MBIA Inc., the Armonk-based bond insurer hit hard by the subprime mortgage crisis, announced yesterday that it will eliminate 48 jobs as part of a restructuring plan.
All of the cuts will take place in MBIAÃ¢â‚¬â„¢s insurance business. Many of the affected employees will move into different jobs, including the companyÃ¢â‚¬â„¢s asset management business that is not affected by the workforce reorganization, according to the company.
Jay Brown, MBIA chairman and chief executive officer, said that adjusting the companyÃ¢â‚¬â„¢s work force is critical as MBIA looks to improve its financial position and restore faith with investors.
Ã¢â‚¬Å“As much as I love my job, making tough decisions that negatively impact our employees is, without a doubt, the hardest part,Ã¢â‚¬? Brown said in a written statement. Ã¢â‚¬Å“In making these decisions, we have tried to do so quickly and in a manner that is as painless and generous as possible, with the same treatment for every employee who will leave our organization.Ã¢â‚¬?
MBIAÃ¢â‚¬â„¢s stock has fallen 82 percent during the past year as the market for subprime mortgages to riskier borrowers weakened and foreclosures soared. Investors have been concerned that the problems for MBIA and other financial companies may not be over with the country mired in the weakest housing market in 25 years. For MBIA, the pain intensified in the fourth quarter when it reported a loss of $2.3 billion, the worst quarterly loss in its history.
MBIA and other bond insurers have taken big write-downs on the mortgage debt that they had insured.
Ã¢â‚¬Å“The MBIA senior management team has moved decisively in the last three weeks to assess the talent and workforce composition required to address our immediate needs and the skills that will allow us to compete effectively in the future,Ã¢â‚¬? Brown added.
Even though it is eliminating positions, MBIA said that it also is recruiting 15 to 20 new workers for Ã¢â‚¬Å“strategic rolesÃ¢â‚¬? and filling another 10 open positions.
MBIA reported 483 employees worldwide as of Dec. 31,Ã‚Â including 365 in its insurance business and 118 in asset management. Most of the eliminated positions will be in Armonk, where MBIA has 416 employees.
Shares of MBIA fell 58 cents to $11.60 in trading on the New York Stock Exchange.