The Hartford Financial Services Group Inc. recently became the latest insurance company to announce bonuses or permanent raises tied to the new GOP tax bill that reduces the corporate tax rate.
Hartford CEO Christopher Swift told reporters at a Jan. 5 meeting of the Connecticut Business and Industry Association that the company will distribute bonuses of $1,000 each to employees who are paid less than $75,000 a year, calling it an acknowledgment of their contributions.
About 9,500 employees of The Hartford will benefit, Swift said. Per an article in the Hartford Courant, Swift said corporate tax rate cuts will likely provide short-term economic stimulus, but he worries about possible responses from other governments cutting taxes to lure business. “Is this just a race to the bottom?” he said. Still, if businesses and the economy grow faster, Swift said, “that will be better for everyone.”
A variety of other insurance-related businesses had previously announced intentions to provide bonuses to employees, crediting the tax reform bill that slashes the corporate income tax rate from 35% to 21% as the impetus behind the bonuses. Here’s a look at them:
Travelers pledges $1,000 worker bonus for 14,000
The Travelers Cos. Inc. told its staff back on Dec. 22 that it would give bonuses of $1,000 to thousands of employees in the wake of the tax reform bill.
Travelers CEO Alan Schnitzer said in a letter to employees that the Hartford and New York-based insurance carrier will this month give the bonuses to about 14,000 employees with a base salary of $75,000 a year or less and who meet “performance expectations.”
Schnitzer also said Travelers will increase its hourly wage to $15 for the “small number” of U.S. employees making less than that amount.
Schnitzer said the new tax law will spur economic growth, which will benefit Travelers and other companies. Schnitzer cited a pair of reasons for Travelers’ action: Storms and wildfires this year tested the company and “required every single one of us to rise to the occasion,” and the bonus and higher minimum pay “show our appreciation to those who can use it the most,” he said.
In another Hartford Courant article, Schnitzer said the tax bill is intended to provide some economic relief to those who need it most. “We think that is a worthy objective and we wanted to do our part to make that objective a reality,” he said.
He added that the legislation will “level the playing field” for U.S. insurers by eliminating a loophole foreign insurers have used to the disadvantage of U.S. companies by moving U.S. profits offshore and avoiding taxes.
Broker dealer Money Concepts pays $1,000 bonus to home office employees, vows to increase staff by 10% in 2018
Palm Beach Gardens, Fla.-based independent broker dealer Money Concepts responded to the late December passage of the new tax bill with an immediate $1,000 bonus to all employees, in addition to their regular annual bonus.
“Our employees work extremely hard to support our independent advisors. We are pleased to share this savings with them. We also plan to reinvest our corporate savings back into the business by hiring additional staff to help support the success of our growth,” said Money Concepts President and CEO Denis Walsh.
“We are excited about the new law and how it can impact the individual employees and their families. We hope that our commitment to reinvest further impacts the importance of hard working people within our organization and our vision to grow.”
Kingstone announces raises of 5% or more for all non-managerial staff
Kingstone Companies, Inc., a multi-line property and casualty insurance holding company, announced salary increases on Jan. 3 for all non-managerial level staff, primarily those located in its Kingston, N.Y. headquarters.
“Prior to the passage and signing of the “Tax Cuts and Jobs Act”, we decided that a reduced corporate income tax burden, down from almost 35% to under 21%, would afford us with a great opportunity,” said Barry Goldstein, Kingstone’s Chairman and CEO. “We’ve always sought to achieve an equitable balance and alignment of interests among the Company’s three main constituencies: our shareholders, our select producer partners, and our staff. Over the course of 2017, our stock price appreciated significantly and our dividend has been increased, resulting in a substantial investment return for our shareholders. Our select producers, in addition, will benefit from a bonus commission payout for 2017 that will be the highest ever paid by Kingstone.”
“Now, with another outstanding year behind us, we’ve chosen to redirect some of the savings from the new tax law to our dedicated and well-deserving core staff. We will accomplish this by providing an immediate salary increase to all non-managerial staff. This permanent benefit will provide them with a material amount of additional spendable income,” Goldstein said. “In combination with other benefits from the new tax law, many will see their take-home pay rise materially, helping to propel the local Kingston economy. This will improve our ability to hire, retain, and continue to build our excellent staff, which is now approaching 100 full-time employees.”
Every Kingstone employee participates in the company’s profit sharing plan, where distributions are driven directly by the company’s combined ratio. Over the past five years the average annual payout has been more than 17% of employee base pay. All employees have access to company-sponsored health insurance, where Kingstone pays over 75% of the total cost. Managerial and executive staff all receive restricted stock grants, providing long-term incentives aligned with shareholder value.
“In November, we increased the Company’s minimum hourly wage to $15. With the new tax law in place, our Compensation Committee has approved, effective January 1st, an increase in base pay of 5%, with a minimum of $2,500 per year, for all non-managerial level employees,” Goldstein said. “This is not just the one-time bonus that other larger companies have chosen to pass along to their staffs. It is a permanent increase, and over the course of 2018 additional merit raises will be based upon these increased base salaries.”
Kingstone is a multi-line P&C company writing business exclusively through independent retail and wholesale agents and brokers. Kingstone is licensed to write insurance policies in New York, New Jersey, Pennsylvania, Connecticut, Texas and Rhode Island. Kingstone offers property and casualty insurance products to individuals and small businesses in New York, New Jersey, Rhode Island and Pennsylvania.