Company Posts $198-Million Loss for 1984 : Mission Insurance Chief Resigns

Mission Insurance Group simultaneously reported a 1984 loss of more than $198 million Friday and announced the resignation of its president and chief executive, Louis F. Marioni, a veteran of more than 23 years with the Los Angeles-based company.

Marioni, 56, who succeeded E. Richard DeRosa on his retirement in November, 1983, was in turn succeeded by Ray D. Johnson Jr., senior executive vice president and chief operating officer. Johnson, also 56, formerly headed Encino-based Republic Indemnity Co. of America.

The company gave no reason for Marioni’s resignation. It took effect Thursday on the eve of the announcement of Mission’s record 1984 net loss of $198.1 million, or $16.61 a share. This is more than 12 times 1983’s loss of $15.4 million--its first in 19 years.

In a statement, Johnson said the company suffered along with the property-casualty insurance industry generally, which weathered its “sixth and most severe” year of losses.

“Major corrective steps” taken in 1984 will eventually dispel the red ink, he said, predicting that “given time and additional capital, this company can turn around.”

The company has hired the New York investment banking firm of Salomon Bros. Inc. to seek additional capital, he noted.

The Insurance Information Institute, a trade group, estimates that total underwriting losses in the property-casualty field totaled $21 billion last year, compared to $13.3 billion in 1983--combining to exceed the total loss for the previous 25 years.

Income from investing premium revenue amounted to $17.3 billion, not enough to make up for the industry’s loss.

Mission said increased workers’ compensation payments contributed heavily to the loss, noting that a government-imposed increase in benefits was not accompanied by increased rates. (Workers’ compensation accounts for more than two-thirds of the company’s insurance business.)

Mission also slashed its dividend on all workers’ compensation policies effective since Nov. 1, 1982, to half the current rate. This allowed the company to reduce its dividend reserve by $32.5 million in the fourth quarter.

In reporting its loss, Mission also announced that it is withdrawing from the reinsurance business, blaming heavy underwriting losses.

Total 1984 revenue was $511.5 million, up from $483.2 million in 1983, but the operating loss swelled to $200.4 million, compared to $15.2 million.

The fourth-quarter net loss was $93.4 million on revenue of $112.9 million, compared to a loss of $37.3 million in the 1983 quarter on revenue of $125.2 million.

Mission added $70 million in the latest quarter to its reserve against anticipated insurance losses.

Stockholders’ equity plunged from $215.7 million to $8.5 million.

Mission’s stock closed on the New York Stock Exchange on Friday at $7.125, down 37.5 cents for the day, a fall from a 12-month high of nearly $22.

Mission said it spent more than $161.20 last year for every $100 in premiums earned, compared to $124.70 for each $100 in 1983. Premium income rose to $336.4 million, up from $329.4 million.