In Symetra Financial's first annual report last spring, Chairman David Foy used an ominous quote from a German philosopher to describe the...
In Symetra Financial’s first annual report last spring, Chairman David Foy used an ominous quote from a German philosopher to describe the longtime Safeco division’s transformation into a stand-alone company.
“[Friedrich] Nietzsche said, ‘That which does not kill me makes me stronger.’ This is certainly the case for this group of people,” he wrote.
The 1,500 employees endured almost two years of uncertainty and change before settling into their new offices in two Bellevue high-rises this summer.
The concerns began in fall 2003, when Safeco put its Life & Investments unit on the block and chopped about 500 headquarters jobs that supported the group. Adding to employees’ anxiety, most suitors wanted to break up the business.
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So Randy Talbot, who ran the division for Safeco, was relieved when White Mountains Insurance Group asked whether he would run the company if it was kept intact.
“Having no other future in mind, I quickly accepted,” said the 52-year-old executive.
In the end, Symetra kept most of its employees, management team and 2 million customers. After a year on its own, the firm’s earnings remain stable, and its deep-pocketed new owners — which include superinvestor Warren Buffett’s Berkshire Hathaway — are pleased with their investment.
2004 net income:
Product lines: Life insurance, annuities, retirement services, specialized health insurance and other specialized products
Regional offices: Ashland, Wis.; Atlanta; Hartford, Conn.; Miami
“The company’s off to a good start,” said Foy, who is non-executive chairman of Symetra and chief financial officer of White Mountains.
“It’s the best possible outcome we could have imagined,” said Talbot, now Symetra’s chief executive, looking back on Symetra’s 14 months as an independent company.
White Mountains, Berkshire Hathaway and other investors paid $1.4 billion for the unit, and sold the mutual-funds business for $30 million. Another 50 jobs were lost in that transaction.
The new owners’ solid backing could protect its independence in an industry where small players are being swallowed up, said Steven Weisbart, an economist at the Insurance Information Institute.
“It’s very difficult for a small company to compete in the marketplace these days,” Weisbart said. “Access to capital is a critical factor.”
Together, Symetra’s life-insurance subsidiaries make it the country’s 42nd-largest life insurance group, based on 2004 total assets of $19.5 billion, according to A.M. Best.
Symetra also sells specialized health insurance and other products, bringing total assets to $22.2 billion.
Its profit for the first half of 2005 was $73.3 million, for which there is no apples-to-apples comparison at Safeco a year earlier. For 2004, the business — which changed hands Aug. 2 that year — earned $157.9 million, up from $138.7 million in 2003.
Talbot foresees no more major changes at Symetra, which is not altering its basic geographic or product focus. It does business nationwide, with the greatest concentrations in the Pacific Northwest and California.
And while its product mix changes over time, it basically sells life insurance, annuities, specialized health insurance and other products through independent agents and other outside sales channels.
Being a stand-alone company allows Symetra to be more agile in the marketplace, Talbot said. “At Safeco, we had more layers. We were not the driving force,” he said.
But that doesn’t mean it will be making any rapid moves.
Symetra’s fastest-growing product is a low-cost, limited-benefit health-insurance program that employers can use to supplement or substitute for major-medical coverage for employees.
Sales for that product rose 20 percent in 2004, which Talbot acknowledged would not be considered white-hot in many industries.
“We don’t want a rocket ship,” he said, explaining the importance of prudent pricing and growth. “We’re a rock-solid turtle.”
Melissa Allison: 206-464-3312 or email@example.com