USF&G Corp., whacked by the costs of 17 storms and tornadoes during the past three months, said yesterday that it lost $56 million in the second quarter, continuing a string of losses that began last year.
The giant Baltimore-based insurer, which is in the midst of a massive restructuring, said further employee cuts and costs associated with reducing the scope of the company had also eroded earnings.
"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," Norman P. Blake Jr., chairman and chief executive of the company, said in a prepared statement.
Since the end of last year, USF&G, parent of the United States Fidelity and Guaranty Co., has undergone a major restructuring aimed at slashing costs and shifting assets in the face of operating losses and plummeting real estate and junk bond prices. The company lost $569 million last year after taking large write-offs in its investment portfolio. On June 30, the company had $14.4 billion in assets.
Businesses -- including computer leasing, travel services and oil and gas operations -- have either been
sold or are slated for sale. The company has about 9,700 employees, down from 12,300 at the start of the year but still shy of its goal of cutting to 9,000 workers by year-end, spokeswoman Kerrie Burch-DeLuca said.
Despite the second-quarter loss, the company said its completion of a $320-million equity infusion in June had significantly helped some important operating ratios.
In all, USF&G said it lost $56 million, or 77 cents a share, in contrast to income of $5 million, or 1 cent a share, during last year's comparable period. Total revenues slipped slightly to $1.06 billion from $1.13 billion a year ago.
The company lost $111 million, or $1.47 a share, on revenue of $2.15 billion during the past six months.
USF&G primarily blamed the storms that swept through the South and Midwest over the past three
months for $46 million of the company's operating losses, leading to a $44 million net loss in its core property and casualty insurance segment.
The company also said its life insurance segment earned $11 million during the period while its investment management group in New York lost $3 million.