American Express to Sell More of Fireman’s Fund

American Express said Tuesday that it plans to sell up to 20 million shares of its remaining 41% stake in Fireman’s Fund Corp., the insurance holding company created last Oct. 23 in a public stock sale that raised $824 million--the largest initial offering in U.S. history.

At Fireman’s Fund headquarters in the Marin County town of Novato, Chairman Jack Byrne called the announcement “a positive step” in completing the 122-year-old company’s orderly return to the independence it had enjoyed until its acquisition by American Express in 1968.

Analysts said the move was expected, given American Express’ previously announced intention to get out of the feast-and-famine property-casualty insurance business in which Fireman’s Fund specializes. “They want out,” said analyst David Seiffer, who follows the insurance industry for First Boston Corp.

The new offering will be managed by Salomon Bros. and Shearson Lehman Bros. (an American Express subsidiary) at a date to be set. The companies said the required filing with the Securities and Exchange Commission could come as early as March, with the sale following by a month to six weeks, depending on market conditions.

American Express said it plans to sell 10 million of its remaining 27 million shares. It also expects to sell up to 10 million warrants--or options--for a further 10 million shares.

If all 10 million shares were sold, the former parent’s stake would shrink to 26% of Fireman’s Fund common stock. Were the warrants fully exercised, American Express holdings would decline to 7 million shares, 11% of the outstanding stock.

After the offering, the company will retain its remaining investment for at least one more year, Chairman and Chief Executive James D. Robinson III said.

American Express initially offered Fireman’s Fund to the public at $25.75 a share. The stock has performed well in the four months since returning to the New York Stock Exchange, and it closed Tuesday at $35.75 a share, down $1.375.

At the time of the October sale, Fireman’s Fund had just returned to profitability with third-quarter earnings of $20 million, following a $4.1-million first-quarter loss and an $85.1-million loss in the second quarter (which included a $191-million addition to reserves against potential insurance claims). Fourth-quarter earnings increased to $23.1 million and non-insurance income of $1.8 million reduced the bottom-line loss for the year to $44 million, the company said.