Safeco posted a nearly 25 percent drop in quarterly earnings yesterday as Chief Executive Mike McGavick said he was leaving, reportedly to make a run for the U.S. Senate.
Insurance industry sources in Washington said Mr. McGavick will announce an exploratory committee tomorrow to consider seeking the Republican nomination to run against U.S. Sen. Maria Cantwell, D-Wash. The Seattle Times reported Saturday he is the GOP consensus candidate.
The Seattle-based property-casualty insurer produced net income in the second quarter of $187.3 million compared to $247 million in the same period last year. It attributed the poorer showing to declining investment income and a rising combined ratio.
Much of the decline can be attributed to after-tax net realized investment gains from continuing operations that came in at $9.2 million, compared to $55.4 million in the second quarter of last year.
Mr. McGavick in a conference call with analysts chose to put a positive spin on results, including the second-quarter combined ratio of 89.1, which rose from 85.4 in 2004.
Noting that the combined ratio was evidence of the continuation of a "truly strong bottom-line performance," he said the figure fell in line with recent quarters, even though it wasn't as good as the truly extraordinary" 85.4 figure recorded last year.
Concerning his political activity, Mr. McGavick said that "a number of folks began encouraging me to consider the possibility that there was public service on my horizon," and "I've decided to step down...in order to consider that possibility fully."
While he said the best way to do that is to "make a clean break" so that his consideration of this possibility will not in any way impact the company, Mr. McGavick will actually stay on as chairman of the board until year-end. He leaves as CEO at the end of the month.
Mr. McGavick also said the board has requested that he be available to continue to lead the company if a new CEO is not in place by Aug. 31--and that he has agreed to spend the remainder of the year traveling around to meet with agents and perform other "transitional leadership services."
Safeco Lead Director Bob Cline said that many potential successors "have already been identified," and that both internal and external candidates are being considered.
The company said that second-quarter catastrophe losses fell more than 50 percent to $13.1 million pretax compared to $29 million in the second quarter of 2004.
Overall written premiums grew 3.6 percent. "While that's a healthy rate given what we see going on in the marketplace, we note that it's in line with our expectation that premium growth would slow at this time--as we had forecast earlier in the year," Mr. McGavick said.
Mr. McGavick's background includes a stint in 1988 as chief of staff for former GOP Sen. Slade Gordon, who Ms. Cantwell defeated by a razor-thin margin in 2000.
As chief of staff, "The job was all-around communications and, in essence, what we now tend to call brand," he said in a 2001 interview with National Underwriter, drawing a parallel to the world of personal insurance, where "it's very important how you handle your brand."
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
