Safeco today announced strong second-quarter results, reflecting the company's solid underwriting and the competitive strength of its automated sales platform. In addition, weather-related catastrophe losses were relatively light for the second quarter. The company posted net income of $247.5 million -- or $1.77 per diluted share. This represents an increase over second-quarter 2003 net income, which was $111.9 million--or $0.81 per diluted share.
Safeco's annualized return on equity (ROE) for the quarter was 18.7 percent, up from 10.2 percent in the second quarter of 2003. Consolidated operating annualized ROE -- measured using operating earnings and shareholders' equity, excluding unrealized gains on bond investments - was 21.9 percent, compared with 11.8 percent in the same period last year.
"These results demonstrate the effectiveness of operating our three major insurance lines -- auto, homeowners and small commercial -- on a single business platform," said Mike McGavick, Safeco chairman and chief executive officer. "These are lines of business where Safeco's cultural tradition of discipline gives us a real advantage."
Auto, Safeco's largest business line, reported a quarterly underwriting profit of $61.0 million, a major improvement over the $0.9 million underwriting loss in the second quarter of 2003.
Auto's combined ratio in the second quarter was 90.5, significantly better than the 100.2 combined ratio in the second quarter of 2003. During the quarter, Auto results benefited from $9.0 million in subrogation reserves, or a 1.4 point impact on the combined ratio.
Net written premiums for Auto continue to grow at a healthy rate, increasing 16.2 percent in the second quarter, compared with a 17.1 percent increase in the same period last year.
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