Seattle-based Safeco said it is expecting independent agents, in part, will help the company grow organically and provide predictable returns for investors. In a question and answer session following its listing on the New York Stock Exchange, Safeco’s CEO Paula Reynolds, Chief Financial Officer Ross Kari and Insurance Operations Executive Vice President Mike Hughes noted that the company is making a commission change to improve bonuses, effective Jan. 1, 2007.
“Our distributors clearly told us we were not competitive in that area,” Hughes said.
“We obviously monitor our competitors’ rate reductions,” Reynolds added. “The first level is where is Safeco presented in the queue in [agents’] presentation of competitive pricing? Add to that enhanced commission, and we start to see our win rates improve.”
In discussing ways Safeco will build its business, Reynolds noted a priority to improve agility, business process and technology. She believes the company made progress in this area in 2006.
“To be a great company, you have to execute on a lot of fronts, and we believe that with the work we have done this year that we do have the ability to provide value to [share] owners that is very sustainable, transparent, predictable.”
Hughes noted that personal auto remains competitive and that there might be slight rate reductions in 2007. In the homeowners market, there is more competition outside of coastal areas, whereas the need for capacity and rates are going up significantly in coastal areas, he said.
Hughes added that the company is “winning in the small commercial space,” in which the company grew its business by 6 percent in 2006. “The area we feel most enthusiastic and aggressive about is in the small commercial area,” he said. “We added to P/C multiperil business. We added markets. We are looking to be fairly aggressive with small commercial.”
Despite competitive business, Reynolds noted that the company’s book of homeowners business is growing at “a healthy pace” because of innovations.
“Safeco is known for its application, inventiveness and technology, and we need to ignite that to get a modest edge for the future through how we deliver product and what the product is, deepening our presence in areas where we are strong,” she said.
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