Safeco Net Off For The Quarter

Safeco reported that second quarter net income was down nearly 20 percent, and investment income was off by 8.8 percent.

Net income for the Seattle-based insurer was $149.5 million (or $1.65 per diluted share), a decrease of 10 cents a share ($36.9 million) from last year's net for the period of $186.4 million ($1.75 per share).

Safeco said its planned acquisition by Boston-based Liberty Mutual for $6.2 billion, announced on April 22, is on schedule to close by the end of September.

Pretax catastrophe losses for the second quarter were $66.9 million, compared with a light weather loss of $6.7 million a year ago. The second quarter losses added 4.8 points to the combined ratio, Safeco noted.

The insurer said annualized return on equity for the second quarter was 17.8 percent.

Net written premiums were reported as $1.43 billion for the second quarter–a 2.5 percent decrease from the year-ago period. Net earned premiums were $1.38 billion for the quarter, a 1.3 percent decrease compared with the prior year.

Safeco's p-c combined ratio was 94 for the quarter–down 4.3 points from the period last year, when it stood at 89.7.

Property-casualty pretax net investment income for the quarter was $109.5 million, a decrease of 8.8 percent compared with the same period last year.

Property-casualty after-tax net investment income was $89.2 million, a decrease of 6.6 percent compared with 2007 levels.

The company said the decrease in net investment income was a result of an overall lower invested asset base, due to the sale of securities to fund a July 2007 debt maturity and redemption, share repurchases, and the special dividend paid by its insurance subsidiaries to Safeco Corp. during 2007.

After-tax net realized investment gains for the quarter were listed as $10.7 million, compared with net realized investment gains of $11.4 million in the same period of 2007.

The company said its gain on sales of investment securities was offset by impairment charges of $40.4 million, primarily related to write-downs on securities impacted by continuing volatility in the equity markets.

Safeco's chair, president and chief executive officer, Paula Rosput Reynolds, in a statement called the company's performance “strong.”

“We made a commitment to continue to deliver top-tier returns to shareholders in 2008, even though we expected a weak underwriting cycle and a sluggish economy,” she said. “While others might have taken a breather after announcing a transaction, we continued to introduce new products and greater efficiencies to the business.”