Late yesterday, Seattle-based Safeco announced that Chief Executive Office Mike McGavick will leave his post, effective Aug. 31, to turn to a life of public service.
Although neither Mr. McGavick nor Safeco specifically addressed the rumor that Mr. McGavick will make a run for the U.S. Senate in official announcements or during an earnings conference call, the Seattle Times reported yesterday–and earlier this year==that the CEO is the top Republican contender in the state.
Recalling different types of rumors–rumors "about whether or not Safeco was going to survive," which had swirled around the company four-and-a-half years ago when he took the helm, Mr. McGavick said the decision to step down was difficult one after having been part of the management team credited with turning the company around.
Also announcing second-quarter net income of $187.3 million, or $1.46 per share, yesterday, he said that several events converged during the last to support his decision to leave.
"We had fulfilled the mission that I had been hired to take on–to get Safeco back to being one of the top performers," he said.
"And a number of folks began encouraging me to consider the possibility that there was public service on my horizon," he said during a conference call.
"I've decided to step down…in order to consider that possibility fully, he said. While he said the best way to do that is to "make a clean break," so that his consideration of this possibility will not in any way impact the company, Mr. McGavick will actually stay on as chairman of the board until year end.
He also noted that the board has requested that he be available to continue to lead the company if a new CEO is not in place by Aug. 31–and that he has also agreed to spend the remainder of the year traveling around to meet with agents and perform other "transitional leadership services."
Safeco Lead Director Bob Cline said that many potential successors "have already been identified," and that both internal and external candidates are being considered.
Mr. McGavick is no stranger to the world of politics. Before taking his previous position in insurance–as head of Agency Market operations for Chicago-based CNA–Mr. McGavick worked to develop strategy and manage communications for Seattle politicians, he revealed in a Feb. 2001 interview with National Underwriter, noting that he worked as chief of staff to former U.S. Senator Slade Gorton in 1988.
Prior to joining CNA in 1995, Mr. McGavick also was director of Superfund Improvement Project for the American Insurance Association, serving as lead negotiator in working to transform the nation's Superfund environmental laws.
During yesterday's conference call, Mr. McGavick highlighted some of the positive earnings results for the quarter, noting that the second-quarter combined ratio of 89.1 was evidence of the continuation of a "truly strong bottom-line performance." The figure fell in line with recent quarters, but wasn't quite as good as the "truly extraordinary" 85.7 combined ratio recorded for second-quarter 2004, he said.
Overall written premiums grew 3.6 percent. "While that's a healthy rate given what we see going on in the marketplace, we note that it's in line with our expectation that premium growth would slow at this time–as we had forecast earlier in the year," Mr. McGavick said.
Commenting on the market generally, he said: "Conditions certainly continue to change, but they're only changing slightly. We're not seeing some aggressive new data out there. We're just seeing it continue to become a bit more competitive," he said, noting that he saw no any evidence of "overtly irrational competition."
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