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St. Paul, Minn. — Some in the Twin Cities are worried that when it comes to job cuts at St. Paul Travelers, St. Paul is on the chopping block.
When the St. Paul Companies merged with Travelers Property Casualty in April, executives called the deal "a merger of equals," and structured it so that neither company technically absorbed the other. The company headquarters remained in St. Paul.
But Travelers was twice as large. And the primary business of the new company would be selling general commercial insurance. That's the bread and butter of Travelers, and that unit is still run from the former Travelers headquarters in Hartford, Connecticut.
St. Paul Travelers CEO Jay Fishman, formerly CEO of The St. Paul Companies, withheld any details on job cuts until Friday. At that time, he told analysts the company would cut 10 percent nationwide -- not a surprise, but still the first hard figure for the number of jobs the merger will eliminate.
That's about 3,000 of the company's 30,000 total employees. Company officials cannot say how big a cut will come out of the more than 2,500 employees in St. Paul. But analysts contacted by Minnesota Public Radio say they have no reason to believe St. Paul will feel the brunt of the cuts.
To the extent that they were to cut costs and weaken that brand name, I think that would hurt the company in the long run. So I think they're going to be very careful (about) personnel cuts.
"My guess is that a lot of the cuts are going to be in the field and not so much at the head office," says Ira Zuckerman, who follows the insurance industry for Nutmeg Securities.
More than two-thirds of St. Paul Travelers employees are not in St. Paul or in Hartford, but in field offices around the country. Zuckerman says many cities now have two of those, and that's where the greatest redundancies will be found.
Both in the field offices and the homes offices, Zuckerman does not believe executives will disproportionately cut workers who came from one company or the other.
"I don't think they've got any agenda there, other than to try and do the best they can," in deciding whom to keep, Zuckerman says. "It's not as if they're going to say, 'We're going to fire all the St. Paul people because they're St. Paul people.' If you'll pardon the mixed metaphor, that's no way to run an airline."
Another insurance industry analyst, Mike Dion with Sanford O'Neill and Partners, agrees. Dion says he is surprised that a number of top St. Paul Companies executives gave way to their Travelers counterparts. But that, he says, is a separate issue from where cuts will fall on rank-and-file employees.
Dion says St. Paul will maintain its specialty commercial insurance business, which supports a significant workforce in St. Paul.
He also says deep cuts in the city could create something of an image problem for the company.
"One thing that I've been telling investors and clients is that one of the strengths of the company is the St. Paul name," Dion says. "So to the extent that they were to cut costs and weaken that brand name, I think that would hurt the company in the long run. So I think they're going to be very careful in terms of were the personnel cuts are coming (from)."
Dion points out another factor in St. Paul's favor: Employees cost more in Connecticut.
"To the extent that they're wanting to save money and talking about expense savings and cost cuts because of this merger, then if my employee base in the East is going to cost me 10 percent more than my employee base in the Midwest, then it makes more sense to cut from the East than from the Midwest," Dion says.
Nonetheless, right now even informed speculation is still just speculation -- and the media's focus on yet-unknown layoffs is not going over well at company headquarters. A company spokesman says even though he has no details about just where or when the cuts will hit, it is important to remember they will unfold over a two-year period.
In a meeting with employees this week, CEO Fishman said the company is committed to achieving as many cuts as possible through retirement and other forms of natural attrition.
Whatever layoffs occur, they will probably not be large or sudden enough to trigger a federal law that would require St. Paul Travelers to disclose them to the state. But the company says it will voluntarily disclose any pending layoffs to Minnesota economic officials. The state official in charge says he has no news yet from the company.