The St. Paul Cos. Inc. said yesterday that its current round of job cuts will result in the firings of 1,250 employees worldwide, including 200 at the insurer's Mount Washington and Owings Mills offices.
The notices went out to employees starting last week, and will be sent throughout this week. The fired workers will generally stay on for 60 days after receiving notice, and receive severance packages and placement assistance.
The terminations, which cut across several departments, account for about 9 percent of the Minnesota company's work force.
"What we're trying to do here is bring our expenses in line with those of our competitors," said David Monfried, a company spokesman. "We need to gain the greatest amount of productivity in everything we do to compete successfully in a very, very tough marketplace."
The company said it will save $100 million from the job cuts and other savings measures, such as outsourcing or eliminating certain back-office operations. Monfried said the company had expected to have to cut 1,500 to 1,600 jobs to achieve the desired savings.
St. Paul bought Baltimore insurer USF&G; Corp. last year. On July 12, Metropolitan Life Insurance Co. said it was buying St. Paul's personal insurance business for $600 million. About 1,700 St. Paul workers worldwide are being transferred to Met Life, including 125 in the Baltimore area.
Analyst Ira L. Zuckerman of Nutmeg Securities Ltd. in Westport, Conn., said the job cuts were no surprise, adding that the company still faces a difficult path ahead. "They're not in good shape," he said.
At the root of the problem, Zuckerman said, are years of intense price competition. "Right now the industry is at the nadir, at the bottom," Zuckerman said. "Everybody's sort of hunkering down at this juncture."
At the St. Paul offices in Mount Washington, there was unease even among those who kept their jobs. Two employees stood outside one of the enclosed parking lots, smoking cigarettes and talking. They had avoided the ax, but declined to give their names.
"It's pretty somber," said one. "It affected a lot of people here. Some of our friends got caught, so it's pretty bad."