USF&G plans to sell preferred stock to raise needed capital

May 14, 1991

USF&G Corp., the Baltimore-based insurance company, has filed a registration statement with the Securities and Exchange Commission to publicly offer $150 million worth of convertible preferred stock as part of its effort to raise $300 million in capital.

The registration, which was filed yesterday, proposes the sale of 3 million shares of Series C Cumulative Convertible Preferred Stock in June at $50 per share. Another 450,000 shares will also be issued to satisfy possible demand beyond the 3 million shares.

Kidder, Peabody & Co. Inc. will act as the underwriter of the proposed offering.

The dividend yield of the preferred stock will be set shortly before the stock is issued.

USF&G will raise another $150 million by a private sale of convertible preferred stock, the press release said.

The money is being raised primarily to bolster the surplus of its main subsidiary, United States Fidelity and Guaranty Co.

USF&G said the proposed stock sale is connected to the decision by A.M. Best Co., an insurance rating company, to assign a rating of A- to the United States Fidelity and Guaranty Co. The rating, which indicates a strong financial condition, was given on the basis of the the corporation's stated plan to add the additional equity by the third quarter of this year and the continuation of a cost-containment and a capital-preservation strategy.

USF&G, which has $14 billion in assets, consists of subsidiaries that write property and casualty insurance and life insurance and sell investment-management products and services.

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