American Express Plans Fireman’s Fund Offering

American Express plans to spin off to the public about 49% of its wholly owned Fireman’s Fund insurance unit through a stock offering that is expected to raise about $190 million for the troubled insurance firm.

In a preliminary prospectus filed Wednesday with the Securities and Exchange Commission, Fireman’s Fund said American Express will retain 45% of the Novato, Calif.-based insurance firm’s stock, while 6% will be owned by a new employee stock ownership plan at Fireman’s.

Disclosure of these and other details marked the first time that American Express and Fireman’s Fund have revealed terms of the offering, part of a major restructuring at the insurance firm announced in June.

The spinoff will net American Express about $600 million in cash and rid it of sole responsibility for Fireman’s, which has been a drag on the earnings of the New York-based financial-services company for the past two years. The restructuring will leave Fireman’s Fund an independent public company, with only its property and casualty insurance operations--the largest such operations among California-based insurance firms.

Fireman’s profitable life, accident and health insurance operation was sold last month for $330 million in cash to American Express Travel Related Services, a wholly owned subsidiary of American Express.

Analysts said there were no major surprises in the structure and terms of offering. As generally expected, American Express will reap between $576 million and $648 million from the sale of 24 million shares of Fireman’s stock, while Fireman’s will reap about $190 million from the sale of 8 million of the shares.

The stock is expected to be listed on the New York Stock Exchange and fetch an initial price of between $24 and $27 per share.

Fireman’s said its proceeds will be used by one or more of its property and casualty subsidiaries. But the insurance firm said it will not receive any of the proceeds from the sale of shares by American Express.

American Express has injected at least $430 million into Fireman’s during the past two years.

The property and casualty operations of Fireman’s Fund, excluding the life insurance operations, suffered a net loss of $87 million in the first half of 1985 and $6 million in 1984. However, Fireman’s Fund said that recent results show continuing improvement due to more selective underwriting, price increases on premiums and cost cutting. The firm reported a preliminary net profit of $14 million for the two months ended Aug. 31, although that includes an $8-million income tax benefit.