Safeco Fourth Quarter Profit Improves

The insurer's fourth-quarter operating earnings–which include a $6 million after-tax restructuring charge for previously announced cost-cutting steps–came in at $151.8 million, which is up 62.4 percent from $93.5 million posted for 2002 fourth quarter.

The company said its total losses from California wildfires were $10.5 million after-tax for the quarter. Safeco's fourth-quarter p-c net earned premiums grew 10.5 percent over the same period last year, while net written premiums rose 13 percent compared with the same period one year ago.

The consolidated revenue for the 2003 fourth quarter went up to $1.94 billion from $1.76 billion reported one year ago. The return on equity also moved up, to 13.8 percent from 5.9 percent a year ago. Net realized investment gains for the quarter were $14.4 million after-tax, reversing after-tax realized investment losses of $36.4 million for the 2002 fourth quarter.

For overall 2003, Safeco earned $339.2 million in net income, compared to $301.1 million reported for 2002. Total consolidated revenues for the year were $7.36 billion, compared with $7.07 billion in 2002. P-c net earned premiums increased 8.4 percent for the year over 2002. P-c net written premiums increased 11.6 percent over 2002.

For full-year 2003, Safeco had net realized investment losses of $65.8 million after-tax, which include $95.2 million in after-tax impairments from the announced plan to sell off the Life & Investments business. In comparison, the insurer had $53.5 million after-tax net realized investment gains in 2002.

Mr. McGavick commented that the insurer's latest financial figures are proof that its p-c products and the automated sales-and-service platform Safeco has been building are producing excellent results.

He also noted that these results—produced in the face of job reductions and uncertainty around the announced intent to sell Safeco's Life & Investments unit–demonstrate the company's ability to stay focused during this transitional period. (Safeco had announced last September that it is undertaking a major restructuring plan, including cost-cutting and staff reduction initiatives and the intention to sell off its Life & Investments business to focus exclusively on property-casualty products.)

The following are some key segment results Safeco disclosed today:

? Safeco's personal insurance unit reported a yearly underwriting profit of $191.8 million, a turnaround from $52.7 million underwriting loss in 2002. For the quarter, the unit reported an underwriting profit of $77.6 million, compared with $10.1 million underwriting profit posted for the 2002 fourth quarter.

The personal-auto segment had an annual underwriting profit of $65.1 million for 2003, reversing a $44.4 million underwriting loss in 2002. The homeowners business reported an underwriting profit of $82.2 million for 2003, improving a $37.2 million underwriting loss from one year earlier.

? Safeco's business insurance unit reported a pretax underwriting profit of $24.1 million for the quarter, compared to $17.7 million underwriting loss for the same period in 2002. But for the full year, it had an underwriting loss of $197.9 million, which includes a $205 million third-quarter pre-tax charge for prior-year workers' compensation reserves. In 2002, the business insurance unit had a $141.4 million underwriting loss.

? The company's surety unit generated an underwriting profit of $27.6 million for 2003, up from $17.6 million in 2002.

? Safeco's other p-c segment, which includes non-voluntary business for personal lines and results from operations that the company has exited or placed in runoff, had an underwriting loss of $17.5 million in the quarter, compared with a $17.1 million loss in the same quarter of 2002. The loss was mostly caused by prior-year reserve strengthening.