New USF&G chief sharpens his sword Says he will 'dispose of' parts of insurance giant if necessary

November 27, 1990|By Ross Hetrick | Ross Hetrick,Evening Sun Staff

Norman P. Blake Jr., who starts his new job today as head of the troubled USF&G Corp., is bringing his samurai swords with him from Chicago.

Blake, 49, has a reputation in the financial services industry as a turnaround artist. He said he will be taking a hard look at all operations of the giant Baltimore-based insurance and financial services company, which reported a loss of $15 million for the third quarter.

Parts of USF&G that "diffuse" the energies of the company "will not be continued to be pursued. They will be disposed of," he said in an interview yesterday.

That is where his samurai swords may come in handy.

In his previous job as chairman and chief executive officer of Chicago-based Heller International Corp., Blake had a pair of samurai swords prominently displayed in his office. He recounted how he would jokingly tell Heller executives: "If you don't make budget, you can use the short sword. If you need help, you can use the long sword."

Another indicator of his get-down-to-business attitude is the sign he always puts on his desk: "Get the Spectators off the Field."

Blake's appointment, announced yesterday, came nearly three weeks after USF&G said Jack Moseley, 59, would step down after leading the company for nine years. USF&G, which has assets of $13.9 billion, also said it would embark on a $75 million cost-cutting program that will include work force reductions at all levels.

Following the news of Blake's appointment, USF&G stock closed yesterday at $7.87 1/2 a share, down 12 1/2 cents. By 1 p.m. today, the stock had recovered the 121/2 cents and was trading at $8.

Blake said he asked USF&G to delay announcing his appointment to allow him to make a smooth transition from Heller.

Moseley's salary and bonus was nearly $1.18 million last year, according to company documents. Blake declined to disclose his compensation.

Employees of USF&G getting their first impression of Blake today with a letter from the new chairman, chief executive and president. It is signed "Norm."

Blake said the letter expresses his philosophy of being visible and accessible. It also appeals to the employees personal pride and the importance of "ethics, moral strengths, honesty and hard work," he said.

USF&G had 12,600 employees nationwide, with 2,500 in Maryland, at the end of last year. The company's principal subsidiary is United States Fidelity and Guaranty Co., a major writer of casualty and life insurance.

Blake comes to Baltimore after revitalizing Heller, a former money-loser that became a subsidiary of Fuji Bank Ltd., of Tokyo. Blake took the top job in 1984 at Heller, which is known for making leveraged buyout loans to mid-size companies.

While at Heller, Blake "led a strong turnaround in profitability," USF&G said in a release. Heller's domestic financial services unit realized a 38 percent compounded growth in earnings from 1986 to 1989, reporting a net income of $102 million last year. Heller's international unit also "achieved a significant improvement in profitability over the same period" under Blake's leadership, the release said.

Before joining Heller, Blake was with General Electric Credit Corp., as executive vice president for financing operations from 1981 to 1984. He was responsible for all operating components and oversaw a $13 billion asset portfolio.

In February 1986, Fortune magazine named Blake as one of America's most wanted managers. The article said executive recruiters rated him as "charismatic, creative, gutsy. Has unbelievable energy and Boy Scout ethics."

But stock analysts who follow USF&G were skeptical of the appointment.

"I don't know if he's the right man," said Gloria L. Vogel, an analyst for Bear, Stearns & Co. Inc., a New York investment banking firm. "He's certainly not a well known entity in the insurance industry."

As did other analysts, Vogel said USF&G should concentrate on its core insurance business and not on its financial services division, which was started in 1985.

"He has no insurance expertise," she said.

Michael A. Lewis, an analyst for Dean Witter Reynolds, a brokerage firm based in New York, said he was surprised by Blake's appointment. "It's a wait-and-see situation," he said, adding that it makes sense "to get back to basics and get back to the insurance side."

Even though his insurance experience is limited to two years from 1974 to 1976 as president of TOP, Inc. a Detroit-based provider of insurance services, Blake said he brings with him his abilities as a strategic planner and motivator of people.

He said he has not made any judgments yet as to what needs to be done at the company. "The most important thing is to understand what I don't understand," he said.

Despite his financial services background, Blake said that his focus will be on the fundamentals of the company, which are its property and casualty and life insurance businesses. "No one should have fear that I will be preoccupied with financial services," he said. "That is not going to happen."

Blake's appointment comes as insurance companies, and USF&G in particular, face dismal prospects.

Along with the cost-cutting program announced on Nov. 7, the company cut its annual dividend by 66 percent, to $1 a share from $2.92. The cut was a reversal of the company's policy of ever-increasing dividends, which was strongly supported by Moseley.

The company had a third-quarter loss of $15 million, or 22 cents a share, compared with a loss of $17 million, or 25 cents a share, in the 1989 third quarter.

USF&G said the changes will help it survive the downturn and benefit from the next upturn.

USF&G stock was severely battered Nov. 19 in heavy trading after a column in the Wall Street Journal detailed the financial problems facing the Baltimore insurance company. The price of USF&G shares dropped $2.37 1/2 a share to close at $7.75, its lowest closing price in 52 weeks.

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