Ides Capital nominates directors at Safety Insurance, wants share buyback
18/01/2022 13:00
By Svea Herbst-Bayliss
BOSTON, Jan 18 (Reuters) - Activist investment firm Ides
Capital Management has nominated two directors to the board of
Safety Insurance Group SAFT.O and wants the company to buy
back shares, cut costs and improve financial disclosure,
according to a letter seen by Reuters.
New York-based Ides wrote to the Boston-based company's
board on Tuesday and said it was making the nominations public
because its concerns about the lagging stock price and its
proposals for changes had been largely ignored over the last
months.
"The Board's overarching failure to be responsive, the
repeated lack of both preparation and willingness to engage, the
absence of candor and the pre-arranged press release all
indicate that the Board had no intention of constructive
engagement," the letter said.
A representative for Safety Insurance was not immediately
available to comment.
Last week, Safety Insurance, which has a market
capitalization of $1.3 billion, announced governance changes
that include expanding its board by one person to seven members,
appointing a lead independent director and appointing a new
chair to its nominating and governance committee.
The company, which specializes in property and casualty
insurance in Massachusetts, did not identify the people who
would take up those roles.
"The changes announced by Safety's press release fall
woefully short of what is required to put the Company on a
better path forward," Ides, which has owned a roughly 1% stake
in Safety Insurance for about a year, wrote in the letter.
In early December, Ides nominated insurance industry
executives Olga Kondrashova and Farooq Sheikh to Safety
Insurance's board, according to the letter.
The hedge fund laid out its criticisms in Tuesday's letter
and called on Safety Insurance to buy back 10% of its shares and
continue those repurchases over time, start the process of
having all directors stand for election every year, and improve
its proxy advisor audit scores.
It also insisted that Safety Insurance hold quarterly
earnings calls, something most publicly traded companies do
routinely.
Safety Insurance's stock price has climbed 14% in the last
52 weeks but still has lagged the benchmark SPDR S&P Insurance
ETF, which gained 25%. Over the last three years, the company's
share price gained 22% while the benchmark climbed 49%.
Ides was co-founded by Dianne McKeever and Rob Longnecker in
2015, and won success when it pushed companies like Arcosa Inc
ACA.N and Boingo Wireless to diversify their boards. McKeever
is the chief investment officer at Ides.
(Reporting by Svea Herbst-Bayliss
Editing by Paul Simao)
((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))