USF&G profits jump in quarter Insurer's recovery largely completed

July 29, 1993|By David Conn | David Conn,Staff Writer

USF&G Corp., the Baltimore insurer, yesterday reported a strong second quarter that provided further proof the company has largely finished its nearly three-year turnaround.

For the three months that ended June 30, the company earned $25 million, or 15 cents a share, after paying preferred stock dividends. That was more than four times higher than the gain of $6 million, or a loss of 7 cents on a per-share basis, reported in the same period last year.

For the first half, earnings rose more than 750 percent, to $86 million, or 73 cents a share, compared with $10 million, or a 17-cent per-share loss, after preferred stock dividends, last year. (The 1993 first quarter included a $38 million gain from a one-time accounting change.)

The June 30 results represented the company's sixth consecutive quarterly profit.

"We are pleased with the steady improvement in our core property/casualty insurance operations," Chairman, President and Chief Executive Norman P. Blake Jr. said in a statement. "We're reaping the benefits of refocusing our operations on profitable lines of insurance in states that allow adequate rates."

Since he took over the company in late 1990, USF&G has been removing itself from unprofitable business lines, such as workmen's compensation, and from high-risk states.

The second-quarter earnings matched analysts' predictions. "Everything looked really in line with expectations," said Ira H. Malis, of Alex. Brown & Sons. A survey of analysts by the Zacks Investment Service showed a consensus of 11 cents a share, but Alex. Brown had been expecting 14 cents, Mr. Malis said.

For the full year, Alex. Brown predicts USF&G will earn 50 cents a share, and $1.25 next year. "And that's without much improvement in [property/casualty industry] pricing, just from pulling out of unprofitable businesses," Mr. Malis said. "We think premiums are going to start rising next year."

Until then, the stock market probably will remain tepid toward USF&G and other property/casualty companies. USF&G's shares fell 25 cents yesterday, to close at $17.875, on the New York Stock Exchange.

USF&G ........ Ticker ........ Yesterday's

Corp. ........ Symbol ........ Cls. Chg.

..... ........ FG .............. 17 7/8 - 1/4

Period ended

June 30 ...... 2nd qtr. ...... Year ago ..... Chg.

Revenue ...... $820,000 ....... $906,000 ....-9.5%

Net Income .... $25,000 ......... $6,000.. +316.7%

Primary EPS* .... $0.15 ........ ($0.07)....... --

....... .... .... 6 mos. ....... Year ago .... Chg.

Revenue ...... $1,695,000 ..... $1,847,000 ...-8.2%

Net Income ...... $86,000 ........ $10,000 ... +760%

Primary EPS* ...... $0.73 ........ ($0.17) ...... --

Figures in thousands (except per share data)

* Earnings per share is for income applicable to common stock, after deducting preferred stock dividends.

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