By Paul O'Donnell
Dallas Morning News | Business Editor
State Farm’s state-of-the-art regional hub in Richardson, already home to 7,200 employees, will likely grow in the next few years as the insurance company closes 11 offices around the country.
The Bloomington, Ill.-based insurance company plans to close the leased offices beginning next year through 2021 and move that work to its headquarters, new regional facilities in Dallas-Fort Worth, Atlanta and Phoenix, and other existing locations.About 4,200 of the company’s nearly 70,000 employees will be affected. State Farm said it will offer displaced workers a chance to relocate.
State Farm spokesman Justin Tomczak said in an email that he could not estimate how many jobs will move to North Texas, but indicated that the 2 million-square-foot CityLine campus can hold 8,000 to 10,000 employees.“While the exits will begin in 2018 and continue over several years, we are announcing this decision now in order to give employees time to make personal and professional decisions,” said Mary Schmidt, State Farm’s executive vice president and chief administrative officer, in a statement.
The leased offices being closed are in:
■ Parsippany, N.J. (2018)
■ Petaluma, Calif. (2018)
■ Kalamazoo, Mich. (2019)
■ Irvine, Calif. (2019)
■ Tulsa (2019)
■ Indianapolis (2020)
■ Medley, Fla. (2020)
■ Downers Grove, Ill. (2020)
■ West Lafayette, Ind. (2020)
■ Bakersfield, Calif. (2021)
■ Frederick, Md. (2021)
There are more than 500 employees in the Kalamazoo, Tulsa, Bakersfield and Frederick facilities. The first two offices to shut down, Parsippany and Petaluma, have fewer than 60.According to Bloomberg News, State Farm’s decision to consolidate came after a $7 billion annual underwriting loss last year on auto policies. It is the largest U.S. home and auto insurer.
State Farm, Allstate Corp., Hartford Financial Services Group Inc. and Warren Buffett’s Berkshire Hathaway Inc. are among companies that have been burned in recent years by higher claims expenses from car crashes as more drivers are distracted by electronic devices.Higher repair costs have also hurt in an era when drivers are logging more miles behind the wheel. Companies have been charging more for coverage and looking for ways to reduce costs.
Michael Tipsord, State Farm’s chief executive, is working to improve results at the insurer after being named in 2015 to replace Ed Rust, who led the policyholder-owned company for three decades. Net income dropped to $400 million last year from $6.2 billion in 2015, hurt by the auto insurance results.Last fall, State Farm sold the four-building CityLine campus for more than $800 million to South Korean and Texas investors. State Farm is occupying the buildings under a long-term lease.
The State Farm buildings are the centerpiece of the $1.5 billion CityLine development near the southeast corner of U.S. Highway 75 and Bush Turnpike.This report contains material from Bloomberg.