COMPANY PRESS RELEASE

SAFECO CORPORATION TO ACQUIRE AMERICAN STATES FINANCIAL CORPORATION

SEATTLE -- (BUSINESS WIRE) -- June 9, 1997 -- SAFECO CORPORATION 
(NASDAQ:SAFC) and AMERICAN STATES FINANCIAL CORPORATION (NYSE:ASX) announced 
today that they have signed a definitive agreement for SAFECO to acquire 
American States for $47.00 per share or approximately $2.8 billion.  The 
combination will create the 12th largest property and casualty insurance 
company in the United States with combined 1996 revenues of $5.9 billion.  
The combination will enhance the product mix, geographic reach and network 
of independent agents of both operations.

The definitive agreement was approved by the Boards of Directors of both 
companies.  Lincoln National Corporation, which currently owns 83.3 percent 
of American States' outstanding common stock, has agreed to support the 
transaction.

"The combination of two of the finest agency companies will significantly 
enhance SAFECO's growth objectives," said Roger Eigsti, Chairman and Chief 
Executive Officer of SAFECO. "American States' small business and commercial 
expertise will complement our personal lines expertise.  We are excited about 
the opportunities this combination creates for our shareholders, customers, 
employees and agents."

"SAFECO is a company we at American States have always respected, admired 
and, in many ways, have tried to emulate," said Robert A. Anker, Chairman and 
Chief Executive Officer of American States Financial Corporation.

Upon completion of the transaction, the combined enterprise will nearly 
double the number of independent agents that either organization currently 
works with.  The acquisition will accelerate SAFECO's growth east of the 
Rocky Mountains and enhance its position in eight core Midwestern and 
Pacific Northwest states (Illinois, Indiana, Missouri, Ohio, Michigan, 
Kansas, Washington and Oregon).

Importantly, American States is one of the largest writers of property and 
casualty insurance in the small business sector, a rapidly growing market for 
insurance.  American States is recognized as the second largest writer of 
property and casualty insurance through independent agencies for businesses 
with fewer than 50 employees.

"American States has the three key elements we sought in an acquisition 
candidate -- strength in small business commercial lines, a Midwestern 
geographic focus and a strong independent agency network," said Boh Dickey, 
President and Chief Operating Officer of SAFECO.  "In addition, it offered 
two other advantages -- a highly skilled workforce and a strong cultural fit 
with SAFECO."



American States, with assets of more than $5.5 billion, operates in more 
than 40 states through 4,800 independent agents. In addition to property and 
casualty insurance, the company also offers life insurance and surety.  The 
company employs 3,200 people with major offices in Indiana, Kansas and 
Washington.

"The addition of American States to SAFECO will result in approximately 
4,000 new agents.  This is a key component of our growth strategy.  With 
superior agents representing us in more communities across the country, we 
can focus on developing the financial services products our customers need 
and refining the excellent service they associate with SAFECO," said Randy 
Stoddard, senior vice president of SAFECO Property/Casualty Insurance 
Companies, who will become president of the property and casualty operations 
on July 1.

Founded in 1923 as the General Insurance Company of America, SAFECO today is 
one of the largest diversified financial corporations in the country with 
more than $20 billion in assets. Property and casualty insurance was SAFECO's 
original business and remains its largest operation.  In addition, SAFECO 
today engages in life and health insurance, surety, real estate investment 
and management, commercial credit and asset management.  SAFECO is 
headquartered in Seattle, with regional offices in Redmond, Wash., Atlanta, 
St. Louis, Denver and Fountain Valley, Calif.