Hurricane cases, dividend erase USF&G's profit

October 29, 1992|By David Conn | David Conn,Staff Writer

USF&G Corp. reported yesterday a small operating profit in the third quarter, all of which was erased by the financial damage from Hurricane Andrew and by the payment of a preferred stock dividend.

It was the third quarter in a row that the Baltimore-based insurer had operated in the black, only to see its gains paid out in dividends. But the continuing improvement in operations, aided by the sale of investment securities, cheered some of the analysts who follow the company.

"It looks like they're on target in terms of their recovery," said Ellen Barzilai, an analyst in the New York office of Alex. Brown Inc., which rates USF&G a "strong buy."

USF&G stock rose 50 cents a share yesterday, to close at $12.25, on the New York Stock Exchange.

For the three months that ended Sept. 30, USF&G reported income of $5 million. That turned into a loss of 9 cents a share, or about $7.6 million, after paying the preferred dividend. That was in contrast to a loss of $25 million, or 44 cents a share, in the third quarter of 1991.

The results were hurt in the quarter by higher-than-expected payments for victims of Hurricane Andrew, which devastated parts of Florida and Louisiana in August. The company's estimate of losses from the storm eventually doubled, to $80 million, mostly from higher-than-expected construction costs.

"The trends are improving," said Lehman Brothers analyst Gloria Vogel. "If you back out the [catastrophic losses], the numbers look better" than in previous quarters.

USF&G also announced an unexpected $51 million restructuring charge because of a push to expand its field offices. "We are opening six new regional offices by year end, and will expand into our first new full-service branch office in many years," said Norman P. Blake Jr., chairman, president and chief executive officer.

Three months ended 9/30/92

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

'92.. ...... 1,011,000,000... 5,000,000........... (0.09)

'91......... 991,000,000.....(25,000,000)......... (0.44)

% change............ +2.0.............. NA............... NA

Nine months ended 9/30/92

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

91.. ...... .. 2,858,000,000.... . 15,000,000..... (0.25)

90............ 3,136,000,000..... (136,000,000)... (1.91)

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

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