CEO Of The Hartford Says Company Is Moving Forward
By MATTHEW STURDEVANT
April 01, 2010
One day after repaying its $3.4 billion federal bailout, The Hartford rolled out a three-year plan to "move forward" with improved brand recognition, efficiency and profits.
The growth strategy, awaited by investors, customers and employees since Liam E. McGee took over as chief executive in October, calls for leaner operations and lower investment risk. It also calls for pricing new business at a level that would bring 13 percent to 15 percent return on equity -- a higher profit than the company now realizes overall.
"The Hartford is a strong company with a strong balance sheet," McGee said in an interview with The Courant.
The pricing goals are for new products, unrelated to existing insurance policies.
"We're actually quite confident that we can continue price-setting and get the kind of business that we want," McGee said in the interview, as a result of "the combination of the products we have, some of the innovation we have, our distribution relationships and their regard for us."
When asked whether improved efficiency would mean job cuts in the company's home state or elsewhere, McGee said, "I think it's far too premature to speculate on what impact, if any, it has on jobs in any of our geographies, let alone Connecticut."
McGee, who met with investors and analysts in New York, said the goal is to improve the efficiency ratio -- a measure of expenses divided into revenue -- by two percentage points. The Hartford Financial Services Group last year cut its workforce by 8 percent in Connecticut, where it has 11,300 workers, and 10 percent worldwide, dropping from 31,000 people at the end of 2008 to 28,000 at the end of last year.
The company plans to lay off 101 workers starting in May at its Bloomfield record-keeping office, which will close.
McGee tried to distance the company from its investment problems during the recession. Both Fitch Ratings and A.M. Best Co. affirmed in March that The Hartford's rating outlook remains negative.
One of four cornerstones of McGee's strategy is to improve the company's portfolio with better risk management and increased accountability. The Hartford announced Wednesday it had repaid the U.S. Treasury's bailout funds. Earlier this month the company raised $1.65 billion with a stock offer, and $1.1 billion in new debt.
McGee also said the company has been inconsistent in marketing its brand on all of its products. The Hartford name and the trademark stag logo are recognizable symbols that will be associated with everything the insurer does.
"We'll do that by presenting and executing the brand consistently at every customer touch point .?|.?|. whether that's a telephone call to one of our customer service agents, whether it's a piece of merchandising, it's a letter we send to a customer or it's a commercial," McGee said. "We'll be more disciplined and consistent in how we manage the brand."
The Hartford is headquartered on Asylum Hill in Hartford and has major local offices in Windsor and Simsbury, where its Hartford Life unit is based.
Speaking about the timing of the bailout payback, McGee said, "The business has had three consecutive quarters of improving core earnings; it had a profitable quarter on net-income basis in the fourth quarter for the first time in two years...We consulted with those constituents -- our regulators, our insurance commissioner and rating agencies ....The markets were available and receptive to both The Hartford and a TARP repayment. Obviously it was very well received."
Shares in The Hartford closed Thursday at $28.88 on the New York Stock Exchange, up 46 cents for the day.
Reprinted with permission of the Hartford Courant.
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