SEATTLE, Aug. 2--Safeco today announced it has completed the sale of its Life & Investments (L&I) operation to an investor group led by White Mountains Insurance Group, Ltd., and Berkshire Hathaway Inc. Safeco completed the sales of Safeco Trust Company in April 2004 and Talbot Financial Corporation in July 2004.
Proceeds from these sales totaled $1.51 billion. Approximately $710 million of the proceeds will be used to retire $620 million aggregate face value of debt and capital securities, returning Safeco's debt-to-capital ratios to pre-sale levels, and approximately $620 million has been returned to shareholders through a common stock buyback of 13.2 million shares, executed through an accelerated stock buyback program.
Safeco will retain approximately $150 million at the parent company to provide financial flexibility for the future. Safeco expects to realize cash tax benefits in 2004 of $23 million related to the sales. The estimated net after-tax loss on these sales is $260 million.
"With the sale completed, our energy and focus are fully directed on our Property & Casualty business. Our profitability, sales momentum and strong partnerships with independent agents demonstrate clearly that we're on the right course for future success," said Mike McGavick, Safeco chairman and chief executive officer. "We extend our best wishes to our former colleagues at L&I as they begin their journey as a stand-alone enterprise."
