With its $3.4 billion bailout repaid, Hartford Financial Services Group Inc. is focused on continuing to trim costs while growing its consumer and commerical lines of business and chasing wealthier clients, its top officer said Thursday.
Liam McGee, The Hartford’s chairman, president and CEO, unveiled the Hartford insurer’s “go-forward business plan” to investors in New York City Thursday morning.
During his hour-long presentation, McGee mostly outlined broader goals he says position The Hartford for sustainable profit growth, adding the company now has a balance sheet that could “sustain any reasonable stress scenario.”
He said the company will organize into three main business lines going forward including commercial and consumer markets and wealth management.
Juan Andrade will serve as president of commercial markets, which will provide risk protection and benefits for businesses.
John Walters will serve as president of wealth management, which will focus on retirement savings, and income and estate planning needs of consumers and small business owners.
The company is conducting an internal and external search for a consumer markets leader.
At noon, The Hartford was up 74 cents, or 2.6 percent, at $29.16.
McGee also discussed the launch of a new effort to enhance the company’s ability to reach customers via the Web and implement a “low-cost operating model.”
McGee said the company has cut expenses by $400 million over the past 18 months, adding that there is still “a lot of complexity and redundancy within the organization,”
He said the company, for example, continues to spend too much on information technology.
Reflecting on his first six months in office, McGee highlighted several big changes during that time, including adding new chief financial officer Chris Swift, performing a successful capital raise, and paying back on Wednesday $3.4 billion in federal bailout funds.
“With the successful capital raise, repayment of the Treasury investment and customer-focused strategy, we are well positioned to move The Hartford forward with confidence to achieve what’s ahead,” McGee said. “The go-forward plan will focus the company around our customers, partners and The Hartford’s strong brand.”
The Hartford is coming off one of the most volatile periods in its history, as it experienced tremendous losses over the past year and a half from sour investments and an ailing variable annuity business.
The insurer lost money for five consecutive quarters through parts of 2008 and 2009, forcing it to accept a $2.5 billion capital infusion from German insurer Allianz SE, and $3.4 billion in federal bailout funds. The Stag also reduced its local workforce by 900 positions in 2009, and recently announced plans to cut 101 jobs in Bloomfield later this year.
But the insurer’s performance has been on the upswing. The Hartford saw a profit in the fourth quarter of 2009, earning $557 million, and recently had a successful capital raise to pay back its federal bailout.
McGee, who took office in October after former CEO Ramani Ayer retired, said the company has always had disciplined underwriting, with exception of its variable annuities business and commercial investments. Those are two areas that got the company in trouble because they were closely tied to the performance of the stock market.
McGee said the company continues to “de-risk” its portfolio, and revamp its annuity business, including introducing new, less risky products to the market, and exiting the international annuity business.
“We learned our lessons from the last two years,” McGee said.
