Safeco Estimates Katrina After-Tax Losses at $78M

Seattle-based Safeco announced estimated after-tax catastrophe losses from Hurricane Katrina of $78 million, or $0.61 per diluted share.

Safeco’s gross pretax losses before reinsurance are estimated to be $170 million. After reinsurance, net pretax catastrophe losses from Hurricane Katrina are estimated at $120 million.

These figures represent the estimated losses both from claims received through Sept. 26, 2005 and from future expected claims from policyholders with damage from the storm, as well as wind pool assessments and reinsurance reinstatement costs.

Losses from Hurricane Rita, which hit the Texas-Louisiana border late last week, currently are being evaluated. Safeco’s National Catastrophe Team remains busy along the Gulf Coast, helping customers in Mississippi, Louisiana, Texas, Alabama and Florida recover from both hurricanes.

“Hurricane Katrina dealt a devastating blow to our customers and agents on the Gulf Coast. There’s no doubt that recovery efforts will command the nation’s full attention in the months and years ahead,” said Mike McGavick, Safeco chairman and chief executive officer.

“Safeco claims professionals were among the first on the ground in the hardest-hit towns along the Mississippi and Alabama coast – operating under difficult and sometimes dangerous conditions to help customers begin the recovery process,” McGavick said.

Safeco already has made partial or full payments on the majority of Hurricane Katrina-related claims in areas accessible to insurance personnel. Claims received are being processed swiftly to allow the rebuilding process to begin. In addition, Safeco deployed customer service personnel, generators and satellite phones to help distribution partners whose business operations were disrupted, so they could serve their customers.

Safeco’s market share in areas hit by Hurricane Katrina is relatively small. In Mississippi, Safeco has a 1.3 percent share of the homeowners market and a 1.4 percent share of the commercial multi-peril market.

In Louisiana, the company has a 0.6 percent share of the homeowners market and a 0.8 percent share of the commercial multi-peril market. Safeco’s loss estimate is expected to be less than proportionate to Safeco’s market share, due to strict underwriting guidelines in areas susceptible to coastal storms.

The company will announce its third-quarter financial results on Oct. 18, 2005.