Safeco Q1 Net Fell 10%, But Continuing Biz Rose
NU Online News Service, April 20, 11:07 a.m. EDT?Safeco Corporation said its quarterly profit fell 10 percent from the year-ago period?including results from units that were sold?but continuing operations reported a 20 percent increase in profit.[@@]
The Seattle, Wash.-based insurer reported $212 million in total profit for its 2005 first quarter, down from $236.2 million one year ago, which included $50.6 million from now-discontinued life and investments operations.
Safeco's operating income from continuing businesses, however, increased to $190 million, up from $157.8 million last year. Safeco has been streamlining its businesses and focusing on its property-casualty underwriting during the past year. In August 2004, the insurer divested its life insurance and investment operations.
The company's overall property-casualty combined ratio showed improvement, falling to 88.5 from 89.9 one year ago. The p-c net written premiums rose to $1.46 billion, up 5.9 percent from the same period last year.
The company's personal, business and surety units all posted higher pretax underwriting profit. Safeco said its auto insurance unit reported $30.1 million in pretax underwriting income, up from $23.1 million one year ago.
For auto the combined ratio was 95.7, improving from 96.3. The business insurance unit reported $57.1 million in pretax underwriting profit, up from $42.3 million last year. The unit's combined ratio was 86.4, falling from 89.9.
The surety unit reported a pretax underwriting profit of $14.8 million, up from $9.3 million one year ago. The combined ratio was 75.1, improving from 79.6.
"Our p-c focus continues to serve us well, even in these more difficult market conditions," said Safeco Chief Executive Officer Mike McGavick. "We're maintaining strong margins because of our underwriting discipline and commitment to profitable growth."
The p-c pretax net investment income was $113 million, a 1.2 percent increase from one year ago.
Jay Gelb, insurance analyst at investment firm Lehman Brothers in New York, said in his research note that "first-quarter results confirm our view that Safeco can continue to beat the consensus estimates by delivering strong underwriting results."
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