A.M. Best Assigns Debt Ratings to SAFECO’s New Senior Notes

January 30, 2003

A.M. Best Co. has assigned “bbb+” senior unsecured debt ratings to the $200 million 4.200 percent five-year notes and $300 million 4.875 percent seven-year notes issued by SAFECO Corporation.

These securities were issued under SAFECO’s $775 million shelf registration previously filed with the Securities and Exchange Commission. Also, SAFECO’s existing debt ratings have been affirmed while the financial strength ratings on the group’s property/casualty and life/health companies are unaffected.

The proceeds from the senior debt will be used to repay SAFECO’s $300 million 7.875 percent notes maturing on March 15, 2003, and to call at par on April 1, 2003, up to $200 million of the principal amount of 7.875 percent notes due April 2005. This offering has no impact on the total amount of SAFECO’s debt. Its total debt to capital ratio (including capital securities) is approximately 30 percent. A.M. Best anticipates that SAFECO’s fixed charge coverage will continue to improve toward the upper end of the four-six times range, reflective of the recent earnings improvement and lower interest expense.

The strategies and action plans recently implemented by management have strengthened SAFECO’s balance sheet, fostered the introduction of new products and related technology and enabled the company to significantly improve its operating performance. Its property/casualty operations have benefited considerably from operational changes and milder weather in 2002, while the strong, steady performance of SAFECO Life & Investments continues to generate significant earnings and provide much-needed diversification to the organization.

The following debt ratings have been assigned:

SAFECO Corporation–
“bbb+” rating on $200 million 4.200 percent senior unsecured notes, due Feb. 1, 2008
“bbb+” rating on $300 million 4.875 percent senior unsecured notes, due Feb. 1, 2010

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