SAFECO Notes Gains in 2ndQ Results

July 24, 2002

Seattle-based SAFECO has reported second-quarter income before charges and gains of $46.8 million, or $0.37 per diluted share. This compares with a loss of $33.4 million, or $0.26 per share, in the second quarter of last year.

Net income, including realized gains, for the quarter was $105.2 million, or $0.82 per share, compared with a net loss of $14.4 million, or $0.11 per share, for the same period last year.

During the second quarter, SAFECO incurred a $3.6 million net charge as part of a previously announced restructuring. “We are very pleased with our performance this quarter,” SAFECO president and CEO Mike McGavick said. “We keep doing what we said we’d do, and what’s most exciting is that it’s showing up in the numbers.”

McGavick reiterated that he “remains comfortable” with financial analysts’ range of estimates of SAFECO’s performance for the full year. Currently, published estimates of SAFECO’s performance for the year range between $1.50 and $1.80 per diluted share, with the consensus, according to Thomson Financial First Call, of $1.67 per share.

Net written premiums for SAFECO’s Property and Casualty products increased 3.3 percent in the second quarter compared with the same period in 2001. This increase was primarily the result of higher sales of SAFECO’s automobile product. “We are seeing the positive results of our new business entry model, improved product offering and our new commission structure,” McGavick added.

SAFECO’s losses due to WorldCom were $43.2 million after taxes. Those losses were more than offset by gains resulting from a change in the Property and Casualty investment strategy initiated during the second quarter to shorten duration and reduce equity holdings.

Personal Auto, SAFECO’s largest product line, reported underwriting losses of $7.3 million—an improvement over the $37.7 million underwriting loss recorded in second quarter 2001.

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