-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S5JUbT6KnZY3uM1drYWXttmuoigBjFto51i2K/+MRz0gTlOMbya2NsepNTfLGbSF X95jfVjzy06t9ihjzRzLLA== /in/edgar/work/20000810/0000891020-00-001434/0000891020-00-001434.txt : 20000921 0000891020-00-001434.hdr.sgml : 20000921 ACCESSION NUMBER: 0000891020-00-001434 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAFECO CORP CENTRAL INDEX KEY: 0000086104 STANDARD INDUSTRIAL CLASSIFICATION: [6331 ] IRS NUMBER: 910742146 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06563 FILM NUMBER: 690777 BUSINESS ADDRESS: STREET 1: 4333 BROOKLYN AVE NE STREET 2: SAFECO PLAZA CITY: SEATTLE STATE: WA ZIP: 98185 BUSINESS PHONE: 2065455000 MAIL ADDRESS: STREET 1: 4333 BROOKLYN AVE NE CITY: SEATTLE STATE: WA ZIP: 98185 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL AMERICA CORP DATE OF NAME CHANGE: 19680529 10-Q 1 e10-q.txt FORM 10-Q FOR PERIOD ENDED JUNE 30, 2000 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 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) 127,629,632 shares of no par value common stock were outstanding at June 30, 2000. 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 [ ]. 2 SAFECO CORPORATION TABLE OF CONTENTS AND SIGNATURES - --------------------------------------------------------------------------------
Part I - Financial Information Page ---- Item 1. Financial Statements: Consolidated Balance Sheet June 30, 2000 and December 31, 1999 3 Statement of Consolidated Income and Retained Earnings for the Six Months and Quarters Ended June 30, 2000 and 1999 5 Statement of Consolidated Cash Flows for the Six Months Ended June 30, 2000 and 1999 6 Statement of Consolidated Comprehensive Income (Loss) for the Six Months and Quarters Ended June 30, 2000 and 1999 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II - Other Information Item 1. Legal Proceedings 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information - Bylaw Amendments 16 Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES Pursuant to the requirements 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. SAFECO CORPORATION ----------------------------------- Registrant ROD A. PIERSON ----------------------------------- Rod A. Pierson Senior Vice President Dated August 10, 2000 and Chief Financial Officer H. PAUL LOWBER ----------------------------------- H. Paul Lowber Vice President, Controller Dated August 10, 2000 and Chief Accounting Officer -2- 3 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET (In Millions) - --------------------------------------------------------------------------------
June 30 December 31 ASSETS 2000 1999 ------ --------- ----------- Investments: Fixed Maturities Available-for-Sale, at Market Value (Amortized cost: $17,759.2; $17,258.9) $17,394.6 $16,830.7 Fixed Maturities Held-to-Maturity, at Amortized Cost (Market value: $2,781.0; $2,772.1) 2,743.9 2,733.3 Marketable Equity Securities, at Market Value (Cost: $1,081.4; $972.5) 1,997.5 2,004.7 Mortgage Loans 815.8 770.4 Real Estate (At cost less accumulated depreciation) 57.0 106.5 Policy Loans 90.4 91.4 Other Invested Assets 16.8 18.0 Short-Term Investments 315.5 376.0 --------- --------- Total Investments 23,431.5 22,931.0 Cash 94.4 112.3 Accrued Investment Income 327.6 328.1 Finance Receivables (Less unearned finance charges and allowance for doubtful accounts) 1,543.9 1,460.6 Premiums and Other Service Fees Receivable 1,109.0 1,058.3 Other Notes and Accounts Receivable 51.9 147.2 Deferred Income Tax Recoverable (Includes tax on unrealized appreciation of investment securities: $193.0; $211.3) 135.3 105.3 Reinsurance Recoverables 406.6 384.8 Deferred Policy Acquisition Costs 610.4 598.8 Land, Buildings and Equipment for Company Use (At cost less accumulated depreciation) 415.1 344.8 Goodwill (Accumulated amortization: $172.3; $142.5) 1,331.0 1,354.9 Other Assets 326.9 343.4 Separate Account Assets 1,398.5 1,403.2 --------- --------- TOTAL $31,182.1 $30,572.7 ========= =========
(continued) -3- 4 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET (Continued) (In Millions) - -------------------------------------------------------------------------
June 30 December 31 LIABILITIES AND SHAREHOLDERS' EQUITY 2000 1999 ------------------------------------ --------- ----------- Losses and Adjustment Expense $ 4,545.0 $ 4,416.4 Life Policy Liabilities 318.0 281.5 Unearned Premiums 1,933.5 1,853.1 Funds Held Under Deposit Contracts 14,098.6 13,762.9 Debt: Commercial Paper 556.9 508.8 Credit Company Borrowings ($1,013.4 maturing within one year) 1,024.6 1,323.1 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 Other ($5.9 maturing within one year) 82.6 84.2 Other Liabilities 1,479.7 1,396.8 Current Income Taxes 7.1 6.1 Separate Account Liabilities 1,398.5 1,403.2 --------- --------- Total Liabilities 26,144.5 25,436.1 --------- --------- Corporation-Obligated, Mandatorily Redeemable Capital Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of the Corporation ("Capital Securities") 842.8 842.5 --------- --------- 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: (7.2; 7.3) Shares Issued and Outstanding: (127.6; 128.9) 833.9 841.7 Retained Earnings 3,005.4 3,062.7 Total Accumulated Other Comprehensive Income - Unrealized Appreciation of Investment Securities, Net of Tax 355.5 389.7 --------- --------- Total Shareholders' Equity 4,194.8 4,294.1 --------- --------- TOTAL $31,182.1 $30,572.7 ========= =========
-4- 5 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS (In Millions Except Per Share Amounts) - --------------------------------------------------------------------------------
Six Months Ended Three Months Ended June 30 June 30 ------------------------- ------------------------- 2000 1999 2000 1999 --------- --------- --------- --------- REVENUES: Insurance: Property and Casualty Earned Premiums $ 2,268.3 $ 2,147.7 $ 1,136.6 $ 1,083.3 Life Premiums and Other Revenues 255.5 177.0 130.3 90.4 --------- --------- --------- --------- Total 2,523.8 2,324.7 1,266.9 1,173.7 Credit 65.4 54.1 33.7 27.1 Asset Management 22.8 21.3 12.4 11.1 Other 47.2 61.0 21.3 28.8 Net Investment Income 813.3 785.2 407.6 395.6 Realized Investment Gain 57.2 86.3 26.1 30.0 --------- --------- --------- --------- Total 3,529.7 3,332.6 1,768.0 1,666.3 --------- --------- --------- --------- EXPENSES: Losses, Adjustment Expense and Policy Benefits 2,484.5 2,137.4 1,245.9 1,094.0 Commissions 403.8 395.8 202.0 202.9 Personnel Costs 241.4 232.1 120.4 108.5 Interest 80.5 67.1 41.7 33.3 Goodwill Amortization 29.9 27.3 15.1 13.8 Other 219.3 223.0 111.9 122.1 Amortization of Deferred Policy Acquisition Costs 419.8 420.8 207.4 219.2 Deferral of Policy Acquisition Costs (430.5) (428.3) (218.4) (222.0) --------- --------- --------- --------- Total 3,448.7 3,075.2 1,726.0 1,571.8 --------- --------- --------- --------- Income before Income Taxes 81.0 257.4 42.0 94.5 --------- --------- --------- --------- Provision (Benefit) for Income Taxes: Current 14.1 78.9 14.3 45.8 Deferred (14.4) (35.5) (12.6) (35.6) --------- --------- --------- --------- Total (0.3) 43.4 1.7 10.2 --------- --------- --------- --------- Income before Distributions on Capital Securities 81.3 214.0 40.3 84.3 Distributions on Capital Securities, Net of Tax (22.4) (22.4) (11.2) (11.2) --------- --------- --------- --------- Net Income 58.9 191.6 29.1 73.1 Retained Earnings, Beginning of Period 3,062.7 3,257.2 3,023.8 3,326.6 Amortization of Underwriting Compensation on Capital Securities (0.2) (0.2) (0.1) (0.1) Dividends Declared (94.4) (96.4) (47.2) (48.7) Common Stock Reacquired (21.6) (184.9) (0.2) (183.6) --------- --------- --------- --------- Retained Earnings, End of Period $ 3,005.4 $ 3,167.3 $ 3,005.4 $ 3,167.3 ========= ========= ========= ========= Net Income Per Share of Common Stock: Diluted $ 0.46 $ 1.41 $ 0.23 $ 0.54 ========= ========= ========= ========= Basic $ 0.46 $ 1.42 $ 0.23 $ 0.55 ========= ========= ========= ========= Dividends Paid to Common Shareholders $ 0.74 $ 0.70 $ 0.37 $ 0.35 ========= ========= ========= ========= Average Number of Shares Outstanding During the Period: Diluted 128.0 135.6 127.7 134.5 ========= ========= ========= ========= Basic 127.9 135.2 127.6 134.1 ========= ========= ========= =========
-5- 6 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED CASH FLOWS (In Millions) - --------------------------------------------------------------------------------
Six Months Ended June 30 ----------------------- 2000 1999 -------- -------- OPERATING ACTIVITIES Insurance Premiums Received $2,471.1 $2,297.1 Dividends and Interest Received 817.1 806.9 Other Operating Receipts 125.1 131.7 Insurance Claims and Policy Benefits Paid (2,124.6) (1,825.4) Underwriting, Acquisition and Insurance Operating Costs Paid (865.5) (700.4) Interest Paid and Distributions on Capital Securities (101.8) (116.4) Other Operating Costs Paid (78.0) (76.8) Income Taxes Paid (0.9) (58.6) -------- -------- Net Cash Provided by Operating Activities 242.5 458.1 -------- -------- INVESTING ACTIVITIES Purchases of: Fixed Maturities Available-for-Sale (2,097.4) (2,642.5) Fixed Maturities Held-to-Maturity (1.5) -- Equities (236.9) (97.7) Other Investments (182.9) (251.7) Maturities of Fixed Maturities Available-for-Sale 481.4 624.9 Maturities of Fixed Maturities Held-to-Maturity 8.5 1.4 Sales of: Fixed Maturities Available-for-Sale 1,142.6 1,633.6 Fixed Maturities Held-to-Maturity* 0.1 6.3 Equities 219.2 123.1 Other Investments 252.0 592.2 Net Decrease (Increase) in Short-Term Investments 242.7 (18.3) Finance Receivables Originated or Acquired (333.8) (340.1) Principal Payments Received on Finance Receivables 248.0 208.2 Other (55.5) (159.5) -------- -------- Net Cash Used in Investing Activities (313.5) (320.1) -------- -------- FINANCING ACTIVITIES Funds Received Under Deposit Contracts 824.4 1,069.2 Return of Funds Held Under Deposit Contracts (672.5) (533.7) Proceeds from Notes and Mortgage Borrowings 300.0 -- Repayment of Notes and Mortgage Borrowings (16.0) (152.1) Net Repayment of Short-Term Borrowings (224.9) (17.1) Common Stock Reacquired (30.3) (216.8) Dividends Paid to Shareholders (94.9) (95.4) Other (32.7) (118.0) -------- -------- Net Cash Provided by (Used in) Financing Activities 53.1 (63.9) -------- -------- Net Increase (Decrease) in Cash (17.9) 74.1 Cash at the Beginning of Period 112.3 74.9 -------- -------- Cash at the End of Period $ 94.4 $ 149.0 ======== ========
*The sales of fixed maturities held-to-maturity were made due to evidence of significant deterioration in the bond issuer's creditworthiness. (continued) -6- 7 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED CASH FLOWS (Continued) (In Millions) - --------------------------------------------------------------------------------
Six Months Ended June 30 --------------------- 2000 1999 ------- ------- Net Income $ 58.9 $ 191.6 ------- ------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Realized Investment Gain (57.2) (86.3) Amortization and Depreciation 69.7 74.4 Amortization of Fixed Maturity Investments (19.9) (24.8) Deferred Income Tax Benefit (14.4) (35.5) Interest Expense on Deposit Contracts 267.2 294.7 Other Adjustments (1.7) (18.7) Changes in: Losses and Adjustment Expense 128.6 24.5 Life Policy Liabilities 36.5 2.9 Unearned Premiums 80.4 100.4 Accrued Income Taxes 1.0 7.2 Accrued Interest on Accrual Bonds (21.8) (23.2) Accrued Investment Income 0.5 0.4 Deferred Policy Acquisition Costs (11.6) (7.3) Other Assets and Liabilities (273.7) (42.2) ------- ------- Total Adjustments 183.6 266.5 ------- ------- Net Cash Provided by Operating Activities $ 242.5 $ 458.1 ======= =======
SAFECO CORPORATION AND SUBSIDIARIES STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (In Millions) - --------------------------------------------------------------------------------
Six Months Ended Three Months Ended June 30 June 30 --------------------- --------------------- 2000 1999 2000 1999 ------- ------- ------- ------- Net Income $ 58.9 $ 191.6 $ 29.1 $ 73.1 Other Comprehensive Loss, Net of Taxes: Change in Unrealized Appreciation of Investment Securities (34.2) (490.1) (57.4) (275.5) ------- ------- ------- ------- Comprehensive Income (Loss) $ 24.7 $(298.5) $ (28.3) $(202.4) ======= ======= ======= =======
-7- 8 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note 1 - Nature of Operations and Summary of Significant Accounting Policies SAFECO Corporation ("SAFECO" or the "Corporation") is a Washington corporation that owns operating subsidiaries in various segments of insurance and other financially related businesses. SAFECO's businesses operate on a nationwide basis. The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation of results for the interim periods have been included. It is suggested that these condensed consolidated financial statements and notes be read in conjunction with the financial statements and notes included in the Corporation's Form 10-K/A for the year ended December 31, 1999 which has been previously filed with the Commission. Certain reclassifications have been made to the prior year financial information to conform to the current year classifications. Note 2 - New Accounting Standards The Financial Accounting Standards Board (FASB) issued Statement 133, "Accounting for Derivative Instruments and Hedging Activities," in June 1998. The Statement amends or supersedes several previous FASB statements and requires recognizing all derivatives as either assets or liabilities in the statement of financial position and measuring those instruments at fair value. In June 1999, the FASB issued Statement 137 which allows entities to defer adoption of Statement 133 to fiscal years beginning after June 15, 2000. Statement 133 may still be adopted early, as of the beginning of any fiscal quarter that begins after June 1998. In June 2000, the FASB issued Statement 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities", which addresses a limited number of implementation issues arising from FAS 133. SAFECO will adopt the new statement no later than the first quarter of 2001. The impact of the Statement is currently being studied. Because of continuing emerging implementation guidance from the FASB, the effect of the new statement on the Corporation's financial statements has not yet been determined. Note 3 - Segment Data The operating segments are presented based on SAFECO's internal reporting structure and how management analyzes the operating results. These segments generally represent groups of related products. The property and casualty operations include four main reportable underwriting segments. The underwriting segments are Personal Lines, Commercial Lines, Surety and Other. Personal Lines is further split into Personal Auto, Homeowners and Other. Commercial Lines is further split into American States Business Insurance (ASBI) and SAFECO Commercial (SCI). ASBI delivers insurance products and services to small-to-medium sized businesses while SAFECO Commercial delivers insurance products and services to medium-to-large complex commercial clients. The life operations include five reportable segments which include Retirement Services, Settlement Annuities, Group, Individual and Other. Credit and Asset Management are distinct operations managed separately from the insurance operations. Other and Eliminations include corporate investment income, corporate expenses, results of the real estate operations and eliminations, none of which are individually significant. -8- 9 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - -------------------------------------------------------------------------------- Note 3 - Segment Data (continued) (in Millions)
SIX MONTHS ENDED UNDERWRITING PRETAX INCOME NET INCOME TOTAL JUNE 30, 2000 REVENUES GAIN (LOSS) (LOSS)* (LOSS) ASSETS - ---------------- -------- ------------ ------------- ---------- --------- Property and Casualty: Personal Lines: Personal Auto $ 855.6 $ (63.7) $ (8.2) $ 3,088.3 Homeowners 359.3 (52.2) (29.8) 1,321.4 Other 91.7 10.2 16.9 398.3 Commercial Lines: ASBI 586.0 (85.4) (19.1) 3,797.0 SAFECO Commercial 342.1 (70.0) (25.2) 2,435.9 Surety 30.3 7.1 8.0 100.7 Other 3.3 (3.0) 6.0 430.6 -------- ------- ------ --------- Total 2,268.3 $(257.0) (51.4) $ 41.2 11,572.2 -------- ======= ------ --------- Life: Retirement Services 19.8 20.2 7,425.6 Settlement Annuities 0.5 14.0 6,195.5 Group 158.1 0.7 107.9 Individual 66.6 13.7 3,050.3 Other 10.5 35.8 957.6 -------- ------ --------- Total 255.5 84.4 46.3 17,736.9 -------- ------ --------- Credit 67.9 8.9 5.7 1,747.9 Asset Management 22.8 8.3 5.4 80.0 Other and Eliminations 44.7 (26.4) (39.7) 45.1 -------- ------ ------ --------- Consolidated Totals $2,659.2 $ 23.8 $ 58.9 $31,182.1 ======== ====== ====== =========
SIX MONTHS ENDED UNDERWRITING PRETAX INCOME NET INCOME TOTAL JUNE 30, 1999 REVENUES GAIN (LOSS) (LOSS)* (LOSS) ASSETS - ---------------- -------- ------------ ------------- ---------- --------- Property and Casualty: Personal Lines: Personal Auto $ 862.5 $ 0.5 $ 59.9 $ 3,258.3 Homeowners 349.5 (34.6) (11.8) 1,382.2 Other 88.0 7.8 14.5 418.9 Commercial Lines: ASBI 478.5 (85.3) (21.4) 3,957.9 SAFECO Commercial 335.6 (13.6) 30.4 2,571.8 Surety 29.7 12.4 13.1 107.9 Other 3.9 (0.5) 10.2 457.9 -------- ------- ------ --------- Total 2,147.7 $(113.3) 94.9 $145.1 12,154.9 -------- ======= ------ --------- Life: Retirement Services 16.6 25.0 7,399.9 Settlement Annuities 0.7 19.6 6,142.4 Group 96.5 (11.6) 92.7 Individual 56.4 12.9 2,041.6 Other 6.8 37.4 1,142.5 -------- ------ --------- Total 177.0 83.3 53.2 16,819.1 -------- ------ --------- Credit 57.3 11.0 7.1 1,582.2 Asset Management 21.3 5.8 3.8 69.6 Other and Eliminations 57.8 (23.9) (17.6) 207.3 -------- ------ ------ --------- Consolidated Totals $2,461.1 $171.1 $191.6 $30,833.1 ======== ====== ====== =========
* Earnings before realized gains (losses), distributions on capital securities and income taxes. -9- 10 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) - -------------------------------------------------------------------------------- Note 3 - Segment Data (continued) (In Millions)
THREE MONTHS ENDED UNDERWRITING PRETAX INCOME NET INCOME TOTAL JUNE 30, 2000 REVENUES GAIN (LOSS) (LOSS)* (LOSS) ASSETS - ------------------ -------- ------------ ------------- ---------- --------- Property and Casualty: Personal Lines: Personal Auto $ 428.1 $ (23.9) $ 3.1 $ 3,088.3 Homeowners 180.4 (38.1) (27.0) 1,321.4 Other 46.1 5.8 9.2 398.3 Commercial Lines: ASBI 298.6 (26.4) 6.4 3,797.0 SAFECO Commercial 167.3 (43.5) (21.5) 2,435.9 Surety 14.8 2.4 2.9 100.7 Other 1.3 (0.7) 3.6 430.6 -------- ------- ------ --------- Total 1,136.6 $(124.4) (23.3) $ 17.3 11,572.2 -------- ======= ------ --------- Life: Retirement Services 9.3 9.0 7,425.6 Settlement Annuities 0.3 7.0 6,195.5 Group 81.8 4.7 107.9 Individual 34.4 6.6 3,050.3 Other 4.5 18.1 957.6 -------- ------ --------- Total 130.3 45.4 27.7 17,736.9 -------- ------ --------- Credit 35.1 4.0 2.4 1,747.9 Asset Management 12.4 4.8 3.1 80.0 Other and Eliminations 19.9 (15.0) (21.4) 45.1 -------- ------ ------ --------- Consolidated Totals $1,334.3 $ 15.9 $ 29.1 $31,182.1 ======== ====== ====== =========
THREE MONTHS ENDED UNDERWRITING PRETAX INCOME NET INCOME TOTAL JUNE 30, 1999 REVENUES GAIN (LOSS) (LOSS)* (LOSS) ASSETS - ------------------ -------- ------------ ------------- ---------- --------- Property and Casualty: Personal Lines: Personal Auto $ 432.1 $ (5.5) $ 31.8 $ 3,258.3 Homeowners 175.8 (15.9) (10.1) 1,382.2 Other 44.4 3.5 8.6 418.9 Commercial Lines: ASBI 243.9 (54.4) (33.9) 3,957.9 SAFECO Commercial 170.2 (11.7) 17.4 2,571.8 Surety 15.3 6.4 8.7 107.9 Other 1.6 0.6 5.2 457.9 -------- ------ ------ --------- Total 1,083.3 $(77.0) 27.7 $ 60.7 12,154.9 -------- ====== ------ --------- Life: Retirement Services 8.9 12.4 7,399.9 Settlement Annuities 0.4 10.0 6,142.4 Group 48.5 (8.7) 92.7 Individual 29.4 6.3 2,041.6 Other 3.2 18.6 1,142.5 -------- ------ --------- Total 90.4 38.6 23.3 16,819.1 -------- ------ --------- Credit 28.3 5.7 3.7 1,582.2 Asset Management 11.1 3.3 2.2 69.6 Other and Eliminations 27.6 (10.8) (16.8) 207.3 -------- ------ ------ --------- Consolidated Totals $1,240.7 $ 64.5 $ 73.1 $30,833.1 ======== ====== ====== =========
* Earnings before realized gains (losses), distributions on capital securities and income taxes. -10- 11 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- SAFECO Corporation Our net income for the first six months of 2000 was $58.9 million or $.46 per diluted share, compared with $1.41 per share for the same period in 1999. If we exclude realized gain from investments, our income was $.17 per diluted share, compared with $1.00 per share in 1999. The following summarized financial information sets forth the contributions of each business segment to our consolidated income.
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30 JUNE 30 --------------------- --------------------- 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------ (In Millions Except Per Share Amounts) Income (Loss) before Realized Gain and Income Taxes: * Property and Casualty Insurance: Underwriting Loss $(257.0) $(113.3) $(124.4) $ (77.0) Net Investment Income 227.6 230.0 112.1 115.7 Goodwill Amortization (22.0) (21.8) (11.0) (11.0) ------- ------- ------- ------- Total Property and Casualty (51.4) 94.9 (23.3) 27.7 Life 84.4 83.3 45.4 38.6 Credit 8.9 11.0 4.0 5.7 Asset Management 8.3 5.8 4.8 3.3 Corporate (26.4) (23.9) (15.0) (10.8) ------- ------- ------- ------- Total 23.8 171.1 15.9 64.5 ------- ------- ------- ------- Realized Gain before Taxes from: Security Investments 57.2 56.3 26.1 30.0 Real Estate Investments -- 30.0 -- -- ------- ------- ------- ------- Total 57.2 86.3 26.1 30.0 ------- ------- ------- ------- Income before Income Tax 81.0 257.4 42.0 94.5 ------- ------- ------- ------- Provision (Benefit) for Income Taxes on: Income before Realized Gain (20.2) 13.3 (7.4) 0.1 Realized Investment Gain 19.9 30.1 9.1 10.1 ------- ------- ------- ------- Total (0.3) 43.4 1.7 10.2 ------- ------- ------- ------- Income before Distributions on Capital Securities 81.3 214.0 40.3 84.3 Distributions on Capital Securities, Net of Tax (22.4) (22.4) (11.2) (11.2) ------- ------- ------- ------- Net Income $ 58.9 $ 191.6 $ 29.1 $ 73.1 ======= ======= ======= ======= Net Income Per Diluted Share of Common Stock: Income before Realized Gain $ .17 $ 1.00 $ .10 $ .40 Realized Gain .29 .41 .13 .14 ------- ------- ------- ------- Net Income $ .46 $ 1.41 $ .23 $ .54 ======= ======= ======= ======= Dividends Paid to Common Shareholders $ .74 $ .70 $ .37 $ .35
* Note: Income before Realized Gain and Income Taxes is a standard industry measurement used by management to analyze income from core operations and is presented to supplement net income as a measure of profitability. -11- 12 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) - -------------------------------------------------------------------------------- We are disappointed that we did not make more progress this quarter. The major reasons were severe weather, mainly affecting the homeowners line and several large losses in our large commercial (SCI) operation. We are pleased, however, with the improved results for the quarter in the American States Business Insurance (ASBI) line. The ASBI combined loss and expense ratio decreased to 108.8 from 120.6 in the first quarter. We also saw significant improvement in our Life Company group insurance operation which produced a profit of $4.7 million in the second quarter, compared with a loss of $4.0 million in the first quarter. Our property and casualty price increases continue to be on or ahead of schedule. We also continued to improve our expense ratio, which decreased over one point to 28.6% for the six months ended June 30, 2000, compared with 29.8% for calendar year 1999. We anticipate improved underwriting results in the third and fourth quarters of this year from price increases, expense reductions and elimination of unprofitable business. Property and Casualty Insurance Property and casualty operations for the six months of 2000 produced a pretax loss of $51 million before realized gain from investments, compared with a profit of $95 million a year ago. These operations had an underwriting loss of $124 million during the second quarter of 2000. This compares with a $133 million loss last quarter and a loss of $77 million for the second quarter last year. These results reflect inadequate rates, large losses in SCI and seasonal weather-related losses. Weather-related losses increased $22 million over the 1999 second quarter to $111 million. The combined ratio was 111.3 for the first six months of 2000, compared with 105.3 for the first six months last year. Underwriting results by major line of business are stated in the chart below. Investment income was $228 million, down one percent from a year ago.
SIX MONTHS ENDED THREE MONTHS ENDED Underwriting Results (In Millions) JUNE 30 JUNE 30 --------------------- --------------------- 2000 1999 2000 1999 ------- ------- ------- ------- Personal Lines: Personal auto $ (63.7) $ 0.5 $ (23.9) $ (5.5) Homeowners (52.2) (34.6) (38.1) (15.9) Other personal lines 10.2 7.8 5.8 3.5 Commercial Lines: American States Business Insurance (85.4) (85.3) (26.4) (54.4) SAFECO Commercial (70.0) (13.6) (43.5) (11.7) Surety 7.1 12.4 2.4 6.4 Other (3.0) (0.5) (0.7) 0.6 ------- ------- ------- ------- Total $(257.0) $(113.3) $(124.4) $ (77.0) ======= ======= ======= =======
The combined ratio for personal auto improved to 105.6 for the quarter, down from 109.3 in the first quarter. Rate reductions taken in 1999 in response to intensified industry wide price competition are the primary cause of this year's weaker results compared with 1999. The number of automobile policies in force at the end of the second quarter was one percent higher than a year ago. We are increasing our auto rates approximately 5% this year. The effect of these rate increases, agency cancellations and tighter underwriting have resulted in a slight decrease in the number of automobile policies in force during the second quarter. Homeowner weather-related losses in the second quarter were $63 million, up from $31 million in the first quarter. While weather-related claims in the first six months were approximately the same as a year ago, fire and other non-weather losses increased this year causing the weaker six month results. The number of homes insured is 4.6% higher than a year ago. We are increasing our rates over 6% this year. In addition, to improve results, we have begun the next cycle of our "insurance to value" program to assure that our homeowners book of business is properly valued and that we receive appropriate rates for these risks. -12- 13 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) - -------------------------------------------------------------------------------- In both our personal auto and homeowners lines, we are expanding our use of an underwriting technique known as "credit scoring" which should improve the overall quality of this business. Results for American States Business Insurance, which is focused on small-to-medium sized businesses, improved in the second quarter. For the quarter, this line produced an underwriting loss of $26.4 million, an improvement of $32.6 million from the first quarter. The combined ratio decreased to 108.8 from 120.6 in the first quarter. We have reviewed our book of business, tightened underwriting standards and increased our prices in this line by over 10% from a year ago. Additional price increases are planned for the remainder of this year and 2001. SAFECO Commercial produced a combined ratio of 120.5 for the first six months, compared with 104.1 for the first six months of 1999. Results this year have been impacted by a number of large losses including fires, workers compensation and general liability losses. Our prices on business written in the first six months were approximately 11% higher than a year ago with additional increases planned for the second half of the year. Surety produced a profit of $7.1 million in the first six months, compared with a profit of $12.4 million for the first six months last year. We are confident that we will see improvements in our property and casualty operations during the second half of 2000. Our price increases, being taken in every major line, are being accepted in the marketplace. Our overall expense ratio continues to improve as we manage expenses aggressively. In addition, our emphasis on underwriting and agency management will have a positive impact on our earnings. Life Insurance Our life insurance operations produced a pretax profit, before realized capital gains, of $84.4 million for the first six months of 2000. This compares with $83.3 million for the first six months of 1999. The second quarter profit of $45.4 million compares with $38.6 million reported for the second quarter of 1999. Earnings for the annuity lines were $34.1 million, compared with $44.6 million for the first half of 1999. The decrease is primarily due to lower interest margins, as well as the effect of changes in pay downs of collateralized mortgage obligations. Annuity assets total $12.9 billion compared to $12.8 billion at the end of the first half of 1999. Group insurance earned a profit of $700,000 for the first half of 2000, compared with a loss of $11.6 million for the same period last year. The second quarter profit of $4.7 million compares with a loss of $8.7 million for the second quarter of last year. The improved results are due to the underwriting and rating actions that were taken to correct the adverse experience in medical stop loss coverages. Group premium volume for the first six months was $157 million, an increase of 63% from last year. This is mainly due to the December 1999 acquisition of the medical excess loss and group life business of ING Medical Risk Solutions. Individual life earnings were $13.7 million for the first half of 2000, compared with $12.9 million for the same period last year. The increase is mainly due to increased Business Owned Life Insurance (BOLI) deposits of $415 million for the first half of 2000. BOLI deposits issued from inception total $1.8 billion as of June 30, 2000. Credit SAFECO Credit Company produced a pretax profit of $8.9 million for the first six months of 2000, compared with $11.0 million in 1999. Pretax profit for the second quarter was $4.0 million compared with $4.9 million in the first quarter. While revenues increased $10.6 million over the comparable period in 1999, higher interest costs adversely impacted interest spreads. New loans and leases funded during the first six months were $331 million, compared with $348 million in 1999. Non-affiliate receivables and operating leases were $1.7 billion, compared with $1.6 billion at December 31, 1999. Delinquency and write-off experience continue to be at satisfactorily low levels. -13- 14 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) - -------------------------------------------------------------------------------- SAFECO Credit's summarized financial information is as follows (in millions):
JUNE 30 DECEMBER 31 2000 1999 -------- ----------- Finance Receivables $1,543.9 $1,460.6 Other Assets 204.0 175.4 -------- -------- Total Assets $1,747.9 $1,636.0 ======== ======== Credit Company Borrowings $1,024.6 $1,323.1 Other Liabilities 580.0 173.4 -------- -------- Total Liabilities $1,604.6 $1,496.5 ======== ========
SIX MONTHS ENDED JUNE 30 2000 1999 ----- ----- Revenues $67.9 $57.3 Expenses 59.0 46.3 ----- ----- Income before Income Taxes 8.9 11.0 Provision for Income Taxes 3.2 3.9 ----- ----- Net Income $ 5.7 $ 7.1 ===== =====
Asset Management Our asset management operations earned $8.3 million in pretax profits during the first half of 2000, compared with $5.8 million for the same six-month period in 1999. Assets under management totaled $6.1 billion at June 30, 2000. Investment Portfolios The amortized cost of our consolidated fixed maturities securities portfolio was $327 million in excess of market value at June 30, 2000; amortized cost exceeded market value by $389 million at December 31, 1999. The reason for the decrease in the excess of amortized cost over market value between the two dates was due primarily to the decline in longer term interest rates. The market value of our equity securities portfolio was $916 million in excess of cost at June 30, 2000. Debt Offering On March 16, 2000, SAFECO Corporation issued $300 million of medium-term notes at 7.875% which mature on March 15, 2003. The proceeds of the notes were subsequently loaned to our subsidiary SAFECO Credit to primarily repay its commercial paper debt. Year 2000 Readiness Disclosure As of August 10, 2000 SAFECO has not experienced any material Year 2000 complications regarding its computer systems, technology embedded in the equipment it uses, or its third-party partners and vendors. Also as of August 10, 2000, SAFECO is not aware of any Year 2000-related claims made under its property and casualty insurance policies. Stock Repurchase Program In February 2000, the Board of Directors authorized the repurchase of three million shares of SAFECO Corporation common stock. The authorization was in addition to nearly 1.3 million shares that remained under the May 1999 authorization. During the first quarter, we repurchased 1,333,000 shares in the open market at a total cost of approximately $30 million for an average price of $22.53. The number of shares currently authorized but not yet repurchased is 2.9 million. The Company did not repurchase any shares during the second quarter. -14- 15 SAFECO CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) - -------------------------------------------------------------------------------- Lead Director On May 3, 2000, William G. Reed, Jr. was appointed Lead Director by our Board of Directors. He is working with senior management and the other directors to achieve the Company's short and long-term earnings objectives. Mr. Reed, whose family is a long-term shareholder of SAFECO, is our longest-tenured director, serving on the board since 1974. His father previously was a director of SAFECO for 41 years. Subsequent Event On August 3, 2000, the Company announced changes in senior management. Roger Eigsti, Chairman and Chief Executive Officer, announced his intention to retire effective December 31, 2000, and Randall Stoddard, Property & Casualty President, submitted his resignation effective immediately. SAFECO's press release covering this event was filed under Form 8-K dated August 3, 2000, as noted on page 17 of this report. Forward-Looking Statements Statements made in this report that relate to anticipated financial performance, business prospects and plans, regulatory developments and similar matters may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Statements in this report that are not historical information are forward-looking. Such statements are subject to certain risks and uncertainties that may cause the operations, performance, development and results of our business to differ materially from those suggested by the forward-looking statements. The risks and uncertainties include: - - our ability to obtain rate increases and non-renew underpriced insurance accounts; - - realization of growth and business retention estimates; - - achievement of our premium targets and profitability; - - changes in competition and pricing environments; - - achievement of our expense reduction goals; - - the occurrence of significant natural disasters, including earthquakes; - - weather conditions, including the severity and frequency of storms, hurricanes, snowfalls, hail and winter conditions; - - driving patterns; - - fluctuations in interest rates; - - performance of financial markets; - - court decisions and trends in litigation; - - legislative and regulatory developments; - - the adequacy of loss reserves; - - the availability and pricing of reinsurance; - - the development of major Year 2000 related claims or liabilities; and - - general economic and market conditions. In particular, because insurance rates in some jurisdictions are subject to regulatory review and approval, our achievement of rate increases may occur in amounts and on a time schedule different than planned, which may affect our efforts to restore earnings in our property and casualty lines. -15- 16 SAFECO CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ITEM 5 - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K - -------------------------------------------------------------------------------- Item 1. Legal Proceedings Because of the nature of their businesses, the Corporation's insurance and other subsidiaries are subject to 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 property and casualty insurance subsidiaries of the Corporation 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 Corporation's financial condition. Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders of SAFECO Corporation was held May 3, 2000. SAFECO shareholders elected four nominees to the Board of Directors by the votes shown below. The terms of all of the nominees elected will expire in 2003. There were no broker non-votes with respect to any of the nominees.
FOR WITHHELD ----------- ---------- Joshua Green III 106,388,272 7,181,718 William G. Reed, Jr. 106,385,920 7,184,070 Norman B. Rice 105,449,774 8,120,216 Judith M. Runstad 102,470,666 11,099,324
Continuing as Directors are Robert S. Cline, Roger H. Eigsti, John W. Ellis and William W. Krippaehne, Jr., whose terms expire in 2001, and Phyllis J. Campbell, Boh A. Dickey, William P. Gerberding and Paul W. Skinner, whose terms expire in 2002. Mr. Eigsti announced on August 3, 2000 that his intention is to retire December 31, 2000. Item 5. Other Information - Bylaw Amendments The Board of Directors of SAFECO Corporation adopted certain amendments to the Corporation's Bylaws on May 3, 2000. The amended Bylaws provide that the Board of Directors will adopt an Audit Committee Charter under which the corporation's Audit Committee will be governed. The Audit Committee Charter sets forth the Committee's responsibilities, establishes qualifications for Committee membership, and provides for regular meetings of the Committee. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 3 - Bylaws (as amended May 3, 2000) Exhibit 27 - Financial Data Schedule. (This exhibit is included only in the electronic EDGAR filing version of this 10-Q. The Financial Data Schedule is not a separate financial statement but a schedule that summarizes certain standard financial information extracted directly from the financial statements in this filing.) -16- 17 SAFECO CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (Continued) - -------------------------------------------------------------------------------- Item 6. Exhibits and Reports on Form 8-K (Continued) (b) Reports on Form 8-K SAFECO filed an 8-K dated April 13, 2000 under Item 5 (Other Items), relating to its preliminary review of earnings for the first quarter of 2000. SAFECO filed an 8-K dated April 24, 2000 under Item 5, relating to its first quarter 2000 earnings release. SAFECO filed an 8-K dated August 3, 2000 under Item 5, relating to changes in senior management. -17- EX-3 2 ex3.txt EX-3 1 EXHIBIT 3 BYLAWS OF SAFECO CORPORATION (As last amended May 3, 2000) ARTICLE I STOCKHOLDERS' MEETINGS 1. ANNUAL MEETING. (a) The annual meeting of the stockholders of the corporation for the election of Directors to succeed those whose terms expire, and for the transaction of such other business as may properly come before the meeting, shall be held at 11:00 o'clock in the morning on the first Wednesday in May or, if such day is a legal holiday, then on the following business day or on such other day as may be designated by the Chairman, the President, or the Board of Directors ("Board of Directors"). The meeting shall be held at the principal executive office of the corporation or at such other place as may be designated in the notice of the meeting. (b) For business to be properly brought before the annual meeting in accordance with these Bylaws, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before the annual meeting by a stockholder, the stockholder must file a written notice of intention to bring such business ("Business Notice") with the Secretary of the corporation not less than 90 days before the date specified in Section 1(a) of this Article I, or if the meeting is not held within 14 days of the date specified in Section 1(a) of this Article I, then 90 days before the date of the meeting. The Business Notice shall state the name, address, telephone number and class and number of shares of capital stock owned by the stockholder who intends to bring such business before the meeting; and, as to each matter the stockholder proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest of the stockholder in such business. (c) No business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 1; provided, however, that nothing in this Section 1 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting. The presiding officer of an annual meeting shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the foregoing procedure and, if the presiding officer should so determine, the presiding officer shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 2 SAFECO Corporation Bylaws May 3, 2000 Page 2 2. SPECIAL MEETINGS. Special meetings of the stockholders may be called only by the Board of Directors. Such special meetings may be for any purpose or purposes, which shall be described in the notice of such special meeting, and shall be at the date, time and place prescribed in the notice of the meeting. 3. NOTICE OF MEETING. (a) Written notice of each annual and special stockholders' meeting shall be given to all stockholders of record entitled to notice of such meeting no fewer than 10 nor more than 60 days before the meeting date, except that notice of a stockholders' meeting to act on an amendment to the articles of incorporation, a plan of merger or share exchange, a proposed sale of assets other than in the regular course of business or the dissolution of the corporation shall be given no fewer than 20 nor more than 60 days before the meeting date. If such written notice is placed in the United States mail, postage prepaid, and correctly addressed to the stockholder's address shown in the corporation's current record of stockholders, then the notice is effective when mailed. (b) Notice of any stockholders' meeting may be waived in writing by any stockholder at any time, either before or after the meeting. In addition, notice of the date, time, place and purpose of the meeting shall be deemed waived by any stockholder who attends a stockholders' meeting in person or by proxy, unless the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting. 4. ORGANIZATION OF MEETING - QUORUM. A stockholders' meeting, duly called, can be organized for the transaction of business whenever a quorum is present. The presence, in person or by proxy, of the holders of a majority of the votes entitled to be cast at the meeting shall constitute a quorum. Once a share is represented for any purpose at a meeting, other than solely to object to holding the meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. 5. ADJOURNED MEETINGS. Unless a new record date is or must be set for an adjourned meeting, an adjournment or adjournments of any stockholders' meeting may be taken to the date, time and place announced by the presiding officer at the meeting, without new notice being given; but any meeting at which directors are to be elected shall be adjourned only from day to day until such directors are elected. 6. VOTING AT MEETINGS. Each holder of common stock shall be entitled to one vote for each share of common stock then of record in the holder's name on the books of the corporation. Each holder of a share of capital stock other than common stock shall have the right to vote on those matters prescribed by the Board of Directors in establishing the preferences, limitations and relative rights for that class of capital stock. Every stockholder shall have the right to vote either in person or by proxy. All voting at stockholders' meetings shall be viva voce, unless any qualified voter shall demand a vote by ballot. In the case of voting by ballot, 3 SAFECO Corporation Bylaws May 3, 2000 Page 3 each ballot shall state the name of the stockholder voting, the number of shares owned by the stockholder, and, in addition, if such vote be cast by proxy it shall also state the name of the proxy. ARTICLE II BOARD OF DIRECTORS 1. NUMBER AND QUALIFICATIONS. The business and affairs of the corporation shall be managed under the direction of a Board of Directors of from 12 to 18 directors, as set from time to time by resolution of the Executive Committee, which directors need not be stockholders of the corporation. 2. ELECTION - TERM OF OFFICE. The directors shall be divided into three classes, designated Class 1, Class 2, and Class 3. Each class shall consist, as nearly as may be possible, of one-third of the total number of Directors constituting the entire Board of Directors. At each annual meeting of stockholders successors to the class of Directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, but in no case will a decrease in the number of Directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which the director's term expires and until the director's successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. In the event of a failure to hold an election of Directors at any annual stockholders' meeting, election of Directors may be held at a special meeting of the stockholders called for that purpose; provided, that notice thereof be given all stockholders entitled to vote at such meeting at least 30 days prior to the date set for such special meeting. 3. VACANCIES. Any vacancy on the Board of Directors shall be filled by the Board of Directors or, if the directors in office constitute fewer than a quorum of the Board of Directors, then by the affirmative vote of the majority of all directors in office. 4. NOMINATIONS OF DIRECTORS. (a) The Board of Directors or at its direction a committee of the Board of Directors shall nominate individuals for election as directors at the annual meeting of stockholders and at any special meeting of stockholders called for the purpose of electing directors. Nominations may also be made by any stockholder entitled to vote for the election of Directors at such meeting who complies with the notice procedures set forth in this Section 4. (b) A nomination for election as director, other than nominations made by or at the direction of the Board of Directors, may be made only if a written notice of intention to nominate ("Nomination Notice") has been received by the secretary to the Board of Directors not less than 4 SAFECO Corporation Bylaws May 3, 2000 Page 4 90 days before the date specified in Section 1(a) of Article I above, or if the meeting is not held within 14 days of the date specified in Section 1(a) of Article I above, then 90 days before the date of the meeting. The Nomination Notice shall state the name, address, telephone number and class and number of shares of capital stock owned by the stockholder who intends to make a nomination; the name, age, address and telephone number of each nominee; a description of each nominee's business experience for the past five years; a statement whether the nominee has ever been prosecuted for any crime or been a party to any proceeding in which it was alleged the nominee or any affiliate of the nominee violated any law or regulation and, if so, a complete description of such prosecution or proceeding; and any other information relating to each nominee that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended. The corporation may require any proposed nominee to furnish such additional information as may reasonably be required to determine the eligibility of such proposed nominee. In order to be considered valid the Nomination Notice must be accompanied by the written consent of each nominee to be nominated and a statement of each nominee's intention to serve as a director if elected. (c) No person shall be eligible for election as a director unless nominated in accordance with the procedures set forth in this Section 4. The presiding officer at the stockholders' meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure and, if the presiding officer should so determine, the presiding officer shall so declare to the meeting and the defective nomination shall be disregarded. 5. ANNUAL MEETING. The first meeting of each newly elected Board of Directors shall be known as the annual meeting thereof. 6. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held quarterly, on the first Wednesday in February, May, August and November of each year, at such time and place as designated in the notice of the meeting. 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any place at any time when called by the Chairman or the President, or when called by the Secretary or an Assistant Secretary on request of three directors, or when called by any director during a national emergency of the kind that would make emergency bylaws operative for domestic insurers under the provisions of Sections 48.07.160 through 48.07.200 of the Revised Code of Washington. 8. NOTICE OF MEETINGS. (a) Notice of the time and place of meetings of the Board of Directors and of meetings of committees of the Board of Directors shall be given by the secretary to the Board of Directors, or by the person calling the meeting, in writing or orally at least two days prior to the day upon which the meeting is to be held. Notice may be given by mail, private 5 SAFECO Corporation Bylaws May 3, 2000 Page 5 carrier, personal delivery, telegraph or teletype, telephone, or by wire or wireless equipment which transmits a facsimile of the notice. (b) A director may waive notice of any meeting of the Board of Directors or any committee of the Board of Directors in writing before or after the date and time of the meeting and such waiver shall be deemed the equivalent of giving notice of the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors or any committee of the Board of Directors need be specified in the waiver of notice of such meeting. (c) A director's attendance at or participation in a Board of Directors or committee meeting shall constitute a waiver of notice of such meeting, unless the director at the beginning of the meeting, or promptly upon the director's arrival at the meeting, objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. 9. QUORUM. A majority of the total number of Directors fixed by or in the manner provided in these Bylaws or, if vacancies exist on the Board of Directors, a majority of the total number of Directors then serving on the Board of Directors shall constitute a quorum for the transaction of business at any Board of Directors' meeting; provided, however, that a quorum may not be less than one-third of the total number of Directors fixed by or in the manner provided by these Bylaws. When a quorum is present, a majority of the directors in attendance at a meeting shall be sufficient to transact business and to adjourn the meeting from time-to-time without further notice. ARTICLE III EXECUTIVE COMMITTEE 1. MEMBERSHIP. The Executive Committee shall consist of not less than two members and shall include (i) the chief executive officer of the corporation, (ii) the chairs of each of the Audit, Compensation, Finance and Nominating Committees, and (iii) any other director of the corporation appointed by the Board of Directors. The chief executive officer shall be the chair of the Executive Committee, unless the Board of Directors designates some other member of the Executive Committee as chair. 2. POWERS AND DUTIES. (a) Other than those powers specifically denied to a committee of a Board of Directors under Washington law, the Executive Committee may exercise all the powers of the Board of Directors in the management of the business of the corporation when the Board of Directors is not in session. All such actions of the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action 6 SAFECO Corporation Bylaws May 3, 2000 Page 6 and shall be subject to revision or alteration by the Board of Directors; provided, that no rights of third parties shall be affected by any such revision or alteration. (b) The Executive Committee shall determine the corporation's policy regarding charitable contributions and shall review and make recommendations to the Board of Directors as appropriate on fundamental matters, including election of Directors, succession planning, appointment of officers of the corporation and its principal subsidiaries, capital allocation among the corporation's operations, issuance and repurchase or redemption of securities, dividends to shareholders, formation of subsidiaries, and material acquisitions or dispositions of subsidiaries or assets. 3. RULES OF PROCEDURE. The Executive Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board of Directors. Special meetings of the Executive Committee may be called at any time by the chair of the Executive Committee or any two members. At all meetings of the Executive Committee, the presence of a majority of the members shall be necessary to constitute a quorum, and the affirmative vote of a majority of the quorum shall be necessary and sufficient to transact business. ARTICLE IV FINANCE COMMITTEE 1. MEMBERSHIP. The Finance Committee shall consist of not less than five members appointed by the Board of Directors, one of whom shall be designated as its chair by the Board of Directors. Each member of the Finance Committee shall continue as a member at the pleasure of the Board of Directors. 2. POWERS AND DUTIES. The Finance Committee shall have general supervision of the finances and investments of the corporation. It shall designate or approve the designation of depositories for the funds of the corporation and shall have authority over all matters related to bank and custodial accounts; it shall have authority to buy and sell securities and to make loans of such character as is permitted by law; and it may direct any action necessary to collect amounts due the corporation. All actions of the Finance Committee shall be recorded in minutes of its meetings and reported to the Board of Directors. Such actions shall be subject to revision or alteration by the Board of Directors; provided, that no rights of third parties shall be affected by any such revision or alteration. 3. RULES OF PROCEDURE. The Finance Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board of Directors. Special meetings of the Committee may be called at any time by the chair of the Finance Committee or by any two members. At all meetings, the presence of a majority of the members 7 SAFECO Corporation Bylaws May 3, 2000 Page 7 shall be necessary to constitute a quorum, and the affirmative vote of a majority of the quorum shall be necessary and sufficient to transact business. 8 SAFECO Corporation Bylaws May 3, 2000 Page 8 ARTICLE V AUDIT COMMITTEE 1. MEMBERSHIP. The Audit Committee shall consist of not less than three members who meet the qualifications described in the Audit Committee Charter and who are appointed by the Board of Directors. The Board of Directors shall designate one member of the Audit Committee as its chair. Each member of the Audit Committee shall continue as a member at the pleasure of the Board of Directors. 2. CHARTER. The Audit Committee shall be governed under an Audit Committee Charter which shall be adopted by the Board of Directors. 3. RULES OF PROCEDURE. The Audit Committee shall, consistent with its Charter, fix its own rules of procedure and meet where and as provided by its Charter, its rules of procedure or the Board of Directors. Special meetings of the Audit Committee may be called at any time by the chair of the Audit Committee or by any two members. At all meetings the presence of a majority of the members shall be necessary to constitute a quorum, and the affirmative vote of a majority of the quorum shall be necessary and sufficient to transact business. ARTICLE VI NOMINATING COMMITTEE 1. MEMBERSHIP. The Nominating Committee shall consist of not less than three members appointed by the Board of Directors, not more than one of whom shall be an employee of the corporation or any of its subsidiaries. The Board of Directors shall designate one member of the Nominating Committee as its chair. Each member of the Nominating Committee shall continue as a member at the pleasure of the Board of Directors. 2. POWERS AND DUTIES. (a) The Nominating Committee shall: (1) Review qualifications of candidates for Board of Directors membership from whatever source received; (2) Recommend to the Executive Committee the slate of director candidates to be proposed for election by stockholders at the annual meeting; (3) Recommend to the Executive Committee candidates to fill director vacancies which occur between annual meetings of stockholders; (4) Recommend to the Board of Directors criteria regarding personal qualifications for nomination as director, including experience, skills, affiliations and characteristics; 9 SAFECO Corporation Bylaws May 3, 2000 Page 9 (5) Recommend to the Board of Directors criteria regarding the composition of the Board of Directors, including total size and number of employee-directors; (6) Recommend to the Board of Directors criteria relating to tenure as a director, including retirement age and continuation of a director in an honorary or similar capacity; and (7) Recommend to the Board of Directors the fees to be paid to directors, including retainer, meeting and committee meeting fees, and any additional fees to be paid to a director for particular service, e.g., to the chairman of the Board of Directors or chair of any committee. The Committee shall not recommend that any such fees be paid to any director who is also an employee of the corporation or its subsidiaries. (b) All actions of the Nominating Committee shall be recorded in minutes of its meetings and reported to the Board of Directors. 3. RULES OF PROCEDURE. The Nominating Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board of Directors. Special meetings of the Nominating Committee may be called at any time by the chair of the Nominating Committee or by any two members. At all meetings, the presence of a majority of the members shall be necessary to constitute a quorum, and the affirmative vote of a majority of the quorum shall be necessary and sufficient to transact business. ARTICLE VII COMPENSATION COMMITTEE 1. MEMBERSHIP. The Compensation Committee shall consist of not less than three members appointed by the Board of Directors, none of whom shall be an employee of the corporation or any of its subsidiaries. The Board of Directors shall designate one member of the Compensation Committee as its chair. Each member of the Compensation Committee shall continue as a member at the pleasure of the Board of Directors. 2. POWERS AND DUTIES. (a) The Compensation Committee shall: (1) Review and approve in advance salary increases for officers of the corporation and employees of its subsidiaries where the proposed salary exceeds an amount set from time-to-time by the Board of Directors; (2) Report to the Board of Directors remuneration information concerning the chief executive officer and through the chief executive officer make such information as to any employee available to any director upon request; 10 SAFECO Corporation Bylaws May 3, 2000 Page 10 (3) Review and recommend to the Board of Directors any additional employee benefit program of a substantial nature and material changes to existing programs; (4) Review and approve changes required by law to be made to existing employee benefit programs and non-material changes to existing programs; and (5) Administer the corporation's stock option program. (b) All actions of the Compensation Committee shall be recorded in minutes of its meetings and reported to the Board of Directors. 3. RULES OF PROCEDURE. The Compensation Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board of Directors. Special meetings of the Compensation Committee may be called at any time by the chair of the Compensation Committee or by any two members. At all meetings, the presence of a majority of the members shall be necessary to constitute a quorum, and the affirmative vote of a majority of the quorum shall be necessary and sufficient to transact business. ARTICLE VIII OTHER COMMITTEES The Board of Directors shall have authority to establish by resolution such other committees as the Board of Directors may from time to time deem necessary or advisable. The membership, duties and authority of such committees shall be as the Board of Directors may from time to time establish. ARTICLE IX OFFICERS 1. OFFICERS ENUMERATED - APPOINTMENT. The officers of the corporation shall be a Chairman, a President, one or more Vice Presidents, one or more Assistant Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers, all of whom shall be appointed by the Board of Directors at the annual meeting thereof, to hold office for the term of one year and until their successors are appointed and qualified. 2. QUALIFICATIONS. None of the officers of the corporation, except the Chairman and President, need be a director. Any two or more corporate offices may be combined in one person. 3. CHAIRMAN. The Chairman shall preside at all meetings of the stockholders and directors, shall be the chief executive officer of the corporation, and, subject to the Board of Directors and Executive Committee, shall have general supervisory power and ultimate authority over and responsibility for the business and affairs of the corporation. 11 SAFECO Corporation Bylaws May 3, 2000 Page 11 4. PRESIDENT. The President shall be the chief operating officer of the corporation, and, subject to the ultimate authority of the Board of Directors, Executive Committee and Chairman, shall have general charge, supervision and control over the business and affairs of the corporation and of such of its subsidiaries as have been designated by the Chairman, and shall be responsible for the management thereof. In the absence of the Chairman the President shall act in the place of the Chairman with the authority to exercise all of the Chairman's powers and perform the Chairman's duties. 5. VICE PRESIDENTS. In the absence or disability of both the Chairman and President, one of the Vice Presidents, in the order determined by seniority of responsibility and then order of their appointment, shall act as Chairman and President until such time as the Board of Directors acts to appoint an individual or individuals to the offices of Chairman and President. One or more of the vice presidents may be designated by the Board of Directors as executive vice president, senior vice president or such other title as the Board of Directors deems appropriate for the position and duties. 6. SECRETARY. The Secretary shall be the custodian of the records, books of account, and seal of the corporation, and, in general, shall perform all duties usually incident to the office of Secretary, and make such reports and perform such other duties as may from time to time be requested of or assigned by the Board of Directors, the Executive Committee, the chief executive officer or chief operating officer of the corporation. 7. ASSISTANT SECRETARIES. The Assistant Secretaries shall perform such duties as may be assigned to them by the Secretary of the corporation, the Board of Directors, the Executive Committee, the chief executive officer or the chief operating officer of the corporation. 8. TREASURER. The Treasurer shall have charge and custody of and be responsible for all funds and securities of the corporation. The Treasurer shall deposit all such funds in the name of the corporation in such depositories or invest them in such investments as may be designated or approved by the Finance Committee or the Board of Directors, and shall authorize disbursement of the funds of the corporation in payment of just demands against the corporation, or as may be ordered by the Board of Directors, the Executive Committee, or the Finance Committee on securing proper vouchers for such disbursements. The Treasurer shall render to the Board of Directors from time to time as may be required an account of all transactions as Treasurer, and shall perform such other duties as may from time to time be assigned by the Board of Directors, the Executive Committee, the Finance Committee, or the chief executive officer of the corporation. 9. ASSISTANT TREASURERS. The Assistant Treasurers shall perform such duties as may be assigned to them by the Treasurer, the Board of Directors, the Executive Committee, the chief executive officer or the chief operating officer of the corporation. 10. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other officers and agents as it shall deem necessary to exercise such powers and perform such duties as 12 SAFECO Corporation Bylaws May 3, 2000 Page 12 shall be determined from time to time by the Board of Directors. 11. REMOVAL. Any officer of the corporation may be removed by the affirmative vote of a majority of the whole Board of Directors; such removal, however, shall be without prejudice to the contract rights of the person so removed. ARTICLE X CORPORATION PROXIES Unless otherwise ordered by the Board of Directors, any and all shares of stock owned or held by the corporation in any other corporation shall be represented and voted at any meeting of the stockholders of such other corporation by any one of the following officers of the corporation in the following order who may attend such meeting; i.e., the Chairman, the President, a Vice President, or the Treasurer, and such representation by any one of the officers above named shall be deemed and considered a representation in person by the corporation at such meeting. Any one of the officers above named may execute a proxy appointing any other person as attorney and proxy to represent the corporation at such stockholders' meeting and to vote all stock of such corporation owned or held by the corporation with all power and authority in the premises that any of the officers above named would possess if personally present. The Board of Directors by resolution may from time to time confer like powers upon any other person or persons. ARTICLE XI STOCK 1. CERTIFICATES OF STOCK. Certificates of stock of the corporation shall be issued in such form in accordance with the corporation law of the State of Washington as may be approved by the Board of Directors, and may be signed by the chief executive officer, the chief operating officer, or any Vice President, and by the Secretary or any Assistant Secretary. 2. TRANSFERS. Shares of stock may be transferred by delivery of the certificates therefor accompanied either by an assignment in writing on the back of the certificate or by a written power of attorney to sell, assign and transfer the same by the record holder of the certificate. No transfer shall be valid except as between the parties thereto until such transfer shall have been made on the books of the corporation. Except as specifically provided in these Bylaws, no shares of stock shall be transferred on the books of the corporation until the outstanding certificate therefor has been surrendered to the corporation. 3. STOCKHOLDERS OF RECORD. The corporation shall be entitled to treat the holder of record on the books of the corporation of any share or shares of stock as the holder in fact thereof for all purposes, including the payment of dividends on such stock and the right to vote such stock. 4. LOSS OR DESTRUCTION OF CERTIFICATES. In the case of loss or destruction of 13 SAFECO Corporation Bylaws May 3, 2000 Page 13 any certificate of stock, another may be issued in its place upon proof of such loss or destruction, and upon the giving of a satisfactory bond or indemnity to the corporation. A new certificate may be issued without requiring any bond when in the judgment of the Treasurer it is proper to do so. 5. The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the stock of the corporation not inconsistent with these Bylaws, the Articles of Incorporation, or the laws of the State of Washington. ARTICLE XII INDEMNIFICATION 1. DIRECTORS. (a) Each person who was or is a party to any proceeding (whether brought by or in the right of the corporation or otherwise) by reason of the fact that he or she is or was a director of the corporation, or, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan (an "Indemnitee"), whether the basis of a proceeding is an alleged action in an official capacity as such a director, officer, partner, trustee, employee, or agent or in any other capacity while serving as such a director, officer, partner, trustee, employee, or agent, shall be indemnified and held harmless by the corporation against all judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the Indemnitee in connection with such proceeding. Except as provided in paragraph (d) of this Section 1 with respect to proceedings seeking to enforce rights to indemnification, the corporation shall indemnify any Indemnitee only if the proceeding (or part thereof) was authorized or ratified by the Board of Directors. (b) No indemnification shall be provided to any Indemnitee for acts or omissions of the Indemnitee finally adjudged to be intentional misconduct or a knowing violation of law, for conduct of the Indemnitee finally adjudged to be in violation of Section 23B.08.310 of the Washington Business Corporation Act, for any transaction with respect to which it was finally adjudged that such Indemnitee personally received a benefit in money, property or services to which the Indemnitee was not legally entitled or if the corporation is otherwise prohibited by applicable law from paying such indemnification, except that if Section 23B.08.560 or any successor provision is hereafter amended, the restrictions on indemnification set forth in this paragraph (b) shall be as set forth in such amended statutory provision. (c) The right to indemnification conferred under this Article XII shall include the right to be paid by the corporation the expenses incurred in defending any proceeding in advance of its final disposition. An advancement of expenses shall be made upon delivery to the corporation of an undertaking, by or on behalf of an Indemnitee, to repay all amounts so advanced if it is ultimately determined by final judicial decision from which there is no right to appeal that such Indemnitee is not entitled to be indemnified for such expenses under this Article XII. 14 SAFECO Corporation Bylaws May 3, 2000 Page 14 (d) If a claim under this Section 1 is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the Indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. An Indemnitee shall be presumed to be entitled to indemnification under this Article XII upon submission of a written claim (and, in an action brought to enforce a claim for an advancement of expenses, where the required undertaking has been tendered to the corporation), and the corporation shall have the burden of proof to overcome the presumption that the Indemnitee is so entitled. 2. OFFICERS. The corporation shall extend rights to indemnification and advancement of expenses in the same manner and to the same extent provided to directors under Section 1 of this Article to any person, not a director of the corporation, who is or was an officer of the corporation or is or was serving at the request of the corporation as a director, officer, partner, trustee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan. 3. OTHER EMPLOYEES AND AGENTS. The corporation may, by action of the Board of Directors, grant rights to indemnification and advancement of expenses to employees and agents or any class or group of employees and agents of the corporation (I) with the same scope and effect as the provisions of this Article with respect to the indemnification and advancement of expenses of directors; (ii) pursuant to rights provided by the Washington Business Corporation Act; or (iii) as are otherwise consistent with law. 4. DEFINITIONS. For purposes of this Article XII, the terms "director," "corporation," "expenses," "party" and "proceeding" have those meanings assigned to them in Section 23B.08.500 of the Washington Business Corporation Act. 5. SERVICE AT THE REQUEST OF THE CORPORATION. Any person who, while a director, officer or employee of the corporation, is or was serving (a) as a director or officer of another corporation of which a majority of the shares entitled to vote is held by the corporation or (b) as a partner, trustee or otherwise in a management capacity in a partnership, joint venture, trust or other enterprise of which the corporation or a wholly-owned subsidiary of the corporation is a general partner or has a majority ownership shall be deemed to be so serving at the request of the corporation. 6. PROCEDURES EXCLUSIVE. Pursuant to Section 23B.08.560(2) or any successor provision of the Washington Business Corporation Act, the procedures for indemnification and advancement of expenses set forth in this Article are in lieu of the procedures required by Section 23B.08.550 or any successor provision of the Washington Business Corporation Act. 7. NOT EXCLUSIVE -- CONTINUING. The indemnification provided by this Article shall 15 SAFECO Corporation Bylaws May 3, 2000 Page 15 not be deemed exclusive of other rights to which the director, officer, employee or agent may be entitled as a matter of law or by contract, and shall continue as to a person who has ceased to be a director, officer, partner, trustee, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. 8. INSURANCE. The corporation may maintain insurance at its expense to protect itself and any director, officer, partner, trustee, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Washington Business Corporation Act. ARTICLE XIII SEAL The seal of this corporation shall consist of a flat-faced, circular die which shall include: "SAFECO CORPORATION," "Corporate Seal, 1929" and the corporation's logo design. ARTICLE XIV COPIES OF RESOLUTIONS Any person dealing with the corporation may rely upon a copy of any of the records of the proceedings, resolutions, or votes of the stockholders, the Board of Directors, and any committees of or established by the Board of Directors, when certified by the chief executive officer, the chief operating officer, a Vice President, Secretary, or an Assistant Secretary. ARTICLE XV AMENDMENT OF BYLAWS 1. BY THE STOCKHOLDERS. These Bylaws may be amended, altered or repealed at any meeting of the stockholders, if notice of the proposed alteration or amendment is contained in the notice of the meeting. 2. BY THE BOARD OF DIRECTORS. These Bylaws may be amended, altered or repealed by the affirmative vote of a majority of the Board of Directors at any regular meeting of the Board of Directors, or at any special meeting if notice of the proposed alteration or amendment is contained in the notice of such special meeting; provided, however, that the Board of Directors shall not amend, alter or repeal any Bylaw in such a manner as to affect in any way the qualification, classification, or term of office of the directors. Any action of the Board of Directors with respect to the amendment, alteration or repeal of these Bylaws is hereby made expressly subject to change or repeal by the stockholders. EX-27 3 ex27.txt EX-27
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE STATEMENT OF CONSOLIDATED INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 17,395 2,744 2,781 1,998 816 57 23,432 94 407 610 31,182 4,545 1,934 318 14,099 2,364 843 0 834 3,361 31,182 2,524 813 57 135 2,485 420 0 81 0 81 0 0 0 59 0.46 0.46 0 0 0 0 0 0 0
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