American Express Co., which last month reported an 18% increase in 1984 earnings of $610 million, credited its once-flagging property-casualty insurance arm, Fireman's Fund Insurance Cos., for having made "substantial progress" in responding to the unit's $242-million loss recorded in 1983.
In contrast, American Express' insurance division reported net income of $43 million in 1984. Earnings by the fast-growing life-insurance operation offset the property-casualty business' modest $7-million loss.
The 1983 disaster cost American Express its 36th straight year of ever-higher earnings, and the company responded by dispatching President Sanford I. Weill and the head of the successful travel-card business, William M. McCormick, to clean house in Novato, Calif., where Fireman's Fund has its headquarters. The pair quickly laid off nearly 1,200 employees, cut layers of management and brought in new data-processing systems to reduce the 122-year-old company's tradition-bloated overhead.
Bigger Than Imagined
"I thought the task was sizable," McCormick said in an interview, "but it was even bigger than I imagined. But we're no longer the (industry's) high-cost producer; we're right in the middle of the pack."