Safety Insurance (SAFT) the second largest private passenger insurer in Massachusetts reported good earnings on November 2nd. Book value jumped 10.9% YoY and earnings again showed signs of stabilising.

Safety Insurance (SAFT) closed up 2.47% to $34.01. Book value was $39.20 at end of Q2 and will be over $40 when Q3 is announced. At some point in the future the share price is highly probably to be above book value and book value is adding around $1 a quarter.

Ten months ago I recommended SAFT. Its share price is down since then, but far from out. While I prefer absolute returns my sense of well being dictates I must look at 2008 through a relative lens. Relatively SAFT was a great performer, beating the pants off the S&P500 by 22%, SAFT is down 20% over the last ten months while the S&P500 has fallen 42%.

Safety Insurance Group Inc. (SAFT) is trading at a price to book of 1. While business is declining, it is worth more than the zero you’re paying for it.

A recent article on Seeking Alpha theorized that Safety Insurance Group (SAFT) would benefit from higher gas prices and global warming. I’m unsure whether that thesis will be proved correct, but I am certain the author is clearly a very lateral thinker. I too like to have a thesis when investing, but require hard numbers to validate it. I thought I’d see if there is any safety in Safety’s numbers.

The first important maxim I learnt about investing in insurance companies was…