Zurich to cut area jobs; Commercial insurer moves a headquarters from Baltimore to Ill.; 'Some reduction here'; Maryland Casualty, Fidelity & Deposit parent reorganizing


In a reorganization of its U.S. commercial insurance businesses, Zurich Financial Services Group could lay off as many as 850 employees -- including an unspecified number in Baltimore -- a top company official said yesterday.

Frank A. Patalano, chief executive of the newly created subsidiary Zurich Services, also said Baltimore is no longer the headquarters for the Swiss company's commercial and small business insurance operations, which will be directed from Schaumburg, Ill. The Baltimore and Schaumburg operations have been folded into another newly created subsidiary, Zurich U.S.

Patalano, who works out of Schaumburg and has run the Baltimore operations since Dec. 1, said the company expects to save $80 million to $100 million over the next two years by consolidating redundant operations and cutting costs.

"Reduction in head count will occur in the system, largely in the support area," Patalano said in Baltimore. "Certainly, there will be some reduction here."

The cuts will come out of Zurich U.S., which employs 6,500 across the country, he said. Patalano did not know how many people could lose their jobs in Baltimore, where the company employs 1,900 at its Keswick Road offices, its Hunt Valley field office and its Timonium service center.

Richard C. Mike Lewin, Maryland's secretary of business and economic development, said he will meet with Zurich executives today to discuss saving jobs in the state.

The restructuring "could amount to a significant number of jobs [lost] over time," Lewin said.

"We are willing to talk about work force training incentives, whatever imaginative steps we can take to ameliorate the situation," the business and economic development secretary said.

Patalano said Zurich's Los Angeles-based Farmers Insurance Group is expanding and Baltimore could become an East Coast hub for that company.

Zurich is a sprawling company, based in Zurich, Switzerland, that operates in 60 countries and made $1.2 billion in 1997, selling everything from insurance products to money management services. It acquired Maryland Casualty Co. in 1989 for its property and casualty insurance business. In 1993, Zurich bought Fidelity & Deposit Co. of Maryland.

Zurich is following the lead of other large insurance companies that have been slashing costs because of intense competition. Particularly hard hit has been Maryland Casualty, which sells property and casualty insurance to midsized and small businesses as well as individuals.

"The financial results on the Maryland companies have not been good for several years," Patalano said. "This is a tough time in the marketplace."

In addition, expenses are too high because a number of business units have been running independently with separate staff, Patalano said.

"We don't need three claims systems, we need one," he said.

Patalano said the restructuring will allow the company to operate more efficiently.

"We get a unified management structure and ease of access for distributors. We are going to be an easier place to do business with. If you are complicated, nobody has time to deal with it," he said.

Patalano expects the restructuring to be completed in six to nine months. He said he will commute to Baltimore "frequently" until the job is completed.

"Over the next two years, the benefits will emerge," Patalano said.

Pub Date: 1/27/99

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