USF&G Corp. was hit with a couple of major unexpected expenses during the first quarter and ended up posting a net loss of $55 million, the Baltimore-based insurance company reported yesterday.
In a letter to shareholders, Norman P. Blake Jr., the chairman, president and chief executive, said the company paid out $20 million to the National Workers' Compensation Reinsurance Pool, which is used by insurers to spread the risk of providing workers' compensation coverage for high-risk companies.
The company also set aside another $21 million to be used as part of its nationwide restructuring program. The restructuring could involve the elimination of 2,000 jobs by the end of the year as the insurer seeks to terminate its property and casualty insurance operations out of Texas and Louisiana. In addition, it is consolidating branch offices throughout its marketing region.
The consolidated net loss for the three months that ended March 31 was 70 cents per share, compared with net income of $51 million, or 56 cents per share, in the same period in 1990. The net loss for the quarter includes realized gains on investments of $400,000, compared with $13 million in the first quarter of 1990.
The company said its operating loss, which excludes realized gains and restructuring charges, for the first quarter of 1991 was $34 million. This compares with an operating profit of $41 million in the same period last year.
Kerrie Burch-DeLuca, a spokeswoman for USF&G, said that if it was not for the payment to the workers' compensation reinsurance pool and the added restructuring costs, first- quarter results would have been about what the company expected.
She said that USF&G sees 1991 as "a year of transition" and decided to take its additional restructuring costs out of first-quarter earnings.
About 17 percent of USF&G's premiums come from workers' compensation insurance. According to its latest figures, it costs the company $1.44 for every dollar taken in from workers' compensation premiums.
Ms. DeLuca said the company wants to reduce its involvement in this insurance by 25 percent over the next two to three years.
The company's property/casualty operations posted a loss of $15 million, compared with income of $80 million in the same quarter last year. Its life insurance division had a break-even quarter.
Three months ended 03/31/91
.. .. .. Revenue.. .. .. Net.. .. .. .. Share
'91.. .. 1,092,000,000.. (55,000,000).. (0.70)
'90.. .. 1,114,000,000.. 51,000,000. .. 0.56
% change -1.9.. .. .. .. -- .. .. .. .. --