Safeco Launches Initiatives, Reports Improved 3Q

After taking a small step backward last quarter with disappointing results, Seattle-based Safeco reported better-than-expected earnings for the third quarter of 2000. According to Boh Dickey, president and chief operating officer, the company expects even better underwriting results over the next several quarters.

During the third quarter, Safeco Property & Casualty companies recorded an underwriting loss of $116 million. This is an improvement over an underwriting loss of $139 million in the third quarter of 1999, as well as the underwriting losses recorded in each of the first two quarters of this year.

Late last year SAFECO launched a recovery plan expected to take at least 24 months to fully implement. Elements include returning rates to adequate levels, disciplined underwriting of insurance policies, and aggressive expense management. As a result, Safeco management has been busy taking aggressive steps to improve performance and is focused on returning the company to acceptable levels of profitability. The company launched two separate online initiatives during the third quarter.

The first initiative is a new suite of online products and services that Safeco began offering last month. The company got the ball rolling with auto policy sales in Oregon and an online term life sales pilot with 15 agencies in Oregon, Kansas and Washington state. On Nov. 1, sales expanded to include Tennessee and Illinois, and the plan is to continue with nationwide expansion early next year.

Safeco’s Internet model includes something that other sites have been known to leave out—and that’s the advice and expertise of an independent agent or financial advisor. People without a lot of free time to surf the web have the option of “virtually visiting” an independent agent and buying an auto policy in as little as 15 minutes or term life coverage in five minutes.

Or, for the more detail-focused consumer, the website provides real-time web-chat, e-mail and immediate “call me” features so that those who need quick answers will receive them from licensed insurance specialists as they work through the application. Regardless, Safeco was careful not to eliminate the independent agent from the online process.

During his keynote address at the Sacramento “I” Day on Oct. 13, Dickey stressed Safeco’s commitment to the independent agency system. “We’ve hitched our cart to the independent agency system and that won’t change,” he said.

Surety Online
For its second initiative, Safeco launched its “Surety Online” program, a self-service

system that will help independent agents process bonds step-by-step through the Internet. Safeco launched the program in an effort to help its licensed agents expand their markets by selling bonds.

The fully integrated Surety Online system will produce a complete and printable bond package, including a bond form, a bond-specific power-of-attorney, a transaction receipt and other ancillary documents for an agent once the transaction is complete.

To create the XML-based application, Safeco approached JetForm Corporation, a global provider of e-Process solutions. Initially, the application will be available to agents in Washington, Oregon, Illinois and Indiana. The remaining states will be rolled out through second-quarter 2001.

Safeco Business Insurance
In other news, Safeco announced its American States Business Insurance (ASBI)

enterprise will now be known as Safeco Business Insurance—bringing the brand in line with the corporation’s two other p/c units, Safeco Personal Insurance and Safeco Commercial Insurance.

Safeco acquired Indianapolis-based American States for $2.8 billion in 1997 in an effort to fill the gap between its sizeable personal lines and large commercial books of business, yet the company struggled with the integration of ASBI for months.

Lastly, Safeco has agreed to pay more than $1.1 million to Randy Stoddard in exchange for his resignation as head of the company’s property and casualty operations. The agreement was made in August, but only disclosed Nov 7.

According to federal filings, the payments include $375,000 in exchange for Stoddard’s releasing any claims he might have against Safeco and $763,181 payable over two years for his agreeing not to disparage, compete against or solicit employees from the company.

The information was contained in Stoddard’s separation agreement, part of Safeco’s third-quarter report to the Securities and Exchange Commission. Stoddard resigned in August as part of a management shakeup.