THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Safeco Corporation (SAFC)

3/24/2006 Proxy Information

Mr. Reed was Chairman of the Board of Directors of Safeco from January 30, 2001 until January 1, 2003, and served as our Acting Chairman and Acting Chief Executive Officer for a one-month period from January 1, 2001 through January 30, 2001.

Safeco’s Policies. Our policy is that all employees and directors must avoid any action that would put their own interests in conflict with the best interests of Safeco. Specifically, they must avoid involvement in any outside activities, whether through employment, investment or otherwise, that would interfere with job performance, create a conflict of interest or provide an unfair business advantage. These policies are included in our Code of Business and Financial Conduct and Ethics, which applies to all of Safeco’s directors, officers and employees. Each director and executive officer is instructed to inform the Audit Committee whenever confronted with any situation that may be perceived as a conflict of interest, even if the person does not believe the situation would violate Safeco’s Code of Business and Financial Conduct and Ethics. Our Audit Committee must pre-approve all related party transactions entered into between our directors and executive officers and the company.

Nasdaq Rules. Conflict of interest situations are also governed by the Nasdaq rules that define “independent” director status. Each of our directors, other than Ms. Reynolds, qualifies as “independent” in accordance with the Nasdaq rules.

The Nasdaq rules include a series of objective tests that do not allow a director to be considered independent if the director has certain employment, business or family relationships with the company. The Nasdaq independence definition includes a requirement that the board also review the relations of each independent director to the company on a subjective basis (including relationships discussed below). In accordance with that review, on February 1, 2006, the board, based on analysis made by the Nominating/Governance Committee, made a subjective determination as to each non-employee director as of that date that no relationships exist that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and Safeco with regard to each director’s business and personal activities as they may relate to Safeco and Safeco’s management.

SEC Rules. The SEC also has specific disclosure requirements covering certain types of transactions involving Safeco and a director, executive officer or other specified party. We retained the law firm of Foster Pepper PLLC to perform legal services in 2005, and we continue to use that firm in 2006. Mrs. Runstad, one of our directors, is Of Counsel to Foster Pepper PLLC. She is not a partner or member of the firm, and her compensation from the firm does not include amounts connected to payments made by Safeco to the firm. We paid the firm approximately $291,000 in 2005. We also retained the law firm of Davis Wright Tremaine LLP before Mr. Locke joined the board and before he joined that firm as a partner. We paid the firm approximately $4,200 in 2005 for legal services. This payment was incurred and paid before Mr. Locke became a member of our Audit Committee, and we no longer use that firm to provide legal services.

Safeco also has a relationship with Puget Energy and its affiliates, who purchase surety coverage from Safeco’s surety organization. This is a long-standing relationship that pre-dates Ms. Reynolds’ appointment as Safeco’s CEO. Puget Energy’s CEO is the spouse of Ms. Reynolds. Puget Energy paid premiums to Safeco for surety coverage in 2005 that totaled less than $1 million, and Safeco does not consider the relationship material. However, to avoid any actual, potential or perceived conflicts of interest, Safeco has established an internal screen such that Ms. Reynolds will not be directly involved in any business decisions, including any disputes and claims discussions, directly involving Safeco’s surety relationship with Puget Energy.

In 2001 and 2002, prior to enactment of the Sarbanes-Oxley Act, we made loans in connection with the retention of certain officers and their relocations to Washington State and purchases of homes. In accordance with the Sarbanes-Oxley Act, these loans have not been modified or renewed, and it is no longer our practice to offer such loans to executives. We loaned Mike McGavick $1,275,000; and Michael LaRocco $780,000. These amounts remained outstanding on February 28, 2006, and these amounts were the greatest amounts outstanding for these individuals between January 1, 2005 and December 31, 2005. The interest rate of each of the above loans is zero percent, the lowest non-taxable interest rate. Pursuant to its original terms, each loan is due and payable one year after the executive leaves the company. Accordingly, Mr. McGavick’s loan is due and payable on February 28, 2007, pursuant to its original terms.

We made similar relocation loans to Yom Senegor in 2001, in connection with his retention as Senior Vice President, Chief Strategy Officer and Chief Information Officer, and Ms. Mead in 2002, in connection with her retention as Chief Financial Officer. Mr. Senegor’s loan was in the amount of $1,000,000, and Ms. Mead’s loan was in the amount of $900,000. These amounts were the greatest amounts outstanding on these loans in 2005. Mr. Senegor re-paid his loan in full on March 3, 2005, and Ms. Mead repaid her loan in full on December 19, 2005.

3/24/2005 Proxy Information

Safeco’s Policies. Our policy is that all employees and directors must avoid any action that would put their own interests in conflict with the best interests of Safeco. Specifically, they must avoid involvement in any outside activities, whether through employment, investment or otherwise, that would interfere with job performance, create a conflict of interest or provide an unfair business advantage. These policies are included in our Code of Business and Financial Conduct and Ethics, which applies to all of Safeco’s directors, officers and employees. Each director and executive officer is instructed to inform the board whenever confronted with any situation that may be perceived as a conflict of interest, even if the person does not believe the situation would violate Safeco’s Code of Business and Financial Conduct and Ethics. Our Audit Committee must pre-approve all related party transactions entered into between our directors and executive officers and the company.

Nasdaq Rules. Conflict of interest situations are also governed by the Nasdaq rules that define “independent” director status. Each of our directors, other than Mr. McGavick, qualifies as “independent” in accordance with the Nasdaq rules. The Nasdaq rules include a series of objective tests that do not allow a director to be considered independent if the director has certain employment, business or family relationships with the company. The Nasdaq independence definition includes a requirement that the board also review the relations of each independent director to the company on a subjective basis. In accordance with that review, on February 2, 2005, the board, based on analysis made by the Nominating/Governance Committee, made a subjective determination as to each non-employee director as of that date that no relationships exist that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and Safeco with regard to each director’s business and personal activities as they may relate to Safeco and Safeco’s management. The Board of Directors appointed Gary Locke as a director on February 16, 2005. We believe that Mr. Locke is independent, based on information he provided in response to our independence inquiries, and the board will conduct a formal review of his independence in May 2005.

SEC Rules. The SEC also has specific disclosure requirements covering certain types of transactions involving Safeco and a director, executive officer or other specified party. There are two transactions for 2004 involving directors that require disclosure. We retained the law firm of Foster Pepper & Shefelman PLLC to perform legal services in 2004, and we will continue to use that firm in 2005. In addition, we retained the law firm of Davis Wright Tremaine LLP to perform legal services in 2004, but we do not intend to use that firm in 2005 or in future years. Mrs. Runstad, one of our directors, is Of Counsel to Foster Pepper & Shefelman PLLC. She is not a Partner of the firm, and her compensation from the firm does not include amounts connected to payments made by Safeco to the law firm. Mr. Locke joined our board in February 2005 and joined the law firm of Davis Wright Tremaine LLP as a Partner in March 2005. He was not affiliated with that firm, nor was he affiliated with Safeco, when the firm performed legal services for us in 2004 or when we paid for those services.

We have the following disclosure with respect to our executive officers. In 2001, under the employment agreement with Mr. McGavick and in connection with his relocation to Washington State and his purchase of a home, one of our subsidiaries loaned him $1,275,000, which was the amount outstanding on February 17, 2005 and the greatest amount outstanding between January 1, 2004 and December 31, 2004. Under the terms of his employment agreement, the interest rate on the loan is zero percent, the lowest non-taxable interest rate. In connection with our retention of Christine Mead, in 2002, as Senior Vice President, Chief Financial Officer and Secretary; Michael LaRocco, in 2001, as President and Chief Operating Officer for Safeco Personal Insurance; and Yom Senegor, also in 2001, as Senior Vice President, Chief Strategy Officer and Chief Information Officer and with respect to the relocation of each to Washington State and their purchases of homes, we loaned Ms. Mead $900,000, Mr. LaRocco $780,000 and Mr. Senegor $1,000,000, which amounts were the amounts outstanding on February 17, 2005 and the greatest amounts outstanding between January 1, 2004 and December 31, 2004. The interest rate of each loan is zero percent, the lowest non-taxable interest rate. Mr. Senegor re-paid his loan in full on March 3, 2005.

Randall Talbot, former president of our life and investments operations, received payments in connection with the sale of that line of business. These payments are discussed above in the section called “Employment Arrangements.”

3/24/2004 Proxy Information

Judith M. Runstad, a director of Safeco, is of counsel to the Seattle law firm of Foster Pepper & Shefelman PLLC, which received fees in the amount of $38,006 for legal services provided to Safeco and its subsidiaries during 2003. Mrs. Runstad does not perform any legal services for Safeco.

Under the employment agreement for Mr. McGavick, our Chairman, President and Chief Executive Officer, and in connection with his relocation to Washington State and his purchase of a residence, a Safeco subsidiary loaned him $1,275,000, which was the greatest amount outstanding between January 1, 2003 and December 31, 2003 and was the amount outstanding on February 9, 2004. Pursuant to the terms of his employment agreement the interest rate on the loan is zero percent, the lowest non-taxable interest rate. In connection with our retention of Christine Mead as Senior Vice President, Chief Financial Officer and Secretary, Michael LaRocco as President and Chief Operating Officer for Safeco Personal Insurance and Yom Senegor as Senior Vice President, Chief Strategy Officer and Chief Information Officer and with respect to the relocation of each to Washington State and their purchases of residences, a Safeco subsidiary loaned Ms. Mead $900,000, Mr. LaRocco $780,000 and Mr. Senegor $1,000,000, which amounts were the greatest amounts outstanding between January 1, 2003 and December 31, 2003 and were the amounts outstanding on February 9, 2004. The interest rate of each loan is zero percent, the lowest non-taxable interest rate.

3/21/2003 Proxy Information

Mrs. Runstad, a director of Safeco, is of counsel to the Seattle law firm of Foster Pepper & Shefelman PLLC, which received fees for legal services provided to Safeco and its subsidiaries during 2002.

Prior to August 1, 2002, one of our subsidiaries extended credit to optionees under our stock option program at a rate, adjusted quarterly, equal to the applicable federal rate determined pursuant to Section 1274(d) of the Code. During the period January 1, 2002 to December 31, 2002, the two greatest amounts outstanding on such loans was $88,764 for James Ruddy, Senior Vice President and General Counsel, who repaid his loan in full on August 1, 2002, and $73,899 for Dale Lauer, President of Safeco Business Insurance, who repaid his loan in full on August 2, 2002. This loan program has been discontinued.

Under Mr. McGavick’s employment agreement and in connection with his relocation to Washington State and his purchase of a residence, a Safeco subsidiary loaned him $1,275,000, which was the greatest amount outstanding between January 1, 2002 and December 31, 2002 and was the amount outstanding on February 12, 2003. Pursuant to the terms of his employment agreement the interest rate on the loan is the lowest non-taxable interest rate, which, in this case, is zero percent. In connection with our retention of Christine Mead as Senior Vice President, Chief Financial Officer and Secretary, Michael LaRocco as President and Chief Operating Officer for Safeco Personal Insurance and Yom Senegor as Senior Vice President, Chief Strategy Officer and Chief Information Officer and with respect to the relocation of each to Washington State and their purchases of residences, a Safeco subsidiary loaned Ms. Mead $900,000, Mr. LaRocco $780,000 and Mr. Senegor $1,000,000, which amounts were the greatest amounts outstanding between January 1, 2002 and December 31, 2002 and were the amounts outstanding on February 12, 2003. The interest rate of each loan is the lowest non-taxable interest rate, which, in all cases, is zero percent.