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DUFF & PHELPS: USFG PREFERRED STOCK RATING DOWNGRADED TO 'BB+'; FIDELITY AND GUARANTY LIFE INSURANCE CLAIMS PAYING ABILITY REAFFIRMED AT 'A'

DUFF & PHELPS: USFG PREFERRED STOCK RATING DOWNGRADED TO 'BB+'; FIDELITY
 AND GUARANTY LIFE INSURANCE CLAIMS PAYING ABILITY REAFFIRMED AT 'A'
 CHICAGO, Jan. 23 /PRNewswire/ -- Duff & Phelps Credit Rating Co. today downgraded the preferred stock rating of USF&G Corporation (USF&G) to 'BB+' (Double-B-Plus) from 'BBB-' (Triple-B-Minus). Duff & Phelps has, however, reaffirmed the senior debt rating of USF&G at 'BBB' (Triple-B) and the commercial paper rating at Duff 3.
 The rating action reflects strained preferred dividend coverage as a result of the protracted trough in the property and casualty underwriting cycle and some adverse effects of the company's organizational restructuring. Duff & Phelps believes USF&G's restructuring activities have positive implications for the long term, particularly operating expense reductions, troubled asset sales,
and non-strategic business divestitures. However, the down-sizing is adversely affecting current profitability and cash flow by reducing investment income and premium collections.
 In addition to these rating actions, Duff & Phelps has reaffirmed the claims paying ability rating of Fidelity and Guaranty Life Insurance Company (FGLIC) at 'A' (Single-A). FGLIC is USF&G's primary life insurance subsidiary.
 USF&G Corp. is an insurance holding company whose core business line is property and casualty insurance. USF&G had total assets of $13.9 billion and stockholders' equity of $1.4 billion at Sept. 30, 1991. Led by a new management team, USF&G has undergone a significant organizational and investment portfolio restructuring since 1989. The company has achieved many of its strategic objectives including a refocusing on the USF&G core business. Unfortunately, the property and casualty underwriting cycle has remained weak throughout the company's restructuring efforts. Positively, USF&G is endeavoring to remove itself from difficult regions and product lines.
 -0- 1/23/92
 /CONTACT: Julie A. Burke of Duff & Phelps, 312-368-3158/
 (FG) CO: USF&G Corporation ST: Maryland IN: INS SU: RTG


CK -- NY058 -- 2801 01/23/92 12:21 EST
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Publication:PR Newswire
Date:Jan 23, 1992
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