Mr. McGavick said it was "rather astonishing to have your first year as CEO be the worst catastrophe year in the corporation's history by more than $100 million in net costs."

He also noted that the $17 million profit was achieved in spite of the fact that fourth-quarter results included $18 million of Enron-related surety losses, a $17 million increase in estimate 9/11 losses, and unreasonably-late weather losses in the Midwest.

In this quarter, "we showed that our book of business is becoming more resilient. That negative events don't wipe out all profits," Mr. McGavick said.

Explaining the increased estimates for World Trade Center losses, Mr. McGavick said they did not result from any underlying change in loss patterns.

He said the increase reflected a "narrow SAFECO issue," explaining that when the company reviewed its reinsurance treaties, it found that one treaty did not meet risk transfer rules under generally accepted accounting principles. As a result, recoveries from that treaty had to be rebooked.

Weather-related catastrophes generated $32.2 million of losses in the homeowners line, compared with $21.8 million in fourth-quarter 2000.

Mr. McGavick made his remarks during an investor conference call held today , just two days short of his first anniversary with the company.

The $17.1 million profit figure he cited for the fourth-quarter, amounting to 13 cents per share, excludes an $8.1 million after-tax restructuring charge for the quarter, an $8.6 million after-tax write-off associated with a United Kingdom subsidiary, and $8.2 million of realized gains, after taxes.

Including the charges and the realized gains, the net after-tax profit figure is $8.6 million, or 6 cents per share, for the fourth quarter of 2001.

In fourth quarter 2000, the comparable figure was $10.2 million, or 8 cents per share.

For the year 2001, SAFECO also took an after-tax earnings hit of $156 million to strengthen reserves and an additional $21 million in restructuring charges in the third quarter, and recorded a $917 million after-tax balance sheet adjustment (a goodwill write off) in the first quarter.

Excluding these charges and realized gains, SAFECO's income for the year was $3.5 million.

Including the charges and a $54 million gain from the sale of the company's credit operations last year, the bottom-line net loss was $989 million for 2001.

While pointing to the ability to post a small profit as a positive sign of the underlying progress of restructuring and balance sheet clean-up actions taken during 2001, the CEO was quick to correct an analyst's description of the company as a "ship that had been righted."

"This ship isn't righted. For an organization with our assets, making $17 million in a quarter, is only a sign that it's coming the right way. But it is by no means what our shareholders have a right to expect," he said.

"We have another challenging year ahead of us. It's just that the challenges are different now," he said, noting that SAFECO's main challenge for 2002 is to begin to grow its business.

Mr. McGavick and members of his management team spent a lot of time during the call, explaining prospective changes, centering on goals to grow in the personal auto and small commercial business segments, in particular.

In personal auto, Mr. McGavick and Mike LaRocco, chief operating officer for SAFECO Personal, spoke about the creation and rollout of a multi-tiered auto product that will expand the companies focus beyond preferred customers. The intent, they said, is to have a product that will be available to a customer base that extends from nonstandard to ultra-preferred and to price risk more appropriately on a risk-by-risk basis, Mr. LaRocco said.

While the company expects 7 percent growth on auto business overall, some customers will get lower rates under an automated underwriting model in which the company will also change the way it rates individual customers by age, gender, and marital status.

They also noted a change in commission structure, moving new business commissions on auto up to 17 percent, from 10 percent, while decreasing commissions for monoline homeowners?a line SAFECO wants to shrink?to 10 percent from 15 percent.

The new auto product rollout is to be completed in two phases, with a first stage to be rolled out in all states by the end of the first quarter. Four states are being targeted for a first-quarter rollout of the more comprehensive second-stage product, Mr. LaRocco said, adding that between two and four states would be added on a month-by-month basis for the remainder of the year.