NU Online News Service, April 1, 3:45 p.m. EST
Declaring that the company has learned its lesson from the economic crisis, The Hartford's chief executive outlined a new company strategy for growth during its investor meeting today in New York.
The meeting, broadcast live online, featured the company's Chairman, President and Chief Executive Officer, Liam E. McGee, describing a corporate structure that will concentrate its sales efforts in three distinct areas and pay close attention to enterprise risk management.
"We learned our lesson from the last two years," Mr. McGee told investors, as he outlined a multi-tiered management and committee structure charged with examining and evaluating the company's risk.
The enterprise risk management approach will consist of an independent chief risk officer reporting to the CEO, a risk committee of the board of directors and an executive risk committee chaired by the CEO.
The Hartford, Conn.-based insurer just completed repaying $3.4 billion it borrowed from the U.S. Treasury under the Troubled Asset Relief Program after its life operations suffered severe investment losses and the need to deliver on guaranteed returns for variable annuities.
He said after "a comprehensive review" of the company and a capital raise of close to $3 billion, the company now "has a balance sheet that can sustain any reasonable stress scenario, including severe market and credit stresses."
Under stress scenarios the company outlined, a worst case depletion of capital in the 2010-2011 timeframe would leave the company with $1.9 billion in capital, the Hartford said.
Mr. McGee said the company will re-focus around its strong brand and concentrate its efforts in three groups, which the company outlined as:
o Commercial Markets: providing risk protection and benefits businesses, offering small commercial, middle market and specialty property and casualty, and group benefits, with a growth focus on small and mid-sized businesses. This will be led by Juan Andrade who will serve as president of commercial markets.
o Wealth Management: this segment will provide solutions for the retirement savings, income and estate planning needs of consumers and small business owners. With the over-65 population expected to increase in years to come, the company said there are significant opportunities in this area for growth. This segment will he headed by John Walters who will serve as president of Wealth Management.
o Consumer Markets: The Hartford plans to grow its AARP auto and homeowners insurance program through independent agents and direct distribution with an initial focus on customers 40 and over through independent agents. The company plans to expand its affinity market relationships in the future and is conducting a search for an executive to head this division.
On the affinity markets front, Mr. McGee said the company is not looking for relationships through a "Sears or Ford," but ties with organizations where members have an emotional connection with those organizations. He would not elaborate further during a question and answer period about what specific organizations are being discussed.
Technology improvements will also be a vital focus of the organization, said Mr. McGee, noting that the carrier's technology is often not integrated, and suffers from high cost supporting legacy systems.
In a separate interview, Mr. McGee said that the company has opportunities to update and streamline its technology "and one of the motivating factors will be to make it easier to do business with us."
The company has done a good job of patchwork to its systems "but we want to be a more contemporary company around technology," he explained.
When asked how this new alignment would affect producers, Mr. McGee said a clear message coming out of the day is that "our relationship with independent agents has always been one of the most important things at the Hartford; it is more important today and tomorrow than it was yesterday."
He said agents should be heartened by the realignment, because while they will be doing business with the same company representatives they have in the past, they will have greater coordination to accessing products to fill their client's needs.
"I think this is very much influenced by our desire to do a better job and make it easier for our agents to do business with us," he observed.
Currently, there are two distinct sale forces that agents deal with, noted Mr. McGee. The reorganization is aimed at making p&c and benefits products more accessible to agents. He was emphatic that agents will not see new requirements that they sell more products to their customers.
"We have to earn the right to have the agent sell our products," said Mr. McGee. "Our goal is to make it simpler for an agent, if he or she chooses [to sell those products].
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