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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

          [X]   Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                   For the fiscal year ended December 31, 2000
                                       or
          [ ] Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934
                 For the transition period from _____ to _____.

                          Commission File Number 1-6563

                               SAFECO CORPORATION
             (Exact name of registrant as specified in its charter)

                        Washington                91-0742146
               (State of Incorporation)   (I.R.S. Employer I.D. No.)

                     SAFECO Plaza, Seattle, Washington 98185
                    (Address of principal executive offices)

                                  206-545-5000
                                   (Telephone)

           Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, No Par Value
            (127,649,087 shares were outstanding at January 31, 2001)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X]. NO [ ].


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].


The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of January 31, 2001, was $3,200,000,000.


Documents incorporated by reference: Portions of the registrant's 2000 Annual
      Report to Shareholders are incorporated by reference into Parts I and II.
      The announcement regarding the Corporation's decision to sell SAFECO
      Credit Company, Inc., which is disclosed as a Subsequent Event on page 14
      and filed on Form 8-K on March 15, 2001, should be read in conjunction
      with the 2000 Annual Report to Shareholders. Portions of the registrant's
      definitive Proxy Statement for the 2001 annual shareholders meeting to be
      held May 2, 2001, are incorporated by reference into Part III.



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                       SAFECO CORPORATION AND SUBSIDIARIES

                                    CONTENTS


- - - - - - ----------------------------------------------------------------------------------------------

         ITEM       DESCRIPTION                                                           PAGE
- - - - - - ----------------------------------------------------------------------------------------------
                                                                                 
                FINANCIAL INFORMATION
PART I
         1      Business                                                                     2
         2      Properties                                                                  14
         3      Legal Proceedings                                                           14
         4      Submission of Matters to a Vote of Security Holders                         15
         --     Executive Officers of the Registrant                                        16

PART II

         5      Market for Registrant's Common Stock and Related Security Holder Matters    17
         6      Selected Financial Data                                                     17
         7      Management's Discussion and Analysis of Financial Condition and Results of
                Operations                                                                  17
         7A     Quantitative and Qualitative Disclosures About Market Risk                  17
         8      Financial Statements and Supplementary Data                                 17
         9      Changes in and Disagreements with Accountants on Accounting and Financial
                Disclosure                                                                  17

PART III

         10     Directors and Executive Officers of the Registrant                          17
         11     Executive Compensation                                                      17
         12     Security Ownership of Certain Beneficial Owners and Management              17
         13     Certain Relationships and Related Transactions                              17

                EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

PART IV

         14     (a)(1) -- Financial Statements                                              18
         14     (a)(2) -- Financial Statement Schedules                                     19
         14     (a)(3) -- Exhibits                                                          20
         14     (b) -- Reports on Form 8-K                                                  20

                Signatures                                                                  21




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PART I            ITEM 1 -- BUSINESS

                  GENERAL

                        SAFECO Corporation (the Corporation) is a Washington
                  corporation that owns operating subsidiaries in segments of
                  insurance and other financially related businesses. (The
                  Corporation and its subsidiaries are collectively referred to
                  as SAFECO.) SAFECO's businesses operate on a nationwide basis.
                  Non-U.S. operations are insignificant. The insurance
                  subsidiaries engage in property and casualty, surety and life
                  insurance, and generated approximately 95% of SAFECO's total
                  2000 revenues. SAFECO's property and casualty insurance
                  operation is one of the largest in the United States. All
                  areas of the insurance business are highly competitive and no
                  one insurance company or group of insurers dominates the
                  market.

                        The home offices of the Corporation and its principal
                  subsidiaries are in Seattle and Redmond, Washington. As of
                  December 31, 2000, SAFECO had approximately 13,000 employees.

                        SAFECO's other operations include subsidiaries involved
                  in commercial lending and leasing, investment management and
                  insurance agency and financial services distribution
                  operations. See page 13 of this report for additional
                  information on the other operations. Additional financial
                  information about SAFECO's business segments appears in Note
                  15 on page 74 of the 2000 Annual Report to Shareholders,
                  incorporated herein by reference (Exhibit 13).

                        The Corporation and its insurance subsidiaries are
                  subject to extensive regulation and supervision, primarily
                  designed to protect the interests of policyholders rather than
                  shareholders and other investors. Such regulation, generally
                  administered by a department of insurance in each state in
                  which the insurance subsidiaries do business, relates to,
                  among other things the:

                        -       standards of solvency that must be met and
                                maintained;

                        -       licensing of insurers and their agents;

                        -       nature of and limitations on investments;

                        -       ability to enter into or withdraw from the
                                state;

                        -       approval of premium rates;

                        -       restrictions on the size of risks that may be
                                insured under a single policy;

                        -       required reserves and provisions for unearned
                                premiums, losses and other purposes;

                        -       deposits of securities for the benefit of
                                policyholders;

                        -       approval of policy forms; and

                        -       regulation of market conduct, including
                                underwriting and claims practices.

                        State insurance departments also conduct periodic
                  examinations of the affairs of insurance companies and require
                  the filing of annual and other reports relating to the
                  financial condition of insurance companies, holding company
                  issues and other matters. The Corporation's insurance
                  subsidiaries are collectively licensed to transact insurance
                  business in all 50 states and the District of Columbia. See
                  page 35 of the 2000 Annual Report to Shareholders for more
                  information on regulatory issues.


                  PROPERTY AND CASUALTY INSURANCE -- OPERATIONS

                  Through independent agents, the Corporation's property and
                  casualty insurance subsidiaries write personal, commercial and
                  surety lines of insurance. Included in the lines of insurance
                  written are automobile, homeowners, fire, commercial
                  multi-peril, workers' compensation, miscellaneous casualty,
                  surety and fidelity. Products are sold in all states and the
                  District of Columbia. A listing of the Corporation's property
                  and casualty insurance subsidiaries can be found on Exhibit 21
                  of this report, numbers 1 through 9 inclusive.



                                       2
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                  Consolidated gross premiums written for the Corporation's
                  property and casualty insurance subsidiaries' ten largest
                  states are as follows:



                    Year Ended December 31             2000                     1999                       1998
                    ---------------------------------------------------------------------------------------------------
                    (Amounts In Millions)
                                                            % of                      % of                       % of
                    State                      Amount       Total        Amount       Total         Amount       Total
                    ------------------------- ------------------------ --------------------------- --------------------
                                                                                               
                    California               $   758.4        16%     $   688.4         15%       $    669.1       15%
                    Washington                   585.3        12          594.5         13             587.6       13
                    Texas                        327.8         7          323.4          7             314.3        7
                    Illinois                     280.0         6          286.7          6             273.6        6
                    Oregon                       241.7         5          239.5          5             238.6        5
                    Missouri                     211.2         5          221.6          5             219.3        5
                    Florida                      173.3         4          174.2          4             166.9        4
                    Indiana                      140.9         3          160.7          3             167.2        4
                    Michigan                     133.5         3          144.3          3             131.7        3
                    Tennessee                    117.3         2          119.3          3             106.7        2
                                             --------------------------------------------------------------------------
                                               2,969.4        63        2,952.6         64           2,875.0       64
                    All Others                 1,739.7        37        1,692.4         36           1,566.8       36
                                             --------------------------------------------------------------------------
                          Total              $ 4,709.1       100%     $ 4,645.0        100%       $  4,441.8      100%
                                             ==========================================================================


                        Personal lines, SAFECO Business Insurance (SBI)
                  (formerly known as American States Business Insurance), SAFECO
                  Commercial and surety lines comprised approximately 57%, 26%,
                  15% and 2%, respectively, of the 2000 gross premiums written
                  of $4.7 billion.


                  PROPERTY AND CASUALTY INSURANCE -- LOSS RESERVES

                        The consolidated financial statements include the
                  estimated liability (reserves) for unpaid losses and loss
                  adjustment expense (LAE) of the Corporation's property and
                  casualty insurance subsidiaries. The liability is presented
                  net of amounts from expected salvage and subrogation
                  recoveries and gross of amounts recoverable from reinsurance.

                        Reserves for losses that have been reported to SAFECO
                  and certain legal expenses are established on the "case basis"
                  method. Claims incurred but not reported (IBNR) and other loss
                  adjustment expenses are estimated using statistical
                  procedures. Salvage and subrogation recoveries are accrued
                  using the "case basis" method for large claims and statistical
                  procedures for smaller claims.

                        SAFECO's objective is to set reserves that are adequate;
                  that is, the amounts originally recorded as reserves should at
                  least equal the amounts ultimately required to settle losses.
                  SAFECO's reserves aggregate its best estimates of the total
                  ultimate cost of claims that have been incurred but have not
                  yet been paid. The estimates are based on past claims
                  experience and consider current claim trends as well as
                  social, legal and economic conditions, including inflation.
                  The reserves are not discounted.

                        Loss and LAE reserve development is regularly reviewed
                  to determine that the reserving assumptions and methods are
                  appropriate. Reserves initially set are compared to the
                  amounts ultimately paid. A statistical estimate of the
                  projected amounts necessary to pay outstanding claims is made
                  regularly and compared to the recorded reserves and adjusted
                  as necessary. Any such adjustments are included in current
                  operations.

                        Analysis indicates that SAFECO's recorded reserves are
                  adequate at December 31, 2000, 1999 and 1998. The table on
                  page 4 provides an analysis of changes in losses and LAE
                  reserves (net of reinsurance amounts) for 2000, 1999, and
                  1998. Changes in the reserves are reflected in the income
                  statement for the year when the changes are made.



                                       3
   5

                        Operations in 2000 were charged $148.3 million from
                  increases in estimated loss and LAE for claims occurring in
                  prior years. These increases were due to adverse development
                  within commercial operations in the workers' compensation
                  ($50.9 million), general liability ($44.4 million), commercial
                  auto ($23.5 million) and in other ($29.5 million) lines of
                  business as the cost of settling claims has increased.
                  Workers' compensation development of $50.9 million was due to
                  continued adverse development of prior reported claims as well
                  as IBNR reserve additions to improve future adequacy. General
                  liability development of $44.4 million was due primarily to
                  continued adverse development of construction defect claims
                  related to the SBI operation. Commercial auto development of
                  $23.5 million was due to higher-than-expected loss costs in
                  commercial operations on prior reported claims.

                        Operations in 1999 were charged $78.8 million from
                  increases in estimated loss and LAE from claims occurring in
                  prior years, primarily in the construction defect, asbestos
                  and environmental and workers' compensation lines. For both
                  construction defect and asbestos and environmental, increased
                  reserve estimates resulted from higher-than-expected reported
                  claims in 1999. The increased reserve estimates for workers'
                  compensation resulted from SAFECO's re-evaluation of loss
                  exposures on claims related to larger commercial insureds, to
                  an upturn in medical costs and less favorable workers'
                  compensation legislation.

                        Operations in 1998 benefited $100.0 million from
                  decreases in estimated loss and LAE for claims occurring in
                  prior years. These decreases related primarily to American
                  States Financial Corporation (American States) operations. The
                  claims departments of the two companies were combined in 1998.
                  The unified claims department implemented training and
                  reserving procedures, resulting in lower claims settlements
                  and reduced reserves on prior years' American States' losses.
                  The reductions were in both personal and commercial auto,
                  workers' compensation and general liability.


        ANALYSIS OF CHANGES IN LOSS AND LAE RESERVES (NET OF REINSURANCE)



                                                                               2000         1999          1998
                  -----------------------------------------------------------------------------------------------
                  (In Millions)
                                                                                              
                  Loss and LAE Reserves at Beginning of Year                $  4,069.1   $  3,966.3    $  4,081.9
                                                                            --------------------------------------

                  Incurred Loss and LAE for Claims
                       Occurring in the Current Year                           3,621.7      3,353.0       3,163.2
                  Increase (Decrease) in Estimated Loss and LAE
                       for Claims Occurring in Prior Years                       148.3         78.8        (100.0)
                                                                            --------------------------------------
                  Total Incurred Loss and LAE                                  3,770.0      3,431.8       3,063.2
                                                                            --------------------------------------

                  Loss and LAE Payments for Claims Occurring During:
                           Current Year                                        2,059.3      1,926.4       1,836.2
                           Prior Years                                         1,510.7      1,402.6       1,342.6
                                                                            --------------------------------------
                  Total Loss and LAE Payments                                  3,570.0      3,329.0       3,178.8
                                                                            --------------------------------------

                  Loss and LAE Reserves at End of Year                      $  4,269.1   $  4,069.1    $  3,966.3
                                                                            ======================================
                  Reconciliation:
                       Loss and LAE, Net of Reinsurance                     $  4,269.1   $  4,069.1    $  3,966.3
                       Add: Reinsurance Recoverables on Unpaid Losses            343.6        309.5         253.6
                                                                            --------------------------------------

                       Loss and LAE, Gross of Reinsurance                   $  4,612.7   $  4,378.6    $  4,219.9
                                                                            ======================================




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                        The table on page 6 presents the development of the loss
                  and LAE reserves for 1990 through 2000. The amounts reported
                  in the table for the 1996 and prior year balances are for
                  SAFECO only (i.e., do not include any amounts for American
                  States). The top lines of the table present the recorded
                  reserve for unpaid loss and LAE at December 31 for each of the
                  indicated years, both gross and net of related reinsurance
                  amounts. The upper portion of the table displays the
                  cumulative amount paid with respect to the previously recorded
                  reserves as of the end of each succeeding year. The next
                  section reports the re-estimated amount of the previously
                  recorded reserves based on experience as of each succeeding
                  year. The estimate is increased or decreased as more
                  information becomes known about individual claims and as
                  changes in conditions and claim trends become apparent. The
                  lower section of the table presents the cumulative redundancy
                  (deficiency) developed with respect to the previously recorded
                  liability as of the end of each succeeding year. For example,
                  the 1990 reserve of $1,791.4 million developed a $24.0 million
                  redundancy after one year which grew over ten years to a
                  redundancy of $178.5 million.

                        For 1990 through 1997, inclusive, SAFECO's reserve
                  development had been favorable. This trend reflects several
                  factors: conservative reserving previously undertaken to
                  correct deficiencies in years prior to 1988, favorable
                  workers' compensation legislation, moderation of medical costs
                  and inflation, and claims department changes. The favorable
                  legislation in workers' compensation, which relates primarily
                  to the states of Oregon and California in the early 1990's,
                  helped reduce fraud, allowed for faster claim settlements and
                  made it more difficult to reopen claims -- all of which
                  reduced SAFECO's ultimate loss costs. The cost of claim
                  settlements in several lines of business has benefited from
                  changes in the organization of SAFECO's claims department
                  which has established separate specialized units for workers'
                  compensation, environmental exposures and fraud
                  investigations. In addition, increased focus on loss
                  adjustment expenses helped reduce these costs. As discussed on
                  page 4, the development for 1999 was unfavorable due to
                  commercial lines adverse development in worker's compensation,
                  general liability and commercial auto. The development for
                  1998 was unfavorable resulting primarily from construction
                  defect, asbestos and environmental and workers' compensation.

                        In evaluating the reserve development table on page 6,
                  note that each amount includes the effects of all changes in
                  amounts for prior periods. For example, the amount of the
                  redundancy shown for the December 31, 1997 reserves that
                  relates to losses incurred in 1990 is also included in the
                  cumulative redundancy amount for the years 1990 through 1996.
                  Conditions and trends that affected development of the
                  liability in the past may not necessarily occur in the future.
                  Accordingly, it may not be appropriate to extrapolate future
                  redundancies or deficiencies based on this table.



                                       5
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       ANALYSIS OF LOSSES AND LOSS ADJUSTMENT EXPENSE RESERVE DEVELOPMENT



Year Ended December 31             1990     1991     1992     1993     1994     1995     1996     1997     1998     1999     2000
- - - - - - -----------------------------------------------------------------------------------------------------------------------------------
(In Millions)
                                                                                          
Reserve for Unpaid Losses
 and LAE:

   Gross of Reinsurance          $1,872.1 $2,017.3 $2,052.3 $2,095.2 $2,236.8 $2,180.8 $2,059.1 $4,310.5 $4,219.9 $4,378.6 $4,612.7

   Reinsurance                       80.7    152.0     89.2    100.1    143.9    110.7    103.4    228.6    253.6    309.5    343.6
                                 --------------------------------------------------------------------------------------------------

   Net of Reinsurance            $1,791.4 $1,865.3 $1,963.1 $1,995.1 $2,092.9 $2,070.1 $1,955.7 $4,081.9 $3,966.3 $4,069.1 $4,269.1
                                 ==================================================================================================


Cumulative Net Amount Paid as of:

                One Year Later   $  603.0 $  584.9 $  598.9 $  620.5 $  693.0 $  755.4 $  772.9 $1,345.5 $1,389.2 $1,510.7

               Two Years Later      914.5    905.7    913.4    947.6  1,068.3  1,095.0  1,101.4  2,049.3  2,165.5

             Three Years Later    1,109.4  1,086.5  1,106.0  1,147.6  1,252.9  1,267.6  1,287.9  2,516.3

              Four Years Later    1,221.6  1,207.2  1,230.6  1,252.5  1,341.5  1,370.0  1,404.3

              Five Years Later    1,301.1  1,294.4  1,295.7  1,300.2  1,403.5  1,440.5

               Six Years Later    1,368.9  1,336.7  1,326.1  1,342.9  1,449.6

             Seven Years Later    1,403.5  1,356.9  1,357.8  1,377.0

             Eight Years Later    1.419.0  1,381.4  1,386.6

              Nine Years Later    1,439.3  1,406.2

               Ten Years Later    1,462.4

Net Reserve Re-estimated as of:

                One Year Later    1,767.4  1,820.7  1,866.2  1,913.8  2,033.2  1,992.4  1,947.7  3,981.9  4,045.1  4,217.4

               Two Years Later    1,705.8  1,732.8  1,782.1  1,818.3  1,902.3  1,889.9  1,861.4  3,989.0  4,070.3

             Three Years Later    1,666.1  1,686.0  1,712.2  1,716.1  1,801.9  1,804.7  1,806.6  3,986.0

              Four Years Later    1,657.2  1,650.7  1,642.3  1,643.6  1,733.8  1,757.1  1,799.6

              Five Years Later    1,637.5  1,594.9  1,600.9  1,599.8  1,702.8  1,757.3

               Six Years Later    1,608.5  1,569.5  1,554.7  1,568.3  1,691.2

             Seven Years Later    1,595.4  1,548.7  1,549.8  1,578.3

             Eight Years Later    1,586.7  1,551.0  1,567.2

              Nine Years Later    1,592.1  1,570.1

               Ten Years Later    1,612.9

Cumulative Net Redundancy (Deficiency) as of:

                One Year Later       24.0     44.6     96.9     81.3     59.7     77.7      8.0    100.0    (78.8)  (148.3)

               Two Years Later       85.6    132.5    181.0    176.8    190.6    180.2     94.3     92.9   (104.0)

             Three Years Later      125.3    179.3    250.9    279.0    291.0    265.4    149.1     95.9

              Four Years Later      134.2    214.6    320.8    351.5    359.1    313.0    156.1

              Five Years Later      153.9    270.4    362.2    395.3    390.1    312.8

               Six Years Later      182.9    295.8    408.4    426.8    401.7

             Seven Years Later      196.0    316.6    413.3    416.8

             Eight Years Later      204.7    314.3    395.9

              Nine Years Later      199.3    295.2

               Ten Years Later      178.5




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                        The following table summarizes reserve development,
                  gross of reinsurance, for the last three years as of December
                  31, 2000. The gross and ceded amounts for 1997 and 1998
                  reflect development for Michigan auto claims for personal
                  injury protection. The reserves on these claims were increased
                  $57.7 million, gross of reinsurance, to reflect the expected
                  lifetime payout. This gross development was ceded to the
                  Michigan Catastrophic Claims Association. The development on
                  reserves net of reinsurance was unaffected.



                  December 31                             1999         1998         1997
                  --------------------------------------------------------------------------
                  (In Millions)
                                                                        
                  Gross Reserves                       $  4,378.6   $  4,219.9   $  4,310.5
                                                       =====================================

                  Cumulative Development:
                       Net of Reinsurance              $   (148.3)  $   (104.0)  $     95.9
                       Reinsurance                          (21.0)       (90.0)      (128.9)
                                                       -------------------------------------

                       Gross of Reinsurance            $   (169.3)  $   (194.0)  $    (33.0)
                                                       =====================================



                  ENVIRONMENTAL AND ASBESTOS CLAIMS

                        The property and casualty companies' reserves for losses
                  and LAE for liability coverages related to environmental,
                  asbestos and other toxic claims totaled $315.5 million at
                  December 31, 2000 compared with $332.3 million at December 31,
                  1999. These amounts are before the effect of reinsurance,
                  which totaled $28.8 million and $30.1 million at December 31,
                  2000 and 1999, respectively. These reserves are approximately
                  8% of total property and casualty reserves for losses and LAE
                  at both December 31, 2000 and 1999. The reserves include
                  estimates for both reported and IBNR losses and related legal
                  expenses.

                        The vast majority of SAFECO's property and casualty
                  insurance companies' environmental, asbestos and other toxic
                  claims result from the commercial general liability line of
                  business and the discontinued assumed reinsurance operations
                  of American States. A few of these losses occur in other
                  coverages such as umbrella, small commercial package policies
                  and personal lines. Approximately 5,600 of these claims,
                  computed on an occurrence basis, were pending at December 31,
                  2000. Most of these pending environmental claims involve some
                  type of environmental-related coverage dispute. The average
                  settlement cost of each environmental, asbestos and other
                  toxic claim for 2000 was $12,800 including legal expenses.

                        The following table summarizes the components of
                  SAFECO's reserves for environmental, asbestos and other toxic
                  claims before the effect of reinsurance:



                  December 31, 2000        Loss       LAE       Total
                  -----------------------------------------------------
                  (In Millions)
                                                      
                  Case                  $  107.3    $  7.1     $  114.4
                  IBNR                     134.3      66.8        201.1
                                        -------------------------------

                  Total                 $  241.6    $ 73.9     $  315.5
                                        ===============================




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                        The table below displays the loss reserve activity
                  analysis for liability coverages related to environmental,
                  asbestos and other toxic claims, before the effect of
                  reinsurance.



                                                               2000        1999         1998
                 ------------------------------------------------------------------------------
                 (In Millions)
                                                                             
                 Reserves at Beginning of Year               $  332.3    $  329.8     $  346.9
                 Incurred Losses and LAE                          9.6        24.8          1.6
                 Losses and LAE Payments                        (26.4)      (22.3)       (18.7)
                                                             ----------------------------------

                 Reserves at End of Year                     $  315.5    $  332.3     $  329.8
                                                             ==================================


                        Although estimation of environmental claims is
                  difficult, the reserves established for these claims at
                  December 31, 2000 are believed to be adequate based on the
                  known facts and current law. SAFECO has generally avoided
                  writing coverages for larger companies with substantial
                  exposure in these areas. In view of changes in environmental
                  regulations and evolving case law, which affect the
                  development of loss reserves, the process of estimating loss
                  reserves for environmental, asbestos and other toxic claims
                  results in imprecise estimates. Quantitative loss reserving
                  techniques in this area need to be supplemented by subjective
                  considerations and managerial judgment. Because of these
                  conditions, trends that have affected development of these
                  liabilities in the past may not necessarily occur in the
                  future.


                  CONSTRUCTION DEFECT CLAIMS

                        Construction defect claims are a subset of claims that
                  arise from coverage provided by general property damage
                  liability insurance. Construction defect claims are claims
                  arising from the alleged defective work performed in the
                  construction of large habitation structures, such as
                  apartments, condominiums and large developments of single
                  family dwellings or other housing. In addition to damages
                  arising directly from the alleged defective work, construction
                  defect claims also allege that the economic value of the
                  structure has been diminished. The vast majority of SAFECO's
                  construction defect claims arise from past contractor business
                  written in California. SAFECO Commercial, which does not
                  include SBI, has avoided writing the construction class of
                  business in California since 1989 and has limited exposure to
                  these types of claims. Because of this, SAFECO has not
                  historically separated these claims for the purpose of reserve
                  analysis. However, American States, prior to the acquisition
                  by SAFECO, was a major writer of California contractor
                  business until 1994 when it implemented significant
                  restrictions in this line. The total SBI reserves for
                  construction defect claims were $322.6 million at December 31,
                  2000 and $306.1 million at December 31, 1999, representing
                  approximately 8% of total property and casualty reserves for
                  losses and LAE at both December 31, 2000 and 1999.

                        The following table presents the loss reserve activity
                  analysis for American States construction defect claims after
                  the effect of reinsurance.



                                                               2000       1999        1998
                 ----------------------------------------------------------------------------
                 (In Millions)
                                                                           
                 Reserves at Beginning of Year               $  306.1   $  328.6    $  340.3
                 Incurred Losses and LAE                         71.5       28.1        55.4
                 Losses and LAE Payments                        (55.0)     (50.6)      (67.1)
                                                             --------------------------------

                 Reserves at End of Year                     $  322.6   $  306.1    $  328.6
                                                             ================================




                                       8
   10
                  GAAP VS. STATUTORY

                        State insurance regulatory authorities require the
                  Corporation's property and casualty insurance subsidiaries to
                  file annual statements prepared on an accounting basis
                  prescribed or permitted by their respective state of domicile
                  (that is, on a statutory basis). The difference between the
                  $4,612.7 million reserve at December 31, 2000, for the losses
                  and LAE disclosed in the consolidated financial statements in
                  accordance with accounting principles generally accepted in
                  the United States (GAAP), and the $4,269.1 million reported in
                  the annual statements filed with state regulatory authorities
                  relates to reinsurance recoverables. Under Statement of
                  Financial Accounting Standards No. 113, "Accounting and
                  Reporting for Reinsurance of Short-Duration and Long-Duration
                  Contracts," the GAAP-basis liability for losses and LAE is
                  reported gross of amounts recoverable from reinsurance.
                  Statutory-basis financial statements report the liability net
                  of reinsurance.

                  REINSURANCE

                        SAFECO's property and casualty insurance companies use
                  treaty and facultative reinsurance to help manage exposure to
                  loss. As noted on page 4, the liability for unpaid losses and
                  LAE is reported gross of reinsurance recoverables of $343.6
                  million at December 31, 2000 and $309.5 million at December
                  31, 1999. Approximately 50% of the total reinsurance
                  recoverable balance at December 31, 2000 was with the
                  following four reinsurers: American Re-Insurance, Employers
                  Reinsurance Corporation, Swiss Reinsurance America Corporation
                  and General Reinsurance Corporation all of whom are rated A++
                  by A.M. Best. The reinsurance recoverable balance categorized
                  by reinsurer rating (by A.M. Best Company on a scale ranging
                  from A++ to F) at December 31, 2000 is presented below:



                                                                     Percent at
                  Rating                                      December 31, 2000
                  --------------------------------------------------------------
                                                           
                  A++                                                  50.9%
                  A+                                                    4.6
                  A                                                     2.3
                  A-                                                    0.2
                  B                                                     6.5
                                                                      ----------
                       Total Domestic Reinsurers                       64.5
                                                                      ----------

                  Mandatory Pools                                      25.8
                  Voluntary Pools                                       2.3
                  Foreign                                               7.4
                                                                      ----------
                       Total Pools and Foreign                         35.5
                                                                      ----------

                       Total                                          100.0%
                                                                      ==========


                        The availability and cost of reinsurance are subject to
                  prevailing market conditions, both in terms of price and
                  available capacity. Due to recent tightening in the
                  reinsurance marketplace, it is likely that the cost of
                  reinsurance will increase in 2001. Although the reinsurer is
                  liable to SAFECO to the extent of the reinsurance ceded,
                  SAFECO remains primarily liable to the policyholder as the
                  direct insurer on all risks insured. To SAFECO's knowledge,
                  none of its reinsurers is experiencing financial difficulties.
                  SAFECO's business is not substantially dependent upon any
                  single reinsurance contract.

                        SAFECO's nationwide catastrophe property reinsurance
                  program for 2001, covering 90% of $400 million of single-event
                  losses in excess of $100 million retention, is unchanged from
                  2000. In a large catastrophe, SAFECO retains the first $100
                  million of losses, 10% of the next $400 million and all losses
                  in excess of $500 million. In addition to this nationwide
                  coverage, for all states other than California, SAFECO has a
                  supplemental earthquake-only reinsurance contract that would
                  cover 90% of $250 million of single-event earthquake losses in
                  excess of $500 million. In 2000, this supplemental coverage
                  was for $350 million of single-event earthquake losses in
                  excess of $500 million. Catastrophe property reinsurance
                  contracts for 2001 include provisions for one reinstatement
                  for a second catastrophe event in 2001 at current rates.



                                       9
   11
                        The Corporation's insurance subsidiaries do not enter
                  into retrospective reinsurance contracts and do not
                  participate in any unusual or nonrecurring reinsurance
                  transactions such as "swaps" of reserves or loss portfolio
                  transfers. SAFECO does not use funding covers and does not
                  participate in any surplus relief transactions. For additional
                  information on reinsurance, see Note 5 on page 65 of the 2000
                  Annual Report to Shareholders.

                  SUBSEQUENT EVENT
                        On February 28, 2001, a 6.8 magnitude earthquake struck
                  the Puget Sound area. SAFECO is currently assessing the damage
                  to determine the amount of reserve that will need to be
                  recorded to cover the estimated claims costs for this
                  catastrophe. Because of the time it takes to complete accurate
                  surveys and inventories on homes and businesses damaged in
                  earthquakes, it will be some time before a reasonable estimate
                  of SAFECO's losses and loss adjustment expense can be made.
                  The reserve will be recorded in the first quarter of 2001.



                                       10
   12
                  LIFE INSURANCE -- OPERATIONS

                        The Corporation's life insurance subsidiaries are
                  collectively referred to as "SAFECO Life." SAFECO Life offers
                  individual and group insurance products, retirement services
                  (pension) and annuity products. Products are sold in all
                  states and the District of Columbia. The most significant
                  product lines in terms of premium/deposit volume include
                  single premium immediate and deferred annuities,
                  business-owned life insurance, equity-indexed and variable
                  annuities, tax-sheltered annuities for the education and
                  nonprofit markets, corporate retirement plans, excess loss
                  group medical insurance and individual life insurance. SAFECO
                  Life reinsures portions of its individual and group life,
                  accident and health insurance through commercial reinsurance
                  treaties, providing protection against large risks and
                  catastrophe situations. A listing of the Corporation's life
                  insurance subsidiaries can be found on Exhibit 21 of this
                  report. SAFECO Life acquired Medical Risk Managers, Inc. on
                  December 31, 1999.

                        Funds held under deposit contracts relate primarily to
                  annuity, retirement services and individual products. The
                  table below summarizes the components of funds held under
                  deposit contracts at December 31, 2000, and describes the
                  applicable surrender charges and surrender experience.




                                     DETAIL OF SAFECO LIFE'S FUNDS HELD UNDER DEPOSIT CONTRACTS
- - - - - - -----------------------------------------------------------------------------------------------------------------------------------
                   Outstanding      Expected         Range of Credited
                       at          Maturities       or Assumed Interest                                         Approximate
                    12/31/00     of Liabilities          Rates at                                                Surrender
  Product        (In Millions)   (at issue date)         12/31/00            Surrender Charges                  Experience
- - - - - - -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Universal          $ 2,992.1      Approximately     5.25% to 6.00%           Varies by issue age, sex and      7% per annum
Individual Life                   10--25 years                               duration from $1 to $58
                                                                             per $1,000 of insurance.
Annuities:
   Structured        6,167.8      Over 25 years     3.50% to 12.23%          Cannot surrender.                 Cannot
   Settlement                                                                                                  surrender
   Immediate

Retirement
Services:
   Guaranteed          594.3      Typically 2-5     5.63% to 8.44%           Market value adjustment or        Less than 1%
   Investment                     years                                      cannot surrender in first year.   per annum
   Contracts

   Other             3,940.0      Approximately     4.00% to 7.95%           Highest surrender charges         13% per annum
   Annuities &                    5-20 years                                 range from 10% to 5%, graded
   Deposits                                                                  down to 0% within 5 to 10
                                                                             years.  SAFECO has the
                                                                             option to defer payout over 5
                                                                             years for approximately 13%
                                                                             of these contracts.

Equity                 391.5      Approximately     Equity return            Typically 8% in year 1 graded     More than 50%
Indexed                           6 years at        credited is based on     to 0% after year 6.               due to an offer
Annuities (EIA)                   original          S&P 500                                                    to EIA policy-
                                  issuance,         performance with                                           holders in 2000
                                  remaining         no minimum                                                 to surrender
                                  expected          guarantee. Floor                                           their policies
                                  maturity of       return based on a                                          and receive
                                  approximately     minimum fixed                                              December 31,
                                  4 years           return on a portion                                        1999 account
                                                    (typically 90%) of                                         value with no
                                                    the original deposit                                       surrender
                                                    amount.                                                    charge.
                   ---------
       Total       $14,085.7
                   =========




                                       11
   13
                  INVESTMENTS

                        A description of SAFECO's investment portfolio appears
                  on pages 43-45 of the 2000 Annual Report to Shareholders. The
                  remainder of this section provides additional information
                  about SAFECO's mortgage-backed securities and investment
                  income yields.

                        SAFECO's consolidated investment in mortgage-backed
                  securities of $4.5 billion at market value at December 31,
                  2000, consists mainly of residential collateralized mortgage
                  obligations (CMOs), pass-throughs and commercial loan-backed
                  mortgage obligations (CMBS). The life insurance companies'
                  portfolio contains virtually all of these securities.
                  Approximately 87% of the mortgage-backed securities are
                  government/agency-backed or AAA rated at December 31, 2000.
                  SAFECO has intentionally limited its investment in riskier,
                  more volatile CMOs and CMBS (e.g., principal only, inverse
                  floaters, etc.) to less than 1% of total mortgage-backed
                  securities at December 31, 2000.

                        SAFECO's Consolidated Holdings of Mortgage-Backed
                  Securities at December 31, 2000:



                                                                                         GAAP Market Value
                                                                           Amortized    --------------------
                 December 31, 2000                                           Cost        Amount         %
                 ------------------------------------------------------    ---------    ---------    -------
                 (Dollar Amounts In Millions)
                                                                                            
                 Residential CMOs:
                           Planned (PAC) and Targeted (TAC)
                                Amortization Class (Fixed Coupon)          $   477.4    $   484.3      10.8%
                           Sequential Pay (SEQ)                              1,158.9      1,182.8      26.4
                           Accrual Coupon (Z-Tranche)                          622.2        676.7      15.1
                           Floating Rate                                        76.2         78.5       1.8
                           Companion/Support, Principal Only,
                                Inverse Floaters                                31.7         33.0       0.7
                                                                           ---------    ---------    -------
                                      Subtotal                               2,366.4      2,455.3      54.8
                                                                           ---------    ---------    -------
                 Residential Mortgage-Backed
                      Pass-Throughs (Non-CMOs)                                 331.2        341.1       7.6
                                                                           ---------    ---------    --------

                 Securitized Commercial Real Estate:

                           Government/Agency-Backed                            411.1        419.8       9.4
                           Pass-Throughs (Non-agency)                           25.6         26.2       0.6
                           CMOs (Non-agency)                                   887.8        907.4      20.3
                                                                           ---------    ---------    --------
                                      Subtotal                               1,324.5      1,353.4      30.3
                                                                           ---------    ---------    --------

                 Asset-Backed Securities (Non-Real Estate):                    322.8        324.3       7.3
                                                                           ---------    ---------    --------

                                      Total Mortgaged-Backed Securities    $ 4,344.9    $ 4,474.1     100.0%
                                                                           =========    =========    ========


                        The quality rating of SAFECO's mortgage-backed security
                  portfolio (GAAP market values) is shown in the following
                  table:



                                                                     Percent at
                  Rating                                      December 31, 2000
                  -------------------------------------------------------------
                                                           
                  Government/Agency Backed                            46%
                  AAA                                                 41
                  AA                                                   7
                  A                                                    3
                  BBB                                                  3
                  BB or lower                                          -
                                                              -------------
                               Total                                 100%
                                                              =============




                                       12
   14
                        The pretax investment income yields for the
                  Corporation's property and casualty and life insurance
                  subsidiaries (calculations are based on GAAP amortized cost)
                  are shown below. The main reason for the increase in the
                  property and casualty yield in 2000 over 1999 is the shift in
                  the property and casualty bonds from tax-exempt to taxable
                  fixed-income bonds and proceeds from equity securities sales
                  in third quarter which were reinvested in taxable fixed-income
                  bonds.



                  Year Ended December 31                2000    1999    1998
                  ----------------------------------------------------------
                                                               
                  Property and Casualty Insurance       6.4%    6.2%    6.3%
                  Life Insurance                        7.7%    7.7%    7.8%


                        Effective October 1, 2000, the entire held-to-maturity
                  fixed maturities investment portfolio, with a market value of
                  $2.8 billion, was reclassified to available-for-sale. This
                  reclassification was made to provide more flexibility in
                  managing the bond portfolio and resulted in an increase in
                  other comprehensive income of $41 million in the fourth
                  quarter. All of SAFECO's fixed-income securities are now
                  carried at market.


                  OTHER OPERATIONS

                        SAFECO's other operations include subsidiaries involved
                  in commercial lending and leasing, investment management and
                  insurance agency and financial services distribution
                  operations.

                        SAFECO Credit Company, Inc., organized in 1969, provides
                  commercial loans and equipment financing and leasing to
                  businesses, insurance agents and affiliated companies. At
                  December 31, 2000, 10% of the Credit Company's outstanding
                  loans and leases consisted of loans to affiliated SAFECO
                  companies. See subsequent event relating to SAFECO Credit
                  Company, Inc. on page 14.

                        SAFECO Asset Management Company, acquired in 1973, is
                  the investment advisor for the SAFECO mutual funds, variable
                  annuity portfolios, and outside pension and trust accounts.

                        SAFECO Securities, Inc., organized in 1967, is the
                  principal underwriter of the SAFECO Mutual Funds, comprising
                  the SAFECO Common Stock Trust, SAFECO Taxable Bond Trust,
                  SAFECO Tax-Exempt Bond Trust, SAFECO Money Market Trust and
                  SAFECO Managed Bond Trust. These five trusts are made up of
                  eighteen separate investment portfolios, all of which are sold
                  on a "no-load" basis directly to the public. Fifteen of these
                  portfolios have two to three additional classes of stock which
                  are sold to the public through intermediaries. In addition,
                  SAFECO Securities, Inc. is the principal underwriter for the
                  SAFECO Resource Series Trust, a registered investment company
                  with six separate investment portfolios. SAFECO Securities is
                  also the principal underwriter for the variable insurance
                  products issued by SAFECO Resource Variable Account B, SAFECO
                  Separate Account SL, SAFECO Deferred Variable Annuity Account
                  and SAFECO Separate Account C, all of which are separate
                  accounts of SAFECO Life Insurance Company and for First SAFECO
                  Separate Account S, which is a separate account of First
                  SAFECO National Life Insurance Company of New York.

                        SAFECO Services Corporation, organized in 1972, is the
                  transfer agent for SAFECO's mutual funds.

                        SAFECO Trust Company, organized in 1994, provides asset
                  management and trust administrative services to high net worth
                  individuals and unrelated organizations.

                        SAFECO Investment Services, Inc., organized in 1986, is
                  a broker/dealer and registered investment advisor that
                  primarily distributes affiliated and nonaffiliated mutual
                  funds and variable insurance products through its registered
                  representatives.

                        Talbot Financial Corporation, acquired in 1993, is a
                  broad-based insurance broker with a concentrated emphasis on
                  the distribution of qualified and nonqualified annuity
                  products and mutual funds through the banking and brokerage
                  arenas.



                                       13
   15
                        In February 1998, SAFECO decided to sell its real estate
                  subsidiary, SAFECO Properties, Inc., to focus on its core
                  insurance and financial services businesses. Since SAFECO
                  Properties' operations are not material to the consolidated
                  financial statements, they have not been reclassified as
                  discontinued operations. See Note 1 on page 55 of the 2000
                  Annual Report to Shareholders for more information.

                  Subsequent Event

                        On March 14, 2001, the Corporation announced its
                  decision to sell SAFECO Credit Company, Inc. An investment
                  banker has been retained by the Corporation to advise it in
                  connection with the sale. There is currently no formal plan of
                  disposal and a measurement date has not yet been established.

                  ITEM 2 -- PROPERTIES

                        SAFECO's property and casualty insurance companies lease
                  their home office complex located in Seattle, Washington from
                  General America Corporation (a wholly-owned subsidiary of the
                  Corporation). This complex totals 567,000 gross square feet. A
                  700-car parking garage is connected to the complex. SAFECO's
                  life insurance companies lease their headquarters building
                  located in Redmond, Washington from General America
                  Corporation. This complex totals 220,000 gross square feet.

                        SAFECO is currently developing approximately 350,000
                  gross square feet of additional office space for its use on
                  land near SAFECO life insurance companies' Redmond, Washington
                  headquarters.

                        Other buildings owned and occupied include service
                  facilities in Redmond, Washington and Indianapolis, Indiana,
                  as well as regional and branch offices in Fountain Valley and
                  Pleasant Hill, California; Denver, Colorado; Carol Stream,
                  Illinois; St. Louis, Missouri; Cincinnati, Ohio; Portland,
                  Oregon; Mountlake Terrace, Redmond and Spokane, Washington.
                  These buildings comprise approximately 1,600,000 gross square
                  feet. All other branch and service offices occupy leased
                  premises comprising approximately 2,500,000 square feet,
                  generally for periods of five years or less.

                        SAFECO Properties' remaining real estate investments are
                  primarily retail centers. See Item 1 on page 13 of this
                  report.


                  ITEM 3 -- LEGAL PROCEEDINGS

                        Because of the nature of their businesses, the
                  Corporation's insurance and other subsidiaries are subject to
                  certain legal actions filed or threatened in the ordinary
                  course of their business operations, generally as liability
                  insurers defending third-party claims brought against their
                  insureds or as insurers defending policy coverage claims
                  brought against them. The Corporation does not believe that
                  such litigation will have a material adverse effect on its
                  financial condition, future operating results or liquidity.

                        The Corporation's property and casualty insurance
                  subsidiaries are parties to a number of lawsuits for liability
                  coverages related to environmental claims. Although estimation
                  of environmental claims loss reserves is difficult, the
                  Corporation believes that reserves established for these
                  claims are adequate based on the known facts and current law.
                  The loss and loss adjustment expense with respect to any such
                  lawsuit, or all lawsuits related to a single incident
                  combined, are not expected to be material to the financial
                  condition of the Corporation. See page 7 of Item 1 for more
                  information regarding the liability of such subsidiaries for
                  environmental claims and the process of estimating
                  environmental loss reserves.



                                       14
   16
                        Four of the Corporation's property and casualty
                  insurance subsidiaries were among 23 underwriters of real
                  property insurance named as defendants in a case brought in
                  February 1996 in the United States District Court for the
                  Western District of Missouri alleging that their underwriting,
                  sales and marketing practices violated the Fair Housing Act
                  and certain other civil rights laws. The trial court refused
                  to certify the plaintiff class and dismissed the lawsuit in
                  June 1997. The plaintiffs appealed. In February 1998, the
                  Eighth Circuit Court of Appeals upheld the dismissal and, in
                  January 1999, the United States Supreme Court refused to grant
                  certiori to hear the case. Meanwhile, in January 1999, a group
                  of plaintiffs filed separate lawsuits in Missouri State court
                  against the SAFECO property and casualty insurance companies
                  named in the federal court action. The state court actions
                  against the SAFECO defendants have been removed to federal
                  district court and assigned to the same judge who had ordered
                  dismissal of the original federal court action. The actions
                  have been stayed while a related action that has been
                  dismissed against other insurers is on appeal before the
                  Eighth Circuit Court of Appeals. Based on current information,
                  management expects that the remaining lawsuits against the
                  Corporation's subsidiaries will be dismissed just as the
                  original federal court action was and intends to vigorously
                  pursue such dismissal.

                        The Corporation and one of its property and casualty
                  insurance subsidiaries, General Insurance Company of America
                  ("General"), are defendants along with six other property and
                  casualty insurance groups in a putative class-action lawsuit
                  filed in 1999 in Illinois State court, Hobbs v. State Farm
                  Mutual Automobile Insurance Co., et al. The plaintiffs'
                  complaint against the Corporation and General has been
                  narrowed to an allegation that the defendants' support of the
                  Certified Auto Parts Association ("CAPA"), an independent
                  organization that certifies the quality of non-original
                  equipment manufactured parts for vehicles, constituted a
                  conspiracy to further the improper use of those parts. The
                  plaintiffs seek actual as well as punitive damages. The
                  Corporation and General will vigorously defend against these
                  claims.

                        One of the Corporation's life insurance subsidiaries is
                  engaged in litigation with several factoring companies that
                  have purchased from annuitants, at a discount, the right to
                  receive future payments from numerous structured settlement
                  annuity contracts. Consistent with the language of the annuity
                  contracts, the Corporation's life insurance subsidiary has
                  resisted with varying results the purchases and assignments of
                  rights to these future payments.


                  ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                        There were no matters submitted to a vote of security
                  holders, through the solicitation of proxies or otherwise,
                  during the fourth quarter of 2000.



                                       15
   17

                  EXECUTIVE OFFICERS OF THE REGISTRANT

                        As of March 19, 2001, these are the names, ages and
                  positions of the executive officers of the registrant as
                  required by Item 10. No family relationships exist.


                                         
                  Michael S. McGavick   43     Named President, Chief Executive Officer and Director
                                               effective January 30, 2001. President and Chief Operating
                                               Officer of CNA Agency Market Operations from October 1997
                                               until January 2001, and President of CNA's Commercial Lines
                                               group from January until October 1997, and held a series of
                                               executive positions with CNA's commercial insurance
                                               operations from 1995 through October 1997. Director of the
                                               Superfund Improvement Project for the American Insurance
                                               Association from 1992 to 1995.

                  Rodney A. Pierson     53     Chief Financial Officer since August 1996. Senior Vice
                                               President since February 1994. Secretary since 1991.
                                               Controller from 1990 to 1997. Vice President from 1990 to
                                               1994. Vice President of SAFECO Property and Casualty
                                               Insurance Companies from 1987 to 1990. Controller of SAFECO
                                               Property and Casualty Insurance Companies from 1984 to 1990.

                  James W. Ruddy        51     Senior Vice President since 1992. General Counsel since
                                               1989. Vice President from 1989 to 1992. Associate General
                                               Counsel from 1985 to 1989.

                  Randall H. Talbot     46     President of SAFECO Life Insurance Companies since February
                                               1998. Chief Executive Officer and President of Talbot
                                               Financial Corporation from 1988 to 1998.




                                       16
   18

PART II           ITEM 5 -- MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
                            SECURITY HOLDER MATTERS

                        Pages 47 and 73 of the 2000 Annual Report to
                  Shareholders are incorporated herein by reference.

                  ITEM 6 -- SELECTED FINANCIAL DATA

                        Pages 80 through 83 of the 2000 Annual Report to
                  Shareholders are incorporated herein by reference.

                  ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                            CONDITION AND RESULTS OF OPERATIONS

                        Pages 33 through 47 of the 2000 Annual Report to
                  Shareholders are incorporated herein by reference.

                  ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                             MARKET RISK

                        Pages 46 and 47 of the 2000 Annual Report to
                  Shareholders are incorporated herein by reference.

                  ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                        Pages 49 through 79 of the 2000 Annual Report to
                  Shareholders are incorporated herein by reference.

                  ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                            ACCOUNTING AND FINANCIAL DISCLOSURE

                        None.


PART III          The definitive proxy statement to be filed within 120 days
                  after December 31, 2000, excluding the Annual Report of the
                  Compensation Committee on Executive Compensation appearing on
                  Pages 8 through 13, is incorporated herein by reference to
                  fulfill the requirements of Items 10 -- 13 below.

                  ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
                             (except for the portion of Item 10 relating to
                             executive officers that appears on page 16 in Part
                             I of this Form 10-K).

                  ITEM 11 -- EXECUTIVE COMPENSATION

                  ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                             MANAGEMENT

                  ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



                                       17
   19

PART IV           ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                             REPORTS ON FORM 8-K

                  (a) (1) FINANCIAL STATEMENTS

                  F-1  Consent of Ernst & Young LLP, Independent Auditors

                       SAFECO Corporation and Subsidiaries:

                           The following consolidated financial statements of
                           SAFECO Corporation and its subsidiaries, included in
                           the 2000 Annual Report to Shareholders (pages 48
                           through 79), are incorporated herein by reference
                           (the announcement regarding the Corporation's
                           decision to sell SAFECO Credit Company, Inc., which
                           is disclosed as a Subsequent Event on page 14 and
                           filed on Form 8-K on March 15, 2001, should be read
                           in conjunction with the 2000 Annual Report to
                           Shareholders)

                             Report of Ernst & Young LLP, Independent Auditors

                             Statements of Consolidated Income
                                Years Ended December 31, 2000, 1999 and 1998

                             Consolidated Balance Sheets
                                December 31, 2000 and 1999

                             Statements of Consolidated Cash Flows
                                Years Ended December 31, 2000, 1999 and 1998

                             Statements of Consolidated Shareholders' Equity
                                Years Ended December 31, 2000, 1999 and 1998

                             Statements of Consolidated Comprehensive Income
                                (Loss)
                                Years Ended December 31, 2000, 1999 and 1998

                             Notes to Consolidated Financial Statements
                                December 31, 2000

                       SAFECO Corporation and Subsidiaries Supplemental
                                Consolidating Information:

                  F-2        Balance Sheets
                                December 31, 2000 and 1999

                  F-3        Statement of Income
                                Year Ended December 31, 2000

                  F-4        Statement of Cash Flows
                                Year Ended December 31, 2000



                                       18
   20

PART IV           ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                             REPORTS ON FORM 8-K (CONTINUED)

                  (a) (2) FINANCIAL STATEMENT SCHEDULES

                  F-5        Schedule I   Summary of Investments Other Than
                                           Investments in Related Parties
                                             December 31, 2000

                  F-6        Schedule II  Balance Sheets (Condensed Financial
                                           Information of registrant (Parent
                                           Company Only))
                                             December 31, 2000 and 1999


                  F-7        Schedule II  Statements of Income (Condensed
                                           Financial Information of registrant
                                           (Parent Company Only))
                                             Years Ended December 31, 2000, 1999
                                               and 1998

                  F-8        Schedule II  Statements of Cash Flows (Condensed
                                           Financial Information of registrant
                                           (Parent Company Only))
                                             Years Ended December 31, 2000, 1999
                                               and 1998

                  --               --     Statements of Consolidated
                                           Shareholders' Equity
                                             Years Ended December 31, 2000, 1999
                                               and 1998. (See page 54 of the
                                               2000 Annual Report to
                                               Shareholders which is
                                               incorporated herein by
                                               reference.)

                  --               --     Statements of Consolidated
                                           Comprehensive Income (Loss)
                                             Years Ended December 31, 2000, 1999
                                               and 1998. (See page 54 of the
                                               2000 Annual Report to
                                               Shareholders which is
                                               incorporated herein by
                                               reference.)

                  F-9        Schedule III Supplementary Insurance Information
                                           Years Ended December 31, 2000, 1999
                                               and 1998

                  F-10       Schedule IV  Reinsurance
                                           Years Ended December 31, 2000, 1999
                                               and 1998

                  F-11       Schedule VI  Supplemental Information Concerning
                                           Property-Casualty Insurance
                                           Operations
                                             Years Ended December 31, 2000,
                                               1999 and 1998

                  --         Schedule V   This Article 7 schedule is omitted
                                           because the information is provided
                                           elsewhere in the Annual Report (Form
                                           10-K) or because of the absence of
                                           conditions under which it is
                                           required.



                                       19
   21

PART IV           ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                             REPORTS ON FORM 8-K (CONTINUED)

                  (a) (3) EXHIBITS

                             Exhibit Index

                             Exhibit 11  Computation of Income Per Share

                             Exhibit 12  Computation of Ratio of Earnings to
                                         Fixed Charges

                             Exhibit 13  2000 Annual Report to Shareholders
                                         (the announcement regarding the
                                         corporation's decision to sell SAFECO
                                         Credit Company, Inc., which is
                                         disclosed as a Subsequent Event on
                                         page 14 and filed on Form 8-K on March
                                         15, 2001, should be read in
                                         conjunction with the 2000 Annual
                                         Report to Shareholders)

                             Exhibit 21  Subsidiaries of the Registrant


                  (b) REPORTS ON FORM 8-K

                        The registrant filed the following 8-K's during the
                  quarter ended December 31, 2000 and for the period up to March
                  19, 2001 (the filing date of this Form 10-K).



                   FILING DATED               UNDER                             FILING RELATED TO:
                  ---------------      --------------------  -----------------------------------------------------------
                                                       
                  October 9, 2000      Item 5 (Other Items)  Preliminary review of earnings for the 3rd quarter of 2000.

                  December 21, 2000    Item 5 (Other Items)  Announcement naming William G. Reed, Jr. as acting Chairman and
                                                             acting Chief Executive Officer.

                  January 12, 2001     Item 5 (Other Items)  Preliminary review of earnings for the 4th quarter of 2000.

                  January 30, 2001     Item 5 (Other Items)  Announcement naming Michael S. McGavick as President, Chief
                                                             Executive Officer and Director.

                  February 8, 2001     Item 5 (Other Items)  Announcement on reduction of dividend to common shareholders.

                  March 1, 2001        Item 5 (Other Items)  Announcement regarding earthquake coverage relating to February 28th
                                                             Puget Sound area earthquake.

                  March 15, 2001       Item 5 (Other Items)  Announcement regarding decision to sell SAFECO Credit Company, Inc.



                                       20
   22

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on this 19th day of March
2001.

                                            SAFECO CORPORATION
                                            -----------------------
                                            Registrant

                                            /s/ MICHAEL S. MCGAVICK
                                            -----------------------
                                            Michael S. McGavick, President,
                                            Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on March 19, 2001.



NAME                                         TITLE
- - - - - - ----------------------------------------------------------------------
                                          
/s/    MICHAEL S. MCGAVICK                   President,
- - - - - - ---------------------------------            Chief Executive Officer
       Michael S. McGavick                   and Director

/s/    ROD A. PIERSON                        Senior Vice President,
- - - - - - ---------------------------------            Chief Financial Officer
       Rod A. Pierson                        and Secretary

/s/    H. PAUL LOWBER                        Vice President, Controller
- - - - - - ---------------------------------            and Chief Accounting Officer
       H. Paul Lowber


/s/    PHYLLIS J. CAMPBELL                   Director
- - - - - - ---------------------------------
       Phyllis J. Campbell


/s/    ROBERT S. CLINE                       Director
- - - - - - ---------------------------------
       Robert S. Cline


/s/    JOHN W. ELLIS                         Director
- - - - - - ---------------------------------
       John W. Ellis




                                       21
   23



NAME                                         TITLE
- - - - - - ----------------------------------------------------------------------
                                          
/s/   WILLIAM P. GERBERDING                  Director
- - - - - - ---------------------------------
      William P. Gerberding


/s/   JOSHUA GREEN III                       Director
- - - - - - ---------------------------------
      Joshua Green III


/s/   WILLIAM W. KRIPPAEHNE, JR.             Director
- - - - - - ---------------------------------
      William W. Krippaehne, Jr.


/s/   WILLIAM G. REED, JR.                   Chairman
- - - - - - ---------------------------------
      William G. Reed, Jr.


/s/   NORMAN B. RICE                         Director
- - - - - - ---------------------------------
      Norman B. Rice


/s/   JUDITH M. RUNSTAD                      Director
- - - - - - ---------------------------------
      Judith M. Runstad


/s/   PAUL W. SKINNER                        Director
- - - - - - ---------------------------------
      Paul W. Skinner




                                       22
   24

                                                                             F-1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


SAFECO Corporation:

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of SAFECO Corporation of our report dated February 9, 2001, included in the 2000
Annual Report to Shareholders of SAFECO Corporation.

Our audits also included the financial statement schedules of SAFECO Corporation
listed in the Index at Item 14(a). These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
schedules based on our audits. In our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information set
forth therein.

We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-26393) pertaining to the SAFECO Long-Term Incentive Plan of
1997 and the incorporation by reference in the Registration Statements (Forms
S-3) pertaining to the $800,000,000 in SAFECO debt securities and the SAFECO
Agency Stock Purchase Plan, of our report dated February 9, 2001, with respect
to the consolidated financial statements of SAFECO Corporation incorporated by
reference, and our report included in the preceding paragraph with respect to
the financial statement schedules included in this Annual Report (Form 10-K) for
the year ended December 31, 2000 of SAFECO Corporation.



                                            /s/ Ernst & Young LLP


Seattle, Washington
March 15, 2001



   25

SAFECO CORPORATION AND SUBSIDIARIES                                          F-2
Balance Sheets - Supplemental Consolidating Information
December 31, 2000
- - - - - - --------------------------------------------------------------------------------
(In Millions)



                                                               Property &                      Credit       Other and
ASSETS                                                         Casualty         Life           Company     Eliminations Consolidated
                                                               ---------------------------------------------------------------------
                                                                                                         
Investments:
       Fixed Maturities Available-for-Sale, at Market Value    $ 6,347.4       $14,403.0      $      --     $    79.8      $20,830.2
       Marketable Equity Securities, at Market Value             1,695.0            26.2             --          94.2        1,815.4
       Mortgage Loans                                               58.9           848.1             --         (84.0)         823.0
       Other Investment Assets                                      16.6            95.1             --          48.6          160.3
       Short-Term Investments                                      172.6           142.3             --        (132.6)         182.3
                                                               ---------------------------------------------------------------------
            Total Investments                                    8,290.5        15,514.7             --           6.0       23,811.2
Cash                                                               134.0            33.8            9.9          18.5          196.2
Accrued Investment Income                                          101.8           224.6            5.2           1.5          333.1
Finance Receivables (Less unearned finance charges
       and allowance for doubtful accounts)                           --              --        1,617.7            --        1,617.7
Loans to Affiliates                                                   --              --          171.3        (171.3)            --
Premiums and Other Service Fees Receivable                         993.9            57.4             --          11.7        1,063.0
Other Notes and Accounts Receivable                                   --            19.3             --          18.3           37.6
Reinsurance Recoverables                                           362.5            99.2             --            --          461.7
Deferred Policy Acquisition Costs                                  312.1           293.3             --            --          605.4
Land, Buildings and Equipment for Company Use
       (At cost less accumulated depreciation)                     258.2             1.5            0.2         180.5          440.4
Goodwill (At cost less accumulated amortization)                 1,163.1            90.7             --          53.6        1,307.4
Other Assets                                                       180.2            74.0          102.0           6.5          362.7
Separate Account Assets                                               --         1,275.1             --            --        1,275.1
                                                               ---------------------------------------------------------------------
            Total                                              $11,796.3       $17,683.6      $ 1,906.3     $   125.3      $31,511.5
                                                               =====================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Losses and Loss Adjustment Expense                             $ 4,612.7       $    74.2      $      --     $      --      $ 4,686.9
Life Policy Liabilities                                               --           342.1             --            --          342.1
Unearned Premiums                                                1,826.9             9.6             --            --        1,836.5
Funds Held Under Deposit Contracts                                    --        14,085.7             --            --       14,085.7
Debt:
       Commercial Paper                                               --              --             --         349.8          349.8
       Credit Company Borrowings - Nonaffiliates                      --              --        1,154.7            --        1,154.7
       Credit Company Borrowings - Affiliates                         --              --          504.0        (504.0)            --
       7.875% Medium-Term Notes Due 2003                              --              --             --         300.0          300.0
       7.875% Notes Due 2005                                          --              --             --         200.0          200.0
       6.875% Notes Due 2007                                          --              --             --         200.0          200.0
       Other                                                          --              --             --          80.7           80.7
Other Liabilities                                                  834.2           323.0           39.2         112.1        1,308.5
Current Income Taxes                                               (10.7)           35.7            3.4           0.7           29.1
Deferred Income Taxes
       (Includes tax on unrealized appreciation
       of investment securities)                                   132.7            18.2           56.4         (83.7)         123.6
Separate Account Liabilities                                          --         1,275.1             --            --        1,275.1
                                                               ---------------------------------------------------------------------
            Total Liabilities                                    7,395.8        16,163.6        1,757.7         655.6       25,972.7
                                                               ---------------------------------------------------------------------
Capital Securities                                                    --              --             --         843.0          843.0
                                                               ---------------------------------------------------------------------
Common Stock                                                        37.9             6.0            1.0         789.6          834.5
Additional Paid-In Capital                                       3,000.5           264.8           27.0      (3,292.3)            --
Retained Earnings                                                  543.5         1,180.9          120.6       1,121.4        2,966.4
Total Accumulated Other Comprehensive Income                       818.6            68.3             --           8.0          894.9
                                                               ---------------------------------------------------------------------
            Total Shareholders' Equity                           4,400.5         1,520.0          148.6      (1,373.3)       4,695.8
                                                               ---------------------------------------------------------------------
            Total                                              $11,796.3       $17,683.6      $ 1,906.3     $   125.3      $31,511.5
                                                               =====================================================================




   26

SAFECO CORPORATION AND SUBSIDIARIES                                          F-2
Balance Sheets - Supplemental Consolidating Information
December 31, 1999                                                    (Continued)
- - - - - - --------------------------------------------------------------------------------
(In Millions)





                                                              Property &                    Credit       Other and
ASSETS                                                        Casualty        Life         Company      Eliminations   Consolidated
                                                              ---------------------------------------------------------------------
                                                                                                        
Investments:
       Fixed Maturities Available-for-Sale, at Market Value   $ 5,950.8     $10,789.2       $      --      $    90.7      $16,830.7
       Fixed Maturities Held-to-Maturity, at Amortized Cost          --       2,733.3              --             --        2,733.3
       Marketable Equity Securities, at Market Value            1,897.5          33.6              --           73.6        2,004.7
       Mortgage Loans                                              57.5         830.4              --         (117.5)         770.4
       Other Investment Assets                                     17.8          95.4              --          102.7          215.9
       Short-Term Investments                                     287.8         382.8              --         (294.6)         376.0
                                                              ---------------------------------------------------------------------
            Total Investments                                   8,211.4      14,864.7              --         (145.1)      22,931.0
Cash                                                               61.9          23.2             9.2           18.0          112.3
Accrued Investment Income                                         104.2         218.4             4.0            1.5          328.1
Finance Receivables (Less unearned finance charges
       and allowance for doubtful accounts)                          --            --         1,460.6             --        1,460.6
Loans to Affiliates                                                  --            --            58.3          (58.3)            --
Premiums and Other Service Fees Receivable                      1,034.9          13.3              --           10.1        1,058.3
Other Notes and Accounts Receivable                                22.9          65.6             2.0           56.7          147.2
Deferred Income Tax Recoverable
       (Includes tax on unrealized appreciation
       of investment securities)                                    5.4         123.0           (51.5)          28.4          105.3
Reinsurance Recoverables                                          332.3          52.5              --             --          384.8
Deferred Policy Acquisition Costs                                 325.4         273.4              --             --          598.8
Land, Buildings and Equipment for Company Use
       (At cost less accumulated depreciation)                    261.4           1.5             0.3           81.6          344.8
Goodwill (At cost less accumulated amortization)                1,209.0          95.7              --           50.2        1,354.9
Other Assets                                                      134.6          75.1           101.5           32.2          343.4
Separate Account Assets                                              --       1,403.2              --             --        1,403.2
                                                              ---------------------------------------------------------------------
            Total                                             $11,703.4     $17,209.6       $ 1,584.4      $    75.3      $30,572.7
                                                              =====================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Losses and Loss Adjustment Expense                            $ 4,378.6     $    37.8       $      --      $      --      $ 4,416.4
Life Policy Liabilities                                              --         281.5              --             --          281.5
Unearned Premiums                                               1,844.3           8.8              --             --        1,853.1
Funds Held Under Deposit Contracts                                   --      13,762.9              --             --       13,762.9
Debt:
       Commercial Paper                                              --            --              --          508.8          508.8
       Credit Company Borrowings - Nonaffiliates                     --            --         1,323.1             --        1,323.1
       Credit Company Borrowings - Affiliates                        --            --            92.8          (92.8)            --
       7.875% Notes Due 2005                                         --            --              --          200.0          200.0
       6.875% Notes Due 2007                                         --            --              --          200.0          200.0
       Other                                                         --            --              --           84.2           84.2
Other Liabilities                                               1,052.8         499.2            26.3         (181.5)       1,396.8
Current Income Taxes                                              (10.1)         15.1             2.8           (1.7)           6.1
Separate Account Liabilities                                         --       1,403.2              --             --        1,403.2
                                                              ---------------------------------------------------------------------
            Total Liabilities                                   7,265.6      16,008.5         1,445.0          717.0       25,436.1
                                                              ---------------------------------------------------------------------
Capital Securities                                                   --            --              --          842.5          842.5
                                                              ---------------------------------------------------------------------
Common Stock                                                       25.9          17.0             1.0          797.8          841.7
Additional Paid-In Capital                                      3,010.8         266.3            27.0       (3,304.1)            --
Retained Earnings                                                 815.9       1,130.9           111.4        1,004.5        3,062.7
Total Accumulated Other Comprehensive Income                      585.2        (213.1)             --           17.6          389.7
                                                              ---------------------------------------------------------------------
            Total Shareholders' Equity                          4,437.8       1,201.1           139.4       (1,484.2)       4,294.1
                                                              ---------------------------------------------------------------------
            Total                                             $11,703.4     $17,209.6       $ 1,584.4      $    75.3      $30,572.7
                                                              =====================================================================




   27

SAFECO CORPORATION AND SUBSIDIARIES                                         F-3
Statement of Income - Supplemental Consolidating Information
Year Ended December 31, 2000
- - - - - - -------------------------------------------------------------------------------
(In Millions)



                                                               Property &                      Other and
                                                               Casualty          Life         Eliminations     Consolidated
                                                               ------------------------------------------------------------
                                                                                                   
REVENUES
     Insurance:
         Property and Casualty Earned Premiums                 $4,563.4          $     --          $     --        $4,563.4
         Life Premiums and Other Revenues                            --             502.7                --           502.7
                                                               ------------------------------------------------------------
             Total                                              4,563.4             502.7                --         5,066.1
     Credit                                                          --                --             143.3           143.3
     Asset Management                                                --                --              42.9            42.9
     Other                                                           --                --              99.4            99.4
     Net Investment Income                                        460.5           1,175.2              (8.5)        1,627.2
     Realized Investment Gain  (Loss)                             154.4             (16.2)              1.3           139.5
                                                               ------------------------------------------------------------
             Total                                              5,178.3           1,661.7             278.4         7,118.4
                                                               ------------------------------------------------------------

EXPENSES

     Losses, Adjustment Expense and Policy Benefits             3,770.0           1,232.2             (14.6)        4,987.6
     Commissions                                                  689.1             104.5                --           793.6
     Personnel Costs                                              342.5              85.9              68.7           497.1
     Interest                                                        --                --             173.1           173.1
     Goodwill Amortization                                         44.0               5.9              10.6            60.5
     Other                                                        270.4             106.3              72.4           449.1
     Amortization of Deferred Policy Acquisition Costs            796.6              37.6                --           834.2
     Deferral of Policy Acquisition Costs                        (783.3)            (52.1)               --          (835.4)
                                                               ------------------------------------------------------------
             Total                                              5,129.3           1,520.3             310.2         6,959.8
                                                               ------------------------------------------------------------

Income Before Income Taxes                                         49.0             141.4             (31.8)          158.6
                                                               ------------------------------------------------------------

Provision (Benefit) for Income Taxes:
     Current                                                      (52.7)             59.8              34.2            41.3
     Deferred                                                      12.2             (10.3)            (44.0)          (42.1)
                                                               ------------------------------------------------------------
             Total                                                (40.5)             49.5              (9.8)           (0.8)
                                                               ------------------------------------------------------------

Income Before Distributions on Capital Securities                  89.5              91.9             (22.0)          159.4

Distributions on Capital Securities, Net of Tax                      --                --             (44.8)          (44.8)
                                                               ------------------------------------------------------------

Net Income  (Loss)                                             $   89.5          $   91.9          $  (66.8)       $  114.6
                                                               ============================================================



   28

SAFECO CORPORATION AND SUBSIDIARIES                                         F-4
Statement of Cash Flows - Supplemental Consolidating Information
Year Ended December 31, 2000
- - - - - - --------------------------------------------------------------------------------
(In Millions)



                                                                         Property &                  Other and
                                                                         Casualty         Life       Eliminations  Consolidated
                                                                         ------------------------------------------------------
                                                                                                       
OPERATING ACTIVITIES
     Insurance Premiums Received                                        $ 4,572.9       $   317.3        $     --     $ 4,890.2
     Dividends and Interest Received                                        450.8         1,087.5           137.8       1,676.1
     Other Operating Receipts                                                  --            64.7           160.3         225.0
     Insurance Claims and Policy Benefits Paid                           (3,550.0)         (606.5)             --      (4,156.5)
     Underwriting, Acquisition and Insurance Operating Costs Paid        (1,388.5)         (271.2)            6.9      (1,652.8)
     Interest Paid and Distributions on Capital Securities                     --              --          (202.4)       (202.4)
     Other Operating Costs Paid                                                --              --          (126.7)       (126.7)
     Income Taxes Refunded (Paid)                                            51.8           (39.4)           (6.7)          5.7
                                                                        -------------------------------------------------------
               Net Cash Provided by (Used in) Operating Activities          137.0           552.4           (30.8)        658.6
                                                                        -------------------------------------------------------

INVESTING ACTIVITIES
     Purchases of:
          Fixed Maturities Available-for-Sale                              (916.6)       (2,651.8)          (35.6)     (3,604.0)
          Fixed Maturities Held-to-Maturity                                    --            (2.2)             --          (2.2)
          Equities                                                         (247.0)          (20.8)         (104.8)       (372.6)
          Other Investments                                                  (2.7)         (344.5)          (14.8)       (362.0)
     Maturities of Fixed Maturities Available-for-Sale                      161.9           786.5            23.8         972.2
     Maturities of Fixed Maturities Held-to-Maturity                           --             8.7              --           8.7
     Sales of:
          Fixed Maturities Available-for-Sale                               772.0         1,465.0            28.4       2,265.4
          Fixed Maturities Held-to-Maturity                                    --             0.1              --           0.1
          Equities                                                          566.3            28.9            66.5         661.7
          Other Investments                                                  13.2           308.9            90.1         412.2
     Net Decrease (Increase) in Short-Term Investments                      268.6            44.0           (31.2)        281.4
     Finance Receivables Originated or Acquired                                --              --          (684.9)       (684.9)
     Principal Payments Received on Finance Receivables                        --              --           536.0         536.0
     Other                                                                 (318.6)          213.5             7.9         (97.2)
                                                                        -------------------------------------------------------
               Net Cash Provided by (Used in) Investing Activities          297.1          (163.7)         (118.6)         14.8
                                                                        -------------------------------------------------------

FINANCING ACTIVITIES
     Funds Received Under Deposit Contracts                                    --         1,266.0              --       1,266.0
     Return of Funds Held Under Deposit Contracts                              --        (1,603.1)             --      (1,603.1)
     Proceeds from Notes and Mortgage Borrowings                               --              --           300.0         300.0
     Repayment of Notes and Mortgage Borrowings                                --              --           (19.3)        (19.3)
     Net Proceeds from (Repayment of) Short-Term Borrowings                    --             8.5          (316.8)       (308.3)
     Common Stock Reacquired                                                   --              --           (30.4)        (30.4)
     Dividends Paid to Shareholders                                        (362.0)          (49.5)          222.1        (189.4)
     Other                                                                     --              --            (5.0)         (5.0)
                                                                        -------------------------------------------------------
               Net Cash Provided by (Used in) Financing Activities         (362.0)         (378.1)          150.6        (589.5)
                                                                        -------------------------------------------------------
     Net Increase in Cash                                                    72.1            10.6             1.2          83.9

     Cash at the Beginning of Year                                           61.9            23.2            27.2         112.3
                                                                        -------------------------------------------------------

     Cash at the End of the Year                                        $   134.0       $    33.8       $    28.4     $   196.2
                                                                        =======================================================



   29

SAFECO CORPORATION AND SUBSIDIARIES                                         F-5
Summary of Investments Other Than Investments in Related Parties     Schedule I
December 31, 2000
- - - - - - --------------------------------------------------------------------------------
(In Millions)



                                                                                                                 Amount at
                                                                                                                 Which Shown
                                                                                                                  in the
Type of Investment                                                                Cost        Market Value      Balance Sheet
                                                                                  -------------------------------------------
                                                                                                       
Fixed Maturities Available-for-Sale
      Bonds:
          United States Government and Government
               Agencies and Authorities                                           $ 1,582.5        $ 1,756.2        $ 1,756.2
          States, Municipalities and Political Subdivisions                         2,916.6          3,220.5          3,220.5
          Mortgage-Backed Securities                                                4,344.9          4,474.1          4,474.1
          Foreign Governments                                                         303.6            354.6            354.6
          Public Utilities                                                          1,970.7          1,980.6          1,980.6
          All Other Corporate Bonds                                                 8,942.2          8,726.2          8,726.2
      Redeemable Preferred Stocks                                                     327.6            318.0            318.0
                                                                                  -------------------------------------------

               Total Fixed Maturities Classified as Available-for-Sale(1)          20,388.1        $20,830.2         20,830.2
                                                                                  -----------------=========----------------


Equity Securities
      Common Stocks:
          Public Utilities                                                             15.7        $    65.6             65.6
          Banks, Trust and Insurance Companies                                         34.2            165.5            165.5
          Industrial, Miscellaneous and All Other                                     689.7          1,438.4          1,438.4
      Non-Redeemable Preferred Stocks                                                 136.3            145.9            145.9
                                                                                  -------------------------------------------
               Total Equity Securities                                                875.9        $ 1,815.4          1,815.4
                                                                                  -----------------=========----------------


Other
      Mortgage Loans on Real Estate(1)                                                823.0                             823.0
      Policy Loans                                                                     91.4                              91.4
      Other Investment Assets(1)                                                       68.9                              68.9
      Short-Term Investments                                                          182.3                             182.3
                                                                                  ---------                         ---------
               Total Other                                                          1,165.6                           1,165.6
                                                                                  ---------                         ---------
                     Total Investments                                            $22,429.6                         $23,811.2
                                                                                  =========                         =========




(1)      The carrying value of investments in fixed maturities, mortgage loans
         and real estate (included in other investment assets) that have not
         produced income for the last twelve months is less than one percent of
         the total of such investments at December 31, 2000.


   30

SAFECO CORPORATION                                                          F-6
Balance Sheets                                                      Schedule II
(Parent Company Only)



December 31                                                               2000              1999
- - - - - - -------------------------------------------------------------------------------------------------
(In Millions)
                                                                                   
ASSETS

Investments:
     Stock of Subsidiaries - At Cost Plus Equity in
         Undistributed Earnings Since Acquisition
         (Includes unrealized appreciation of investment
         securities, net of tax, held by subsidiaries)                  $6,226.9         $5,981.2
     Fixed Maturities Available-for-Sale, at Market Value
         (Amortized cost: $58.4; $77.4)                                     60.5             76.1
     Marketable Equity Securities, at Market Value
         (Cost: $54.8: $22.4)                                               62.6             43.9
     Short-Term Investments                                                 19.1             62.8
                                                                        -------------------------
             Total Investments                                           6,369.1          6,164.0
Cash                                                                         0.1              0.1
Notes Receivable from Affiliated Companies                                 300.0               --
Accounts Receivable from Affiliated Companies                                4.9              2.8
Income Taxes - Current                                                       2.9             11.5
             - Deferred                                                     47.4               --
Other Assets                                                                24.4             21.7
                                                                        -------------------------
             Total Assets                                               $6,748.8         $6,200.1
                                                                        =========================

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest Payable                                                        $   48.7         $   41.8
Accounts Payable                                                            14.3              8.2
Deferred Income Taxes                                                         --              7.0
Dividends Payable to Shareholders                                           47.2             47.7
Debt:
     Commercial Paper                                                      349.8            508.8
     Medium-Term Notes Due 2002                                             50.0             50.0
     7.875% Medium-Term Notes Due 2003                                     300.0               --
     7.875% Notes Due 2005                                                 200.0            200.0
     6.875% Notes Due 2007                                                 200.0            200.0
     8.072% Junior Subordinated Debentures (Capital Securities)            843.0            842.5
                                                                        -------------------------
             Total Liabilities                                           2,053.0          1,906.0
                                                                        -------------------------

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: 7.1; 7.3
     Shares Issued and Outstanding: 127.6; 128.9                           834.5            841.7
Retained Earnings                                                        2,966.4          3,062.7
Total Accumulated Other Comprehensive Income                               894.9            389.7
                                                                        -------------------------
             Total Shareholders' Equity                                  4,695.8          4,294.1
                                                                        -------------------------
             Total Liabilities and Shareholders' Equity                 $6,748.8         $6,200.1
                                                                        =========================




   31

SAFECO CORPORATION                                                          F-7
Statements of Income                                                Schedule II
(Parent Company Only)


Year Ended December 31                                                         2000          1999            1998
- - - - - - -------------------------------------------------------------------------------------------------------------------
(In Millions)
                                                                                                    
REVENUES
             Dividends -Nonaffiliates                                       $   1.9         $   2.3         $   2.5
             Interest  -Affiliates                                             20.6             0.9             0.2
                       -Others                                                  4.9             7.0             6.6
             Realized Gain (Loss) from Security Investments                     0.8            (0.5)            5.8
                                                                            ---------------------------------------
                   Total                                                       28.2             9.7            15.1
                                                                            ---------------------------------------

EXPENSES
             Interest                                                         157.6           140.9           152.7
             Other                                                              8.6             1.1             1.9
                                                                            ---------------------------------------
                   Total                                                      166.2           142.0           154.6
                                                                            ---------------------------------------

Loss Before Income Taxes                                                     (138.0)         (132.3)         (139.5)
Benefit for Income Taxes
              (Includes provision (benefit) on realized gain (loss):
             $0.3; $(0.2); $2.0)                                              (48.7)          (47.0)          (48.9)
                                                                            ---------------------------------------

Loss Before Equity in Earnings of Subsidiaries                                (89.3)          (85.3)          (90.6)
Equity in Earnings of Subsidiaries                                            203.9           337.5           442.5
                                                                            ---------------------------------------

                   Consolidated Net Income                                  $ 114.6         $ 252.2         $ 351.9
                                                                            =======================================


Dividends Accrued and Received From Subsidiaries (Cash):
             SAFECO Insurance Company of America                            $  93.5         $ 168.0         $ 144.5
             General Insurance Company of America                              53.0           174.0           106.0
             First National Insurance Company of America                       10.0             8.0             9.0
             SAFECO National Insurance Company                                  6.0             7.0             5.5
             SAFECO Insurance Company of Illinois                              14.0            12.0            12.0
             American States Financial Corporation                               --           346.0           233.0
             American States Insurance Company                                132.5              --              --
             American Economy Insurance Company                                43.5              --              --
             American States Preferred Insurance Company                        5.5              --              --
             SAFECO Life Insurance Company                                     49.0              --            90.0
             SAFECO Administrative Services, Inc.                                --              --            14.5
             SAFECO Properties, Inc.                                           45.0            25.7             0.2
             SAFECO Credit Company, Inc.                                        3.6             3.6             3.5
             SAFECO Asset Management Company                                    8.9             1.8             5.6
             Other                                                              0.6              --             2.1
                                                                            ---------------------------------------

                   Total                                                    $ 465.1         $ 746.1         $ 625.9
                                                                            =======================================



   32

SAFECO CORPORATION                                                           F-8
Statements of Cash Flows                                             Schedule II
(Parent Company Only)


Year Ended December 31                                                     2000            1999             1998
- - - - - - ----------------------------------------------------------------------------------------------------------------
(In Millions)
                                                                                                 
OPERATING ACTIVITIES
         Dividends and Interest Received -Affiliates                     $ 486.9         $ 761.3         $ 657.3
                                         -Others                             6.6            10.4             9.2
         Interest Paid                                                    (150.1)         (143.4)         (150.0)
         Other Operating Costs Paid                                         (2.2)           (6.8)           (1.2)
         Income Taxes Refunded                                               6.6            50.0            23.1
                                                                         ---------------------------------------
              Net Cash Provided by Operating Activities                    347.8           671.5           538.4
                                                                         ---------------------------------------

INVESTING ACTIVITIES
         Purchases of:
              Fixed Maturities Available-for-Sale                          (14.9)             --           (25.7)
              Equities                                                     (93.8)           (0.1)           (7.2)
         Maturities of Fixed Maturities Available-for-Sale                  20.0            19.4            25.0
         Sales of:
              Fixed Maturities Available-for-Sale                           13.2              --             3.2
              Equities                                                      63.3             9.7            19.3
         Funds Loaned to Affiliate                                        (300.0)             --              --
         Net Decrease (Increase) in Short-Term Investments                  43.7            19.5           (77.3)
         Other                                                                --              --            (0.4)
                                                                         ---------------------------------------
              Net Cash Provided by (Used in) Investing Activities         (268.5)           48.5           (63.1)
                                                                         ---------------------------------------

FINANCING ACTIVITIES
         Proceeds from Medium-Term Notes                                   300.0              --              --
         Net Repayment of Short-Term Borrowings                           (159.1)         (229.9)          (80.0)
         Common Stock Reacquired                                           (30.4)         (303.1)         (236.8)
         Dividends Paid to Shareholders                                   (189.4)         (192.2)         (187.5)
         Other                                                              (0.4)            5.0             3.8
                                                                         ---------------------------------------
              Net Cash Used in Financing Activities                        (79.3)         (720.2)         (500.5)
                                                                         ---------------------------------------

Net (Decrease) Increase in Cash                                               --            (0.2)          (25.2)
Cash at the Beginning of Year                                                0.1             0.3            25.5
                                                                         ---------------------------------------
Cash at the End of Year                                                  $   0.1         $   0.1         $   0.3
                                                                         =======================================



Statement of Cash Flows
Reconciliation of Net Income to Net Cash Provided by Operating Activities
(Parent Company Only)


Year Ended December 31                                                   2000            1999            1998
- - - - - - --------------------------------------------------------------------------------------------------------------
(In Millions)
                                                                                               
Net Income                                                             $ 114.6         $ 252.2         $ 351.9
                                                                       ---------------------------------------
Adjustments to Reconcile Net Income to
         Net Cash Provided by Operating Activities:
              Equity in Net Income of Consolidated Subsidiaries         (203.9)         (337.5)         (442.5)
              Dividends Received from Consolidated Subsidiaries          465.1           746.1           625.9
              Realized Investment (Gain) Loss                             (0.8)            0.5            (5.8)
              Other                                                        1.4             1.6             1.9
              Changes in:
                   Accrued Income Taxes                                    8.6             2.6           (27.0)
                   Interest Payable                                        6.9            (3.1)            2.1
                   Other Assets and Liabilities                          (44.1)            9.1            31.9
                                                                       ---------------------------------------
              Total Adjustments                                          233.2           419.3           186.5
                                                                       ---------------------------------------
Net Cash Provided by Operating Activities                              $ 347.8         $ 671.5         $ 538.4
                                                                       =======================================




   33

SAFECO CORPORATION AND SUBSIDIARIES                                         F-9
Supplementary Insurance Information                                Schedule III




December 31, 2000
- - - - - - -------------------------------------------------------------------------------------------------
(In Millions)






                                                        Reserve for                Other Policy
                                                       Future Policy                Claims and
                                           Deferred      Benefits,                Benefits Payable
                                            Policy        Losses,                  (Funds Held
                                         Acquisition    Claims and      Unearned   Under Deposit
Segment                                     Costs      Loss Expenses    Premiums     Contracts)
- - - - - - --------------------------------------------------------------------------------------------------
                                                                      
Property and Casualty:
           Personal Lines:
                 Personal Auto           $     61.5     $  1,134.7      $    437.6
                 Homeowners                    80.9          261.0           403.5
                 Other Personal                24.1           86.4           119.7
           Commercial Lines:
                 SBI                           93.8        1,625.1           534.8
                 SAFECO Commercial             38.6        1,201.4           245.0
           Surety                              12.9          (11.8)           70.4
           Other                                0.3          315.9            15.9
                                         -----------------------------------------
                 Total                        312.1        4,612.7         1,826.9
                                         -----------------------------------------
Life:
           Retirement Services                104.3           14.1              --     $  4,925.8
           Settlement Annuities                  --             --              --        6,167.8
           Group                               17.8          173.1             2.9             --
           Individual                         171.2          229.1             6.7        2,992.1
           Other                                 --             --              --             --
                                         --------------------------------------------------------
                 Total                        293.3          416.3             9.6       14,085.7
                                         --------------------------------------------------------
Credit                                           --             --              --             --
Asset Management                                 --             --              --             --
Other and Eliminations(1)                        --             --              --             --
                                         --------------------------------------------------------
                 Consolidated Totals     $    605.4     $  5,029.0      $  1,836.5     $ 14,085.7
                                         ========================================================




                                         Year Ended December 31, 2000
                                         ----------------------------------------------------------------------------------------
                                         (In Millions)
                                                                                                         Other
                                                                                                        Operating
                                                                                                         Costs
                                                                                                        (Including
                                                                                                       Dividends to
                                                                                                      Policyholders,
                                                                                                         Goodwill
                                                                       Benefits,     Amortization      Amortization
                                                                        Claims,      of Deferred       and Deferral
                                        Premiums and      Net         Losses and         Policy          of Policy        Net
                                        Service Fee    Investment     Adjustment      Acquisition       Acquisition      Premiums
Segment                                   Revenues       Income         Expenses          Costs            Costs)        Written
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Property and Casualty:
           Personal Lines:
                 Personal Auto           $  1,723.6     $    125.3      $  1,446.9      $    201.6      $    118.4     $  1,725.6
                 Homeowners                   729.8           52.9           626.9           185.9           109.1          738.7
                 Other Personal               186.7           16.3           108.2            55.2            32.3          193.3
           Commercial Lines:
                 SBI                        1,171.7          145.1           948.5           211.3           181.4        1,140.9
                 SAFECO Commercial            683.4           98.5           612.8           121.6           113.6          671.1
           Surety                              61.6            4.6            21.2            21.2             7.9           63.8
           Other                                6.6           17.8             5.5            (0.2)             --            6.3
                                         ----------------------------------------------------------------------------------------
                 Total                      4,563.4          460.5         3,770.0           796.6           562.7     $  4,539.7
                                         ------------------------------------------------------------------------------==========
Life:
           Retirement Services                 36.8          392.5           328.8            22.8            47.7
           Settlement Annuities                 1.2          495.8           440.3              --            30.3
           Group                              313.6            1.9           214.7             5.3            91.2
           Individual                         133.8          207.0           248.4             9.5            58.2
           Other                               17.3           78.0              --              --            23.1
                                         -------------------------------------------------------------------------
                 Total                        502.7        1,175.2         1,232.2            37.6           250.5
                                         -------------------------------------------------------------------------
Credit                                           --             --              --              --           125.0
Asset Management                                 --             --              --              --            30.0
Other and Eliminations(1)                        --           (8.5)          (14.6)             --           169.8
                                         -------------------------------------------------------------------------
                 Consolidated Totals     $  5,066.1     $  1,627.2      $  4,987.6      $    834.2      $  1,138.0
                                         =========================================================================


(1)      Real Estate operations reported separately in 1998 are combined with
         Other and Eliminations in 2000. The real estate operations are
         currently being disposed of; its operations are not material to the
         consolidated financial statements.


   34

SAFECO CORPORATION AND SUBSIDIARIES                                         F-9
Supplementary Insurance Information                                Schedule III
                                                                    (Continued)



December 31, 1999
- - - - - - -------------------------------------------------------------------------------------------------
(In Millions)






                                                         Reserve for                   Other Policy
                                                        Future Policy                   Claims and
                                           Deferred       Benefits,                  Benefits Payable
                                            Policy         Losses,                     (Funds Held
                                         Acquisition     Claims and        Unearned    Under Deposit
Segment                                      Costs      Loss Expenses      Premiums      Contracts)
- - - - - - -----------------------------------------------------------------------------------------------------
                                                                         
Property and Casualty:
           Personal Lines:
                 Personal Auto           $      65.6     $   1,125.2      $     435.6
                 Homeowners                     82.5           223.1            394.9
                 Other Personal                 22.8            79.9            118.6
           Commercial Lines:
                 SBI                           102.5         1,561.1            561.1
                 SAFECO Commercial              40.1         1,119.6            255.0
           Surety                               11.6           (58.8)            62.9
           Other                                 0.3           328.5             16.2
                                         --------------------------------------------
                 Total                         325.4         4,378.6          1,844.3
                                         --------------------------------------------
Life:
           Retirement Services                 103.4            12.7               --     $   5,782.3
           Settlement Annuities                   --              --               --         5,823.4
           Group                                13.7            80.9              2.2              --
           Individual                          156.3           225.7              6.6         2,157.2
           Other                                  --              --               --              --
                                         ------------------------------------------------------------
                 Total                         273.4           319.3              8.8        13,762.9
                                         ------------------------------------------------------------
Credit                                            --              --               --              --
Asset Management                                  --              --               --              --
Other and Eliminations(1)                         --              --               --              --
                                         ------------------------------------------------------------
                 Consolidated Totals     $     598.8     $   4,697.9      $   1,853.1     $  13,762.9
                                         ============================================================





                                     Year Ended December 31, 1999
                                     ----------------------------------------------------------------------------------------------
                                     (In Millions)
                                                                                                        Other
                                                                                                      Operating
                                                                                                        Costs
                                                                                                      (Including
                                                                                                      Dividends to
                                                                                                      Policyholders,
                                                                                                        Goodwill
                                                                        Benefits,      Amortization   Amortization
                                                                         Claims,       of Deferred    and Deferral
                                       Premiums and        Net         Losses and         Policy       of Policy          Net
                                       Service Fee      Investment      Adjustment      Acquisition    Acquisition       Premiums
Segment                                  Revenues         Income         Expenses          Costs          Costs)         Written
- - - - - - -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Property and Casualty:
           Personal Lines:
                 Personal Auto          $   1,725.6     $     131.0     $   1,382.7     $     211.0     $     102.0     $   1,722.5
                 Homeowners                   708.3            51.9           544.5           190.5            92.0           722.5
                 Other Personal               177.7            15.8            97.8            57.2            27.7           182.2
           Commercial Lines:
                 SBI                        1,017.6           141.7           830.8           190.8           179.5         1,115.7
                 SAFECO Commercial            686.4            97.2           553.8           124.8           115.2           676.0,
           Surety                              59.4             3.0            17.9            17.9             8.4            59.8
           Other                                7.9            21.7             4.3             0.8            43.8             5.1
                                        -------------------------------------------------------------------------------------------
                 Total                      4,382.9           462.3         3,431.8           793.0           568.6     $   4,483.8
                                        --------------------------------------------------------------------------------===========
Life:
           Retirement Services                 32.9           410.9           310.5            37.2            43.6
           Settlement Annuities                 1.1           486.6           423.0              --            22.6
           Group                              193.9             1.9           157.1             4.4            53.6
           Individual                         119.8           144.7           181.6             5.5            47.3
           Other                               13.2            76.0              --              --            16.0
                                        ---------------------------------------------------------------------------
                 Total                        360.9         1,120.1         1,072.2            47.1           183.1
                                        ---------------------------------------------------------------------------
Credit                                           --              --              --              --            97.2
Asset Management                                 --              --              --              --            30.7
Other and Eliminations(1)                        --             2.7              --              --           161.1
                                        ---------------------------------------------------------------------------
                 Consolidated Totals    $   4,743.8     $   1,585.1     $   4,504.0     $     840.1     $   1,040.7
                                        ===========================================================================



(1)      Real Estate operations reported separately in 1998 are combined with
         Other and Eliminations in 1999. The real estate operations are
         currently being disposed of; its operations are not material to the
         consolidated financial statements.


   35

SAFECO CORPORATION AND SUBSIDIARIES                                         F-9
Supplementary Insurance Information                                Schedule III
                                                                    (Continued)



December 31, 1998
- - - - - - -------------------------------------------------------------------------------------------------
(In Millions)






                                                         Reserve for                  Other Policy
                                                        Future Policy                  Claims and
                                          Deferred        Benefits,                  Benefits Payable
                                           Policy          Losses,                     (Funds Held
                                         Acquisition     Claims and        Unearned    Under Deposit
Segment                                     Costs       Loss Expenses      Premiums     Contracts)
- - - - - - -----------------------------------------------------------------------------------------------------
                                                                          
Property and Casualty:
           Personal Lines:
                 Personal Auto           $      67.6     $   1,046.9      $     438.7
                 Homeowners                     78.8           215.2            380.3
                 Other Personal                 22.8            91.6            117.8
           Commercial Lines:
                 SBI                            87.3         1,504.8            463.0
                 SAFECO Commercial              42.6         1,072.0            268.7
           Surety                                8.2           (59.3)            62.3
           Other                                 0.7           348.7             11.4
                                         --------------------------------------------
                 Total                         308.0         4,219.9          1,742.2
                                         --------------------------------------------
Life:
           Retirement Services                  92.6            12.8               --     $   5,819.0
           Settlement Annuities                   --              --               --         5,531.6
           Group                                 9.8            83.3              2.3              --
           Individual                          110.7           223.5              6.4         1,367.5
           Other                                                  --               --              --
                                         ------------------------------------------------------------
                 Total                         213.1           319.6              8.7        12,718.1
                                         ------------------------------------------------------------
Real Estate                                       --              --               --              --
Credit                                            --              --               --              --
Asset Management                                  --              --               --              --
Other and Eliminations                            --              --               --              --
                                         ------------------------------------------------------------
                 Consolidated Totals     $     521.1     $   4,539.5      $   1,750.9     $  12,718.1
                                         ============================================================





                                        Year Ended December 31, 1998
                                        -------------------------------------------------------------------------------------------
                                        (In Millions)
                                                                                                         Other
                                                                                                       Operating
                                                                                                         Costs
                                                                                                       (Including
                                                                                                      Dividends to
                                                                                                      Policyholders,
                                                                                                        Goodwill
                                                                      Benefits,      Amortization     Amortization
                                                                       Claims,       of Deferred      and Deferral
                                        Premiums and       Net       Losses and         Policy          of Policy          Net
                                         Service Fee   Investment    Adjustment       Acquisition      Acquisition      Premiums
Segment                                    Revenues       Income       Expenses          Costs            Costs)         Written
- - - - - - -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                      
Property and Casualty:
           Personal Lines:
                 Personal Auto           $   1,729.7    $     139.5    $   1,302.0     $     210.8      $     114.3     $   1,740.5
                 Homeowners                    686.7           54.3          532.9           182.4             98.9           701.4
                 Other Personal                165.2           16.0           95.6            51.7             28.0           178.0
           Commercial Lines:
                 SBI                           911.6          144.2          670.1           175.6            140.7           927.6
                 SAFECO Commercial             640.9           98.9          438.7           110.7            119.3           648.8
           Surety                               58.5            3.4           16.8            14.1              8.4            58.8
           Other                                15.7           23.9            7.1            (0.4)            43.0             1.5
                                         ------------------------------------------------------------------------------------------
                 Total                       4,208.3          480.2        3,063.2           744.9            552.6     $   4,256.6
                                         -------------------------------------------------------------------------------===========
Life:
           Retirement Services                  25.2          411.7          349.8            26.8             79.7
           Settlement Annuities                  1.5          449.4          399.1              --             21.1
           Group                               203.1            2.7          161.1             3.8             55.0
           Individual                          110.2           98.4          135.5             8.6             62.2
           Other                                13.4           78.8             --              --             19.4
                                         --------------------------------------------------------------------------
                 Total                         353.4        1,041.0        1,045.5            39.2            237.4(1)
                                         --------------------------------------------------------------------------
Real Estate                                       --             --             --              --             72.6
Credit                                            --             --             --              --             87.2
Asset Management                                  --             --             --              --             31.2
Other and Eliminations                            --           (2.3)            --              --            115.5
                                         --------------------------------------------------------------------------
                 Consolidated Totals     $   4,561.7    $   1,518.9    $   4,108.7     $     784.1      $   1,096.5
                                         ==========================================================================



(1)      Life other operating costs for 1998 include the $46.8 million write-off
         of deferred acquisition costs.

   36

SAFECO CORPORATION AND SUBSIDIARIES                                         F-10
Reinsurance                                                          Schedule IV
Year Ended December 31
- - - - - - --------------------------------------------------------------------------------
(In Millions)



                                                                                                                      Percentage
                                                              Ceded to           Assumed                              of Amount
                                              Gross             Other          from Other                              Assumed
                                              Amount          Companies         Companies       Net Amount             to Net
                                             ------------------------------------------------------------------------------------
                                                                                                       
2000
Life Insurance In Force at Year End          $55,077.6        $(8,815.0)        $   184.2        $46,446.8              0.4%
                                             =============================================================

Premiums earned:
          Life Insurance                     $   231.7        $   (18.8)        $    16.6        $   229.5              7.2%
          Accident/Health Insurance              269.1            (15.1)             19.2            273.2              7.0%
          Property/Casualty Insurance          4,717.6           (163.0)              8.8          4,563.4              0.2%
                                             -------------------------------------------------------------
              Total                          $ 5,218.4        $  (196.9)        $    44.6        $ 5,066.1              0.9%
                                             =============================================================


1999
Life Insurance In Force at Year End          $48,021.0        $(6,168.8)        $   153.8        $42,006.0              0.4%
                                             =============================================================

Premiums earned:
          Life Insurance                     $   215.2        $   (14.2)        $     0.7        $   201.7              0.3%
          Accident/Health Insurance              171.9            (12.7)               --            159.2              0.0%
          Property/Casualty Insurance          4,539.4           (164.4)              7.9          4,382.9              0.2%
                                             -------------------------------------------------------------
              Total                          $ 4,926.5        $  (191.3)        $     8.6        $ 4,743.8              0.2%
                                             =============================================================


1998
Life Insurance In Force at Year End          $45,009.4        $(5,378.4)        $   192.2        $39,823.2              0.5%
                                             =============================================================

Premiums earned:
          Life Insurance                     $   198.8        $   (13.1)        $     0.9        $   186.6              0.5%
          Accident/Health Insurance              174.8             (9.6)              1.6            166.8              1.0%
          Property/Casualty Insurance          4,378.5           (188.5)             18.3          4,208.3              0.4%
                                             -------------------------------------------------------------
              Total                          $ 4,752.1        $  (211.2)        $    20.8        $ 4,561.7              0.5%
                                             =============================================================



   37

SAFECO CORPORATION
Supplemental Information Concerning Consolidated                            F-11
Property-Casualty Insurance Operations                               Schedule VI
- - - - - - --------------------------------------------------------------------------------
(In Millions)

Affiliation with Registrant: Property-Casualty Subsidiaries:



December 31                                                                2000                1999               1998
- - - - - - -------------------------------------------------------------------------------------------------------------------------
                                                                                                        
          Deferred Policy Acquisition Costs                              $  312.1            $  325.4            $  308.0

          Reserve for Losses and Adjustment Expenses                      4,612.7             4,378.6             4,219.9

          Discount Deducted from Loss Reserves                                 --                  --                  --

          Unearned Premiums                                               1,826.9             1,844.3             1,742.2





Year Ended December 31                                                     2000                1999                1998
- - - - - - -------------------------------------------------------------------------------------------------------------------------
                                                                                                        
          Earned Premiums                                                $4,563.4            $4,382.9            $4,208.3

          Net Investment Income                                             460.5               462.3               480.2

          Loss and Adjustment Expenses Incurred Related to:
              Current Year                                                3,621.7             3,353.0             3,163.2
              Prior Year                                                    148.3                78.8              (100.0)

          Amortization of Deferred Policy Acquisition Expenses              796.6               793.0               744.9

          Paid Losses and Adjustment Expenses                             3,570.0             3,329.0             3,178.8

          Net Premiums Written                                            4,539.7             4,483.8             4,256.6



   38

SAFECO CORPORATION AND SUBSIDIARIES
Exhibit Index
- - - - - - --------------------------------------------------------------------------------


       Exhibit 3.1            Bylaws (as last amended January 26, 2001).

       Exhibit 3.2*           Restated Articles of Incorporation (as amended May
                              7,1997), filed as Exhibit 3.2 to SAFECO's
                              Quarterly Report on Form 10-Q for the quarter
                              ended June 30, 1997 (File No. 1-6563), are
                              incorporated herein by this reference.

       Exhibit 4.1            SAFECO agrees to furnish the Securities and
                              Exchange Commission, upon request, with copies of
                              all instruments defining rights of holders of
                              long-term debt of SAFECO and its consolidated
                              subsidiaries.

       Exhibit 4.2*           Indenture, dated as of July 15, 1997, between
                              SAFECO and The Chase Manhattan Bank, as Trustee,
                              filed as Exhibit 4.2 to SAFECO's Quarterly Report
                              on Form 10-Q for the quarter ended June 30, 1997
                              (File No. 1-6563), is incorporated herein by this
                              reference.

       Exhibit 4.3*           Form of Certificate of Exchange Junior
                              Subordinated Debenture filed as Exhibit 4.2 to
                              SAFECO's Registration Statement on Form S-4 (No.
                              333-38205) dated October 17,1997, is incorporated
                              herein by this reference.

       Exhibit 4.4*           Certificate of Trust of SAFECO Capital Trust I
                              dated June 18, 1997, filed as Exhibit 4.4 to
                              SAFECO's Quarterly Report on Form 10-Q for the
                              quarter ended June 30, 1997 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 4.5*           Amended and Restated Declaration of Trust of
                              SAFECO Capital Trust I dated as of July 15, 1997,
                              filed as Exhibit 4.5 to SAFECO's Quarterly Report
                              on Form 10-Q for the quarter ended June 30, 1997
                              (File No. 1-6563), is incorporated herein by this
                              reference.

       Exhibit 4.6*           Form of Exchange Capital Security Certificate for
                              SAFECO Capital Trust I filed as Exhibit 4.5 to
                              SAFECO's Registration Statement on Form S-4 (No.
                              333-38205) dated October 17, 1997, is incorporated
                              herein by this reference.

       Exhibit 4.7*           Form of Exchange Guarantee of SAFECO relating to
                              the Exchange Capital Securities, filed as Exhibit
                              4.6 to SAFECO's Registration Statement on Form S-4
                              (No. 333-38205) dated October 17,1997, is
                              incorporated herein by this reference.

       Exhibit 4.8*           Indenture, dated as of February 15, 2000, among
                              SAFECO and The Chase Manhattan Bank, N.A., as
                              Trustee, filed as Exhibit 4.8 to SAFECO's Annual
                              Report on Form 10-K for the fiscal year ended
                              December 31, 1999 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 4.9*           Form of 7.875% Notes due 2003, filed as Exhibit
                              4.9 to SAFECO's Annual Report on Form 10-K for the
                              fiscal year ended December 31, 1999 (File No.
                              1-6563), is incorporated herein by this reference.

       Exhibit 4.10           Form of SAFECO Agency Stock Purchase Plan Terms
                              and Conditions as Agreed to by the Agency.

       Exhibit 10.1*          Purchase and Sale Agreement by and between
                              Washington Square, Inc., Kitsap Associates Limited
                              Partnership, Winmar Cascade, Inc., Winmar Oregon,
                              Inc., Winmar of Kitsap, Inc., SCIT, Inc., Town
                              Center Associates, and Winmar Company, Inc., as
                              sellers; and The Macerich Partnership, L.P., and
                              Ontario Teachers' Pension Plan Board, as
                              purchaser, dated December 11, 1998, filed as
                              Exhibit 10.1 to SAFECO's Annual Report on Form
                              10-K for the fiscal year ended December 31, 1998
                              (File No. 1-6563), is incorporated herein by this
                              reference. SAFECO agrees to furnish the Securities
                              and Exchange Commission, upon request, with copies
                              of all omitted schedules to the foregoing Purchase
                              and Sale Agreement.

       Exhibit 10.2*          Five-Year Credit Agreement dated as of September
                              24, 1997, among SAFECO; Bank of America National
                              Trust and Savings Association, as Agent; Mellon
                              Bank, N.A., as Documentation Agent; The Chase
                              Manhattan Bank, as Syndication Agent; and the
                              various co-agents, lead managers, and financial
                              institutions identified in said Credit Agreement
                              as a party thereto, filed as Exhibit 10.1 to
                              SAFECO's Annual Report on Form 10-K for the fiscal
                              year ended December 31, 1997 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 10.3*          SAFECO Corporation Deferred Compensation
                              Plan for Directors, As Amended and Restated on
                              August 2, 2000, filed as Exhibit 10.1 to SAFECO's
                              Quarterly Report on Form 10-Q for the quarter
                              ended September 30, 2000 (File No. 1-6563), is
                              incorporated herein by this reference.


   39

SAFECO CORPORATION AND SUBSIDIARIES
Exhibit Index                                                        (Continued)
- - - - - - --------------------------------------------------------------------------------


       Exhibit 10.4*          SAFECO Deferred Compensation Plan for Executives,
                              As Amended and Restated on August 2, 2000, filed
                              as Exhibit 10.2 to SAFECO's Quarterly Report on
                              Form 10-Q for the quarter ended September 30, 2000
                              (File No. 1-6563), is incorporated herein by this
                              reference.

       Exhibit 10.5*          The following documents are incorporated herein by
                              this reference: Form of Executive Severance
                              Agreements between SAFECO and each of Rod A.
                              Pierson and James W. Ruddy, in each case dated
                              March 11, 1999, and between SAFECO and Boh A.
                              Dickey dated May 5, 1999, filed as Exhibit 10.1 to
                              SAFECO's Quarterly Report on Form 10-Q for the
                              quarter ended March 31,1999 (File No. 1-6563); and
                              Executive Severance Agreement between SAFECO,
                              SAFECO Life Insurance Company and Randall H.
                              Talbot dated March 11, 1999, filed as Exhibit 10.2
                              to SAFECO's Quarterly Report on Form 10-Q for the
                              quarter ended March 31, 1999 (File No. 1-6563).

       Exhibit 10.6*          SAFECO Long-Term Incentive Plan of 1997 as Amended
                              and Restated May 5, 1999, filed as Exhibit 10.3 to
                              SAFECO's Quarterly Report on Form 10-Q for the
                              quarter ended March 31, 1999 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 10.7*          Form of Stock Option Contract granted under the
                              SAFECO Long-Term Incentive Plan of 1997, filed as
                              Exhibit 10.6 to SAFECO's Annual Report on Form
                              10-K for the fiscal year ended December 31, 1997
                              (File No. 1-6563), is incorporated herein by this
                              reference.

       Exhibit 10.8*          Form of Nonqualified Stock Option Award Agreement
                              - Non-Employee Director granted under the SAFECO
                              Long-Term Incentive Plan of 1997 as Amended and
                              Restated May 5, 1999, filed as Exhibit 10.4 to
                              SAFECO's Quarterly Report on Form 10-Q for the
                              quarter ended March 31, 1999 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 10.9*          Form of Restricted Stock Rights Award Agreement
                              granted under the SAFECO Long-Term Incentive Plan
                              of 1997, filed as Exhibit 10.7 to SAFECO's Annual
                              Report on Form 10-K for the fiscal year ended
                              December 31, 1997 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 10.10*         Form of Performance Stock Rights Award Agreement
                              granted under the SAFECO Long-Term Incentive Plan
                              of 1997, filed as Exhibit 10.8 to SAFECO's Annual
                              Report on Form 10-K for the fiscal year ended
                              December 31, 1997 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 10.11*         SAFECO Incentive Plan of 1987 contained in the
                              Prospectus dated November 10, 1989, as amended
                              January 31, 1990, filed as Exhibit 10 to SAFECO's
                              Annual Report on Form 10-K for the fiscal year
                              ended December 31, 1989 (File No. 1-6563), and the
                              Supplement to such Prospectus dated November 8,
                              1990, filed as Exhibit 10 to SAFECO's Annual
                              Report on Form 10-K for the fiscal year ended
                              December 31, 1990 (File No. 1-6563), are
                              incorporated herein by this reference.

       Exhibit 10.12*         Separation Agreement between SAFECO Insurance
                              Company of America and W. Randall Stoddard dated
                              August 2, 2000, filed as Exhibit 10.3 to SAFECO's
                              Quarterly Report on Form 10-Q for the quarter
                              ended September 30, 2000 (File No. 1-6563), is
                              incorporated herein by this reference.

       Exhibit 10.13          Separation Agreement between SAFECO Corporation
                              and Roger H. Eigsti dated October 3, 2000.

       Exhibit 11             Computation of Income Per Share

       Exhibit 12             Computation of Ratio of Earnings to Fixed Charges

       Exhibit 13             2000 Annual Report to Shareholders

       Exhibit 21             Subsidiaries of the Registrant


* Copies of Exhibits are available without charge by making a written request
  to:

                               Rod A. Pierson
                               Senior Vice President and Chief Financial Officer
                               SAFECO Corporation
                               SAFECO Plaza, Seattle, Washington 98185