USF&G Corp., ending nearly three weeks of intense speculation, announced yesterday that Norman P. Blake Jr., a longtime financial-services executive, has been named chairman, chief executive and president of the giant Baltimore-based insurance company.
Mr. Blake, 49, takes over the troubled insurer effective today, leaving his posts as chairman and chief executive of Chicago-based Heller International Corp., a lender and provider of financial services to primarily medium-sized companies. He replaces Jack Moseley, the 59-year-old head of USF&G, who said Nov. 7 he would take early retirement after nearly 10 years at the helm.
The appointment of Mr. Blake, whose long career in the financial industry includes little experience in the insurance business, was viewed primarily as a call by USF&G directors for an executive able to identify problems and, if needed, effect deep-seated changes at the company.
USF&G, which lost $15 million during the third quarter, remains mired in an insurance downturn that has squeezed the industry nationwide and pushed down precipitously the value of its real estate and "junk" bond holdings.
As part of its Nov. 7 announcement, USF&G said it was slashing its dividend by two-thirds and would cut its work force to pare $75 million in expenses.
Though his immediate aims remain unclear, Mr. Blake's experience at Heller is likely to serve him well at his new company. He is perhaps best known as the man who moved Heller back to profitability in the last six years while dramatically changing its corporate direction and management.
"My strength is one of being able to develop effective strategies for business and then having the ability to develop a culture and organizational commitment to that structure," Mr. Blake said yesterday. "Like any financial-services industry, there is an abundance of competition and overcapacity and to be effective, one must be cost-effective and cost-competitive."
Mr. Blake said it was too early to decide what changes he would bring to USF&G, but he indicated that some were likely. He said he needs time to understand "what we are and what we are to become" while remaining "conscious of not wanting to throw the baby out with the bathwater."
But "if I don't know where we're going to take this business in three months, they've got the wrong person for this job," he said.
Those who have worked for Mr. Blake described him as an intense and forceful executive who thrives on change and a quick management pace. Whether executives like him or leave, observers said, Mr. Blake is not someone they easily forget.
"His focus and his intensity tends to create love-hate relationships," said Sam Eichenfield, who worked for Mr. Blake for three years at Heller and is now president and chief executive of Greyhound Financial Corp. in Phoenix. "He's one of the few people I've met who you can love one moment, hate the next and love the next."
In 1984, Mr. Blake left General Electric Credit Corp., where he was in charge of running all of the operating components of a $13 billion portfolio, to take over Heller, which had just been purchased by Fuji Bank Ltd. of Tokyo for $425 million.
Heller was about to lose $181 million that year and $32 million more in 1985. Mr. Blake quickly brought in new executives from General Electric Credit and moved the company's focus away from its traditional businesses.
He moved aggressively out of consumer-finance operations and mortgage lending and began expanding the business of providing financing for buyouts and acquisitions, a strategy that worked well during the 1980s but has begun to sour somewhat lately. The company earned $102 million last year and $63 million during the first nine months of 1990, compared with income of $67 million during 1989's first three quarters.
Overall, Mr. Blake estimated that 90 percent of the senior officers at Heller changed during his tenure while the company pared its overall work force by 25 percent.
The reaction from the financial community was muted yesterday. Analysts who track USF&G and the insurance industry said they were mostly unfamiliar with Mr. Blake's history. But what little they could determine yesterday about Heller's corporate history and Mr. Blake's tenure there was generally favorable, they said. Most observers gave Mr. Blake fairly high marks for the years he spent running and realigning the company.
"The reaction is good," said Denis J. Callaghan, an insurance analyst at Alex. Brown Inc. in Baltimore. "My understanding is that he has the kind of background in terms of cost-cutting and willingness to make tough decisions that probably fits what USF&G needs now."
Traded on the New York Stock Exchange, USF&G closed down 12.5 cents a share, to $7.785, yesterday.