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Fascinating F1 Fact:58
February 3, 2017 by Joe Saward
Can you imagine what would happen today if an executive in a big insurance company proposed that the firm bankroll a Formula 1 engine programme – in order to promote a computer leasing subsidiary? It doesn’t sound very likely, does it?
Except that it happened…
The United States Fidelity and Guaranty Company, an insurance company, set up shop in Baltimore in 1896 and soon became one of the country’s biggest such firms, surviving ups and downs and gradually building up. In the early 1980s, the then chairman and CEO Jack Moseley transformed the business into a holding company, renamed it USF&G and went on a buying spree. The company had annual revenues of $4.3 billion and profits of around $300 million and so money was not a problem. USF&G collected real estate, bonds and companies, some of them unrelated to the insurance industry. One such business was a Detroit-based computer leasing company called Megatron Inc., which had been established in 1977 by an enterprising individual call John J Schmidt.
Schmidt was a huge fan of racing and managed to convince USF&G that it ought to be in F1, primarily as a way to do business, by bringing top executives of big corporations to watch the races, to promote its asset management activities. For 1986 USF&G was talked into becoming the title sponsor of the Arrows-BMW F1 team, which was run by team bosses Jackie Oliver and Alan Rees. The money helped the team to grow and matters were helped by the implosion of the Haas Lola F1 team, which provided Arrows with the chance to hire a young designer called Ross Brawn.
At the same time, BMW decided to quit F1, which meant that its customer teams needed to find alternative engines. Benetton jumped to Ford while Oliver decided on a different strategy and set out to buy the engine programme from BMW, to help the Munich firm recoup some of its investment. He then took on engine tuner Heini Mader to prepare and develop the BMW 4-cylinder turbos and the engines were paid for by USF&G and badged as Megatrons. The costs were partially offset by selling a supply of the units to Ligier.
The Arrows-Megatron A10 was a relatively successful car with the team finishing sixth in the Constructors’ World Championship in 1987. Brawn then reworked it as the A10B and Arrows finished fourth in the Constructors’ Championship, it’s best ever result, in 1988. The rules were changing in 1989 with turbos being banned and Arrows switched to Cosworth power. The team slipped back to seventh in the Constructors’, Brawn was lured away to design Jaguar sports cars and USF&G withdrew. It was in trouble. Large losses saw Moseley replaced by Norman Blake, who took radical steps to save the business. He sold off the non-core business, fired half the staff and tripled the company’s share price. By 1998 he was able to sell the business to the Saint Paul Companies for $2.8 billion. Today it is part of the insurance giant known as Travelers.