Transamerica Corp. will lay off more than 100 of its remaining employees at the company’s Employee Benefits (TEB) group in Little Rock by the end of 2019, bringing to close a long period of downsizing and job cuts that began nearly five years ago, a company spokesman told Talk Business and Politics on Monday (April 26).
The announcement by the global insurance giant will end TEB’s long run over nearly two decades as the U.S. headquarters for the company’s business unit that sells voluntary life and other supplemental health insurance products to employers at the workplace.
“Transamerica continually assesses its location strategy to ensure alignment with our business requirements and financial objectives,” said the Transamerica spokesman who asked not to be identified. “We have determined that Little Rock is no longer a long-term strategic location for our operations and we will close our office there at the end of 2019.”
Today, Transamerica’s U.S. corporate headquarters are in Baltimore, Maryland, with other major operations in Cedar Rapids, Iowa. Transamerica is the U.S. arm of the publicly-traded Aegon Group, The Hague, Netherlands-based financial services giant that is one of the world’s largest providers of life insurance, pension solutions and asset management products, operating in over 25 global markets with some 28,000 employees.
In late February, Aegon reported that its worldwide profits fell 83% in the second half of 2018 from $1.62 billion to only $286 million as the company faced major financial headwinds, especially in the U.S. market. In addition, Aegon’s revenue in 2018 fell nearly 8.4% to $34.1 billion, well below yearly global sales topping $37 billion in 2016 and 2017.
Aegon CEO Alex Wynaendts blamed the declining profits on unfavorable market movements, primarily in the U.S., along with a $195 million legal settlement involving Transamerica life insurance policyholders and the divestment of the company’s last block of reinsurance business, which was part of TEB’s portfolio of products.
“The second half of 2018 was challenging as we experienced a significant decline in the markets towards the end of the year. This impacted the value of our customers’ investments, and thereby the results of our administration and services businesses,” Wynaendts said in announcing the company’s dismal earnings report in late February.
“At the same time, we continue to simplify the organization, strengthen relationships with our customers and advisors, and enhance our service levels,” said Wynaendts. “This year’s extension of our partnership with Atos in the UK and the new partnership with TCS in the U.S. allow us to modernize our administration systems, and provide faster and better propositions to our customers.”
SEPARATION PACKAGES, OUTPLACEMENT SERVICES OFFERED
According to the Transamerica spokesperson, approximately 110 Transamerica employees in Little Rock were affected by the most recent realignment. The impact on each employee depends on their job function, he said, with some employees receiving offers to work from home for a specified or indefinite period.
“By the end of 2019, we expect the total number of position eliminations in Little Rock to be about 70,” the company spokesperson said. “We are keenly aware of the impact these actions will have on our employees and their families. For this reason, we will be offering separation benefits to eligible employees, including outplacement services.”
Transamerica first landed in Little Rock in 2002 when then-Gov. Mike Huckabee and more than 100 local dignitaries celebrated the topping out ceremony of Transamerica Worksite Marketing’s brand new three-story, 105,000 square foot office complex on 18 acres in west Little Rock. At the time, the company announced plans for 200 mostly white-collar jobs locally, along with some positions filled by transfers from the former worksite marketing headquarters in California.
At its peak, when the insurance firm changed its name from Employee Benefits in a companywide rebranding in 2013, Transamerica employed nearly 500 workers locally. But in late 2016, the company’s U.S. headquarters in Baltimore announced more than 800 job cuts across the U.S. as part of a companywide cost-cutting and reorganization program, including 20 layoffs at TEB.
As noted by Wynaendts, Transamerica announced a deal with Mumbai, India-based Tata Consultancy Services (TCS) in early January 2018 with plans to transform the administration of the company’s insurance and annuity business lines in the U.S. by accelerating efforts to outsource its digital capabilities and modernize all technology platforms.
Under that reorg plan, company officials said nearly 2,200 Transamerica employees supporting the TEB and other business lines involved in the shakeup would be offered positions by TCS, including 200 in Little Rock. As part of the deal, the Indian tech firm with annual revenue of $20.9 billion took over occupancy of several floors at Transamerica’s 1400 Centerview office building as part of a multi-year pact.
That deal also allowed Transamerica to shift more than $2 billion in revenues and thousands of company employees to TCS’s payroll, cutting the company’s annual expenses in the U.S. by $70 million. It also was forecasted to provide annual savings of $100 million over three years as transition and conversion charges on the company’s half-year financials.
According to TCS officials, the company’s local offices in Little Rock will have digital capabilities to service 10 million Transamerica insurance policies on an integrated modern IT platform. The local office is a new U.S. business center for TCS, adding to the tech firm’s existing office in Bentonville that employs more than 150 employees.
In November 2018, Hathaway Group announced the acquisition and new occupancy plans for the Transamerica building. The property was purchased for just over $9 million from Transamerica Life Insurance Company by the 1400 Centerview LLC. That investor group included Larry Crain Jr., Jeff Hathaway, John Hathaway and Wes Martin of Hathaway Group; and other Hathaway Group clients.
Although the company is exiting Little Rock, Transamerica officials said the company’s Employee Benefits business line will continue to be “an integral part of our strategy, and we are continuing to grow this market with talent in other U.S. locations.”