Recently, American Skandia underwent an executive reorganization that resulted in the elimination of three positions and coincided with the retirement of Gordon Boronow, deputy CEO.
The job cuts include: Y.K. Chan, director of IT; Debbie Ulman, director of operations; and Ian Kennedy, director of customer service. Kennedy has been reassigned to Skandia's global operations under the rubric of a "Global Special Assignment."
Additionally, Lincoln Collins, SVP in charge of strategic planning and development, has assumed the role of COO, vacant since Wade Dokken became CEO.
The cuts are the third since October of 2000, and will soon be followed by another announcement.
"This is part and parcel of a larger program of cost reductions which we have not announced the particulars of. These cost reductions will help reinstate some of the benefits that were suspended in March and April," said Tim Klahs, director of investor relations.
While such measures invariably cause generalized anxiety among the remaining employees, Klahs said that American Skandia has taken steps to reassure its staff.
"I'm not going to say that any kind of reduction in personnel has a positive effect on the staff, but I think that we do an extraordinarily good job of explaining our moves and to make internal management available to questions that both exiting and remaining employees might have regarding the moves," said Klahs.
Furthermore, Klahs said that job cuts have not equaled the drop in sales revenue for the firm; this year, American Skandia's earnings are about half of last year's $12 billion. "We certainly left plenty of flesh on the bone to expand when the market returns -- and we all expect it to return," he said.
In particular, American Skandia has experienced a precipitous drop in sales of variable annuities, formerly the firm's flagship product. At mid-year, American Skandia had plummeted from third place in VA sales to ninth.
Some industry observers suspected that the ever-broadening product lineup had diluted the message of wholesalers.
"That complaint you have heard is mostly in the wirehouse channel, where the mantra of keep it simple, stupid' is repeated far and wide," Klahs said.
"Frankly, I don't think it's any secret that we've suffered a performance disadvantage in terms of where the products had been sold into in the heyday of 1999 and early 2000," he said.