Broad Inc. Sets Shift to L.A., to Add 200 Jobs
Broad Inc., one of two companies spun off as part of the breakup of Kaufman & Broad, said Wednesday that it will move the administrative headquarters of its financial services operation to Los Angeles from Atlanta, creating 200 new jobs locally in the next year.
The Los Angeles-based firm also plans to invest $15 million in a new service center in Los Angeles that it hopes will make selling tax-deferred savings products faster and less costly.
Those announcements are part of several to be presented today to Broad shareholders in what is expected to be an upbeat first annual meeting as a separate company.
The company was split away from the former Kaufman & Broad in March, with home building operations remaining in Kaufman & Broad Home, a company formed in 1986 that was majority owned by Kaufman & Broad.
The restructuring was designed to enhance shareholder value. Management believed that the firm was hampered by a “two industry” image that resulted in its stock selling at ratios below those of home builders or insurance companies.
So far the strategy seems to have worked. A share of pre-breakup Kaufman & Broad, worth about $11 in December just before the restructuring was announced, has risen recently to nearly $16. That price represents the value of one share of Broad Inc. and 0.73 share of Kaufman & Broad Home, which shareholders of the former Kaufman & Broad received in the breakup.
Also, Standard & Poor’s Corp. recently boosted ratings on Broad Inc.’s debt issues, partly because the company will no longer be burdened with the cyclical revenues and earnings of home building.
Broad Inc. continues to transform its financial services operation. It has been divesting traditional life insurance businesses, focusing instead on faster-growing retirement-oriented savings products such as single-premium annuities. Those annuities--which allow investors to accumulate earnings tax deferred until retirement--have been gaining popularity, particularly among middle-aged consumers saving for retirement.
“We think we are in the right market and will be equipped to service our customers better and more efficiently than anyone else,” said Eli Broad, chairman and chief executive of Broad Inc.
The move of the headquarters of Broad’s SunAmerica Corp. financial services operation to Los Angeles is part of an attempt to move closer to its primary markets and become the nation’s lowest cost provider of retirement-oriented savings products, Eli Broad said. The move, he said, will allow the firm to upgrade its caliber of employees and create a new corporate culture and technology designed to sell annuities and life insurance products in the same way banks sell certificates of deposit, without lengthy paperwork procedures.
The move, however, will result in layoffs of about 350 workers in Atlanta, whom the firm opted not to transfer to California.
