L&G and RSA cut jobs as crisis infects insurers
The jobs bloodbath spread to the insurance sector today, when two household names revealed they are taking the axe to staffing levels.
No shelter from the storm: 450 jobs are expected to go at L&G
Legal & General is getting rid of up to 450 people, while RSA is to lose 1200 positions in the UK - 14% of its total. The job losses at RSA look particularly brutal, coming on the day the insurer unveiled excellent results and bragged about its financial strength. It is also increasing the dividend by 10% to 4.98p.
Chief executive Andy Haste said the job cuts are necessary. 'These are never easy decisions to make but the UK arm isn't in the place it needs to be. It is the right decision,' he said.
The cuts should lead to savings of £70m. Unions are likely to react with anger. The decision to raise the dividend may also raise eyebrows at the Financial Services Authority, which is desperate not to see the banking crisis spill into the insurance sector and has been asking insurers to act with caution.
RSA said premiums rose 11% to £6.5bn in 2008. Profits jumped 13% to £759m.
Haste reckons 2009 could be a bumper year. With insurance rates hardening and rivals lacking capital, he should be able to expand the business.
L&G's job cuts come as it grapples with a plunging share price and questions about its finances.
The insurer is under attack from short-sellers who are betting that the shares will keep falling.
It is also faces scepticism about its financial health despite recently reassuring the market it has a healthy surplus and no immediate need for an injection of cash.
It is in talks to get rid of between 250 and 450 staff. A spokesman said: 'L&G has entered into consultation with collective representatives over potential redundancies within its support functions. L&G will keep any potential redundancies to a minimum and will try to find suitable alternative employment for staff affected.'
L&G, which employs 8500 people, said it faced 'changing business demand and operational efficiencies'.
Its main offices are in London, Cardiff, Brighton and Kingswood, Surrey. Unite union said: 'We are extremely disappointed and saddened at this announcement.'
Most watched Money videos
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Contestant 'hopes to win' shed of the year competition
- Iconic Dodge Charger goes electric as company unveils its Daytona
- How to invest for income and growth: SAINTS' James Dow
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- How to invest to beat tax raids and make more of your money
- Mini unveil an electrified version of their popular Countryman
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Land Rover unveil newest all-electric Range Rover SUV
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Shawbrook didn't transfer my cash Isa and paid just 0.1%...
- Delivery app Getir pulls out of UK in major setback for...
- The Jaguar XJS is reborn as a £225k supercar - but TWR...
- Metro Bank deposits lifted by high-interest savings accounts
- MARKET REPORT: Frasers Group in fashion as it unveils...
- First profit for Vinted as young shoppers turn their...
- Inflation 'brought to heel' as shop prices rise by just...
- Europe set for June interest rate cut as inflation...
- I paid my Thames Water bill when I moved - now it says I...
- HSBC shocks market as boss Noel Quinn retires after...
- Hargreaves Lansdown and St James's Place cash-in on Isa...
- BUSINESS LIVE: HSBC boss Quinn to retire; Whitbread hikes...
- Tesla surges on hopes of Chinese self-driving deal
- Charlotte Tilbury owner Puig set for £12bn Spanish float
- BHP urged to improve its offer for rival Anglo American
- Haleon to close UK production site with more than 400 job...
- US private equity giant in £1.3bn swoop for troubled...
- FCA at war with City over plan to 'name and shame' firms...