Hit by record claims for 17 different catastrophes, USF&G Corp. today announced that it lost $56 million, or 77 cents a share, during the second quarter. That compares to a net income of $5 million, or 1 cent a share, for the same quarter a year ago.
The disasters, which included storms and tornadoes in the Midwest and South, drained $46 million from the company, the largest amount for one quarter in USF&G's history. The previous record was $36.3 million in the 1989 third quarter when the company paid claims on the disaster caused by
USF&G also provided an additional $11 million in restructuring charges, primarily connected to severance costs for staff reductions and streamlining businesses.
Earlier this year the giant Baltimore insurance company dramatically revamped its operation and eliminated 2,825 jobs, about a quarter of its work force.
USF&G's restructuring also included a revaluation of many of the company's assets that contributed to a loss of $569 million last year.
For the first six months of the year, losses totaled $111 million, compared with net income of $56 million in the same period in 1990. The loss was 1.47 per share compared with 57 cent per share in the year-earlier period.
Both 1991 periods reflect the catastrophe losses and restructuring charges, as well as a $5 million gain from discon
tinued operations, primarily from the sale of a domestic computer leasing company.
"It is disappointing the timing and full effect of our restructuring efforts have not yet taken hold to sufficiently offset the unanticipated and unprecedented high level of catastrophic losses as well as the costs associated with our ongoing restructuring process," said Norman P. Blake Jr., chairman, president and chief executive officer of USF&G.
The effort includes leaving unprofitable states, restricting the amount of business in marginal markets, and ensuring that price margins reflect the soft market, he said.
Baltimore-based USF&G Corp., with assets of $14.4 billion, is composed of subsidiaries engaged in the writing of property/casualty and life insurance and in the sale of investment management products and services. Its principal subsidiary is United States Fidelity and Guaranty Co.