Earnings rise 48% at USF&G

July 28, 1994|By David Conn | David Conn,Sun Staff Writer

USF&G Corp. got a break from Mother Nature after a slightly disappointing first quarter, and yesterday it reported a 48 percent increase in operating earnings during the second quarter.

The Baltimore-based insurer earned $37 million, or 29 cents a share during the quarter, not including securities gains and tax benefits.

USF&G also reported a $35 million income tax benefit and a $1 million gain from investments in the latest period, raising net income to $73 million, or 72 cents a share after the payment of preferred stock dividends. Last year, operating earnings were the same as net income, at $25 million, or 15 cents a share in the second quarter.

The earnings exceeded all but the most optimistic analysts' estimates. The stock gained 12.5 cents a share to close at $12.875.

"We still have challenges and opportunities for significant improvement in some lines of business, but overall USF&G is moving as planned through its building phase," Norman P. Blake Jr., the chairman, president and chief executive officer, said in a statement.

The strong performance followed a first quarter that was tTC plagued with near-record losses from natural catastrophes, especially the damages from extensive snow and ice storms on the East Coast and in the Midwest. Weather-related losses were minimal in the second quarter. And the higher earnings came despite a 5 percent drop in premiums earned, to $589 million from $620 million a year ago.

USF&G is having its second profitable year after an extensive restructuring that included thousands of layoffs, as well as a retreat from unprofitable products and locations.

The report "shows us that they're doing a pretty good job of limiting the business that they've been trying to get out of," said Alex. Brown Inc. analyst Ira H. Malis.

"Now the challenge is getting more of the desirable business that they want," he said.

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

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

.. .. .. .. .. .. .. FG .. .. .. .. .. .. .. 12 7/8 .. .. .. +

Period ended

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

Revenue .. .. .. .. $791,000 .. .. .. .. .. $820,000 .. .. -3.5%

Net Income .. .. .. $73,000* .. .. .. .. .. $25,000 .. ... +192%

Primary EPS .. .. ..$0.72*.. .. .. .. .. .. $0.15 .. .. .. +380%

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

Revenue .. .. .. ..$1,557,000 .. .. .. .. $1,695,000.. .. .-8.1%

Net Income .. .. ..$96,000**.. .. .. .. ..$86,000*.. .. ...+11.6%

Primary EPS.. .. ..$0.85**.. .. .. .. .. $0.73* .. .. .. . +6.4%

* Includes $35 million income tax benefit

** Includes $34 million income tax benefit

* Includes $38 million net gain related to accounting changes

Figures in thousands (except per share data.)

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