SAFECO Announces Fourth-Quarter and Year-End 2000 Results

January 22, 2001

Safeco has reported lower profits for 2000, and an operating loss for the fourth quarter. For the full year 2000, SAFECO reported net income of $114.6 million, or $0.90 per diluted share, on revenues of $7.1 billion. Operating income, excluding realized gains from investments, was $24.2 million, or a profit of $0.19 per diluted share. This compares to operating income of $1.32 per diluted share in 1999.

During the fourth quarter, SAFECO reported net income of $10.2 million, or $0.08 per diluted share, on revenues of $1.7 billion. Operating losses, excluding realized gains from investments, were $9.6 million, or a loss of $0.08 per diluted share. This compares with an operating profit of $0.24 per diluted share in the fourth quarter 1999, and an operating profit of $0.10 per diluted share in the third quarter of 2000.

SAFECO Personal Insurance, including auto and homeowners insurance, reported a quarterly underwriting loss of $70.2 million, compared with an underwriting loss of $19.4 million during the same quarter a year earlier. The change is the result of weather-related homeowners losses, which were nearly three times higher in the fourth quarter than during the same period in 1999, and losses for SAFECO’s auto insurance lines, which increased by $5 million when compared with the fourth quarter of 1999.

SAFECO Business Insurance continued to show improvement as fourth-quarter underwriting losses declined to $26.1 million. That represents a 30 percent improvement over the $37.1 million underwriting loss reported during the same period in 1999.

SAFECO Commercial Insurance reported an underwriting loss of $51.9 million, a slight improvement over the $59.1 million loss during the fourth quarter of 1999.

SAFECO’s Surety operations generated a $1.8 million loss in the fourth quarter, its first quarterly loss in three years. This is largely attributable to reserving $5 million for a loss resulting from the bankruptcy eclaration of a customer SAFECO has bonded. For the year, Surety produced a profit of $11.7 million, compared with $15.2 million in 1999.

SAFECO Life generated a pretax operating profit of $157.6 million for the year, down from $178.6 million in 1999. In the fourth quarter, Life reported profits of $36.1 million, compared with $49.8 million a year earlier. The decline in annual profits is attributed largely to the performance of SAFECO Life’s annuity lines, which reported earnings of $56.5 million compared with $94.8 million in 1999. This was caused by several factors including lower investment income and policyholders taking advantage of an early-surrender offer. Partially offsetting this was the performance of SAFECO’s group insurance line, which earned $4.3 million, a significant improvement over the loss of $19.4 million in 1999.

SAFECO Credit produced a pretax profit of $6.1 million for the quarter, up from $5.0 million for the fourth quarter of 1999. SAFECO Asset Management operations produced profits of $1.7 million for the quarter, a decline from $4.1 million in the fourth quarter a year earlier.

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