UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
For the fiscal year ended December 31, 2025
Or
☐	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)

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

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes ☐ No ☒

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 definitions 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the registrant’s voting and non-voting common equity (based on the closing sales price on NASDAQ) held by non-affiliates of the registrant as of June 30, ~~2024~~2025, was approximately $1,~~092~~158,~~939~~391,~~051~~399.

As of February 1413, ~~2025~~2026 there were 14,~~838~~631,~~007~~684 Common Shares with a par value of $0.01 per share outstanding.

Documents Incorporated by Reference

Portions of the registrant’s definitive proxy statement for its Annual Meeting of Shareholders, which Safety Insurance Group, Inc. (“Safety”, the “Company”, “we”, “our”, “us”) intends to file within 120 days after its December 31, ~~2024~~2025 year-end, are incorporated by reference into Part II and Part III hereof.

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SAFETY INSURANCE GROUP, INC.

Table of Contents


PART I.		Page
Item 1.	Business	1
Item 1A.	Risk Factors	26
Item 1B.	Unresolved Staff Comments	3334
Item 1C.	Cybersecurity	3334
Item 2.	Properties	3536
Item 3.	Legal Proceedings	3536
Item 4.	Mine Safety Disclosures	3536

PART II.
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3637
Item 6.	[Reserved]	3940
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3940
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5859
Item 8.	Financial Statements and Supplementary Data	5960
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	99100
Item 9A.	Controls and Procedures	99100
Item 9B.	Other Information	~~100~~101
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~101~~102


PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	~~102~~103
Item 11.	Executive Compensation	~~102~~103
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related
	Stockholder Matters	~~102~~103
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~102~~103
Item 14.	Principal Accounting Fees and Services	~~102~~103

PART IV.
Item 15.	Exhibits, Financial Statement Schedules	~~102~~103
Item 16	Form 10-K Summary	115

SIGNATURES		116

Table of Contents

In this Form 10-K, all dollar amounts are presented in thousands, except average premium, average claim and per claim data, share, and per share data.

PART I.

ITEM 1. BUSINESS

General

We are a leading provider of private passenger automobile, commercial automobile, and homeowners insurance in Massachusetts. In addition to these coverages, we offer a portfolio of other insurance products, including dwelling fire, umbrella and business owner policies. Operating exclusively in Massachusetts, New Hampshire and Maine through our insurance company subsidiaries, Safety Insurance Company ("Safety Insurance"), Safety Indemnity Insurance Company ("Safety Indemnity"), Safety Property and Casualty Insurance Company ("Safety P&C"), and Safety Northeast Insurance Company (“Safety Northeast”) (together referred to as the "Insurance Subsidiaries"), we have established strong relationships with independent insurance agents, who numbered ~~828~~797 in 1,~~079~~063 locations throughout these three states during ~~2024~~2025. We have used these relationships and, in particular, our extensive knowledge of the Massachusetts market to become the ~~third~~fourth largest private passenger automobile carrier and the ~~second~~ largest commercial automobile carrier in Massachusetts, capturing an approximate 9.74% and 1213.90% share, respectively, of the Massachusetts private passenger and commercial automobile markets in ~~2024~~2025 according to statistics compiled by Commonwealth Automobile Reinsurers ("CAR"). We also are the third largest homeowners insurance carrier in Massachusetts with a 67.30% share of that market in ~~2023~~2024. We were ranked the ~~55th~~52nd largest automobile writer in the country according to S&P Global Market Intelligence, based on ~~2023~~2024 direct written premiums. We were incorporated under the laws of Delaware in 2001, but through our predecessors, we have underwritten insurance in Massachusetts since 1979.

Our Insurance Subsidiaries began writing insurance in New Hampshire during 2008 and Maine in 2016. The table below shows the amount of direct written premiums written in each state during the year ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023.


	Years Ended December 31,
Direct Written Premiums	~~2024~~2025		~~2023~~2024		~~2022~~2023
Massachusetts	$	1,~~130~~204,~~254~~809	$	~~941~~1,~~721~~130,254	$	~~782~~941,~~790~~721
New Hampshire		5257,~~095~~666		4252,~~762~~095		3642,~~519~~762
Maine		1016,~~708~~130		610,~~741~~708		46,~~009~~741
Total	$	1,~~193~~278,~~057~~605	$	~~991~~1,~~224~~193,057	$	~~823~~991,~~318~~224

Website Access to Information

The Internet address for our website is www.SafetyInsurance.com. All of our press releases and United States Securities and Exchange Commission ("SEC") reports are available for viewing or download at our website. These documents are made available as soon as reasonably practicable after each press release is made and SEC report is filed with, or furnished to, the SEC. Copies of any current public information about our Company is available without charge upon written, telephone, faxed or e-mailed request to the Office of Investor Relations, Safety Insurance Group, Inc., 20 Custom House Street, Boston, MA 02110, Tel: 877-951-2522, Fax: 617-603-4837, or e-mail: [email protected]. The materials on our website are not part of this report on Form 10-K nor are they incorporated by reference into this report and the URL above is intended to be an inactive textual reference only. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

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Our Competitive Strengths

We Have Strong Relationships with Independent Agents. In ~~2024~~2025, independent agents accounted for approximately 6668.18% of the Massachusetts personal lines insurance market measured by direct written premiums as compared to approximately 39.0% nationwide, based on data made available by Independent Insurance Agents and Brokers of America, Inc. and CAR. For that reason, our strategy is centered around, and we sell exclusively through, a network of independent agents. In order to support our independent agents and enhance our relationships with them, we:

●

provide our agents with a portfolio of property and casualty insurance products at competitive prices to help them effectively address the insurance needs of their clients;

●

provide our agents with a variety of technological resources which enable us to deliver superior service and support to them; and

●

offer our agents competitive commission schedules and profit sharing programs.

Through these measures, we strive to become the preferred provider of the independent agents in our agency network and capture a growing share of the total insurance business written by these agents in Massachusetts, New Hampshire and Maine. We must compete with other insurance carriers for the business of independent agents.

We Have a History of Profitable Operations. In 4344 out of 4445 years since our inception in 1979, we have been profitable. We have achieved our profitability, among other things, by:

● operating as the ~~third~~fourth largest private passenger auto premium insurance carrier, the ~~second~~ largest commercial auto insurance carrier, and third largest homeowner insurance carrier in Massachusetts.

●

maintaining a combined ratio that is typically below industry averages (refer to Insurance Ratios under Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion on insurance ratios);

●

taking advantage of the institutional knowledge our management has amassed during its long tenure in the industry;

●

introducing new lines and forms of insurance products;

●

investing in technology to provide our agents with state-of-the-art tools that make the ease and convenience of doing business with us second to none; and

●

maintaining a high-quality investment portfolio.

We Continue to Develop and Deploy Advanced Technology and Services for Our Business. We have dedicated significant human and financial resources to the development and deployments of advanced information systems and technologies, customer and agent facing websites, mobile applications, and customer engagement tools including online chat and text. Over the last several years we have modernized all of our core systems along with many of our surround systems and technology platforms in an effort to increase efficiencies within the organization and provide a better user experience for our employees, agents, and customers. These modern systems and platforms position us to continue to take advantage of the latest in InsureTech offerings, Software as a Service (SaaS) products and cloud-based technologies to improve the customer experience, engage with customers on their terms, and assist with customer retention all while improving operational efficiencies and reducing operational costs. We also continue to expand our usage of Robotics Process Automation throughout the organization to automate manual processes, streamline the software testing process and perform application performing testing to insure a robust technical environment.

We Have an Experienced, Committed and Knowledgeable Management Team. Our senior management team has an average of over 2627 years of experience with Safety and a demonstrated ability to operate successfully within the property and casualty market.

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Our Strategy

To achieve our goal of increasing shareholder value, our strategy is to maintain and develop strong independent agent relationships by providing our agents with a full package of insurance products and information technology services. We believe this strategy will allow us to:

●

further penetrate the Massachusetts, New Hampshire and Maine markets in all lines of business;

●

implement rates, forms and billing options that allow us to cross-sell private passenger automobile, homeowners, dwelling fire, and personal umbrella policies in the personal lines market and commercial automobile, business owner policies and commercial umbrella policies in the commercial lines market in order to capture a larger share of the total Massachusetts, New Hampshire and Maine property and casualty insurance business written by each of our independent agents; and

●

continue to expand our technology to enable independent agents to more easily serve their customers and conduct business with us, thereby strengthening their relationships with us.

Property and Casualty Insurance Market

Introduction. We are licensed by the respective state insurance departments to transact property and casualty insurance in Massachusetts, New Hampshire, and Maine. All of our business is regulated by these departments, with the most extensive oversight from our domestic regulator, the Massachusetts Division of Insurance (“Division”).

Products

We provide our insureds with an extensive offering of coverage options in private passenger automobile, homeowners, commercial automobile, business owner and personal and commercial umbrella insurance lines. Private passenger automobile coverage is written by Safety Insurance. Homeowners, business owner, personal umbrella, dwelling fire and commercial umbrella coverages are written by Safety Insurance at standard rates, and written by Safety Indemnity at preferred rates. Safety P&C offers a high value homeowners product and competitive commercial automobile coverage. Safety Northeast writes homeowners insurance products in Massachusetts, offering a basic coverage package at ultra preferred rates.

The table below shows our premiums in each of these product lines for the periods indicated and the portions of our total premiums each product line represented.


	Years Ended December 31,
Direct Written Premiums	~~2024~~2025				~~2023~~2024				~~2022~~2023
Private passenger automobile	$	~~664~~701,~~178~~420	5554.89	%	$	~~543~~664,~~167~~178	5455.78	%	$	~~427~~543,~~665~~167	5254.07	%
Commercial automobile		~~181~~194,~~677~~136	15.2			~~157~~181,~~101~~677	15.92			~~143~~157,~~571~~101	1715.49
Homeowners		~~290~~322,~~386~~197	2425.32			~~242~~290,~~346~~386	24.53			~~208~~242,~~577~~346	2524.35
Business owners		3132,~~072~~514	2.65			2631,~~583~~072	2.76			2426,~~200~~583	2.97
Personal umbrella		1011,~~787~~564	0.9			910,~~385~~787	1.0.9			89,~~441~~385	1.0
Dwelling fire		1315,~~408~~006	1.12			1113,~~305~~408	1.1			911,~~667~~305	1.21
Commercial umbrella		1,~~549~~768	0.1			1,~~337~~549	0.1			1,~~197~~337	0.21
Total	$	1,~~193~~278,~~057~~605	100.0	%	$	~~991~~1,~~224~~193,057	100.0	%	$	~~823~~991,~~318~~224	100.0	%

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Our product lines are as follows:

Private Passenger Automobile (5554.89% of ~~2024~~2025 direct written premiums). Private passenger automobile insurance is our primary product. These policies provide coverage for bodily injury and property damage to others, no-fault personal injury coverage for the insured/insured's car occupants, and physical damage coverage for an insured's own vehicle for collision or other perils.

Commercial Automobile (15.2% of ~~2024~~2025 direct written premiums). Commercial automobile policies provide coverage for bodily injury and property damage to others, no-fault personal injury coverage, and physical damage coverage for an insured's own vehicle for collision or other perils resulting from the ownership or use of commercial vehicles in a business. We offer insurance for commercial vehicles used for business purposes such as private passenger-type vehicles, trucks, tractors and trailers (excluding long-haul trucking), and insure individual vehicles as well as commercial fleets.

Homeowners (2425.32% of ~~2024~~2025 direct written premiums). We offer a broad selection of coverage forms for qualified policyholders. Homeowners policies provide coverage for losses to a dwelling and its contents from numerous perils, and coverage for liability to others arising from ownership or occupancy. We write policies on homes, condominiums, and apartments.

Business Owner Policies (2.65% of ~~2024~~2025 direct written premiums). We serve eligible small and medium sized commercial accounts with a program that covers apartments and residential condominiums; mercantile establishments, including restaurants; offices, including office condominiums; processing and services businesses; special trade contractors; and wholesaling businesses. Business owner policies provide liability and property coverage for many perils, including business interruption from a covered loss. Equipment breakdown coverage is automatically included, and a wide range of additional coverage is available to qualified customers. We write policies for business owners at standard rates with qualifying risks eligible for preferred lower rates.

Personal Umbrella (0.9% of ~~2024~~2025 direct written premiums). We offer personal excess liability coverage over and above the limits of individual automobile, watercraft, and homeowner's insurance policies to clients. We write policies at standard rates with limits of $1,000 to $5,000.

Dwelling Fire (1.12% of ~~2024~~2025 direct written premiums). We underwrite dwelling fire insurance, which is a limited form of a homeowner's policy for non-owner occupied residences. We write all forms of dwelling fire coverage at standard rates.

Commercial Umbrella (0.1% of ~~2024~~2025 direct written premiums). We offer an excess liability product to clients for whom we underwrite both commercial automobile and business owner policies. The program is directed at commercial automobile risks with private passenger-type automobiles or light and medium trucks. We write commercial umbrella policies at standard rates with limits ranging from $1,000 to $5,000.

Inland Marine (included in our Homeowners direct written premiums). We offer inland marine coverage as an endorsement for all homeowners and business owner policies. Inland marine provides additional coverage for jewelry, fine arts and other items that a homeowners or business owner policy would limit or not cover. Scheduled items valued at more than $10 must meet our underwriting guidelines and be appraised.

Watercraft (included in our Homeowners direct written premiums). We offer watercraft coverage for small and medium sized pleasure craft with maximum lengths of 32 feet, valued at less than $75 and maximum speed of 39 knots. We write this coverage as an endorsement to our ~~homeowner's~~homeowners policies.

The insurance industry can also be impacted by terrorism, and we have filed and received approval for a number of terrorism endorsements, which limit our liability and property exposure according to the Terrorism Risk Insurance Act of 2002, the Terrorism Risk Insurance Extension Act of 2005, the Terrorism Risk Insurance Program

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Reauthorization Act of 2007, the Terrorism Risk Insurance Program Reauthorization of 2015 and the Terrorism Risk Insurance Program Reauthorization Act of 2019. See "Reinsurance," discussed below.

Distribution

We distribute our products exclusively through independent agents, unlike some of our competitors who use multiple distribution channels. We believe this gives us a competitive advantage with the agents. With the exception of personal automobile business assigned to us by the Massachusetts Automobile Insurance Plan (“MAIP”) or written through CAR’s commercial automobile Servicing Carrier program, we do not accept business from insurance brokers. Our voluntary agents have authority pursuant to our voluntary agency agreement to bind our Insurance Subsidiaries for any coverage that is within the scope of their authority. We reserve the ability to cancel any coverage bound, in accordance with applicable law. In total, our independent agents numbered ~~828~~797 and had 1,~~079~~063 offices (some agencies have more than one office) and approximately 1110,~~183~~853 customer service representatives during ~~2024~~2025.

Voluntary Agents. In ~~2024~~2025, we obtained approximately 9596.83% of our direct written premiums for automobile insurance and 100% of our direct written premiums for all of our other lines of business through our voluntary agents. As of December 31, ~~2024~~2025, we had agreements with ~~734~~709 voluntary agents. Our voluntary agents are located in all regions of Massachusetts, New Hampshire and Maine.

We look for agents with profitable portfolios of business. To become a voluntary agent for our Company, we generally require that an agency: (i) have been in business for at least five years; (ii) have exhibited a three year private passenger average ratio of losses, excluding loss adjustment expenses, to net earned premiums ("pure loss ratio") of 65.0% or less on the portion of the agent's portfolio that we would underwrite; (iii) make a commitment for us to underwrite at least 300 policies from the agency during the first twelve months after entering an agreement with us; and (iv) offer multiple product lines. Every year, we review the prior year performance of our agents. If an agent fails to meet our profitability standards, we try to work with the agent to improve the profitability of the business it places with us. We generally terminate contracts each year with a few agencies, which, despite our efforts, have been consistently unable to meet our standards. Although independent agents usually represent several unrelated insurers, our goal is to be one of the top two insurance companies represented in each of our agencies, as measured by direct written premiums. No individual agency generated more than 10.0% of our direct written premiums in ~~2024~~2025.

Massachusetts law guarantees that CAR provides motor vehicle insurance coverage to all eligible risks. Under the MAIP, personal automobile policies are assigned to us for three years, unless the policyholder is offered a voluntary policy by another insurer. All Massachusetts agents are authorized to submit eligible business to the MAIP for random assignment to a carrier such as Safety Insurance. We are allocated all private passenger residual market business through the MAIP.

CAR runs a reinsurance pool for ceded commercial automobile policies through the Commercial Automobile Program (the “Commercial Automobile Program”). CAR has appointed Safety and three other servicing carriers to process ceded commercial automobile insurance. Safety was reappointed for this program for an additional five-year term effective January 1, ~~2022~~2027. Historically, CAR ran a separate reinsurance pool for Taxi, Limousine and Car Service risks; however, beginning with the January 1, 2022 policy year, this pool was combined into the Commercial Automobile Program. Approximately $246,000 of ceded premium is spread equitably among the four servicing carriers. Subject to the review of the Massachusetts Commissioner of Insurance (“the Commissioner”), CAR sets the premium rates for commercial automobile policies reinsured through CAR and this reinsurance pool can generate an underwriting result that is a profit or deficit based upon CAR's rate level. This underwriting result is allocated among every Massachusetts commercial automobile insurance company, including us, based on a company's commercial automobile voluntary market share.

We are assigned independent agents by CAR who can submit commercial business to us in the Commercial Automobile Program, and we classify those agents as Exclusive Representative Producers (“ERPs”).

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The table below shows our direct written exposures in each of our product lines for the periods indicated and the change in exposures for each product line.

Years Ended December 31,

~~2024~~2025

~~2023~~2024

~~2022~~2023

Line of Business

Exposures

Change

Exposures

Change

Exposures

Change

Private passenger automobile:

Voluntary agents

~~493~~482,~~164~~454

10(2.72)

~~445~~493,~~336~~164

1410.97

~~387~~445,~~463~~336

(014.9)

MAIP

5,~~537~~464

~~298~~(1.93)

15,~~388~~537

~~(35~~298.1)9

21,~~140~~388

1(35.41)

Total private passenger automobile

~~498~~487,~~701~~918

11(2.62)

~~446~~498,~~724~~701

1411.76

~~389~~446,~~603~~724

(014.9)7

Commercial automobile:

Voluntary agents

7376,~~464~~526

54.82

6973,~~451~~464

45.98

6669,~~214~~451

04.69

ERPs

43,~~482~~628

6(19.01)

4,~~229~~482

146.30

34,~~700~~229

(114.5)3

Total commercial automobile

7780,~~946~~154

52.8

7377,~~680~~946

5.48

6973,~~914~~680

0.5.4

Other:

Homeowners

182,~~954~~766

7(0.61)

~~170~~182,~~047~~954

117.26

~~152~~170,~~884~~047

(011.7)2

Business owners

87,~~220~~918

(3.97)

8,~~557~~220

(03.89)

8,~~624~~557

(10.78)

Personal umbrella

24,~~361~~586

80.59

2224,~~462~~361

68.5

2122,~~099~~462

(26.0)5

Dwelling fire

6,~~634~~752

71.28

6,~~188~~634

87.32

56,~~715~~188

~~(4.~~8).3

Commercial umbrella

~~721~~723

-0.3

721

~~9.6~~-

~~658~~721

(29.1)6

Total other

222,~~890~~745

7(0.21)

~~207~~222,~~975~~890

107.12

~~188~~207,~~980~~975

(110.0)1

Total

~~799~~790,~~537~~817

9(1.81)

~~728~~799,~~379~~537

129.38

~~648~~728,~~497~~379

(012.8)3

Total voluntary agents

~~789~~781,~~518~~725

9(1.20)

~~722~~789,~~762~~518

129.52

~~642~~722,~~657~~762

(012.8)5

In ~~2024~~2025, 6160.39% of the private passenger automobile exposures we insure had an other than private passenger policy with us, compared to 6461.53% and 6564.25% in ~~2023~~2024 and ~~2022~~2023, respectively. In addition, 8281.2% of our homeowners’ policyholders had a matching automobile policy with us in ~~2024~~2025 compared to 8382.02% in ~~2023~~2024 and 8183.90% in ~~2022~~2023.

Marketing

We view the independent agent as our customer and business partner. As a result, a component of our marketing efforts focuses on developing interdependent relationships with leading Massachusetts, New Hampshire and Maine agents that write profitable business and positioning ourselves as the preferred insurance carrier of those agents, thereby receiving a larger portion of each agent's aggregate business. Our principal marketing strategies to agents are:

●

to offer a range of products, which we believe enables our agents to meet the insurance needs of their clients;

●

to price our products competitively, including offering discounts when and where appropriate for safer drivers for our personal automobile products, loss-free credits for our homeowner products, paperless e-Customer discounts, and also offering account discounts for policyholders that have more than one policy with us;

●

to design, price and market our products to our agents for their customers to place all their insurance with us;

●

to offer agents competitive commissions, with incentives for placing their more profitable business with us; and

●

to provide a level of support and service that enhances the agent's ability to do business with its clients and with us.

We have a comprehensive branding and advertising campaign using a variety of radio, television, digital, social and print advertisements.

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Commission Schedule and Profit Sharing Plan. We have several programs designed to attract profitable new business from agents by paying them competitive commissions. We recognize our top performing agents by making them members of either our Chairman's Elite, Chairman's, President's, Executive's or Preferred Agent's Club.

Further, we have a competitive agency incentive commission program under which we pay agents a percentage of premiums based on the loss ratio on their business.

Service and Support. We believe that the level and quality of service and support we provide helps differentiate us from other insurers. We have made a significant investment in information technology designed to facilitate our agents' business. Our Agents Virtual Community website helps agents manage their work efficiently. We provide a substantial amount of information online that agents need to serve their customers, such as information about the status of policies, billing and claims. We are also committed to providing our agents with new information through our Marketing Toolkit and Resource Center articles on SafetyInsurance.com to keep their customers informed on how to best protect their auto, home and business. Providing this type of content reduces the number of customer calls we receive and empowers the agent's customer service representatives by enabling them to respond to customers' inquiries while the customer is on the telephone. Finally, we believe that the knowledge and experience of our employees enhances the quality of support we provide.

Underwriting and Insurance Operations

Our underwriting department is responsible for a number of key decisions affecting the profitability of our business, including:

●

pricing of our private passenger automobile, commercial automobile, homeowners, dwelling fire, personal umbrella, business owner, and commercial umbrella policies;

●

developing new products, coverages, forms and discounts, as well as expansion into new states;

●

determining underwriting guidelines for all our products; and

●

evaluating whether to accept transfers of a portion of an existing or potential new agent's portfolio from another insurer.

Pricing. Subject to the applicable state insurance department’s review, we set rates for all of our products using our own loss experience, industry loss cost data, residual market deficits, catastrophe modeling and prices charged by our competitors. We have four pricing segments for most products, utilizing Safety Insurance for standard rates, Safety Indemnity for preferred rates, Safety Northeast for ultra preferred rates and Safety P&C for high value homeowners rates.

Massachusetts Residual Automobile Insurance Markets. CAR establishes the rates for personal automobile policies assigned to carriers through the MAIP. In accordance with Massachusetts law, insurers may only charge MAIP policyholders the lower of the MAIP rate or the company's competitive voluntary market rate. CAR also sets rates for commercial automobile policies, reinsured through the CAR residual market pool. All commercial automobile business that is not written in the voluntary market in Massachusetts is apportioned to one of the servicing carriers that handles business on behalf of CAR. Every Massachusetts commercial automobile insurer must bear a portion of the losses of the total commercial reinsurance pool that is serviced by the approved servicing carriers. We are one of four servicing carriers in CAR’s Commercial Automobile Program.

Bulk Policy Transfers and New Voluntary Agents. From time to time, we receive proposals from an existing voluntary agent to transfer a portfolio of the agent's business from another insurer to us. Our underwriters model the profitability of these portfolios before we accept these transfers. We generally require any new voluntary agent to commit to transfer a portfolio to us consisting of at least $300 in written premium.

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Policy Processing. Our underwriting department assists in processing policy applications, endorsements, renewals and cancellations. Our proprietary software applications, Safety Express and Safety Commercial Express, provide our agents with new business and endorsement entry, real-time policy issuance, immediate printing of declarations pages in agents' offices, policy downloads to most major agency management systems and data imports from Boston Software's SinglePoint (Massachusetts) and Vertafore's PL Rater (Massachusetts, New Hampshire and Maine) for personal lines.

Rate Pursuit. We aggressively monitor all insurance transactions to make sure we receive the correct premium for the risk insured. We accomplish this by verifying pricing criteria. For automobile policies, we verify proper classification of drivers, the make, model, and age of insured vehicles, and the availability of discounts. We also verify that operators are properly listed and classified, assignment of operators to vehicles, and vehicle garaging. In our homeowners and dwelling fire lines, we use third party software to evaluate property characteristics and we conduct property inspections. We have a premium audit program in our business owner program, as well as other loss control reviews for additional commercial lines of business.

Product Management. The Product Management department is responsible for the overall review and updating of our products. The department maintains an annual schedule where each line of business is reviewed and benchmarked against our major competitors. Product offerings, discounts, rate levels and underwriting guidelines are reviewed and updates are performed as required. The department is also responsible for updating producer materials such as rate and rule manuals, underwriting guidelines, and promotional materials. In conjunction with the underwriting operations area, the department works with third party vendors that assist with risk information, data, and rate pursuit for in-force policies. The department also provides product training and general marketplace education for the organization.

Legal. The Legal department provides legal and compliance support to all business units within the Company. The department serves as the primary liaison with regulators, government, and industry trade associations. The department also provides legal support to all areas of the ~~company~~Company, including general corporate matters and vendor contracting. The department monitors legal and regulatory changes affecting the enterprise and provides guidance on how to comply with those changes. The department additionally reviews business unit operations to identify and address compliance vulnerabilities.

Business Intelligence. The Business Intelligence department unit within the Actuarial Services division is responsible for maintaining and improving the quality of Safety’s data, maintaining Safety’s enterprise data warehouse environment, and providing a suite of management reports and predictive analytical models to all departments and management levels at Safety. The Business Intelligence unit’s directive is to turn the daily transactional data in the warehouse into usable information to help Safety’s management team make more intelligent data-driven business decisions.

Customer Engagement. The Customer Engagement department provides professional customer service to our agents and insureds by continuously identifying new ways to enhance the ease of doing business with us and by looking for new ways to personalize our services for each customer.

Technology

The focuses of our information technology (“IT”) efforts are:

●

to support the strategic goals, objectives, and business needs of the Company by aligning our IT annual goals with those of the business, assuring that IT resources are being utilized efficiently;

●

to constantly re-engineer internal processes to allow more efficient operations, resulting in lower operating costs;

●

to continuously improve the customer experience, making it easier for independent agents and policyholders to transact business with us;

●

to enable agents to efficiently provide their clients with a high level of service; and

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●

to maintain and support a secure computing environment.

We believe that our technology initiatives have increased revenue and decreased costs while at the same time improving the customer experience for our employees, agents, and policyholders. In 2021, we introduced our Safety Commercial Express commercial auto quoting and policy issuance system in Massachusetts for new business. During 2022, this system was updated to allow for agent processing of endorsements. In 2024, our Safety Commercial Express system was upgraded to the most current cloud enabled version of the system. We are continuously investing in new technologies, including areas such as robotic process automation, artificial intelligence, and automated testing to improve company efficiency.

Cybersecurity. We continuously evolve our cybersecurity strategy to protect Safety's computer assets from a cybersecurity attack. Safety’s cybersecurity committee monitors the landscape for emerging threats, evaluates the latest preventative tools and methods, and recommends ways to increase enterprise security. An employee education program provides ongoing training to Safety's employees, including phishing tests and remediation training. Annual Tabletop exercises allow us to simulate cyber events to continuously improve our incidence response plans while ongoing security assessments and continuous penetration testing strengthen our control environments and network defenses.

Innovation Lab. Since 2018, we have had an Innovation Lab to foster a culture of innovative thinking, monitor the InsureTech landscape, and provide Safety, our independent agents, and policyholders with the tools and processes necessary to continuously improve the customer experience and remain competitive in both the current and future insurance marketplace. ~~During~~ 2024, the Innovation Lab saw two of its successful proof of concepts make it into production in the claims area. In February, an electronic claims payment system was implemented to allow claim payments to be made electronically thus reducing cycle times and improving the customer experience. In the Fall of last year, we also implemented a two-way texting system within the claims department to allow claims adjusters to correspond with customers via SMS text messaging. In September of 2024, the Innovation Lab also partnered with the underwriting, insurance operations and marketing teams to introduce a leak and freeze monitoring device program for our personal property customers. These devices provide real time alerts to customers if water or freezing temperatures are detected in the customers’ property. During 2024, the Innovation Lab continued to perform research on Generative Artificial Intelligence (AI) and Large Language Models and produced working proof of concepts for internal use. In July of 2024, a “Generative AI In the Workplace Policy” was published governing the use of AI tools in the workplace.

Artificial Intelligence (“AI”). We have taken meaningful steps toward AI maturity through enterprise GenAI policies, early automation initiatives, vendor governance frameworks, AI‑enabled RPA programs, experimentation with leading technology tools, document extraction, and workflow automation. During 2025, we continued to refine and train Large Language Models and built a virtual assistant that enables natural language inquiries, which has been introduced internally with plans for agent rollout in 2026. The AI team also partnered with the claims department in 2025 to pilot and fully implement a GenAI application that extracts data from PDF documents and uses robotics to enter the extracted data into core systems. The team is currently working with the claims department to introduce a Virtual AI Voice Assistant to handle simple inquiries, improving operational efficiency while increasing caller satisfaction; this capability is expected to launch in the first half of 2026, with additional opportunities across the service center and customer service to follow. Work is also underway to AI‑enable Safety’s most‑used application, which supports internal teams, agents, and consumers, while core systems modernization efforts continue to position Safety to take advantage of emerging agentic AI capabilities.

Internal Applications

Our employees access our proprietary and vendor supplied applications through our secure corporate intranet. Our intranet applications streamline internal processes and improve overall operational efficiencies and customer experience in areas including:

Claims. A vendor supplied claims system provides the claims department with a workload management application that allows our claims and subrogation adjusters to better manage the claims process. Subrogation refers to the process by which we are reimbursed by other insurers for claims costs we incur due to the fault of their insureds. The use of this application has reduced the time it takes for us to respond to and settle claims, which we believe helps reduce the total amount of our claims expense while also providing a better customer experience for the policyholder and claimant.

The automated adjuster assignment system categorizes our new claims by severity and assigns them to the appropriate adjuster responsible for investigation. Once assigned, the integrated workload management tools facilitate the work of promptly assigning appraisers, investigating liability, issuing payments, and receiving subrogation receipts.

Billing. A vendor supplied billing systems, integrated with the systems of our print and lock-box vendors, expedite the processing and collection of premium receipts and finance charges from agents and policyholders. This billing system also allows for policyholder automatic payments (AutoPay) as well as electronic bill (eBill). We believe the sophistication of our direct bill system helps us to limit our bad debt expense. Our bad debt expense as a percentage of direct written premiums was 0.3% and 0.2% in 2024 and 2023, respectively.

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Billing. A vendor supplied billing systems, integrated with the systems of our print and lock-box vendors, expedite the processing and collection of premium receipts and finance charges from agents and policyholders. This billing system also allows for policyholder automatic payments (AutoPay) as well as electronic bill (eBill). We believe the sophistication of our direct bill system helps us to limit our bad debt expense. Our bad debt expense as a percentage of direct written premiums was 0.3% in 2025 and 2024, respectively.

External Applications

Our agent technology offerings are centralized within our agency portal and feature PowerDesk, Safety Express and Safety Commercial Express. PowerDesk is a web-based application that allows for billing inquiry, agent payments on behalf of their policyholders, policy inquiry and claims inquiry. Safety Express and Safety Commercial Express provide agents with new business and endorsement entry, real-time policy issuance for personal lines, immediate printing of declarations pages in agents' offices, policy downloads to most major agency management systems and data imports from Boston Software's SinglePoint, Vertafore's PL Rater, EZLynx and TurboRater. In addition, we provide our agents with commission and claims download for all lines of business, Transformation Station and Transact Now Inquires, e-Claims online claims reporting, e-View daily transaction reports, and ~~e-Docs~~iDocs online electronic document file cabinet.

We also provide eBill, online bill pay (including credit and debit cards), online AutoPay registration for both agents and customers, online declarations pages, billing inquiry, claims inquiry, auto and homeowners claims first notice of loss, online auto insurance cards, and bill pay reminder alerts to our agents’ policyholders through our public website, SafetyInsurance.com.

Additionally, we provide policyholders with mobile technology through our Safety Mobile App for iPhone and Android devices. Safety Mobile provides consumers with access to their agent information, bill pay capabilities, the ability to report an automobile or homeowners claim and access to their insurance card, among other features.

Claims

OnAn ~~casualty~~essential ~~claims~~aspect weof ~~utilize~~our ~~stringent~~approach to claims management is the prompt investigation and settlement ~~procedures,~~of ~~which~~claims. ~~include~~We ~~guidelines~~have observed that ~~establish~~faster ~~settlement~~settlements ~~ranges~~lead ~~for~~to ~~soft~~lower ~~tissue~~claim ~~injuries~~costs and enhanced customer service. If To expedite claim handling, we ~~are~~provide ~~unable~~several tooptions ~~settle~~for ~~these~~reporting ~~claims~~the ~~within~~initial ~~our~~notice ~~pricing~~of ~~guidelines,~~loss. wePolicyholders ~~explore~~can ~~other~~report ~~cost-effective~~claims ~~options~~through ~~including~~their ~~alternative~~agent, ~~dispute~~via ~~resolutions~~web ~~and/~~or ~~litigation.~~mobile Weapplications, ~~believe~~or ~~that~~by ~~these~~calling ~~procedures~~Safety ~~result~~directly in24 ~~providing~~hours ~~our~~a ~~adjusting~~day, ~~staff~~365 ~~with~~days a ~~uniform~~year. ~~approach~~Quick notice of loss allows our claims staff to ~~negotiation~~promptly contact insured parties, third-party claimants, and witnesses, facilitating swift and accurate investigations.

WeOur ~~believe an important component of handling~~ claims ~~efficiently~~staff isutilizes ~~prompt~~industry ~~investigation~~leading ~~and~~modern ~~settlement. We find that faster~~ claims ~~settlements~~software ~~often~~equipped ~~result~~with inefficient ~~less~~workplan ~~expensive~~management ~~claims settlements~~tools. ~~Our~~ ~~E-Claim~~These ~~reporting~~tools ~~system~~assist ~~is an online product that reduces the time it takes for agents to notify our~~ adjusters ~~about~~in ~~claims,~~handling ~~thereby enabling us to contact third-party claimants and other witnesses quickly. Our insureds can report~~ claims ~~directly~~rapidly bywhile ~~phone,~~maintaining ~~web,~~the orhighest ~~mobile~~standards ~~application. In~~of ~~addition,~~customer ~~we utilize an after-hours reporting vendor to ensure that new claims can be reported 24 hours per day and 365 days per year~~service.

WeOur ~~believe~~claims ~~that~~department ~~early~~is ~~notification~~organized ~~results~~into inspecialized groups, which enhance our ~~adjusters~~ability ~~conducting~~to ~~prompt~~respond ~~investigations~~quickly ofto claims and ~~compiling~~manage ~~more~~loss ~~accurate~~costs ~~information~~on ~~about~~physical ~~those~~damage and injury claims. ~~Our~~ ~~modern~~Field ~~claims~~adjusting ~~software~~resources, ~~provides~~including ~~our~~independent ~~staff~~appraisers and adjusters, are allocated to respond promptly to claims with ~~efficient~~large ~~workplan~~potential ~~management~~exposures. ~~tools~~A dedicated group is assigned to ~~assist~~litigation ~~our~~claims ~~adjusters~~and in“other ~~handling~~than auto” liability claims ~~quickly~~in ~~while~~order ~~providing~~to ~~high~~focus ~~levels~~on controlling costs and mitigate expenses. Where appropriate, alternative dispute resolution forums are utilized to protect the interests of ~~customer~~our ~~service~~insured while mitigating potential claim exposures.

WeOur ~~believe~~auto ~~the~~physical ~~structure~~damage ofclaims ~~our~~units ~~claims~~are ~~department~~responsible ~~allows~~for ushandling toclaims ~~respond~~in ~~quickly~~private topassenger ~~claimants~~and commercial automobile lines. ~~The~~ ~~department~~Automation ishas ~~organized~~streamlined ~~into~~this ~~distinct~~function, ~~claim~~and ~~units~~established ~~that~~policies ~~contain~~and ~~loss~~procedures ~~costs~~ensure onproactive ~~injury~~management of new claims. ~~Field~~ ~~adjusting~~This ~~resources~~includes ~~are~~verifying ~~utilized~~coverage, ~~for~~appraising ~~prompt~~damages, ~~response~~and toissuing ~~large~~payments ~~potential~~efficiently. ~~exposure~~The ~~claims~~combination of automation and ~~dedicated~~structured ~~litigation~~policies ~~staff~~results ~~focus~~in onreduced ~~managing~~claim ~~loss~~cycle ~~costs~~times and ~~litigation~~lower ~~expense~~handling expenses, while maintaining superior customer service. We utilize dedicated units to oversee total loss vehicles to ensure

Additionally, we utilize a special investigation unit to investigate potential fraud in connection with claims presented. In cases where adjusters suspect fraud in connection with a claim, we deploy this special unit to conduct investigations. We deny payment in cases in which we have succeeded in accumulating sufficient evidence of fraud.

Our auto physical damage claims units handle physical damage claims arising in our private passenger and commercial automobile lines. Process automation has streamlined our claims function and in combination with established policy and procedures newly reported claims are handled in a proactive manner to ensure that coverages are

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~~verified~~regulatory compliance, ~~damages~~consistent ~~are~~actual ~~appraised~~cash ~~and~~value ~~claim~~determinations, ~~payments are issued in a timely~~ and ~~efficient~~reduced ~~manner. This ensures the highest level of customer service to our insureds while reducing claim~~ cycle times ~~and~~to ~~mitigating~~mitigate ~~claim~~storage ~~handling~~fees ~~expenses. We continue to vet~~ and ~~implement~~substitute ~~new~~transportation ~~methods of appraisal for vehicle damage, including vehicle photo only appraisals within the regulatory established guidelines. Once we receive this information, an automated system redirects the~~ claim toexpenses the appropriate internal adjuster responsible for investigating the claim to determine liability. Upon determination of liability, the system automatically begins the process of seeking a subrogation recovery from another insurer, if liable. We believe this process results in a shorter time period from when the claimant first contacts the agent to when the claimant receives a claim payment, while ~~enabling~~maximizing ~~our~~vehicle ~~agents~~salvage ~~to build credibility with their clients by responding to claims in a timely and efficient manner~~recoveries.

~~Our~~Innovative ~~property~~appraisal ~~claims~~methods, ~~division~~such ~~oversees~~as ~~physical~~vehicle ~~damage~~photo-only ~~claims~~appraisals ~~arising~~within inregulatory ~~our~~guidelines, ~~homeowners~~are ~~and~~continually ~~other~~assessed ~~than~~and ~~auto~~implemented. ~~insurance~~Once ~~lines. Property~~appraisal ~~Field~~information ~~Adjusters~~is ~~are~~received, ~~located~~our ~~remotely~~automated ~~across~~system ~~our~~redirects ~~service~~the ~~areas~~claim to ~~handle~~the ~~larger~~appropriate ~~more~~internal ~~complex~~adjuster, ~~property~~who ~~losses~~investigates liability. ~~Our~~ ~~modern~~Upon ~~claims~~liability ~~software~~determination, the system ~~and~~automatically ~~applications~~initiates ~~enables~~subrogation ~~more~~recovery ~~efficient~~from ~~handling~~another ofinsurer ~~the~~when ~~claim~~applicable. This process ~~and~~shortens ~~customer~~the ~~engagement~~time from ~~first~~initial ~~notice~~contact ofto ~~loss~~claim ~~through~~payment ~~settlement~~ and ~~potential~~helps ~~subrogation. We~~agents ~~also~~build ~~utilize~~credibility ~~house~~with ~~counsel~~their onclients ~~subrogation~~by ~~recoveries~~responding topromptly ~~reduce collection expenses~~ and ~~maximize damage recoveries~~effectively.

The property claims division manages physical damage claims related to homeowners and other non-auto insurance lines. Property Field Adjusters are strategically located across our service areas to address larger, more complex property losses. Our advanced claims software and applications support efficient claim processing and enhance customer engagement from the first notice of loss through settlement and potential subrogation. We offer insured self-service options for the submission of damage photos and supporting documentation on lesser damage claims which allow for desk adjusting and faster payments, including offering digital payments, speeding up the claim resolution process, and minimizing claim handling expenses.

In addition to panel counsels, we employ house counsel on both liability claims and on subrogation recoveries, reducing collection expenses and maximizing damage recovery.

A special investigation unit is tasked with examining potential fraud associated with claims. When adjusters suspect fraudulent activity, this unit is deployed to conduct thorough investigations. Payment is denied in cases where sufficient evidence of fraud is found.

Reserves

Significant periods of time can elapse between the occurrence of an insured loss, the reporting of the loss to the insurer and the insurer's payment of that loss. To recognize liabilities for unpaid losses, insurers establish reserves as balance sheet liabilities representing estimates of amounts needed to pay reported and unreported losses and the expenses associated with investigating and paying the losses, or loss adjustment expenses. Every quarter, we review and establish our reserves. Regulations promulgated by the Commissioner require us to annually obtain a certification from either a qualified actuary or an approved loss reserve specialist, who may be one of our employees, that our loss and loss adjustment expense reserves are reasonable.

When a claim is reported, claims personnel establish a "case reserve" for the estimated amount of the ultimate payment. The amount of the reserve is primarily based upon an evaluation of the type of claim involved, the circumstances surrounding each claim and the policy provisions relating to the loss. The estimate reflects informed judgment of such personnel based on general insurance reserving practices and on the experience and knowledge of the claims professional. During the loss adjustment period, these estimates are revised as deemed necessary by our claims department based on subsequent developments and periodic reviews of the cases.

In accordance with industry practice, we also maintain reserves for estimated losses incurred but not yet reported (“IBNR”). IBNR reserves are determined in accordance with commonly accepted actuarial reserving techniques on the basis of our historical information and experience. We make adjustments to incurred but not yet reported reserves quarterly to take into account changes in the volume of business written, claims frequency and severity, our mix of business, claims processing and other items that can be expected to affect our liability for losses and loss adjustment expenses over time.

When reviewing reserves, we analyze historical data and estimate the impact of various loss development factors, such as our historical loss experience and that of the industry, legislative enactments, judicial decisions, legal developments in imposition of damages, and changes and trends in general economic conditions, including the effects of inflation. There is no precise method, however, for evaluating the impact of any specific factor on the adequacy of reserves, because the eventual development of reserves is affected by many factors. After taking into account all relevant factors, management believes that our provision for unpaid losses and loss adjustment expenses at December 31, 2024 is adequate to cover the ultimate cost of losses and claims incurred as of that date.

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~~high of $566,772 as of December 31, 2024. The Company's net loss and LAE~~ reserves, ~~based~~because ~~on our actuaries' best estimate, were set at $540,877 as of December 31, 2024. The ultimate liability may be greater or less than reserves carried at~~ the ~~balance~~eventual ~~sheet~~development ~~date. Establishment~~ of ~~appropriate~~ reserves is anaffected ~~inherently~~by ~~uncertain~~many ~~process, and there can be no certainty that currently established reserves will prove adequate in light of subsequent actual experience~~factors. To ~~the~~After ~~extent~~taking ~~that~~into ~~reserves~~account ~~are~~all ~~inadequate~~relevant ~~and are strengthened~~factors, ~~the~~management ~~amount~~believes ~~of such increase is treated as a charge to earnings in the period~~ that ~~the~~our ~~deficiency~~provision isfor ~~recognized. To~~unpaid ~~the~~losses ~~extent~~and ~~that~~loss ~~reserves~~adjustment ~~are~~expenses ~~redundant~~at ~~and are released~~December 31, ~~the~~2025 ~~amount of the release~~ is aadequate ~~credit~~ to ~~earnings~~cover in the ~~period~~ultimate ~~the~~cost ~~redundancy~~of islosses ~~recognized. We~~and doclaims ~~not~~incurred ~~discount~~as ~~any~~ of ~~our~~that ~~reserves~~date.

Management determines its loss and loss adjustment expense ("LAE") reserve estimates based upon the analysis of the Company's actuaries. Management has established a process for the Company's actuaries to follow in establishing reasonable reserves. The ~~following~~process ~~table~~consists ~~presents~~of meeting with our claims department, establishing ultimate incurred losses by using development ~~information~~models onaccepted ~~changes~~by inthe actuarial community, and reviewing the ~~reserves~~analysis with management. The Company's estimate for ~~losses~~loss and LAE reserves, net of ~~our~~the ~~Insurance~~effect ~~Subsidiaries~~of ~~for~~ceded ~~each~~reinsurance, ~~year~~ranges infrom ~~the~~a ~~three-year~~low ~~period~~of ~~ended~~$573,526 to a high of $640,415 as of December 31, ~~2024~~2025. The Company's net loss and LAE reserves, ~~2023~~based on our actuaries' best estimate, were set at $612,298 as of December 31, 2025. The ultimate liability may be greater or less than reserves carried at the balance sheet date. Establishment of appropriate reserves is an inherently uncertain process, and ~~2022~~there can be no certainty that currently established reserves will prove adequate in light of subsequent actual experience. To the extent that reserves are inadequate and are strengthened, the amount of such increase is treated as a charge to earnings in the period that the deficiency is recognized. To the extent that reserves are redundant and are released, the amount of the release is a credit to earnings in the period the redundancy is recognized. We do not discount any of our reserves.


	Year Ended
	2024		2023			2022
Reserves for losses and LAE at beginning of year	$	603,081	$	549,598	$	570,651
Less receivable from reinsurers related to unpaid losses and LAE		(112,623)		(93,394)		(90,667)
Net reserves for losses and LAE at beginning of year		490,458		456,204		479,984
Incurred losses and LAE, related to:
Current year		768,531		689,683		549,258
Prior years		(51,894)		(47,381)		(57,279)
Total incurred losses and LAE		716,637		642,302		491,979
Paid losses and LAE related to:
Current year		449,562		409,634		342,971
Prior years		216,656		198,414		172,788
Total paid losses and LAE		666,218		608,048		515,759
Net reserves for losses and LAE at end of period		540,877		490,458		456,204
Plus receivable from reinsurers related to unpaid losses and LAE		130,792		112,623		93,394
Reserves for losses and LAE at end of period	$	671,669	$	603,081	$	549,598

The following table presents development information on changes in the reserves for losses and LAE of our Insurance Subsidiaries for each year in the three-year period ended December 31, 2025, 2024 and 2023.


		Year Ended
		2025			2024			2023
Reserves for losses and LAE at beginning of year		$	671,669		$	603,081	$	549,598
Less receivable from reinsurers related to unpaid losses and LAE			(130,792)			(112,623)		(93,394)
Net reserves for losses and LAE at beginning of year			540,877			490,458		456,204
Incurred losses and LAE, related to:
Current year			841,734			768,531		689,683
Prior years			(44,552)			(51,894)		(47,381)
Total incurred losses and LAE			797,182			716,637		642,302
Paid losses and LAE related to:
Current year			475,254			449,562		409,634
Prior years			250,507			216,656		198,414
Total paid losses and LAE			725,761			666,218		608,048
Net reserves for losses and LAE at end of period			612,298			540,877		490,458
Plus receivable from reinsurers related to unpaid losses and LAE			149,441			130,792		112,623
Reserves for losses and LAE at end of period		$	761,739		$	671,669	$	603,081

The following table represents the development of reserves, net of reinsurance, for calendar years ~~2014~~2015 through ~~2024~~2025. The top line of the table shows the reserves at the balance sheet date for each of the indicated years. This represents the estimated amounts of losses and loss adjustment expenses for claims arising in all years that were unpaid at the balance sheet date, including losses that had been incurred but not yet reported to us. The upper portion of the table shows the cumulative amounts paid as of the end of each successive year with respect to those claims. The lower portion of the table shows the re-estimated amount of the previously recorded reserves based on experience as of the end of each succeeding year, including cumulative payments made since the end of the respective year. The estimate changes as more information becomes known about the payments, frequency and severity of claims for individual years. Favorable loss development, shown as a cumulative redundancy in the table, exists when the original reserve estimate is greater than the re-estimated reserves at December 31, ~~2024~~2025.

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Information with respect to the cumulative development of gross reserves (that is, without deduction for reinsurance ceded) also appears at the bottom portion of the table.

As of and for the Year Ended December 31,

~~2024~~2025

~~2023~~2024

~~2022~~2023

~~2021~~2022

~~2020~~2021

~~2019~~2020

~~2018~~2019

~~2017~~2018

~~2016~~2017

~~2015~~2016

~~2014~~2015

Reserves for losses and

LAE originally estimated:

$ ~~540~~612,~~877~~298

$ ~~490~~540,~~458~~877

$ ~~456~~490,~~204~~458

$ ~~479~~456,~~984~~204

$ ~~461~~479,~~270~~984

$ ~~488~~461,~~194~~270

$ ~~476~~488,~~321~~194

$ ~~490~~476,~~969~~321

$ ~~476~~490,~~597~~969

$ ~~485~~476,~~716~~597

$ ~~420~~485,~~767~~716

Cumulative amounts paid as of:

One year later

~~216~~250,~~656~~507

~~198~~216,~~414~~656

~~172~~198,~~788~~414

~~132~~172,~~897~~788

~~153~~132,~~727~~897

~~164~~153,~~595~~727

~~159~~164,~~234~~595

~~164~~159,~~466~~234

~~174~~164,~~506~~466

~~132~~174,~~364~~506

Two years later

~~270~~307,~~716~~413

~~258~~270,~~181~~716

~~202~~258,~~320~~181

~~216~~202,~~822~~320

~~230~~216,~~294~~822

~~241~~230,~~032~~294

~~231~~241,~~473~~032

~~250~~231,~~306~~473

~~189~~250,~~367~~306

Three years later

~~297~~318,~~187~~839

~~253~~297,~~495~~187

~~263~~253,~~149~~495

~~269~~263,~~065~~149

~~282~~269,~~242~~065

~~283~~282,~~812~~242

~~290~~283,~~287~~812

~~223~~290,~~465~~287

Four years later

~~275~~322,~~417~~618

~~296~~275,~~870~~417

~~293~~296,~~203~~870

~~304~~293,~~009~~203

~~305~~304,~~024~~009

~~310~~305,~~140~~024

~~241~~310,~~589~~140

Five years later

~~311~~290,~~300~~752

~~314~~311,~~032~~300

~~318~~314,~~471~~032

318,~~149~~471

~~319~~318,~~817~~149

~~252~~319,~~714~~817

Six years later

~~321~~319,~~188~~960

~~328~~321,~~661~~188

~~325~~328,~~785~~661

325,~~669~~785

~~255~~325,~~581~~669

Seven years later

~~332~~325,~~383~~614

~~331~~332,~~864~~383

~~328~~331,~~703~~864

~~256~~328,~~733~~703

Eight years later

~~332~~334,~~923~~532

332,~~439~~923

~~257~~332,~~956~~439

Nine years later

333,~~252~~229

~~260~~333,~~163~~252

Ten years later

~~260~~333,~~779~~384

As of and for the Year Ended December 31,

~~2024~~2025

~~2023~~2024

~~2022~~2023

~~2021~~2022

~~2020~~2021

~~2019~~2020

~~2018~~2019

~~2017~~2018

~~2016~~2017

~~2015~~2016

~~2014~~2015

Reserves re-estimated as of:

One year later

$ ~~438~~496,~~564~~325

$ ~~408~~438,~~823~~564

$ ~~422~~408,~~705~~823

$ ~~407~~422,~~597~~705

$ ~~433~~407,~~350~~597

$ ~~434~~433,~~273~~350

$ 434,~~481~~273

$ 434,~~813~~481

$ ~~440~~434,~~268~~813

$ ~~390~~440,~~452~~268

Two years later

~~380~~415,~~677~~211

~~384~~380,~~120~~677

~~359~~384,~~564~~120

~~395~~359,~~578~~564

~~393~~395,~~948~~578

~~400~~393,~~312~~948

~~391~~400,~~630~~312

~~406~~391,~~253~~630

~~348~~406,~~660~~253

Three years later

~~360~~368,~~965~~994

~~328~~360,~~268~~965

~~365~~328,~~786~~268

~~372~~365,~~282~~786

~~376~~372,~~584~~282

~~372~~376,~~379~~584

~~376~~372,~~201~~379

~~313~~376,~~100~~201

Four years later

~~312~~351,~~141~~117

~~344~~312,~~785~~141

~~355~~344,~~215~~785

~~365~~355,~~267~~215

~~359~~365,~~549~~267

~~361~~359,~~335~~549

~~287~~361,~~131~~335

Five years later

~~332~~305,~~391~~045

~~341~~332,~~625~~391

~~355~~341,~~415~~625

~~352~~355,~~330~~415

~~353~~352,~~983~~330

~~276~~353,~~309~~983

Six years later

~~332~~328,~~919~~425

~~345~~332,~~705~~919

~~346~~345,~~607~~705

~~347~~346,~~373~~607

~~272~~347,~~178~~373

Seven years later

~~339~~330,~~495~~530

~~340~~339,~~738~~495

~~343~~340,~~345~~738

~~268~~343,~~514~~345

Eight years later

~~336~~337,~~046~~605

~~338~~336,~~934~~046

~~266~~338,~~532~~934

Nine years later

~~335~~334,~~504~~772

~~264~~335,~~095~~504

Ten years later

~~262~~334,~~456~~737

Cumulative

(redundancy) deficiency 2024

(51,894)

(75,527)

(119,019)

(149,129)

(155,803)

(143,402)

(151,474)

(140,551)

(150,212)

(158,311)

(redundancy) deficiency 2025

(44,552)

(75,247)

(87,210)

(128,867)

(156,225)

(159,769)

(145,791)

(153,364)

(141,825)

(150,979)

As of and for the Year Ended December 31,

~~2024~~2025

~~2023~~2024

~~2022~~2023

~~2021~~2022

~~2020~~2021

~~2019~~2020

~~2018~~2019

~~2017~~2018

~~2016~~2017

~~2015~~2016

~~2014~~2015

Gross liability-end of year

$ 671,669

$ 603,081

$ 549,598

$ 570,651

$ 567,580

$ 610,566

$ 584,719

$ 574,054

$ 560,321

$ 553,977

$ 482,012

Gross liability

$ 761,739

$ 671,669

$ 603,081

$ 549,598

$ 570,651

$ 567,580

$ 610,566

$ 584,719

$ 574,054

$ 560,321

$ 553,977

Reinsurance recoverables

~~130~~149,~~792~~441

~~112~~130,~~623~~792

93112,~~394~~623

9093,~~667~~394

~~106~~90,~~310~~667

~~122~~106,~~372~~310

~~108~~122,~~398~~372

83108,~~085~~398

83,~~724~~085

6883,~~261~~724

6168,~~245~~261

Net liability-end of year

540,877

490,458

456,204

479,984

461,270

488,194

476,321

490,969

476,597

485,716

420,767

Net liability

612,298

540,877

490,458

456,204

479,984

461,270

488,194

476,321

490,969

476,597

485,716

Gross estimated liability-latest

~~549~~625,~~610~~720

~~478~~521,~~630~~343

~~435~~462,~~511~~044

~~400~~422,~~283~~733

~~440~~390,~~376~~823

~~431~~434,~~174~~415

~~416~~427,~~519~~532

~~395~~414,~~679~~229

~~365~~394,~~598~~357

~~301~~364,~~493~~799

Reinsurance recoverables-latest

~~111~~129,~~046~~395

97106,~~953~~132

7493,~~546~~050

8871,~~142~~616

~~107~~85,~~985~~778

98105,~~255~~990

7797,~~024~~002

5976,~~633~~624

3059,~~094~~585

3930,~~037~~062

Net estimated liability-latest

~~438~~496,~~564~~325

~~380~~415,~~677~~211

~~360~~368,~~965~~994

~~312~~351,~~141~~117

~~332~~305,~~391~~045

~~332~~328,~~919~~425

~~339~~330,~~495~~530

~~336~~337,~~046~~605

~~335~~334,~~504~~772

~~262~~334,~~456~~737

In evaluating the information in the table, it should be noted that each amount entered incorporates the effects of all changes in amounts entered for prior periods. Thus, if the ~~2024~~2025 estimate for a previously incurred loss was $150 and the loss was reserved at $100 in ~~2020~~2021, the $50 deficiency (later estimate minus original estimate) would be included in the cumulative (redundancy) deficiency in each of the years ~~2020~~2021-~~2023~~2024 shown in the table. It should further be noted that the table does not present accident or policy year development data. In addition, conditions and trends that have affected the development of liability in the past may not necessarily recur in the future. Accordingly, it is not appropriate to extrapolate future redundancies or deficiencies from the table.

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The table shows that we have substantially benefited in the current and prior years from releasing redundant reserves. In the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023 we decreased loss reserves related to prior years by $5144,~~894~~552, $4751,~~381~~894 and $5747,~~279~~381, respectively. Reserves and development are discussed further in Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations, Executive Summary and Overview.

As a result of our focus on core business lines since our founding in 1979, we believe we have no specific exposure to asbestos or environmental pollution liabilities.

Reinsurance

Reinsurance involves an insurance company transferring (ceding) a portion of its exposure on insurance underwritten by it to another insurer (reinsurer). The reinsurer assumes a portion of the exposure in return for a share of the premium. Reinsurance does not legally discharge an insurance company from its primary liability for the full amount of the policies, but it does make the reinsurer liable to the company for the reinsured portion of any loss realized.

We maintain reinsurance coverage to help lessen the effect of losses from catastrophic events, maintaining coverage that during ~~2024~~2025 protected us in the event of a "~~121~~138-year storm" (that is, a storm of a severity expected to occur once in a ~~121~~138-year period). We use various software products to measure our exposure to catastrophe losses and the probable maximum loss to us for catastrophe losses such as hurricanes. In ~~2024~~2025, we purchased three layers of excess catastrophe reinsurance providing $~~615~~675,000 of coverage for property losses in excess of $75,000 up to a maximum of $~~690~~750,000. Our reinsurers’ co-participation is 8085.0% of $75,000 for the 1st layer, 8085.0% of $250,000 for the 2nd layer, and 8085.0% of $~~290~~350,000 for the 3rd layer.

For ~~2025~~2026, we have purchased three layers of excess catastrophe reinsurance providing $~~675~~770,000 of coverage for property losses in excess of $7580,000 up to a maximum of $~~750~~850,000. Our reinsurers’ co-participation is 85.0% of $75120,000 for the 1st layer, 85.0% of 250,000 for the 2nd layer and 8590.0% of $~~350~~400,000 for the 3rd layer.

We also have casualty excess of loss reinsurance for large casualty losses occurring in our automobile, homeowners, dwelling fire, and business owner lines of business in excess of $2,000 up to a maximum of $10,000. We have property excess of loss reinsurance coverage for large property losses, with coverage in excess of $3,000 up to a maximum of $20,000, for our homeowners, and business owners. In addition, we have liability excess of loss reinsurance for umbrella large losses in excess of $1,000 up to a maximum of $10,000. We also have various reinsurance agreements with Hartford Steam Boiler Inspection and Insurance Company, of which the primary contract is a quota share agreement under which we cede 100% of the premiums and losses for the equipment breakdown coverage under our business owner policies.

Our reinsurance program excludes coverage for acts of terrorism. The Terrorism Risk Insurance Program Reauthorization Act of 2019 was signed into law on December 20, 2019 which extended the Terrorism Risk Insurance Act (“TRIA”) through the year 2027. The intent of this legislation is to provide federal assistance to the insurance industry for the needs of commercial insurance policyholders with the potential exposure for losses due to acts of terrorism. TRIA provides reinsurance for certified acts of terrorism.

In addition to the above mentioned reinsurance programs and as described in more detail above under The Massachusetts Property and Casualty Insurance Market, we are a participant in CAR, a state-established body that, in part, runs the residual market reinsurance programs for commercial automobile insurance in Massachusetts under which premiums, expenses, losses and loss adjustment expenses on ceded business are shared by all insurers writing

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automobile insurance in Massachusetts.

At December 31, ~~2024~~2025, we also had $~~168~~169,~~538~~596 due from CAR comprising of loss and loss adjustment expense reserves, unearned premiums and reinsurance recoverables.

The Company participated in the Massachusetts Property Insurance Underwriting Association (“FAIR Plan”), in which premiums, expenses, losses and loss adjustment expenses on homeowners business that could not be placed in the voluntary market was shared by all insurers writing homeowners business in Massachusetts. On April 1, 2024, the Division 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.

On March 10, 2005, our Board of Directors (the “Board”) adopted a resolution that prohibits Safety from purchasing finite reinsurance (reinsurance that transfers only a relatively finite or limited amount of risk to the reinsurer) without approval by the Board. To date, the Company has never purchased a finite reinsurance contract.

Competition

Although, historically, a number of national insurers that are much larger than we have chosen not to compete in a material way in the Massachusetts private passenger automobile market, since 2008, several new companies have entered the market. These companies include some that would be able to sustain significant losses in order to acquire market share, as well as others which use distribution methods that compete with the independent agent channel. There can be no assurance that we will be able to compete effectively against these companies in the future.

We are the ~~third~~fourth largest writer of private passenger automobile insurance in Massachusetts with a market share of 9.74% in ~~2024~~2025. Our principal competitors within the Massachusetts private passenger automobile insurance market are MAPFRE SA, ~~Government~~Progressive ~~Employees~~Casualty Insurance Company, ~~Progressive~~Government ~~Casualty~~Employees Insurance Company, and Plymouth Rock Assurance Corporation, which held 1918.03%, 12.61%, 911.65% and 7.79% market shares based on premiums, respectively, in ~~2024~~2025 according to CAR.

We are the ~~second~~ largest writer of commercial automobile insurance in Massachusetts with a market share of 1213.90% in ~~2024~~2025. Our principal competitors in the Massachusetts commercial automobile insurance market are MAPFRE SA, Arbella Mutual Insurance Company and Progressive Casualty Insurance Company, which held 1311.18 %, 1011.40% and 9.41% market shares based on premium, respectively, according to CAR. This includes our share of residual market business as one of four servicing carriers in CAR’s Commercial Automobile Program.

We are the third largest writer of homeowners insurance business in Massachusetts, with a market share of 67.30% in ~~2023~~2024. Our principal competitors within the Massachusetts homeowners insurance market are MAPFRE SA, Liberty Mutual and The Andover Companies, which held 1210.26%, 98.01% and 6.35% market shares, respectively, in ~~2023~~2024 (according to S&P Global Market Intelligence).

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Human Capital

At December 31, ~~2024~~2025, we employed ~~551~~568 employees who all work in the New England region. The management team establishes hiring and compensation practices for our Company. The Board is periodically updated on key employee engagement and employee relations measures. In addition, the Board’s Compensation Committee is responsible for reviewing performance and approving compensation paid to senior leaders. Our Human Resources team, led by our Chief Financial Officer, supports the Compensation Committee in the execution of its responsibilities. In addition to the day-to-day support, they provide to our management team, the Human Resources team monitors the pulse of our employee population.

As noted in our Environmental, Social and Governance (“ESG”) Report, located on our Company website, we create a workplace where all employees are treated with dignity and respect, and individual differences are valued, all with the goal of securing the trust and satisfaction of our employees. The Company is committed to a policy of inclusiveness and is committed to actively seeking out highly-qualified candidates. The Company prioritizes an environment where employees are respected, inspired to perform at their best, and are recognized for their contributions. We persistently work to improve the employee experience in support of our continuing strategic objective to attract, retain and develop talent in the insurance industry. Our commitment to a robust talent pool starts at the top. The Board engages with the Compensation Committee annually to review executive level compensation, consider key pipeline talent and conduct succession planning. In addition, our leadership team conducts a comprehensive annual review process across our organization each year. We have a history of promotion from within as approximately 1917% of our organization has 25 years of experience at Safety.

We offer competitive pay and benefits to our employees. In addition to competitive salaries, all management level employees are included in our long-term incentive compensation program where they can receive a combination of time and performance-based awards. The Company also engages in a number of additional practices to ensure pay fairness, including:

●

Centralized compensation function ensuring consistent programs and practices across the enterprise;

●

Enterprise-wide framework for evaluating and aligning roles and compensation levels based on job responsibilities, strategic importance of the role, and other relevant factors;

●

Prohibition against asking external job applicants for current or historical compensation information;

●

Individual compensation decisions consider each employee’s experience, proficiency, and performance;

●

Multiple levels of review and approval required for all compensation decisions.

We are committed to our extensive, long-standing policies and practices to ensure fair pay across the organization, while also staying attuned to external best practices and insights, and leveraging input from our pay consultants.

We further foster our culture through our robust learning and development program and our competitive benefit programs. Our extensive benefits include a variety of items, not limited to the following:

●

Medical and vision plan options;

●

HSA & FSA options

●

Dental options;

●

Company paid life-insurance;

●

401(k) plan with company matching contributions of up to 8%;

●

Sick hours;

●

Paid holidays;

●

Flexible work schedules, including remote work arrangements;

●

Tuition reimbursement that is not capped;

●

Short and long-term disability;

●

Family medical leave;

●

Parental leave;

● Employee assistance program.

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●

Employee assistance program.

Our employees participate in a work from home program that helps contribute to a flexible work-life balance and allows the Company to minimize the real estate rented at our home office. Our employees are not covered by any collective bargaining agreement.

Our employees give both their time and their financial resources to charities of all types, and the Company promotes corporate citizenship through charitable donations and Company-sponsored volunteer activities. Safety is committed to making a positive impact on the communities where our employees live and work through our matching gift program, corporate giving and employee volunteerism. We help employees amplify their community impact by providing our employees with a 1:1 match on their donations to recognized charitable organizations. The Safety Insurance Charitable Foundation was established in 2005 and has provided financial support for a wide array of charities in areas such as community service, education, job training, homelessness, arts/culture, food banks, youth programs, healthcare, medical research and disaster relief.

The reputation of the Company depends on the conduct of its Board, officers, and employees. Every employee who is associated with Safety must play a part in maintaining our corporate reputation for the highest ethical standards. Management considers our relationship with our employees to be strong.

Investments

~~Investment~~The ~~income is an important source of revenue for us and the return on our~~ investment ~~portfolio~~committee ~~has a material effect on our net earnings. Our investment objective~~ is toresponsible ~~focus~~for onestablishing ~~maximizing total returns while investing conservatively. We maintain a high-quality~~ investment ~~portfolio consistent with our established investment~~ policy~~. As~~ ~~of December 31, 2024, our portfolio of fixed maturity investments was comprised principally of investment grade corporate fixed maturity securities, U.S. government~~ and ~~agency~~guidelines ~~securities~~and, ~~and~~together ~~asset-backed~~with ~~securities. The portion of our non-investment grade portfolio of fixed maturity investments is primarily comprised of variable rate secured and~~ senior ~~bank~~management, ~~loans~~for ~~and~~overseeing ~~high~~their ~~yield bonds~~execution.

~~According~~Our toprincipal ~~our~~ investment ~~guidelines,~~objectives noare ~~more~~to ~~than~~ensure ~~2.0%~~funds ofare ~~our~~available ~~portfolio~~to ~~may~~meet beinsurance ~~invested~~obligations inand ~~the~~to ~~securities~~maximize ofafter-tax ~~any~~investment ~~one~~income ~~issuer~~while ~~(excluding~~maintaining ~~U.S.~~a ~~government~~high-~~backed~~quality ~~securities). In~~diversified ~~addition,~~investment noportfolio. ~~more~~Considering ~~than~~these ~~0.5%~~objectives, ofwe view our investment portfolio ~~may~~as behaving ~~invested~~two incomponents: ~~securities~~(1) ofthe ~~any~~investments ~~one~~needed ~~issuer~~to ~~rated~~satisfy ~~"Baa~~outstanding liabilities (i.e.," orcore ~~the~~fixed ~~lowest~~maturities ~~investment~~portfolio) ~~grade~~and ~~assigned~~(2) investments funded by ~~Moody's~~our shareholders’ equity. OfFor the ~~less~~portion ~~than~~needed ~~15.0%~~to ofsatisfy ~~our~~outstanding ~~portfolio~~liabilities, ~~invested~~we generally invest in ~~senior~~fixed ~~bank~~maturities ~~loans~~with ~~and~~strong ~~high~~average ~~yield~~credit ~~bonds~~quality. atThis ~~December 31,~~fixed ~~2024,~~maturity nosecurities ~~more~~portfolio ~~than~~is ~~5.0%~~managed ~~may~~by beindependent, ~~invested~~professional ininvestment managers. We have expanded the ~~securities~~allocation of ~~any~~our ~~one~~investments ~~issuer,~~funded noby ~~more~~shareholders’ ~~than~~equity ~~10.0%~~to ~~may~~include befixed ~~invested~~and infloating ~~any~~rate ~~issuers~~securities, ~~total~~equity ~~outstanding~~securities ~~debt~~and ~~issue,~~private credit and aequity ~~maximum~~limited ofpartnership 10investments.0% ~~may~~The beobjective ~~invested~~of inthis ~~securities~~portfolio ~~unrated~~diversification oris ~~rated~~to "Benhance the risk-"adjusted ortotal ~~below~~return of the investment portfolio by ~~Moody's~~allocating a prudent portion of the portfolio to higher return asset classes. We ~~continually~~limit ~~monitor~~our ~~the~~allocation ~~mix~~to these asset classes because of ~~taxable~~the ~~and~~potential ~~tax-exempt~~for ~~securities~~volatility in antheir ~~attempt~~values toand ~~maximize~~the ~~our~~impact ~~total~~of ~~after-tax~~these ~~return~~investments on capital models. We utilize the services of ~~third-party~~independent, professional investment managers experienced in these markets, and adjust our allocation to these investments based upon market conditions.

WeInvestment ~~believe~~income ~~that~~is ~~the~~an ~~incorporation~~important source of ~~material,~~revenue ~~non-financial~~for ~~factors~~us ~~into~~and ~~investment~~the ~~selection~~return ~~and~~on ~~risk~~our ~~management~~investment portfolio has ~~the~~a ~~potential~~material toeffect ~~enhance~~on ~~long-term~~our ~~investment~~net ~~returns~~earnings. WeAs ~~incorporate~~of ~~ESG~~December 31, ~~factors~~2025, ~~managed~~our ~~for~~portfolio usof byfixed ~~third-party~~maturity investments was comprised principally of investment ~~managers.~~grade Wecorporate ~~measure~~fixed ~~our~~maturity ~~exposure~~securities, toU.S. ~~ESG~~government ~~risks~~and atagency ~~both~~securities, ~~individual~~and asset-backed ~~classes~~securities, ~~and~~including ~~total~~collateralized loan obligations. A portion of our investment portfolio ~~levels~~is also comprised of high yield bonds.

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The following table reflects ~~the composition of~~ our investment ~~portfolio~~results asfor each of the three-year periods ended December 31, 2025, 2024 and 2023.


	As of December 31,
	2024				2023
	Estimated		% of		Estimated		% of
	Fair Value		Portfolio		Fair Value		Portfolio
U.S. Treasury Securities	$	2,343	0.2	%	$	2,320	0.2	%
Obligations of states and political subdivisions		36,166	2.4			36,523	2.6
Residential mortgage-backed securities (1)		301,227	19.9			247,237	17.4
Commercial mortgage-backed securities		129,375	8.6			139,850	9.8
Other asset-backed securities		63,717	4.2			61,333	4.3
Corporate and other securities		582,390	38.5			564,882	39.6
Subtotal, fixed maturity securities		1,115,218	73.8			1,052,145	73.9
Short term investments		19,975	1.3			-	-
Equity securities (2)		221,422	14.6			238,022	16.7
Other invested assets (3)		156,444	10.3			133,946	9.4
	$	1,513,059	100.0	%	$	1,424,113	100.0	%

(1) Residential mortgage-backed securities consists primarily of obligations of U.S. Government agencies including collateralized mortgage obligations and mortgage-backed securities 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).


	Years Ended December 31,
	2025			2024			2023
Average cash and invested securities (at cost)	$	1,551,230		$	1,431,163		$	1,421,882
Net investment income (1)	$	62,732		$	55,720		$	56,377
Net effective yield (2)		4.0	%		3.9	%		4.0	%

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

The principal risks inherent in holding mortgage-backed securities and other pass-through securities are prepayment and extension risks, which affect the timing of when cash flows will be received. When interest rates decline, mortgages underlying mortgage-backed securities tend to be prepaid more rapidly than anticipated, causing early repayments. When interest rates rise, the underlying mortgages tend to be prepaid at a slower rate than anticipated, causing the principal repayments to be extended. Although early prepayments may result in acceleration of income from recognition of any unamortized discount, the proceeds could be reinvested at a lower current yield, resulting in a net reduction of future investment income. In addition, in the current market environment, such investments can also contain liquidity risks.

The Company invests in bank loans which are primarily investments in senior secured floating rate loans that banks have made to corporations. The loans are generally priced at an interest rate spread over the floating rate feature; this asset class provides protection against rising interest rates. However, this asset class is subject to default risk since these investments are typically below investment grade.

Equity risk is the risk that we will incur economic losses due to adverse changes in equity prices. Our exposure to changes in equity prices results from our holdings of common stock, preferred stock, mutual funds and interests in mutual funds held to fund the executive deferred compensation plan. We continuously evaluate market conditions and we expect in the future to purchase additional equity securities. We principally manage equity price risk through industry and issuer diversification and asset allocation techniques.

The following table reflects our investment results for each of the three-year periods ended December 31, 2024, 2023 and 2022.


	Years Ended December 31,
	2024			2023			2022
Average cash and invested securities (at cost)	$	1,431,163		$	1,421,882		$	1,462,761
Net investment income (1)	$	55,720		$	56,377		$	46,725
Net effective yield (2)		3.9	%		4.0	%		3.2	%

(1) After investment expenses, excluding realized investment gains or losses.

(2) Net investment income for the period divided by average invested securities and cash for the same period.

According to our investment guidelines, no more than 2.0% of our fixed maturity investment portfolio may be invested in the securities of any one issuer (excluding U.S. government-backed securities). In addition, no more than 0.5% of the portfolio may be invested in securities of any one issuer rated "Baa," or the lowest investment grade rating assigned by nationally recognized rating agencies. Of the less than 10.0% of the portfolio invested in high yield bonds at December 31, 2025, no more than 5.0% may be invested in the securities of any one issuer, no more than 10.0% may be invested in any issuers total outstanding debt issue, and a maximum of 10.0% may be invested in securities unrated or rated "B-" or below by nationally recognized rating agencies. We continually monitor the mix of taxable and tax-exempt securities in an attempt to maximize our total after-tax return.

We believe that the incorporation of material, non-financial factors into investment selection and risk management has the potential to enhance long-term investment returns. We incorporate ESG factors managed for us by independent, professional investment managers. We measure our exposure to ESG risks at both individual asset classes and total portfolio levels.

The following table reflects the composition of our investment portfolio as of December 31, 2025 and 2024.


	As of December 31,
	2025				2024
	Estimated		% of		Estimated		% of
	Fair Value		Portfolio		Fair Value		Portfolio
U.S. Treasury Securities	$	4,205	0.3	%	$	2,343	0.2	%
Obligations of states and political subdivisions		37,718	2.2			36,166	2.4
Residential mortgage-backed securities (1)		366,047	21.7			301,227	19.9
Commercial mortgage-backed securities		157,018	9.3			129,375	8.6
Other asset-backed securities		169,509	10.0			63,717	4.2
Corporate and other securities		581,051	34.4			582,390	38.5
Subtotal, fixed maturity securities		1,315,548	77.9			1,115,218	73.8
Short term investments		-	-			19,975	1.3
Equity securities (2)		220,953	13.1			221,422	14.6
Other invested assets (3)		151,020	9.0			156,444	10.3
	$	1,687,521	100.0	%	$	1,513,059	100.0	%

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

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AsThe ofprincipal ~~December 31,~~risks ~~2024,~~inherent ~~our~~in ~~portfolio~~holding ofmortgage-backed ~~fixed~~securities ~~maturity~~and ~~investments~~other ~~was~~pass-through ~~comprised~~securities ~~principally~~are ofprepayment ~~investment~~and ~~grade~~extension ~~corporate~~risks, ~~fixed~~which ~~maturity~~affect ~~securities,~~the Utiming of when cash flows will be received.S. ~~government~~When ~~and~~interest ~~agency~~rates ~~securities~~decline, ~~and~~mortgages ~~asset~~underlying mortgage-backed securities tend to be prepaid more rapidly than anticipated, causing early repayments. ~~The~~ ~~portion~~When ofinterest ~~our~~rates ~~non-investment~~rise, ~~grade~~the ~~portfolio~~underlying ofmortgages ~~fixed~~tend ~~maturity~~to ~~investments~~be isprepaid ~~primarily~~at ~~comprised~~a slower rate than anticipated, causing the principal repayments to be extended. Although early prepayments may result in acceleration of ~~variable~~income ~~rate~~from ~~secured~~recognition of any unamortized discount, ~~senior~~the ~~bank~~proceeds ~~loans~~could ~~and~~be ~~high~~reinvested at a lower current yield, ~~bonds~~resulting in a net reduction of future investment income. Such investments can also contain liquidity risks.

Equity risk is the risk that we will incur economic losses due to adverse changes in equity prices. Our exposure to changes in equity prices results from our holdings of common stock, mutual funds and interests in mutual funds held to fund the executive deferred compensation plan. We continuously evaluate market conditions and we expect in the future to purchase additional equity securities. We principally manage equity price risk through industry and issuer diversification and asset allocation techniques.

The composition of our fixed income security portfolio by rating is presented in the following table.

The composition of our fixed income security portfolio by rating is presented in the following table.

	As of December 31,
		~~2024~~2025				~~2023~~2024
	Estimated					Estimated
	Fair Value		Percent			Fair Value	Percent
U.S. Treasury securities and obligations of U.S. Government agencies	$	~~301~~366,~~227~~047	27.08	%	$	~~247~~301,~~237~~227	2327.50	%
Aaa/Aa		~~211~~326,~~088~~018	1824.98			~~212~~211,~~833~~088	2018.29
A		~~205~~291,~~305~~463	1822.41			~~219~~205,~~018~~305	2018.84
Baa		~~210~~219,~~254~~395	1816.97			~~202~~210,~~513~~254	1918.29
Ba		4355,~~869~~035	34.92			4743,~~946~~869	43.69
B		7644,~~538~~332	63.94			8476,~~681~~538	86.09
Caa/Ca		51,~~553~~293	0.51			35,~~733~~553	0.45
Not rated		6111,~~384~~965	50.59			3461,~~184~~384	35.35
Total	$	1,~~115~~315,~~218~~548	100.0	%	$	1,~~052~~115,~~145~~218	100.0	%

Ratings are generally assigned upon the issuance of the securities and are subject to revision on the basis of ongoing evaluations. Ratings in the table are as of the date indicated.

~~The~~During ~~Securities Valuation Office of~~ the ~~National~~year ~~Association~~ended ofDecember ~~Insurance~~31, ~~Commissioners~~2025, (the ~~"SVO")~~credit ~~evaluates~~quality ~~all public and private bonds purchased as investments by insurance companies. The SVO assigns one~~ of ~~six investment categories to each security it reviews. Category 1 is~~ the ~~highest~~fixed ~~quality~~maturity ~~rating~~investment ~~and~~portfolio ~~Category 6~~improved isas ~~the~~management ~~lowest.~~reduced ~~Categories 1~~exposure ~~and~~to ~~2 are the equivalent of~~ below-investment grade ~~debt~~senior assecured ~~defined~~bank byloans ~~rating agencies such as Standard & Poor's Ratings Services~~ and ~~Moody's,~~reinvested ~~while Categories 3-6 are~~ the ~~equivalent~~proceeds ofinto ~~below~~ investment -grade ~~securities.~~collateralized ~~SVO~~loan ~~ratings~~obligations ~~are reviewed at least annually~~(“CLOs”). AtThese ~~December 31,~~transactions ~~2024,~~increased ~~66.6%~~the proportion of ~~our~~securities ~~available for sale fixed maturity investments were~~ rated ~~Category 1~~investment-grade and ~~17.5%~~reduced ~~were~~overall ~~rated~~exposure ~~Category 2,~~to ~~the~~lower ~~two~~rated ~~highest ratings assigned by the SVO~~assets.

~~The~~This ~~following~~repositioning ~~table~~reflects ~~indicates~~management’s ~~the~~ongoing ~~composition~~efforts to optimize risk-adjusted returns while maintaining appropriate levels of ~~our~~liquidity ~~fixed~~and ~~income~~capital ~~security~~efficiency. ~~portfolio~~The ~~(at~~investment-grade ~~carrying~~CLOs ~~value)~~acquired byare ~~time~~primarily tosenior ~~maturity~~tranches asthat ofbenefit ~~December 31,~~from ~~2024~~substantial credit enhancement and structural protection against underlying loan defaults.

As a result, the percentage of invested assets rated investment grade increased to 91.4% at December 31, 2025, compared with 83.2% at December 31, 2024, while below-investment grade exposure declined to 8.6% from 16.8%. Management continues to monitor credit conditions and portfolio performance and believes the current allocation remains consistent with our investment guidelines and risk management objectives.

The Securities Valuation Office of the National Association of Insurance Commissioners (the "SVO") evaluates all public and private bonds purchased as investments by insurance companies. The SVO assigns one of six investment categories to each security it reviews. Category 1 is the highest quality rating and Category 6 is the lowest. Categories 1 and 2 are the equivalent of investment grade debt as defined by rating agencies such as Standard & Poor's Ratings Services and Moody's, while Categories 3-6 are the equivalent of below investment grade securities. SVO ratings are

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reviewed at least annually. At December 31, 2025, 74.7% of our available for sale fixed maturity investments were rated Category 1 and 16.7% were rated Category 2, the two highest ratings assigned by the SVO.

The following table indicates the composition of our fixed income security portfolio (at carrying value) by time to maturity as of December 31, 2025.


	As of December 31, ~~2024~~2025
	Estimated
	Fair Value		Percent
Due in one year or less	$	397,~~095~~451		30.56	%
Due after one year through five years		~~300~~299,~~994~~617		2722.08
Due after five years through ten years		~~251~~295,~~641~~111		22.64
Due after ten years through twenty years		2719,~~924~~929		21.5
Due after twenty years		~~1,245~~866		0.1
Asset-backed securities (1)		~~494~~692,~~319~~574		4452.36
Totals	$	1,~~115~~315,~~218~~548		100.0	%

(1) Actual maturities of asset-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Prepayment rates are influenced by a number of factors that cannot be predicted with certainty, including: the relative sensitivity of the underlying mortgages or other collateral to changes in interest rates; a variety of economic, geographic and other factors; and the repayment priority of the securities in the overall securitization structures.

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Ratings

A.M. Best, which rates insurance companies based on factors of concern to policyholders, currently assigns the Company an "A (Excellent)" rating. Our "A" rating was reaffirmed by A.M. Best on June 1820, ~~2024~~2025. Such rating is the third highest rating of 13 ratings that A.M. Best assigns to solvent insurance companies, which currently range from "A++ (Superior)" to "D (Poor)." Publications of A.M. Best indicate that the "A" rating is assigned to those companies that in A.M. Best's opinion have an excellent ability to meet their ongoing obligations to policyholders over a long period of time. In evaluating a company's financial and operating performance, A.M. Best reviews the Company's profitability, leverage and liquidity, as well as its book of business, the adequacy and soundness of its reinsurance, the quality and estimated fair value of its assets, the adequacy of its loss reserves, the adequacy of its surplus, its capital structure, the experience and competence of its management and its market presence. A.M. Best's ratings reflect its opinion of an insurance company's financial strength, operating performance and ability to meet its obligations to policyholders and are not evaluations directed to purchasers of an insurance company's securities.

In assigning the Company’s rating, A.M. Best recognized its solid risk-adjusted capitalization, conservative operating strategy, and long-standing agency relationships. A.M. Best also noted among our positive attributes our favorable investment leverage, our disciplined underwriting approach, and our expertise in the closely managed Massachusetts automobile insurance market. A.M. Best cited other factors that partially offset these positive attributes, including our concentration of business in the Massachusetts private passenger automobile market which exposes our business to regulatory actions.

Supervision and Regulation

Introduction. Our principal operations are conducted through the Insurance Subsidiaries which are subject to comprehensive regulation by state insurance departments, primarily through our domestic regulator, the Division, of which the Commissioner is the senior official. The Commissioner is appointed by the Governor. We are subject to the authority of the Commissioner in many areas of our business under Massachusetts law, including:

●

our licenses to transact insurance;

●

the rates and policy forms we may use;

●

our financial condition including the adequacy of our reserves and provisions for unearned premium;

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●

the solvency standards that we must maintain;

●

the type and size of investments we may make;

●

the prescribed or permitted statutory accounting practices we must use; and

●

the nature of the transactions we may engage in with our affiliates.

In addition, the Commissioner periodically conducts financial and market conduct examinations of all licensees domiciled in Massachusetts. Our most recent financial condition examination was for the five-year period ending December 31, ~~2018~~2023. The Division had no material findings as a result of this examination. ~~The Division recently began their review of the five-year period ended December 31, 2023.~~

We are also required to be licensed by the insurance department in each state in which we do business, as well as to comply with the various laws and regulations of those jurisdictions, including those governing our use of rates and policy forms in those states.

Insurance Holding Company Regulation. Our principal operating subsidiaries are insurance companies, and therefore we are subject to certain laws in Massachusetts regulating insurance holding company systems. These laws require that we file a registration statement with the Commissioner that discloses the identity, financial condition, capital structure and ownership of each entity within our corporate structure and any transactions among the members of our holding company system. In some instances, we must provide prior notice to the Commissioner for material transactions between our insurance company subsidiaries and other affiliates in our holding company system. These holding company statutes also require, among other things, prior approval of the payment of extraordinary dividends or distributions and any acquisition of a domestic insurer and that we file an annual Enterprise Risk Management report with the Commissioner.

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between our insurance company subsidiaries and other affiliates in our holding company system. These holding company statutes also require, among other things, prior approval of the payment of extraordinary dividends or distributions and any acquisition of a domestic insurer and that we file an annual Enterprise Risk Management report with the Commissioner.

Insurance Regulation Concerning Dividends. We rely on dividends from the Insurance Subsidiaries for our cash requirements. The insurance holding company law of Massachusetts requires notice to the Commissioner of any dividend to the shareholders of an insurance company. The Insurance Subsidiaries may not make an "extraordinary dividend" until thirty days after the Commissioner has received notice of the intended dividend and has not objected in such time. As historically administered by the Commissioner, this provision requires the prior approval by the Commissioner of an extraordinary dividend. An extraordinary dividend is defined as any dividend or distribution that, together with other distributions made within the preceding twelve months exceeds the greater of 10.0% of the insurer's surplus as of the preceding December 31, or the insurer's net income for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting practices. Under Massachusetts law, an insurer may pay cash dividends only from its unassigned funds, also known as its earned surplus, and the insurer's remaining surplus must be both reasonable in relation to its outstanding liabilities and adequate to its financial needs. At December 31, ~~2024~~2025, the statutory surplus of Safety Insurance was $~~758~~833,~~789~~432 and its net income for ~~2024~~2025 was $4383,~~387~~092. A maximum of $7583,~~879~~092 will be available during ~~2025~~2026 for such dividends without prior approval of the Commissioner.

Acquisition of Control of a Massachusetts Domiciled Insurance Company. Massachusetts law requires advance approval by the Commissioner of any change in control of an insurance company that is domiciled in Massachusetts. That law presumes that control exists where any person, directly or indirectly, owns, controls, holds the power to vote or holds proxies representing 10.0% or more of our outstanding voting stock. Even persons who do not acquire beneficial ownership of more than 10.0% of the outstanding shares of our common stock may be deemed to have acquired control if the Commissioner determines that control exists in fact. Any purchaser of shares of common stock representing 10.0% or more of the voting power of our capital stock will be presumed to have acquired control of the Insurance Subsidiaries unless, following application by that purchaser the Commissioner determines that the acquisition does not constitute a change of control or is otherwise not subject to regulatory review. These requirements may deter, delay or prevent transactions affecting the control of or the ownership of our common stock, including transactions that could be advantageous to our stockholders.

Protection Against Insurer Insolvency. Massachusetts law requires that insurers licensed to do business in Massachusetts participate in the Massachusetts Insurers Insolvency Fund ("Insolvency Fund"). The Insolvency Fund must pay any claim up to $300 of a policyholder of an insolvent insurer if the claim existed prior to the declaration of insolvency or arose within sixty days after the declaration of insolvency. Members of the Insolvency Fund are assessed the amount the Insolvency Fund deems necessary to pay its obligations and expenses in connection with handling covered claims. Subject to certain exceptions, assessments are made in the proportion that each member's net written premiums for the prior calendar year for all property and casualty lines bore to the corresponding net written premiums for Insolvency Fund members for the same period. As a matter of Massachusetts law, insurance rates and premiums include amounts to recoup any amounts paid by insurers for the costs of the Insolvency Fund. By statute, no insurer in Massachusetts may be assessed in any year an amount greater than two percent of that insurer's direct written premium for the calendar year prior to the assessment. We account for allocations from the Insolvency Fund as underwriting expenses. CAR also assesses its members as a result of insurer insolvencies. Because CAR is not able to recover an insolvent company's share of the net CAR losses from the Insolvency Fund, CAR must increase each of its member's shares of the deficit in order to compensate for the insolvent carrier's inability to pay its deficit assessment. It is anticipated that there will be future assessments from time to time relating to various insolvencies.

The Insurance Regulatory Information System. The Insurance Regulatory Information System ("IRIS") was developed to help state insurance regulators identify companies that may require special financial attention. IRIS consists of a statistical phase and an analytical phase whereby financial examiners review annual statements and financial ratios. The statistical phase consists of 13 key financial ratios based on year-end data that are generated annually from the database of the National Association of Insurance Commissioners ("NAIC"). Each ratio has an established "usual range" of results. These ratios assist state insurance departments in executing their statutory mandate to oversee the financial condition of insurance companies.

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insolvency or arose within sixty days after the declaration of insolvency. Members of the Insolvency Fund are assessed the amount the Insolvency Fund deems necessary to pay its obligations and expenses in connection with handling covered claims. Subject to certain exceptions, assessments are made in the proportion that each member's net written premiums for the prior calendar year for all property and casualty lines bore to the corresponding net written premiums for Insolvency Fund members for the same period. As a matter of Massachusetts law, insurance rates and premiums include amounts to recoup any amounts paid by insurers for the costs of the Insolvency Fund. By statute, no insurer in Massachusetts may be assessed in any year an amount greater than two percent of that insurer's direct written premium for the calendar year prior to the assessment. We account for allocations from the Insolvency Fund as underwriting expenses. CAR also assesses its members as a result of insurer insolvencies. Because CAR is not able to recover an insolvent company's share of the net CAR losses from the Insolvency Fund, CAR must increase each of its member's shares of the deficit in order to compensate for the insolvent carrier's inability to pay its deficit assessment. It is anticipated that there will be future assessments from time to time relating to various insolvencies.

AThe ~~ratio~~Insurance ~~result~~Regulatory ~~falling~~Information ~~outside~~System. The ~~the~~Insurance ~~usual~~Regulatory ~~range~~Information ofSystem ("IRIS") ~~ratios~~was isdeveloped ~~not~~to ~~considered~~help astate ~~failing~~insurance ~~result;~~regulators ~~rather,~~identify ~~unusual~~companies ~~values~~that ~~are~~may ~~viewed~~require asspecial ~~part~~financial attention. IRIS consists of ~~the~~a ~~regulatory~~statistical ~~early~~phase ~~monitoring~~and ~~system.~~an ~~Furthermore,~~analytical inphase ~~some~~whereby ~~years,~~financial itexaminers ~~may~~review ~~not~~annual bestatements ~~unusual~~and ~~for~~financial ~~financially~~ratios. The ~~sound~~statistical ~~companies~~phase toconsists ~~have~~of ~~several~~13 key financial ratios ~~with~~based ~~results~~on ~~outside~~year-end ~~the~~data ~~usual~~that ~~ranges. Generally,~~are angenerated ~~insurance~~annually ~~company~~from ~~will~~the ~~become~~database ~~subject~~of tothe ~~regulatory~~National ~~scrutiny~~Association ifof itInsurance ~~falls~~Commissioners ~~outside~~("NAIC"). ~~the~~Each ~~usual~~ratio ~~ranges~~has ofan ~~four~~established or"usual ~~more~~range" of ~~the~~results. These ratios~~. In~~ ~~2024,~~assist ~~2023,~~state ~~and~~insurance ~~2022~~departments ~~all~~in ~~our~~executing ~~ratios~~their ~~for~~statutory ~~all~~mandate ~~our~~to ~~Insurance~~oversee ~~Subsidiaries~~the ~~were~~financial ~~within~~condition ~~the~~of ~~normal~~insurance ~~range~~companies.

A ratio result falling outside the usual range of IRIS ratios is not considered a failing result; rather, unusual values are viewed as part of the regulatory early monitoring system. Furthermore, in some years, it may not be unusual for financially sound companies to have several ratios with results outside the usual ranges. Generally, an insurance company will become subject to regulatory scrutiny if it falls outside the usual ranges of four or more of the ratios. In 2025, 2024, and 2023 all our ratios for all our Insurance Subsidiaries were within the normal range.

Risk-Based Capital Requirements. The NAIC has adopted a formula and model law to implement risk-based capital requirements for most property and casualty insurance companies, which are designed to determine minimum capital requirements and to raise the level of protection that statutory surplus provides for policyholder obligations. The risk-based capital formula for property and casualty insurance companies measures three major areas of risk facing property and casualty insurers:

●

underwriting, which encompasses the risk of adverse loss developments and inadequate pricing;

●

declines in asset values arising from market and/or credit risk; and

●

off-balance sheet risk arising from adverse experience from non-controlled assets, guarantees for affiliates or other contingent liabilities and reserve and premium growth.

Under Massachusetts law, insurers having less total adjusted capital than that required by the risk-based capital calculation will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy.

The risk-based capital law provides for four levels of regulatory action. The extent of regulatory intervention and action increases as the level of total adjusted capital to risk-based capital falls. The first level, the company action level, as defined by the NAIC, requires an insurer to submit a plan of corrective actions to the Commissioner if total adjusted capital falls below 200% of the risk-based capital amount. The regulatory action level, as defined by the NAIC requires an insurer to submit a plan containing corrective actions and requires the Commissioner to perform an examination or other analysis and issue a corrective order if total adjusted capital falls below 150.0% of the risk-based capital amount. The authorized control level, as defined by the NAIC, authorizes the Commissioner to take whatever regulatory actions he or she considers necessary to protect the best interest of the policyholders and creditors of the insurer which may include the actions necessary to cause the insurer to be placed under regulatory control, i.e., rehabilitation or liquidation, if total adjusted capital falls below 100.0% of the risk-based capital amount. The fourth action level is the mandatory control level, as defined by the NAIC, which requires the Commissioner to place the insurer under regulatory control if total adjusted capital falls below 70.0% of the risk-based capital amount.

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The formulas have not been designed to differentiate among adequately capitalized companies that operate with higher levels of capital. Therefore, it is inappropriate and ineffective to use the formulas to rate or to rank these companies. At December 31, ~~2024~~2025, our Insurance Subsidiaries had total adjusted capital in excess of amounts requiring company or regulatory action at any prescribed risk-based capital action level.

Own Risk Solvency Assessment. On January 11, 2017, the Division adopted the National Association of Insurance Commissioners’ Own Risk Solvency Assessment (“ORSA”) Act requiring the Company to file its assessment on an annual basis. ORSA is an internal process undertaken by an insurer or insurance group to assess the adequacy of its risk management and current and prospective solvency positions under normal and severe stress scenarios. We have completed this filing for the ~~2024~~2025 period.

Executive Officers and Directors

The table below sets forth certain information concerning our directors and executive officers as of the date of this annual report.


			Years
			Employed
Name	Age (1)	Position	by Safety
George M. Murphy	59	President, Chief Executive Officer, Chairman of the Board	37
Christopher T. Whitford	43	Vice President, Chief Financial Officer and Secretary	13
Mary F. McConnell	42	Vice President - Underwriting	19
John P. Drago	59	Vice President - Marketing	31
Brian S. Lam	46	Vice President - Insurance Operations	24
Paul J. Narciso	62	Vice President - Claims	35
Stephen A. Varga	58	Vice President - Management Information Systems	33
Glenn R. Hiltpold	55	Vice President - Actuarial Services	26
Thalia M. Meehan	64	Lead Independent Director	-
Mary C. Moran	70	Director	-
John D. Farina	62	Director	-
Deborah E. Gray	62	Director	-
Dennis J. Langwell	67	Director	-
Charles J. Brophy III	69	Director	-
___________________
(1) As of February 15, 2026

George M. Murphy, CPCU, was appointed President and Chief Executive Officer of the Company effective April 1, 2016. He previously was the Vice President of Marketing since October 1, 2005. Mr. Murphy was appointed to the Board of Directors and to the Investment Committee in February 2016. Effective May 17, 2023, Mr. Murphy was elected to serve as Chairman of the Board. Mr. Murphy has been employed by the Insurance Subsidiaries for over 37 years. Mr. Murphy is also on the Board of Trustees of the Insurance Library Association of Boston.

22Christopher T. Whitford, was appointed Chief Financial Officer, Vice President and Secretary of the Company on March 2, 2020. Mr. Whitford, a Certified Public Accountant in Massachusetts, has been employed by the Insurance Subsidiaries for over 13 years, previously serving as the Company’s Controller since 2012, and began his career at PricewaterhouseCoopers in 2005. Mr. Whitford serves on the Audit Committee of Guaranty Fund Management Services and serves on the Audit Committee of the Massachusetts Property Insurance Underwriting Association.

~~Table~~Mary F. McConnell was appointed Vice President of ~~Contents~~Underwriting of the Company in July 2024 and was named as Secretary of the Insurance Subsidiaries at that time. Prior to that, she served as the Director of Products and Services since April 2019. Ms. McConnell has been employed by the Insurance Subsidiaries for over 19 years and has held numerous positions in Underwriting throughout her career. Ms. McConnell was appointed by the Commissioner of Insurance to the Commonwealth Automobile Reinsurers (“CAR”) Governing Committee in January 2023 and was reappointed for the term effective July 1, 2024 through June 30, 2030. She has served on several committees of CAR including the Commercial Automobile Committee, MAIP Steering Committee, and Market Review Committee. She has also served as a member of the Automobile Insurers Bureau of Massachusetts (“AIB”) Rules and Forms Advisory Panel.


			Years
			Employed
Name	Age (1)	Position	by Safety
George M. Murphy	58	President, Chief Executive Officer, Chairman of the Board	36
Christopher T. Whitford	42	Vice President, Chief Financial Officer and Secretary	12
Mary F. McConnell	41	Vice President - Underwriting	18
John P. Drago	58	Vice President - Marketing	30
Brian S. Lam	45	Vice President - Insurance Operations	23
Paul J. Narciso	61	Vice President - Claims	34
Stephen A. Varga	57	Vice President - Management Information Systems	32
Glenn R. Hiltpold	54	Vice President - Actuarial Services	25
Thalia M. Meehan	63	Lead Independent Director	-
Mary C. Moran	69	Director	-
John D. Farina	61	Director	-
Deborah E. Gray	61	Director	-
Dennis J. Langwell	66	Director	-
Charles J. Brophy III	68	Director	-
___________________
(1) As of February 15, 2025

George M. Murphy, CPCU, was appointed President and Chief Executive Officer of the Company effective April 1, 2016. He previously was the Vice President of Marketing since October 1, 2005. Mr. Murphy was appointed to the Board of Directors and to the Investment Committee in February 2016. Effective May 17, 2023, Mr. Murphy was elected to serve as Chairman of the Board. Mr. Murphy has been employed by the Insurance Subsidiaries for over 36 years. Mr. Murphy is also on the Board of Trustees of the Insurance Library Association of Boston.

Christopher T. Whitford, was appointed Chief Financial Officer, Vice President and Secretary of the Company on March 2, 2020. Mr. Whitford, a Certified Public Accountant in Massachusetts, has been employed by the Insurance Subsidiaries for over 12 years, previously serving as the Company’s Controller since 2012, and began his career at PricewaterhouseCoopers in 2005. Mr. Whitford serves on the Audit Committee of Guaranty Fund Management Services and serves on the Audit Committee of the Massachusetts Property Insurance Underwriting Association.

Mary F. McConnell was appointed Vice President of Underwriting of the Company in July 2024 and was named as Secretary of the Insurance Subsidiaries at that time. Prior to that, she served as the Director of Products and Services since April 2019. Ms. McConnell has been employed by the Insurance Subsidiaries for over 18 years and has held numerous positions in Underwriting throughout her career. Ms. McConnell was appointed by the Commissioner of Insurance to the Commonwealth Automobile Reinsurers (“CAR”) Governing Committee in January 2023 and was reappointed for the term effective July 1, 2024 through June 30, 2030. She has served on several committees of CAR including the Commercial Automobile Committee, MAIP Steering Committee, and Market Review Committee. She has also served as a member of the Automobile Insurers Bureau of Massachusetts (“AIB”) Rules and Forms Advisory Panel.

John P. Drago was appointed Vice President of Marketing on February 1, 2016. Mr. Drago has been employed by the Insurance Subsidiaries for over 30 years and most recently served as Director of Marketing.

Brian S. Lam was appointed Vice President of Insurance Operations of the Company on February 27, 2024, effective March 1, 2024. Mr. Lam has held the Director of Insurance Operations and Customer Engagement position with the Company since 2014 and began his career with the Company in 2002. He currently sits on the Deep Customer Connections Innovators Committee.

Paul J. Narciso was appointed Vice President of Claims of the Company on August 5, 2013. Mr. Narciso has held various adjusting and claims management positions with the Company since 1990. Mr. Narciso has 38 years of claim experience having worked at two national carriers prior to joining Safety. He has previously served on the Governing Board of the Massachusetts Insurance Fraud Bureau and the Claims Subcommittee at Commonwealth Automobile Reinsurers.

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John P. Drago was appointed Vice President of Marketing on February 1, 2016. Mr. Drago has been employed by the Insurance Subsidiaries for over 31 years and most recently served as Director of Marketing.

Brian S. Lam was appointed Vice President of Insurance Operations of the Company on February 27, 2024, effective March 1, 2024. Mr. Lam has held the Director of Insurance Operations and Customer Engagement position with the Company since 2014 and began his career with the Company in 2002. He currently sits on the Deep Customer Connections Innovators Committee.

Paul J. Narciso was appointed Vice President of Claims of the Company on August 5, 2013. Mr. Narciso has held various adjusting and claims management positions with the Company since 1990. Mr. Narciso has 39 years of claim experience, including prior roles at two national carriers before joining Safety. He has previously served on the Governing Board of the Massachusetts Insurance Fraud Bureau and the Claims Subcommittee at Commonwealth Automobile Reinsurers.

Stephen A. Varga was appointed Vice President of Management Information Systems of the Company on August 6, 2014. Mr. Varga has held various information technology positions with the Company since 1992 and most recently served as Senior Director of MIS.

Glenn R. Hiltpold was appointed Vice President of Actuarial Services of the Company on March 1, 2021. Mr. Hiltpold, a Fellow of the Casualty Actuarial Society, has held the Director of Actuarial Services position with the Company since 2004 and has been an employee of the Insurance Subsidiaries for 2526 years.

Thalia M. Meehan was appointed Director of the Company on July 3, 2017 and Lead Independent Director on January 11, 2022. Ms. Meehan has also been appointed to serve as a member of the Investment Committee and the Compensation Committee. Ms. Meehan, a Chartered Financial Analyst, has over 3031 years of experience in the investment sector. Ms. Meehan retired from Putnam Investments in 2016 with 27 years of experience and most recently served as a Team Leader and Portfolio Manager at Putnam Investments. Ms. Meehan currently serves on the Advisory Committees for both the Board of Boston Women in Public Finance and the Huntington Theatre Company. Previously, she was a board member at Cambridge Bancorp, where she served on the Trust and Risk Committees. She also was a member of the Nominating and Governance Committees for the Municipal Securities Rulemaking Board.

Mary C. Moran was appointed Director of the Company on March 27, 2020. Ms. Moran has over 45 years of financial experience in both private industry as well as consulting. Ms. Moran began her career at KPMG, previously Peat Marwick, where she became a Senior Manager before serving as Senior Vice President of Finance and Administration for Boston Sand and Gravel Company from 1990 to 2001. Since 2002 she has served as CEO of MCM Financial Consulting, focusing on projects within the banking, construction, higher education, manufacturing, not-for-profit and professional services industries. Ms. Moran is a former director of Care Dimensions where she served on the finance and audit committee and is a former director and audit committee member of Danvers Bankcorp, the College of the Holy Cross and Catholic Memorial School. Ms. Moran graduated from Northeastern University with a M.B.A. and MS in Accounting and from the College of the Holy Cross with a degree in Economics. Ms. Moran qualifies as an “Audit Committee Financial Expert” as defined by ~~the~~SEC ~~U.S. Securities and Exchange Commission~~ rules. Ms. Moran serves as ~~Chairperson~~a member of the Nominating and Governance Committee and ~~serves as a member of~~ the Audit Committee.

John D. Farina was appointed Director of the Company on March 24, 2022. Mr. Farina was appointed Chairperson of the Audit Committee in May 2023, and also serves as a member of the Nominating and Governance Committee. Mr. Farina ~~recently~~ retired from PricewaterhouseCoopers (“PwC”) as Northeast Managing Partner and as a member of PwC’s Global Board of Directors, where he was a member of the Risk & Quality and Operations Committees. He has 36 years of experience advising both domestic and multinational Fortune 500 companies on financial accounting, regulatory, and tax matters, with a deep expertise in the insurance industry. Mr. Farina also led PwC’s US Insurance Tax practice and has deep insurance industry expertise. During his time at PwC, Mr. Farina held a variety of senior leadership roles including Managing Partner of the Northeast Region, where he was responsible for approximately 3,800 partners and staff in five offices. In this role, he oversaw strategic planning, operations, finance, risk management, human capital, and marketing functions. Mr. Farina was elected by his fellow partners for two terms on both PwC’s US and Global Boards, providing 10 years of governance oversight to the firm. After retiring from PwC in 2021, Mr. Farina was elected to join the Board of Directors of St. Jude Children's Research Hospital in Memphis, Tennessee, where he serves as the Vice Chair of the Audit & Compliance Committee. Mr. Farina has also served on several non-profit boards, including the Greater Boston Chamber of Commerce. Mr. Farina received his BBA in Accounting from Evangel University and was a CPA in Massachusetts and Texas. Mr. Farina qualifies as an “Audit Committee Financial Expert” as defined by the U.S. SEC rules.

Deborah E. Gray was appointed Director of the Company on March 24, 2022. Ms. Gray has also been appointed to serve as a member of the Nominating and Governance Committee and the Compensation Committee. She joins the Board with over 30 years of experience as a corporate attorney and General Counsel for both publicly traded and private entities in a diverse range of industries, including high tech, ed tech, Software-as-a-Service (SaaS), professional services and life sciences. Her legal and business expertise with high-growth companies, ranging from start-ups to publicly traded multibillion-dollar corporations, are beneficial to Safety, particularly in relation to risk management, compliance, data privacy and security, and corporate governance matters. Ms. Gray has served in various General Counsel roles over her 30-year career, including most recently providing her expertise as an outside General

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~~Counsel~~Boards, toproviding a10 ~~variety~~years of ~~companies.~~governance ~~She~~oversight isto ~~also~~the ~~currently~~firm. ~~Vice~~After ~~President~~retiring ~~and~~from ~~General~~PwC ~~Counsel~~in ~~of The Achievement Network~~2021, aMr. ~~private,~~Farina ~~non-profit,~~was ~~national~~elected ~~education and technology organization where she leads all day-~~to~~-day~~ ~~legal,~~join ~~data~~the ~~privacy~~Board ~~and~~of ~~security,~~Directors ~~and~~of ~~compliance initiatives~~St. ~~Prior~~Jude toChildren's ~~this~~Research ~~role,~~Hospital ~~Ms.~~in ~~Gray served as Vice President~~Memphis, ~~General Counsel and Secretary at Acquia~~Tennessee, ~~Inc., a SaaS company~~ where ~~she~~he ~~led~~serves as the ~~creation~~Chair ~~and build out~~ of ~~its~~the ~~global~~Audit ~~legal,~~& ~~data~~Compliance ~~security~~Committee. ~~and~~Mr. ~~corporate~~Farina ~~compliance~~has ~~functions~~also ~~including~~served ~~M&A,~~on ~~commercial~~several ~~contracts,~~non-profit ~~licensing~~boards, ~~real~~including ~~estate,~~the ~~employment,~~Greater ~~corporate~~Boston ~~and~~Chamber ~~board~~ of ~~directors~~Commerce. ~~governance~~Mr. ~~Previously~~Farina ~~she~~received ~~held~~his ~~senior~~BBA ~~positions~~in ~~with~~Accounting ~~Charles~~from ~~River~~Evangel ~~Laboratories,~~University ~~International, Sapient Corporation~~ and ~~Harcourt~~was ~~General. Ms.~~a ~~Gray~~CPA ~~began her legal career at WilmerHale~~ in ~~Boston~~Massachusetts ~~where she specialized in mergers~~ and ~~acquisitions,~~Texas. ~~public offerings and SEC compliance matters~~Mr. ~~She~~ ~~also~~Farina ~~currently~~qualifies ~~serves on the Board of Directors for The Home for Little Wanderers, serving~~ as ~~Secretary~~an ~~and~~“Audit ~~a member of the Executive~~ Committee, isFinancial aExpert” ~~Trustee~~as ~~Emerita~~defined ofby ~~Colby~~SEC ~~College, and a former Overseer of the Boston Symphony Orchestra~~rules.

~~Dennis~~Deborah JE. ~~Langwell~~Gray was appointed Director of the Company on ~~April~~March 524, ~~2023~~2022. MrMs. ~~Langwell~~Gray ishas aalso ~~retired~~been ~~senior~~appointed ~~executive~~to serve as Chairperson of ~~Liberty~~the ~~Mutual~~Nominating ~~Insurance,~~and Governance Committee and serves as a ~~Fortune~~member ~~100~~of ~~company,~~the ~~where~~Compensation heCommittee. ~~worked~~She ~~more~~joins ~~than~~the 25Board with over 35 years inof ~~various~~experience ~~executive,~~as ~~strategic~~a corporate attorney and ~~financial~~General ~~positions,~~Counsel ~~until~~for ~~his~~both ~~retirement~~publicly traded and private entities in ~~2021.~~a ~~His~~diverse ~~most~~range ~~recent~~of ~~position~~industries, ~~was~~including ~~Vice~~high ~~Chairman~~tech, ofed ~~Insurance~~tech, ~~Operations~~Software-as-a-Service (SaaS), professional services and ~~prior~~life tosciences. ~~that~~Her helegal ~~was~~and ~~President~~business ofexpertise ~~Global~~with ~~Risk~~high-growth ~~Solutions~~companies, ~~where~~ranging hefrom ~~led~~start-ups ~~Liberty’s~~to ~~$20~~publicly ~~billion~~traded ~~global~~multibillion-dollar ~~commercial~~corporations, ~~(re)~~are ~~insurance~~beneficial ~~business.~~to ~~Prior~~Safety, toparticularly ~~his~~in ~~role~~relation asto ~~President~~risk ofmanagement, ~~Global~~compliance, ~~Risk~~data ~~Solutions~~privacy and security, Mrand corporate governance matters. ~~Langwell~~Ms. Gray has served asin ~~Executive~~various ~~Vice~~General ~~President~~Counsel ~~and~~roles ~~Chief~~over ~~Financial~~her ~~Officer~~35-year ~~from~~career, ~~2003~~including most recently providing her expertise as an outside General Counsel to ~~2018.~~a Mrvariety of companies. ~~Langwell~~She ~~began~~is ~~his~~also ~~career~~currently atVice ~~KPMG~~President and ~~has~~General ~~over~~Counsel 40of ~~years~~The ofAchievement ~~insurance~~Network, ~~and~~a ~~finance~~private, ~~experience.~~non-profit, ~~Mr.~~national ~~Langwell~~education ~~also~~and ~~serves~~technology onorganization ~~the~~where ~~boards~~she ofleads ~~James~~all ~~River~~day-to-day ~~Group~~legal, ~~and~~data ~~Companion~~privacy ~~Protect~~and security, and oncompliance ~~the~~initiatives. ~~Advisory~~Prior ~~Board~~to ofthis ~~Owl~~role, Ms.~~co.~~ HeGray isserved ~~also~~as ~~the~~ Vice ~~Chairman~~President, ofGeneral ~~the~~Counsel ~~Providence~~and ~~College~~Secretary ~~Board~~at ofAcquia, ~~Trustees~~Inc., a SaaS company where heshe ~~received~~led ~~his~~the ~~Bachelor~~creation and build out of ~~Science~~its inglobal ~~Accounting~~legal, data security and iscorporate ~~Chairman~~compliance offunctions ~~the~~including ~~Board~~M&A, ofcommercial ~~Trustees~~contracts, licensing, real estate, employment, corporate and board of ~~the~~directors Ugovernance.~~S.S.~~ ~~Constitution~~Previously ~~Museum~~she held senior positions with Charles River Laboratories, International, Sapient Corporation and Harcourt General. MrMs. ~~Langwell~~Gray ~~qualifies~~began asher anlegal ~~“Audit~~career ~~Committee~~at ~~Financial~~WilmerHale ~~Expert”~~in asBoston ~~defined~~where byshe ~~the~~specialized ~~U.S.~~in mergers and acquisitions, public offerings and SEC ~~rules.~~compliance Mrmatters. She ~~Langwell~~served ~~serves~~on the Board of Directors for The Home for Little Wanderers for 22 years, serving as ~~Chairperson~~Secretary and a member of the ~~Compensation~~Executive Committee, is a Trustee Emerita of Colby College, and ~~member~~a former Overseer of the ~~Audit~~Boston ~~Committee~~Symphony Orchestra.

~~Charles~~Dennis J. ~~Brophy~~Langwell ~~III~~ was appointed Director of the Company on April 5, 2023. Mr. ~~Brophy~~Langwell ~~has~~serves ~~also~~as ~~been~~Chairperson ~~appointed~~of tothe ~~serve~~Compensation asCommittee aand member of the ~~Investment~~Audit Committee. Mr. ~~Brophy~~Langwell ~~joined~~is ~~the~~a ~~Board~~retired ~~with~~senior ~~over~~executive 30of ~~years~~Liberty ofMutual ~~experience~~Insurance, ina ~~the~~Fortune ~~insurance~~100 ~~industry.~~company, Hewhere ~~spent~~he ~~the~~worked ~~last~~more 23than 25 years ~~with~~in ~~HUB~~various ~~International~~executive, ~~where~~strategic heand ~~currently~~financial ~~serves~~positions, asuntil ~~the~~his ~~Regional~~retirement ~~President~~in (U2021.S. ~~East)~~His most recent position was Vice Chairman of Insurance Operations, and ~~has~~prior ~~extensive~~to ~~commercial~~that ~~and~~he ~~personal~~was ~~sales~~President ~~development~~of ~~and~~Global ~~management~~Risk ~~experience~~Solutions, where he led Liberty’s $20 billion global commercial (re) insurance business. Prior to ~~joining~~his ~~HUB~~role ~~International~~as President of Global Risk Solutions, Mr. ~~Brophy~~Langwell ~~was~~served aas ~~Director~~Executive atVice ~~Bain~~President ~~Hogg~~and ~~Robinson,~~Chief ~~LLC,~~Financial ~~and~~Officer from 2003 to 2018. Mr. Langwell began his career inat ~~commercial~~KPMG ~~lines~~and ~~underwriting~~has ~~with~~over ~~The~~40 ~~Travelers~~years ~~Insurance~~of ~~Company~~insurance ~~(“Travelers”)~~and finance experience. Mr. ~~Brophy~~Langwell ~~was~~also ~~the~~serves ~~2016~~on ~~Massachusetts~~the ~~Insurance~~board ~~Professional~~ of ~~the~~James ~~Year~~River ~~and~~Group, ~~has~~where ~~served~~he onserves ~~various~~as ~~advisory~~the ~~councils~~chair ~~for~~of ~~The~~the ~~Hartford~~Audit ~~Insurance Group~~Committee, ~~Arbella~~on ~~Mutual~~the ~~Insurance,~~board ~~The~~of ~~Hanover~~Companion ~~Insurance Group~~Protect, and ~~Travelers~~on the Advisory Board of Owl.co. He is also athe ~~member~~Vice atChairman of the ~~Insurance~~Providence ~~Library~~College ~~Association~~Board of ~~Boston~~Trustees, where he received his Bachelor of Science in Accounting. Mr. Langwell qualifies as an “Audit Committee Financial Expert” as defined by SEC rules.

~~The~~Charles ~~Company~~J. ~~has~~Brophy ~~adopted~~III awas ~~Code~~appointed Director of ~~Business~~the ~~Conduct~~Company ~~and~~on ~~Ethics~~April ~~(“Code~~5, of2023. ~~Ethics”)~~Mr. ~~that~~Brophy ~~applies~~has also been appointed to ~~all~~serve ~~employees,~~as ~~including~~a ~~executive~~member ~~officers,~~of ~~and~~the toInvestment ~~directors~~Committee. ~~The~~Mr. ~~Code~~Brophy joined the Board with over 35 years of ~~Ethics~~experience isin ~~available~~the oninsurance industry. He spent the ~~About~~last Us24 years with HUB International, ~~Investor~~where ~~Information~~he ~~page~~currently ofserves as the ~~Company’s~~Regional ~~website~~President ~~at www~~(U.~~safetyinsurance~~S.~~com.~~ IfEast), ~~the~~and ~~Company~~has ~~ever~~extensive ~~were~~commercial toand ~~amend~~personal orsales ~~waive~~development ~~any~~and ~~provision~~management ofexperience. ~~its~~Prior ~~Code~~to ofjoining ~~Ethics~~HUB ~~that~~International, ~~applies~~Mr. toBrophy ~~the~~was ~~Company’s~~a ~~principal~~Director ~~executive~~at ~~officer,~~Bain ~~principal~~Hogg ~~financial~~Robinson, ~~officer~~LLC, ~~principal~~and ~~accounting~~began ~~officer~~his orcareer ~~any~~in ~~person~~commercial ~~performing~~lines ~~similar~~underwriting ~~functions,~~with ~~the~~The Travelers Insurance Company ~~intends~~(“Travelers”). toMr. ~~satisfy~~Brophy ~~its~~was ~~disclosure~~the ~~obligations,~~2016 ifMassachusetts ~~any,~~Insurance ~~with~~Professional ~~respect~~of tothe ~~any~~Year ~~such~~and ~~waiver~~has orserved ~~amendment~~on byvarious ~~posting~~advisory ~~such~~councils ~~information~~for onThe ~~its~~Hartford ~~website~~Insurance ~~set~~Group, ~~forth~~Arbella ~~above~~Mutual ~~rather~~Insurance, ~~than~~The byHanover ~~filing~~Insurance Group, and Travelers. He is also a ~~Current~~member ~~Report~~at onthe ~~Form~~Insurance ~~8-K~~Library Association of Boston.

The Company has adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to all employees, including executive officers, and to directors. The Code of Ethics is available on the About Us, Investor Information page of the Company’s website at www.safetyinsurance.com. If the Company ever were to amend or waive any provision of its Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, the Company intends to satisfy its disclosure obligations, if any, with respect to any such waiver or amendment by posting such information on its website set forth

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above rather than by filing a Current Report on Form 8-K.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a number of risks. Any of the risks described below could result in a significant or material adverse effect on our results of operations or financial condition, and a corresponding decline in the market price of our common stock.

We operate in a heavily regulated industry and are subject to regulations and laws in various jurisdictions:

We are subject to comprehensive government regulation and our ability to earn profits may be restricted by these regulations.

General Regulation. We are subject to regulation by the state insurance department of each state in which we do business. In each jurisdiction, we must comply with various laws and regulations, including those involving:

●

approval or filing of premium rates and policy forms;

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limitation of the right to cancel or non-renew policies in some lines;

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requirements to participate in residual markets;

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licensing of insurers and agents; and

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regulation of the right to withdraw from markets or terminate involvement with agencies;

We also are subject to enhanced regulation by our domestic regulator, the Division, from which we must obtain prior approval for certain corporate actions. Among other things, we must comply with laws and regulations governing:

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transactions between an insurance company and any of its affiliates;

●

the payment of dividends;

●

the acquisition of an insurance company or of any company controlling an insurance company;

●

solvency standards;

●

minimum amounts of capital and surplus which must be maintained;

●

limitations on types and amounts of investments;

●

restrictions on the size of risks which may be insured by a single company;

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deposits of securities for the benefit of policyholders; and

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reporting with respect to financial condition.

In addition, insurance department examiners from Massachusetts perform periodic financial and market conduct examinations of insurance companies. Such regulation is generally intended for the protection of policyholders rather than security holders.

Massachusetts, New Hampshire and Maine require that all licensed property and casualty insurers bear a portion of the losses suffered by some insureds as a result of impaired or insolvent insurance companies by participating in each state’s insolvency fund. Members of the state’s insolvency fund are assessed a proportionate share of the obligations and expenses of the fund in connection with an insolvent insurer. These assessments are made by the fund to cover the cost of paying eligible claims of policyholders of these insolvent insurers. Similarly, assessments are made by each state’s commercial automobile insurance residual market mechanism to recover the shares of net losses that would have been assessed to the insolvent companies but for their insolvencies. In addition, Massachusetts has established an underwriting association in order to ensure that property insurance is available for owners of high risk property who are not able to

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~~obtain~~assessed ~~insurance~~to ~~from private insurers. The losses of this underwriting association,~~ the ~~Massachusetts~~insolvent ~~Property~~companies ~~Insurance~~but ~~Underwriting~~for ~~Association,~~their ~~are shared by all insurers that write property and casualty insurance in Massachusetts~~insolvencies. ~~We are assessed from time to time to pay these losses.~~ The effect of these assessments could reduce our profitability in any given period and limit our ability to grow our business.

Because we are unable to predict with certainty changes in the political, economic or regulatory environments of the states in which we operate in the future, there can be no assurance that existing insurance-related laws and regulations will not become more restrictive in the future or that new restrictive laws will not be enacted and, therefore, it is not possible to predict the potential effects of these laws and regulations on us.

There are anti-takeover provisions contained in our organizational documents and in laws of the State of Delaware and the Commonwealth of Massachusetts that could impede an attempt to replace or remove our management or prevent the sale of our ~~company~~Company, which could diminish the value of our common stock.

Our certificate of incorporation, bylaws and the laws of Delaware contain provisions that may delay, deter or prevent a takeover attempt that shareholders might consider in their best interests. For example, our organizational documents provide for a classified board of directors with staggered terms and provide for the filling of vacancies on our board of directors by the vote of a majority of the directors then in office. These provisions will render the removal of the incumbent board of directors or management more difficult. In addition, these provisions may prevent shareholders from receiving the benefit of any premium over the market price of our common stock offered by a bidder in a potential takeover. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

The Massachusetts insurance law prohibits any person from acquiring control of us, and thus indirect control of the Insurance Subsidiaries, without the prior approval of the Commissioner. That law presumes that control exists where any person, directly or indirectly, owns, controls, holds the power to vote or holds proxies representing 10.0% or more of our outstanding voting stock. Even persons who do not acquire beneficial ownership of more than 10.0% of the outstanding shares of our common stock may be deemed to have acquired such control if the Commissioner determines that such control exists in fact. Therefore, any person seeking to acquire a controlling interest in us would face regulatory obstacles which could delay, deter or prevent an acquisition that shareholders might consider in their best interests.

Section 203 of the General Corporation Law of Delaware, the jurisdiction in which the Company is organized, may affect the ability of an "interested stockholder" to engage in certain business combinations including mergers, consolidations or acquisitions of additional shares, for a period of three years following the time that the stockholder becomes an interested stockholder. An interested stockholder is defined to include persons owning directly or indirectly 15.0% or more of the outstanding voting stock of the corporation.

Our private passenger automobile business is concentrated in in New England:

With a concentration of private passenger automobile insurance, our business may be adversely affected by conditions in this industry.

Approximately 5554.89% of our direct written premiums for the year ended December 31, ~~2024~~2025 were generated from private passenger automobile insurance policies. As a result of our focus on that line of business, negative developments in the economic, competitive or regulatory conditions affecting the private passenger automobile insurance industry could have a material adverse effect on our results of operations and financial condition. In addition, these developments would have a disproportionate effect on us, compared to insurers which conduct operations in multiple business lines.

Because we write insurance principally in Massachusetts, our business may be adversely affected by conditions in Massachusetts, including the impact of additional competitors.

A majority of our direct written premiums are currently generated in Massachusetts. Our revenues and profitability are therefore subject to prevailing regulatory, economic, demographic, competitive and other conditions in

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~~Because~~Massachusetts. weChanges ~~write~~in ~~insurance~~any ~~principally~~of inthese ~~Massachusetts,~~conditions could make it more costly or difficult for us to conduct our business. ~~may~~The beMassachusetts ~~adversely~~market ~~affected~~has byseen an increased level of competition, particularly in the private passenger automobile insurance line, due to prior changes in regulatory conditions. To date, we have not had a significant decrease in ~~Massachusetts~~our private passenger automobile insurance business. However, ~~including~~further ~~the~~competition ~~impact~~and adverse results could include loss of ~~additional~~market ~~competitors.~~share, decreased revenue, and/or increased costs.

Almost all of our direct written premiums are currently generated in Massachusetts. Our revenues and profitability are therefore subject to prevailing regulatory, economic, demographic, competitive and other conditions in Massachusetts. Changes in any of these conditions could make it more costly or difficult for us to conduct our business. The Massachusetts market has seen an increased level of competition, particularly in the private passenger automobile insurance line, due to prior changes in regulatory conditions. To date, we have not had a significant decrease in our private passenger automobile insurance business. However, further competition and adverse results could include loss of market share, decreased revenue, and/or increased costs.

As writers of property insurance, our Insurance Subsidiaries are exposed to potential losses related to severe weather:

We have exposure to claims related to severe weather conditions, which may result in an increase in claims frequency and severity.

We are subject to claims arising out of severe weather conditions, such as rainstorms, snowstorms and ice storms, that may have a significant effect on our results of operations and financial condition. The incidence and severity of weather conditions are inherently unpredictable. There is generally an increase in claims frequency and severity under the private passenger automobile insurance we write when severe weather occurs because a higher incidence of vehicular accidents and other insured losses tend to occur as a result of severe weather conditions. In addition, we have exposure to an increase in claims frequency and severity under the homeowners and other property insurance we write because property damage may result from severe weather conditions.

Because some of our insureds live near the Massachusetts coastline, we also have a potential exposure to losses from hurricanes and major coastal storms such as Nor'easters. Although we purchase catastrophe reinsurance to limit our exposure to natural catastrophes, in the event of a major catastrophe resulting in property losses to us in excess of $~~690~~750,000 our losses would exceed the limits of this reinsurance in addition to losses from our co-participation retention of a portion of the risk up to $~~690~~750,000.

Climate change and increasing climate change regulation may adversely impact our results of operations.

There are concerns that the increase in weather-related catastrophes and other losses incurred by the industry in recent years may be indicative of changing weather patterns. This change in weather patterns could lead to higher overall losses and higher reinsurance costs. Changes in climate conditions may also cause our underlying modeling data to not adequately reflect frequency and severity, limiting our ability to effectively evaluate and manage risks of catastrophes and severe weather events. Among other impacts, this could result in not charging enough premiums or not obtaining timely state approvals for rate increases to cover the risks we insure. Climate change could also have an impact on issuers of securities in which we invest, resulting in realized and unrealized losses in future periods which could have a material adverse impact on our results of operations and/or financial position.

We are also subject to complex and changing laws and regulations relating to climate change which are difficult to predict and quantify and may have an adverse impact on our business. Changes in regulations relating to climate change or our own management decisions implemented as a result of assessing the impact of climate change on our business may result in an increase in the cost of doing business.

We are subject to economic and underwriting market conditions:

The impact of inflation and supply chain delays may increase loss severity.

Economic and market conditions outside of our control, such as inflation and supply chain issues, may adversely impact our underwriting profitability. Inflation in recent periods has significantly increased our loss costs across all lines of business, especially private passenger automobile. Inflation higher than the levels that the Company anticipates could continue to negatively impact our loss costs in future periods. In addition to the impact of inflation on reserves, on a going forward basis, we may not be able to offset the impact of inflation on our loss costs with sufficient price increases.

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We operate in the highly competitive property and casualty insurance industry:

If we are not able to attract and retain independent agents, it could adversely affect our business.

We market our insurance solely through independent agents. We must compete with other insurance carriers for the business of independent agents. Some of our competitors offer a larger variety of products, lower prices for insurance coverage or higher commissions. While we believe that the commissions and services we provide to our agents are competitive with other insurers, changes in commissions, services or products offered by our competitors could make it harder for us to attract and retain independent agents to sell our insurance products.

Established competitors with greater resources may make it difficult for us to market our products effectively and offer our products at a profit.

The property and casualty insurance business is highly competitive and many of our competitors have substantially greater financial and other resources than we do. We compete with both large national writers and smaller regional companies. Further, our competitors include other companies which, like us, serve the independent agency market, as well as companies which sell insurance directly to customers. Direct writers may have certain competitive advantages over agency writers, including increased name recognition, loyalty of the customer base to the insurer rather than to an independent agency and, potentially, lower cost structures. A material reduction in the amount of business independent agents sell would directly and negatively affect our profitability and our ability to compete with insurers that do not rely solely on the independent agency market to sell their products. Further, our Company and others compete on the basis of the commissions and other cash and non-cash incentives provided to agents. Although a number of national insurers that are much larger than we are do not currently compete in a material way in the Massachusetts personal auto market, if one or more of these companies decided to aggressively enter the market it could reduce our share of the Massachusetts market and thereby have a material adverse effect on us. These companies include some that would be able to sustain significant losses in order to acquire market share, as well as others which use distribution methods that compete with the independent agent channel. Progressive Corporation, GEICO and Allstate, large insurers that market directly to policyholders rather than through agents, along with other carriers have entered the Massachusetts private passenger automobile insurance market.

We may enter new markets and there can be no assurance that our diversification strategy will be effective.

Although we intend to concentrate on our core businesses in Massachusetts, New Hampshire, and Maine, we also may seek to take advantage of prudent opportunities to expand our core businesses into other states where we believe the independent agent distribution channel is strong. As a result of a number of factors, including the difficulties of finding appropriate expansion opportunities and the challenges of operating in an unfamiliar market, we may not be successful in this diversification. Additionally, in order to carry out any such strategy we would need to obtain the appropriate licenses from the insurance regulatory authority of any such state.

The success of our business is subject to operational risks:

We may not be able to successfully alleviate risk through reinsurance arrangements, which could cause us to reduce our premiums written in certain lines or could result in losses.

In order to reduce risk, to increase our underwriting capacity, and mitigate the volatility of losses on our financial condition and operations, we purchase reinsurance. The availability and the cost of reinsurance protection are subject to market conditions, which are outside of our control. As a result, we may not be able to successfully alleviate risk through these arrangements. For example, if reinsurance capacity for homeowner's risks were reduced as a result of terrorist attacks, climate change or other causes, we might seek to reduce the amount of homeowners business we write. As a result, the Company may not be able to successfully purchase reinsurance and transfer a portion of the Company’s risk through reinsurance arrangements. In addition, we are subject to credit risk with respect to our reinsurance because the ceding of risk to reinsurers does not relieve us of our liability to our policyholders. A significant reinsurer's

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~~The~~insolvency ~~success~~or inability to make payments under the terms of a reinsurance treaty could have a material adverse effect on our ~~business~~results isof ~~subject~~operations toor ~~operational~~financial ~~risks:~~condition.

We may not be able to successfully alleviate risk through reinsurance arrangements which could cause us to reduce our premiums written in certain lines or could result in losses.

As a holding company, Safety Insurance Group, Inc. is dependent on the results of operations of the Safety Insurance Company.

Safety Insurance Group, Inc. is a company and a legal entity separate and distinct from Safety Insurance Company, our principal operating subsidiary. As a holding company without significant operations of its own, the principal sources of Safety Insurance Group, Inc.'s funds are dividends and other distributions from Safety Insurance Company. Our rights to participate in any distribution of assets of Safety Insurance Company are subject to prior claims of policyholders, creditors and preferred shareholders, if any, of Safety Insurance Company (except to the extent that our rights, if any, as a creditor are recognized). Consequently, our ability to pay debts, expenses and cash dividends to our shareholders may be limited. The ability of Safety Insurance Company to pay dividends is subject to limits under Massachusetts insurance law. Further, the ability of Safety Insurance Group, Inc. to pay dividends, and our subsidiaries' ability to incur indebtedness or to use the proceeds of equity offerings, will be subject to limits under our revolving credit facility.

Our failure to maintain a commercially acceptable financial strength rating would significantly and negatively affect our ability to implement our business strategy successfully.

A.M. Best has currently assigned Safety Insurance an "A (Excellent)" rating. An "A" rating is A.M. Best's third highest rating, out of 13 possible rating classifications for solvent companies. An "A" rating is assigned to insurers that in A.M. Best's opinion have an excellent ability to meet their ongoing obligations to policyholders. Moreover, an "A" rating is assigned to companies that have, on balance, excellent balance sheet strength, operating performance and business profile when compared to the standards established by A.M. Best. A.M. Best bases its ratings on factors that concern policyholders and not upon factors concerning investor protection. Such ratings are subject to change and are not recommendations to buy, sell, or hold securities. An important factor in an insurer's ability to compete effectively is its A.M. Best rating. Our A.M. Best rating is lower than those of some of our competitors. Any future decrease in our rating could affect our competitive position.

Our losses and loss adjustment expenses may exceed our reserves, which could significantly affect our business.

The reserves for losses and loss adjustment expenses that we have established are estimates of amounts needed to pay reported and unreported claims and related expenses based on facts and circumstances known to us as of the time we established the reserves. Reserves are based on historical claims information, industry statistics and other factors. The establishment of appropriate reserves is an inherently uncertain process. If our reserves are inadequate and are strengthened, we would have to treat the amount of such increase as a charge to our earnings in the period that the deficiency is recognized. As a result of these factors, there can be no assurance that our ultimate liability will not materially exceed our reserves and have a negative effect on our results of operations or financial condition.

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Due to the inherent uncertainty of estimating reserves, it has been necessary, and may over time continue to be necessary, to revise estimated future liabilities as reflected in our reserves for claims and policy expenses. The historic development of reserves for losses and loss adjustment expenses may not necessarily reflect future trends in the development of these amounts. Accordingly, it is not appropriate to extrapolate redundancies or deficiencies based on historical information.

If we lose key personnel, our ability to implement our business strategy could be delayed or hindered.

The loss of key personnel could prevent us from fully implementing our business strategy and could significantly and negatively affect our financial condition or results of operations. As we continue to grow, we will need to recruit and retain additional qualified management personnel, and our ability to do so will depend upon a number of factors, such as our results of operations and prospects and the level of competition then prevailing in the market for qualified personnel.

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Acquisitions may not produce the anticipated benefits and may result in unintended consequences, which could have a material adverse impact on our financial condition or results of operations.

We may not be able to successfully integrate acquired businesses or achieve the expected synergies as a result of such acquisitions. The process of integrating an acquired business can be complex and costly and may create unforeseen operating difficulties that could result in the business performing differently than we expected, including through the loss of customers or in our failure to realize anticipated increased revenue growth or expense-related efficiencies.

If our agency business does not perform well, we may be required to recognize an impairment of our goodwill.

Goodwill represents the excess of the amounts we paid to acquire businesses over the fair value of their net assets at the date of acquisition. We test goodwill at least annually for impairment. Impairment testing is performed based upon estimates of the fair value of the “reporting unit” to which the goodwill relates. The fair value of the reporting unit could decrease if new business, customer retention, profitability or other drivers of performance differ from expectations. If it is determined that the goodwill has been impaired, we must write down the goodwill by the amount of the impairment, with a corresponding charge to net income (loss). These write downs could have a material adverse effect on our results of operations or financial condition.

Future sales of shares of our common stock by our existing shareholders in the public market, or the possibility or perception of such future sales, could adversely affect the market price of our stock.

Investors currently known to be the beneficial owners of greater than 5.0% of our outstanding common stock hold approximately 4538.30% of the common stock of Safety Insurance Group, Inc. on a fully diluted basis. No prediction can be made as to the effect, if any, that future sales of shares by our existing shareholders, or the availability of shares for future sale, will have on the prevailing market price of our common stock from time to time. Sales of substantial amounts of our common stock in the public market by our existing shareholders, or the possibility or perception that such sales could occur, could cause the prevailing market prices for our common stock to decrease. If such sales reduce the market price of our common stock, our ability to raise additional capital in the equity markets may be adversely affected.

A proxy contest with an activist shareholder could cause us to incur significant costs, divert management’s attention and resources, and have an adverse effect on our business

Activist shareholders may engage in proxy solicitations, advance shareholder proposals or director nominations or otherwise attempt to affect changes or acquire control over us. Responding to these actions can be costly and time-consuming and divert the attention of our Board and management from the management of our operations and the pursuit of our business strategies, particularly if such activist shareholders advocate for actions that are not supported by other shareholders, our Board or management. In addition, perceived uncertainties as to our future direction may result in the loss of potential business opportunities, damage to our reputation and may make it more difficult to attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to experience periods of volatility.

Our success depends on our ability to adjust claims accurately.

We must accurately evaluate and pay claims that are made under our insurance policies. Our failure to pay claims fairly, accurately, and in a timely manner, or to deploy claims resources appropriately and in a cost-effective manner, could result in unanticipated costs to us, lead to material litigation, undermine customer goodwill and our reputation in the marketplace, and impair our brand and, as a result, could materially adversely affect our competitiveness, customer retention, financial results, prospects, or liquidity.

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loss of potential business opportunities, damage to our reputation and may make it more difficult to attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to experience periods of volatility.

We are subject to technology, cybersecurity and privacy risks:

Our business depends on the uninterrupted operation of our systems and business functions, including our information technology, telecommunications and other business systems. Our business continuity and disaster recovery plans may not sufficiently address all contingencies.

Our business is highly dependent upon our ability to execute, in an efficient and uninterrupted fashion, necessary business functions, such as processing new and renewal business, providing customer service, and processing and paying claims. A shut-down of or inability to access our facility, a power outage, or a failure of one or more of our information technology, telecommunications or other systems could significantly impair our ability to perform such functions on a timely basis. If sustained or repeated, such a business interruption, systems failure or service denial could result in a deterioration in the level of service we provide to our agents and policyholders. We have established a business continuity plan in an effort to ensure the continuation of core business operations in the event that normal business operations could not be performed due to a catastrophic event. While we continue to test and assess our business continuity plan to ensure it meets the needs of our core business operations and addresses multiple business interruption events, there is no assurance that core business operations could be performed upon the occurrence of such an event, which may result in a material adverse effect on our financial position or results of operations.

We outsource certain business and administrative functions to third parties and may do so increasingly in the future. If we fail to develop and implement our outsourcing strategies or our third-party providers fail to perform as anticipated, we may experience operational difficulties, increased costs and a loss of business that may have a material adverse effect on our results of operations or financial condition.

Our business could be materially and adversely affected by a security breach or other attack involving our computer systems or the systems of one or more of our agents and vendors.

Our highly automated and networked organization is subject to cyber-terrorism and a variety of other cyber-security threats. These threats come in a variety of forms, such as viruses and malicious software. Such threats can be difficult to prevent or detect, and if experienced, could interrupt or damage our operations, harm our reputation or have a material effect on our operations. Our technology and telecommunications systems are highly integrated and connected with other networks. Cyber-attacks involving these systems could be carried out remotely and from multiple sources and could interrupt, damage or otherwise adversely affect the operations of these critical systems. In addition, the rapid evolution and increased adoption of AI technologies may heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain and mitigate. Cyber-attacks could result in the modification or theft of data, the distribution of false information or the denial of service to users. The risks of cyber-attacks could be exacerbated by geopolitical tensions, including hostile actions taken by nation-states and terrorist organizations. We obtain, utilize and maintain data concerning individuals and organizations with which we have a business relationship. Threats to data security can emerge from a variety of sources and change in rapid fashion, resulting in the ongoing need to expend resources to secure our data in accordance with customer expectations and statutory and regulatory requirements.

Our businesses must comply with regulations to control the privacy of customer, employee and third-party data, and state, federal and international regulations regarding data privacy, are becoming increasingly more onerous. A misuse or mishandling of confidential or proprietary information could result in legal liability, regulatory action and reputational harm. We could be subject to liability if confidential customer information is misappropriated from our technology systems. Despite the implementation of security measures, these systems may be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or similar disruptive problems. Any well-publicized compromise of security could deter people from entering into transactions that involve transmitting confidential information to our systems, which could have a material adverse effect on our business and reputation. We rely on services and products provided by many vendors. In the event that one or more of our vendors fails to protect personal information of our customers, claimants or employees, we may incur operational impairments, or could be exposed to litigation, compliance costs or reputational damage. We maintain cyber-liability insurance coverage to offset certain potential losses, subject to policy limits, such as liability to others, costs of related crisis management, data extortion, applicable forensics and certain regulatory defense costs, fines and penalties.

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exposed to litigation, compliance costs or reputational damage. We maintain cyber-liability insurance coverage to offset certain potential losses, subject to policy limits, such as liability to others, costs of related crisis management, data extortion, applicable forensics and certain regulatory defense costs, fines and penalties.

While, to date, we are not aware of having experienced a material breach of our cyber security systems, administrative, internal accounting and technical controls as well as other preventive actions may be insufficient to prevent physical and electronic break-ins, denial of service, cyber-attacks, business email compromises, ransomware or other security breaches to our systems or those of third parties with whom we do business.

We believe that we have established and implemented appropriate security measures to provide reasonable assurance that our information technology systems are secure and appropriate controls and procedures to enable us to identify and respond to unauthorized access to such systems. While we have not experienced material cyber-incidents to date, the occurrence and effects of cyber-incidents may remain undetected for an extended period. We periodically engage third parties to evaluate and test the adequacy of our security measures, controls and procedures. Despite these security measures, controls and procedures, disruptions to and breaches of our information technology systems are possible.

Our development and use of new technology, such as generative artificial intelligence, may present additional risks, may not be successful, and could have a material adverse effect on our business.

We have developed and are developing new technologies, including machine learning and other forms of AI, predictive models, algorithms and automated processes, and will in the future develop and use AI and other new technologies in our business. As with many technological innovations, the growing development and use of generative AI (GenAI) presents additional risks that may adversely affect our business. GenAI might produce or reveal datasets that are flawed or insufficient or contain biased information, which could result in unintentionally and unfairly discriminatory outcomes in our business processes. These deficiencies could also undermine the associated predictions, analysis, or decisions GenAI applications produce or the business decisions we make based on this information. We could face challenges on whether we use AI in our business processes in a responsible, compliant, and effective manner. Since GenAI is subject to public debate, and depending on how observers view our development and use of AI, we could be subject to criticism or experience an adverse impact on our brand or reputation, which could decrease demand for our products or services, create difficulties in our ability to recruit and retain employees and lead to greater regulatory scrutiny of our businesses. Additionally, one or more of our key vendors may begin to use AI in their business in a manner that does not meet existing or rapidly evolving regulatory standards. Furthermore, our competitors or other third parties may be able to incorporate GenAI into their products more quickly, or more successfully, than us.

Intellectual property ownership rights, including those associated with related copyrights, patent rights, GenAI inputs for model training, and other GenAI outputs, have not been fully interpreted by courts or regulations. Additionally, we are subject to new AI-focused regulations and regulatory expectations that could impose varied compliance and reporting requirements and challenges that could impact our operations or ability to write business profitably in one or more jurisdictions. For example, the National Association of Insurance Commissioners (NAIC) has adopted guiding principles on AI, as well as a model bulletin, to inform and articulate general expectations for businesses, professionals, and stakeholders across the insurance industry as they implement AI tools to facilitate operations. Nearly half of all departments of insurance have adopted the NAIC AI model bulletin. Other states have adopted or are considering alternatives, including comprehensive AI legislation or reminders that existing state laws pertain to AI activities, including laws regarding unfair claims and trade practices. Further, there is uncertainty regarding the impact of state laws related to artificial intelligence as the result of an executive order issued by the current presidential administration in December 2025, which directs federal regulators to challenge and preempt state laws that the administration views as obstructive to artificial intelligence innovation. If we are unable to use artificial intelligence technology in our operations as a result of such legal restrictions, or if regulations on artificial intelligence require additional compliance or reporting obligations, our business operations in certain regions could be adversely impacted. We cannot predict what other regulatory actions may be taken with regard to AI but any limitations, or any failure or perceived failure by us to comply with any such requirements, could have an adverse impact on our business.

Any of these impacts could result in significant operational difficulties, reputational harm, litigation, and adverse actions by regulators, potentially increasing our costs or causing customers to refrain from buying insurance from us or other businesses to refrain from doing business with us, which could have a material effect on our business, financial condition, or results of operations.

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We invest in securities which are subject to market risk:

Market fluctuations and changes in interest rates can have significant and negative effects on our investment portfolio.

Our results of operations depend in part on the performance of our invested assets. As of December 31, ~~2024~~2025, based upon fair value measurement, 7377.89% of our investment portfolio was invested in fixed maturity securities, 1413.61% in equity securities, 10and 9.30% in other invested assets~~, and 1~~.3% ~~in short term investments.~~ Certain risks are inherent in connection with debt securities including loss upon default and price volatility in reaction to changes in interest rates and general market factors. Changes in interest rates affect the carrying value of our fixed maturity investments and returns on our fixed maturity investments. A decline in interest rates reduces the returns available on new fixed maturity investments (including those purchases to re-invest maturities from the existing portfolio), thereby negatively impacting our net investment income on a going-forward basis, while rising interest rates reduce the market value of existing fixed maturity investments, thereby negatively impacting our book value.

We have a significant investment portfolio and adverse capital market conditions, including but not limited to volatility and credit spread changes, will impact the liquidity and value of our investments, potentially resulting in higher realized or unrealized losses. Values of our investments can also be impacted by reductions in price transparency and changes in investor confidence and preferences, potentially resulting in higher realized or unrealized losses. If the carrying value of our investments exceeds the fair value, and the decline in fair value is deemed to be other-than-temporary, we will be required to write down the value of our investments, which could materially harm our results of operations or financial condition.

ITEM 1B. UNRESOLVED STAFF COMMENTS

As of the date of this report, the Company had no unresolved comments from the Commission staff regarding its periodic or current reports under the Exchange Act.

ITEM 1C. CYBERSECURITY

The Company has implemented a cybersecurity program that oversees, assesses, and manages its cybersecurity risks. As a component of the Company’s formal enterprise risk management program, whose goal is to support the business objectives and strategy, the cybersecurity program leverages multiple security measures to protect the integrity of the Company’s information assets. The program's strategy aligns to the National Institute of Standards and Technology Cybersecurity Control Framework, where controls are implemented throughout our environment to achieve five categorical objectives of a cybersecurity program, including identification, protection, detection, response, and recovery.

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Technology Cybersecurity Control Framework, where controls are implemented throughout our environment to achieve five categorical objectives of a cybersecurity program, including identification, protection, detection, response, and recovery.

Our cybersecurity program is regularly assessed to ensure it meets the ever-changing cyber risk environment. This is accomplished via monthly risk assessment meetings performed by our technical cybersecurity committee, periodic risk assessments and audits performed by internal audit, and cyber tests and assessments performed by contracted consultants.

Our cybersecurity program includes several methods to protect against intrusion by a bad actor, including such techniques as reputational filtering, anti-virus scans, intrusion prevention, multi-factor authentication, and account isolation among others. We also use numerous approaches to detect ransomware and other cyber-attacks, including among others, dark web searches, email sandboxing, endpoint detection, and intrusion detection. The Company continuously monitors and enhances its program to respond to evolving cyber threats and changes in the regulatory environment.

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To ensure the effectiveness of the cybersecurity program, we have implemented various assurance methods including ongoing internal audit control reviews, external reviews by third-party consultants including penetration testing, and cyber incident response team exercises. Ongoing monitoring of our systems and security metric reviews are in place to manage external threats. Our cyber monitoring and supporting metrics include such areas as intrusion detection, phishing attempts, cyber training results, and patch management vulnerabilities. Additionally, the Company collaborates with industry associations, government authorities, peers, and external advisors to monitor the threat environment to ensure no gaps exist in our security practices.

A third-party risk management program is in place ensuring those risks associated with our use of vendors to support our business objectives and strategic initiatives are properly understood and mitigated. Through management’s oversight, third-party assessments of vendor’s information security practices and protocols, including their readiness to protect against and respond to cybersecurity breaches are performed. Third-party service providers are categorized into tiers in consideration of the risk of a vendor’s activities. Vendor due diligence questionnaires are issued seeking to understand a service provider’s cyber and information security control environment, as well as their resiliency in the event of an intrusion to their systems. Formalized vendor incident response procedures are in place that support the activities required should a cyber event occur.

We continue to improve our ability to defend against, respond to, and recover from ransomware and other cyber events; enhance application cybersecurity capabilities, including defenses against fraud attacks; and to ensure security capabilities are built into new cloud-based platforms that we adopt. We are also required to maintain strong cyber defense protocols in the states where we are authorized or licensed to write business. We monitor the status of new cybersecurity regulations, including notification requirements.

To the best knowledge of management, no risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.

Our Board is ultimately responsible for the oversight of risk management strategy, business plan and management of financial resources. As part of these responsibilities, the Board is apprised, annually and as needed, of developments in the external environment and business strategies that present increased cyber risk exposure to the Company. On a weekly basis, The Vice President of Management Information Services (“VP of MIS”) meets with the Chairman of the Board of Directors, President and Chief Executive Officer (“Chairman, President and CEO”), to discuss developments with the Company’s IT environment, including its cybersecurity program. The Chairman, President and CEO would then inform the Board of those developments, as needed. The Board has delegated oversight of cybersecurity risk management to the Audit Committee of the Board of Directors.

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The Audit Committee meets on a quarterly basis. A set agenda of risk matters includes detailed updates of the Company’s preparedness and significant cybersecurity activities. The topics covered by these updates have included discussions of policies and procedures to prevent, detect and respond to cybersecurity incidents, modifications to on-line platforms, and the use of cloud-based applications. Lessons learned from cybersecurity incidents and the internal and external testing of our cyber defenses are provided quarterly. The Board is also provided with an annual cybersecurity technology risk and control update.

A management level risk committee exists and oversees the management of the Company’s highest-level risks, including cybersecurity. This committee consists of representatives from the Risk, Financial, Underwriting, Information Technology, Marketing and Legal Departments. The Risk Committee, as supported by the Cybersecurity Committee, is responsible for keeping the audit committee apprised of the Company’s cybersecurity preparedness and cyber incidents. The Cybersecurity Committee oversees and ensures the Company’s cyber-related controls are sufficient to protect the Company’s information and proprietary assets, in accordance with the acceptable risk policies and risk tolerances.

The VP of MIS has expertise assessing and managing cybersecurity risks, and is a member of both the Risk Committee and Cybersecurity Committee. He has served in his current role since 2014 and has held several senior-level information technology roles in his 3233-year tenure with the Company. In his various roles, he has been responsible for ~~providing senior leadership in the areas of information security, IT governance risk & compliance, business continuity, and disaster recovery.~~

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providing senior leadership in the areas of information security, IT governance risk & compliance, business continuity, and disaster recovery.

ITEM 2. PROPERTIES

We conduct most of our operations in approximately 72 thousand square feet of leased space at 20 Custom House Street in downtown Boston, Massachusetts. Our lease will expire on December 31, 2028. This real estate space was remodeled in 2018 and included capital expenditures to update lighting as well as heating, ventilation and air condition systems with state of the art and environmentally focused technologies.

ITEM 3. LEGAL PROCEEDINGS

Our Insurance Subsidiaries are parties to a number of lawsuits arising in the ordinary course of their insurance business. We believe that the ultimate resolution of these lawsuits will not, individually or in the aggregate, have a material adverse effect on our financial condition.

On October 19, 2021, the Supreme Judicial Court of Massachusetts (the “SJC”) unanimously ruled that property and casualty insurers must compensate third-party claimants under property damage coverage, part 4 of the standard Massachusetts automobile insurance policy, 2008 edition (standard policy), for the inherent diminished value (“IDV”) that occurs when their vehicles are damaged in a crash. This ruling overturned a previous decision by the Massachusetts Superior Court (the “Superior Court”), which found that a Massachusetts auto insurance policy did not provide property damage coverage for inherent diminished value damages for third-party claimants. The SJC placed the burden of proof on the individual claimant by explicitly specifying that the claimant must establish that the vehicle has suffered IDV damages and also the amount of IDV damages at issue. The SJC further ruled that an insurer’s previous denial of coverage for such damages could not serve as the basis for a claim of unfair business practices. On June 20, 2023, the Superior Court denied a motion brought by the plaintiffs seeking class certification. The plaintiffs had filed a motion to amend the complaint, seeking to address the concerns raised by the Superior Court in denying their motion for class certification, which Safety had opposed. The motion was denied, thus at this point, there will not be a renewed motion for class certification. Safety has not accrued for a specific loss contingency.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

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PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of February 1413, ~~2025~~2026, there were 7 holders of record of the Company's common stock, par value $0.01 per share, and we estimate another 1926,~~346~~159 held in "Street Name."

The closing price of the Company's common stock on February 1413, ~~2025~~2026 was $7779.9633 per share. The Company’s common stock trades on the NASDAQ stock exchange under the symbol SAFT.

During ~~2024~~2025 and ~~2023~~2024, the Company’s Board declared four quarterly cash dividends to shareholders, which were paid and accrued in the amounts of $53,~~166~~952 and $5253,~~992~~166, respectively. On February 25, ~~2025~~2026, the Company's Board of Directors declared a quarterly cash dividend of $0.9092 per share to shareholders of record on March 32, ~~2025~~2026 payable on March 1413, ~~2025~~2026. The Company plans to continue to declare and pay quarterly cash dividends in ~~2025~~2026, depending on the Company's financial position and the regularity of its cash flows.

The Company relies on dividends from its Insurance Subsidiaries for a portion of its cash requirements. The payment by the Company of any cash dividends to the holders of common stock therefore depends on the receipt of dividend payments from its Insurance Subsidiaries. The payment of dividends by the Insurance Subsidiaries is subject to limitations imposed by Massachusetts law, as discussed in Item 1—Business, Supervision and Regulation, Insurance Regulation Concerning Dividends, and also in Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources.

The information called for by Item 201 (d) of Regulation S-K regarding securities authorized for issuance under equity compensation plans will be contained in the Company's Proxy Statement for its Annual Meeting of Shareholders, which the Company intends to file with the U.S. Securities and Exchange Commission within 120 days after December 31, ~~2024~~2025 (the Company's fiscal year end), and such information is incorporated herein by reference.

For information regarding our share repurchase program, refer to Item 8—Financial Statements and Supplementary Data, Note 14, Share Repurchase Program, of this Form 10-K.

COMMON STOCK PERFORMANCE GRAPH

Set forth below is a line graph comparing the dollar change in the cumulative total shareholder return on the Company's Common Stock, for the period beginning on December 31, ~~2019~~2020 and ending on December 31, ~~2024~~2025 with the cumulative total return of the NASDAQ Stock Market Index and a peer group comprised of seven selected property & casualty insurance companies over the same period. The peer group consists of Donegal Group, Inc., Erie Indemnity Company, Horace Mann Educators Corporation, The Hanover Insurance Group, Inc., Mercury General Corp., Selective Insurance Group, Inc., and United Fire Group. Note that this peer group has changed from prior years due to acquisition activity. The graph shows the change in value of an initial one-hundred-dollar investment over the period indicated, assuming re-investment of all dividends.

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Comparative Cumulative Total Returns since December 31, ~~2019~~2020 AmongSafety Insurance Group, Inc.,Property & Casualty Insurance Peer Group and the NASDAQ Stock Market Index

The foregoing performance graph and data shall not be deemed "filed" as part of this Form 10-K for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and should not be deemed incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into such filing.

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ISSUER PURCHASES OF EQUITY SECURITIES

On February 23, 2022, the Board of Directors approved an additional share repurchase 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 ~~shares~~There were 262,370 shares repurchased during the three months ended December 31, ~~2024~~2025.


	Total number	Average		Total number of shares purchased as part of	Maximum number of
	of Shares	price paid		publicly announced	shares that may yet be purchased under the
Period	purchase	per share		plans or programs	plans or programs
October 1-31, 2024	—		—	—		703,971
October 1-31, 2025	—		—	—		703,971
November 1-30, 2024	—		—	—		703,971
November 1-30, 2025	123,201		76.10	123,201		580,770
December 1-31, 2024	—		—	—		703,971
December 1-31, 2025	139,169		76.34	139,169		441,601
Total	—262,370		—	—262,370

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ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our accompanying consolidated financial statements and notes thereto, which appear elsewhere in this document. In this discussion, all dollar amounts are presented in thousands, except share and per share data.

The following discussion contains forward-looking statements. We intend statements which are not historical in nature to be, and are hereby identified as “forward-looking statements” to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, the Company’s senior management may make forward-looking statements orally to analysts, investors, the media and others. This safe harbor requires that we specify important factors that could cause actual results to differ materially from those contained in forward-looking statements made by or on behalf of us. We cannot promise that our expectations in such forward-looking statements will turn out to be correct. Our actual results could be materially different from and worse than our expectations. See “Forward-Looking Statements” below for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.

Executive Summary and Overview

In this discussion, “Safety” refers to Safety Insurance Group, Inc. and “our Company,” “we,” “us” and “our” refer to Safety Insurance Group, Inc. and its consolidated subsidiaries. Our subsidiaries consist of Safety Insurance Company (“Safety Insurance”), Safety Indemnity Insurance Company (“Safety Indemnity”), Safety Property and Casualty Insurance Company (“Safety P&C”), Safety Northeast Insurance Company (“Safety Northeast”), Safety Northeast Insurance Agency, Inc. (“SNIA”), and Safety Management Corporation (“SMC”), which is SNIA’s holding company.

We are a leading provider of private passenger automobile (5554.89% of our direct written premiums in ~~2024~~2025), commercial automobile, (15.2% of ~~2024~~2025 direct written premiums), and homeowners (2425.32% of ~~2024~~2025 direct written premiums) insurance. In addition to these coverages, we offer a portfolio of other insurance products, including dwelling fire, umbrella and business owner policies (totaling 4.7% of ~~2024~~2025 direct written premiums). Operating exclusively in Massachusetts, New Hampshire and Maine through our insurance company subsidiaries, Safety Insurance, Safety Indemnity, Safety P&C, and Safety Northeast (together referred to as the “Insurance Subsidiaries”), we have established strong relationships with independent insurance agents, who numbered ~~828~~797 in 1,~~079~~063 locations throughout these three states during ~~2024~~2025. We have used these relationships and our extensive knowledge of the market to become the ~~third~~fourth largest private passenger automobile carrier and the ~~second~~ largest commercial automobile carrier in Massachusetts, capturing an approximate 9.74% and 1213.90% share, respectively, of the Massachusetts private passenger and commercial automobile markets in ~~2024~~2025, according to statistics compiled by the Commonwealth Automobile Reinsurers (“CAR”) based on automobile exposures. We are the third largest homeowners insurance carrier in Massachusetts, with a market share of 67.30% in ~~2023~~2024.

A.M. Best, which rates insurance companies based on factors of concern to policyholders, currently assigns Safety Insurance an “A (Excellent)” rating. Our “A” rating was reaffirmed by A.M. Best on June 1820, ~~2024~~2025.

Our Insurance Subsidiaries began writing insurance in New Hampshire during 2008 and Maine in 2016. In November 2020, we formed a fourth insurance subsidiary, Safety Northeast, which became licensed to write insurance products in Massachusetts. The table below shows the amount of direct written premiums in each state during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023.

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	Years Ended December 31,
Direct Written Premiums	2025		2024		2023
Massachusetts	$	1,204,809	$	1,130,254	$	941,721
New Hampshire		57,666		52,095		42,762
Maine		16,130		10,708		6,741
Total	$	1,278,605	$	1,193,057	$	991,224


	Years Ended December 31,
Direct Written Premiums	2024		2023		2022
Massachusetts	$	1,130,254	$	941,721	$	782,790
New Hampshire		52,095		42,762		36,519
Maine		10,708		6,741		4,009
Total	$	1,193,057	$	991,224	$	823,318

Recent Trends and Events

Direct and Net Written Premiums. For the ~~quarter ended December 31, 2024, the Company achieved its ninth consecutive quarter of double-digit growth in direct and net written premiums. For the~~ three months ended December 31, ~~2024~~2025, direct written premium growth and net written premium growth were 182.76% and 126.95%, respectively. For the year ended December 31, ~~2024~~2025, direct written premium growth and net written premium growth were 207.42% and 187.25%, respectively. The increase in premium is driven by ~~new business production, improved retention, and~~ rate increases. For the year ended December 31, ~~2024~~2025, the Company achieved policy count growth across all lines of business, including 10.0%, 4.5% and 8.7% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. Additionally, for the year ended December 31, 2024, average written premium per policy increased 148.1%, 104.76% and 8.9.7% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in ~~2023~~2024.

The following rate changes have been filed and approved by the insurance regulators of Massachusetts, New Hampshire and Maine in ~~2025~~2026, ~~2024~~2025 and ~~2023~~2024.


Line of Business	Effective Date	Rate Change
Massachusetts Private Passenger Automobile	January 1, 2026	1.3%
Maine Commercial Automobile	December 1, 2025	14.8%
Maine Homeowners	November 1, 2025	6.6%
New Hampshire Commercial Automobile	November 1, 2025	8.2%
New Hampshire Homeowners	October 1, 2025	3.9%
New Hampshire Private Passenger Automobile	October 1, 2025	5.2%
Maine Private Passenger Automobile	September 1, 2025	9.6%
Massachusetts Homeowners	August 1, 2025	4.2%
Massachusetts Private Passenger Automobile	July 1, 2025	5.1%
Massachusetts Commercial Automobile	May 1, 2025	5.2%
Massachusetts Private Passenger Automobile	January 1, 2025	5.3%
New Hampshire Commercial Automobile	November 1, 2024	9.5%
New Hampshire Private Passenger Automobile	October 1, 2024	4.4%
New Hampshire Homeowners	October 1, 2024	7.4%
Maine Private Passenger Automobile	September 1, 2024	4.4%
Massachusetts Homeowners	August 1, 2024	5.9%
Massachusetts Private Passenger Automobile	July 1, 2024	4.8%
Massachusetts Commercial Automobile	May 1, 2024	6.3%
New Hampshire Private Passenger Automobile	April 1, 2024	3.4%
Massachusetts Private Passenger Automobile	January 1, 2024	3.5%
New Hampshire Commercial Automobile	November 1, 2023	7.9%
New Hampshire Homeowners	October 1, 2023	6.0%
Maine Private Passenger Automobile	October 1, 2023	7.3%
New Hampshire Private Passenger Automobile	September 1, 2023	6.5%
Massachusetts Homeowners	August 1, 2023	3.9%
Massachusetts Private Passenger Automobile	July 1, 2023	4.3%
Massachusetts Commercial Automobile	May 1, 2023	4.0%

Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the three months ended December 31, ~~2024~~2025 increased by $2014,~~902~~671, or 127.16%, to $~~193~~207,~~007~~678 from $~~172~~193,~~105~~007 for the comparable ~~2023~~2024 period. Losses and loss adjustment expenses incurred for the year ended December 31, ~~2024~~2025 increased by $7480,~~335~~545, or 11.62%, to $~~716~~797,~~637~~182 from $~~642~~716,~~302~~637 for the comparable ~~2023~~2024 period. The increase in losses for ~~the~~both ~~three~~periods ~~months~~ ended ~~and year ended~~ December 31, ~~2024~~2025 is primarily driven by our larger policy counts and current market conditions, specifically inflationary impacts on our Private Passenger Automobile book of business.

Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles (“GAAP”) for the quarter ended December 31, ~~2024~~2025 were 7170.78%, 3028.26%, and ~~101~~99.94%, respectively, compared to 7671.17%, 30.42%, and ~~106~~101.59%, respectively, for the comparable ~~2023~~2024 period. Loss, expense, and combined ratios calculated under U.S. ~~generally accepted accounting principles~~ GAAP for the year ended December 31, ~~2024~~2025 were 70.90%, 3029.20%, and ~~101~~99.10%, respectively, compared to 7770.09%, 30.72%, and ~~107~~101.71%, respectively, for the comparable ~~2023~~2024 period. The ~~2024~~2025 decrease in the loss ratios is due to growth in earned premiums, slightly offset by increased loss severity. The decrease in the expense ratios in both periods is primarily driven by growth in earned premiums.

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in loss ratio is primarily due to the moderation of loss severity in Private Passenger Automobile, growth in earned premiums, and favorable prior year development. Additionally, the prior year loss ratio for the year ended December 31, 2023 was impacted by two severe weather events, totaling $41,178. The 2024 decrease in the expense ratios in both periods is primarily driven by the increase in net earned premium.

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We define a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1,000 and involves multiple first-party policyholders, or an event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event. Catastrophes are caused by various natural events including high winds, winter storms, tornadoes, hailstorms, and hurricanes. The nature and level of catastrophes in any period cannot be reliably predicted.

Catastrophe losses incurred by the type of event are shown in the following table.


		Years Ended December 31,
Event		~~2024~~2025		~~2023~~2024		~~2022~~2023
Freeze		$	-	$	~~29,543~~-	$	-29,543
Windstorms and hailstorms		$	-	$	~~11,635~~-	$	-11,635
	Total losses incurred (1)	$	-	$	~~41,178~~-	$	-41,178

(1)

Total losses incurred include losses plus defense and cost containment expenses and excludes adjusting and other claims settlement expenses.

Statutory Accounting Principles

Our results are reported in accordance with ~~generally accepted accounting principles (“~~GAAP”), which differ from amounts reported in accordance with statutory accounting principles ("SAP") as prescribed by insurance regulatory authorities, which in general reflect a liquidating, rather than going concern concept of accounting. Specifically, under GAAP:

●

Policy acquisition costs such as commissions, premium taxes and other variable costs incurred which are directly related to the successful acquisition of a new or renewal insurance contract are capitalized and amortized on a pro rata basis over the period in which the related premiums are earned, rather than expensed as incurred, as required by SAP.

●

Certain assets are included in the consolidated balance sheets whereas, under SAP, such assets are designated as "nonadmitted assets," and charged directly against statutory surplus. These assets consist primarily of premium receivables that are outstanding over ninety days, federal deferred tax assets in excess of statutory limitations, furniture, equipment, leasehold improvements and prepaid expenses.

●

Amounts related to ceded reinsurance are shown gross of ceded unearned premiums and reinsurance recoverables, rather than netted against unearned premium reserves and loss and loss adjustment expense reserves, respectively, as required by SAP.

●

Fixed maturities securities, which are classified as available-for-sale, are reported at current fair values, rather than at amortized cost, or the lower of amortized cost or market, depending on the specific type of security, as required by SAP.

●

The differing treatment of income and expense items results in a corresponding difference in federal income tax expense. Changes in deferred income taxes are reflected as an item of income tax benefit or expense, rather than recorded directly to surplus as regards policyholders, as required by SAP. Admittance testing may result in a charge to unassigned surplus for non-admitted portions of deferred tax assets. Under GAAP reporting, a valuation allowance may be recorded against the deferred tax asset and reflected as an expense.

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Insurance Ratios

The property and casualty insurance industry uses the combined ratio as a measure of underwriting profitability. The combined ratio is the sum of the loss ratio (losses and loss adjustment expenses incurred as a percent of net earned premiums) plus the expense ratio (underwriting and other expenses as a percent of net earned premiums, calculated on a GAAP basis). The combined ratio reflects only underwriting results and does not include income from investments or finance and other service income. Underwriting profitability is subject to significant fluctuations due to competition, catastrophic events, weather, economic and social conditions, and other factors.

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investments or finance and other service income. Underwriting profitability is subject to significant fluctuations due to competition, catastrophic events, weather, economic and social conditions, and other factors.

Our GAAP insurance ratios are presented in the following table for the periods indicated.


	Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
GAAP ratios:
Loss ratio	70.90	%	7770.09	%	6477.90	%
Expense ratio	3029.20		30.72		3230.37
Combined ratio	~~101~~99.10	%	~~107~~101.71	%	97107.27	%

Share-Based Compensation

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 increases 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.

The maximum number of shares of common stock between both the 2018 Amended 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 December 31, ~~2024~~2025, there were ~~364~~235,~~912~~663 shares available for future grant. Grants outstanding under the plans as of December 31, ~~2024~~2025, were comprised of ~~136~~148,~~754~~902 restricted shares.

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Grants made under the Incentive Plan during the years ~~2022~~2023 through ~~2024~~2025 were as follows.


Type of		Number of		Fair
Equity		Awards		Value per
Awarded	Effective Date	Granted		Share (1)	Vesting Terms
RS - Service	February 23, 2022	31,864	$	84.98	3 years, 30%-30%-40%
RS - Performance	February 23, 2022	26,037	$	84.98	3 years, cliff vesting (3)
RS	February 23, 2022	5,000	$	84.98	No vesting period (2)
RS	March 24, 2022	2,000	$	89.63	No vesting period (2)
RS - Performance	February 23, 2022	5,791	$	84.98	No vesting period (4)
RS - Service	February 23, 2023	33,101	$	80.24	3 years, 30%-30%-40%
RS - Performance	February 23, 2023	25,990	$	80.24	3 years, cliff vesting (3)
RS - Performance	February 23, 2023	4,703	$	80.24	3 years, cliff vesting (4)
RS	February 23, 2023	6,000	$	80.24	No vesting period (2)
RS	May 17, 2023	1,000	$	71.78	No vesting period (2)
RS - Service	February 27, 2024	31,221	$	85.61	3 years, 30%-30%-40%
RS - Performance	February 27, 2024	25,390	$	85.61	3 years, cliff vesting (3)
RS	February 27, 2024	7,000	$	85.61	No vesting period (2)
RS - Service	July 011, 2024	1,196	$	75.24	3 years, 30%-30%-40%
RS - Service	September 033, 2024	314	$	86.00	3 years, 30%-30%-40%
RS - Performance	July 011, 2024	1,327	$	75.24	3 years, cliff vesting (3)
RS - Performance	September 033, 2024	365	$	86.00	3 years, cliff vesting (3)
RS - Service	February 25, 2025	35,178	$	79.67	3 years, 30%-30%-40%
RS - Performance	February 25, 2025	29,105	$	79.67	3 years, cliff vesting (3)
RS	February 25, 2025	6,000	$	79.67	No vesting period (2)
RS - Service	July 15, 2025	311	$	72.31	3 years, 30%-30%-40%
RS - Performance	July 15, 2025	352	$	72.31	3 years, cliff vesting (3)

(1) The fair value per share of the restricted stock grant is equal to the closing price of our common stock on the grant date.

(2) Board of Director members must maintain stock ownership equal to at least four times their annual cash retainer. This requirement must be met within five years of becoming a director.

(3) The shares represent performance-based restricted shares award. Vesting of these shares is dependent upon the attainment of pre-established performance objectives, and any difference between shares granted and shares earned at the end of the performance period will be reported at the conclusion of the performance period.

(4) The shares represent a true-up 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.

Reinsurance

We reinsure with other insurance companies a portion of our potential liability under the policies we have underwritten, thereby protecting us against an unexpectedly large loss or a catastrophic occurrence that could produce large losses, primarily in our homeowners line of business. We use various software products to measure our exposure to catastrophe losses and the probable maximum loss to us for catastrophe losses such as hurricanes. The reinsurance market has seen from the various software modelers, increases in the estimate of damage from hurricanes in the southern and northeast portions of the United States due to revised estimations of increased hurricane activity and increases in the estimation of demand surge in the periods following a significant event. We continue to manage and model our exposure and adjust our reinsurance programs as a result of the changes to the models. As of January 1, ~~2024~~2025, we purchased three layers of excess catastrophe reinsurance providing $~~615~~675,000 of coverage for property losses in excess of $75,000 up to a maximum of $~~690~~750,000. Our reinsurers’ co-participation is 8085.0% of $75,000 for the 1st layer, 8085.0% of $250,000 for the 2nd layer, and 8085.0% of $~~290~~350,000 for the 3rd layer. As a result of the changes to the models, our catastrophe reinsurance in ~~2024~~2025 protects us in the event of a “~~121~~138-year storm” (that is, a storm of a severity expected to occur once in a ~~121~~138-year period). Most of our reinsurers have an A.M. Best rating of “A+” (Superior) or “A” (Excellent).

We are a participant in CAR, a state-established body that runs the residual market reinsurance programs for commercial automobile insurance in Massachusetts under which premiums, expenses, losses and loss adjustment expenses on ceded business are shared by all insurers writing commercial automobile insurance in Massachusetts.

We also had $~~168~~169,~~538~~596 due from CAR comprising of loss and loss adjustment expense reserves, unearned premiums and reinsurance recoverables.

Non-GAAP Measures

Management has included certain non-generally accepted accounting principles (“non-GAAP”) financial measures in presenting the Company’s results. Management believes that these non-GAAP measures better explain the

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Company’s results of operations and allow for a more complete understanding of the underlying trends in the Company’s business. These measures should not be viewed as a substitute for those determined in accordance with GAAP. In addition, our definitions of these items may not be comparable to the definitions used by other companies.

Non-GAAP operating income and non-GAAP operating income per diluted share consist of our GAAP net income adjusted by the net realized gains on investments, net impairment losses on investments, changes in net unrealized gains on equity securities, credit loss benefit (expense) and taxes related thereto. Net income and earnings per diluted share are the GAAP financial measures that are most directly comparable to non-GAAP operating income and non-GAAP operating income per diluted share, respectively. A reconciliation of the GAAP financial measures to these non-GAAP measures is included in the financial highlights below.

Results of Operations

The following table shows certain of our selected financial results.


	Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Direct written premiums	$	1,~~193~~278,~~057~~605	$	~~991~~1,~~224~~193,057	$	~~823~~991,~~318~~224
Net written premiums	$	1,~~093~~175,~~405~~637	$	~~925~~1,~~295~~093,405	$	~~773~~925,~~735~~295
Net earned premiums	$	1,~~010~~139,~~704~~011	$	~~834~~1,~~414~~010,704	$	~~758~~834,~~505~~414
Net investment income		5562,~~720~~732		5655,~~377~~720		4656,~~725~~377
Earnings from partnership investments		108,~~271~~461		510,~~540~~271		125,~~484~~540
Net realized gains on investments		717,~~720~~982		17,~~327~~720		91,~~190~~327
Change in net unrealized gains on equity securities		~~3,951~~(802)		73,~~502~~951		~~(44~~7,~~386)~~502
Credit loss benefit (expense)		91,198		~~(530)~~9		14(530)
Commission income		79,~~942~~498		67,~~932~~942		~~566~~6,932
Finance and other service income		2325,~~700~~652		1923,~~394~~700		1419,~~461~~394
Total revenue		1,~~120~~263,~~017~~732		~~930~~1,~~956~~120,017		~~797~~930,~~559~~956
Losses and loss adjustment expenses		~~716~~797,~~637~~182		~~642~~716,~~302~~637		~~491~~642,~~979~~302
Underwriting, operating and related expenses		~~305~~330,~~322~~396		~~256~~305,~~580~~322		~~245~~256,~~145~~580
Other expense		7,~~683~~941		67,~~836~~683		~~330~~6,836
Interest expense		~~509~~1,530		~~818~~509		~~524~~818
Total expenses		1,~~030~~137,~~151~~049		~~906~~1,~~536~~030,151		~~737~~906,~~978~~536
Income before income taxes		89126,~~866~~683		2489,~~420~~866		5924,~~581~~420
Income tax expense		1927,~~132~~428		519,~~545~~132		135,~~020~~545
Net income	$	7099,~~734~~255	$	1870,~~875~~734	$	4618,~~561~~875
Earnings per weighted average common share:
Basic	$	46.7972	$	14.2879	$	31.1728
Diluted	$	46.7870	$	14.2878	$	31.1528
Cash dividends paid per common share	$	3.6064	$	3.60	$	3.60

Reconciliation of Net Income to Non-GAAP Operating Income:

Net income	$	7099,~~734~~255	$	1870,~~875~~734	$	4618,~~561~~875
Exclusions from net income:
Net realized gains on investments		(717,~~720~~982)		(17,~~327~~720)		(91,~~190~~327)
Change in net unrealized (gains) on equity securities		(3,951)		(7,502)		44,386
Change in net unrealized gains on equity securities		802		(3,951)		(7,502)
Credit loss (benefit) expense		(91,198)		~~530~~(9)		~~(14)~~530
Income tax benefit (expense)		2,453		1,743		(7,388)
Income tax expense		3,859		2,453		1,743
Non-GAAP Operating income	$	6184,~~507~~736	$	1261,~~319~~507	$	7412,~~355~~319

Net income per diluted share	$	46.7870	$	14.2878	$	31.1528
Exclusions from net income:
Net realized gains on investments		(01.5222)		(0.0952)		(0.6209)
Change in net unrealized (gains) on equity securities		(0.27)		(0.51)		3.02
Change in net unrealized gains on equity securities		0.05		(0.27)		(0.51)
Credit loss (benefit) expense		-(0.08)		~~0.04~~-		-0.04
Income tax benefit (expense)		0.17		0.12		(0.50)
Income tax expense		0.26		0.17		0.12
Non-GAAP Operating income per diluted share	$	45.1671	$	04.8416	$	50.0584

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YEAR ENDED DECEMBER 31, ~~2024~~2025 COMPARED TO YEAR ENDED DECEMBER 31, ~~2023~~2024

Direct Written Premiums. Direct written premiums for the year ended December 31, ~~2024~~2025 increased by $~~201~~85,~~833~~548, or 207.42%, to $1,~~193~~278,~~057~~605 from $~~991~~1,~~224~~193,057 for the comparable ~~2023~~2024 period. The increase in direct written premium is ~~the~~primarily ~~result~~driven ofby ~~new business production, improved retention, and~~ rate increases. For the year ended December 31, ~~2024~~2025, the Company achieved policy count growth across all lines of business, including 10.0%, 4.5% and 8.7% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in 2023. Additionally, for the year ended December 31, 2024, average written premium per policy increased 148.1%, 104.76% and 8.9.7% in Private Passenger Automobile, Commercial Automobile and Homeowners lines, respectively, compared to the same period in ~~2023~~2024.

Net Written Premiums. Net written premiums for the year ended December 31, ~~2024~~2025 increased by $~~168~~82,~~110~~232, or 187.25%, to $1,~~093~~175,~~405~~637 from $~~925~~1,~~295~~093,405 for the comparable ~~2023~~2024 period. The ~~2024~~2025 increase was primarily due to the factors that increased direct written premiums.

Net Earned Premiums. Net earned premiums for the year ended December 31, ~~2024~~2025 increased by $~~176~~128,~~290~~307, or 2112.17%, to $1,~~010~~139,~~704~~011 from $~~834~~1,~~414~~010,704 for the comparable ~~2023~~2024 period. The ~~2024~~2025 increase was primarily due to the factors that increased direct written premiums.

The effect of reinsurance on net written and net earned premiums is presented in the following table.


		Year Ended December 31,
	~~2024~~2025		~~2023~~2024
Written Premiums
Direct	$	1,~~193~~278,~~057~~605	$	~~991~~1,~~224~~193,057
Assumed		2023,~~279~~765		3020,~~850~~279
Ceded		(~~119~~126,~~931~~733)		(96119,~~779~~931)
Net written premiums	$	1,~~093~~175,~~405~~637	$	~~925~~1,~~295~~093,405

Earned Premiums
Direct	$	1,~~102~~244,~~695~~722	$	~~897~~1,~~598~~102,695
Assumed		1822,~~874~~760		2918,~~702~~874
Ceded		(~~110~~128,~~865~~471)		(92110,~~886~~865)
Net earned premiums	$	1,~~010~~139,~~704~~011	$	~~834~~1,~~414~~010,704

Net Investment Income. Net investment income for the year ended December 31, ~~2024~~2025 ~~decreased~~increased by $~~657~~7,012, or 112.26%, to $5562,~~720~~732 from $5655,~~377~~720 for the comparable ~~2023~~2024 period. The ~~decrease~~increase iswas aprimarily ~~result~~driven ofby ~~decreases~~higher ~~due~~assets tounder ~~the~~management, ~~earned~~reinvestment ~~interest~~rates ~~from~~that ~~our~~exceeded ~~higher~~the ~~yield~~yields ~~bonds~~on ~~and~~maturing ~~variable~~securities, ~~rate secured~~ and ~~senior~~strong ~~bank~~alternative ~~loans~~asset returns. Net effective annual yield on the investment portfolio was 34.90% for the year ended December 31, ~~2024~~2025, compared to 43.09% for comparable ~~2023~~2024 period. Our duration was 3.59 years at December 31, ~~2024~~2025, compared to 3.65 years at December 31, ~~2023~~2024.

Earnings from Partnership Investments. Earnings from partnership investments were $108,~~271~~461 for the year ended December 31, ~~2024~~2025 compared to $510,~~540~~271 for the year ended December 31, ~~2023~~2024. The ~~2024~~2025 earnings reflect ana ~~increase~~decrease in investment appreciation and distribution of investment returns compared to the prior year. Timing and generation of these returns on capital can vary based on the results and transactions of the underlying partnerships.

Net Realized Gains on Investments. Net realized gains on investments were $717,~~720~~982 for the year ended December 31, ~~2024~~2025 compared to $17,~~327~~720 for the comparable ~~2023~~2024 period. The increase iswas primarily driven by ~~higher~~gains realized ~~gains~~ from the sale of ~~equity~~mutual ~~securities~~fund ~~compared~~holdings towithin ~~prior~~our ~~years~~equity security portfolio.

The gross unrealized gains and losses on investments in fixed maturity securities, ~~including redeemable preferred stocks that have characteristics of fixed maturities,~~ equity securities, including interests in mutual funds, and other invested assets were as follows:

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	As of December 31, ~~2024~~2025

	Cost or		Allowance for		Gross Unrealized				Estimated
	Amortized		Expected Credit						Fair
	Cost		Losses		Gains		Losses (3)		Value
U.S. Treasury securities	$	24,~~418~~211	$	—	$	222	$	(7728)	$	24,~~343~~205
Obligations of states and political subdivisions		38,~~581~~837		—		~~170~~532		(21,~~585~~651)		3637,~~166~~718
Residential mortgage-backed securities (1)		~~327~~376,~~161~~354		—		~~601~~5,075		(2615,~~535~~382)		~~301~~366,~~227~~047
Commercial mortgage-backed securities		~~140~~162,~~124~~755		—		91702		(106,~~840~~439)		~~129~~157,~~375~~018
Other asset-backed securities		65170,~~456~~332		—		~~155~~373		(1,~~894~~196)		63169,~~717~~509
Corporate and other securities		~~607~~584,~~298~~746		~~(1,198)~~—		27,~~734~~431		(2611,~~444~~126)		~~582~~581,~~390~~051
Subtotal, fixed maturity securities		1,~~181~~337,~~038~~235		~~(1,198)~~—		314,~~753~~135		(6835,~~375~~822)		1,~~115~~315,~~218~~548
Short-term investments		19,970		—		5		—		19,975
Equity securities (2)		201,591		—		27,327		(7,965)		220,953
Equity securities (2)		201,258		—		29,244		(9,080)		221,422
Other invested assets (4)		151,020		—		—		—		151,020
Other invested assets (4)		156,444		—		—		—		156,444
Totals	$	1,689,846	$	—	$	41,462	$	(43,787)	$	1,687,521
Totals	$	1,558,710	$	(1,198)	$	33,002	$	(77,455)	$	1,513,059

(1) Residential mortgage-backed securities ~~consists~~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) Our investment portfolio included ~~884~~700 securities in an unrealized loss position at December 31, ~~2024~~2025.

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

The composition of our fixed income security portfolio by rating was as follows:


	As of December 31, ~~2024~~2025
	Estimated
	Fair Value		Percent
U.S. Treasury securities and obligations of U.S. Government agencies	$	~~301~~366,~~227~~047	27.08	%
Aaa/Aa		~~211~~326,~~088~~018	1824.98
A		~~205~~291,~~305~~463	1822.41
Baa		~~210~~219,~~254~~395	1816.97
Ba		4355,~~869~~035	34.92
B		7644,~~538~~332	63.94
Caa/Ca		51,~~553~~293	0.51
Not rated		6111,~~384~~965	50.59
Total	$	1,~~115~~315,~~218~~548	100.0	%

Ratings are generally assigned upon the issuance of the securities and are subject to revision on the basis of ongoing evaluations. Ratings in the table are as of the date indicated.

As of December 31, ~~2024~~2025, ~~our~~the ~~portfolio of~~ fixed maturity ~~investments~~portfolio was ~~principally~~primarily ~~comprised~~composed of investment ‑grade corporate ~~fixed maturity~~ securities, U.S. government and agency securities, ~~and~~ asset-‑backed securities., ~~The~~and ~~portion~~investment‑grade ofcollateralized ~~our~~loan ~~non-investment~~obligations ~~grade~~(“CLOs”). ~~portfolio~~During ofthe ~~fixed~~year, ~~maturity~~management ~~investments~~undertook isa ~~primarily~~strategic ~~comprised~~repositioning ofthat ~~variable~~reduced ~~rate~~exposure ~~secured~~to ~~and~~below‑investment‑grade senior secured bank loans and ~~high~~increased allocations to investment‑grade CLOs. These actions resulted in an improvement in the overall credit quality of the portfolio. The portion of our non‑investment‑grade fixed maturity portfolio is primarily comprised of high‑yield bonds.

The following table illustrates the gross unrealized losses included in our investment portfolio and the fair value of those securities, aggregated by investment category. The table also presents the length of time that they have been in a continuous unrealized loss position of December 31, ~~2024~~2025.

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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

The Company’s analysis of its fixed maturity portfolio at December 31, 2024 concluded that $1,198 of unrealized losses were due to credit factors and were recorded as an allowance for expected credit losses at December 31, 2024, compared to $1,208 at December 31, 2023. The Company concluded that outside of the securities that were recognized as credit impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2024 and 2023 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 operating 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.

As of December 31, 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

—

1,474

Obligations of states and political subdivisions

1,199

10,684

1,645

11,883

1,651

Residential mortgage-backed securities

26,318

153

156,857

15,229

183,175

15,382

Commercial mortgage-backed securities

15,491

108

103,960

6,331

119,451

6,439

Other asset-backed securities

95,322

146

10,113

1,050

105,435

1,196

Corporate and other securities

91,652

464

176,063

10,662

267,715

11,126

Subtotal, fixed maturity securities

229,982

877

459,151

34,945

689,133

35,822

Equity securities

68,924

5,162

7,967

2,803

76,891

7,965

Total temporarily impaired securities

298,906

6,039

467,118

37,748

766,024

43,787

~~Specific~~The ~~qualitative~~Company’s analysis ~~was~~of ~~also~~its ~~performed~~fixed maturity portfolio as of December 31, 2025 concluded that none of the unrealized losses in the fixed maturity portfolio were due to credit factors; therefore, no allowance for credit losses was recorded compared to an allowance of $1,198 as of December 31, 2024. The Company concluded that, other than securities ~~appearing~~previously identified as credit-impaired, the unrealized losses recorded on the fixed maturity portfolio at December 31, 2025 and 2024 were driven by changes 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 ~~“Watch~~history ~~List~~of positive operating cash flows,” ifmanagement 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.

Qualitative analysis considered such factors as the financial condition and the near 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 and the historical volatility of the fair value of the security.

~~The~~Specific ~~majority~~qualitative ofanalysis ~~unrealized~~was ~~losses~~also ~~recorded~~performed onfor ~~the~~securities ~~investment~~appearing ~~portfolio~~on atour ~~December 31~~“Watch List,” ~~2024~~if ~~resulted~~any. Qualitative ~~from~~analysis ~~fluctuations~~considered insuch ~~market~~factors ~~interest rates and other temporary market conditions~~ as ~~opposed to fundamental changes in~~ the ~~credit~~financial ~~quality~~condition ofand the ~~issuers~~near ofterm ~~such~~prospects ~~securities. Given our current level~~ of ~~liquidity,~~ the ~~fact that we do not intend to sell these securities~~issuer, ~~and~~whether ~~that~~the itdebtor is ~~more~~current ~~likely~~on ~~than~~its ~~not~~contractually ~~that~~obligated weinterest ~~will~~and ~~not~~principal bepayments, ~~required~~changes to ~~sell~~the ~~these~~rating ~~securities prior to recovery~~ of the ~~cost~~security ~~basis~~by ofa ~~these~~rating ~~securities,~~agency ~~these~~and ~~decreases~~the inhistorical ~~values~~volatility ~~are~~of ~~viewed~~the asfair ~~being~~value ~~temporary~~of the security.

For information regarding fair value measurements of our investment portfolio, refer to Item 8—Financial Statements and Supplementary Data, Note 16, Fair Value of Financial Instruments, of this Form 10-K.

Commission Income: Commission income includes revenues from new and renewal commissions paid by insurance carriers, which we recognize when earned. Commission income was $79,~~942~~498 and $67,~~932~~942 for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. The year-over-year change is driven by policy count growth and increased premium rates across the property and casualty insurance market.

Finance and Other Service Income. Finance and other service income includes revenues from premium installment charges, which we recognize when earned, and other miscellaneous income and fees. Finance and other service income increased by $41,~~306~~952, or 228.2%, to $2325,~~700~~652 for the year ended December 31, ~~2024~~2025 from $1923,~~394~~700 for the comparable ~~2023~~2024 period. The increase is primarily driven by the increase in policy counts and changes to our fee assessment policies.

Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses incurred for the year ended December 31, ~~2024~~2025 increased by $7480,~~335~~545, or 11.62%, to $~~716~~797,~~637~~182 from $~~642~~716,~~302~~637 for the comparable ~~2023~~2024 period.

Our GAAP loss ratio for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 were 70.90% and 7770.09%, respectively. Our GAAP loss ratio excluding loss adjustment expenses was 62.63% and 6762.96% for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. Total prior year favorable development included in the pre-tax results for the year ended December 31, ~~2024~~2025 was $5144,~~894~~552, compared to $4751,~~381~~894 for the comparable ~~2023~~2024 period. The decrease in favorable prior year development in 2025 is primarily attributable to the inclusion of $8,644 of FAIR Plan development in the prior year.

47Underwriting, Operating and Related Expenses. Underwriting, operating and related expenses for the year ended December 31, 2025 increased by $25,074, or 8.2%, to $330,396 from $305,322 for the comparable 2024 period. The increase is driven by an increase in base commissions resulting from the increase in written premiums. Our GAAP

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~~Underwriting,~~expense ~~Operating~~ratio ~~and Related Expenses. Underwriting, operating and related expenses~~ for the year ended December 31, ~~2024~~2025 ~~increased~~decreased byto ~~$48,742, or 19~~29.0%, ~~to $305,322~~ from ~~$256,580~~30.2% for the comparable ~~2023~~2024 period. ~~The~~due increase is driven by an increase in base commissions resulting from the increase in written premiums, offset by a decrease in contingent commission expense. Our GAAP expense ratio for the year ended December 31, 2024 decreased to ~~30.2%~~higher ~~from~~earned 30premium.~~7% for the comparable 2023 period.~~

Other Expense: Other expense includes the operating and related expenses associated with SNIA.

Interest Expense. Interest expense was $~~509~~1,530 and $~~818~~509 for the years ended December 31, 2025 and 2024, respectively. The credit facility commitment fee included in interest expense was $14 and ~~2023~~$60 for the years ended December 31, 2025 and 2024, respectively. ~~Interest~~The increase in interest expense during the current year is primarily ~~relates~~due to the ~~borrowing~~new ~~from~~borrowings under the ~~FHLB~~Company’s asexisting ~~noted~~Credit ~~within~~Agreement ~~Item~~with 8Citizens –Bank ~~Financial~~on ~~Statements~~March ~~and~~27, ~~Supplementary Data~~2025, ~~Note~~which ~~10,~~carries ~~Debt,~~an interest rate of ~~this~~SOFR ~~Form~~rate ~~10-K~~plus 1.25%, ~~The~~compared to the repaid FHLB loan that had a fixed rate of 1.42%. Additionally, the Company no longer incurs a credit facility commitment fee ~~included~~as inof ~~interest~~March ~~expense~~27, ~~was~~2025, ~~$60~~since ~~and~~a ~~$75~~loan ~~for~~is currently outstanding under the ~~years~~facility. ~~ended~~For ~~December 31~~further information, ~~2024~~refer to Item 8 – Financial Statements and ~~2023~~Supplementary Data, ~~respectively~~Note 10, Debt, of this Form 10‑K.

Income Tax Expense. Our effective tax rates were 21.37% and 2221.73% for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. The effective rates for the year ended December 31, ~~2024~~2025 and ~~2023~~2024 were higher than the statutory rate primary due to the impact of stock-based and executive compensation.

The comparison of results for the year ended December 31, ~~2023~~2024 compared to the year ended December 31, ~~2022~~2023 can be found in the Company’s ~~2023~~2024 Annual Report on Form 10-K filed with the SEC on February 2827, ~~2024~~2025.

Liquidity and Capital Resources

As a holding company, Safety’s assets consist primarily of the stock of our direct and indirect subsidiaries. Our principal source of funds to meet our obligations and pay dividends to shareholders, therefore, is dividends and other permitted payments from our subsidiaries, principally Safety Insurance. Safety is the borrower under our credit facility.

Safety Insurance’s sources of funds primarily include premiums received, investment income and proceeds from sales and redemptions of investments. Safety Insurance’s principal uses of cash are the payment of claims, operating expenses and taxes, the purchase of investments and payment of dividends to Safety.

Net cash provided by operating activities was $~~128~~194,~~688~~498, $52128,~~114~~688, and $4452,~~326~~114 during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively. Our operations typically generate positive cash flows from operations as most premiums are received in advance of the time when claim and benefit payments are required. These positive operating cash flows are expected to continue to meet our liquidity requirements.

Net cash used for investing activities was $125,706 and $54,541 during the ~~year~~years ended December 31, ~~2024~~2025 ~~compared~~and to2024, ~~net~~respectively. Net cash provided by investing activities ofwas $24,269 for ~~December 31, 2023, and net cash used for investing activities of $19,988 for~~ the year ended December 31, ~~2022~~2023. This fluctuation was driven by purchases exceeding proceeds from sales, paydowns, calls and maturities of fixed maturity and equity securities in ~~2024~~2025.

Net cash used for financing activities was $53,~~325~~865, $6353,~~531~~325, and $6263,~~641~~531 during the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively. Net cash used for financing activities during the year ended December 31, ~~2024~~2025 consisted of dividend payments to shareholders., the acquisition of treasury stock and payments on a loan that matured during the year, partially offset by proceeds from a new loan.

The Insurance Subsidiaries maintain a high degree of liquidity within their respective investment portfolios in fixed maturity and short-term investments. We do not anticipate the need to sell these securities to meet the Insurance Subsidiaries cash requirements. We expect the Insurance Subsidiaries to generate sufficient operating cash to meet all short-term and long-term cash requirements. However, there can be no assurance that unforeseen business needs or other items will not occur causing us to have to sell securities before their values fully recover; thereby causing us to recognize additional impairment charges in that time period.

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Credit Facility

For information regarding our Credit Facility, please refer to Item 8—Financial Statements and Supplementary Data, Note 10, Debt, of this Form 10-K.

Recent Accounting Pronouncements

For information regarding Recent Accounting Pronouncements, please refer to Item 8—Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, of this Form 10-K.

Regulatory Matters

Our insurance company’s subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of the Commissioner. The Massachusetts statute limits the dividends an insurer may pay in any twelve-month period, without the prior permission of the Commissioner, to the greater of (i) 10% of the insurer’s surplus as of the preceding December 31 or (ii) the insurer’s net income for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting practices. Our Insurance Subsidiaries may not declare an “extraordinary dividend” (defined as any dividend or distribution that, together with other distributions made within the preceding twelve months, exceeds the limits established by Massachusetts statute) until thirty days after the Commissioner has received notice of the intended dividend and has not objected. As historically administered by the Commissioner, this provision requires the Commissioner’s prior approval of an extraordinary dividend. Under Massachusetts law, an insurer may pay cash dividends only from its unassigned funds, also known as earned surplus, and the insurer’s remaining surplus must be both reasonable in relation to its outstanding liabilities and adequate to its financial needs. At year-end ~~2024~~2025, the statutory surplus of Safety Insurance was $~~758~~833,~~789~~432, and its net income for ~~2024~~2025 was $4383,~~387~~092. As a result, a maximum of $7583,~~879~~343 is available in ~~2024~~2026 for such dividends without prior approval of the Commissioner. As a result of this Massachusetts statute, the Insurance Subsidiaries had restricted net assets in the amount of $~~682~~750,~~910~~089 at December 31, ~~2024~~2025. During the twelve months ended December 31, ~~2024~~2025, Safety Insurance ~~recorded~~paid dividends to Safety of $51,~~123~~993.

The maximum dividend permitted by law is not indicative of an insurer’s actual ability to pay dividends, which may be constrained by business and regulatory considerations, such as the impact of dividends on surplus, which could affect an insurer’s ratings or competitive position, the amount of premiums that can be written and the ability to pay future dividends.

Since the initial public offering of its common stock in November 2002, the Company has paid regular quarterly dividends to shareholders of its common stock. Quarterly dividends paid during ~~2024~~2025 and ~~2023~~2024 were as follows:


					Total
Declaration	Record	Payment	Dividend per		Dividends Paid
Date	Date	Date	Common Share		and Accrued
February 15, 2023	March 1, 2023	March 15, 2023	$	0.90	$	13,247
May 3, 2023	June 1, 2023	June 15, 2023	$	0.90	$	13,283
August 2, 2023	September 1, 2023	September 15, 2023	$	0.90	$	13,223
November 3, 2023	December 1, 2023	December 15, 2023	$	0.90	$	13,239
February 15, 2024	March 1, 2024	March 15, 2024	$	0.90	$	13,280
May 8, 2024	June 1, 2024	June 15, 2024	$	0.90	$	13,308
August 7, 2024	September 3, 2024	September 13, 2024	$	0.90	$	13,314
November 5, 2024	December 2, 2024	December 13, 2024	$	0.90	$	13,264
February 14, 2025	March 3, 2025	March 14, 2025	$	0.90	$	13,370
May 7, 2025	June 2, 2025	June 13, 2025	$	0.90	$	13,384
August 6, 2025	September 2, 2025	September 15, 2025	$	0.92	$	13,641
November 5, 2025	December 1, 2025	December 15, 2025	$	0.92	$	13,557

On February 1413, ~~2025~~2026, our Board approved and declared a quarterly cash dividend on our common stock of $0.9092 per share to be paid on March 14 13, ~~2025~~2026 to shareholders of record on March 3 2, ~~2025~~2026. We plan to continue to declare and pay quarterly cash dividends in ~~2025~~2026, depending on our financial position and the regularity of our cash flows.

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On February 23, 2022, the Board approved a share repurchase program of up to $50,000 of the Company’s outstanding common shares. The Board of Directors had 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 may be modified, suspended or terminated at any time without prior notice.

No share purchases were made by the Company during the year ended December 31, 2024. During the year ended December 31, 2023, the Company purchased 74,213 shares at a cost of $5,240. As of December 31, 2024 and 2023, the Company had purchased 3,215,690 shares on the open market at a cost of $155,240.

During the three months ended December 31, 2025, the Company purchased 262,370 shares at a cost of $20,000. No share purchases were made by the Company during the three months ended December 31, 2024. For the year ended December 31, 2025, the Company purchased 262,370 shares at a cost of $20,000. No shares were purchased by the Company during the year ended December 31, 2024. Included in the cost of treasury stock acquired during 2025, in the consolidated statement of shareholders’ equity, is the one percent excise tax imposed as part of the Inflation Reduction Act, which became effective January 1, 2023. As of December 31, 2025 and 2024, the Company had purchased 3,478,060 and 3,215,690 shares at cost of $175,240 and $155,240, respectively

Management believes that the current level of cash flow from operations provides us with sufficient liquidity to meet our operating needs over the next 12 months. We expect to be able to continue to meet our operating needs after the next 12 months from internally generated funds. Since our ability to meet our obligations in the long term (beyond such twelve-month period) is dependent upon such factors as market changes, insurance regulatory changes and economic conditions, no assurance can be given that the available net cash flow will be sufficient to meet our operating needs. We expect that we would need to borrow or issue capital stock if we needed additional funds, for example, to pay for an acquisition or a significant expansion of our operations. There can be no assurance that sufficient funds for any of the foregoing purposes would be available to us at such time.

Contractual Obligations

We have obligations to make future payments under contracts and credit-related financial instruments and commitments.

As of December 31, ~~2024~~2025, the Company had loss and LAE reserves of $~~671~~761,~~669~~739, unpaid reinsurance recoverables of $~~130~~149,~~792~~441 and net loss and LAE reserves of $~~540~~612,~~877~~298. Our loss and LAE reserves are estimates as described in more detail under Critical Accounting Policies and Estimates. The specific amounts and timing of obligations related to case reserves, IBNR reserves and related LAE reserves are not set contractually, and the amounts and timing of these obligations are unknown. While management believes that historical performance of loss payment patterns is a reasonable source for projecting future claims payments, there is inherent uncertainty in this estimated projected settlement of loss and LAE reserves, and as a result these estimates will differ, perhaps significantly, from actual future payments.

As part of the Company’s investment activity, we have committed $170,000 to investments in limited partnerships. The Company has contributed $~~144~~152,~~682~~626 to these commitments as of December 31, ~~2024~~2025. As of December 31, ~~2024~~2025, the remaining committed capital that could be called is $3429,~~033~~112, which includes potential recallable capital distributions.

Critical Accounting Policies and Estimates

Loss and Loss Adjustment Expense Reserves

Significant periods of time can elapse between the occurrence of an insured loss, the reporting to us of that loss and our final payment of that loss. To recognize liabilities for unpaid losses, we establish reserves as balance sheet liabilities. Our reserves represent estimates of amounts needed to pay reported and estimated losses incurred but not yet reported (“IBNR”) and the expenses of investigating and paying those losses, or loss adjustment expenses. Every quarter, we review our previously established reserves and adjust them, if necessary.

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~~judgment~~liabilities. ofOur ~~such~~reserves ~~personnel~~represent ~~based~~estimates onof ~~general~~amounts ~~insurance~~needed ~~reserving~~to ~~practices~~pay ~~and~~reported ~~on the experience~~ and ~~knowledge~~estimated oflosses ~~the~~incurred ~~claims~~but ~~professional. During~~not ~~the~~yet ~~loss~~reported ~~adjustment~~(“IBNR”) ~~period, these estimates are revised as deemed necessary by our claims department based on subsequent developments~~ and ~~periodic~~the ~~reviews~~expenses of ~~the~~investigating ~~cases. When~~and apaying ~~claim~~those islosses, ~~closed~~or ~~with~~loss oradjustment ~~without~~expenses. aEvery ~~payment~~quarter, ~~the~~we ~~difference~~review ~~between~~our ~~the~~previously ~~case~~established ~~reserve~~reserves and ~~the~~adjust ~~settlement~~them, ~~amount creates a reserve deficiency~~ if ~~the payment exceeds the case reserve or a reserve redundancy if the payment is less than the case reserve~~necessary.

When a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the ultimate payment. The amount of the reserve is primarily based upon an evaluation of the type of claim involved, the circumstances surrounding each claim and the policy provisions relating to the loss. The estimate reflects the informed judgment of such personnel based on general insurance reserving practices and on the experience and knowledge of the claims professional. During the loss adjustment period, these estimates are revised as deemed necessary by our claims department based on subsequent developments and periodic reviews of the cases. When a claim is closed with or without a payment, the difference between the case reserve and the settlement amount creates a reserve deficiency if the payment exceeds the case reserve or a reserve redundancy if the payment is less than the case reserve.

In accordance with industry practice, we also maintain reserves for IBNR. IBNR reserves are determined in accordance with commonly accepted actuarial reserving techniques on the basis of our historical information and experience. We review and make adjustments to incurred but not yet reported reserves quarterly. In addition, IBNR reserves can also be expressed as the total loss reserves required less the case reserves on reported claims.

When reviewing reserves, we analyze historical data and estimate the impact of various loss development factors, such as our historical loss experience and that of the industry, trends in claims frequency and severity, our mix of business, our claims processing procedures, legislative enactments, judicial decisions, legal developments in imposition of damages, and changes and trends in general economic conditions, including the effects of inflation. A change in any of these factors from the assumption implicit in our estimate can cause our actual loss experience to be better or worse than our reserves, and the difference can be material. There is no precise method, however, for evaluating the impact of any specific factor on the adequacy of reserves, because the eventual development of reserves is affected by many factors.

In estimating all our loss reserves, we follow the guidance prescribed by ASC 944, Financial Services – Insurance.

Management determines our loss and loss adjustment expense reserves estimate based upon the analysis of our actuaries. A reasonable estimate is derived by selecting a point estimate within a range of indications as calculated by our actuaries using generally accepted actuarial techniques. The key assumption in most actuarial analysis is that past patterns of frequency and severity will repeat in the future, unless a significant change in the factors described above takes place. Our key factors and resulting assumptions are the ultimate frequency and severity of claims, based upon the most recent ten years of claims reported to the Company, and the data CAR reports to us to calculate our share of the residual market, as of the date of the applicable balance sheet. For each accident year and each coverage within a line of business our actuaries calculate the ultimate losses incurred. Our total reserves are the difference between the ultimate losses incurred and the cumulative loss and loss adjustment payments made to date. Our IBNR reserves are calculated as the difference between our total reserves and the outstanding case reserves at the end of the accounting period. To determine ultimate losses, our actuaries calculate a range of indications and select a point estimation using such actuarial techniques as:

●

Paid Loss Indications: This method projects ultimate loss estimates based upon extrapolations of historic paid loss trends. This method tends to be used on short tail lines such as automobile physical damage.

●

Incurred Loss Indications: This method projects ultimate loss estimates based upon extrapolations of historic incurred loss trends. This method tends to be used on long tail lines of business such as automobile liability and homeowner’s liability.

●

Bornhuetter-Ferguson Indications: This method projects ultimate loss estimates based upon extrapolations of an expected amount of IBNR, which is added to current incurred losses or paid losses. This method tends to be used on small, immature, or volatile lines of business, such as our BOP and umbrella lines of business.

● Bodily Injury Code Indications: This method projects ultimate loss estimates for our private passenger and commercial automobile bodily injury coverage based upon extrapolations of the historic number of accidents and the historic number of bodily injury claims per accident. Projected ultimate bodily injury claims are then segregated into expected claims by type of injury (e.g. soft tissue injury vs. hard tissue injury) based on past experience. An ultimate severity, or average paid loss amounts, is estimated based upon extrapolating historic trends. Projected ultimate loss estimates using this method are the aggregate of estimated losses by injury type.52

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~~Such~~● ~~techniques~~Bodily ~~assume~~Injury ~~that~~Code ~~past~~Indications: ~~experience,~~This ~~adjusted~~method ~~for~~projects ~~the~~ultimate ~~effects~~loss ofestimates ~~current developments and anticipated trends, is an appropriate basis~~ for ~~predicting~~ our ~~ultimate~~private ~~losses,~~passenger ~~total reserves~~ and ~~resulting~~commercial ~~IBNR~~automobile ~~reserves. It~~bodily isinjury ~~possible~~coverage ~~that~~based ~~the~~upon ~~final~~extrapolations ~~outcome~~of ~~may~~the ~~fall~~historic ~~above~~number orof ~~below~~accidents ~~these~~and ~~amounts~~the ashistoric ~~a result of a~~ number of ~~factors,~~bodily ~~including~~injury ~~immature~~claims ~~data,~~per ~~sparse data, or significant growth in a line of business~~accident. ~~Using~~ ~~these~~Projected ~~methodologies~~ultimate ~~our~~bodily ~~actuaries~~injury ~~established~~claims aare ~~range~~then ofsegregated ~~reasonably~~into ~~possible~~expected ~~estimations~~claims ~~for~~by ~~net~~type ~~reserves~~ of ~~approximately~~injury ~~$497,512~~(e.g. tosoft ~~$566,772~~tissue asinjury ofvs. ~~December 31,~~hard ~~2024~~tissue ~~compared~~injury) tobased aon ~~range~~past ofexperience. ~~$449,272~~An toultimate ~~$511~~severity,~~724~~ asor ofaverage ~~December 31,~~paid ~~2023. In~~loss ~~general~~amounts, ~~the~~is ~~low~~estimated ~~and high values of the ranges represent reasonable minimum and maximum values of the indications~~ based onupon ~~the~~extrapolating ~~techniques~~historic ~~described above~~trends. ~~Our~~Projected ~~selected~~ultimate ~~point estimate of net~~ loss ~~and~~estimates ~~loss~~using ~~adjustment~~this ~~expense~~method ~~reserves~~are ~~based upon~~ the ~~analysis~~aggregate of ~~our~~estimated ~~actuaries~~losses ~~was~~by ~~$540,877~~injury ~~as of December 31, 2024 compared to $490,458 as of December 31, 2023~~type.

The following table presents the point estimation of the recorded reserves and the range of estimations by line of business for net loss and LAE reserves as of December 31, 2024.


		As of December 31, 2024
Line of Business	Low		Recorded		High
Private passenger automobile	$	249,126	$	264,837	$	270,302
Commercial automobile		103,924		116,277		125,318
Homeowners		85,637		94,577		101,532
All other		58,825		65,186		69,620
Total	$	497,512	$	540,877	$	566,772

Such techniques assume that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting our ultimate losses, total reserves and resulting IBNR reserves. It is possible that the final outcome may fall above or below these amounts as a result of a number of factors, including immature data, sparse data, or significant growth in a line of business. Using these methodologies our actuaries established a range of reasonably possible estimations for net reserves of approximately $573,526 to $640,415 as of December 31, 2025 compared to a range of $497,512 to $566,772 as of December 31, 2024. In general, the low and high values of the ranges represent reasonable minimum and maximum values of the indications based on the techniques described above. Our selected point estimate of net loss and loss adjustment expense reserves based upon the analysis of our actuaries was $612,298 as of December 31, 2025 compared to $540,877 as of December 31, 2024.

The following table presents the point estimation of the recorded reserves and the range of estimations by line of business for net loss and LAE reserves as of December 31, 2025.

The following table presents our total net reserves and the corresponding case reserves and IBNR reserves for each line of business as of December 31, 2024.


			As of December 31, 2025
Line of Business		Low			Recorded			High
Private passenger automobile		$	288,180		$	303,850		$	313,932
Commercial automobile			116,109			128,123			138,377
Homeowners			109,020			113,588			116,109
All other			60,217			66,737			71,997
Total		$	573,526		$	612,298		$	640,415


		As of December 31, 2024
Line of Business	Case		IBNR		Total
Private passenger automobile	$	321,894	$	(57,066)	$	264,828
CAR assumed private passenger auto		1		8		9
Commercial automobile		76,920		5,636		82,556
CAR assumed commercial automobile		20,941		12,780		33,721
Homeowners		104,859		(10,282)		94,577
All other		45,789		19,397		65,186
Total net reserves for losses and LAE	$	570,404	$	(29,527)	$	540,877

The following table presents our total net reserves and the corresponding case reserves and IBNR reserves for each line of business as of December 31, 2025.

At December 31, 2024 and 2023, our total IBNR reserves for our private passenger automobile line of business were comprised of ($98,528) and ($87,456) related to estimated ultimate decreases in the case reserves, including anticipated recoveries (i.e. salvage and subrogation), and $41,462 and $34,170 related to our estimation for not yet reported losses, respectively.


			As of December 31, 2025
Line of Business		Case			IBNR			Total
Private passenger automobile		$	350,959			(47,117)		$	303,842
CAR assumed private passenger auto			-			8			8
Commercial automobile			86,764			8,078			94,842
CAR assumed commercial automobile			19,763			13,518			33,281
Homeowners			123,552			(9,964)			113,588
All other			52,000			14,737			66,737
Total net reserves for losses and LAE		$	633,038		$	(20,740)		$	612,298

~~Our~~At ~~IBNR~~December 31, ~~reserves~~2025 ~~consist~~and of2024, our ~~estimate of the~~ total ~~loss reserves required less our case reserves. The~~ IBNR reserves for ~~CAR~~our ~~assumed~~private ~~commercial~~passenger automobile ~~business~~line ~~are 37.9%~~ of ~~our~~business ~~total~~were ~~reserves~~comprised ~~for~~of ~~CAR~~($90,414) ~~assumed~~and ~~commercial~~($98,528) ~~automobile~~related ~~business~~to asestimated ofultimate ~~December 31,~~decreases ~~2024~~in ~~due to~~ the ~~reporting~~case ~~delays~~reserves, inincluding ~~the~~anticipated ~~information~~recoveries we(i.e. ~~receive~~salvage ~~from~~and ~~CAR~~subrogation), asand ~~described~~$43,297 ~~further~~and in$41,462 ~~the~~related ~~section~~to onour ~~Residual~~estimation ~~Market~~for ~~Loss~~not ~~and~~yet ~~Loss~~reported ~~Adjustment~~losses, ~~Expense Reserves~~respectively.

Our ~~The~~IBNR ~~following~~reserves ~~table~~consist ~~presents~~of ~~information~~our byestimate ~~line~~ of ~~business~~the ~~for~~total loss reserves required less our ~~total~~case ~~net~~reserves. The IBNR reserves ~~and~~for ~~the~~CAR ~~corresponding~~assumed ~~retained~~commercial (iautomobile business are 40.e.6% ~~direct~~of ~~less~~our ~~ceded)~~total reserves ~~and~~for CAR assumed ~~reserves~~commercial automobile business as of December 31, ~~2024~~2025 due to the reporting delays in the information we receive from CAR, as described further in the section on Residual Market Loss and Loss Adjustment Expense Reserves.

The following table presents information by line of business for our total net reserves and the corresponding retained (i.e. direct less ceded) reserves and assumed reserves as of December 31, 2025.

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		As of December 31, ~~2024~~2025
Line of Business		Retained		Assumed		Net
Private passenger automobile	$	~~264~~303,~~828~~842
CAR assumed private passenger automobile			$	98
Net private passenger automobile					$	~~264~~303,~~837~~850
Commercial automobile		8294,~~556~~842
CAR assumed commercial automobile				33,~~721~~281
Net commercial automobile						~~116~~128,~~277~~123
Homeowners		94113,~~577~~588		—		113,588
FAIR Plan assumed homeowners				—
All other		66,737		—		66,737
Net homeowners						94,577
Total net reserves for losses and LAE	$	579,009	$	33,289	$	612,298
All other		65,186		—		65,186
Total net reserves for losses and LAE	$	507,147	$	33,730	$	540,877

Residual Market Loss and Loss Adjustment Expense Reserves

We are a participant in CAR and other various residual markets and assume a portion of losses and LAE on business ceded by the industry participants to the residual markets. We were a participant in the FAIR Plan until the recent FAIR Plan Restructuring in 2024. We estimate reserves for assumed losses and LAE that have not yet been reported to us by the residual markets. Our estimations are based upon the same factors we use for our own reserves, plus additional factors due to the nature of and the information we receive.

Residual market deficits consist of premium ceded to the various residual markets less losses and LAE and is allocated among insurance companies based on a various formulas (the “Participation Ratio”) that take into consideration a company’s voluntary market share.

Because of the lag in the various residual market estimations, and in order to try to validate to the extent possible the information provided, we estimate the effects of the actions of our competitors in order to establish our Participation Ratio.

Although we rely to a significant extent in setting our reserves on the information the various residual markets provide, we are cautious in our use of that information, because of the delays in receiving data from the various residual markets. As a result, we have to estimate our Participation Ratio and these reserves are subject to significant judgments and estimates.

Sensitivity Analysis

Establishment of appropriate reserves is an inherently uncertain process. There can be no certainty that currently established reserves based on our key assumptions regarding frequency and severity in our lines of business, or our assumptions regarding our share of the CAR loss will prove adequate in light of subsequent actual experience. To the extent that reserves are inadequate and are strengthened, the amount of such increase is treated as a charge to earnings in the period that the deficiency is recognized. To the extent that reserves are redundant and are released, the amount of the release is a credit to earnings in the period the redundancy is recognized. For the twelve months ended December 31, ~~2024~~2025, a 1 percentage-point change in the loss and LAE ratio would result in a change in reserves of $1011,~~110~~391. Each 1 percentage-point change in the loss and loss expense ratio would have had a $78,~~987~~999 effect on net income, or $0.5461 per diluted share.

Our assumptions consider that past experience, adjusted for the effects of current developments and anticipated trends, are an appropriate basis for establishing our reserves. Our individual key assumptions could each have a reasonable possible range of plus or minus 5 percentage-points for each estimation, although there is no guarantee that our assumptions will not have more than a 5 percentage point variation. The following sensitivity tables present information for each of our primary lines of business on the effect each 1 percentage-point change in each of our key assumptions on unpaid frequency and severity could have on our retained (i.e., direct minus ceded) loss and LAE reserves and net income for the twelve months ended December 31, ~~2024~~2025. In evaluating the information in the table, it should be noted that a 1 percentage-point change in a single assumption would change estimated reserves by 1 percentage-point. A 1 percentage-point change in both our key assumptions would change estimated reserves within a range of plus or minus 2 percentage-points.

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percentage-point. A 1 percentage-point change in both our key assumptions would change estimated reserves within a range of plus or minus 2 percentage-points.


	-1 Percent		No		+1 Percent
	Change in		Change in		Change in
	Frequency		Frequency		Frequency
Private passenger automobile retained loss and LAE reserves
-1 Percent Change in Severity
Estimated decrease in reserves	$	(56,~~297~~077)	$	(23,~~648~~038)	$	—
Estimated increase in net income		4,~~185~~801		2,~~092~~400		—
No Change in Severity
Estimated (decrease) increase in reserves		(23,~~648~~038)		—		23,~~648~~038
Estimated increase (decrease) in net income		2,~~092~~400		—		(2,~~092~~400)
+1 Percent Change in Severity
Estimated increase in reserves		—		23,~~648~~038		56,~~297~~077
Estimated decrease in net income		—		(2,~~092~~400)		(4,~~185~~801)

Commercial automobile retained loss and LAE reserves
-1 Percent Change in Severity
Estimated decrease in reserves		(1,~~651~~897)		(~~826~~948)		—
Estimated increase in net income		1,~~304~~499		~~653~~749		—
No Change in Severity
Estimated (decrease) increase in reserves		(~~826~~948)		—		~~826~~948
Estimated increase (decrease) in net income		~~653~~749		—		(~~653~~749)
+1 Percent Change in Severity
Estimated increase in reserves		—		~~826~~948		1,~~651~~897
Estimated decrease in net income		—		(~~653~~749)		(1,~~304~~499)

Homeowners retained loss and LAE reserves
-1 Percent Change in Severity
Estimated decrease in reserves		(12,~~892~~272)		(~~946~~1,136)		—
Estimated increase in net income		1,~~495~~795		~~747~~897		—
No Change in Severity
Estimated (decrease) increase in reserves		(~~946~~1,136)		—		~~946~~1,136
Estimated increase (decrease) in net income		~~747~~897		—		(~~747~~897)
+1 Percent Change in Severity
Estimated increase in reserves		—		~~946~~1,136		12,~~892~~272
Estimated decrease in net income		—		(~~747~~897)		(1,~~495~~795)

All other retained loss and LAE reserves
-1 Percent Change in Severity
Estimated decrease in reserves		(1,~~304~~335)		(~~652~~667)		—
Estimated increase in net income		1,~~030~~054		~~515~~527		—
No Change in Severity
Estimated (decrease) increase in reserves		(~~652~~667)		—		~~652~~667
Estimated increase (decrease) in net income		~~515~~527		—		(~~515~~527)
+1 Percent Change in Severity
Estimated increase in reserves		—		~~652~~667		1,~~304~~335
Estimated decrease in net income		—		(~~515~~527)		(1,~~030~~054)

Our estimated share of CAR loss and LAE reserves is based on assumptions about our Participation Ratio, the size of CAR, and the resulting deficit. Our assumptions consider that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for establishing our CAR reserves. Each of our assumptions could have a reasonably possible range of plus or minus 5 percentage-points for each estimation.

The following sensitivity table presents information of the effect each 1 percentage-point change in our assumptions on our share of reserves for CAR and other residual markets could have on our assumed loss and LAE reserves and net income for the year ended December 31, ~~2024~~2025. In evaluating the information in the table, it should be noted that a 1 percentage-point change in our assumptions would change estimated reserves by 1 percentage-point.

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	-1 Percent		+1 Percent
	Change in		Change in
	Estimation		Estimation
CAR assumed commercial automobile
Estimated (decrease) increase in reserves	$	(~~337~~333)	$	~~337~~333
Estimated increase (decrease) in net income		~~266~~263		(~~266~~263)

Reserve Development Summary

The changes we have recorded in our reserves in the past illustrate the uncertainty of estimating reserves. Our prior year reserves decreased by $5144,~~894~~552, $4751,~~381~~894 and $5747,~~279~~381 during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively.

The following table presents a comparison of prior year development of our net reserves for losses and LAE for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively. Each accident year represents all claims for an annual accounting period in which loss events occurred, regardless of when the losses are actually reported, booked or paid. Our financial statements reflect the aggregate results of the current and all prior accident years.


	Year Ended December 31,
Accident Year	~~2024~~2025		~~2023~~2024		~~2022~~2023
2014 & prior	$	(1,689)	$	(2,399)	$	(1,824)
2015 & prior	$	(770)	$	(3,529)	$	(4,381)
2015		(1,840)		(1,982)		(2,057)
2016		(494)		(1,335)		(1,484)
2016		(1,335)		(1,484)		(1,662)
2017		(615)		(1,476)		(3,836)
2017		(1,476)		(3,836)		(3,749)
2018		(936)		(2,563)		(3,892)
2018		(2,563)		(3,892)		(7,233)
2019		(1,612)		(3,704)		(7,451)
2019		(3,704)		(7,451)		(12,520)
2020		(2,527)		(3,484)		(10,212)
2020		(3,484)		(10,212)		(18,985)
2021		(2,727)		(7,031)		(7,246)
2021		(7,031)		(7,246)		(9,249)
2022		(1,993)		(5,079)		(8,879)
2022		(5,079)		(8,879)		—
2023		(11,668)		(23,693)		—
2023		(23,693)		—		—
2024		(21,210)		—		—
All prior years	$	(5144,~~894~~552)	$	(4751,~~381~~894)	$	(5747,~~279~~381)

At the end of each period, the reserves were re-estimated for all prior accident years. Our prior year reserves decreased by $5144,~~894~~552, $4751,~~381~~894, and $5747,~~279~~381 for the years ended ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively. The decreases in prior year reserves in ~~2024~~2025 resulted from re-estimations of prior years’ ultimate loss and LAE liabilities and are primarily composed of reductions of $1213,~~742~~732 in our retained automobile reserves and $2928,~~286~~809 in our retained other than auto and homeowner’s reserves. The decreases in prior year reserves in ~~2023~~2024 resulted from re-estimations of prior year’s ultimate loss and LAE liabilities and are primarily composed of reductions of $1512,~~451~~742 in our retained automobile reserves and $29,~~782~~286 in our retained other than auto and homeowner reserves. The decrease in prior year reserves during ~~2022~~2023 are primarily composed of reductions of $2015,~~241~~451 in our retained automobile reserves and $3229,~~963~~782 in our retained homeowners reserves. It is not appropriate to extrapolate future favorable or unfavorable development of reserves from this past experience.

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The following table presents information by line of business for prior year development of our net reserves for losses and LAE for the year ended December 31, ~~2024~~2025.


	Private Passenger		Commercial
Accident Year	Automobile		Automobile		Homeowners		All Other		Total
2014 & prior	$	99	$	(27)	$	(1,407)	$	(354)	$	(1,689)
2015 & prior	$	(469)	$	—	$	(199)	$	(102)	$	(770)
2015		(34)		(414)		(357)		(1,035)		(1,840)
2016		(26)		(5)		(333)		(130)		(494)
2016		42		(184)		(325)		(868)		(1,335)
2017		59		(237)		(88)		(349)		(615)
2017		87		(267)		(241)		(1,055)		(1,476)
2018		292		(30)		(311)		(887)		(936)
2018		607		34		(849)		(2,355)		(2,563)
2019		544		(689)		(132)		(1,335)		(1,612)
2019		157		(889)		(1,135)		(1,837)		(3,704)
2020		274		(317)		(785)		(1,699)		(2,527)
2020		280		(661)		(1,416)		(1,687)		(3,484)
2021		272		(538)		(634)		(1,827)		(2,727)
2021		(797)		(1,235)		(1,830)		(3,169)		(7,031)
2022		3,423		(906)		(2,575)		(1,935)		(1,993)
2022		2,181		(234)		(3,373)		(3,653)		(5,079)
2023		(157)		(1,645)		(8,129)		(1,737)		(11,668)
2023		(9,353)		(3,356)		(7,807)		(3,177)		(23,693)
2024		(12,452)		(3,136)		(3,384)		(2,238)		(21,210)
All prior years	$	(68,~~731~~240)	$	(7,~~233~~503)	$	(1816,~~740~~570)	$	(1912,~~190~~239)	$	(5144,~~894~~552)

To further clarify the effects of changes in our reserve estimates for CAR and other residual markets, the next two tables break out the information in the table above by source of the business (i.e., non-residual market vs. residual market).

The following table presents information by line of business for prior year development of retained reserves for losses and LAE for the year ended December 31, ~~2024~~2025 that is, all our reserves except for business ceded or assumed from CAR and other residual markets.


		Retained		Retained
		Private Passenger		Commercial		Retained		Retained
Accident Year		Automobile		Automobile		Homeowners		All Other		Total
2014 & prior	$	99	$	(13)	$	(1)	$	(354)	$	(269)
2015 & prior	$	(469)	$	—	$	(199)	$	(102)	$	(770)
2015		(34)		(351)		(37)		(1,035)		(1,457)
2016		(26)		(5)		(333)		(130)		(494)
2016		42		(40)		(94)		(868)		(960)
2017		59		(237)		(88)		(349)		(615)
2017		87		(141)		(11)		(1,055)		(1,120)
2018		292		(25)		(311)		(887)		(931)
2018		607		19		(589)		(2,355)		(2,318)
2019		544		(471)		(132)		(1,335)		(1,394)
2019		157		(785)		(821)		(1,837)		(3,286)
2020		274		(40)		(785)		(1,699)		(2,250)
2020		280		(409)		(982)		(1,687)		(2,798)
2021		272		(367)		(634)		(1,827)		(2,556)
2021		(797)		(989)		(1,219)		(3,169)		(6,174)
2022		3,423		(748)		(2,575)		(1,935)		(1,835)
2022		2,181		(262)		(2,269)		(3,653)		(4,003)
2023		(157)		(1,091)		(8,129)		(1,737)		(11,114)
2023		(9,353)		(3,040)		(4,073)		(3,177)		(19,643)
2024		(12,452)		(2,508)		(3,384)		(2,238)		(20,582)
All prior years	$	(68,~~731~~240)	$	(65,~~011~~492)	$	(1016,~~096~~570)	$	(1912,~~190~~239)	$	(42,~~028~~541)

The following table presents information by line of business for prior year development of reserves assumed from residual markets for losses and LAE for the year ended December 31, ~~2024~~2025.


		CAR Assumed		CAR Assumed
		Private Passenger		Commercial		~~FAIR Plan~~
Accident Year		Automobile		Automobile		~~Homeowners~~Total		~~Total~~
2014 & prior	$	—	$	(14)	$	(1,406)	$	(1,420)
2015 & prior	$	—	$	—	$	—
2015		—		(63)		(320)		(383)
2016		—		—		—
2016		—		(144)		(231)		(375)
2017		—		—		—
2017		—		(126)		(230)		(356)
2018		—		(5)		(5)
2018		—		15		(260)		(245)
2019		—		(218)		(218)
2019		—		(104)		(314)		(418)
2020		—		(277)		(277)
2020		—		(252)		(434)		(686)
2021		—		(171)		(171)
2021		—		(246)		(611)		(857)
2022		—		(158)		(158)
2022		—		28		(1,104)		(1,076)
2023		—		(554)		(554)
2023		—		(316)		(3,734)		(4,050)
2024		—		(628)		(628)
All prior years	$	—	$	(12,~~222~~011)	$	(82,~~644~~011)	$	~~(9,866)~~

The improved retained private passenger and commercial automobile results were primarily due to fewer IBNR claims than previously estimated and better than previously estimated severity on our established bodily injury and

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property damage case reserves. Our retained other than auto and homeowners line of business prior year reserves decreased, due primarily to fewer IBNR claims than previously estimated.

In estimating all our loss reserves, we follow the guidance prescribed by ASC 944, Financial Services-Insurance.

For further information, see “Results of Operations: Losses and Loss Adjustment Expenses.”

Forward-Looking Statements

Forward-looking statements might include one or more of the following, among others:

●

Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items;

●

Descriptions of plans or objectives of management for future operations, products or services;

●

Forecasts of future economic performance, liquidity, need for funding and income;

●

Legal and regulatory commentary;

●

Descriptions of assumptions underlying or relating to any of the foregoing; and

●

Future performance of credit markets.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “aim,” “projects,” or words of similar meaning and expressions that indicate future events and trends, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements.

Forward-looking statements are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. There are a number of factors, many of which are beyond our control, that could cause actual future conditions, events, results or trends to differ significantly and/or materially from historical results or those projected in the forward-looking statements. These factors include but are not limited to:

●

The competitive nature of our industry and the possible adverse effects of such competition;

●

Conditions for business operations and restrictive regulations in Massachusetts;

●

The possibility of losses due to claims resulting from severe weather;

●

The impact of inflation and supply chain delays on loss severity;

●

The possibility that the Commissioner may approve future rule changes that change the operation of the residual market;

●

The possibility that existing insurance-related laws and regulations will become further restrictive in the future;

●

Our possible need for and availability of additional financing, and our dependence on strategic relationships, among others;

●

Other risks and factors identified from time to time in our reports filed with the SEC. Refer to Part I, Item 1A — Risk Factors.

Some other factors, such as market, operational, liquidity, interest rate, equity and other risks, are described elsewhere in this Annual Report on Form 10-K. Factors relating to the regulation and supervision of our Company are also described or incorporated in this report. There are other factors besides those described or incorporated in this report that could cause actual conditions, events or results to differ from those in the forward-looking statements.

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Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk. Market risk is the risk that we will incur losses due to adverse changes in market rates and prices. We have exposure to market risk through our investment activities and our financing activities. Our primary market risk exposure is to changes in interest rates. We use both fixed and variable rate debt as sources of financing. We have not entered, and do not plan to enter, into any derivative financial instruments for trading or speculative purposes.

Interest Rate Risk. Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. Our exposure to interest rate changes primarily results from our significant holdings of fixed rate investments and from our financing activities. Our fixed maturity investments include U.S. and foreign government bonds, securities issued by government agencies, obligations of state and local governments and governmental authorities, corporate bonds and asset-backed securities, most of which are exposed to changes in prevailing interest rates.

We manage our exposure to risks associated with interest rate fluctuations through active review of our investment portfolio by our management and Board and consultation with third-party financial advisors. As a general matter, we do not attempt to match the durations of our assets with the durations of our liabilities, and the majority of our liabilities are “short tail.” Our goal is to maximize the total after-tax return on all of our investments. An important strategy that we employ to achieve this goal is to try to hold enough in cash and short-term investments in order to avoid liquidating longer-term investments to pay claims.

Based upon the results of interest rate sensitivity analysis, the following table shows the interest rate risk of our investments in fixed maturities, measured in terms of fair value (which is equal to the carrying value for all our fixed maturity securities).


		-100 Basis				+100 Basis
		Point Change		No Change		Point Change
As of December 31, 2024
As of December 31, 2025
Estimated fair value	$	1,~~160~~378,~~184~~973	$	1,~~115~~315,~~218~~548	$	1,~~071~~251,~~548~~890
Estimated increase (decrease) in fair value	$	4463,~~966~~425	$	—	$	(4363,~~670~~658)

With respect to floating rate debt, we are exposed to the effects of changes in prevailing interest rates. At December 31, ~~2024~~2025, we had no$50,000 of debt outstanding under our credit facility. Assuming the full utilization of our current available credit facility, a 2.0% increase in the prevailing interest rate on our variable rate debt would result in interest expense increasing approximately $~~600~~1000 for ~~2024~~2025, assuming that all of such debt is outstanding for the entire year.

In addition, in the current market environment, our investments can also contain liquidity risks.

Equity Risk. Equity risk is the risk that we will incur economic losses due to adverse changes in equity prices. Our exposure to changes in equity prices results from our holdings of common stock and mutual funds held to fund the executive deferred compensation plan. We continuously evaluate market conditions and we expect in the future to purchase additional equity securities. We principally manage equity price risk through industry and issuer diversification and asset allocation techniques.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

SAFETY INSURANCE GROUP, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	6061

Balance Sheets	6364

Statements of Operations	6465

Statements of Comprehensive (Loss) Income	65
Statements of Comprehensive Income	66

Statements of Changes in Shareholders’ Equity	6667

Statements of Cash Flows	6768

Notes to Consolidated Financial Statements	6869

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Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Safety Insurance Group, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Safety Insurance Group, Inc. and subsidiaries (the "Company") as of December 31, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of operations, comprehensive income ~~(loss)~~, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, ~~2024~~2025, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, ~~2024~~2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2024~~2025, and ~~2023~~2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2024~~2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2024~~2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A. Controls and Procedures. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of

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management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Losses and Loss Adjustment Expense Reserves – Refer to Notes 2 and 12 to the financial statements

Critical Audit Matter Description

The Company establishes loss and loss adjustment expense reserves as balance sheet liabilities representing estimates of amounts needed to pay reported and unreported losses and the expenses associated with investigating and paying the losses, or loss adjustment expenses. The loss and loss adjustment expense reserves are determined in accordance with commonly accepted actuarial reserving techniques on the basis of the Company’s historical information and experience. In determining the loss and loss adjustment expense reserves, the Company analyzes historical data and estimates the impact of various loss development factors, such as the Company’s historical loss experience and that of the industry, trends in claims frequency and severity, the Company’s mix of business, the Company’s claims processing procedures, legislative enactments, judicial decisions, legal developments in imposition of damages, and changes and trends in general economic conditions, including the effects of inflation.

Given the subjectivity associated with assumptions and methodologies used in determining the estimated ultimate cost to settle the liabilities for certain long tail reported and unreported losses due to uncertainties caused by various factors including frequency and severity of claims, as well as future legislative, judicial, and legal uncertainties, performing audit procedures to evaluate whether the ultimate cost of loss and loss adjustment expense reserves were appropriately recorded as of December 31, ~~2024~~2025, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to certain loss and loss adjustment expense reserves included the following, among others:

We tested the effectiveness of the Company’s controls related to loss and loss adjustment expense reserves, including controls over inputs, methods, and assumptions used in the Company’s estimation process.

We tested the underlying data that served as the basis for the Company’s analysis, including historical claims, to test that the inputs to the actuarial estimate were complete and accurate.

With the assistance of our actuarial specialists, we evaluated the methods and assumptions used by the Company to estimate ultimate losses incurred in determining loss and loss adjustment expense reserves by:

Assessing the reasonableness of the Company’s analysis, developing independent estimates of loss and loss adjustment expense reserves and comparing such estimates to the Company’s recorded loss and loss adjustment expense reserves.

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Comparing the Company’s prior year estimates of expected incurred losses to actual experience during the current year to identify potential management bias in the determination of loss and loss adjustment expense reserves.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February 27, ~~2025~~2026

We have served as the Company’s auditor since 2021.

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Safety Insurance Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024

Assets
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: $1,181,038 and $1,120,682, allowance for expected credit losses of $1,198 and $1,208)	$	1,115,218	$	1,052,145
Fixed maturities, available for sale, at fair value (amortized cost: $1,337,235 and $1,181,038, allowance for expected credit losses of $0 and $1,198)	$	1,315,548	$	1,115,218
Short-term investments, at fair value (cost: $19,970 and $0)		19,975		—
Short-term investments, at fair value (cost: $0 and $19,970)		—		19,975
Equity securities, at fair value (cost: $201,258 and $221,809)		221,422		238,022
Equity securities, at fair value (cost: $201,591 and $201,258)		220,953		221,422
Other invested assets		~~156~~151,~~444~~020		~~133~~156,~~946~~444
Total investments		1,~~513~~687,~~059~~521		1,~~424~~513,~~113~~059
Cash and cash equivalents		5873,~~974~~901		3858,~~152~~974
Accounts receivable, net of allowance for expected credit losses of $918 and $1,053		306,465		256,687
Accounts receivable, net of allowance for expected credit losses of $802 and $918		320,187		306,465
Receivable for securities sold		~~568~~4,269		~~124~~568
Accrued investment income		712,~~426~~169		7,~~261~~426
Taxes recoverable		—		623
Receivable from reinsurers related to paid loss and loss adjustment expenses		9,433		26,386
Receivable from reinsurers related to paid loss and loss adjustment expenses		26,386		13,129
Receivable from reinsurers related to unpaid loss and loss adjustment expenses		149,441		130,792
Receivable from reinsurers related to unpaid loss and loss adjustment expenses		130,792		112,623
Ceded unearned premiums		39,674		41,413
Ceded unearned premiums		41,413		32,346
Deferred policy acquisition costs		111,791		105,474
Deferred policy acquisition costs		105,474		91,917
Deferred income taxes		4,116		11,200
Deferred income taxes		11,200		12,150
Equity and deposits in pools		4,197		3,740
Equity and deposits in pools		3,740		35,247
Operating lease right-of-use-assets		11,861		15,733
Operating lease right-of-use-assets		15,733		19,756
Goodwill		17,093		17,093
Intangible assets		76,~~730~~783		7,~~551~~730
Other assets		2418,~~037~~672		2524,~~232~~037
Total assets	$	2,~~270~~471,~~090~~108	$	2,~~094~~270,~~004~~090

Liabilities
Losses and loss adjustment expense reserves	$	~~671~~761,~~669~~739	$	~~603~~671,~~081~~669
Unearned premium reserves		~~619~~654,~~916~~803		~~528~~619,~~150~~916
Accounts payable and accrued liabilities		7780,~~276~~461		6477,~~235~~276
Payable for securities purchased		~~6,949~~846		16,~~863~~949
Payable to reinsurers		1915,~~074~~184		1519,~~941~~074
Taxes payable		13,~~009~~903		—1,009
Short-term debt		~~30,000~~—		—30,000
Long-term debt		—50,000		~~30,000~~—
Operating lease liabilities		1511,~~733~~861		1915,~~756~~733
Other liabilities		—		26,711
Total liabilities		1,578,797		1,441,626
Total liabilities		1,441,626		1,289,737

Commitments and contingencies (Note 8)

Shareholders’ equity
Common stock: $0.01 par value; 30,000,000 shares authorized; 17,995,584 and 17,949,484 shares issued		180		179
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		~~230~~235,~~864~~693		~~226~~230,~~380~~864
Accumulated other comprehensive loss, net of taxes		(5117,~~047~~133)		(5351,~~191~~047)
Retained earnings		~~798~~844,~~760~~063		~~781~~798,~~192~~760
Treasury stock, at cost: 3,157,577 shares		(150,293)		(150,293)
Treasury stock, at cost: 3,419,947 and 3,157,577 shares		(170,493)		(150,293)
Total shareholders’ equity		~~828~~892,~~464~~311		~~804~~828,~~267~~464
Total liabilities and shareholders’ equity	$	2,~~270~~471,~~090~~108	$	2,~~094~~270,~~004~~090

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

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Safety Insurance Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)


	Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023

Net earned premiums	$	1,~~010~~139,~~704~~011	$	~~834~~1,~~414~~010,704	$	~~758~~834,~~505~~414
Net investment income		5562,~~720~~732		5655,~~377~~720		4656,~~725~~377
Earnings from partnership investments		108,~~271~~461		510,~~540~~271		125,~~484~~540
Net realized gains on investments		717,~~720~~982		17,~~327~~720		91,~~190~~327
Change in net unrealized gains on equity securities		~~3,951~~(802)		73,~~502~~951		~~(44~~7,~~386)~~502
Credit loss benefit (expense)		91,198		~~(530)~~9		14(530)
Commission income		79,~~942~~498		67,~~932~~942		~~566~~6,932
Finance and other service income		2325,~~700~~652		1923,~~394~~700		1419,~~461~~394
Total revenue		1,~~120~~263,~~017~~732		~~930~~1,~~956~~120,017		~~797~~930,~~559~~956

Losses and loss adjustment expenses		~~716~~797,~~637~~182		~~642~~716,~~302~~637		~~491~~642,~~979~~302
Underwriting, operating and related expenses		~~305~~330,~~322~~396		~~256~~305,~~580~~322		~~245~~256,~~145~~580
Other expense		7,~~683~~941		67,~~836~~683		~~330~~6,836
Interest expense		~~509~~1,530		~~818~~509		~~524~~818
Total expenses		1,~~030~~137,~~151~~049		~~906~~1,~~536~~030,151		~~737~~906,~~978~~536

Income before income taxes		89126,~~866~~683		2489,~~420~~866		5924,~~581~~420
Income tax expense		1927,~~132~~428		519,~~545~~132		135,~~020~~545
Net income	$	7099,~~734~~255	$	1870,~~875~~734	$	4618,~~561~~875

Earnings per weighted average common share:
Basic	$	46.7972	$	14.2879	$	31.1728
Diluted	$	46.7870	$	14.2878	$	31.1528

Cash dividends paid per common share	$	3.6064	$	3.60	$	3.60

Number of shares used in computing earnings per share:
Basic		14,~~692~~711,~~089~~942		14,~~663~~692,~~730~~089		14,~~607~~663,~~483~~730
Diluted		14,~~717~~745,~~118~~125		14,~~710~~717,~~131~~118		14,710,~~611~~131

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)~~

(Dollars in thousands)


	Years Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Net income	$	7099,~~734~~255	$	1870,~~875~~734	$	4618,~~561~~875

Other comprehensive income (loss), net of tax:
Other comprehensive income, net of tax:
Unrealized holding gains (losses) during the period, net of income tax (benefit) expense of $2,191, $7,548, and $(26,013).		8,243		28,395		(97,857)
Unrealized holding gains during the period, net of income tax expense of $12,791, $2,191, and $7,548.		48,120		8,243		28,395
Reclassification adjustment for net realized gains on investments included in net income, net of income tax expense of ($1,621), ($279), and ($1,930).		(6,099)		(1,048)		(7,260)
Reclassification adjustment for net realized gains on investments included in net income, net of income tax expense of ($3,776), ($1,621), and ($279).		(14,206)		(6,099)		(1,048)
Other comprehensive income (loss), net of tax:		2,144		27,347		(105,117)
Other comprehensive income, net of tax:		33,914		2,144		27,347

Comprehensive income (loss)	$	72,878	$	46,222	$	(58,556)
Comprehensive income	$	133,169	$	72,878	$	46,222

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

(Dollars in thousands)


					Accumulated
					Other
			Additional		Comprehensive						Total
	Common		Paid-in		(Loss) Income,		Retained		Treasury		Shareholders’
	Stock		Capital		Net of Taxes		Earnings		Stock		Equity
Balance at January 1, 2022	$	178		216,070		24,579		821,743		(135,397)	$	927,173
Balance at January 1, 2023	$	179		222,049		(80,538)		815,309		(145,000)	$	811,999
Net income		—		—		—		46,561		—		46,561
Unrealized losses on securities available for sale, net of deferred federal income taxes		—		—		(105,117)		—		—		(105,117)
Restricted share awards issued		1		—		—		—		—		1
Recognition of employee share-based compensation		—		5,979		—		—		—		5,979
Dividends paid and accrued		—		—		—		(52,995)		—		(52,995)
Reissuance of treasury stock		—		—		—		—		5,000		5,000
Acquisition of treasury stock		—		—		—		—		(14,603)		(14,603)
Balance at December 31, 2022		179		222,049		(80,538)		815,309		(145,000)		811,999
Net income		—		—		—		18,875		—		18,875
Unrealized gains on securities available for sale, net of deferred federal income taxes		—		—		27,347		—		—		27,347
Unrealized losses on securities available for sale, net of deferred federal income taxes		—		—		27,347		—		—		27,347
Recognition of employee share-based compensation		—		4,331		—		—		—		4,331
Dividends paid and accrued		—		—		—		(52,992)		—		(52,992)
Acquisition of treasury stock		—		—		—		—		(5,293)		(5,293)
Balance at December 31, 2023		179		226,380		(53,191)		781,192		(150,293)		804,267
Net income		—		—		—		70,734		—		70,734
Unrealized gains on securities available for sale, net of deferred federal income taxes		—		—		2,144		—		—		2,144
Restricted share awards issued		1		—		—		—		—		1
Recognition of employee share-based compensation		—		4,484		—		—		—		4,484
Dividends paid and accrued		—		—		—		(53,166)		—		(53,166)
Balance at December 31, 2024	$	180	$	230,864	$	(51,047)	$	798,760	$	(150,293)	$	828,464
Net income		—		—		—		99,255		—		99,255
Unrealized gains on securities available for sale, net of deferred federal income taxes		—		—		33,914		—		—		33,914
Restricted share awards issued		1		—		—		—		—		1
Recognition of employee share-based compensation		—		4,829		—		—		—		4,829
Dividends paid and accrued		—		—		—		(53,952)		—		(53,952)
Acquisition of treasury stock		—		—		—		—		(20,200)		(20,200)
Balance at December 31, 2025	$	181	$	235,693	$	(17,133)	$	844,063	$	(170,493)	$	892,311

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

(Dollars in thousands)


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024			~~2022~~2023
Cash flows from operating activities:
Net income	$	7099,~~734~~255	$	1870,~~875~~734	$	4618,~~561~~875
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Investment amortization, net		~~719~~(1,571)		~~(310)~~719		~~1,693~~(310)
Fixed asset depreciation, net		96,~~465~~777		69,~~949~~465		6,~~610~~949
Stock based compensation		4,~~484~~830		4,~~332~~484		54,~~980~~332
Credit for deferred income taxes		~~380~~(1,931)		~~1,655~~380		(81,~~371)~~655
Net realized gains on investments		(716,~~720~~765)		(17,~~327~~720)		(91,~~190~~327)
Credit loss (benefit) expense		(91,198)		~~530~~(9)		~~(14)~~530
Earnings from partnership investments		~~(7,588)~~500		(47,~~635~~588)		(84,~~388~~635)
Change in net unrealized gains on equity securities		~~(3,951)~~697		(73,~~502~~951)		44(7,~~386~~502)
Changes in assets and liabilities:
Accounts receivable, net		(4913,~~778~~722)		(6449,~~145~~778)		(2164,~~589~~145)
Accrued investment income		(~~165~~4,743)		~~951~~(165)		~~(811)~~951
Receivable from reinsurers		(311,~~426~~696)		(1931,~~370~~426)		2(19,~~519~~370)
Ceded unearned premiums		(91,~~067)~~739		(39,~~893~~067)		(43,~~658~~893)
Deferred policy acquisition costs		(136,~~557~~317)		(1613,~~335~~557)		(216,~~558~~335)
Taxes recoverable/payable		1,632		(2,405)		3,237
Taxes payable		2,894		1,632		(2,405)
Other assets		131,~~559~~586		(213,~~128)~~559		(62,~~477~~128)
Loss and loss adjustment expense reserves		68,588		53,483		(21,053)
Losses and loss adjustment expense reserves		90,070		68,588		53,483
Unearned premium reserves		9134,~~766~~887		9491,~~775~~766		1994,~~888~~775
Accounts payable and accrued liabilities		133,~~200~~096		(913,~~341)~~200		(29,~~680~~341)
Payable to reinsurers		(3,~~133~~890)		43,~~497~~133		24,~~252~~497
Other liabilities		~~(25,711)~~—		(225,~~542~~711)		(32,~~011~~542)
Net cash provided by operating activities		~~128~~194,~~688~~498		52128,~~114~~688		4452,~~326~~114

Cash flows from investing activities:
Fixed maturities purchased		(~~269~~537,~~889~~381)		(91269,~~674~~889)		(~~215~~91,~~092~~674)
Short-term investments purchased		~~(19,580)~~—		—(19,580)		—
Equity securities purchased		(55122,~~920~~074)		(5055,~~849~~920)		(5250,~~192~~849)
Other invested assets purchased		(117,~~352~~944)		(1911,~~066~~352)		(2019,~~204~~066)
Proceeds from sales and paydowns of fixed maturities		~~151~~294,~~220~~069		~~102~~151,~~143~~220		~~154~~102,~~491~~143
Proceeds from maturities, redemptions, and calls of fixed maturities		6070,~~624~~031		1960,~~542~~624		8619,~~406~~542
Proceed from sales of equity securities		85,489		64,691		43,348
Proceeds from maturities of short-term investments		20,000		—
Proceeds from other invested assets redeemed		11,298		3,377		2,933
Proceed from sales of equity securities		148,376		85,489		64,691
Acquisition, net of cash received		(2,065)		(2,112)		(17,586)
Proceeds from other invested assets redeemed		11,725		11,298		3,377
Fixed assets purchased		(4,366)		(1,783)		(2,092)
Acquisition, net of cash received		—		(2,065)		(2,112)
Net cash (used for) / provided by investing activities		(54,541)		24,269		(19,988)
Fixed assets purchased		(2,508)		(4,366)		(1,783)
Net cash (used for) provided by investing activities		(125,706)		(54,541)		24,269

Cash flows from financing activities:
Proceeds from FHLB loan		15,000		20,000		5,000
Proceeds from Citizens loan		50,000		—		—
Payments on FHLB loan		(15,000)		(25,000)		—
Proceeds from FHLB loan		—		15,000		20,000
Dividends paid to shareholders		(53,325)		(53,291)		(53,038)
Payments on FHLB loan		(30,000)		(15,000)		(25,000)
Acquisition of treasury stock		—		(5,240)		(14,603)
Dividends paid to shareholders		(53,865)		(53,325)		(53,291)
Net cash used for financing activities		(53,325)		(63,531)		(62,641)
Acquisition of treasury stock		(20,000)		—		(5,240)
Net cash used for financing activities		(53,865)		(53,325)		(63,531)

Net increase (decrease) in cash and cash equivalents		20,822		12,852		(38,303)
Net (decrease) increase in cash and cash equivalents		14,927		20,822		12,852
Cash and cash equivalents at beginning of year		3858,~~152~~974		2538,~~300~~152		6325,~~603~~300
Cash and cash equivalents at end of period	$	5873,~~974~~901	$	3858,~~152~~974	$	2538,~~300~~152

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Federal and state income taxes	$	16,515	$	6,072	$	19,119
Federal and state income taxes, net of refunds	$	26,856	$	16,515	$	6,072
Interest	$	~~510~~1,435	$	~~811~~510	$	~~507~~811

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

Table of Contents

In this Form 10-K, Notes to the 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 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.

The Company was incorporated on June 25, 2001 in the State of Delaware. On October 16, 2001, the Company acquired all of the issued and outstanding common stock of Thomas Black Corporation (“TBC”) and its property and casualty subsidiaries. TBC subsequently merged with and into Safety Insurance Group, Inc. with Safety Insurance Group, Inc. being the corporation surviving the merger.

The Company is a leading provider of property and casualty insurance in Massachusetts, New Hampshire and Maine. The Company’s principal product line is private passenger automobile insurance, which accounted for 5554.89% of its direct written premiums in ~~2024~~2025. 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”).

SNIA was established on December 1, 2022, when the Company acquired the assets and operations of Northeast Metrowest Insurance Agency, Inc. (“Northeast / Metrowest”), an independent insurance agency, through its wholly-owned subsidiary, SMC. SNIA provides personal and commercial property and casualty insurance products to customers on behalf of the Insurance Subsidiaries and third-party insurance carriers. All intercompany commission transactions, including commission income and underwriting, operating and related expenses, have been eliminated. Eliminated commission income totaled $1,~~069~~122 and $~~963~~1,069 for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. As of December 31, ~~2024~~2025, fiduciary assets held by SNIA were immaterial and less than $~~150~~275.

As part of the purchase of SNIA, the Company paid cash and reissued treasury stock of $5,000.

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, the Company recognized an underwriting gain through the release of prior year loss reserves, (“FAIR Plan Development”) and established a new invested asset, (“Investment in FAIR Plan Trust”).

2.	Summary of Significant Accounting Policies

Investments

Investments in fixed maturities, which include taxable and non-taxable bonds ~~and redeemable preferred stocks~~, are reported at fair value. Fair values for fixed maturity securities are based on estimates obtained from independent pricing services. Unrealized gains or losses on fixed maturity securities reported at fair value are excluded from earnings and reported in a separate component of shareholder’s equity known as “accumulated other comprehensive income net of taxes” until realized. 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 credit loss component of the impairment from the amount related to all other factors and reports the credit loss component as credit loss expense. The impairment related to all other factors (non-credit factors) is reported in accumulated other comprehensive income. The allowance for expected credit losses is adjusted for any additional credit losses and subsequent recoveries. Upon

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that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors and reports the credit loss component as credit loss expense. The impairment related to all other factors (non-credit factors) is reported in accumulated other comprehensive income. The allowance for expected credit losses is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss, the cost basis is not adjusted. See Note 3, Investments, for further details of the Company’s accounting for impairments of available-for-sale investments.

Investments in equity securities, which include interests in common stocks, mutual funds and a real estate investment trust (“REIT”), are reported at fair value. Fair values for equity securities are derived from external market quotations, with the exception of the REIT whose fair value was determined using the trust’s net asset value obtained from its audited financial statements. Changes in unrealized gains or losses on equity securities are recognized in earnings.

Other invested assets consist primarily of investments in limited partnerships. The partnership interest is accounted for using the equity method of accounting and recorded in earnings from partnership investments. The carrying value of these investments are written down, or impaired, to fair value when a decline in value is considered to be other-than-temporary. In applying the equity method (including assessment for other-than-temporary impairment), the Company uses financial information provided by the investee, generally on a three-month lag.

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 Investment in FAIR Plan Trust. The Company’s Investment in FAIR Plan Trust is adjusted to its current fair value on a quarterly basis based on information from the FAIR Plan, with changes recognized through earnings. As of December 31, 2025 and 2024, the Company’s Investment in the FAIR Plan Trust of $14,209 and $14,477, respectively, was included in other invested assets. As of December 31, 2025 and 2024, the Company recognized $616 and $247, respectively, of income in earnings from partnership investments from its Investment in FAIR Plan Trust.

Realized gains or losses on the sale or maturity of investments are determined based on the specific cost identification method.

Investment income is recognized on an accrual basis of accounting. Bonds not backed by other loans are amortized using the interest method. Loan-backed bonds and structured securities are amortized using the interest method and significant changes in estimated cash flows from the original purchase assumptions are accounted for using the retrospective method.

Cash and Cash Equivalents

Cash and cash equivalents includes money market accounts and U.S. Treasury bills with original maturities of three months or less from the date of purchase. U.S. Treasury bills are stated at amortized cost, which approximates fair value.

Accounts Receivable

Amounts included in accounts receivable represent premiums as well as finance charges, the majority of which are billed on a monthly installment basis. Accounts receivable are stated net of allowances for doubtful accounts. At December 31, ~~2024~~2025 and ~~2023~~2024, these allowances were $~~918~~802 and $1918,~~053,~~ respectively. Uncollected premium balances over ninety days past due are written off.

Deferred Policy Acquisition Costs

Amounts that vary with and are primarily related to the successful acquisition of a new or renewal insurance contract, principally commissions, premium taxes and certain other costs, are deferred and amortized ratably over the effective period of the policy. All other acquisition expenses are expensed as incurred. Deferred policy acquisition costs are reviewed to determine if they are recoverable from future income, and if not, are charged to expense. Future investment income attributable to related premiums is not taken into account in measuring the recoverability of the carrying value of this asset. Amortization of acquisition costs in the amount of $220,893, $207,016 and $161,630 were included in underwriting, operating and other expenses for the years ended 2025, 2024 and 2023, respectively.

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carrying value of this asset. Amortization of acquisition costs in the amount of $207,016, $161,630 and $146,013 were included in underwriting, operating and other expenses for the years ended 2024, 2023 and 2022, respectively.

Equity and Deposits in Pools

Equity and deposits in pools represents the net receivable amounts from the residual market ~~mechanisms~~mechanism, Commonwealth Automobile Reinsurers (“CAR”) for automobile ~~and Massachusetts Property Insurance Underwriting Association (“FAIR Plan”) for homeowners~~ insurance in Massachusetts. See Note 11, Reinsurance, for a discussion of the Company’s accounting for amounts assumed from the residual ~~markets~~market.

As an element of the FAIR Plan Restructuring, the Company eliminated its net asset position in FAIR Plan, which was included within equity and deposits in pools. As a result, the Company’s equity and deposits in pools balance no longer includes a net receivable balance from FAIR Plan as of December 31, 2024.

Equipment and Leasehold Improvements

Property, equipment, leasehold improvements, and software which are included in other assets are carried at cost less accumulated depreciation. Depreciation is provided using the straight- line or accelerated method over the estimated useful lives of the related assets, which range from 3 to 10 years. Amortization of leasehold improvements is provided using the straight-line method over the term of the lease. The costs of computer software developed or obtained for internal use are capitalized and amortized over the estimated life of the business system, beginning when the software is ready for its intended use. Maintenance and repairs are charged to expense as incurred.

Business Combinations

The Company accounts for acquisitions of entities that qualify as businesses using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Purchase consideration is allocated to the assets acquired, including customer relationship intangible assets, and liabilities assumed based on their estimated fair values at acquisition. Management estimated the fair value of such intangible assets using an income approach that considered cash flows expected to be generated by the acquired business relationships, a weighted average cost of capital discount rate reflecting the relative risk of achieving the anticipated cash flows, profits, the time value of money, and other relevant inputs. The excess of the total purchase consideration over the fair value of the identified net assets acquired is recognized as goodwill. The results of acquired businesses are included in the results of operations beginning from the date of acquisition. ~~Acquisition~~ Acquisition-related costs are expensed as incurred. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the allocation of purchase consideration and to the fair values of assets acquired and liabilities assumed to the extent that additional information becomes available. After this period, any subsequent adjustments are recorded in earnings.

Goodwill

Goodwill generated through acquisition is carried at cost, net of impairments. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently when indicators of potential impairment exist. Management first evaluates impairment of goodwill by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after performing the qualitative assessment, management determines it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative assessment to determine the fair value of the reporting unit. Management’s determination of the fair value of the reporting unit incorporates multiple inputs into discounted cash flow calculations, including levels of economic capital required to support the business, future business growth, earnings projections, and the weighted average cost of capital used for purposes of discounting. Goodwill is impaired up to the amount that the carrying value of the reporting unit exceeds the fair value. The Company did not recognize any goodwill impairments during the ~~year~~years ended December 31, 2025, 2024 and 2023.

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Intangible Assets

Acquired intangible assets are amortized over their useful lives on a straight-line basis over the period of expected benefit, generally 10 years. The Company recognized $~~885~~948, $~~816~~885 and $44816 of amortization expense for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively, and expects to recognize $~~885~~948 of amortization expense annually through July 31, 2034. Intangible assets are assessed for impairment generally when events or circumstances indicate a potential impairment. If it is determined that the carrying amount of the asset is not recoverable, the asset is written down to fair value and an impairment loss is recognized. The Company did not identify any impairment indicators during the ~~year~~years ended December 31, 2025, 2024 and 2023.

Revenue Recognition

The Company recognizes revenue under both ASC 944, Financial Services – Insurance (“ASC 944”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Premiums are earned over the terms of the respective policies, which are generally one year. Unearned premiums represent the portion of premiums written applicable to the unexpired terms of the policies.

Ceded premiums are charged to income over the terms of the respective policies and the applicable term of the reinsurance contracts with third-party reinsurers. Ceded unearned premiums represent the unexpired portion of premiums ceded to CAR and other reinsurers.

Premiums received in advance of the policy effective date are recorded as a liability and not recognized as income until earned. Such amounts are included in accounts payable and accrued liabilities and totaled $1015,~~144~~546 and $1110,~~983~~144 at December 31, ~~2024~~2025 and ~~2023~~2024, respectively.

Finance and other service income primarily include revenues from premium installment charges, which are recognized when earned.

Commission revenue includes new and renewal commissions paid by insurance carriers. These commissions are earned at the later of the effective date or billing date, as all rights are passed to the insured, the obligation to pay a claim resides with the insurance carrier, and no further performance obligation exists for the Company. Under the terms of its contracts with insurance carriers, the Company can earn additional, variable commission revenue in the form of annual contingent underwriting commissions (“CUC”) based on the underwriting performance of the insurance book of business. Each carrier contract and related CUC is calculated independently. Under ASC 606, the Company must estimate the amount of consideration that will be received in the coming year such that a significant reversal of revenue is not probable. As such, CUC is recognized as a contract asset as policies are issued using applicable premium and payout factors based on the estimated loss ratio from the contract. Other expenses represent commissions remitted to insurance carriers by SNIA.

Losses and Loss Adjustment Expenses

Liabilities for losses and loss adjustment expenses (“LAE”) include case basis estimates for open claims reported prior to year-end and e

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