USF&G; Corp. said yesterday that its total income jumped 34 percent in 1995 as the insurer continued to engineer an impressive turnaround.
The Baltimore-based insurance company, which will be 100 years old in March, said growth was generated by increased premium revenue, lower expenses and sales of new products.
"Upon the successful completion of our 100th year of operation, we are well positioned to achieve even greater success, based upon a significant strengthening of our overall competitiveness," said Norman P. Blake Jr., chairman and chief executive.
Total income was $181 million, or $1.38 a share, in 1995, compared with $135 million, or 94 cents a share in 1994. For the quarter, total income was $50 million, or 39 cents a share, compared with $39 million, or 29 cents a share, in the year-ago quarter.
Net income was $209 million in 1995, compared with $237 million for 1994. Net income for 1994 included gains of $5 million on investments and $280 million in income tax benefits. Excluding these unusual items, net income for the year would have grown 35 percent, from $140 million to $189 million. In the fourth quarter of 1995, the company earned $65 million, up from $64 million.
USF&G;'s stock closed unchanged at $16 yesterday on the New York Stock Exchange.
The company's total income for the year met analysts' projections. Analysts expect the company to post total income of $1.60 to $1.65 a share for the full year.
The company received a dose of good news yesterday when A. M. Best Co., an Oldwick, N.J.-based insurance ratings firm, raised USF&G;'s debt ratings to "A" from an "A minus."
"This rating action reflects the sustained improvement in its operating performance, its improved capitalization and the enhanced financial flexibility of its parent holding company, USF&G;," A. M. Best said in a release.
The ratings firm said USF&G; "has developed a better-balanced book of Main Street, middle market and specialty businesses that should limit its earnings volatility and margin pressure, despite soft market conditions within the property and casualty industry."
Bob Branche, managing partner of Branche Research Group, a Morrisville, Pa., insurance research firm, said the performance was impressive. "We have never really seen a market turnaround like this," he said. "It is like trying to move an aircraft carrier in the harbor with a rowboat."
USF&G;'s revenue from premiums grew 7.3 percent in the company's middle market business, with specialty products contributing heavily. For example, premium income jumped 38 percent from specialty businesses that insure trucking operations and high- technology companies, Chief Financial Officer Dan Hale said.
Life insurance products did well, too. F&G; Life experienced sales growth of 22 percent for the year. Mr. Hale said the company benefited from several new products, which included a tax shelter annuity marketed to schoolteachers. The annuity program generated $84 million in revenues.
Non-insurance products also contributed to the bottom line. USF&G;'s surety bonding business generated $128 million in revenues, up 13.5 percent from the prior year. The company said it now operates the nation's leading bonding operation, based on net written premiums. Surety bonds guarantee completion or performance of work done by contractors.
USF&G; expects to reduce expenses by $100 million from 1995 through 1997, Mr. Hale said.