1172052--3/16/2006--SAFETY_INSURANCE_GROUP

related topics

{loss, insurance, financial}

{personnel, key, retain}

{capital, credit, financial}

{financial, litigation, operation}

{cost, contract, operation}

{stock, price, share}

{provision, law, control}

{product, market, service}

{condition, economic, financial}

{cost, regulation, environmental}

Because we are primarily a private passenger automobile insurance carrier, our business may be adversely affected by conditions in this industry. Because we write insurance only in Massachusetts, our business may be adversely affected by conditions in Massachusetts. We have exposure to claims related to severe weather conditions, which may result in an increase in claims frequency and severity. If we are not able to attract and retain independent agents, it could adversely affect our business. Established competitors with greater resources may make it difficult for us to market our products effectively and offer our products at a profit. As a holding company, Safety Insurance Group, Inc. is dependent on the results of operations of the Safety Insurance Company We are subject to comprehensive regulation by Massachusetts and our ability to earn profits may be restricted by these regulations. We may enter new markets and there can be no assurance that our diversification strategy will be effective. Our failure to maintain a commercially acceptable financial strength rating would significantly and negatively affect our ability to implement our business strategy successfully. Our losses and loss adjustment expenses may exceed our reserves, which could significantly affect our business. If we lose key personnel, our ability to implement our business strategy could be delayed or hindered. Market fluctuations and changes in interest rates can have significant and negative effects on our investment portfolio. 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. 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, which could diminish the value of our common stock. Future sales of shares of our common stock by our existing stockholders in the public market, or the possibility or perception of such future sales, could adversely affect the market price of our stock.

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1172052--3/16/2006--SAFETY_INSURANCE_GROUP_INC