USF&G Corp., the Baltimore-based insurer, said yesterday that it will continue to slim down and focus on its core insurance business by selling six mutual funds to another Baltimore financial company.
T. Rowe Price Associates, a large mutual fund manager, said it signed a letter of intent to buy the USF&G funds, which have $630 million under management and about 50,000 shareholder accounts. The transaction, if approved by regulators and stockholders, is expected to be completed in the third quarter.
The companies declined to reveal the price of the transaction. That information should become available within a month or two as USF&G informs its fund shareholders about the sale.
Geoff Bobroff, a senior vice president of Lipper Analytical Services Inc., said mutual funds have been selling for about 1 percent to 3 percent of their assets. That range, which a T. Rowe Price spokesman said is "not out of line," would price the USF&G transaction at $6 million to $19 million, said Mr. Bobroff, who heads Lipper's Denver office.
For T. Rowe Price, the sale would mean adding 50,000 shareholders to the pool of roughly 2 million investors whose accounts the company manages. The USF&G accounts would be merged tax-free into Price funds with similar investment objectives, the company said.
Price manages about $22 billion in 38 no-load mutual funds and $14 billion in institutional accounts.
Price has bought mutual funds before, said company spokesman Steven Norwitz, noting the February purchase of $38 million in three funds managed by Bell Atlantic Corp. But the USF&G transaction would be the largest such purchase, Mr. Norwitz said.
For the USF&G account holders, the shift to T. Rowe Price means no more "loads," or sales charges, to buy shares in the funds, and no more "12b-1 fees," which are charged in some funds when shares are sold.
The sale furthers USF&G's goal of dismantling its asset-management business.