(1,130)		(2,481)		(1,824)
Equity securities		(650)		(624)		(2,569)		(3,291)
Net realized gains on investments	$	1,338	$	1,314	$	7,732	$	4,521

In the normal course of business, the Company enters into transactions involving various types of financial instruments, including investments in fixed maturities and equity securities. Investment transactions have credit exposure to the extent that a counter party may default on an obligation to the Company. Credit risk is a consequence of carrying, trading and investing in securities. To manage credit risk, the Company focuses on higher quality fixed income securities, reviews the credit strength of all companies in which it invests, limits its exposure in any one investment and monitors the portfolio quality, taking into account credit ratings assigned by recognized statistical rating organizations.

The following tables as of September 30, 2025 and December 31, 2024 present the gross unrealized losses included in the Company’s investment portfolio and the fair value of those securities aggregated by investment category. The tables also present the length of time that they have been in a continuous unrealized loss position.

As of September 30, 2025

Less than 12 Months

12 Months or More

Total

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

U.S. Treasury securities

—

1,465

Obligations of states and political subdivisions

522

19,249

1,795

19,771

1,808

Residential mortgage-backed securities

30,702

357

155,568

16,743

186,270

17,100

Commercial mortgage-backed securities

9,949

112,096

6,950

122,045

7,009

Other asset-backed securities

17,210

19,793

1,281

37,003

1,307

Corporate and other securities

85,142

1,922

214,613

12,335

299,755

14,257

Subtotal, fixed maturity securities

143,525

2,377

522,784

39,142

666,309

41,519

Equity securities

30,761

4,756

19,966

3,805

50,727

8,561

Total temporarily impaired securities

174,286

7,133

542,750

42,947

717,036

50,080

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	As of December 31, 2024
	Less than 12 Months				12 Months or More				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities	$	—	$	—	$	1,742	$	77	$	1,742	$	77
Obligations of states and political subdivisions		13,289		315		19,209		2,270		32,498		2,585
Residential mortgage-backed securities		94,528		2,401		162,260		24,134		256,788		26,535
Commercial mortgage-backed securities		3,050		9		121,152		10,831		124,202		10,840
Other asset-backed securities		11,298		278		22,018		1,616		33,316		1,894
Corporate and other securities		129,953		2,342		287,179		24,102		417,132		26,444
Subtotal, fixed maturity securities		252,118		5,345		613,560		63,030		865,678		68,375
Equity securities		49,268		4,030		21,285		5,050		70,553		9,080
Total temporarily impaired securities	$	301,386	$	9,375	$	634,845	$	68,080	$	936,231	$	77,455

Impairments

For fixed maturities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the expected credit loss component of the impairment from the amount related to all other factors. The expected credit loss component is recognized as an allowance for expected credit losses. The allowance is adjusted for any additional credit losses and subsequent recoveries, which are booked in income as either credit loss expense or credit loss benefit, respectively. Upon recognizing a credit loss, the cost basis is not adjusted. The impairment related to all other factors (non-credit factors) is reported in other comprehensive income.

For fixed maturities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. For fixed maturities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par.

For fixed maturity investments the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in credit loss expense. The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in credit loss expense. The new cost basis is not adjusted for any subsequent recoveries in fair value.

The Company uses a systematic methodology to evaluate declines in fair values below cost or amortized cost of our investments. Some of the factors considered in assessing impairment of fixed maturities due to credit losses include the extent to which the fair value is less than amortized cost, the financial condition of and the near and long-term prospects of the issuer, whether the debtor is current on its contractually obligated interest and principal payments, changes to the rating of the security by a rating agency, the historical volatility of the fair value of the security and whether it is more like than not that the Company will be required to sell the investment prior to an anticipated recovery in value.

As of September 30, 2025 and December 31, 2024, the Company concluded that $966 and $1,198, respectively, of unrealized losses were due to credit factors and were recorded as an allowance for expected credit losses expense. The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at September 30, 2025 and December 31, 2024 resulted from fluctuations in market interest rates and other temporary market conditions as opposed to fundamental changes in the credit quality of the issuers of such securities. Based upon the analysis performed, the Company’s decision to hold these securities, the Company’s current level of liquidity and our history of positive cash flows, management believes it is more likely than not that it will not be required to sell any of its securities before the anticipated recovery in the fair value to its amortized cost basis.

The following table represents a reconciliation of the beginning and ending balances of the allowance for expected credit losses on fixed maturities classified as available for sale.

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	Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024	2025		2024
Beginning of period	$	1,453	$	1,387	$	1,198	$	1,208
Credit losses on securities with no previously recorded credit losses		—		510		303		551
Net increases (decreases) in allowance on previously impaired securities		(55)		40		29		192
Reduction due to sales		(432)		(392)		(564)		(406)
Writeoffs charged against allowance		—		—		—		—
Recoveries of amounts previously written off		—		—		—		—
Ending balance of period	$	966	$	1,545	$	966	$	1,545

The Company holds no subprime mortgage debt securities. All of the Company’s holdings in mortgage-backed securities are either U.S. Government or Agency guaranteed or are rated investment grade by either Moody’s or Standard & Poor’s.

Net Investment Income

The components of net investment income were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Interest on fixed maturity securities	$	13,694	$	10,831	$	40,979	$	34,933
Dividends on equity securities		1,412		1,487		4,356		4,634
Equity in earnings of other invested assets		1,424		644		3,185		3,701
Interest on other assets		80		86		240		247
Total investment income		16,610		13,048		48,760		43,515
Investment expenses		1,075		838		2,927		2,574
Net investment income	$	15,535	$	12,210	$	45,833	$	40,941

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements and Disclosure, provides a revised definition of fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value information. Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). ASC 820 establishes a fair value hierarchy that distinguishes between inputs based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). The fair value hierarchy in ASC 820 prioritizes fair value measurements into three levels based on the nature of the inputs as follows:

Level 1 — Valuations based on quoted prices in active markets for identical assets and liabilities;

Level 2 — Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and quoted prices in active markets for similar, but not identical instruments; and

Level 3 — Valuations based on unobservable inputs.

Fair values for the Company’s fixed maturity securities are based on prices provided by its custodian bank and its investment managers. Both the Company’s custodian bank and investment managers use a variety of independent, nationally recognized pricing services to determine market valuations. If the pricing service cannot provide fair value determinations, the Company obtains non-binding price quotes from broker-dealers. A minimum of two quoted prices is obtained for the majority of the Company’s available-for-sale fixed maturity securities in its investment portfolio. The Company uses a third-party pricing service as its primary provider of quoted prices from third-party pricing services and broker-dealers. To provide reasonable assurance of the validity of each price or quote, a secondary third-party pricing service or broker-dealer quote is obtained from the Company’s custodian or investment managers. An examination of the pricing data is then performed for each security. If the variance between the primary and secondary price quotes for a security is within an accepted tolerance level, the quoted price obtained from the Company’s primary source is used for the security. If the variance between the primary and secondary price quotes exceeds an accepted tolerance level, the Company obtains a quote from an alternative source, if possible, and documents and resolves any differences between

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the pricing sources. In addition, the Company may request that its investment managers and its traders provide input as to which vendor is providing prices that its traders believe are reflective of fair value for the security. Following this process, the Company may decide to value the security in its financial statements using the secondary or alternative source if it believes that pricing is more reflective of the security’s value than the primary pricing provided by its custodian bank. The Company analyzes market valuations received to verify reasonableness, to understand the key assumptions used and their sources, and to determine an appropriate ASC 820 fair value hierarchy level based upon trading activity and the observability of market inputs. Based on this evaluation and investment class analysis, each price is classified into Level 1, 2 or 3.

Fair values of instruments are based on (i) quoted prices in active markets for identical assets (Level 1), (ii) quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs are observable in active markets (Level 2) or (iii) valuations derived from valuation techniques in which one or more significant inputs are unobservable in the marketplace (Level 3).

The Company’s Level 1 securities consist of equity securities whose values are based on quoted prices in active markets for identical assets. The Company’s Level 2 securities are comprised of available-for-sale fixed maturity securities whose fair value was determined using observable market inputs. The Company’s Level 3 security consists of an investment in the FHLB-Boston related to Safety Insurance Company’s membership stock, which is not redeemable in a short-term time frame. Fair values for securities for which quoted market prices were unavailable were estimated based upon reference to observable inputs such as benchmark interest rates, market comparables, and other relevant inputs. Investments valued using these inputs include U.S. Treasury securities, obligations of states and political subdivisions, corporate and other securities, commercial and residential mortgage-backed securities, and other asset-backed securities. Short-term investments are comprised of U.S. Treasury securities. Inputs into the fair value application that are utilized by asset class include but are not limited to:

●Obligations of states and political subdivisions: overall credit quality, including assessments of market sectors and the level and variability of sources of payment such as general obligation, revenue or lease; credit support such as insurance, state or local economic and political base, prefunded and escrowed to maturity covenants.

●Corporate and other securities: overall credit quality, the establishment of a risk adjusted credit spread over the applicable risk-free yield curve for discounted cash flow valuations; assessments of the level of industry economic sensitivity, company financial policies, indenture restrictive covenants, and/or security and collateral.

●Residential mortgage-backed securities, U.S. agency pass-throughs, collateralized mortgage obligations (“CMOs”), non U.S. agency CMOs: estimates of prepayment speeds based upon historical prepayment rate trends, underlying collateral interest rates, original weighted average maturity, vintage year, borrower credit quality characteristics, interest rate and yield curve forecasts, U.S. government support programs, tax policies, and delinquency/default trends.

●Commercial mortgage-backed securities: overall credit quality, including assessments of the level and variability of credit support and collateral type such as office, retail, or lodging, predictability of cash flows for the deal structure, prevailing economic market conditions.

●Other asset-backed securities: overall credit quality, estimates of prepayment speeds based upon historical trends and characteristics of underlying loans, including assessments of the level and variability of collateral, revenue generating agreements, area licenses agreements, product sourcing agreements and equipment and property leases.

●Federal Home Loan Bank of Boston (“FHLB-Boston”): value is equal to the cost of the member stock purchased, which is expected to be the exit price.

In order to ensure the fair value determination is representative of an exit price, the Company’s procedures for validating quotes or prices obtained from third parties include, but are not limited to, obtaining a minimum of two price

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quotes for each fixed maturity security if possible, as discussed above, the periodic testing of sales activity to determine if there are any significant differences between the market price used to value the security as of the balance sheet date and the sales price of the security for sales that occurred around the balance sheet date, and the periodic review of reports provided by its external investment manager regarding those securities with ratings changes and securities placed on its “Watch List.” In addition, valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by the Company’s external investment manager, whose investment professionals are familiar with the securities being priced and the markets in which they trade, to ensure the fair value determination is representative of an exit price.

All unadjusted estimates of fair value for our fixed maturities priced by the pricing services as described above are included in the amounts disclosed in Level 2. With the exception of the FHLB-Boston security, which is categorized as a Level 3 security, the Company’s entire portfolio was priced based upon quoted market prices or other observable inputs as of September 30, 2025. There were no significant changes to the valuation process during the nine months ended September 30, 2025. As of September 30, 2025 and December 31, 2024, no quotes or prices obtained were adjusted by management. All broker quotes obtained were non-binding.

At September 30, 2025 and December 31, 2024, investments in fixed maturities classified as available-for-sale had a fair value which equaled carrying value of $1,256,620 and $1,115,218, respectively. The carrying values of cash and cash equivalents and investment income accrued approximated fair value.

The following tables summarize the Company’s total fair value measurements for investments for the periods indicated.

As of September 30, 2025

Total

Level 1 Inputs

Level 2 Inputs

Level 3 Inputs

U.S. Treasury securities

2,381

—

2,381

—

Obligations of states and political subdivisions

37,887

—

37,887

—

Residential mortgage-backed securities

354,788

—

354,788

—

Commercial mortgage-backed securities

154,223

—

154,223

—

Other asset-backed securities

66,749

—

66,749

—

Corporate and other securities

640,592

—

640,592

—

Other invested assets

14,938

—

14,938

—

Equity securities

211,384

210,452

—

932

Total investment securities

1,482,942

210,452

1,271,558

932


	As of December 31, 2024
	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
U.S. Treasury securities	$	2,343	$	—	$	2,343	$	—
Obligations of states and political subdivisions		36,166		—		36,166		—
Residential mortgage-backed securities		301,227		—		301,227		—
Commercial mortgage-backed securities		129,375		—		129,375		—
Other asset-backed securities		63,717		—		63,717		—
Corporate and other securities		582,390		—		582,390		—
Short-term investments		19,975		—		19,975		—
Other invested assets		14,477		—		14,477		—
Equity securities		189,668		187,548		—		2,120
Total investment securities	$	1,339,338	$	187,548	$	1,149,670	$	2,120

As of September 30, 2025 and December 31, 2024, there were approximately $31,957 and $31,754, respectively, in a real estate investment trust (“REIT”). The REIT is excluded from the fair value hierarchy because the fair value is recorded using the net asset value per share practical expedient. The net asset value per share of this REIT is derived from member ownership in the capital venture to which a proportionate share of independently appraised net assets is attributed. The fair value was determined using the trust’s net asset value obtained from its financial statements. The Company is required to submit a request 45 days before a quarter end to dispose of the security.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2025 and 2024.

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The following table summarizes the changes in the Company’s Level 3 fair value securities for the periods indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
	Level 3		Level 3		Level 3		Level 3
	Fair Value		Fair Value		Fair Value		Fair Value
	Securities		Securities		Securities		Securities
Balance at beginning of period	$	932	$	2,120	$	2,120	$	2,086
Net gains and losses included in earnings		—		—		—		—
Net gains included in other comprehensive income		—		—		—		—
Purchases		—		—		48		372
Sales		—		—		(1,236)		(338)
Transfers into Level 3		—		—		—		—
Transfers out of Level 3		—		—		—		—
Balance at end of period	$	932	$	2,120	$	932	$	2,120
Amount of total losses included in earnings attributable to the change in unrealized losses related to assets still held at end of period	$	—	$	—	$	—	$	—

Transfers in and out of Level 3 are attributable to changes in the ability to observe significant inputs in determining fair value exit pricing. As noted in the table above, no transfers were made in or out of Level 3 during the three and nine months ended September 30, 2025 and 2024. The Company held one Level 3 security at September 30, 2025 and 2024.

As an element of the FAIR Plan Restructuring, in a non-cash transaction, the Company liquidated its net asset position in the FAIR Plan and established an Investment in FAIR Plan Trust. The Company’s Investment in FAIR Plan Trust was adjusted to its current fair value on a quarterly basis based on information from the FAIR Plan, with changes recognized through earnings. As of September 30, 2025 and December 31, 2024, the Company’s Investment in FAIR Plan Trust of $14,938 and $14,477, respectively, was included in other invested assets. The Company recognized $138 and $461, respectively, of income in earnings from partnership investments from its Investment in FAIR Plan Trust during the three and nine months ended September 30, 2025. The Company recognized $0 of income in earnings from partnership investments from its Investment in FAIR Plan Trust during the three and nine months ended September 30, 2024.

6. Allowance for Expected Credit Losses

The Company’s financial instruments measured at amortized cost include premiums and accounts receivable, and reinsurance recoverables.

Premiums and accounts receivable are reported net of an allowance for expected credit losses. The allowance is based upon the Company’s ongoing review of amounts outstanding, historical loss data, including delinquencies and write-offs, current and forecasted economic conditions and other relevant factors. Credit risk is partially mitigated by the Company’s ability to cancel the policy if the policyholder does not pay the premium and the Company writes off premiums receivable balances that are more than 90 days overdue.

The following tables present the balances of premiums receivable, net of the allowance for expected credit losses and changes in the allowance for expected credit losses for the three and nine months ended September 30, 2025 and 2024.

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		At and For the				At and For the
		Three Months Ended September 30, 2025				Three Months Ended September 30, 2024
		Accounts Receivable Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses		Accounts Receivable Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
Balance, beginning of period	$	333,014	$	827	$	312,361	$	939
Current period change for expected credit losses				838				720
Writeoffs of uncollectable accounts receivable				(787)				(958)
Balance, end of period	$	333,178	$	878	$	311,443	$	701


		At and For the				At and For the
		Nine Months Ended September 30, 2025				Nine Months Ended September 30, 2024
		Accounts Receivable Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses		Accounts Receivable Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses
Balance, beginning of period	$	306,465	$	918	$	256,687	$	1,053
Current period change for expected credit losses				2,513				2,145
Writeoffs of uncollectable accounts receivable				(2,553)				(2,497)
Balance, end of period	$	333,178	$	878	$	311,443	$	701

Reinsurance recoverables include amounts due from reinsurers for both paid and unpaid losses. The Company cedes insurance to Commonwealth Automobile Reinsurers (“CAR”) and to other reinsurers. The Company has a property catastrophe excess of loss agreement and a casualty excess of loss agreement that qualify as reinsurance treaties and are designed to protect against large or unusual loss and loss adjustment expenses (“LAE”) activity. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company reports its reinsurance recoverables net of an allowance for estimated uncollectable reinsurance. A probability-of-default methodology which reflects current and forecasted economic conditions is used to estimate the amount of uncollectible reinsurance due to credit-related factors and the estimate is reported in an allowance for estimated uncollectible reinsurance. Amounts deemed to be uncollectible, including amounts due from known insolvent reinsurers, are written off against the allowance. Changes in the allowance, as well as any subsequent collections of amounts previously written off, are reported as part of losses and loss adjustment expenses.

The majority of the Company’s reinsurance recoverable on paid and unpaid losses is a result of our participation as a servicing carrier in the CAR Commercial Automobile Program, which represented 96% and 93% of the total reinsurance recoverable on paid and unpaid losses at September 30, 2025 and December 31, 2024, respectively. The remaining 4% and 7%, respectively, of amounts due from reinsurers are related to our other excess of loss and quota share contracts. For amounts due under these contracts, the Company utilizes updated A.M. Best credit ratings on a quarterly basis to determine the allowance for expected credit losses. As of September 30, 2025 and December 31, 2024, most of the reinsurers under these programs are rated “A” or better by A.M. Best. Certain of the Company's reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements. The Company’s analysis concludes that there are no expected credit losses at September 30, 2025 or December 31, 2024.

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7. Loss and Loss Adjustment Expense Reserves

The following table sets forth a reconciliation of beginning and ending reserves for losses and LAE, as shown in the Company’s consolidated financial statements for the periods indicated.


	Nine Months Ended September 30,
	2025		2024
Reserves for losses and LAE at beginning of year	$	671,669	$	603,081
Less receivable from reinsurers related to unpaid losses and LAE		(130,792)		(112,623)
Net reserves for losses and LAE at beginning of year		540,877		490,458
Incurred losses and LAE, related to:
Current year		622,684		562,568
Prior years		(33,180)		(38,938)
Total incurred losses and LAE		589,504		523,630
Paid losses and LAE related to:
Current year		333,165		310,855
Prior years		219,299		190,654
Total paid losses and LAE		552,464		501,509
Net reserves for losses and LAE at end of period		577,917		512,579
Plus receivable from reinsurers related to unpaid losses and LAE		141,895		131,596
Reserves for losses and LAE at end of period	$	719,812	$	644,175

At the end of each period, the reserves were re-estimated for all prior accident years. The Company’s prior year reserves decreased by $33,180 and $38,938 for the nine months ended September 30, 2025 and 2024, respectively, and resulted from re-estimations of prior year’s ultimate loss and LAE liabilities. The decreases in prior years reserves during the nine months ended September 30, 2025 and 2024 are primarily composed of reductions in our retained automobile and retained homeowners lines reserves.

The Company’s automobile lines of business reserves decreased for the nine months ended September 30, 2025 and 2024, primarily due to fewer incurred but not yet reported claims than previously estimated and better than previously estimated severity on the Company’s established bodily injury and property damage case reserves. Due to the nature of the risks that the Company underwrites and has historically underwritten, management does not believe that it has an exposure to asbestos or environmental pollution liabilities.

8. Commitments and Contingencies

Commitments

As part of the Company’s investment activity, we have committed $170,000 to investments in limited partnerships. The Company has contributed $150,755 to these commitments as of September 30, 2025. As of September 30, 2025, the remaining committed capital that could be called is $30,424, which includes potential recallable capital distributions.

Contingencies

Various claims, generally incidental to the conduct of normal business, are pending or alleged against the Company from time to time. In the opinion of management, based in part on the advice of legal counsel, the ultimate resolution of such claims will not have a material adverse effect on the Company’s consolidated financial statements. However, if estimates of the ultimate resolutions of those proceedings are revised, liabilities related to those proceedings could be adjusted in the near term.

Massachusetts law requires that insurers licensed to do business in Massachusetts participate in the Massachusetts Insurers Insolvency Fund (“Insolvency Fund”). Members of the Insolvency Fund are assessed a proportionate share of the obligations and expenses of the Insolvency Fund in connection with an insolvent insurer. It is anticipated that there will be additional assessments from time to time relating to various insolvencies. Although the

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timing and amounts of any future assessments are not known, based upon existing knowledge, management’s opinion is that such future assessments are not expected to have a material effect upon the financial position of the Company.

9. Debt

On August 10, 2023, the Company extended its Revolving Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A. (“Citizens Bank”) to a maturity date of August 10, 2028. The Credit Agreement provides a $30,000 revolving credit facility with an accordion feature allowing for future expansion of the committed amount up to $50,000. Loans under the credit facility bear interest at the Company’s option at the higher of the Citizens Bank prime rate, the daily SOFR rate plus 1.25% per annum, or 0.5% above the federal funds rate. Interest only is payable prior to maturity.

The Company’s obligations under the credit facility are secured by pledges of its assets and the capital stock of its operating subsidiaries. The credit facility is guaranteed by the Company’s non-insurance company subsidiaries. The credit facility contains covenants including requirements to maintain minimum risk-based capital ratios and statutory surplus of Safety Insurance Company as well as limitations or restrictions on indebtedness, liens, and other matters. As of September 30, 2025, the Company was in compliance with all covenants. In addition, the credit facility includes customary events of default, including a cross-default provision permitting the lenders to accelerate the facility if the Company (i) defaults in any payment obligation under debt having a principal amount in excess of $10,000 or (ii) fails to perform any other covenant permitting acceleration of all such debt.

On March 27, 2025, the Company borrowed $30,000 under the Credit Agreement with Citizens Bank, bearing interest at SOFR plus 1.25%. Interest is payable quarterly and the principal is due upon the maturity of the Credit Agreement. Principal may be repaid at any time without penalty. The Company had $30,000 outstanding on its credit facility at September 30, 2025, and no amounts outstanding at December 31, 2024. The credit facility commitment fee included in interest expense was computed at a rate of 0.20% per annum on the $30,000 commitment. Commitment fees were incurred through March 27, 2025, when the Company borrowed under the facility.

Safety Insurance Company is a member of the FHLB-Boston. Membership in the FHLB-Boston allows Safety Insurance Company to borrow money at competitive interest rates provided the loan is collateralized by specific U.S. Government residential mortgage backed securities. At September 30, 2025, Safety Insurance Company has the ability to borrow $261,292 using eligible invested assets that would be used as collateral.

On March 17, 2020, the Company borrowed $30,000 from the FHLB-Boston for a term of five-years, bearing interest at a rate of 1.42%. The interest and principal were paid on the maturity date of March 17, 2025.

On April 8, 2024, the Company borrowed $10,000 from FHLB-Boston for a term of one-week, bearing an interest rate of 5.50%. The interest and principal were paid on the maturity date of April 15, 2024.

On April 15, 2024, the Company borrowed $5,000 from FHLB-Boston for a term of one-week, bearing an interest rate of 5.52%. The interest and principal were paid on the maturity date of April 22, 2024.

The Company estimates the fair value of the FHLB-Boston and the Citizens Bank Credit Agreement loans (the “Loans”) by discounting cash flows using the interest rate stated in the loan agreements, which is an observable input. As such, the Loans are categorized as Level 2 within the fair value hierarchy. The fair value of the outstanding loan with the FHLB-Boston was $0 and $30,088 at September 30, 2025 and December 31, 2024, respectively. At December 31, 2024, this loan was fully collateralized by specific U.S. Government residential mortgage-backed securities with a fair value of $47,341. The fair value of the loan under the Credit Agreement with Citizens Bank was $32,157 and $0 at September 30, 2025 and December 31, 2024, respectively.

Interest expense on the FHLB-Boston borrowing was $0 and $109 for the three months ended September 30, 2025 and 2024, respectively. Interest expense on the FHLB-Boston borrowing was $89 and $340 for the nine months ended September 30, 2025 and 2024, respectively. Interest expense on the Credit Agreement with Citizens Bank was

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$426 and $15 for the three months ended September 30, 2025 and 2024, respectively. Interest expense on the Credit Agreement with Citizens Bank was $883 and $45 for the nine months ended September 30, 2025 and 2024, respectively.

10. Income Taxes

Federal income tax expense for the nine months ended September 30, 2025 and 2024 has been computed using estimated effective tax rates. These rates are revised, if necessary, at the end of each successive interim period to reflect the current estimates of the annual effective tax rates.

The Company believes that the positions taken on its income tax returns for open tax years will be sustained upon examination by the Internal Revenue Service. Therefore, the Company has not recorded any liability for uncertain tax positions under ASC 740, Income Taxes.

During the nine months ended September 30, 2025, there were no material changes to the amount of the Company’s unrecognized tax benefits or to any assumptions regarding the amount of its ASC 740 liability.

On July 4, 2025, the “One Big Beautiful Bill Act” (H.R.1) (the “Act”) was signed into law. This wide-ranging budget reconciliation legislation introduces significant changes across multiple areas of federal policy, including taxation, and social programs. Based on the Company’s ongoing monitoring and analysis, the provisions of the Act do not currently have a material impact on the Company’s financial position or results of operations, nor are they expected to have a material impact in future periods.

All tax years prior to 2021 are closed. There are no current examinations ongoing.

In the Company’s opinion, adequate tax liabilities have been established for all open years. However, the amount of these tax liabilities could be revised in the near term if estimates of the Company’s ultimate liability are revised.

11. Share Repurchase Program

On February 23, 2022, the Board of Directors approved a share repurchase program of up to $50,000 of the Company’s outstanding common shares. The Board of Directors has cumulatively authorized increases to the existing share repurchase program of up to $200,000 of its outstanding common shares. Under the program, the Company may repurchase shares of its common stock for cash in public or private transactions, in the open market or otherwise. The timing of such repurchases and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable regulatory and corporate requirements. The program does not require the Company to repurchase any specific number of shares and it may be modified, suspended or terminated at any time without prior notice.

No share purchases were made by the Company under the program during the three and nine months ended September 30, 2025 and 2024. As of September 30, 2025 and December 31, 2024, the Company had purchased 3,215,690 shares at a cost of $155,240.

12. Leases

The Company has various non-cancelable, long-term operating leases, the largest of which are for office space including the corporate headquarters, VIP claims centers and law offices. Other operating leases consist of auto leases and various office equipment. The Company has no finance leases. Our leases have remaining lease terms of one year to four years, some of which include options to extend the leases for up to five years.

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In calculating lease liabilities the Company uses its incremental borrowing rate as of the application date based on original lease terms. The components of lease expense were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024		2025		2024
Operating lease cost	$	904	$	993	$	2,713	$	3,012

Other information related to leases was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

Cash paid for amounts included in the measurement of lease liabilities:

SAFETY INSURANCE GROUP INC 10-Q