An investor unsure that big changes are under way at USF&G Corp. need only to have clocked this year's annual meeting.
The event, held yesterday at the Hyatt Inner Harbor, spanned more than two hours and included colorful slides, spirited banter between stockholders and officers, and a pep rally atmosphere that even won praise from some fired executives.
Corporations invariably use their annual meetings to project an upbeat image, but under USF&G's previous management the affairs rarely lasted 30 minutes. Former Chairman Jack Moseley, a tough executive with a reputation for expediency, took pride in the brevity of his meetings.
But Moseley left the company last year after its finances soured. The new chairman, Norman P. Blake Jr., used his first annual meeting to demonstrate a decidedly different style and substance. He detailed his sweeping reorganization for investors, actively encouraged questions from the audience, and held a news conference after the meeting.
At one point during his presentation, Blake paused at the podium to say "God bless you" to a stockholder who had !B sneezed.
Clearly, the context of the meeting differed greatly from that in past years and investors deserved some hand-holding. The company lost $569 million last year and cut its almost sacrosanct dividend. And the stock, which was selling for more than $30 last year, closed at 9 7/8 yesterday.
But Blake, 49, said he intended to demonstrate a new, more accessible style.
"I went for the shareholders. I owe them the accountability to communicate with them in a very direct way and I want to communicate that with them," Blake said after the meeting.
Shortly after Blake took over UFG&G, the company posted a fourth-quarter loss of $610 million, largely as a result of investments in real estate and junk bonds. Blake took drastic cost-cutting measures: 25 percent of the work force was eliminated and the company has ended its foray into financial services and is refocused on property and casualty insurance.
Blake said yesterday that the strategy is working -- despite a $55 million loss in the first quarter, compared with a year-ago reported profit of $51 million -- and that the worst of the job cuts and hard times are over. Much of the first quarter's loss was attributed to restructuring and other one-time costs.
"There is no planned, further reduction in force," Blake said. The company's plans call for a work force of about 9,000, down about 3,000 from the beginning of the year. In Baltimore, there are now about 2,200 workers, down nearly 600 since Jan. 1.
Although the company is re-examining everything from the makeup of the board of directors to employee compensation, Blake said no more significant structural changes are anticipated.
The company is on its way to recovery but probably will not make money this year, he said.
"I anticipate a steady improvement in profitability," he said.
In a reply to the question most asked by investors at the annual meeting, Blake said any increase in dividends will depend on profits.
He also vowed to promote more women and minorities, who are noticeably absent on his just-assembled senior management team.
Blake announced that the company has begun proceedings to cease selling auto insurance in Massachusetts and is trying to get out of long-term contracts to sponsor sporting events, including college football's Sugar Bowl. With USF&G's shift to property and casualty insurance, there is less need for advertising with such wide exposure, he said.
The company also announced yesterday that it expects to sell an aggregate of $130 million worth of series B cumulative convertible preferred stock in a private placement.
The sale is in connection with an effort to raise up to $300 million in additional equity capital through a public offering and a separate private placement.