City's disappearing headquarters USF&G: A growing number of local companies have been acquired or merged.

January 21, 1998

BY SUMMER, USF&G Corp. will no longer be a major publicly held company based in Baltimore. The city's largest property and casualty insurer is being merged into St. Paul Cos. For Baltimore, this change is unsettling, but it does not have to be bad news.

USF&G will join a long list of home-grown firms -- Alex. Brown & Sons, Noxell, A. S. Abell Co. -- acquired by or merged into out-of-town companies. With corporate merger activity at its highest levels in a century, the list of companies with local headquarters dwindles.

USF&G, the nation's 22nd largest property and casualty insurer, isn't large enough to compete effectively against the giants in its field. Financial difficulties in the past decade sapped the company's balance sheet. In today's tempestuous capital markets, USF&G was destined to be an acquiree, not an acquirer.

St. Paul Cos., chartered 154 years ago by the Minnesota territorial government, is a bigger company with a strong balance sheet. Last year, St. Paul's chairman, Douglas Leatherdale, said he was looking for a suitable acquisition. USF&G, which writes many of the same lines of commercial insurance, seems a good fit. St. Paul does most of its business in the Midwest, while USF&G has focused on the Eastern seaboard and the South. USF&G also has a life insurance subsidiary, which St. Paul lacks.

Between 1,500 and 2,000 jobs will be cut, based on early estimates. Many of these are likely to be in this region, which isn't good news.

The loss of corporate headquarters from the city has taken its toll on the region. Thousands of well-paying jobs are gone. Corporate growth and expansion often takes place elsewhere. Without the participation of top officials from publicly held companies, local civic and cultural institutions suffer. They don't get the same level of financial support or commitment.

The good news is that St. Paul has a history of solid corporate citizenship. Despite attractive offers to move to the suburbs, the company built its new corporate headquarters in St. Paul, Minn. It took an active role in redeveloping that city's blighted downtown. The company has been generous to charitable causes, contributing $11 million last year, and has invested heavily in urban neighborhood redevelopment projects across the nation.

If St. Paul follows the same pattern here, the loss of USF&G won't sting as much.

Pub Date: 1/21/98

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