Branch Insurance, a Columbus digital insurer with a unicorn valuation, has cut its workforce for the second time in seven months.
Persistent inflation – which increases the costs to repair and replace homes and autos when claims are filed – required the startup to preserve capital, a spokesman said via email.
The company did not release the number of positions affected nor how many employees remain.
"This decision was made to ensure the strength of Branch’s business during these economically turbulent times, but makes parting with valued individuals no less difficult," the company said in its statement.
Affected employees will receive severance pay, two months' of continued health insurance coverage and job placement services with a coach, according to the statement.
In June, Branch was required to report to the state eliminating 55 Ohio-based employees, and acknowledged cuts elsewhere without releasing the total. The home and auto insurer attributed those cuts to catastrophic claims losses from natural disasters early last year.
Branch, incorporated as Branch Financial Inc., operates as an insurance exchange owned by members. Depending on where policyholders live, their coverage is underwritten by the Branch exchange or one of two outside insurers.
Branch's capital surplus dropped to $21 million as of Sept. 30 from $44.5 million at Dec. 31, according to financial reports to the Ohio Department of Insurance. (The state minimum requirement is $2 million.)
Direct losses of $189 million were 1.4 times that of earned premiums, $132 million. In 2021, when the startup was still tiny, it had a remarkably low loss ratio of 78% on just over $6 million in premiums.
Branch had launched an ambitious growth plan since June 2022, when it was valued at $1.05 billion in a $147 million private equity Series C round. But last June and with this week's statement, the company cited good stewardship of members' capital in needing to cut expenses.
"Branch is a company that makes big bets," the company said in its statement. "While this is a moment of loss and reflection, we’re equally focused on the opportunity that lies ahead."
Branch sold its first policies and moved to Columbus in 2019. Co-founder and CEO Steve Lekas has said the goal since inception has been to lower costs so consumers save, such as directly embedding quotes at online mortgage lenders and auto dealers instead of spending on advertising.
A year ago it was certified as a B Corp – a for-profit company demonstrates a commitment to promoting community and member interests – for its mission to restore insurance as a "force for communal good."
Affected Branch employees changing their LinkedIn status to "open to work" were effusive in their bittersweet farewells. The posts cited "many" job cuts without enumerating them. There are some 400 LinkedIn profiles associated with the company.
"I've only worked for four companies in the last 20 years. This company was special," one sales manager wrote in a post. "I was given the opportunity to be a sales leader and I developed close relationships with my team. I think this is why leaving this company hurts so much."
Workforce reductions have roiled the tech sector for more than two years, especially since interest rate hikes made investors less willing to deploy capital in largely illiquid VC bets.
Columbus-based Beam Benefits, which manages a suite of employer benefits such as dental, vision and life insurance, also cut jobs this week, according to posts by affected employees on LinkedIn, but the company has not responded to requests for confirmation or comment.
