USF&G Corp. laid off 225 employees in Baltimore yesterday as part of nationwide restructuring that will cut nearly 2,000 people from its work force by year-end.
The reductions, announced to employees early yesterday morning, would trim an additional $100 million from the giant insurer's annual expenses and would mean that one-fourth of the company's work force last year is -- or soon will be --gone.
"The idea is we're going to really get down to fighting weight with our very best people in the markets where we have the best chance of winning," said Norman P. Blake Jr., the company's chairman and chief executive.
As expected, the bulk of the restructuring came in the company's core property and casualty business, by far the largest piece of USF&G's operations. The Baltimore-based company said that most of the lost jobs resulted from its plans to merge operations at 14 branches this year, leaving only enough staff in those offices to resolve claims and to work with USF&G's independent insurance agents.
Yesterday's reorganization, however, dealt only with the commercial insurance side of the business, which accounted for about 60 percent of USF&G's property and casualty unit, the United States Fidelity and Guaranty Co.
Review of the company's personal insurance lines will not be completed until later this year, at which time additional layoffs might occur, Kerrie Burch-DeLuca, a company spokeswoman, said.
The widespread layoffs, mergers and restructuring of USF&G come after months of internal review by Mr.Blake since he took over the company from former Chairman Jack Moseley in late November. The recent changes were the result of the work of five task forces, including a 32-member panel of insurance agents, that were brought together to help find ways to pull the company back to profitability.
USF&G, after taking a series of costly adjustments to its balance sheet partly in recognition of falling real estate and "junk bond" prices, lost $610 million in the fourth quarter of last year, resulting in a $569 million loss for the year.
With many of those losses out of the way, Mr. Blake said, USF&G now is better able to grapple with a stubborn downswing in the insurance business and a highly competitive marketplace that has led to similar layoffs and restructurings throughout the industry in recent months.
USF&G will separate its commercial and personal insurance lines into two discrete businesses, each with its own strategy and focus, Mr. Blake said.
The review of the commercial side of the business led to the company's decision to leave Texas and Louisiana and was at the root of yesterday's announcement to restructure its operations nationwide.
"It's just a reallocation game," Mr. Blake said. "You want to throw your resources where you have the best chance of winning."
Analysts said yesterday's announcement was both expected and welcome.
"It's important to realize that property and casualty remains the core business there, and what this does is get the costs better under control and narrow the focus," said Denis J. Callaghan at Alex. Brown Inc.
In all, USF&G said its reorganizations would lead to a loss of 2,868 jobs at the company by the end of this year. The first wave of cutbacks came in January, when 942 workers -- 360 in Baltimore -- were let go in a move the company said would save it $75 million a year.
Yesterday's announcement meant the further loss of 1,701 jobs outside Baltimore this year as much of the administrative work is transferred from 14 of the company's 54 branch offices to neighboring regional offices.
Of the 225 jobs eliminated in Baltimore in this latest round of layoffs, 65 percent were in management and executive positions, Mr. Blake said. "We weren't shooting Indians," he said, adding that 14 officers of the company were let go as part of the massive sweep.
About 20 percent of the company's 2,826 Baltimore employees as of last year have been laid off in the two reductions.
According to the company, the branch offices to be consolidated this year are in 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.