Less than two weeks after saying that it was pulling out of Texas, the Baltimore-based USF&G Corp. announced yesterday that it will stop offering property and casualty insurance in neighboring Louisiana.
The action will eliminate the jobs of 205 USF&G employees in Louisiana over the next two to three years. Also affected are 92 independent agents who offer USF&G insurance. "We sincerely regret the impact that this decision will ultimately have on our loyal Louisiana employees and their families, and we will make every effort to treat them fairly," USF&G said in a prepared statement.
Excluding the pending Texas and Louisiana reductions, USF&G's work force now stands at about 10,900 nationwide, with 1,940 of those workers in the Baltimore area.
The company said it is ending its property and casualty insurance business in Louisiana because it lost $325 million there over the last 10 years. The company said the move was part of its new strategy of leaving state markets, like Texas, that are not profitable. However, the company said it plans no further withdrawals in the other 48 states in which it operates.
In 1990, the company had written policies with premiums of about $78 million in Louisiana, or about 2 percent of its total business, according to USF&G spokeswoman Kerrie Burch-DeLuca. There are 43,000 USF&G customers in Louisiana.
The company will write no new property and casualty policies in Louisiana as of yesterday. But it will renew current policies for one year, if they meet the normal underwriting standards.
In Louisiana, USF&G will continue to offer fidelity and surety policies, life insurance and re-insurance, which is coverage sold to other insurance companies.
USF&G has been offering insurance in Louisiana since 1896, the year that the company was founded. The state is the site of the USF&G Sugar Bowl, a college football game on New Year's Day and the USF&G Classic golf tournament held annually in March. The tournament and the bowl game are played in New Orleans.
As part of a massive cost-cutting effort announced in January, USF&G decided to drop its sponsorship of the golf tournament after this year. However, the Sugar Bowl is to continue to receive USF&G support.
The cost-cutting effort included the elimination of 900 jobs, including 360 workers in its Baltimore operations. More terminations are expected here in the next few weeks after the company completes a strategic review.
On March 13, USF&G announced that it was withdrawing from Texas and would terminate 424 workers in that state. The company said it had lost $300 million in that state during the last 10 years.
For the fourth quarter, USF&G reported a $610 million loss, or $7.32 a share, compared with a profit of $104 million, or $1.20 a share, in the 1989 fourth quarter. More than half -- $357 million, or $4.25 a share -- came from losses from selling and restructuring investments.
For all of 1990, USF&G reported a loss of $569 million, or $6.99 a share, compared with a profit of $119 million, or $1.24 a share, in 1989. Investment losses for the year amounted to $354 million.
Revenues for the year were $4.5 billion, compared with $4.7 billion in 1989.