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SALT LAKE CITY -- One of Utah's best-known life insurance companies delivered bad news to employees Tuesday: Over the next few decades, Beneficial Life plans to slowly get out of the life insurance business, and that means deep job cuts over the next few months.
Executives are calling it a downsizing of the company, which was started a century ago by The Church of Jesus Christ of Latter-day Saints. But over time, perhaps 60 years or so, the company will lose its reason to be.
The company once had its name on one of Utah's tallest buildings, but now executives say it is just not big enough to compete. Unlike much bigger firms, Beneficial Life has a narrower range of products and investment opportunities.
"We're announcing publicly, for the first time, that for the last several years we've had impairments of $600 million," Mark Willes, president and CEO of Deseret Management Corp., said Tuesday.
It's a big hit in the financial portfolio, and Willes says it is "completely tied to the meltdown in the financial markets, which we face just like everybody else does."
The company plans to stop selling new policies August 31, and that will result in many layoffs. "As we stop selling insurance policies and annuities, the company obviously will get smaller over time. That's why we'll need to lay off people at the headquarters staff. And one of the heartaches in all of this is that we'll be laying off, over time, about 150 of our headquarters' employees out of 214," Willes explained.
Executives are, however, making a commitment to service existing policies until the last beneficiary is gone. "They'll be safe. They'll be secure. And we will pay all claims as we go forward, and that's a commitment that we have made for 104 years, and it's a commitment we will make for another 100 years as we go forward," said Kent Cannon, president and CEO of Beneficial Financial Group.
About 1,000 agents sell Beneficial Life policies on commission. The company is negotiating with bigger firms to fill the gap.
"You're talking about agents who have established a clientele over the years, that have established good loyalties with those clients. And so certainly they'll be able to sell in other locations, and we're working to find the right kind of carriers that can really be helpful to them," said Jay Sitterud, field manager for Beneficial Life.
Executives say the main issue for a small company is that the financial risks outweigh the expected profits. They're offering job placement services for employees, who are mostly in Utah but also in several other Western states including Hawaii.