USF&G close to decision on move F&G Life subsidiary considering sites in Tampa, Nashville

April 16, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

USF&G Corp. will decide next week if it will move its Fidelity & Guaranty Life Insurance headquarters out of Maryland.

The choice of another Baltimore site, Tampa, Fla., or Nashville, Tenn., will affect 85 managers who work at the company's Mount Washington campus.

The possible F&G Life relocation also marks the latest effort by the Baltimore-based insurer to slash costs and increase competitiveness by shuffling personnel.

Later this year, USF&G will relocate nearly 800 people from its 35-story downtown skyscraper to its 69-acre Mount Washington campus, a move that will save the company millions in rental expenses.

"With the consolidation of our property and casualty operations in Mount Washington, we realized it was very important for them to be together and it wasn't so important for us to be in the same location," said Harry N. Stout, president of F&G Life.

The decision comes roughly a month after the company terminated 88 F&G employees and shifted processing functions to Greenville, S.C. Twenty-seven other F&G workers either relocated or found other jobs within the company.

F&G Life, which will move to make room for the Mount Washington consolidation, expects to save $7 million annually by shifting processing and back office functions to South Carolina.

If F&G Life moves to Florida or Tennessee, it would represent a serious symbolic business loss for Baltimore, since life insurance accounts for 14 percent of USF&G's total yearly revenues and about one-third of its $14.6 billion asset base.

In January, USF&G selected Tampa over Baltimore and many other cities as the site of a national claims reception center that one day will employ 500. As part of the selection process, Tampa and Florida officials pledged up to $2.2 million in incentives to lure the company.

A move would also come just as F&G Life has reversed several years of operating losses and is poised for growth.

Last year, USF&G's life insurance component posted operating income of $19 million, a 58 percent gain from 1994. At the same time, F&G Life's sales rose 22 percent to $348 million, Mr. Stout said.

"The driving force behind decisions in that company are the ability to cut costs and increase efficiency," said Gloria L. Vogel, a managing director of Ladenburg, Thalmann & Co., a New York investment house that tracks USF&G. "They'll select a site where operating costs are lowest."

To assist Baltimore's chances, the Baltimore Development Corp. and the Baltimore County economic development office have jointly offered the company a financial incentive package aimed at bridging the gap in expenses between remaining locally and the two Southern cities.

Neither BDC President M. J. "Jay" Brodie nor Baltimore County economic development chief Robert Hannon could be reached to comment on the specifics of the package.

Mr. Stout, who said the decision would come next week, added that F&G Life hopes to be fully operational in its new headquarters by mid-August.

The company will likely occupy 30,000 square feet of office space, and is considering the entire Baltimore metropolitan area. He declined to provide further details on the buildings being considered.

F&G Life, a 36-year-old company that has had its headquarters in Mount Washington since 1989, has been planning to relocate since November, Mr. Stout said.

Pub Date: 4/16/96

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