Safety Insurance Group, Inc. (SAFT) Earnings Call Transcript & Summary

Welcome to the Safety Insurance's Annual Meeting. This is Chris Whitford, the company's CFO. I'm here to introduce George Murphy, our President and CEO, who will start off our meeting today.

Thank you, Chris. Good morning, ladies and gentlemen. It's now 10:00 a.m. on Wednesday, June 1, 2022. The meeting will please come to order. I am George Murphy, President and Chief Executive Officer of Safety Insurance Group, Inc. On behalf of the Safety Insurance Group, I welcome all of you to the 2022 Annual Meeting of Stockholders. Before we go further, I would like to introduce you to our officers, who are present at today's meeting. They are Chris Whitford, Vice President, CFO and Secretary; and James Berry, VP of Underwriting. Joe DeSantis, a representative of Deloitte & Touche, is also with us today and is available to respond to appropriate questions. As is stated in the handout that all of you should have received, we will conduct the formal portion of this meeting first. Following adjournment of the annual meeting, you will have an opportunity to raise any questions that you may have. Furthermore, questions sent in advance via e-mail will also be addressed. Now back to the official part of this meeting. As President and Chief Executive Officer of Safety Insurance Group, I will act as Chairperson of the 2022 Annual Meeting. I hereby appoint Chris Whitford, Safety's Chief Financial Officer, Vice President and Secretary, as the Secretary of this meeting. Now I will ask Chris to take care of certain preliminary formalities.

Thanks, George. Each of you should have received a copy of our 1-page handout showing the agenda and meeting procedures. Please conduct yourself in accordance with those rules of conduct. The handout also contains information regarding certain forward-looking statements, which may be expressed today regarding Safety's future operations or performance. I would like to introduce you to Jennifer Borden of Borden Consulting Group. Ms. Borden has been appointed as Inspector of Elections for this meeting. If you've already voted by proxy, your vote will be counted automatically without any further action on your part. As a matter of convenience for the Inspector of Elections, it would be preferable for a stockholder, who is present and who has previously given a proxy and does not wish to change his or her vote, to allow his or her shares to be voted by proxy rather than voting in person. Is there any stockholder present who wishes to give their proxy to the Inspector of Elections, but has not done so? If so, please raise your hand and the Inspector of Elections will collect them at this time. If there is anyone present who wishes to vote his or her shares, please raise your hand at this time. Before acting on the matters stated in the notice of the meeting and proxy statement, I will establish for the record that this meeting is properly convened and that there is a quorum present for the transaction of business. According to the affidavit of distribution dated April 20, 2022, a notice of this Annual Meeting of Stockholders and instructions as how to access the proxy statement, the proxy card, and the annual report to stockholders, were sent to each stockholder of record as of the close of business on April 8, 2022. Notice of this meeting has been duly given in accordance with Safety's bylaws and the proxy statement and related amendments have been filed with the Securities and Exchange Commission. Extra copies of the annual report and proxy statement are available at the table at the front of the room. Prior to the commencement of this meeting, Ms. Borden took an oath of office to faithfully and honestly execute the duties of inspector with strict impartiality and to the best of her ability. The affidavit of distribution and the oath of the Inspector of Elections are in my possession and will be filed with the minutes of this meeting. On the record date, there were 14,741,778 shares of Safety's common stock outstanding and entitled to vote at this meeting. The list of stockholders of record entitled to vote was taken from Safety's stock ledgers and have been prepared and certified by Broadridge Financial Solutions. I have been informed by the Inspector of Elections that there are holders of a total of no fewer than 13,500,228 shares of stock present or represented by proxy at this meeting. And as a result, I hereby declare a quorum is present, and I hereby declare this meeting is duly convened. Mr. Chairman, I believe that all preliminary matters have been concluded.

Thank you, Chris. If there is no objection to the report of the Secretary, it will be accepted. There being no objection, it stands so accepted. We shall now move on to the transaction of business. In addition to certain procedural matters, there are 7 proposals before the stockholders. The first is the election of 2 of Safety directors to Class II for the term ending in 2025. Second is the ratification of the appointment of Deloitte & Touche LLP as Safety's independent registered public accounting firm for 2022. The third is an advisory vote on the compensation of the named executive officers as disclosed in the company's proxy statement for the 2022 Annual Meeting. The fourth is a vote to provide stockholders the right to call a special meeting. The fifth is a vote to provide stockholders the right to act by written consent. The sixth is a vote to replace supermajority provisions in our certificate. And the seventh is to approve the Amended and Restated 2018 long-term incentive plan. In order to make this process as orderly as possible, after a motion has been moved and seconded, I will open the floor to any questions or discussions related only to that motion. Please hold all other questions not directly related to the motion until after the formal portion of the meeting. The first order of business is the election of 2 Class II directors to serve a 3-year term expiring in 2025. May I have a motion?

I move that we elect 2 Class II directors and on behalf of the Board of Directors, I nominate Deborah Gray and George Murphy to each serve a 3-year term ending at the 2025 Annual Meeting of Stockholders.

Do we have a second?

I second the motion.

Is there any discussion on the motion? The second order of business is the ratification of the appointment of Deloitte & Touche LLP as Safety's independent registered public accounting firm for 2022. May I have a motion?

I move that we ratify the appointment of Deloitte & Touche as Safety's independent registered public accounting firm for 2022.

Do we have a second?

I second the motion.

Is there any discussion on the motion? The third order of business is an advisory vote on compensation of the named executive officers as disclosed in the company's proxy statement for the 2022 Annual Meeting. May I have a motion?

I move that we approve the compensation of the named executive officers as disclosed in the company's proxy statement for the 2022 Annual Meeting.

Do we have a second?

I second the motion.

Is there any discussion on the motion? The fourth order of business is a proposal to provide stockholders the right to call a special meeting as disclosed in the company's proxy statement for the 2022 Annual Meeting. May I have a motion?

I move that we amend our Certificate to enable the adoption of a special meeting right for holders owning shares representing at least 25% of the voting power of all outstanding shares of our common stock.

Is there a second?

I second the motion.

Is there any discussion on the motion? The fifth order of business is a proposal to provide stockholders the right to act by written consent, as disclosed in the company's proxy statement for the 2022 Annual Meeting. May I have a motion?

I move that we amend our Certificate to provide stockholders the right to act by written consent for holders owning shares representing at least 20% of the voting power of all outstanding shares of our common stock.

Is there a second?

I second the motion.

Is there any discussion on the motion? The sixth order of business is a proposal to eliminate supermajority voting requirements, as disclosed in the company's proxy statement for the 2022 Annual Meeting. May I have a motion?

I move that we amend our Certificate to eliminate the supermajority provision and replace it with a majority voting standard.

Is there a second?

I second the motion.

Is there any discussion on the motion? The seventh order of business is the approval of the material terms of the Amended and Restated 2018 Long-term Incentive Plan. May I have a motion?

I move that we approve the material terms of the Amended and Restated 2018 Long-term Incentive Plan.

Is there a second?

I second the motion.

Is there any discussion on the motion? Is the Inspector of Election ready to report on the results of the votes?

Mr. Chairman, I have received and tabulated the proxies and ballots on the first item identified in the company's notice of Annual Meeting of Stockholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,841,809 shares of Safety's common stock or 80.32% of shares outstanding and 99.34% of shares voted, representing a majority of the votes cast by the stockholders entitled to vote on this matter at this meeting in accordance with the bylaws, have been voted in favor of Deborah Gray. Mr. Chairman, I have received and tabulated the proxies and ballots on the first item identified in the company's notice of Annual Meeting of Stockholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,610,206 shares of Safety's common stock or 78.75% of shares outstanding and 97.4% of shares voted representing a majority of the votes cast by the stockholders entitled to vote on this matter at this meeting in accordance with the bylaws, have been voted in favor of George Murphy.

I hereby declare that Ms. Gray and Mr. Murphy have been elected as directors of the Safety Insurance Group.

Mr. Chairman, I have also received and tabulated the proxies and ballots on the second item identified in the company's notice of Annual Meeting of Stockholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 13,323,998 shares of Safety's common stock or 90.38% of shares outstanding and 98.69% of shares voted, representing a majority of the votes present or represented and entitled to vote on this matter at this meeting in accordance with the bylaws, have been voted in favor of ratifying the appointment of Deloitte & Touche LLP as Safety's independent registered public accounting firm for 2022.

I hereby declare that the appointment of Deloitte & Touche LLP as Safety's independent registered public accounting firm for 2022 has been ratified.

Mr. Chairman, I have also received and tabulated the proxies and ballots on the third item identified in the company's notice of Annual Meeting of Stockholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,683,133 shares of Safety's common stock or 79.25% of shares outstanding and 98% of shares voted, representing a majority of the votes present or represented and entitled to vote on this matter at this meeting, have been voted in favor of approving on an advisory basis, the compensation of the named executive officers as disclosed in the company's proxy statement for the 2022 Annual Meeting.

I hereby declare that the compensation of the named executive officers as disclosed in the company's proxy statement for the 2022 annual meeting has been approved on an advisory basis.

Mr. Chairman, I've also received and tabulated the proxies and ballots of the fourth item identified in the company's notice of Annual Meeting of Shareholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,746,103 shares of Safety's common stock or 79.67% of shares outstanding and 98.54% of shares voted, representing a majority of the votes present or represented and entitled to vote on this matter at this meeting, have been voted in favor of approving the adoption of an amendment to the Certificate to enable holders owning shares representing at least 25% of the voting power to call a special meeting.

I hereby declare that the proposal to provide the right for stockholders to call a special meeting has been approved.

Mr. Chairman, I have also received and tabulated the proxies and ballots of the fifth item identified in the company's notice of Annual Meeting of Shareholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,737,762 shares of Safety's common stock or 79.62% of shares outstanding and 98.47% of shares voted, representing a majority of the votes present or represented and entitled to vote on this matter at this meeting, have been voted in favor of approving the adoption of an amendment to the Certificate to enable holders owning shares representing at least 20% of the voting power to act by written consent.

I hereby declare that the proposals provide the right for stockholders to act by written consent has been approved.

Mr. Chairman, I have also received and tabulated the proxies and ballots on the sixth item identified in the company's notice of the Annual Meeting of Shareholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,774,203 shares of Safety's common stock or 79.86% of shares outstanding and 98.78% of shares voted, representing a majority of the votes present or represented and entitled to vote on this matter at this meeting, have been voted in favor of amending the Certificate to eliminate supermajority voting requirements and replace it with a majority voting standard.

I hereby declare that the proposal to replace supermajority voting requirements where the majority of voting requirements has been approved.

Mr. Chairman, I've also received and tabulated the proxies and ballots on the seventh item identified in the company's notice of Annual Meeting of Stockholders and proxy statement dated April 19, 2022. As of June 1, 2022, at least 11,572,970 shares of Safety's common stock or 78.5% of shares outstanding and 97.9% of shares voted, representing a majority of the votes present or represented and entitled to vote on this matter at this meeting, have been voted in favor of approving the material terms of the Amended and Restated 2018 Long-term Incentive Plan.

I hereby declare that the material terms of the Amended and Restated 2018 Long-term Incentive Plan have been approved. Is there any further business to come before the meeting? If there is no other business, I will entertain a motion to adjourn.

So moved.

Is there a second?

I second the motion.

Unless there is an objection, I intend to handle the motion to adjourn by voice vote. All those in favor, please say yes. [Voting]

Those opposed, please say, no. [Voting]

The motion is carried. I declare the formal part of the meeting adjourned. Thank you all for attending and those on the phone who have dialed in. We did not receive any questions prior to the meeting. We are happy to answer any questions that those in person may have at this time. No questions? Meeting is adjourned.

Thank you, everyone, for your time today.