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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who started this subject	10/2/2003 9:31:46 PM
From: russwinter	Read Replies (1) of 110194

Associated Press Insurer Safeco to Eliminate 500 Jobs Monday September 29, 8:26 pm ET Insurer Safeco to Cut 500 Jobs, Sell Its Life and Investment Operations NEW YORK (AP) -- Safeco Corp. plans to sell its life and investment operations and eliminate 500 jobs in ongoing businesses as the company continues its turnaround as a property-casualty insurer for small to medium-size businesses. The insurer also announced Monday that it plans to take charges totaling $133 million, or 96 cents a share, to boost its reserves for its workers compensation business -- most written in 2000 and earlier. Mike McGavick, Safeco's chairman and chief executive, said the Seattle insurer lacked the scale to compete effectively for the life business. The company considered it wiser to focus its resources on its core property-casualty business. "On the life, while we've been producing good results, we can't see a path to produce excellent results," McGavick said. "One of the big keys in the life business is your scale." A number of insurers have sold renewal rights to some businesses or sought out merger partners recently as they try to gain scale or improve their focus on core businesses in recent months. Last week, AXA Financial Inc. agreed to acquire Mony Group Inc. for $1.5 billion in cash. On Sunday, Canadian insurer Manulife Financial Corp. announced it plans to acquire John Hancock Financial Services in an all-stock deal valued at more than $10 billion. Safeco hopes to complete the sale of the life and investments business within six months, McGavick said. The life business generated pretax operating earnings of $237 million last year and had about $23.2 billion in total assets. McGavick said the job cuts will be in its back-office and support operations, mostly in Seattle. Claims and sales operations aren't expected to be affected. Meanwhile, Safeco plans to take two charges related to the workers-compensation business -- a $117 million charge to settle and defend claims and $16 million for claims handling costs. Shares of Safeco closed Monday up 22 cents at $34.74 on the Nasdaq Stock Market.

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