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1
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.
2
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
4
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
======================================
4
6
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
7
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
6
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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
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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.
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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.
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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