EMC Insurance Cos. will cut some jobs next year by shutting down a line of business.
The Des Moines-based insurer said in a press release on Tuesday that executives had decided to exit the reinsurance business, costing 65 workers their jobs. The company declined to say how many of those positions were in central Iowa, where half of EMC’s 2,200 U.S. workers operate.
The company said affected employees would lose their jobs in waves next year, starting Jan. 3.
“While this is an extremely difficult position, EMC believed this decision was necessary to position the company for the future and the achievement of its strategic plans and goals,” CEO Scott Jean said in a statement. a statement.
According to its press release, EMC received about $180 million in annual premiums from reinsurance, which represents about 10% of the company’s total business. The company also offers property, casualty and life insurance.
Reinsurance is a hedging technique in which one company sells a set of policies to another company, thereby spreading the risk of potentially expensive customers. The buyer, on the other hand, receives the business at a discount, betting that these customers are not as risky as the seller believes and that the customer premiums will outweigh any costs.
As for what EMC will do with its reinsurance business, Jean said in its statement, “Options for the management and/or runoff of the existing reinsurance business are currently under consideration.”
Founded in Des Moines 110 years ago, EMC has long maintained a significant presence downtown. The company operates three local offices, including the 20-story “Vodka” building, nicknamed for its resemblance to a bottle of Absolut. The company opened a $40 million office at Eighth and Walnut streets in 2017.
EMC had new downtown expansion aspirations, announcing plans to build offices on the former Younkers department store site across Walnut Street from its headquarters. But after many employees began working from home during the COVID-19 pandemic, executives announced that, in an agreement with the city of Des Moines, they would put that plan on hold and transform the space at least temporarily into a new public park.
In addition to its own offices, EMC has been a major downtown landlord. However, the company announced in January that it wants to sell:
- HUB Tower at 699 Walnut St.
- West side of Kaleidoscope at the HUB at 555 Walnut St.
- Carpenter Paper Building at 106 SW Eighth St.
- Cortex Building at 113 SW Eighth St.
The announcement of the EMC job cuts comes after another major employer in the Des Moines metro financial sector, Wells Fargo, made 10 rounds of layoffs from April to September 22 as its Des Moines-based mortgage business struggles amid rising interest rates. And in February, Principal Financial Group, headquartered in Des Moines announced it had found a buyer for its retail fixed annuity and commercial life insurance lines. It had laid off 55 workers the previous fall after saying it planned to exit those markets.
Nationwide Mutual Insurance Co., meanwhile, has reached an agreement to sell one of its downtown buildings, at 1200 Locust St., to the city because remote work reduces its space requirements. The city plans to move offices scattered throughout the 360,000-square-foot structure and its 1,690-space parking lot, possibly including the police department.