[SAFECO LOGO]
Third Quarter News Release and Statistical Supplement (Unaudited)
October 27, 2003
Table of Contents
Page
Earnings News Release 1-7
Financial Supplement Introduction SS-1
Financial Measures Used by Safeco SS-2
Consolidated Results
Key Metrics SS-6
Summary of Financial Results SS-7
Consolidated Statements of Income SS-8
Consolidated Balance Sheets SS-9
Income Summary SS-10
Property & Casualty Results
Underwriting Profit and Combined Ratios SS-11
Underwriting Profit and Combined Ratios
without 3Q 03 Workers Compensation reserve adjustment SS-12
Net Written Premiums SS-13
Net Earned Premiums SS-14
Personal Auto SS-15
Homeowners and Specialty SS-16
Safeco Business Insurance (SBI) SS-17
Surety, Other and Total SS-18
Statutory Information SS-19
Life & Investments Results
Pretax Operating Earnings and Revenues SS-20
Supplemental Statistics SS-21
Corporate Supplemental Detail
Capitalization SS-22
Investment Portfolios - Consolidated SS-23
Investment Portfolios - Property & Casualty SS-24
Investment Portfolios - Life & Investments SS-25
[Safeco Logo GRAPHIC OMITTED]
FOR RELEASE AT 7:45 a.m., Eastern Time
INVESTOR RELATIONS CONTACT: Neal Fuller, 206-545-5537
MEDIA RELATIONS CONTACT: Paul Hollie, 206-545-3048
Safeco Produces Strong Underwriting Results
in Auto, Homeowners and Surety
SEATTLE--(Oct. 27, 2003)--
Third-Quarter Highlights
- ------------------------
o Posted underwriting profit in Auto, Homeowners and Surety insurance lines.
o Reported net loss of $28.9 million, or $0.21 per diluted share.
o Produced $33.6 million after-tax operating earnings despite $133 million
reserve strengthening.
----------------------------------------------- ----------------------------- -----------------------------
Summary Financial Results after tax 3 Months Ended 9 Months Ended
(In millions except per-share data) September 30 September 30
2003 2002 2003 2002
----------------------------------------------- --------------- ------------- -------------- --------------
Net Income (Loss) $ (28.9) $ 75.2 173.0 $ 244.0
Per Diluted Share of Common Stock $ (0.21) $ 0.59 1.25 $ 1.91
----------------------------------------------- -- ------------ -- ---------- - ------------ --- ----------
Net Realized Investment Gains (Losses) $ (62.5) $ 7.8 (80.2) $ 89.9
----------------------------------------------- -- ------------ -- ---------- - ------------ --- ----------
Operating Earnings* $ 33.6 $ 67.4 253.2 $ 154.1
----------------------------------------------- -- ------------ -- ---------- - ------------ --- ----------
Average Shares Outstanding 138.5 128.1 138.9 128.1
----------------------------------------------- -- ------------ -- ---------- - ------------ --- ----------
* Operating Earnings is Net Income (Loss) excluding Net Realized Investment
Gains (Losses). Measures used in this news release that are not based on
accounting principles generally accepted in the United States (GAAP) are
defined and reconciled to the most directly comparable GAAP measure in our
Form 8-K available through the SEC and online at
http://www.safeco.com/safeco/investor/pdfs/03q2_sup.pdf
-----------------------------------------------------------------------------------------------------------
Safeco (NASDAQ: SAFC)--which recently announced a clear focus on
Property & Casualty insurance--today reported strong third-quarter underwriting
results in most insurance lines.
"We generated healthy underwriting profits in Auto, Homeowners and
Surety," said Mike McGavick, Safeco chairman and CEO. "Our fundamentals are
strong. The underwriting results across our Property & Casualty businesses point
to the soundness of our new course."
As previously announced, the company strengthened workers compensation
reserves in the quarter by $133.3 million after tax ($205.0 million pretax).
"Absent this action, our Business Insurance line also would have been
profitable," McGavick said.
For the quarter, Safeco reported a net loss of $28.9 million ($0.21 per
share). This compares to net income of $75.2 million ($0.59 per diluted share)
in the third quarter of 2002 when the company put its Lloyd's of London
operation into run-off and took a $17.1 million after-tax charge ($0.13 per
share).
Factors contributing to Safeco's overall results in the third quarter
of 2003 were:
o The workers compensation reserve strengthening.
o Impairments of investments securities held by Life & Investments (L&I),
which aren't expected to recover in value before L&I is sold. Although
Safeco intends to continue holding these investments, accounting rules
require impairment recognition of unrealized losses because the business
unit is for sale. During the quarter, Safeco recorded total after-tax
investment impairments of $87.0 million, with $80.5 million associated with
L&I.
o A $13.2 million benefit due to a favorable federal income tax settlement
regarding prior tax years for L&I.
Operating earnings for the third quarter were $33.6 million after tax,
compared with $67.4 million for the same period last year. "When you consider
that our operating earnings include the reserve charge, these are very strong
results," McGavick said.
In the fourth quarter, Safeco anticipates an after-tax restructuring
charge of approximately $10 million associated with previously announced actions
to reduce expenses by $75 million in 2004. This charge is related to eliminating
500 jobs not affected by the sale of L&I.
"We had a number of unusual items in the quarter," McGavick said. "When
you look at our Property & Casualty operating fundamentals, you see outstanding
underwriting performance combined with healthy sales growth.
"Our underwriting models and common sales platform are producing
positive results faster than we initially expected," he added. "We're on the
right path for sustained, profitable growth."
Safeco's return on equity for the first nine months of the year, based
on annualized net income, is 5.0 percent. Operating return on equity, measured
using annualized operating earnings and excluding unrealized gains, is 10.0
percent for the first nine months of 2003.
Overall revenues in the third quarter were $1.8 billion, down slightly
from a year ago. Operating revenues--excluding net realized investment
gains--grew 5.2 percent.
Net earned premiums for all Property & Casualty operations increased
10.1 percent compared with the third quarter of 2002. Net written premiums, a
leading indicator of revenues in future quarters, increased 11.2 percent.
Insured catastrophe losses for the quarter totaled $21.0 million. This
compares with $9.9 million favorable catastrophe reserve development reported in
the third quarter of 2002.
In conjunction with its strategy to focus on Property & Casualty
products, the company is winding down its Safeco Financial Products operation,
which primarily sells credit default swaps.
Safeco Personal Insurance Performance
Personal Auto, Safeco's largest product line, generated an underwriting
profit of $35.4 million in the third quarter, a significant improvement over a
$6.2 million underwriting loss during the same period last year.
The Auto line produced a combined ratio of 93.9 percent, better than
both 99.4 in the second quarter of this year and 101.2 in the third quarter of
2002. (Combined ratio is a standard gauge of underwriting performance measuring
the percentage of premium dollars used for customer claims and expenses. A
combined ratio below 100 indicates the line is operating profitably.)
Net written Auto premiums increased 15.2 percent compared with the
third quarter of 2002. New business was up in the quarter, and the total number
of policies increased 8.9 percent compared to a year ago.
"The trends are pointing in the right direction," McGavick noted. "Auto
is generating the type of profit we anticipated. We're seeing strong growth with
higher Auto policy sales in September than any previous month in company
history."
Safeco's Homeowners line reported a quarterly underwriting profit of
$32.1 million pretax, up from $5.5 million for the same period last year.
Combined ratio was a profitable 83.3, a marked improvement over both
107.0 in the second quarter of this year and 97.1 in the third quarter of 2002.
"Homeowners turned in an extraordinary quarter," McGavick said. "While
weather played a part, most of these results are because of our hard work to
return this line to profitability."
Net written premiums in Homeowners decreased 2.2 percent compared to
the third quarter of last year as policies in force declined 9.3 percent. In
September, however, Safeco reported a small increase in sales of new Homeowners
policies.
"Our new Homeowners product is in place in almost every state where we
write business," McGavick said. "By month's end, we will have lifted moratoriums
on new accounts in all but three states--Florida, New York and Texas.
"Going forward, Homeowners could be a growing line for Safeco," he
added, "but we'll remain mindful that in this line--which is prone to
catastrophe losses and severe weather--profit comes first."
Safeco Business Insurance Performance
Safeco Business Insurance reported a pretax underwriting loss of $195.3
million in the third quarter, the result of strengthening prior-year workers
compensation reserves by $205.0 million pretax. This compares with an
underwriting loss of $23.4 million during the same quarter of last year.
Total combined ratio for Safeco Business Insurance was 151.6 in the
quarter. Excluding the reserve strengthening, the combined ratio was a
profitable 97.4. This compares with a combined ratio of 106.0 in the second
quarter of this year and 106.6 during the third quarter of 2002.
SBI Regular--Safeco's core line of products for small- to medium-sized
businesses--reported a combined ratio of 118.6 in the quarter. Excluding the
effects of the reserve charge, SBI Regular's combined ratio was a profitable
97.7. This compares with a combined ratio of 104.2 in the second quarter of this
year and 104.7 during the third quarter of 2002.
"Our new sales and underwriting platform is generating the types of
results we expected," McGavick said. "We automated commercial Auto insurance
during the quarter, and sales of new policies are up over 26 percent. We
automated our Business-Owners Policy earlier in the year, and sales increased 65
percent in the third quarter.
"More important than the sales growth is the fact that we're producing
underwriting results that allow us to compete profitably in the small-business
insurance marketplace," he added.
Net written premiums for Safeco Business Insurance increased 13.1
percent in the third quarter compared with the same period in 2002.
Net written premiums for SBI Regular increased 11.0 percent compared to
the third quarter of 2002. Total policies in force decreased 5.1 percent
compared to a year ago, but were off only 0.2 percent compared to June 30 of
this year.
Surety Performance
Surety generated a pretax underwriting profit of $8.5 million in the
quarter, up substantially from $2.7 million in the same period last year.
Combined ratio for Surety was a profitable 78.8, compared with 91.8 in the third
quarter of 2002 and 82.2 in the second quarter of this year.
"Surety turned in great results this quarter," McGavick said. "While we
expect continued profit from Surety, we would be hard pressed to regularly
repeat these results."
Life & Investments Performance
Safeco Life & Investments generated pretax operating earnings of $41.1
million in the third quarter, off from $59.6 million for the same period last
year.
"The Life & Investments unit continues to be a strong performer, and
these results are very consistent with our expectations," McGavick said. "As we
shift our focus to Property & Casualty lines, we're seeking a buyer that will
help Life & Investments build on its track record of solid growth and
consistent profits."
The Group product line reported pretax operating earnings of $12.5
million, down from $22.4 million in the third quarter of last year. Group's main
product is stop-loss medical insurance to protect employers with self-funded
benefit plans against large medical claims.
"As we've been saying for several quarters, Group's results had been
exceptional, and we didn't anticipate the line would continue performing at that
level," McGavick noted. "This quarter, the results are more in line with our
expectations."
Income Annuities reported a pretax operating loss of $0.9 million,
compared with pretax operating earnings of $11.5 million for the same period
last year. The change is the result of $5.8 million in unfavorable pre-payment
adjustments on mortgage-backed securities due to changes in interest rates. For
comparison, in the third quarter of 2002, Income Annuities recorded a positive
$6.3 million adjustment on mortgage-backed securities.
Retirement Services generated quarterly pretax operating earnings of
$3.3 million, an improvement over $1.4 million for the third quarter of 2002.
Individual Life reported quarterly pretax operating earnings of $3.9
million in the quarter, up from $3.5 million for the same period last year.
The Asset Management business reported pretax operating earnings of
$1.1 million, a slight improvement over $0.9 million in the third quarter of
2002. Total assets under management were $4.0 billion, essentially unchanged
since the end of the second quarter of this year.
Additional financial information available
Safeco uses both GAAP and non-GAAP financial measures to track the
performance of its insurance and investments operations. The definition of each
non-GAAP measure, and a reconciliation to the most directly comparable GAAP
measure, are included in Safeco's Form 8-K that will be furnished to the U.S.
Securities & Exchange Commission today.
The Form 8-K will include this news release, Safeco's summary financial
results, consolidated statements of income, consolidated balance sheets, and the
company's third-quarter financial supplement.
All of this information is available on Safeco's Website at
http://www.safeco.com/safeco/investor/pdfs/03q3_sup.pdf.
Management reviews results on Webcast
Safeco's senior management team will discuss the company's
third-quarter performance with analysts today at 11 a.m., Eastern Time (8 a.m.,
Pacific Time). The conference call will be broadcast live on the Internet at
http://www.safeco.com/irwebcast and archived later in the day for replay.
About Safeco
Safeco, in business since 1923, is a Fortune 500 company based in
Seattle that sells insurance and investment products through independent agents,
brokers and financial advisors nationwide. More information about Safeco can be
found at www.safeco.com.
####
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Forward-looking information contained in this
news release is subject to risk and uncertainty
Statements, analysis and other information contained in this news release that
relate to anticipated financial performance, business prospects and plans and
similar matters are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Statements in this news release that
are not historical information are forward-looking. The operations, performance
and development of our business are subject to certain risks and uncertainties
that may cause actual results to differ materially from those contained in or
suggested by the forward-looking statements in this news release. The risks and
uncertainties include, but are not limited to:
o Safeco's ability to successfully divest the Life & Investments operations;
o achievement of Safeco's overall expense reduction goals;
o the ability to obtain rate increases and decline or non-renew underpriced
insurance accounts;
o achievement of premium targets and profitability;
o realization of growth and business retention estimates;
o success in implementing a new business entry model for personal and
commercial lines;
o success in obtaining regulatory approval of price-tiered products and the
use of insurance scores, including credit scores as a component;
o the ability to freely enter and exit lines of business;
o changes in the mix of Safeco's book of business;
o driving patterns;
o the competitive pricing environment, initiatives by competitors and other
changes in competition;
o weather conditions, including the severity and frequency of storms,
hurricanes, snowfalls, hail and winter conditions;
o the occurrence of significant natural disasters, including earthquakes;
o the occurrence of significant man-made disasters, such as the attack on
September 11, 2001 or war;
o the occurrence of bankruptcies that result in losses under surety bonds,
investment losses or lower investment income;
o the adequacy of loss and benefit reserves for our businesses;
o the ability to run off the Lloyd's of London business without incurring
material unexpected charges;
o the availability of, pricing of, and ability to collect reinsurance;
o the ability to price for, exclude and reinsure the risk of loss from
terrorism;
o interpretation of insurance policy provisions by courts, court decisions
regarding coverage and theories of liability, trends in litigation and
changes in claims settlement practices;
o the outcome of any litigation against us;
o legislative and regulatory developments affecting the actions of insurers,
including requirements regarding rates, application and availability of
coverage;
o the effect of current insurance and credit ratings levels on business
production and the effect of negative changes to our ratings;
o inflationary pressures on medical care costs, auto parts and repair,
construction costs and other economic sectors that increase the severity of
claims;
o availability of bank credit facilities;
o use of derivative securities by Safeco Financial Products, Inc.;
o fluctuations in interest rates;
o performance of financial markets; and
o general economic and market conditions.
We assume no obligation to update any forward-looking statements contained in
this news release.
- -------------------------------------------------------------------------------
Financial Supplement
Third Quarter, 2003
This report is for informational purposes only. The financial statements and
financial exhibits included in this supplement are unaudited. These financial
statements and financial exhibits should be read in conjunction with the
financial statements filed with the SEC in the Corporation's quarterly 10-Q and
annual 10-K filings.
Neal Fuller
Vice President - Finance
206-545-5537
neaful@safeco.com
Safeco Corporation
Financial Measures Used by Safeco
Amounts are in millions or thousands as specified, except ratio and per share
information.
Property & Casualty businesses include the following segments:
Personal Lines
Personal Auto
Homeowners
Specialty
Safeco Business Insurance
SBI Regular
SBI Special Accounts Facility (SAF)
SBI Runoff
Surety
P&C Other
Life & Investments businesses include the following segments:
Group
Income Annuities
Retirement Services
Individual
Asset Management
L & I Other
Corporate includes all other activities, primarily the financing of our business
activities.
In addition to financial measures presented in the consolidated financial
statements prepared in accordance with accounting principles generally accepted
in the United States (GAAP), we also use certain non-GAAP financial measures to
analyze and report our financial results. Management believes that these
non-GAAP measures, when used in conjunction with the consolidated financial
statements, can aid in understanding our financial condition and results of
operations. These non-GAAP measures are not a substitute for GAAP measures, and
where these measures are described we provide tables that reconcile the non-GAAP
measures to the GAAP measures reported in our consolidated financial statements.
Operating Revenues
Operating revenues is a non-GAAP financial measure used by management to analyze
the revenues derived directly from our Property & Casualty, Life & Investments
and Corporate operations. It excludes net realized investment gains and losses
that can fluctuate significantly and distort a comparison between periods. The
following table provides a reconciliation of operating revenues to revenues, the
most directly comparable GAAP measure.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Total Revenues $1,780.0 $1,794.6 $5,413.3 $5,305.5
Net Realized Investment (Gains) Losses 95.5 (12.5) 123.1 (138.5)
------------------------------------------------------
Operating Revenues $1,875.5 $ 1,782.1 $5,536.4 $5,167.0
- -----------------------------------------------------------------------------------------------------------
Operating Earnings
Operating earnings is a non-GAAP financial measure that we use to assess the
profitability of our consolidated business. In the determination of operating
earnings, we exclude net realized investment gains and losses from net income
(loss). Net realized investment gains and losses can fluctuate significantly and
distort a comparison between periods. The following table reconciles operating
earnings to net income (loss), the most directly comparable GAAP measure.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Net Income (Loss) $ (28.9) $ 75.2 $ 173.0 $ 244.0
Net Realized Investment (Gains) Losses,
Net of Taxes 62.5 (7.8) 80.2 (89.9)
------------------------------------------------------
Operating Earnings $ 33.6 $ 67.4 $ 253.2 $ 154.1
- -----------------------------------------------------------------------------------------------------------
Operating Return on Equity
Operating return on equity is a ratio we calculate using non-GAAP measures. It
is calculated by dividing the annualized operating earnings for the most recent
quarter by the average ending shareholders' equity for the previous five
quarters, excluding from equity after-tax unrealized investment gains and losses
on fixed maturities. This ratio provides management with an additional measure
to evaluate Safeco's results excluding the unrealized changes in the valuation
of its fixed maturities portfolio that can fluctuate between periods. The
following table reconciles operating return on equity to return on equity, the
most directly comparable GAAP measure.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
(Annualized) 2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Net Income (Loss) $ (28.9) $ 75.2 $ 173.0 $ 244.0
Average Shareholders' Equity 4,627.9 3,728.0 4,627.9 3,728.0
Return on Equity
Based on Annualized Net Income -2.5% 8.1% 5.0% 8.7%
Operating Earnings $ 33.6 $ 67.4 $ 253.2 $ 154.1
Average Shareholders' Equity 4,627.9 3,728.0 4,627.9 3,728.0
Average Unrealized Fixed Maturities
Investment Gains, Net of Tax 1,254.9 618.4 1,254.9 618.4
------------------------------------------------------
Adjusted Average Shareholders' Equity 3,373.0 3,109.6 3,373.0 3,109.6
Operating Return on Equity
Based on Annualized Operating Earnings 4.0% 8.7% 10.0% 6.6%
- -----------------------------------------------------------------------------------------------------------
*Net Income (Loss) and Operating Earnings have been annualized for purposes of
this calculation only. The results for the nine months ended September 30, 2003
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2003. Annualized amounts for 2002 are not reflective of the
actual amounts for the year ended December 31, 2002.
- -----------------------------------------------------------------------------------------------------------
Property & Casualty Net Written Premium
Net written premium is a non-GAAP measure representing the amount of premium
charged for policies issued during the period. Premiums are reflected as revenue
in the Consolidated Statements of Income as they are earned over the underlying
policy period. Net written premiums applicable to the unexpired term of a policy
are recorded as unearned premium on our Consolidated Balance Sheets. Safeco's
management views net written premium as a measure of business production trends
for the period under review and as a leading indicator of earned premium. The
following table reconciles net written premium to net earned premium, the most
directly comparable GAAP measure on our Consolidated Statements of Income.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Total Property & Casualty Net Earned Premium $1,250.4 $ 1,135.2 $3,615.3 $3,356.7
Change in Unearned Premium Liability 64.3 47.5 221.7 97.9
------------------------------------------------------
Total Property & Casualty Net Written Premium $1,314.7 $ 1,182.7 $3,837.0 $3,454.6
- -----------------------------------------------------------------------------------------------------------
Segment Profit (Loss) Measures
We have provided the following table that details the GAAP measure Income Before
Income Taxes on our Consolidated Statements of Income. This is the most directly
comparable GAAP measure used to reconcile to Property & Casualty underwriting
profit (loss) and Life & Investments pretax operating earnings.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Property & Casualty $ 13.5 $ 137.3 $ 254.9 $ 411.7
Life & Investments (67.2) 46.6 11.1 70.8
Corporate (24.3) (61.8) (30.2) (106.6)
------------------------------------------------------
Income (Loss) before Income Taxes $ (78.0) $ 122.1 $ 235.8 $ 375.9
- -----------------------------------------------------------------------------------------------------------
Property & Casualty Underwriting Profit (Loss) and Combined Ratio
Underwriting profit (loss) represents the net amount of earned premium less
underwriting losses and expenses on a pretax basis. Management views
underwriting profit (loss) as a critical measure to assess the underwriting
effectiveness of the Property & Casualty operations and to evaluate the results
of these business units. The related investment portfolio is managed separately
from these underwriting businesses and, accordingly, net investment income and
net realized investment gains and losses are discussed separately. The following
table reconciles underwriting profit (loss) to Income before Income Taxes, the
most directly comparable GAAP measure on our Consolidated Statements of Income.
Combined ratio is a standard gauge of underwriting performance and is calculated
as losses and expenses expressed as a percentage of earned premiums.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Property & Casualty Income
before Income Taxes $ 13.5 $ 137.3 $ 254.9 $ 411.7
Property & Casualty Net Investment Income (113.7) (114.5) (343.0) (345.0)
Property & Casualty Restructuring Charges -- 3.0 -- 15.1
Property & Casualty Net Realized Investment
Gains (7.2) (71.2) (10.6) (302.7)
------------------------------------------------------
Total Underwriting Loss $ (107.4) $ (45.4) $ (98.7) $ (220.9)
- -----------------------------------------------------------------------------------------------------------
Life & Investments Pretax Operating Earnings
Life & Investments' results are evaluated based on pretax operating earnings, a
non-GAAP measure, which excludes net realized investment gains and losses.
Management believes the presentation of pretax operating earnings enhances the
understanding of our Life & Investments results of operations by excluding net
realized investment gains and losses, which can fluctuate significantly and
distort a comparison between periods. The following table reconciles pretax
operating earnings to Income before Income Taxes, the most directly comparable
GAAP measure on our Consolidated Statements of Income.
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------
Life & Investments Income (Loss) $ (67.2) $ 46.6 $ 11.1 $ 70.8
before Income Taxes
Net Realized Investment Losses 108.3 13.0 159.7 99.9
------------------------------------------------------
Pretax Operating Earnings $ 41.1 $ 59.6 $ 170.8 $ 170.7
- -----------------------------------------------------------------------------------------------------------
Other Information in this Supplement
Frequency, severity and loss cost information is on a newly reported, claims
incurred, basis which may be different from paid.
Catastrophes are events resulting in losses greater than $500,000, involving
multiple claims and policyholders. Safeco has used this definition since 1991.
Certain reclassifications have been made to the prior periods to conform to the
current presentation.
NM = Not Meaningful
Safeco Corporation
Key Metrics
(In Millions Except Per Share Data)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002 Chg
----------- ---------- ----------- ---------- ---------- ----------- ----------- -------
Net Income (Loss) $ (28.9) $ 111.9 $ 90.0 $ 57.1 $ 75.2 $ 173.0 $ 244.0 -29%
Net Income (Loss) Per Diluted Share (0.21) 0.81 0.65 0.42 0.59 1.25 1.91 -35%
Net Realized Investment
Gains (Losses) after tax (62.5) 14.7 (32.4) (36.4) 7.8 (80.2) 89.9 NM
Operating Earnings 33.6 97.2 122.4 93.5 67.4 253.2 154.1 64%
Operating Earnings Per Share 0.24 0.70 0.88 0.71 0.53 1.82 1.21 50%
Operating Return on Equity
(Pre-FAS 115) annualized 4.0% 11.8% 15.2% 11.8% 8.7% 10.0% 6.6% 52%
Operating Return on Equity
(unadjusted) annualized 2.9% 8.9% 12.1% 9.7% 7.2% 7.3% 5.5% 33%
Operating Revenue $ 1,875.5 $ 1,848.7 $1,812.2 $1,815.6 $ 1,782.1 $5,536.4 $ 5,167.0 7%
% Chg Prior Year Same Qtr 5.2% 8.6% 7.7% 7.2% 5.5%
Life & Investments
Pretax Operating Earnings $ 41.1 $ 57.9 $ 71.8 $ 66.3 $ 59.6 $ 170.8 $ 170.7 -
% Chg Prior Year Same Qtr -31.0% 11.3% 21.5% 41.3% 38.6%
Property & Casualty
Combined Ratio 108.6% 101.0% 98.2% 101.6% 104.0% 102.7% 106.6% (3.9)
Impact of Catastrophes 1.7% 8.2% 1.1% 0.2% -0.9% 3.7% 2.5% 1.2
Net Written Premiums $ 1,314.7 $1,316.5 $1,205.8 $ 1,130.0 $ 1,182.7 $ 3,837.0 $ 3,454.6 11%
% Chg Prior Year Same Qtr 11.2% 11.2% 10.9% 7.4% 6.1%
Net Earned Premiums $1,250.4 $ 1,201.8 $ 1,163.1 $ 1,164.6 $ 1,135.2 $3,615.3 $3,356.7 8%
% Chg Prior Year Same Qtr 10.1% 7.1% 5.8% 4.2% 1.5%
Book Value Per Share $ 35.61 $ 37.22 $ 33.00 $ 32.07 $ 31.77 $ 35.61 $ 31.77 12%
% Chg Prior Year Same Qtr 12.1% 28.7% 20.9% 12.7% 7.8%
BV Per Share (ex-FAS 115) $ 25.35 $ 25.72 $ 24.66 $ 24.39 $ 23.55 $ 25.35 $ 23.55 8%
% Chg Prior Year Same Qtr 7.6% 6.2% -1.3% -0.7% -3.4%
Safeco Corporation
Summary of Financial Results
(In Millions)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
2003 2002 2003 2002
-------- --------- ------- ---------
(Unaudited) (Unaudited)
REVENUES
Property & Casualty
Earned Premiums $1,250.4 $1,135.2 $3,615.3 $3,356.7
Net Investment Income 113.7 114.5 343.0 345.0
Life & Investments 508.3 530.4 1,560.6 1,452.2
Corporate 3.1 2.0 17.5 13.1
Net Realized Investment Gains (Losses) (95.5) 12.5 (123.1) 138.5
-------- --------- ------- ---------
Total 1,780.0 1,794.6 5,413.3 5,305.5
-------- --------- ------- ---------
Income before Net Realized Investment Gains (Losses) and Income Taxes
Property & Casualty
Underwriting Profits (Losses) (107.4) (45.4) (98.7) (220.9)
Net Investment Income 113.7 114.5 343.0 345.0
Restructuring Charges - (3.0) - (15.1)
-------- --------- ------- ---------
Total Property & Casualty 6.3 66.1 244.3 109.0
Life & Investments 41.1 59.6 170.8 170.7
Corporate* (29.9) (16.1) (56.2) (42.3)
-------- --------- ------- ---------
Total 17.5 109.6 358.9 237.4
Net Realized Investment Gains (Losses) before Taxes (95.5) 12.5 (123.1) 138.5
-------- --------- ------- ---------
Income (Loss) before Income Taxes (78.0) 122.1 235.8 375.9
Provision (Benefit) for Income Taxes on
Income (Loss) before Net Realized Investment Gains (Losses) (16.1) 30.9 83.3 49.6
Net Realized Investment Gains (Losses) (33.0) 4.7 (42.9) 48.6
-------- --------- ------- ---------
Total (49.1) 35.6 40.4 98.2
-------- --------- ------- ---------
Distributions on Capital Securities, Net of Taxes* - (11.3) (22.4) (33.7)
-------- --------- ------- ---------
Net Income (Loss) $ (28.9) $ 75.2 $ 173.0 $ 244.0
======== ========= ======== =========
* Effective July 1, 2003 Safeco adopted SFAS 150, "Accounting for Financial
Instruments with Characteristics of Liabilities, Equity or Both" and,
accordingly, Distributions on Capital Securities are now reported with interest
expense in our Corporate segment.
Safeco Corporation
Consolidated Statements of Income
(In Millions Except Per Share Data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -------------------
2003 2002 2003 2002
----------------------------------------------
(Unaudited) (Unaudited)
REVENUES
Property & Casualty Earned Premiums $ 1,250.4 $ 1,135.2 $ 3,615.3 $ 3,356.7
Life & Investments Premiums and Other Revenues 212.6 223.3 657.6 554.5
Net Investment Income 409.8 420.4 1,255.4 1,247.9
Net Realized Investment Gains (Losses) (95.5) 12.5 (123.1) 138.5
Other 2.7 3.2 8.1 7.9
--------------------------------------------------
Total 1,780.0 1,794.6 5,413.3 5,305.5
--------------------------------------------------
EXPENSES
Losses, Loss Adjustment Expenses and Policy Benefits 1,347.0 1,171.8 3,667.1 3,512.8
Other Underwriting and Operating Expenses 252.9 255.5 775.2 697.1
Amortization of Deferred Policy Acquisition Costs 224.2 220.1 663.1 642.0
Interest Expense (including $17.3 Distributions on Capital Securities in 2003) 29.9 17.9 60.2 50.3
Intangibles Amortization 4.0 4.2 11.9 12.3
Restructuring Charges - 3.0 - 15.1
--------------------------------------------------
Total 1,858.0 1,672.5 5,177.5 4,929.6
--------------------------------------------------
Income (Loss) before Income Taxes (78.0) 122.1 235.8 375.9
Provision (Benefit) for Income Taxes (49.1) 35.6 40.4 98.2
Distributions on Capital Securities, Net of Taxes - (11.3) (22.4) (33.7)
--------------------------------------------------
Net Income (Loss) $ (28.9) $ 75.2 $ 173.0 $ 244.0
==================================================
INCOME (LOSS) PER SHARE OF COMMON STOCK
Net Income (Loss) Per Share of Common Stock - Diluted $ (0.21) $ 0.59 $ 1.25 $ 1.91
==================================================
Net Income (Loss) Per Share of Common Stock - Basic $ (0.21) $ 0.59 $ 1.25 $ 1.91
==================================================
Dividends Declared $ 0.185 $ 0.185 $ 0.555 $ 0.555
Average Number of Shares Outstanding During the Period:
Diluted* 138.5 128.1 138.9 128.1
Basic 138.5 127.8 138.4 127.8
* Due to the net loss in the third quarter of 2003, we used basic
weighted-average shares outstanding to calculate diluted net income (loss) per
share of common stock. Using diluted weighted-average shares outstanding would
have resulted in a lower net loss per share of common stock.
Safeco Corporation
Consolidated Balance Sheets
(In Millions)
September 30 December 31
2003 2002
--------------- ----------------
(Unaudited) (Audited)
ASSETS
Investments
Available-for-Sale Securities
Fixed Maturities, at Fair Value
(Cost or amortized cost: $23,544.2; $22,646.1) $ 25,733.5 $ 24,278.0
Marketable Equity Securities, at Fair Value
(Cost: $760.2; $777.2) 1,167.1 1,082.5
Mortgage Loans 937.9 925.9
Other Invested Assets 159.0 173.8
Short-Term Investments 449.2 311.0
--------------- ----------------
Total Investments 28,446.7 26,771.2
Cash and Cash Equivalents 267.4 188.5
Accrued Investment Income 358.8 336.3
Premiums and Service Fees Receivable 1,100.0 1,047.1
Other Notes and Accounts Receivable 161.3 162.3
Current Income Taxes Recoverable 36.7 26.2
Deferred Income Taxes - 124.6
Reinsurance Recoverables 575.2 578.8
Deferred Policy Acquisition Costs 654.0 626.3
Land, Buildings and Equipment for Company Use 453.2 488.7
(At cost less accumulated depreciation: $329.7; $319.7)
Intangibles and Goodwill 186.1 190.0
Other Assets 278.0 259.8
Securities Lending Collateral 2,286.6 2,957.0
Separate Account Assets 1,035.1 899.2
--------------- ----------------
Total Assets $ 35,839.1 $ 34,656.0
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Property & Casualty Loss and Loss Adjustment Expense Reserves $ 5,096.6 $ 4,998.5
Accident and Health Reserves 148.1 170.0
Life Policy Liabilities 330.8 339.9
Unearned Premiums 2,075.5 1,847.5
Funds Held Under Deposit Contracts 16,422.0 15,655.4
Debt (including $850.0 of Capital Securities at September 30, 2003) 1,952.7 1,123.8
Deferred Income Taxes 98.0 -
Other Liabilities 1,460.3 1,389.3
Securities Lending Payable 2,286.6 2,957.0
Separate Account Liabilities 1,035.1 899.2
--------------- ----------------
Total Liabilities 30,905.7 29,380.6
--------------- ----------------
Commitments and Contingencies - -
Corporation-Obligated, Mandatorily Redeemable Capital Securities
of Subsidiary Trust Holding Solely Junior Subordinated
Debentures of the Corporation (Capital Securities) - 843.8
--------------- ----------------
Preferred Stock, No Par Value
Shares Authorized: 10; Shares Issued and Outstanding: None - -
Common Stock, No Par Value
Shares Authorized: 300; Shares Reserved for Options: 11.7; 12.0
Shares Issued and Outstanding: 138.5; 138.2 1,185.8 1,178.1
Retained Earnings 2,168.1 2,072.2
Accumulated Other Comprehensive Income, Net of Taxes
Unrealized Gains and Losses on Available-for-Sale Securities
and Derivative Financial Instruments 1,652.3 1,241.2
Unrealized Foreign Currency Translation Adjustments (14.6) (15.7)
Deferred Policy Acquisition Costs Valuation Allowance (49.4) (35.4)
Minimum Pension Liability Adjustment (8.8) (8.8)
--------------- ----------------
Total Accumulated Other Comprehensive Income 1,579.5 1,181.3
--------------- ----------------
Total Shareholders' Equity 4,933.4 4,431.6
--------------- ----------------
Total Liabilites & Shareholders' Equity $ 35,839.1 $ 34,656.0
=============== ================
Safeco Corporation
Income Summary
(In Millions Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -------------------
2003 2002 2003 2002
-----------------------------------------------------
(Unaudited) (Unaudited)
Pretax Net Income (Loss)
- ------------------------
P&C Underwriting $ (107.4) $ (45.4) $ (98.7) $ (220.9)
P&C Investment Income 113.7 114.5 343.0 345.0
Restructuring Charges - (3.0) - (15.1)
-----------------------------------------------------
Total P&C 6.3 66.1 244.3 109.0
Life & Investments 41.1 59.6 170.8 170.6
Corporate (29.9) (16.1) (56.2) (42.3)
Distributions on Capital Securities - (17.3) (34.5) (51.8)
-----------------------------------------------------
Income before Net Realized Investment Gains (Losses) 17.5 92.3 324.4 185.5
Net Realized Investment Gains (Losses) (95.5) 12.5 (123.1) 138.5
-----------------------------------------------------
Total $ (78.0) $ 104.8 $ 201.3 $ 324.0
=====================================================
Income Tax Expense (Benefit)
- ---------------------------
P&C Underwriting $ (35.3) $ (14.3) $ (32.8) $ (74.1)
P&C Investment Income 30.4 30.4 89.7 84.6
Restructuring Charges - (1.1) - (5.3)
-----------------------------------------------------
Total P&C (4.9) 15.0 56.9 5.2
Life & Investments 1.6 21.1 46.1 59.0
Corporate (12.8) (5.2) (19.7) (14.7)
Distributions on Capital Securities - (6.0) (12.1) (18.1)
-----------------------------------------------------
Income before Net Realized Investment Gains (Losses) (16.1) 24.9 71.2 31.4
Net Realized Investment Gains (Losses) (33.0) 4.7 (42.9) 48.6
-----------------------------------------------------
Total $ (49.1) $ 29.6 $ 28.3 $ 80.0
=====================================================
After-tax Income (Loss)
- -----------------------
P&C Underwriting $ (72.1) $ (31.1) $ (65.9) $ (146.8)
P&C Investment Income 83.3 84.1 253.3 260.4
Restructuring Charges - (1.9) - (9.8)
-----------------------------------------------------
Total P&C 11.2 51.1 187.4 103.8
Life & Investments 39.5 38.5 124.7 111.6
Corporate (17.1) (10.9) (36.5) (27.6)
Distributions on Capital Securities - (11.3) (22.4) (33.7)
-----------------------------------------------------
Income before Net Realized Investment Gains (Losses) 33.6 67.4 253.2 154.1
Net Realized Investment Gains (Losses) (62.5) 7.8 (80.2) 89.9
-----------------------------------------------------
Total $ (28.9) $ 75.2 $ 173.0 $ 244.0
=====================================================
Average Shares Outstanding - Diluted 138.5 128.1 138.9 # 128.1
Average Shares Outstanding - Basic 138.5 127.8 138.4 127.8
Book Value Per Share $ 35.61 $ 31.77 $ 35.61 $ 31.77
Book Value Per Share (ex-FAS 115) $ 25.35 $ 23.55 $ 25.35 $ 23.55
Safeco Property & Casualty
Underwriting Profit and Combined Ratios
(In Millions)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
------------ --------- --------- --------- --------- --------- ----------
Net U/W Profit (Loss)
- -----------------------------------
Safeco Personal Insurance
Personal Auto $ 35.4 $ 3.3 $ (1.5) $(10.6) $ (6.2) $ 37.2 $ (33.8)
Homeowners 32.1 (13.4) 19.5 12.4 5.5 38.2 (49.6)
Specialty 12.5 14.8 11.5 8.3 9.6 38.8 20.6
------------ --------- --------- --------- --------- --------- ----------
Total SPI 80.0 4.7 29.5 10.1 8.9 114.2 (62.8)
------------ --------- --------- --------- --------- --------- ----------
Safeco Business Insurance
SBI Regular (51.3) (11.5) (5.3) 7.8 (11.9) (68.1) (59.5)
Special Accounts Facility 5.8 (0.6) 6.4 7.5 3.9 11.6 10.3
SBI Runoff (149.8) (9.4) (6.3) (33.0) (15.4) (165.5) (74.5)
------------ --------- --------- --------- --------- --------- ----------
Total SBI (195.3) (21.5) (5.2) (17.7) (23.4) (222.0) (123.7)
------------ --------- --------- --------- --------- --------- ----------
Surety 8.5 6.8 3.7 6.0 2.7 19.0 11.6
P&C Other* (0.6) (2.3) (7.0) (17.1) (33.6) (9.9) (46.0)
------------ --------- --------- --------- --------- --------- ----------
Total All Lines $ (107.4) $(12.3) $ 21.0 $(18.7) $ (45.4) $ (98.7) $ (220.9)
============ ========= ========= ========= ========= ========= ==========
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
------------ --------- --------- --------- --------- --------- ----------
Net Combined Ratios (GAAP)
- --------------------------
Safeco Personal Insurance
Personal Auto 93.9% 99.4% 100.3% 102.0% 101.2% 97.8% 102.4%
Homeowners 83.3% 107.0% 89.7% 93.5% 97.1% 93.3% 108.8%
Specialty 75.4% 70.7% 76.9% 83.8% 81.2% 74.3% 86.4%
------------ --------- --------- --------- --------- --------- ----------
Total SPI 90.3% 99.4% 96.2% 98.7% 98.8% 95.2% 102.9%
------------ --------- --------- --------- --------- --------- ----------
Safeco Business Insurance
SBI Regular 118.6% 104.2% 102.0% 97.0% 104.7% 108.4% 107.9%
Special Accounts Facility 94.3% 100.7% 92.7% 91.6% 94.8% 95.9% 94.5%
SBI Runoff NM NM NM NM NM NM NM
------------ --------- --------- --------- --------- --------- ----------
Total SBI 151.6% 106.0% 101.5% 104.9% 106.6% 120.3% 111.2%
------------ --------- --------- --------- --------- --------- ----------
Surety 78.8% 82.2% 88.6% 81.4% 91.8% 82.8% 87.6%
P&C Other* NM NM NM NM NM NM NM
------------ --------- --------- --------- --------- --------- ----------
Total All Lines 108.6% 101.0% 98.2% 101.6% 104.0% 102.7% 106.6%
============ ========= ========= ========= ========= ========= ==========
* P&C Other includes our discontinued assumed reinsurance business, our
involuntary-assigned risk and other state-mandated personal lines business, our
Lloyds of London operations which are in runoff and certain discontinued product
lines.
Safeco Property & Casualty
Underwriting Profit and Combined Ratios
(Without 3Q 03 Workers Compensation Reserve Adjustment)
(In Millions)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
------------ --------- -------- --------- --------- -------- ----------
Net U/W Profit (Loss)
- ---------------------------------
Safeco Personal Insurance
Personal Auto $ 35.4 $ 3.3 $ (1.5) $(10.6) $ (6.2) $ 37.2 $ (33.8)
Homeowners 32.1 (13.4) 19.5 12.4 5.5 38.2 (49.6)
Specialty 12.5 14.8 11.5 8.3 9.6 38.8 20.6
------------ --------- -------- --------- --------- -------- ----------
Total SPI 80.0 4.7 29.5 10.1 8.9 114.2 (62.8)
------------ --------- -------- --------- --------- -------- ----------
Safeco Business Insurance
SBI Regular 6.3 (11.5) (5.3) 7.8 (11.9) (10.5) (59.5)
Special Accounts Facility 8.3 (0.6) 6.4 7.5 3.9 14.1 10.3
SBI Runoff (4.9) (9.4) (6.3) (33.0) (15.4) (20.6) (74.5)
------------ --------- -------- --------- --------- -------- ----------
Total SBI 9.7 (21.5) (5.2) (17.7) (23.4) (17.0) (123.7)
------------ --------- -------- --------- --------- -------- ----------
Surety 8.5 6.8 3.7 6.0 2.7 19.0 11.6
P&C Other* (0.6) (2.3) (7.0) (17.1) (33.6) (9.9) (46.0)
------------ --------- -------- --------- --------- -------- ----------
Total All Lines $ 97.6 $(12.3) $ 21.0 $(18.7) $ (45.4) $106.3 $ (220.9)
============ ========= ======== ========= ========= ======== ==========
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
------------ --------- -------- --------- --------- -------- ----------
Net Combined Ratios (GAAP)
- ---------------------------
Safeco Personal Insurance
Personal Auto 93.9% 99.4% 100.3% 102.0% 101.2% 97.8% 102.4%
Homeowners 83.3% 107.0% 89.7% 93.5% 97.1% 93.3% 108.8%
Specialty 75.4% 70.7% 76.9% 83.8% 81.2% 74.3% 86.4%
------------ --------- -------- --------- --------- -------- ----------
Total SPI 90.3% 99.4% 96.2% 98.7% 98.8% 95.2% 102.9%
------------ --------- -------- --------- --------- -------- ----------
Safeco Business Insurance
SBI Regular 97.7% 104.2% 102.0% 97.0% 104.7% 101.3% 107.9%
Special Accounts Facility 91.8% 100.7% 92.7% 91.6% 94.8% 95.0% 94.5%
SBI Runoff NM NM NM NM NM NM NM
------------ --------- -------- --------- --------- -------- ----------
Total SBI 97.4% 106.0% 101.5% 104.9% 106.6% 101.6% 111.2%
------------ --------- -------- --------- --------- -------- ----------
Surety 78.8% 82.2% 88.6% 81.4% 91.8% 82.8% 87.6%
P&C Other* NM NM NM NM NM NM NM
------------ --------- -------- --------- --------- -------- ----------
Total All Lines 92.2% 101.0% 98.2% 101.6% 104.0% 97.1% 106.6%
============ ========= ======== ========= ========= ======== ==========
* P&C Other includes our discontinued assumed reinsurance business, our
involuntary-assigned risk and other state-mandated personal lines business, our
Lloyds of London operations which are in runoff and certain discontinued product
lines.
Safeco Property & Casualty
Net Written Premiums
(In Millions)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Written Premiums
- --------------------
Safeco Personal Insurance
Personal Auto $ 617.7 $ 570.9 $ 566.0 $ 522.9 $ 536.4 $ 1,754.6 $ 1,502.8
Homeowners 207.4 215.3 172.2 175.2 212.1 594.9 592.4
Specialty 53.2 57.2 46.5 44.2 54.4 156.9 158.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total SPI 878.3 843.4 784.7 742.3 802.9 2,506.4 2,253.7
---------- ---------- ---------- ---------- ---------- ---------- ----------
Safeco Business Insurance
SBI Regular 281.5 308.4 284.0 258.1 253.5 873.9 797.1
Special Accts Facility* 103.7 94.7 97.1 99.2 88.2 295.5 249.7
SBI Runoff (1.2) (0.5) 1.8 (3.7) (2.2) 0.1 28.8
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total SBI 384.0 402.6 382.9 353.6 339.5 1,169.5 1,075.6
---------- ---------- ---------- ---------- ---------- ---------- ----------
Surety 49.9 46.9 35.2 32.4 38.4 132.0 101.2
P&C Other 2.5 23.6 3.0 1.7 1.9 29.1 24.1
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total All Lines $ 1,314.7 $ 1,316.5 $ 1,205.8 $ 1,130.0 $ 1,182.7 $3,837.0 $3,454.6
========= ========== ========== ========== ========== ========== ==========
Net Written Premiums (Percent Change)
- ------------------------------------
Percent Change Over Prior Year Same Quarter Percent Change YTD
-------------------------------------------- ------------------
Safeco Personal Insurance
Personal Auto 15.2% 17.0% 18.3% 14.4% 17.6% 16.8% 12.3%
Homeowners -2.2% 0.8% 3.3% -1.7% 5.4% 0.4% 4.9%
Specialty -2.2% -1.6% 1.3% -4.3% 1.9% -1.0% 0.3%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total SPI 9.4% 11.0% 13.6% 9.0% 12.9% 11.2% 9.4%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Safeco Business Insurance
SBI Regular 11.0% 11.0% 7.0% 17.2% 7.0% 9.6% 4.5%
Special Accts Facility* 17.6% 13.4% 24.8% 187.1% 165.2% 18.3% 151.3%
SBI Runoff NM NM NM NM NM NM NM
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total SBI 13.1% 9.4% 4.0% 4.2% -8.0% 8.7% -10.5%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Surety 29.9% 30.8% 30.7% 7.4% 16.1% 30.4% -0.2%
P&C Other 31.6% 12.9% 95.4% -2.1% -22.7% 20.7% 9.0%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total All Lines 11.2% 11.2% 10.9% 7.4% 6.1% 11.1% 2.0%
========= ========== ========== ========== ========== ========== ==========
*As each existing old Safeco Commercial policy came up for renewal (reported in
Runoff), a decision was made by Special Accounts Facility to renew or not renew.
If it was renewed it became part of Special Accounts Facility, otherwise results
associated with the discontinued account remain in Runoff. In addition, this
number is impacted by the acquisition of the ACE lender-placed property business
of $80 million in premiums in 4Q 2001.
Surety premiums reflected a change from a 50% quota share reinsurance treaty to
an excess of loss treaty in February 2001.
Safeco Property & Casualty
Net Earned Premiums
(In Millions)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
----------- --------- ---------- ---------- --------- ----------- -----------
Net Earned Premiums
- -------------------
Safeco Personal Insurance
Personal Auto $ 581.3 $ 552.9 $ 528.5 $ 523.0 $ 497.4 $1,662.7 $ 1,424.1
Homeowners 191.5 192.1 189.5 192.1 192.7 573.1 565.3
Specialty 50.9 50.5 49.8 50.8 51.1 151.2 152.3
----------- --------- ---------- ---------- --------- ----------- -----------
Total SPI 823.7 795.5 767.8 765.9 741.2 2,387.0 2,141.7
----------- --------- ---------- ---------- --------- ----------- -----------
Safeco Business Insurance
SBI Regular 275.4 272.1 266.0 262.3 255.4 813.5 751.8
Special Accts Facility* 100.6 93.2 87.9 89.2 75.2 281.7 186.8
SBI Runoff 2.2 (4.9) 3.0 8.1 24.2 0.3 162.8
----------- --------- ---------- ---------- --------- ----------- -----------
Total SBI 378.2 360.4 356.9 359.6 354.8 1,095.5 1,101.4
----------- --------- ---------- ---------- --------- ----------- -----------
Surety 40.0 38.5 32.1 32.7 32.7 110.6 93.6
P&C Other 8.5 7.4 6.3 6.4 6.5 22.2 20.0
----------- --------- ---------- ---------- --------- ----------- -----------
Total All Lines $1,250.4 $ 1,201.8 $1,163.1 $ 1,164.6 $ 1,135.2 $3,615.3 $3,356.7
=========== ========= ========== ========== ========= =========== ===========
Net Earned Premiums (Percent Change)
- -----------------------------------
Percent Change Over Prior Year Same Quarter Percent Change YTD
------------------------------------------- ------------------
Safeco Personal Insurance
Personal Auto 16.9% 17.0% 16.3% 14.9% 11.4% 16.8% 8.5%
Homeowners -0.6% 1.5% 3.3% 2.8% 3.1% 1.4% 2.1%
Specialty -0.4% -1.3% -0.4% -0.6% 0.3% -0.7% 1.2%
----------- --------- ---------- ---------- --------- ----------- -----------
Total SPI 11.1% 11.6% 11.6% 10.5% 8.3% 11.5% 6.2%
----------- --------- ---------- ---------- --------- ----------- -----------
Safeco Business Insurance
SBI Regular 7.8% 8.2% 8.6% 7.0% 0.5% 8.2% -4.6%
Special Accts Facility* 33.8% 50.9% 76.2% 152.7% 146.6% 50.8% 101.7%
SBI Runoff NM NM NM NM NM NM NM
----------- --------- ---------- ---------- --------- ----------- -----------
Total SBI 6.6% -2.6% -5.2% -4.5% -12.5% -0.5% -12.2%
----------- --------- ---------- ---------- --------- ----------- -----------
Surety 22.3% 23.5% 7.8% 16.9% 21.3% 18.2% 38.5%
P&C Other 30.8% -5.8% 13.7% -67.5% NM 11.0% 14.9%
----------- --------- ---------- ---------- --------- ----------- -----------
Total All Lines 10.1% 7.1% 5.8% 4.2% 1.5% 7.7% 0.0%
=========== ========= ========== ========== ========= =========== ===========
* As each existing old Safeco Commercial policy came up for renewal (reported in
Runoff), a decision was made by Special Accounts Facility to renew or not renew.
If it was renewed it became part of Special Accounts Facility, otherwise results
associated with the discontinued account remain in Runoff. In addition, this
number is impacted by the acquisition of the ACE lender-placed property business
of $80 million in premiums in 4Q 2001.
Surety premiums reflected a change from a 50% quota share reinsurance treaty to
an excess of loss treaty in February 2001.
Safeco Property & Casualty
Personal Auto
(In Millions Except Ratios)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
----------- ------------ ------------ ----------- ------------ ----------- ------------
Personal Auto
- -------------
Underwriting Profit (Loss) $ 35.4 $ 3.3 $ (1.5) $ (10.6) $ (6.2) $ 37.2 $ (33.8)
Loss and LAE Ratio 71.8% 76.0% 76.8% 78.5% 78.2% 74.8% 78.8%
Expense Ratio 22.1% 23.4% 23.5% 23.5% 23.0% 23.0% 23.6%
----------- ------------ ------------ ----------- ------------ ----------- ------------
Combined Ratio 93.9% 99.4% 100.3% 102.0% 101.2% 97.8% 102.4%
----------- ------------ ------------ ----------- ------------ ----------- ------------
Impact of Catastrophes 0.0% 4.0% 0.2% 0.3% -0.1% 1.4% 0.5%
Impact of Non-Cat Weather 1.1% 1.4% 0.3% 0.4% 0.8% 0.9% 0.8%
Policies In Force (000's) 1,631.7 1,586.1 1,558.6 1,529.9 1,498.4
% Chg Prior Year Same Qtr 8.9% 9.6% 9.6% 8.0% 4.7%
Retention 79.9% 80.1% 81.0% 81.2% 80.5%
New Business Policies (000's) 144.7 115.6 107.4 117.1 137.2
% Chg Prior Year Same Qtr 5.5% -0.5% 12.2% 42.7% 85.2%
Loss Trends (12 mo. rolling)
Frequency -3.2% -3.7% -6.5% -7.3% -5.3%
Severity 3.6% 3.2% 5.1% 7.2% 4.9%
Total Loss Costs 0.3% -0.6% -1.7% -0.6% -0.7%
Net Written Premiums $ 617.7 $ 570.9 $ 566.0 $ 522.9 $ 536.4
% Chg Prior Year Same Qtr 15.2% 17.0% 18.3% 14.4% 17.6%
Net Earned Premiums $ 581.3 $ 552.9 $ 528.5 $ 523.0 $ 497.4
% Chg Prior Year Same Qtr -0.6% 1.5% 3.3% 2.8% 3.1%
Frequency, severity and loss cost information is on a twelve month rolling newly
reported claims incurred basis which may be different from paid.
Safeco Property & Casualty
Homeowners and Specialty
(In Millions Except Ratios)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
----------- ----------- ----------- ----------- ----------- ---------- ----------
Homeowners
- -----------
Underwriting Profit (Loss) $ 32.1 $ (13.4) $ 19.5 $ 12.4 $ 5.5 $38.2 $ (49.6)
Loss and LAE Ratio 54.8% 78.5% 60.9% 61.4% 68.9% 64.8% 80.7%
Expense Ratio 28.5% 28.5% 28.8% 32.1% 28.2% 28.5% 28.1%
----------- ----------- ----------- ----------- ----------- ---------- ----------
Combined Ratio 83.3% 107.0% 89.7% 93.5% 97.1% 93.3% 108.8%
=========== =========== =========== =========== =========== ========== ==========
Impact of Catastrophes 5.8% 31.5% 4.3% 1.9% -3.4% 13.9% 9.0%
Impact of Non-Cat Weather 10.0% 9.1% 6.8% 6.2% 11.4% 8.7% 10.1%
Policies In Force (000's) 1,201.5 1,232.8 1,263.0 1,290.5 1,324.1
% Chg Prior Year Same Qtr -9.3% -9.1% -8.3% -8.2% -8.2%
Retention 82.7% 82.8% 82.8% 82.5% 82.4%
New Business Policies (000's) 31.4 28.6 22.9 27.0 32.5
% Chg Prior Year Same Qtr -3.4% -31.9% -27.4% -11.6% -8.6%
Net Written Premiums $207.4 $ 215.3 $ 172.2 $ 175.2 $ 212.1
% Chg Prior Year Same Qtr -2.2% 0.8% 3.3% -1.7% 5.4%
Net Earned Premiums $ 191.5 $ 192.1 $ 189.5 $ 192.1 $ 192.7
% Chg Prior Year Same Qtr -0.6% 1.5% 3.3% 2.8% 3.1%
Specialty
- ---------
Underwriting Profit $ 12.5 $ 14.8 $ 11.5 $ 8.3 $ 9.6 $38.8 $ 20.6
Loss and LAE Ratio 47.6% 40.1% 46.3% 52.3% 50.0% 44.6% 55.1%
Expense Ratio 27.8% 30.6% 30.6% 31.5% 31.2% 29.7% 31.3%
----------- ----------- ----------- ----------- ----------- ---------- ----------
Combined Ratio 75.4% 70.7% 76.9% 83.8% 81.2% 74.3% 86.4%
=========== =========== =========== =========== =========== ========== ==========
Safeco Property & Casualty
Safeco Business Insurance (SBI)
(In Millions Except Ratios)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
---------- ---------- ---------- ---------- ---------- ---------- -----------
Safeco Business Insurance
- -------------------------
Underwriting Loss $(195.3) $ (21.5) $ (5.2) $ (17.7) $(23.4) $(222.0) $ (123.7)
Loss and LAE Ratio 115.6% 66.1% 62.8% 66.4% 67.0% 82.1% 73.5%
Expense Ratio 36.0% 39.9% 38.7% 38.5% 39.6% 38.2% 37.7%
---------- ---------- ---------- ---------- ---------- ---------- -----------
Combined Ratio (CR) 151.6% 106.0% 101.5% 104.9% 106.6% 120.3% 111.2%
========== ========== ========== ========== ========== ========== ===========
CR excluding reserve adjustment 97.4% 106.0% 101.5% 104.9% 106.6% 101.6% 111.2%
Impact of Catastrophes 2.4% 4.0% 0.9% -1.1% -1.2% 2.4% 1.5%
Impact of Non-Cat Weather 2.5% 2.1% 1.9% 1.9% 2.5% 2.2% 1.9%
SBI Regular
- -----------
Underwriting Profit (Loss) $ (51.3) $ (11.5) $ (5.3) $ 7.8 $ (11.9) $ (68.1) $ (59.5)
Loss and LAE Ratio 81.8% 66.6% 63.8% 60.1% 66.5% 70.9% 71.8%
Expense Ratio 36.8% 37.6% 38.2% 36.9% 38.2% 37.5% 36.1%
---------- ---------- ---------- ---------- ---------- ---------- -----------
Combined Ratio (CR) 118.6% 104.2% 102.0% 97.0% 104.7% 108.4% 107.9%
========== ========== ========== ========== ========== ========== ===========
CR excluding reserve adjustment 97.7% 104.2% 102.0% 97.0% 104.7% 101.3% 107.9%
Impact of Catastrophes 1.9% 3.4% 1.7% -1.7% -1.1% 2.3% 2.2%
Impact of Non-Cat Weather 2.4% 2.2% 1.7% 0.4% 1.6% 2.1% 1.8%
Policies In Force (000's) 509.9 511.1 517.2 529.7 537.1
% Chg Prior Year Same Qtr -5.1% -6.9% -7.4% -8.9% -8.8%
Retention 77.9% 76.7% 76.1% 76.0% 75.8%
New Business Policies (000's) 30.3 31.1 25.2 24.6 24.6
% Chg Prior Year Same Qtr 23.2% 16.9% 13.7% 15.3% 25.2%
Net Written Premiums $ 281.5 $ 308.4 $284.0 $258.1 $253.5
% Chg Prior Year Same Qtr 11.0% 11.0% 7.0% 17.2% 7.0%
Net Earned Premiums $ 275.4 $ 272.1 $266.0 $ 262.3 $255.4
% Chg Prior Year Same Qtr 7.8% 8.2% 8.6% 7.0% 0.5%
Special Accounts Facility
- --------------------------
Underwriting Profit (Loss) $ 5.8 $ (0.6) $ 6.4 $ 7.5 $ 3.9 $ 11.6 $ 10.3
Combined Ratio (CR) 94.3% 100.7% 92.7% 91.6% 94.8% 95.9% 94.5%
CR excluding reserve adjustment 91.8% 100.7% 92.7% 91.6% 94.8% 95.0% 94.5%
SBI Runoff
Underwriting Loss $ (149.8) $ (9.4) $ (6.3) $ (33.0) $ (15.4) $(165.5) $ (74.5)
Safeco Property & Casualty
Surety, Other and Total
(In Millions Except Ratios)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
------------ ----------- ---------- ---------- ----------- ----------- ------------
Surety
- ------
Underwriting Profit $ 8.5 $ 6.8 $ 3.7 $ 6.0 $ 2.7 $ 19.0 $ 11.6
Combined Ratio 78.8% 82.2% 88.6% 81.4% 91.8% 82.8% 87.6%
P&C Other*
- -----------
Underwriting Loss $ (0.6) $ (2.3) $ (7.0) $ (17.1) $ (33.6) $ (9.9) $ (46.0)
Total Property & Casualty
- -------------------------
Underwriting Profit (Loss) $ (107.4) $ (12.3) $ 21.0 $ (18.7) $ (45.4) $(98.7) $(220.9)
Underwriting Profit (Loss)
excluding reserve adjustment $ 97.6 $ (12.3) $ 21.0 $ (18.7) $ (45.4) $ 106.3 $(220.9)
Loss and LAE Ratio 80.2% 70.4% 67.9% 70.6% 72.1% 73.1% 75.7%
Expense Ratio 28.4% 30.6% 30.3% 31.0% 31.9% 29.6% 30.9%
------------ ----------- ---------- ---------- ----------- ----------- ------------
Combined Ratio (CR) 108.6% 101.0% 98.2% 101.6% 104.0% 102.7% 106.6%
============ =========== ========== =========== ========== =========== ============
CR excluding reserve adjustment 92.2% 101.0% 98.2% 101.6% 104.0% 97.1% 106.6%
Impact of Catastrophes 1.7% 8.2% 1.1% 0.2% -0.9% 3.7% 2.5%
Impact of Non-Cat Weather 2.9% 2.8% 1.9% 1.9% 3.2% 2.6% 2.8%
*P&C Other includes our discontinued assumed reinsurance business, our
involuntary-assigned risk and other state-mandated personal lines business, our
Lloyds of London operations which are in runoff and certain discontinued product
lines.
Catastrophes and Non-Catastrophe Weather
- ----------------------------------------
Catastrophes $21.0 $99.1 $13.4 $2.9 ($9.9) $133.5 $82.5
SPI - Personal Auto (0.1) 22.3 0.9 1.4 (0.6) 23.1 7.7
SPI - Homeowners 11.1 60.5 8.2 3.7 (6.6) 79.8 50.6
SPI - Specialty 1.0 2.0 1.1 1.6 1.5 4.1 7.8
Safeco Business Insurance 9.0 14.3 3.2 (3.8) (4.2) 26.5 16.4
Non-Catastrophe Weather $36.6 $33.9 $22.5 $22.2 $36.3 $93.0 $92.9
SPI - Personal Auto 6.3 7.5 1.4 2.3 4.4 15.2 11.2
SPI - Homeowners 19.3 17.5 12.9 12.0 22.0 49.7 57.1
SPI - Specialty 1.4 1.3 1.3 1.4 1.2 4.0 3.5
Safeco Business Insurance 9.6 7.6 6.9 6.5 8.7 24.1 21.1
Safeco Property & Casualty
Statutory Information
(In Millions Except Ratios)
Three Months Ended Nine Months Ended
Statutory: September 30 September 30
-------------------------------------------------------
2003 2002 2003 2002
-------------------------------------------------------
Net Premiums Written $ 1,314.7 $ 1,182.7 $ 3,837.0 $ 3,454.6
Change in Unearned Premium* (64.3) (47.5) (221.7) (97.9)
-------------------------------------------------------
Net Premiums Earned 1,250.4 1,135.2 3,615.3 3,356.7
-------------------------------------------------------
Net Losses Paid 664.6 699.1 2,013.1 2,082.9
Change in Loss Reserve 143.5 (43.7) 121.8 22.3
-------------------------------------------------------
Net Losses Incurred 808.1 655.4 2,134.9 2,105.2
Net LAE Paid 160.0 162.5 480.9 459.8
Change in LAE Reserve 35.4 (14.6) 23.4 (44.9)
-------------------------------------------------------
Loss Expense Incurred 195.4 147.9 504.3 414.9
Other U/W Expense Incurred 372.7 365.3 1,108.1 1,068.0
-------------------------------------------------------
Total Losses and Expense 1,376.2 1,168.6 3,747.3 3,588.1
-------------------------------------------------------
Underwriting Loss (125.8) (33.4) (132.0) (231.4)
Investment Results
Net Investment Income Earned 114.4 114.1 342.9 345.6
Net Realized Capital Gain 13.6 72.5 20.6 307.9
-------------------------------------------------------
Net Gain from Investments 128.0 186.6 363.5 653.5
Other Income 3.8 (5.2) 7.1 (3.0)
-------------------------------------------------------
Net Income before
Dividends to Policyholders 6.0 148.0 238.6 419.1
Dividends to Policyholders 0.4 (6.6) 1.7 (6.1)
-------------------------------------------------------
Net Income before Income Taxes 5.6 154.6 236.9 425.2
Income Tax Expense 14.6 18.3 66.5 57.9
-------------------------------------------------------
Net Income (Loss) $ (9.0) $ 136.3 $ 170.4 $ 367.3
=======================================================
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD
2003 2003 2003 2002 2002 2003 2002
-----------------------------------------------------------------------------------------------
Loss and Expense Ratios (Statutory)
- -----------------------------------
Losses and Loss Adj. Expense
to Premiums Earned 80.3% 70.5% 67.9% 69.5% 70.8% 73.0% 75.1%
Other Underwriting Expenses
to Net Premiums Written 28.3% 28.9% 29.4% 32.1% 30.9% 28.9% 30.9%
-----------------------------------------------------------------------------------------------
Total Loss and Expense 108.6% 99.4% 97.3% 101.6% 101.7% 101.9% 106.0%
Dividends to Policyholders
to Premiums Earned 0.0% 0.0% 0.0% 0.0% -0.6% 0.0% -0.2%
-----------------------------------------------------------------------------------------------
Combined Ratio 108.6% 99.4% 97.3% 101.6% 101.1% 101.9% 105.8%
===============================================================================================
Balance Sheet - Statutory
P&C Companies Only**
- --------------------------------
Loss Reserves $ 3,854.5 $ 3,711.0 $ 3,699.9 $ 3,732.7 $ 3,792.8
Loss Adj Expense Reserves 826.5 791.1 806.5 803.1 792.3
------------------------------------------------------------------------
Total Loss Reserves $ 4,681.0 $ 4,502.1 $ 4,506.4 $ 4,535.8 $ 4,585.1
========================================================================
Unearned Premium Reserves $ 2,022.3 $ 1,957.5 $ 1,845.2 $ 1,804.7 $ 1,838.5
Reserves for Dividends
to Policyholders 6.0 6.8 6.9 7.8 10.5
Net Admitted Assets 10,496.7 10,080.1 9,986.8 9,851.2 9,453.5
Total Capital and Surplus 2,562.3 2,626.9 2,571.8 2,509.5 2,168.2
Ratio of
Net Premiums Written (Annualized)
to Total Capital and Surplus 2.05 2.00 1.88 1.80 2.18
* Also reflects changes in accrued retrospective premiums.
** Certain 2003 amounts used are estimated and subject to change. Such changes
are not expected to be material.
Safeco Life & Investments
Pretax Operating Earnings*
(In Millions)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD %
2003 2003 2003 2002 2002 2003 2002 Chg
-------------------------------------------------------------------------------------------------
Group $ 12.5 $ 24.5 $ 29.0 $ 22.5 $ 22.4 $ 66.0 $ 46.7 41.3%
Income Annuities (0.9) 8.4 10.1 13.9 11.5 17.6 27.6 -36.2%
Retirement Services 3.3 4.9 5.0 8.2 1.4 13.2 13.4 -1.5%
Individual 3.9 (0.5) 1.9 3.9 3.5 5.3 17.7 -70.1%
Asset Management 1.1 0.1 0.1 0.3 0.9 1.3 4.9 -73.5%
L&I Other 21.2 20.5 25.7 17.5 19.9 67.4 60.4 11.6%
--------------------------------------------------------------------------------------------------
Pretax Operating Earnings $ 41.1 $ 57.9 $ 71.8 $ 66.3 $ 59.6 $ 170.8 $ 170.7 0.1%
==================================================================================================
Safeco Life & Investments
Operating Revenues
(In Millions)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD %
2003 2003 2003 2002 2002 2003 2002 Chg
-------------------------------------------------------------------------------------------------
Group $ 133.9 $ 144.5 $ 142.3 $ 149.8 $ 149.3 $ 420.7 $ 327.6 28.4%
Income Annuities 121.7 130.8 131.4 136.6 134.0 383.9 392.6 -2.2%
Retirement Services 96.6 96.4 96.1 95.4 96.3 289.1 284.1 1.8%
Individual 96.3 95.8 95.9 96.9 96.2 288.0 282.8 1.8%
Asset Management 7.0 6.7 6.2 6.7 7.0 19.9 23.2 -14.2%
L&I Other 52.8 50.7 55.5 47.3 47.6 159.0 141.9 12.1%
--------------------------------------------------------------------------------------------------
Operating Revenues $ 508.3 $ 524.9 $ 527.4 $ 532.7 $ 530.4 $ 1,560.6 $ 1,452.2 7.5%
==================================================================================================
*Earnings before net realized investment gains (losses) and income taxes. This
is a standard industry measurement and is used by management as the key
measurement of Life & Investments segment profit or loss. It is presented as a
supplement to net income as a measure of profitability.
Safeco Life & Investments
Supplemental Statistics
(In Millions Except Ratios and Policy Statistics)
3RD 2ND 1ST 4TH 3RD
QTR QTR QTR QTR QTR YTD YTD %
2003 2003 2003 2002 2002 2003 2002 Chg
-----------------------------------------------------------------------------------------
Group
Earned Premiums $132.3 $ 141.6 $140.6 $145.7 $147.3 $414.5 $322.2 28.6%
Loss Ratio 63.3% 56.3% 56.2% 59.2% 58.4% 58.5% 59.2% (0.7)
Income Annuities
Reserves (in billions) $ 6.3 $ 6.4 $ 6.3 $ 6.3 $ 6.3 $ 6.3 $ 6.3 0.0%
Deposits 29.3 35.8 28.5 37.2 34.1 93.6 69.8 34.1%
Retirement Services
Reserves
Fixed (in billions) $ 6.6 $ 6.4 $ 6.1 $ 5.9 $ 5.8 $ 6.6 $ 5.8 13.8%
Variable (in billions) 0.9 0.9 0.8 0.8 0.8 0.9 0.8 12.5%
-----------------------------------------------------------------------------------------
Total Reserves 7.5 7.3 6.9 6.7 6.6 7.5 6.6 13.6%
Deposits 303.6 328.4 332.2 338.0 271.4 964.2 1,019.4 -5.4%
Individual
Reserves $ 3.9 $ 3.9 $ 3.8 $ 3.8 $ 3.7 $ 3.9 $ 3.7 5.4%
Policies Issued:
Term, Universal Life, 5.9 6.5 5.9 6.3 5.2 18.3 15.9 15.1%
Traditional, Disability (000's)
Policies In Force (000's) 284.0 283.2 281.7 280.0 278.6 284.0 278.6 1.9%
Asset Management
Assets Under Management
(in billions) $ 4.0 $ 4.0 $ 3.7 $ 3.9 $ 3.7 $ 4.0 $ 3.7 8.1%
Safeco Corporation
Capitalization
(In Millions)
09/30/2003 12/31/2002 12/31/2001
--------------------------------------------------------------
Short-Term Debt
$500 million back up line of credit (unused) $ - $ - $ -
Commercial Paper - - 299.0
7.875%, due 3/15/03 - 303.5 323.0
Medium-Term Notes and Other 19.2 29.7 74.6
Long-Term Debt
7.875%, due 4/1/05 (callable at par on 4/1/03) - 200.0 200.0
6.875%, due 7/15/07 (non callable) 195.8 200.0 200.0
4.20%, due 2/1/08 (non callable) 200.0 - -
4.875%, due 2/1/10 (non callable) 300.0 - -
7.25%, due 9/15/12 (non callable) 387.7 390.6 -
8.072% Capital Securities due 2037
(Callable at 104 in 2007) 850.0 - -
------------------ ------------------- -------------------
Total Debt $ 1,952.7 $ 1,123.8 $ 1,096.6
------------------ ------------------- -------------------
Capital Securities (callable at 104 in 2007) $ - $ 843.8 $ 843.4
------------------ ------------------- -------------------
Common Equity $ 4,933.4 $ 4,431.6 $ 3,634.6
------------------ ------------------- -------------------
Total Capital (Debt + Capital Securities + Equity) $ 6,886.1 $ 6,399.2 $ 5,574.6
------------------ ------------------- -------------------
Debt to Capital 28.4% 17.6% 19.7%
Debt and Capital Securities to Capital 28.4% 30.7% 34.8%
Debt and Adj. Cap Securities* to Capital 25.9% 28.1% 31.8%
Debt to Equity 39.6% 25.4% 30.2%
Earnings to Fixed Charges Ratio** 1.2 1.3 Negative
Interest Coverage Ratio** 5.4 5.0 Negative
Operating Earnings to Fixed Charges Ratio** 4.0 3.1 Negative
* 20% equity credit
** The Earnings to Fixed Charges Ratio includes net realized investment gains
(losses), interest on deposit contracts and distributions on capital securities.
The Interest Coverage Ratio excludes net realized investment gains (losses),
interest on deposit contracts and distributions on capital securities. The
Operating Earnings to Fixed Charges Ratio excludes net realized investment gains
(losses) and interest on deposit contracts.
Note: Effective July 1, 2003 Safeco adopted SFAS 150, "Accounting for Financial
Insturments with Characteristics of Liabilities, Equity or Both" and,
accordingly, Capital Securities are now reported with debt in our September 30,
2003 Consolidated Balance Sheet.
Safeco Corporation
Investment Portfolios - Consolidated
(In Millions)
Investment Portfolio (Market Value) 09/30/2003 % 12/31/2002 %
------------------- ---------- -------------------- ---------
Fixed Maturities - Taxable $ 23,522.6 82.7 % $ 22,169.2 82.8 %
Fixed Maturities - Nontaxable 2,210.9 7.8 2,108.8 7.9
Equity Securities 1,167.1 4.1 1,082.5 4.0
------------------- ---------- -------------------- ---------
Total Fixed Maturities & Equity Securities 26,900.6 94.6 25,360.5 94.7
Mortgage Loans 937.9 3.3 925.9 3.5
Other Invested Assets 159.0 0.5 173.8 0.6
Short-Term Investments 449.2 1.6 311.0 1.2
------------------- ---------- -------------------- ---------
Total Consolidated Investment Portfolio $ 28,446.7 100.0 % $ 26,771.2 100.0 %
------------------- ---------- -------------------- ---------
Rating (Market Value) 09/30/2003 12/31/2002
------------------- --------------------
AAA 35 % 37 %
AA 6 7
A 24 24
BBB 28 25
BB or lower 6 5
Not Rated 1 2
------------------- --------------------
Total 100 % 100 %
------------------- --------------------
Average Rating A A
------------------- --------------------
Components of Net Realized Investment Gains (Losses) after Tax (in millions):
3rd 3rd
QTR QTR
2003 2002
------------------- --------------------
Gains on Securities Transactions $ 15.7 $ 27.0
Impairments on Fixed Maturities (4.6) (24.3)
Impairments on Equity Securities (4.7) (0.4)
Impairment related to intent to sell L&I (77.7) -
Credit Default Swap Mark-to-Market 1.8 (17.7)
Other 7.0 23.2
------------------- --------------------
Net Realized Investment Gains (Losses) $ (62.5) $ 7.8
=================== ====================
Safeco Corporation
Investment Portfolios - Property & Casualty
(In Millions)
Investment Portfolio (Market Value) 09/30/2003 % 12/31/2002 %
----------------- ---------------- ---------------- ---------------
Fixed Maturities - Taxable $ 5,454.1 59.6 % $ 5,383.0 61.2 %
Fixed Maturities - Nontaxable 2,203.2 24.1 2,108.8 23.9
Equity Securities 1,029.2 11.2 947.9 10.8
----------------- ---------------- ---------------- ---------------
Total Fixed Maturities & Equity Securities 8,686.5 94.9 8,439.7 95.9
Mortgage Loans 48.5 0.5 50.5 0.6
Other Invested Assets 7.3 0.1 15.6 0.2
Short-Term Investments 411.5 4.5 292.9 3.3
----------------- ---------------- ---------------- ---------------
Total Property & Casualty
Investment Portfolio $ 9,153.8 100.0 % $ 8,798.7 100.0 %
----------------- ---------------- ---------------- ---------------
Rating (Market Value) 09/30/2003 12/31/2002
----------------- ----------------
AAA 40 % 45 %
AA 11 11
A 24 22
BBB 20 17
BB or lower 4 3
Not Rated 1 2
----------------- ----------------
Total 100 % 100 %
----------------- ----------------
Average Rating A+ AA
----------------- ----------------
09/30/2003 06/30/2003 03/31/2003 12/31/2002 09/30/2002
----------------------------------------------------------------------------------------
Pretax Investment Income - Quarter $ 113.7 $ 116.5 $ 112.8 $ 115.0 $ 114.5
Effective Tax Rate on P&C
Investment Income - Quarter 26.79% 25.07% 26.64% 25.94% 26.57%
Cost or Amortized Cost $ 8,274 $ 8,003 $ 8,145 $ 8,131 $ 7,903
Market 9,154 9,008 8,877 8,799 8,627
% Equities (at market) 11.2% 11.3% 10.2% 10.8% 10.5%
% Taxable Bonds (at market) 59.6% 59.7% 59.2% 61.2% 60.3%
% Tax Exempt Bonds (at market) 24.1% 24.5% 23.9% 23.9% 23.4%
% Short Term and Other 5.1% 4.5% 6.7% 4.1% 5.8%
Market YTM on Bond Portfolio 3.92% 3.71% 4.10% 4.17% 4.33%
Book YTM on Bond Portfolio 5.56% 5.66% 6.02% 5.99% 6.19%
Duration of Bond Portfolio 4.99 4.57 5.23 5.26 4.91
Safeco Corporation
Investment Portfolios - Life & Investments
(In Millions)
Investment Portfolio (Market Value) 09/30/2003 % 12/31/2002 %
-------------- -------------- --------------- --------------
Fixed Maturities - Taxable $ 17,977.2 93.3 % $ 16,657.6 92.5 %
Fixed Maturities - Nontaxable 7.7 0.0 0.8 0.0
Equity Securities 112.6 0.6 113.8 0.6
-------------- -------------- --------------- --------------
Total Fixed Maturities & Equity Securities 18,097.5 93.9 16,772.2 93.1
Mortgage Loans 961.5 5.0 948.6 5.3
Other Invested Assets 124.2 0.6 118.1 0.7
Short-Term Investments 88.9 0.5 165.8 0.9
-------------- -------------- --------------- --------------
Total Life & Investments Investment Portfolio $ 19,272.1 100.0 % $ 18,004.7 100.0 %
============== ============== =============== ==============
Rating (Market Value) 09/30/2003 12/31/2002
-------------- ---------------
AAA 32 % 34 %
AA 4 5
A 24 25
BBB 32 29
BB or lower 6 5
Not Rated 2 2
-------------- ---------------
Total 100 % 100 %
============== ===============
Average Rating A A+
-------------- ---------------
09/30/2003 06/30/2003 03/31/2003 12/31/2002 09/30/2002
----------- ------------ ------------ ------------ ------------
Cost or Amortized Cost $ 17,639 $ 17,527 $ 17,259 $ 16,885 $ 16,704
Market 19,272 19,325 18,489 18,005 17,797
% Equities (at market) 0.6% 0.6% 0.6% 0.6% 0.6%
% Taxable Bonds (at market) 93.3% 93.0% 92.4% 92.5% 92.1%
% Short Term and Other 6.1% 6.4% 7.0% 6.9% 7.3%
Market YTM on Bond Portfolio 5.09% 4.97% 5.50% 5.70% 5.80%
Book YTM on Bond Portfolio 6.70% 6.73% 6.99% 7.18% 7.17%
Duration of Bond Portfolio 6.83 6.97 6.81 6.81 6.94