More USF&G layoffs on way Moves to streamline operation expected in announcement.

April 04, 1991|By Ross Hetrick | Ross Hetrick,Evening Sun Staff

USF&G Corp., the giant Baltimore-based insurance company, was to announce today additional layoffs and possibly other moves to streamline its operation.

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.

USF&G officials yesterday declined to discuss today's announcement.

The first round of terminations came in January, when the company eliminated 900 jobs, including 360 workers in its Baltimore operations.

Then on March 13, USF&G announced that it would withdraw from Texas and would terminate 424 workers in that state. It said it had lost $300 million in that state during the last 10 years.

Then at the end of last month, USF&G announced it would stop offering property and casualty insurance in Louisiana, cutting another 205 jobs over the next two to three years. Also affected in Louisiana are 92 independent agents who offer USF&G insurance.

USF&G has been offering insurance in Louisiana since 1896, the year that the company was founded. Louisiana is the site of the USF&G Sugar Bowl college football game and the USF&G Classic golf tournament held in March. Both events are staged in New Orleans.

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.

USF&G has also taken other action to shore up its sagging balance sheet.

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.

During USF&G's fourth quarter, the company reduced its investment portfolio by $357 million, or $4.25 a share, as it sold and revalued junk bonds and problem real estate.

This and other actions caused USF&G to report a $610 million loss, or $7.32 a share, during the fourth quarter of 1990, compared with a profit of $104 million, or $1.20 a share, in the fourth quarter in 1989.

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.

"USF&G has taken a series of decisive actions to significantly strengthen our balance sheet, sharpen our business focus, and lower our cost of doing business to enable us to be a vigorous competitor in our markets," Norman P. Blake Jr., chairman and chief executive officer, said in a prepared statement earlier this year.

As part of this effort, Blake said the company is getting out of the leasing and travel services fields and other "non-core" businesses.

"Going forward, USF&G will concentrate its resources on its insurance and investment management businesses where it has strong competitive position, expertise and prospects for an attractive return on investment," he said.

The company also chopped its quarterly dividend from 25 cents to 5 cents a share. The previous dividend amounted to about a 10 percent return.

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