Debt |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Debt | |
| Debt | 9. Debt On August 10, 2023, the Company extended its Revolving Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A. (“Citizens Bank”) to a maturity date of August 10, 2028. Subsequently, on June 9, 2026, the Company amended the Credit Agreement to increase the aggregate committed amount of the revolving credit facility from $50,000 to $100,000 and extend the maturity date to June 9, 2031. Loans under the credit facility bear interest at the Company’s option at the higher of the Citizens Bank prime rate, the daily SOFR rate plus 1.25% per annum, or 0.5% above the federal funds rate. Interest only is payable prior to maturity. The Company’s obligations under the credit facility are secured by pledges of its assets and the capital stock of its operating subsidiaries. The credit facility is guaranteed by the Company’s non-insurance company subsidiaries. The credit facility contains covenants including requirements to maintain minimum risk-based capital ratios and statutory surplus of Safety Insurance Company as well as limitations or restrictions on indebtedness, liens, and other matters. As of June 30, 2026, the Company was in compliance with all covenants. In addition, the credit facility includes customary events of default, including a cross-default provision permitting the lenders to accelerate the facility if the Company (i) defaults in any payment obligation under debt having a principal amount in excess of $10,000 or (ii) fails to perform any other covenant permitting acceleration of all such debt. On March 27, 2025, the Company borrowed $30,000 under the Credit Agreement with Citizens Bank. On November 10, 2025, the Company utilized the accordion feature under the Credit Agreement and borrowed an additional $20,000. Borrowings under the Credit Agreement bear interest at SOFR plus 1.25%. Interest is payable quarterly and the principal is due upon the maturity of the Credit Agreement. Principal may be repaid at any time without penalty. The Company had $50,000 outstanding on its credit facility at June 30, 2026 and December 31, 2025, respectively. The credit facility commitment fee included in interest expense was computed at a rate of 0.20% per annum on the $30,000 commitment. Commitment fees were incurred through March 27, 2025, when the Company borrowed under the facility. Safety Insurance Company is a member of the FHLB of Boston. Membership in the FHLB of Boston allows Safety Insurance Company to borrow money at competitive interest rates provided the loan is collateralized by specific U.S. Government residential mortgage-backed securities. At June 30, 2026, Safety Insurance Company has the ability to borrow $264,435 using eligible invested assets that would be used as collateral.
On March 17, 2020, the Company borrowed $30,000 from the FHLB of Boston for a term of five-years, bearing interest at a rate of 1.42%. The interest and principal were paid on the maturity date of March 17, 2025. The Company estimates the fair value of the loan under the Credit Agreement with Citizens Bank by discounting cash flows using the interest rate stated in the loan agreement, which is an observable input. As such, the loan is categorized as Level 2 within the fair value hierarchy. The fair value of the loan was $53,006 and $53,386 at June 30, 2026 and December 31, 2025, respectively. Interest expense on the FHLB of Boston borrowing was incurred only during the six months ended June 30, 2025 and totaled $89. Interest expense on the Credit Agreement with Citizens Bank was $814 and $443 for the three months ended June 30, 2026 and 2025, respectively. Interest expense on the Credit Agreement with Citizens Bank was $1,432 and $457 for the six months ended June 30, 2026 and 2025, respectively.
|