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USF&G; Corp.'s operating earnings rose 7.6 percent in the first quarter as the Baltimore-based insurer was spared from natural disasters that raked insurers across the country last year.

Operating earnings rose to $47.3 million, or 37 cents per primary share, in the quarter ended March 31, up from $43.9 million, or 33 cents per share, a year earlier.

"A lot of the improvement was Mother Nature being kinder to us than in 1996," said Dan L. Hale, chief financial officer. "We had fewer cat [catastrophic] losses."

Shares of USF&G; fell 37.5 cents yesterday to close at $19.875.

USF&G;'s results offered few if any surprises to analysts who follow the company. "Their numbers on the bottom line were right on target," said Gloria L. Vogel, an analyst with New York-based Advest Inc.

Diana Wehrly, an analyst with Baltimore-based Legg Mason Wood Walker Inc., said it met her expectations, too. But she wasn't impressed with the performance.

"It was an OK quarter, it was not stellar," she said. "There was nothing in the numbers that was cause for alarm, nor was there anything in the numbers that was cause for celebration."

Wehrly noted that operating earnings would have been better, but USF&G; set aside $21 million in the quarter for income taxes.

It was the first quarter since the mid-1980s that the company returned to a tax-paying status after suffering severe losses.

"On a pretax basis, they had a terrific quarter," she said.

USF&G; reported net income of $45 million, or 37 cents per primary share, compared with $57 million, or 43 cents per primary share a year earlier.

An $11 million gain on investments boosted 1996's net income along with a $2 million favorable adjustment when USF&G; ended its lease in its downtown headquarters tower. It has since relocated to Mount Washington.

The company reported $14.5 million in assets and stockholders' equity of $1.8 billion.

Gains in income were driven largely by an increase in USF&G;'s property and casualty business. Pretax operating income totaled $79 million in the quarter, compared with $52 million for the same period in 1996.

The 52 percent increase reflected lower catastrophe losses -- $9 million in 1997 compared with $35 million in 1996's first quarter.

Norman P. Blake Jr., USF&G;'s chairman and chief executive, said in a statement that 45 percent of the company's property and casualty net written premiums are coming from higher-return niche businesses.

"For the first quarter of 1996, these specialty sources produced 40 percent of P/C segment net written premium," Blake said.

He said pretax operating income from sales of life insurance rose to $14 million in the quarter, up 30 percent from a year earlier.

Pub Date: 4/24/97

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