USF&G Corp., the giant, Baltimore-based insurance company, terminated 225 workers in Baltimore today and will eliminate another 1,700 jobs in branch offices through the rest of the year, the company announced today.
The firm also plans for remaining workers to resume a 40-hour work week -- a change from the current 37 1/2 -hour week -- beginning July 1.
The terminations in Baltimore are primarily in the company's core property and casualty division, according to a USF&G spokeswoman.
Today's terminations follow a first round in January, when the company eliminated 900 jobs, including 360 in its Baltimore operations. Those were the first mass job cuts ever at USF&G, which was founded in 1896.
With the terminations, USF&G's national work force will be reduced to a little under 9,000 and its Baltimore work force to 2,521.
Employees who lose their jobs in this round will receive the same severance program as those in January: two weeks of pay for every year of work, plus eight weeks of pay regardless of service, a company spokeswoman said.
hope people understand these things are absolutely necessary for the success of the company," said Norman P. Blake Jr., USF&G chairman, president and chief executive officer, in an interview this morning.
Blake said the severance packages were some of the most generous in the industry.
The terminations today will be the last wholesale reductions for the foreseeable future, Blake said. "It reflects the end to an across-the-board reduction in force," he said.
Yet the pain was evident in at least one laid-off employee, a teary-eyed woman who hugged a security guard at the downtown headquarters as she left the building. She carried with her a shopping bag of her belongings in one hand and her car keys in the other.
"I don't have a job, that's all," she said.
Today's moves come as part of a strategy of separating USF&G's commercial and personal lines into "two discrete businesses, recognizing that they compete in separate arenas requiring different sets of resources," Blake said.
USF&G also is reducing its 50-branch network to 36 branches. The 14 branches being downgraded will become sub-offices and will continue to provide claim and loss control services.
The branches to be scaled back are Albuquerque, N.M.; Birmingham, Ala.; Boston; Columbia, S.C.; Cincinnati; Little Rock, Ark.; Livingston, N.J.; Memphis, Tenn.; Meridian, Miss.; Minneapolis; Omaha, Neb.; Phoenix; Scranton, Pa.; and Toledo, Ohio.
However, these actions do not signal further state withdrawals, a company statement said.
Blake said the new strategy in the commercial lines is going to be implemented immediately and the personal lines strategy will be "fine-tuned" and announced later this year.
"The primary engine here is the commercial lines business," Blake said in the interview. "And that is why, organizationally, we going about getting our house in order in that line of business first,"
While the company will continue to pursue personal lines of property and casualty insurance, the company's main focus will be insurance sold to companies.
"In commercial lines, which comprise about 60 percent of our property/casualty book of business, we are taking actions to both enhance revenues and control expenses," he said.
Blake said USF&G essentially was exiting from the financial services arena -- including real estate investing and leasing, marketing and travel agency -- but would retain its investment management operations for corporate, government and retail accounts.
When the downsizing is complete, the company will have cut a quarter of its work force, which stood at 11,800 at the end of last year. The moves announced today will cut an additional $100 million from the company's expenses, Blake said in a statement. Previous cost-cutting had saved $75 million.
"Following the steps we announced in February to improve the quality of our balance sheet and to dispose of certain businesses that do not meet standards for acceptable return, these initiatives make USF&G a very different company from what it was just a few months ago," Blake said in the statement.
"We are today a stronger, more focused company, positioned to benefit from improved productivity and creativity as a means of managing through the property/casualty underwriting cycle and to deliver a more consistent level of profitability and growth."
The company is one of several large insurance companies that are trimming staff or studying work force reductions as they try to deal with problem investments, which are reducing their capital bases, or with surplus accounts. These companies include Metropolitan Life Insurance Co., Aetna Life & Casualty Co., John Hancock Financial Services, and Prudential Insurance Co.
Previous moves to cut losses and reorganize included slashing the company's dividend for the first time in more than a decade, eliminating the company's executive dining room and discontinuing operations in Texas and Louisiana.