Another Giant Bites The Dust!

Remember the old ad campaign, “When E.F. Hutton talks, people listen,” in which a crowded, noisy room would go so quiet you could hear a pin drop whenever the sponsor's name was mentioned? There have never been very many people who could silence a room like that in the insurance business, but Ramani Ayer was one of them.

Today, the iconic chairman and CEO at The Hartford already has one foot out the door after being pretty much hounded into promising to retire at year's end.  That's not a surprise, given the company's horrific financial troubles over the past year, thanks to investments that went south and overly generous guarantees made on variable annuities, putting the company into a life-threatening jam.

Mr. Ayer tried to make things right, convincing Allianz–which owns rival insurer Fireman's Fund–to cough up $2.5 billion last fall, before having to go hat in hand to Uncle Sam for $3.4 billion in bailout money from the Troubled Asset Relief Program.

But the criticism was relentless, hitting a peak during a May 27 shareholders' meeting, where Mr. Ayer was reportedly grilled about the sad state of a once proud company. One angry shareholder was quoted all over the press, calling out Mr. Ayer for allegedly destroying the reputation, image and good name of The Hartford.

The shareholder, who reportedly has owned Hartford stock since the 1940s, accused Mr. Ayer of running the company into the ground, and bluntly demanded his resignation. For good measure, this shareholder also blasted The Hartford's board for burying their heads in the sand.

Mr. Ayer survived this onslaught and was reelected to the board, but the writing was clearly on the wall.  It was only a matter of time before Mr. Ayer had to step down, if only to redirect attention to the beleaguered company's hopefully brighter future, rather than get bogged down focusing on its recent, dark past.

In short, Mr. Ayer and his colleagues at The Hartford could not afford to be trapped in a blame game, so the top dog had to go. Don't let the door hit you on your way out!

At least this way, with Mr. Ayer retiring by year's end, the organization will have breathing room to choose a worthy, capable successor, and perhaps even allow for a quality transition period to steer The Hartford back on course, while it floats on Washington's temporary investment.   

The company should also split the chairman and CEO jobs, just like AIG has vowed to do once Ed Liddy departs. Organizations need the head of the board to keep an eye on the day-to-management by the CEO, otherwise accountability is lacking.

Shareholders have every reason to be disappointed and angry with The Hartford's sad state of affairs. Still, I am frankly sad to see Mr. Ayer in this predicament.

Mr. Ayer has been a bold leader for many years–taking the point on critical issues such as Superfund reform and passage of the Terrorism Risk Insurance Act–and there aren't many with his gravitas left.  

I had a sense the end was near when Mr. Ayer did not attend the industry's annual “family reunion” this past January–the P-C Joint Industry Forum, where he had been a fixture for years. The likelihood of his departure from the grand stage was driven home by the cancellation of his participation at last month's CEO panel during the Independent Insurance Agents and Brokers of America annual conference.

Since this is an industry lacking a true public face, the loss of even one powerful voice like Mr. Ayer's is to be lamented. Who will replace him–not only at The Hartford, but as an influential force within the industry? There are still a few giants around–such as Ted Kelly, head of Liberty Mutual–but the fraternity is dwindling. Of the relative newcomers, the persona of Evan Greenberg, CEO of ACE, is looming larger with each public appearance.

In short, despite The Hartford's recent woes, Mr. Ayer gave much to this industry for a long time, and his exit should be met with applause, not catcalls or ripe fruit.  He will be missed.