USF&G Pulls Unprofitable Lines in Seven States
BALTIMORE (AP) _ Troubled USF&G Corp., one of the nation’s largest property and casualty insurers, announced it is cutting unprofitable lines in seven states.
The Baltimore-based insurer said this week it is pulling out of the worker’s compensation market in Rhode Island and will stop writing new workers’ compensation insurance in Mississippi.
It also will stop writing new personal lines in Arizona, Delaware, Hawaii, Michigan, Rhode Island and South Carolina Jan. 15.
Chairman Norman Blake Jr. wrote in a letter to USF&G agents Monday that the company wasn’t making enough money from those lines because of regulations. Company spokeswoman Kerrie Burch-DeLuca wouldn’t say Friday whether lines in those states were losing money, only that they were unprofitable.
USF&G reported net losses of $136 million for the first nine months of 1991 and lost $569 million in 1990. It does not anticipate making a profit this year, Ms. Burch-DeLuca said.
The company began an austerity program last year to return USF&G to the traditional insurance company it was before an unsuccessful diversification in the late 1980s.
The company has eliminated 3,000 of 12,000 jobs through Dec. 31, closed 18 offices through the country, shed money-losing enterprises and slashed its dividend by nearly 90 percent.
Gerald Lewinsohn, an analyst for Merrill Lynch in New York, said he didn’t think the latest cuts would have a significant effect on the company’s stock.
″The reason the stock is selling as low as it is, is that there’s a tremendous uncertainty in its future to get rate increases across the board,″ he said.
USF&G’s stock finished at 7.37 1/2 Friday, off 12 1/2 cents.
USF&G is the largest writer of workmen’s compensation insurance in Mississippi with 17 percent of the total market. The announcement has caused four other smaller carriers to either cut back or withdraw their workmen’s compensation lines in Mississippi, said state insurance commissioner George Dale.
Blake said USF&G would be willing to reenter the Mississippi market provided the state legislature revamps the system there.
USF&G is the nation’s 13th largest property and casualty insurer.