The year 1860 marked an end to a recession caused by a credit collapse after banks loaned too much for the westward expansion of railroads during the nation's gold rush.
It was also the 50th anniversary year of the Hartford Fire Insurance Company, which had just finished a wildly successful decade. Income from premiums more than doubled in the 1850s compared with the previous 10 years. The company was stronger than its competitors and well-positioned for growth.
Today, the property-casualty and life insurer now called The Hartford Financial Services Group Inc. celebrates 200 years since its creation. The nation is again emerging from a deep recession. This time, however, The Hartford is stabilizing after a period of tumult inside its own hallowed walls.
As the company marks the day by ringing the opening bell at the New York Stock Exchange, the stag — a company nickname derived from its logo — appears to be back on its feet with a turnaround that's still a work in progress.
The company lost billions in the gold rush of this decade — real-estate securities backing an unsustainable level of lending. The Hartford's oversized variable-annuity business also suffered as the stock markets fell.
At the low point in March 2009, The Hartford's stock fell to $3.62 a share, from a peak of $106 in May 2007. Job cutbacks eliminated 9 percent of the staff, and the company needed multibillion-dollar bailouts from the U.S. Treasury and a German insurer.
More than a year after those depths, share prices have recovered to the mid- to high-$20s.
"I think The Hartford is admired on a number of fronts," said Liam E. McGee, who took over as chairman and chief executive officer last fall. "Clearly, we have to re-earn some regard around our financial performance. I believe we're on the way there. But in terms of the intangibles, the culture, the culture of integrity and ethics, I think The Hartford is as admired as any company in America."
In March, the company paid back $3.4 billion in federal bailout funds that it received last summer, after raising capital in a successful sale of new stock and debt. In April, The Hartford announced its second straight profitable quarter.
Analysts say that some of the company's competitors are better-positioned for growth. And like all financial services firms, its strength depends heavily on Wall Street markets, which have shown weakness in recent days.
Still, many of the company's 28,000 employees, including 11,300 in Connecticut, are sharing a sense of optimism and relief.
McGee said that the company has learned from its actions.
"Historically, I think it's fair to say we had over-concentration in some assets that suffered inordinately during the recent economic cycle," McGee said in an interview. "Never again will we have such a large concentration in any product. I'm not sure that's healthy over time."
The tall, athletic McGee, formerly head of Bank of America's 6,100-branch retail network, is reorganizing the company from "product-driven" to be "consumer-driven."
The idea, in part, banks on delivering more of the company's uniquely broad range of financial and insurance products to a customer base that already numbers 18 million — directly from its website or through 175,000 life insurance and wealth management agents along with 15,000 property-casualty brokers and agents.
The Hartford, which has in recent decades operated as "two silos" — life and property-casualty insurance — will be reconfigured into three divisions: consumer markets, commercial markets and wealth management.
The company is looking inside and outside for a leader of its new consumer markets division. The new commercial markets will be led by the head of The Hartford's property-casualty business, Juan Andrade, and the former chief of life operations, John Walters, will oversee the new wealth management division. McGee, who is married with four children — two grown, two at home in the Hartford area — followed Ramani Ayer, the CEO from 1997 until last fall. Ayer, known for operations strength, upheld a tradition in which The Hartford has one of the largest hometown workforces of any major national corporation.
It's too early to say whether the new plan will translate to more jobs in Connecticut, even as the deep cuts of the downturn are still winding down. Like many companies these days, The Hartford has a plan to drive down costs. But McGee said, "We have no current plans to materially change our employee base in either Hartford or Connecticut."
Analysts have recently given The Hartford's stock a "hold" or "neutral" recommendation, while some say "sell." Skeptics say the strategy relies on difficult cross-selling of products in one business unit to customers in others.
Despite that, McGee — who was reportedly discussed as a possible CEO at Bank of America but joined The Hartford before that job came open — is winning some praise on Wall Street.
Reprinted with permission of the Hartford Courant.
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