USF&G; operating income up 15.4% for 2nd quarter


USF&G; Corp.'s operating income jumped 15.4 percent in the second quarter to $45 million, the company said yesterday, as premiums increased and business lines showed continued improvement.

For the first six months of the year, operating income grew to $84 million, up a whopping 47 percent compared with the period a year ago.

"It was a good first quarter and . . . a good first half," said Dan Hale, chief financial officer of the $14.2 billion-asset Baltimore-based insurance company.

USF&G;'s stock closed at $15.375 a share, up 12.5 cents, yesterday. The company released the results following the close of the market.

The company earned $46 million for the quarter, and $95 million for the first six months of the year. A year ago, net income was $75 million in the second quarter and $98 million for the first six months. The 1994 results, however, included deferred tax benefits of $35 million in both quarters.

The 1995 results include the results of two firms recently acquired by USF&G;: Discover Re Managers, a Farmington, Conn.-based firm that writes insurance for large commercial customers, and Victoria Financial of Cleveland that insures riskier automobile drivers.

The companies were acquired to diversify USF&G;'s line of products. Mr. Hale said the company has no other acquisitions pending, but, "we will always continue to keep our eyes open."

USF&G; Chairman Norman P. Blake Jr. said Discover Re and Victoria have "already seen synergistic growth opportunities with our core property/casualty operations in the two months since the closing."

David Seifer, an insurance analyst for Donaldson Lufkin & Jenrette, a Wall Street investment firm, applauded the results.

"They are continuing to show improvement in their underwriting," he said. "They're beginning to show premium growth. It [the company] continues to regain itself."

For instance, net income from property/casualty was up 7 percent in the quarter to $59 million, life insurance net income grew to $6 million, up from $3 million a year ago, and premiums grew a solid 9 percent despite adverse market conditions.

Meantime, catastrophic losses increased in the quarter to $15 million from $10 million a year ago, Mr. Hale said. He said about $5 million was attributed to last April's Oklahoma City bombing. For the six-month period, catastrophic losses fell to $38 million, compared with $50 million a year ago.

Mr. Blake is largely credited for mending the once-troubled insurer. He joined USF&G; in 1990, leading a turnaround effort that has seen the halving of its 12,500 work force and replacement of three-fourths of its managers.

Losing a total of $745 million in 1990 and 1991, the company has been increasingly profitable on a smaller sales base.

In 1994, profits rose more than 40 percent to $232 million from $165 million in 1993, while annual sales of $3.2 billion were flat from the same period a year ago.

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