In what analysts are calling another blow to the local economy and to a company with a notable history in the Valley, the Woodland Hills offices of auto insurer 21st Century Insurance could lose up to 750 jobs in the next 16 months as its new parent, LA-based Famers Insurance Group, consolidates operations. Farmers, a subsidiary of Zurich Financial Services Group, acquired 21st Century Insurance from troubled insurance giant American International Group July 1, in a $1.9 billion deal, the largest in the company’s history. For the past two months Farmers has been looking for efficiencies and ways to streamline operations, according to Mark Toohey, Senior Vice President for Media Relations. “There were some areas where we found we could reduce the workforce because there were some redundancies,” he said. Fifty-six employees out of 979 who work at the two buildings 21st Century Insurance leases in Woodland Hills, were notified August 27 that they would lose their jobs. Three other positions were cut September 4, one position is scheduled to be eliminated September 30 and 52 others will be cut by the end of October. “The job reduction will be done gradually, almost on a month to month basis,” said Toohey. Farmers will also slash 21st Century jobs in Georgia. Overall, some 1,200 jobs are slated to be cut by the end of 2010 representing 20 percent of the 21st Century workforce. But Toohey said 21st Century Insurance isn’t going anywhere. Its acquisition helped Farmers enter into the direct-to-consumer market, which Farmers hopes will help it compete with other multi-channel companies such as Progressive and Allstate. 21st Century Insurance sells inexpensive auto insurance directly through the phone or Internet rather than through a network of agents, which will complement the plethora of insurance services that Farmers offers, which include life, home and health insurance. “We’re very excited about the acquisition, 21st Century Insurance is a very valuable asset,” Toohey said. In the San Fernando Valley, the job losses represent another economic blow to an area already marred by the loss of thousands of financial services jobs, according to economists. “This will act as another brake on the economy,” said Jack Kyser, senior vice president and chief economist at the Los Angeles County Economic Development Corporation. Since the economy collapsed last year, local banks and mortgage companies have gone out of business or merged into larger, out-of-state companies. Major institutions such as Countrywide Financial, whose branches dotted the West Valley mostly along the 101 freeway in what was known as “Countrywide corridor”, have disappeared into Bank of America operations. Washington Mutual branches have consolidated into J.P. Morgan Chase. “The entire financial services industry is experiencing a shakeup and this is a part of it,” said Elan Shore, Director of Economic Development for the Valley Economic Alliance. “It’s a sad situation – people losing their jobs – but I’m hopeful newer and better jobs will come.” In the Valley, 21st Century’s impact on the local economy has been significant. “21st Century Insurance has been a dominant player in the corporate world and civic world,” said Bruce Ackerman, President and CEO of the Valley Economic Alliance. The company has had a significant presence at Warner Center in Woodland Hills, which over the past two decades has grown into a headquarters location for corporate heavyweights, including Fortune 500 companies such as Health Net. Many remember 21st Century’s deep connection with the Valley especially in the aftermath of the 1994 Northridge earthquake. Headquartered near the epicenter, the company, whose buildings were damaged, set up shop in the parking lot the very next day following the quake, and conducted business in what employees came to call “tent city.” Employees sat at makeshift desks with portable generators and toilets, answering questions and even handing out temporary living expense checks to homeowner policyholders who came by. Back then, the company was called 20th Century Insurance, and sold both auto and homeowners insurance. The company paid out $1.1 billion in claims as a result of the quake bringing the insurer to the brink of insolvency. In 1994, 21st Century lost nearly $500 million. A cash infusion of about $200 million by AIG, which later acquired controlling interest in the company, helped the insurer rebuild its business with a focus on handling much of its direct underwriting business electronically. A decision to discontinue offering homeowners insurance was made shortly afterwards. A decade later the company still struggled with settling claims originating from the Northridge Earthquake, in some cases only after long court battles. Founded in L.A. by insurance agent Louis Foster in 1958, Woodland Hills has been 21st Century’s main California office since 1980. The two buildings were the company’s headquarters until October 2008 when operations were shifted to Wilmington, Del. Toohey said 21st Century Insurance will maintain a presence in Woodland Hills and at least until the end of 2010, the company will keep offices at that location. Farmers, which has had a presence in Southern California since 1928 and has major offices in Simi Valley, Agoura Hills and Westlake Village, will try to absorb a large number of the displaced employees, relocating 21st Century workers to other operations, he said. In greater Los Angeles, Farmers has 5,300 employees and agents. 21st Century companies operate in 49 states and the District of Columbia, have more than 2.4 million customers and insure more than 4 million vehicles.
21st Century’s Turbulent Year
