Safeco to Fire 1,200 in Overhaul of Unit
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Safeco Corp., a Seattle-based property casualty insurer, plans to fire 1,200 employees as part of an overhaul of its auto and home insurance unit.
Safeco said the job cuts, combined with previously announced plans to reorganize its commercial insurance lines, will reduce expenses by about $100 million. The company expects to take restructuring charges of $60 million through 2003, including a pretax charge against earnings in the third quarter of about $40 million, or 20 cents a share.
The job reductions are the latest effort by Chief Executive Michael McGavick to boost the company’s profitability since its 1997 acquisition of American States Insurance Group. The purchase saddled Safeco with debt and a costly distribution system that made it difficult to raise rates even as losses mounted.
Last week, Safeco said it expected a wider-than-expected second-quarter operating loss of 25 cents to 30 cents a share, citing rising claims from storm-related losses.
Safeco shares rose 2 cents to close at $28.83 on Nasdaq.
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