Safeco to Sell Credit Company in Effort to Strengthen Balance Sheet

March 15, 2001

Safeco is looking for a buyer for its commercial credit and leasing subsidiary, a move that could reduce the amount of debt on SAFECO’s consolidated balance sheet by nearly half.

“Our credit company has been consistently profitable since it was founded in 1969,” said Mike McGavick, SAFECO president and CEO. “That’s why this is a tough decision to make. Yet it’s a decision that will make SAFECO a stronger company over the long term.”

The subsidiary, SAFECO Credit Co., specializes in asset-based lending, with significant emphasis on providing financing for heavy equipment used in manufacturing and construction.

With $1.7 billion in receivables and operating leases, it generated a pretax profit of $19.3 million in 2000. To fund a substantial portion of its credit operation, SAFECO regularly issues commercial paper.

As of Dec. 31, 2000, this represented $1.5 billion of SAFECO’s total debt obligations, including capital securities, of $3.1 billion.

“Removing this debt from our balance sheet gives us more flexibility, making SAFECO less susceptible to short-term changes in interest rates,” McGavick said.

SAFECO has retained Goldman Sachs to advise it in connection with the sale of SAFECO Credit.

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