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USF&G CORPORATION REPORTS 1993 SECOND QUARTER PROFIT; CORE PROPERTY/CASUALTY OPERATIONS CONTINUE TO DRIVE EARNINGS

 BALTIMORE, July 28 /PRNewswire/ -- USF&G Corporation (NYSE: FG) today reported consolidated net income of $25 million for the second quarter of 1993, compared with $6 million for the same period in 1992. For the first six months of 1993, consolidated net income totaled $86 million, compared with $10 million for the same period in 1992. After accounting for preferred stock dividends, these results equate to a 1993 second quarter and first half net income of 15 cents and 73 cents per common share, respectively, compared with net losses of 7 cents and 17 cents per common share for the same periods last year. On a fully diluted basis, which assumes the conversion of certain preferred stock to common stock, consolidated net income per share was 15 cents for the second quarter and 69 cents for the first six months of 1993.
 Consolidated second quarter 1993 net income prior to realized gains and losses was $25 million, or 15 cents per common share, compared with break-even, or a loss of 14 cents per common share, for the second quarter of 1992. For the first six months of 1993, net income prior to realized gains and losses and the adoption of new accounting standards was $47 million, or 27 cents per common share, compared with $5 million, or a loss of 23 cents per common share for the same six months of 1992.
 Norman P. Blake Jr., chairman, president, and chief executive officer, said today: "We are pleased with the steady improvement in our core property/casualty insurance operations. We're reaping the benefits of refocusing our operations on profitable lines of insurance in states that allow adequate rates. As a result, the improved loss ratios for both our voluntary and involuntary business are driving our earnings. In addition, growth is being achieved in many areas, especially in Commercial Lines and Reinsurance.
 "In this quarter, our Personal Lines operations launched a state-of- the-art roadside assistance and claim reporting service provided at no additional cost for all customers. We also introduced a new preferred auto and homeowners product. Our Commercial Lines operations completed the roll-out of four of the five regional Small Business Market Centers, launched a new Fidelity product for credit unions, and made significant strides in its product development for the middle market.
 "The favorable underwriting performance for the first half more than offset catastrophe losses that were $19 million higher than the same six-month period last year. In addition, year-to-date, our results included the first quarter net benefit of $38 million that resulted from the adoption of three recent accounting standards. Overall, the positive operating trends resulting from our growth initiatives are encouraging as we continue to become a market-focused organization."
 ADDITIONAL CONSOLIDATED DATA
 Net realized gains on investments for the 1993 first half totaled $1 million, compared with net realized gains of $6 million for the same period in 1992.
 Consolidated revenues for the first half of 1993 totaled $1.7 billion, compared with $1.8 billion for the same period in 1992. Assets were $14.8 billion as of June 30, 1993, and stockholders' equity totaled $1.3 billion, or $9.76 per common share.
 PROPERTY/CASUALTY INSURANCE
 Property/casualty net income totaled $40 million for the second quarter of 1993, compared with $52 million for the second quarter in 1992. Property/casualty net income for the first six months of 1993 totaled $120 million, compared with $92 million for the same period in 1992. Net income prior to realized gains and losses totaled $43 million for the second quarter of 1993, compared with $26 million for the same period in 1992. Net income prior to realized gains and losses and the adoption of new accounting standards for the first six months of 1993 totaled $83 million, compared with $47 million for the same period in 1992.
 The improved operating result is evidenced by a 4.4 point improvement in the loss ratio to 76.0 in the second quarter 1993 from 80.4 in the 1992 second quarter. These favorable loss ratio trends are driven primarily by the company's focus since 1991 on steadily improving the quality and mix of its core book of business. In addition, a major source of loss ratio improvement comes from improved involuntary market results due to the company's withdrawal from unprofitable personal lines and workers' compensation insurance in certain states.
 LIFE INSURANCE
 Life insurance net income for the second quarter of 1993 totaled $8 million, compared with a net loss of $1 million for the same 1992 period. Net income for the first six months of 1993 totaled $8 million, compared with $3 million for the same period in 1992. Net income prior to realized gains and losses and the adoption of new accounting standards was break-even in the second quarter and first half of 1993, compared with $1 million and $3 million for the same periods in 1992.
 PARENT AND NON-INSURANCE OPERATIONS
 Non-insurance operations, interest and unallocated expenses produced a net loss of $23 million in the second quarter of 1993, compared with a net loss of $45 million for the same 1992 period. Second quarter 1993 interest and unallocated expenses totaled $19 million and non-insurance operations had a loss of $4 million. Six month 1993 interest and unallocated expense totaled $37 million and non-insurance operations had a loss of $5 million.
 Baltimore-based USF&G Corporation, with assets or $14.8 billion, is one of the nation's largest property/casualty insurers. The corporation's principal subsidiary is United States Fidelity and Guaranty Company (USF&G Insurance), founded in 1896.
 USF&G CORPORATION
 Condensed Consolidated Statement of Operations
 (Unaudited -- dollars in millions except per share data)
 Three Months Ended Six Months Ended
 June 30, June 30,
 1993 1992 1993 1992
 REVENUES:
 Premiums earned $620 $ 669 $1,294 $1,378
 Net investment income 189 216 381 430
 Other 11 15 19 33
 Revenues before
 realized gains 820 900 1,694 1,841
 Realized gains on
 investments -- 6 1 6
 Total revenues 820 906 1,695 1,847
 EXPENSES:
 Losses, loss expenses
 and policy benefits 537 611 1,127 1,262
 Underwriting, acquisition
 and operating expenses 247 278 499 552
 Interest expense 11 10 21 21
 Total expenses 795 899 1,647 1,835
 Pretax income from
 continuing operations 25 7 48 12
 Provision for income taxes -- -- -- 1
 Income from continuing
 operations before cumulative
 effect of accounting changes 25 7 48 11
 Loss from discontinued
 operations -- (1) -- (1)
 Income (loss) from cumulative
 effect of accounting changes:
 Income taxes -- -- 90 --
 Postretirement benefits -- -- (52) --
 Net income $ 25 $ 6 $ 86 $ 10
 EARNINGS PER COMMON SHARE
 Primary(A) $0.15 $(0.07) $ 0.73 $(0.17)
 Fully diluted(B) 0.15 (0.07) 0.69 (0.17)
 Weighted average common
 shares outstanding (000s):
 Primary 84,695 84,280 84,619 84,277
 Fully diluted 84,695 84,280 113,036 84,277
 (A) Primary earnings per common share amounts are based on income after deduction of preferred stock dividends.
 (B) Fully diluted earnings per common share amounts.
 -0- 7/28/93
 /CONTACT: Kerrie Burch-DeLuca of USF&G, 410-547-3573/
 (FG)


CO: USF&G Corporation ST: Maryland IN: INS SU: ERN

MH-DC -- DC006 -- 6680 07/28/93 09:57 EDT
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Date:Jul 28, 1993
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