USF&G reports increase in consolidated operating income Company plans to buy back some shares

April 25, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

USF&G Corp. said yesterday that its consolidated operating income rose 12 percent during the first quarter and that it will begin buying back up to 5 million shares of its common stock to enhance shareholder value.

Consolidated operating income, which is net income prior to realized gains from investments and from subleasing office space at its downtown headquarters building, was $44 million, or 32 cents per share, compared with $39 million, or 28 cents a share, in the same quarter last year.

Net income for the quarter was $57 million, equal to 42 cents a share, compared with $49 million, or 36 cents a share, in the 1995 quarter. The company said the first-quarter results included $35 million of catastrophic losses, compared with $23 million for the corresponding 1995 quarter, which included estimates of $15 million from the Kobe, Japan, earthquake related to the company's reinsurance operations.

Net income for the first quarter of 1996 also included realized gains on investments of $11 million, compared with $4 million for the first quarter of 1995.

Consolidated revenues for the first three months of 1996 totaled $867 million, compared with $818 million for the same period of 1995.

Directors of the Baltimore-based insurance company approved a plan to repurchase up to 5 million shares of its common stock. This would represent 4.2 percent of USF&G's 119.7 million outstanding shares.

"USF&G's management is firmly committed to enhancing shareholder value," Norman P. Blake Jr., chairman, president and chief executive, said in a prepared statement. "We believe the current price of USF&G common stock does not fully reflect the substantial improvement in earnings power which has been created." The company said that the purchases will be made from time to time on the open market, through block trades, or as otherwise determined by management.

The purchases will be funded through excess cash flow.

USF&G closed at $16, down 25 cents.

Pub Date: 4/25/96

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