SAFECO Corporation

January 7, 2003


Mr. Jonathan G. Katz
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: Proposed Rule - Strengthening the Commission's Requirements Regarding Auditor
Independence - File No. S7-49-02

Dear Mr. Katz:

On behalf of SAFECO Corporation, we are pleased to have this opportunity to comment on the Securities and Exchange Commission's proposed rules relating to the limitation of certain tax services that outside auditors may provide to their public company audit clients.

As a public company, SAFECO fully supports the Commission's most recent proposals regarding auditor independence. While we support these initiatives, the Commission's statements in the proposed rules with respect to the auditor's provision of tax services creates an ambiguity that may be difficult to work through without additional guidance from the SEC. The language of the Sarbanes Oxley Act of 2002 ("Act") demonstrates that Congress did not believe that the provision of tax services compromised auditor independence. Consequently, we recommend that the Commission remove any ambiguity and affirmatively state that tax services do not fall within the list of prohibited non-audit services.

With their in-depth knowledge of our business, we believe that our outside auditors are especially well suited for providing us with valuable tax advice and related service from time to time. Accordingly, the audit committee should be free to determine whether it is appropriate for the outside auditors to perform such services based on all the facts and circumstances at the time.

Congress, in Title II of the Act, clearly defined tax services as a permissible non-audit service, so long as that service was pre-approved by the audit committee of the board of directors. The Commission's proposed rule creates significant uncertainty for the audit committee because it requires the audit committee, when deciding to pre-approve tax services, to assess those services in the context of three "basic principles." These basic principles are that the auditor cannot (i) audit its own work, (ii) function as part of management, or (iii) serve in an advocacy role for the audit client. This subjective analysis calls into question Congress' desire to place a "clear line around a limited list" of prohibited services. By adding a layer of ambiguity onto the process it will make it difficult for the audit committee to fulfill its obligations with certainty and may mean that no tax services will be provided by the outside auditors, which is clearly not the intent of the Act.

Thank you for your consideration. If you or the staff has questions regarding this letter, please do not hesitate to contact me.

Very truly yours,

Richard M. Levy
Chief Accounting Officer and Controller