Liberty Mutual Purchase of Safeco Has Ripple Effect

Liberty Mutual Group of Boston’s $6.2 billion purchase of Seattle, Washington-based Safeco Insurance will mean the city of Seattle will lose a Fortune 500 corporate giant, an 85-year-old iconic headquarters building that towers over the University District (sold two years ago, which some say was a portent of things to come), and jobs on both sides of the deal.  
  
Liberty Mutual Chief Executive Ted Kelly said, "It's premature to know how many and who will be affected," Kelly said. "It won't affect just Safeco employees, but also existing Liberty Mutual employees."  
  
Kelly did not pinpoint where the job cuts will take place, but he said that the Northwest will be hit. Liberty Mutual owns Liberty Northwest Insurance in Portland, he said, so "rationalizing that presence will be part of the overall structure."  
  
Even Safeco’s CEO, Paula Reynolds, said she doesn’t know whether she’ll be staying or going. "We have not discussed anything around executive employment for anybody in the company," said Reynolds.  
  
  
Safeco investors showed their solid confidence in the sale by boosting shares up $20.71 to $65.94. During the past year, Safeco stock has traded between $41.09 and $67.32. "Shareholders have spoken very loudly about the quality of the deal," said Reynolds.  
  
Reynolds said that although the company “has not been for sale, we are a property that has been coveted for a long time, so people are always asking us if we have had a change of heart."  
She continued, the decision to sell came after "Mr. Kelly brought us a number that became so compelling that ... now was the time to undertake the transaction.”  
  
About 7,000 Safeco employees exist nationwide, with 2,100 working in the Puget Sound area, most of them in downtown Seattle or remotely.  
  
Reynolds says it’s too soon to start talking about job losses and declined to share how the local economy might be affected by Safeco’s departure. "I don't know what's going to hurt the economy or help the economy, but the bottom line is we have a buyer here who is very sensitive to the importance of the Safeco brand, the Safeco employees and the Safeco philanthropy in this region," she said. Reynolds noted that Liberty Mutual has a history of "buying companies and living up to commitments in the areas of brand, employment and philanthropy."  
  
Kelly said Liberty Mutual has bought more than three companies a year for most of the past decade, its CEO said. The acquisition will make Liberty Mutual the nation’s fifth-largest property and casualty insurer.  
  
Safeco is by far its largest acquisition, Kelly said. "We will keep the name Safeco. We always keep the name when we buy companies, because part of what one buys is the brand equity."  
  
“Safeco's footprint dovetails well with our business," he said, as does its large presence on the West Coast and good mix of personal and commercial lines of insurance.