SAFC just posted record earnings in the Life, Mutual Funds, and Surety parts of the company. Property and Casualty took a beating. You should note that the company still produced $125 million in profit in 1999.

Safeco kept prices low during the acquisition of American States in order to retain business during the transition. They may have waited longer than necessary to raise rates but that adjustment is being made now that the merger is complete. Other insurance companies are also raising rates so loss of business due to rate increases should be modest.

The acquisition of ASBI has broadened the Safeco product offerings. This leads to synergy. The small business owner may add personal auto, home, and life policies after selecting Safeco for business insurance.

Insurance is a highly cyclical business, especially as rates are regulated by the Insurance Commissioner in each state. That's why insurance companies tend to diversify. Several times in its 80 year history Safeco has rebounded very strongly from a poor year.

A hostile takeover is unlikely. Wahington State has laws in place making such action very difficult. Although designed to protect Boeing, they benefit Safeco as well. In addition, such action must be approved by the state Insurance Commisioner.

A close partnership with a bank is more likely than a takeover. For example, Safeco currently sells products in-bank through an agreement with Washington Mutual Bank.