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                                                                    EXHIBIT 10.5


                             RESTRICTED STOCK RIGHTS
                                 AWARD AGREEMENT
            ISSUED UNDER THE SAFECO LONG-TERM INCENTIVE PLAN OF 1997


SAFECO Corporation ("SAFECO") hereby grants to Michael S. McGavick ("Employee")
the following restricted stock rights pursuant to, and in accordance with the
provisions of, the SAFECO Long-Term Incentive Plan of 1997 (the "Plan").

1. SHARES SUBJECT TO RIGHTS. SAFECO shall issue to Employee the respective
number of shares of SAFECO common stock (the "Shares") listed in the following
schedule of dates (the "Target Dates") or, at Employee's request, make a payment
in U.S. dollars of an amount equal to the fair market value of the Shares
attributable to the respective Target Date (or any portion thereof) if, and only
if, Employee remains continuously employed by SAFECO up to and including the
respective Target Date.

<TABLE>
<CAPTION>
                                            SHARES TO BE ISSUED
               TARGET DATE                     ON TARGET DATE
<S>                                         <C>
               January 26, 2002                    11,856
               January 26, 2003                    11,856
               January 26, 2004                    11,856
               January 26, 2005                    11,856

                               Total               47,424
</TABLE>

2. TAX WITHHOLDING. As a condition to receiving the Shares attributable to a
Target Date or payment for such Shares, as the case may be, employee must tender
to SAFECO on the respective Target Date an amount sufficient to satisfy all
applicable federal, state and local tax withholding requirements ("Tax
Requirements"). Unless Employee pays SAFECO an amount equal to the Tax
Requirements on the Target Date, SAFECO shall pay the Tax Requirements and
either withhold the amount paid from Employee's next pay check or reduce the
number of Shares issued to Employee by the number of Shares which, on the Target
Date, has a fair market value equal to the Tax Requirements.

3. TERMINATION OF EMPLOYMENT. If Employee voluntarily or involuntarily ceases to
be an employee of SAFECO or a SAFECO subsidiary for any reason other than (i) a
termination without Cause as defined in Employee's Employment Contract dated as
of January 26, 2001 (the "Employment Contract"), (ii) a Change in Control, or
(iii) Employee's death or disability, Employee shall have no rights to receive
any Shares attributable to Target Dates occurring after the date of termination
of employment. A leave of absence shall constitute a termination of employment
unless the Committee that administers the Plan determines otherwise.

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4. DEATH OR DISABILITY; CHANGE IN CONTROL; TERMINATION WITHOUT CAUSE. If (i)
Employee's employment by SAFECO or a SAFECO subsidiary terminates by reason of
Employee's death or disability, (ii) SAFECO terminates Employee's employment
without Cause (as defined in the Employment Contract) or (iii) there is a Change
in Control of SAFECO, then as soon as practical following the effective date of
Employee's termination of employment, SAFECO shall issue to Employee or the
personal representative of Employee's estate, as the case may be, all of the
unissued Shares covered by this Award or, in lieu thereof, at the request of
Employee or the personal representative, make a cash payment equal to the fair
market value of such Shares as of the effective date of the termination. Such
Shares shall be issued or payment made without regard to any employment or other
service requirement stated in this Award Agreement.

5. ADDITIONAL COMPENSATION PAYMENTS. So long as Employee remains in the
continuous employ of SAFECO or a SAFECO subsidiary, then, with respect to the
Shares that are to be issued on each Target Date hereunder, SAFECO shall pay to
Employee during the period commencing with the date hereof and ending on such
Target Date, as additional compensation, an amount of cash equal to the
dividends that would have been payable to Employee during such period if
Employee had owned such Shares. Such amounts shall be paid as near in time as
reasonably practical to the applicable dividend payment dates. Upon termination
of employment, Employee's right to receive dividend equivalents under this
paragraph shall immediately cease; provided; however, that if the termination of
employment was due to Employee's death or disability or was without Cause (as
defined in the Employment Contract) and occurred after an ex-dividend date but
prior to payment of the dividend, Employee or the personal representative of
Employee's estate shall be entitled to payment under this paragraph of an amount
equivalent to such dividend.

6. RIGHTS NOT TRANSFERABLE. The rights granted to Employee hereunder shall not
be subject to execution, attachment or similar process. Except to the extent the
Plan or the Compensation Committee may permit, the rights evidenced by this
Award Agreement may not be assigned, pledged or transferred in any manner, by
operation of law or otherwise, except by will or by the laws of descent and
distribution. During Employee's lifetime, only Employee or Employee's guardian
may exercise any right granted hereunder.

7.    FORFEITURE.

      (a) If, at any time within (i) one year after the issuance of Shares or
      the cash settlement of rights granted by this Award or (ii) one year after
      termination of employment, whichever is the later (the "Restricted
      Period"), Employee engages in any activity harmful to SAFECO's interests
      or which is in competition with any of SAFECO's operations, then
      Employee's rights under this Award Agreement shall terminate effective as
      of the date that Employee commences such activity (unless terminated
      sooner by operation of another term or condition of this Award), and the
      value on the issuance date of the Shares issued during the Restricted
      Period (or the cash equivalent paid in lieu thereof) shall be immediately
      payable to SAFECO.

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      (b) Such harmful or competitive activities include, without limitation,
      (i) engaging in conduct related to Employee's job responsibilities for
      which either criminal or civil penalties may be sought; (ii) accepting
      employment with or serving as a consultant, advisor or in any other
      capacity to any party which is in competition with any member or members
      of the SAFECO group of companies in any of their lines of business; (iii)
      disclosing or misusing any confidential information concerning any of the
      SAFECO companies; and (iv) participating in a hostile attempt to acquire
      control of SAFECO.

      (c) SAFECO shall have the right to reduce payment of any amounts owed to
      Employee (for wages, fringe benefits, unused vacation or any other reason
      except as may be prohibited by law) to the extent any amounts are owed to
      SAFECO by Employee under the foregoing forfeiture provisions.

8. RIGHTS AS STOCKHOLDER. Neither Employee, nor Employee's personal
representative, heir, legatee or distributee, shall be deemed to be a holder of,
or to have any rights with respect to, any Shares subject to the rights granted
hereunder until such Shares are issued.

9. NO SEPARATE FUND. SAFECO has not set aside or segregated any assets or
established any separate account or fund to insure payment of its obligations
hereunder.

10. PROVISIONS OF THE SAFECO LONG-TERM INCENTIVE PLAN OF 1997. This Award is
subject to all of the terms and conditions of the SAFECO Long-Term Incentive
Plan of 1997, as it may be amended from time to time and, to the extent provided
in the Plan, to all constructions, interpretations, rules and guidelines which
the Compensation Committee may adopt from time to time in connection with the
Plan. Capitalized terms not otherwise defined in this Award Agreement shall have
the meanings assigned to them in the Plan.

11. PLAN DOCUMENT. By signing in the space provided below to acknowledge
acceptance of this Award, Employee further acknowledges that Employee has
received a plan summary which includes the text of the Plan and has been
afforded an opportunity to ask any questions that he may have regarding the Plan
or the rights granted hereunder.

Dated January 26, 2001.

                                        SAFECO CORPORATION

                                        By:
                                            ------------------------------------
                                            Robert S. Cline
                                            Chair, Compensation Committee

Accepted:


----------------------------------------
Michael S. McGavick

Date:
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