USF&G slashed loss to $40 million in 4th quarter Insurer was in the red $610 million a year earlier

January 30, 1992|By Timothy J. Mullaney

USF&G Corp. drastically reduced its fourth-quarter loss in 1991, to $40 million in the period from $610 million a year earlier, the company said yesterday.

The fourth-quarter results reflect the last major charges from USF&G's restructuring, Chairman Norman P. Blake Jr. said, noting that the corporate overhaul was virtually complete.

"It appears that the numbers came in slightly better than we were looking for, but not enough to cause any major investment decision changes," said Michael A. Lewis, insurance analyst for Dean Witter Reynolds Inc. in New York.

Stock in the Baltimore-based insurance company rose 25 cents, to $9.25 a share, yesterday. It rose sharply in active trading earlier this week, jumping $1 a share Monday.

USF&G spokeswoman Kerrie Burch-DeLuca said the stock had been helped by a bullish article in Barron's magazine over the weekend that noted USF&G executives had been buying shares in the company near the end of 1991.

Last year's fourth-quarter loss included $26 million in restructuring charges and a $24 million loss related to the company's decision to discontinue investment management operations, USF&G said. Those one-time losses were partly offset by income of $16 million from investments.

USF&G has been restructuring since 1990, reducing its staff by 27 percent and selling or closing a number of non-core businesses.

The 1991 fourth-quarter loss worked out to 62 cents a share, 23 cents a share coming from continuing operations and the rest from the special charges. Mr. Lewis had expected the company to lose 49 cents a share from operations, including a $24 million loss resulting primarily from an in vestment management business that USF&G counted as non-continuing because it was put up for sale during the quarter.

"USF&G ended 1991 with its business restructuring essentially completed," Mr. Blake said. "These actions, which were necessary to achieve long-term profitability for the company, continued to impact earnings in the latest quarter."

USF&G said its core property and casualty insurance business made a $17 million profit on operations during the fourth quarter of 1991, despite a weak insurance market.

The company said the profit was the best for the property and casualty business since the second quarter of 1990 and resulted from USF&G's resisting the price-cutting that has hurt it.

But Mr. Lewis said the momentum will be hard to sustain. USF&G will have a hard time breaking into the black for 1992 because the intense competition among property and casualty insurers shows no signs of easing, he said.

Ms. Burch-DeLuca however, said, "We think there's every opportunity for profit this year because our cost structure is drastically lower." USF&G is de-emphasizing volatile insurance lines such as workers' compensation and will emphasize different products at different branches.

Three months ended 12/31/91

.. .. .. Revenue .. .. .. Net .. .. .. Share

'91 ..1,020,000,000 .. (40,000,000) (0.62)

'90 ..1,168,000,000 .(610,000,000) (7.32)

% change .. .. .12.7 .. .. .. .. .NA .. . NA

12 months ended 12/31/91

.. .. .. Revenue .. .. .. Net .. .. .. Share

'91 4,100,000,000. ..(176,000,000) (2.53)

'90 4,500,000,000. ..(569,000,000) (6.99)

% change .. .. 8.9. .. .. .. .. . NA .. . NA

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