I am sorry to ourTCSG associates but it looks like the writing is on the wall.
Once the knowledge transfer is complete and the trust company is caught up, most of the trust positions are going to be outsourced.
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While I appreciate the death spiral breakdown, is there any other information about TCSG?
Death spiral FTW!!
Expect to see another hit to capital this year. Will have to pay down more surplus notes to keep the ratio below 15%. We could not pay participants as much but that’s not a doubling either.
The death spiral begins…
Wow. Kudos to the first reply. I checked out the financials and you were pretty spot on. They nudged down the surplus notes just enough to keep their debt to surplus cap ratio below 15% given the billion dollar hit to surplus cap. You nailed it.
It would be nice if the CEO, CFO and board of Trustees bothered to be more open honest, and detailed about the company’s issues and challenges and actions. They always sound more like they are campaigning than running a company.
Can we get a round of applause for the most informative post on here in months. I understand our business pretty well but haven’t heard that part from a financial standpoint and makes complete sense.
I think we already know the answer that we will be operating at a significant loss again for FY 2024. There is no way that we will break a profit as long as "show me the money T" is in charge.
I am still trying to figure out how T and EC as a collective are still employed as the company hasn't been profitable since Roger left. I can't think of one year under Roger where the company wasn't profitable. I also liked that Roger and his team were transparent by providing a detailed Annual Report with commentary that described the our performance. This is just like what you would see with a public company.
This new EC team just posts the bare minimum to satisfy regulators without giving any context on the performance. That tells you everything that you need to know about where the company has been headed under their leadership.
At some point, the Board needs to cut bait and bring in competent leaders that can bring us off life support.
I feel awful for all those affected by TIAA’s problems. Many of you may be wondering why the cost cutting measures are so swift and deep when you don’t hear about other companies taking such drastic actions to cut costs. I hope this will help you understand. Insurance companies have a metric called Surplus Capital. Their claims paying ability is measured by their credit rating. There are some hard metrics by which credit ratings are granted. One of these metrics is the ratio of debt to Surplus Capital. If a company has outstanding debts greater than 15% of Surplus Capital, it triggers a downgrade from the best credit rating. TIAA has surplus capital of 42 billion. That shrank last year by about 700 million. They have outstanding surplus notes of a little over $6 billion. You can all do the math. The drastic changes like layoffs, asset sales and location changes are being driven by the need to keep that ratio of debt to Surplus & Capital below 15% and avoid the credit downgrade while still paying the participants an acceptable dividend. The problem is, paying down the debt affects the ability to pay the participants a dividend and operate and still operate the business. So the only way to operate the business AND maintain the credit rating without paying down the debt is to cut costs by any means necessary, regardless of the optics, regardless of the long term effects. The company is stuck in a complicated box. If they can’t grow their way out of the problem, then the only hope is to cut costs and pray something comes along to spur growth. Keep an eye on the ratio of outstanding debt to surplus & capital. Once that hits 15% then the problems get worse and nobody, not the managers, not the employees and not the participants, want any part of that smoke. Fingers crossed for a profit reported in the FY ‘24 report.