Safeco said the sale involves two separate cash transactions. In the bigger one, an investor group led by Omaha, Neb.-based Berkshire Hathaway and Bermuda-based White Mountains Insurance Group will together pay $1.35 billion for Safeco Life & Investments' life insurance, group insurance, annuities and mutual fund businesses.

According to a press statement issued by White Mountains, Berkshire and White Mountains will each invest equally, putting $200 million in a newly-formed acquisition company that will be capitalized with approximately $1 billion. The acquisition company also has secured committed bank financing of up to $350 million.

Eight additional investor partners were listed in the press statement.

According to Safeco's Chief Financial Officer Christine Mead, the sale could potentially net Safeco an additional $25 million at closing. More precisely, she said "the price may increase or decrease depending on statutory capital of the life company at June 30, 2004."

In a separate transaction also announced yesterday, Safeco signed a definitive agreement to sell its Talbot Financial Corporation insurance brokerage operation for $90 million to an investor group led by senior management of Talbot Financial, with financial support from Chicago-based Hub International Limited.

In the past, the financial results of Talbot Financial had been included in the Life & Investments segment for financial reporting purposes. Mr. McGavick said that the enterprises included in the two transactions represent substantially all of the earnings generated by Safeco's Life & Investments segment, indicating that only a small trust company was left out of the deals.

In 2003, Life & Investments generated $221 million of pretax operating earnings for Safeco on revenue of just over $2 billion, while the p-c unit produced pretax earnings of $438.8 million on more than $5 billion of net written premiums.

Although the businesses sold together for $1.44 billion, since the price was lower than value that Safeco carried on its books for those businesses, the company will incur a $200 million loss after taxes.

During the conference call, an analyst asked Mr. McGavick whether he had second thoughts about selling the businesses considering the loss and whether there is anything "inherently wrong" with the life business given that its market value was less than what was recorded on Safeco's balance sheet.

"We're very pleased to be complete on this transaction to enable the company to focus on its excellence," Mr. McGavick responded, going on to point out that the P-C operation has been delivering mid-teens returns on equity, while the life business had been generating less than 10. "That was unlikely to change," he said, noting that that calculation weighed heavily in the decision.

"If anything, we thought we could do a little better on P-C?and as we've been reporting to you for a year, that the life segment was likely to deteriorate. So that just didn't seem like a very attractive use of our shareholders' capital," he said.

Responding to the issue of the lower market price, he said that prospective buyers factor "what the future earnings stream looks like" into their calculations. He also said that the life business sold was not plain vanilla life insurance, but included a complex mix of businesses, noting that one-third of the life books of businesses were structured settlements and bank-owned life insurance blocks.

In a press statement, Mr. McGavick said that current management will continue to run each of the sold businesses with the same commitment to channel distribution and customer service.

Safeco expects both transactions, which are subject to regulatory approvals, to close before the end of third-quarter 2004.