EMC Insurance Cos. will cut some jobs next year as it ends a line of business.
The Des Moines-based insurer announced in a news release Tuesday that executives have decided to exit the reinsurance segment, costing 65 workers their jobs. The company declined to say how many of those positions are in central Iowa, where half of EMC’s 2,200 U.S. workers operate.
The company said the affected employees will lose their jobs in waves next year, starting Jan. 3.
“While an extremely difficult position, EMC felt this move 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.
According to its news release, EMC received about $180 million in annual premiums from reinsurance, representing about 10% of the company’s total business. The company also offers commercial property, casualty and life insurance.
Reinsurance is a hedging technique in which one company sells a bundle of policies to another company, spreading the risk from potentially expensive customers. The buyer, meanwhile, receives the business at a discount, betting that those customers aren’t as risky as the seller believes and that that the customers’ premiums will outweigh any eventual costs.
As for what EMC will do with its reinsurance business, Jean said in his statement, “Options for the management and/or runoff of existing reinsurance business are currently being explored.”
Founded in Des Moines 110 years ago, EMC has long maintained a prominent presence downtown. The company operates three local offices, including the 20-story “Vodka” building, nicknamed for its likeness to a bottle of Absolut. The company opened a $40 million office at Eighth and Walnut Streets in 2017.
EMC had further downtown expansion aspirations, announcing plans to build offices on the former site of the Younkers department store 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 turn the space at least temporarily into a new public park.
In addition to its own offices, EMC has been a prominent downtown landlord. However, the company announced in January that it wants to sell the:
- HUB Tower at 699 Walnut St.
- West side of Kaleidoscope at the HUB at 555 Walnut St.
- Carpenter Paper Building at 106 S.W. Eighth St.
- Cortex Building at 113 S.W. Eighth St.
The EMC job cuts announcement comes after another major financial industry employer in the Des Moines metro, Wells Fargo, made 10 rounds of layoffs from April to Sept. 22 as its Des Moines-based mortgage business struggles amid rising interest rates. And in February, Des Moines-headquartered Principal Financial Group announced it had found a buyer for its fixed retail annuity and commercial life insurance lines. It had laid off 55 workers the previous fall after saying it planned to leave 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 as remote work reduces its space needs. The city plans to relocate scattered offices to the 360,000-square-foot structure and its 1,690-space parking garage, including, possibly, the police department.