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Ides Capital nominates directors at Safety Insurance, wants share buyback -Breaking


© Reuters.

By Svea Herbst-Bayliss

BOSTON, (Reuters) – Ides Capital Management, an activist investment company, has appointed two directors to Safety Insurance Group’s board. According to a letter obtained by Reuters, the firm wants to purchase back shares, reduce costs, and increase financial disclosure.

New York-based Ides addressed Tuesday’s letter to Boston-based Ides, stating that it would make the nominations public due to its concern about the stock market and proposals for change.

“The Board’s failure to be responsive and repeated lack of preparation and willingness, as well as the inability of candor to release a press release, all point to the fact that they did not have any intention to engage constructively,” said the letter.

Safety Insurance representatives were not available for comment immediately.

Safety Insurance has an estimated market capitalization $1.3 billion and announced last week governance changes. It will increase its board size by one to seven people, appoint a lead independent director, and appoint a chair for its governance and nomination committee.

The Massachusetts-based company that specializes in property insurance and casualty coverage did not name the individuals who would fill these roles.

Safety Insurance’s changes are woefully inadequate to make the Company a more successful company,” Ides wrote. Ides has held a roughly 11% share in Safety Insurance for approximately a year.

Ides named two insurance executives, Farooq Sheikh and Olga Kondrashova to Safety Insurance’s board in early December. According to the letter.

In Tuesday’s letter, the hedge fund detailed its concerns and asked Safety Insurance for 10% back and continued repurchases. It also requested that Safety Insurance start the process to have all directors eligible for election each year and increase its proxy advisor audit scores.

Safety Insurance also insists on quarterly earnings calls. This is something that most public companies routinely do.

Safety Insurance’s stock price has climbed 14% in the last 52 weeks but still has lagged the benchmark SPDR S&P Insurance (NYSE:) ETF, which gained 25%. The company’s share prices have risen 22% over the past three years while the benchmark has risen 49%.

Dianne McKeever, Rob Longnecker and Rob Longnecker co-founded Ides in 2015. It was a success story when they pushed corporations like Arcosa (NYSE:) Inc Boingo Wireless To diversify their boards, use (NASDAQ:). McKeever, chief investment officer of Ides.

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