Germania Insurance cuts workforce by 7%, citing extreme weather and rising costs

It's the latest insurance company to announce layoffs

Germania Insurance cuts workforce by 7%, citing extreme weather and rising costs

Insurance News

By Gia Snape

Germania Insurance has announced it will lay off 35 of its employees, a workforce reduction of 7%.

The Texas-based insurer cited challenges from extreme weather volatility, inflation, the rising cost of claims, and increased reinsurance costs as the reason for the decision.

It’s the latest insurance company to announce layoffs and restructuring in recent months, joining firms like GEICO, American Family Insurance, and Cowbell.

“While we have taken extensive actions to strengthen Germania’s financial position, these actions will take time to manifest,” said Brandon Keller, Germania Insurance’s president and CEO.

“The workforce reduction is part of our ongoing goal to enhance our operational efficiency and reduce overall expenses to strengthen Germania long term.”

Germania’s workforce reduction was across all categories and at all levels, according to a media release sent by the company to Insurance Business.

All affected personnel were notified directly, and provided 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’s outlook downgraded

In May, AM Best revised its outlook for Germania Insurance’s parent company, Germania Farm Mutual Insurance Association, to negative from stable.

AM Best affirmed the Financial Strength Rating (FSR) of “A-“ (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-“ (Excellent) of Germania Farm Mutual Insurance Association and its subsidiaries: Germania Fire & Casualty Company, Germania Insurance Company and Germania Select Insurance Company.

The revised outlooks consider the declining trend in Germania’s operating results over recent years, AM Best said. These trends arose due to pricing inadequacies in its core lines of business following severe catastrophic weather activity, along with increased costs for reinsurance and higher severity for auto due to inflation, the ratings agency added.

As a result, the group’s combined ratio has been above breakeven in each of the past two years, highly influenced by excessive premium/policy growth as reinsurance prices increase. 

Founded in 1896, Germania Insurance provides auto, home, and life insurance for thousands of customers in Texas. It claims to be the largest farm mutual insurance company in the state.

What are your thoughts on Germania Insurance’s layoffs? Tell us in the comments.

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