Hurricane Fran and a freak windstorm in Arizona battered USF&G Corp.'s third-quarter results, causing operating income to fall 35 percent, the company said yesterday.
Operating income slipped to $31 million, or 22 cents a share, in the quarter ended Sept. 30, compared with $47 million, or 33 cents a share, in the same period a year ago. Net income fell 29 percent to $35 million, compared with the same time a year ago.
"Without the impact of excess catastrophe losses, our results would have been on target," said USF&G's chairman and chief executive, Norman P. Blake Jr. "Our fundamentals are strong. Although we are frustrated by the extent of the hurricane losses despite our significant reduction in exposures in catastrophe-prone areas, we are not deterred by Mother Nature."
Blake said losses in the quarter from Hurricane Fran and the Arizona windstorm totaled $45 million, of which $31 million was related to the hurricane.
He said the losses in the quarter ranked second only to the quarterly losses caused by Hurricane Andrew in 1992, which totaled $80 million.
USF&G's stock was up yesterday 12.5 cents to close at $18.625.
Hurricane Fran raked the East Coast in September, and caused extensive damage and flooding in Western Maryland.
It forced Nationwide Insurance, a large property and casualty insurer, to limit sales of new property insurance policies in the coastal counties from Texas to Maine.
USF&G was also hurt by an unusual storm in Arizona that whipped winds as high as 130 miles an hour.
For the first nine months of the year, USF&G's operating income totaled $129 million, or 93 cents a share, compared with $132 million, or 94 cents a share, a year ago. The company earned $159 million for the first nine months, or $1.16 a share, compared with $144 million, or $1.04 a share.
"Except for the catastrophes, I thought it was a decent quarter," said Robert H. Branche, an analyst with Branche Research Group, a Morrisville, Pa.-based insurance stock research firm. "They were close to a break even on the underwriting. I thought it was a pretty good quarter."
Life insurance operating income totaled $13 million in the quarter, nearly double the amount the same time a year ago.
Total revenues for the first nine months of the year were flat from 1995, totaling $2.6 billion, and assets were $14.5 billion.
Pub Date: 10/24/96