ITEM 2 -- PROPERTIES
SAFECO's property and casualty insurance companies lease their home office complex located in Seattle, Washington from General America Corporation (a wholly-owned subsidiary of the Corporation). This complex totals 567,000 gross square feet. A 700-car parking garage is connected to the complex. SAFECO's life insurance companies lease their headquarters building located in Redmond, Washington from General America Corporation. This complex totals 220,000 gross square feet.
SAFECO is currently developing approximately 350,000 gross square feet of additional office space for its use on land near SAFECO life insurance companies' Redmond, Washington headquarters.
Other buildings owned and occupied include service facilities in Redmond, Washington and Indianapolis, Indiana, as well as regional and branch offices in Fountain Valley and Pleasant Hill, California; Denver, Colorado; Carol Stream, Illinois; St. Louis, Missouri; Cincinnati, Ohio; Portland, Oregon; Mountlake Terrace, Redmond and Spokane, Washington. These buildings comprise approximately 1,600,000 gross square feet. All other branch and service offices occupy leased premises comprising approximately 2,500,000 square feet, generally for periods of five years or less.
SAFECO Properties' remaining real estate investments are primarily retail centers. See Item 1 on page 13 of this report.
ITEM 3
ITEM 3 -- LEGAL PROCEEDINGS
Because of the nature of their businesses, the Corporation's insurance and other subsidiaries are subject to certain legal actions filed or threatened in the ordinary course of their business operations, generally as liability insurers defending third-party claims brought against their insureds or as insurers defending policy coverage claims brought against them. The Corporation does not believe that such litigation will have a material adverse effect on its financial condition, future operating results or liquidity.
The Corporation's property and casualty insurance subsidiaries are parties to a number of lawsuits for liability coverages related to environmental claims. Although estimation of environmental claims loss reserves is difficult, the Corporation believes that reserves established for these claims are adequate based on the known facts and current law. The loss and loss adjustment expense with respect to any such lawsuit, or all lawsuits related to a single incident combined, are not expected to be material to the financial condition of the Corporation. See page 7 of Item 1 for more information regarding the liability of such subsidiaries for environmental claims and the process of estimating environmental loss reserves.
Four of the Corporation's property and casualty insurance subsidiaries were among 23 underwriters of real property insurance named as defendants in a case brought in February 1996 in the United States District Court for the Western District of Missouri alleging that their underwriting, sales and marketing practices violated the Fair Housing Act and certain other civil rights laws. The trial court refused to certify the plaintiff class and dismissed the lawsuit in June 1997. The plaintiffs appealed. In February 1998, the Eighth Circuit Court of Appeals upheld the dismissal and, in January 1999, the United States Supreme Court refused to grant certiori to hear the case. Meanwhile, in January 1999, a group of plaintiffs filed separate lawsuits in Missouri State court against the SAFECO property and casualty insurance companies named in the federal court action. The state court actions against the SAFECO defendants have been removed to federal district court and assigned to the same judge who had ordered dismissal of the original federal court action. The actions have been stayed while a related action that has been dismissed against other insurers is on appeal before the Eighth Circuit Court of Appeals. Based on current information, management expects that the remaining lawsuits against the Corporation's subsidiaries will be dismissed just as the original federal court action was and intends to vigorously pursue such dismissal.
The Corporation and one of its property and casualty insurance subsidiaries, General Insurance Company of America ("General"), are defendants along with six other property and casualty insurance groups in a putative class-action lawsuit filed in 1999 in Illinois State court, Hobbs v. State Farm Mutual Automobile Insurance Co., et al. The plaintiffs' complaint against the Corporation and General has been narrowed to an allegation that the defendants' support of the Certified Auto Parts Association ("CAPA"), an independent organization that certifies the quality of non-original equipment manufactured parts for vehicles, constituted a conspiracy to further the improper use of those parts. The plaintiffs seek actual as well as punitive damages. The Corporation and General will vigorously defend against these claims.
One of the Corporation's life insurance subsidiaries is engaged in litigation with several factoring companies that have purchased from annuitants, at a discount, the right to receive future payments from numerous structured settlement annuity contracts. Consistent with the language of the annuity contracts, the Corporation's life insurance subsidiary has resisted with varying results the purchases and assignments of rights to these future payments.
ITEM 4
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 2000.
EXECUTIVE OFFICERS OF THE REGISTRANT
As of March 19, 2001, these are the names, ages and positions of the executive officers of the registrant as required by Item 10. No family relationships exist.
PART II ITEM 5
ITEM 6 -- SELECTED FINANCIAL DATA
Pages 80 through 83 of the 2000 Annual Report to Shareholders are incorporated herein by reference.
ITEM 7
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Pages 33 through 47 of the 2000 Annual Report to Shareholders are incorporated herein by reference.
ITEM 7A
ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pages 46 and 47 of the 2000 Annual Report to Shareholders are incorporated herein by reference.
ITEM 8
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pages 49 through 79 of the 2000 Annual Report to Shareholders are incorporated herein by reference.
ITEM 9
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III The definitive proxy statement to be filed within 120 days after December 31, 2000, excluding the Annual Report of the Compensation Committee on Executive Compensation appearing on Pages 8 through 13, is incorporated herein by reference to fulfill the requirements of Items 10 -- 13 below.
ITEM 10
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (except for the portion of Item 10 relating to executive officers that appears on page 16 in Part I of this Form 10-K).
ITEM 11
ITEM 11 -- EXECUTIVE COMPENSATION
ITEM 12
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV ITEM 14