This year, The Hartford is celebrating 200 years of operation. AA&B spoke with Juan Andrade, president and COO of The Hartford's Property and Casualty Operations, on the company's past, present and future, and the role independent agents and brokers have played in its success.
Q: As you reflect back on 200 years of the Hartford, what do you believe were the most significant events in the company's history?
Andrade: I've become something of a historian about The Hartford because the company's history is so interesting. I believe the most significant overall event is how we have become an American icon by being there for our customers. I don't say that lightly. The Hartford has been there in virtually every major event in U.S. history: the construction of the Hoover Dam, providing insurance for Abraham Lincoln, Robert E. Lee and Babe Ruth; major catastrophes such as the New York fire of 1835, when we paid all claims at a time when many companies were going under — in fact, the president of the company, Eliphalet Terry, paid many of those claims out of his own pocket. We were there for the Great Chicago Fire of 1871, the San Francisco earthquake of 1906, and after 9/11, we paid more than 950 business, life, auto and property claims.
Q: How has the role of independent agents and brokers changed over the years at Hartford?
Andrade: Although the history of The Hartford is interesting, what's more relevant is that our history is also the history of our agents and brokers. We appointed our first agent shortly after our foundation in 1810. His name was Jonathan George Washington Trumbull from Connecticut, and he sold his first small business policy in January 1811 to a hardware store with $10,000 coverage.
Today in our regional offices, our independent agent councils are named after Mr. Trumbull. As far as the future, there may be system changes, and changes to specific products, solutions and methods, but one thing that hasn't changed is that the vast majority of our customers continue to look to our 15,000 agents and brokers for counsel.
We remain engaged as an independent agent company, and that will not change.
Q: How do independent agents and brokers fit into Hartford's current and future distribution strategy?
Andrade: In April, we once again reaffirmed our commitment to independent agents in the culmination of a 6-month strategic review of our businesses across the company. We wanted to focus on what we're really good at. In examining our core competencies, several things came out: our large and growing customer base, our unique distribution and partnerships with agents, and the breadth of products we can offer. The Hartford can address 85 percent of the needs of business owners — aside from banking products, such as credit and deposits, and health insurance. Taking a look at our customer base, we insure 1 in 6 businesses in the country. The meaningful part of our success is built around our independent agents, and we will continue to build on those relationships, including appointing new agencies, where it makes sense to do so. We're an independent agency company; that's at the heart of our business strategy.
The main thing to stress is a big thank you to all of our agents; they're the key reason why this company has emerged as resiliently as it has from the economic turmoil of the last 2 years. Our first quarter results, which frankly have exceeded expectations, especially on the property-casualty side, are something we couldn't have done without the partnership of our agents.
Q: Now that Hartford has paid back the federal government TARP loans, what are the plans to avoid future problems?
Andrade: In hindsight, our investment portfolio was overly concentrated in certain financial assets and commercial real estate-backed securities. Our investment team, led by Greg McGreevey, has been actively de-risking the portfolio to reduce our exposure in these areas. Additionally, when global equity markets fell in late 2008 and 2009, our large block of variable annuity business created a lot of capital volatility for the company. Since that time, we have introduced a new variable annuity product, which we believe strikes the right balance between risk and reward and is much less sensitive to equity market movements. We have also halted new sales of variable annuities in Japan and the UK.
In terms of our financial strength, our balance sheet is very strong. We raised more than $3 billion in March to repay the U.S. Treasury's investment through TARP, and our capital resources are sufficient to withstand any reasonable economic stress scenario and still maintain strong capitalization. Despite a difficult 2008, we feel the steps we've taken have positioned us well. We've met the challenges, put the past behind us and now we're all about the future.
Q: What new products and services are you promoting in the near future?
Andrade: As part of our new strategy, we're taking all of our commercial insurance products and adding group disability and life, and other voluntary products to form our Commercial Markets Group. One key opportunity is how to help unlock value in occupational leave for workers' compensation and disability.
Our new Hartford Productivity Advantage product, which we introduced last month at RIMS, is a first for the industry. Midsized and large companies can now manage all of the different types of employee leave, like workers' comp, family medical leave issues, long- or short-term disability, with a single integrated solution. We have conducted research with employers and have found that managing employee absences in a compliant way is one of the biggest problems businesses face today. Because there are differences between state and federal regulation, compliance can't be folded together with automation. This makes it hard to track employees, especially for companies with a large employee base.
New technology makes it possible for us not only to track compliance at the state or federal level, but also to bundle this service with both benefits and workers' compensation products. Businesses are traditionally more concerned about leave management from a disability standpoint, but there is just as much complexity on the workers' compensation side.
So far, feedback from our agents and customers about this product has been phenomenal. We're expecting to see an impact on our top line starting in 2011.
###
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.