Beneficial Financial Group, one of Utah's oldest insurance and annuity companies, announced Tuesday that it will cut about 150 jobs from its 214-person Utah work force and discontinue writing new policies.
Parent company Deseret Management Corp. said in a news release that the reason for the decision to pull out of the insurance business, and the resulting job cuts, was Beneficial's "relatively small size putting it at a competitive disadvantage compared to larger insurers." Beneficial's employees were told of the decision Tuesday morning.
"Beneficial is and will remain well capitalized and fully able to meet its obligations to current policyholders," said Mark Willes, Deseret Management's president and chief executive officer. "However, like virtually all life insurers, Beneficial has been impacted by the financial-market meltdown.
"When you combine our lack of scale with the economic impact of the market meltdown, it becomes clear that the limited economic opportunity does not justify the risk of potential future losses."
Kent Cannon, Beneficial's chief executive officer, told the Deseret News that the company would continue to serve its existing policyholders and "do right by our employees and agents, many of whom have ties with Beneficial going back generations."
"This is clearly a very difficult thing to deal with," he said. "The decision to downsize was not easy, and we are committed to a responsible and orderly process."
Founded in 1905 to help protect widows and orphans, Beneficial is the oldest life-insurance company headquartered in the Intermountain West, according to the company's Web site.
Willes told the Deseret News that the company would stop accepting applications for new policies Aug. 31.
He said Beneficial has seen its investment portfolio decline significantly due to its exposure to mortgage-backed and other structured securities, resulting in losses of $600 million over the past two years. Deseret Management had to infuse $594 million into Beneficial to make up the deficit, but at no time did it use funds provided by LDS tithes, Willes noted.
Deseret Management is a for-profit operating company owned by The Church of Jesus Christ of Latter-day Saints. The corporation oversees Beneficial Financial Group, media company Bonneville International Corp., Deseret Book Co., Deseret News Publishing Co., Hawaii Reserves Inc., Temple Square Hospitality Corp. and Zions Securities Corp.
Willes said the Beneficial employees who are being laid off will receive generous severance packages, including outplacement assistance for up to six months, "so that you have a real chance at landing on your feet with a new job."
In addition to Beneficial's 214 Utah employees, the company has 155 Utah field agents among 478 total nationwide, according to Deseret Management spokesman Kent Jarrell.
Willes said Deseret Management is working with "some major (insurance) carriers to help transition our field force to them," so that the agents could sell other firms' insurance. Details of an agreement could be released by the end of the month.
Willes said that while the decision to downsize holdings in the insurance business was motivated in part by the current economic climate, the remaining Deseret Management businesses are not affected, and no cuts are planned in any other affiliated entities.
"This is a decision that is … very much a life-insurance company issue," Willes said. "It has nothing to do with Deseret News or Bonneville or others who are in completely different industries."
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