is planning to sell its life insurance and investment management unit in order to concentrate on its property-casualty business. Senior executives plan to hold a special conference call Tuesday morning to provide more details on the sale. The call will be broadcast at http://www.safeco.com/irwebcast
. Safeco retained Goldman Sachs
to assist in the process of seeking a buyer.
While Safeco does operate mutual funds, those efforts are a small part of its over all business. At the end of the second quarter Safeco funds held just $4.0 billion of assets.
Safeco plans to use the proceeds of the sale to pay a special dividend, repurchase stock or a combination of the two, said Mike McGavick
, Safeco chairman and CEO. He added that a portion of the proceeds will be used to reduce Safeco's debt to a level appropriate with the company's new size, and a small amount may be retained to support ongoing business needs.
The Safeco business is the second one put on the auction block in recent months. Goldman Sachs was also retained by Cigna to explore opportunities for that insurer's retirement and investment unit. The Cigna sale includes more than $50 billion of asset management mandates.
Safeco's decision to sell its investment management business came as part of a campaign to cut $75 million in expenses by the end of 2004. The firm is also unveiling a new corporate structure and branding campaign.
"Great companies don't stand still," stated McGavick. "We did the hard work in successfully turning our company around and making Safeco competitive again. That was only the first step.
"We might have been able to cruise along at this level, producing average results quarter after quarter," he added. "But we aspire to be much better than average. We aim to be an extraordinary company -- among the leaders in our industry in terms of profit, return to shareholders, premium growth, and agent and customer satisfaction."
McGavick said the insurer is putting its energy into selling standardized Property & Casualty products through a common network of independent distributors supported by a common sales, service and technology platform.
"Our new Property & Casualty business model has been delivering superior results across our three largest lines -- auto, homeowners and small commercial," McGavick said. "The more energy we invest in this model, the greater the returns."
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