Texas writer Germania Insurance is laying off 7% of employees company-wide as it balances expenses to a planned policy count reduction, according to Chief Financial Officer Trey Hardy.
That means 35 staff members will lose their jobs, he said — part of an overall plan to lower costs.
Germania is challenged by “extreme weather volatility, inflation, the rising cost of claims and the increased reinsurance costs experienced throughout the industry,” it said in a statement.
President and Chief Executive Officer Brandon Keller said it will take time for extensive actions taken to strengthen Germania’s financial position.
The ongoing goal to enhance operational efficiency and reduce overall expenses will strengthen Germania in the long term, said Keller.
Impacted employees received severance packages based on salary, position and years of service. “We value the contributions of our team members and deeply regret the need for this action,” Keller said.
Germania Insurance offers automobile, home, and life insurance and is the state’s largest farm mutual insurance company.
AM Best in August downgraded the Best’s Financial Strength Rating to B (Fair) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bb+” (Fair) from “a-” (Excellent) of Germania Farm Mutual Insurance Association and its subsidiaries: Germania Fire & Casualty Co., Germania Insurance Co. and Germania Select Insurance Co.
“The assessments of Germania’s the balance sheet strength and operating performance were revised downward, reflecting significant erosion in the group’s policyholder surplus, weakening balance sheet metrics and corresponding decline in the group’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio,” AM Best said, following sizable underwriting losses in the second quarter of 2023 on sharply higher-than-normal catastrophe activity, as well as inflation-driven increases in loss costs.
“As a result, operating losses and the group’s combined ratio each reached a historical high as of June 2023 and policyholder surplus declined by over 50%. Germania’s business profile assessment reflects the group’s geographic and product concentration of primarily residential risks in a catastrophe-prone state,” it said.