A rock solid foundation in public accounting is among the best assets a CFO can bring to his role, according to Saul Basch, vice chairman, treasurer and chief financial officer of HSB Group, the parent company of the Hartford Steam Boiler Inspection and Insurance Co.
One need only survey the Hartford region’s financial services firms to identify a particularly consistent number of peer CFOs and other senior executives who hail from public accounting to confirm that other firms share this sentiment. Among them, he said, are some of the region’s most well known companies — Aetna, Travelers, The Hartford, CIGNA, and Mass Mutual.
“Very likely, it’s because in public accounting you are exposed to so many facets of the way a business operates and the challenges it experiences. The opportunity to learn from your clients is great,” said Basch.
Basch, who was a partner in Cooper & Lybrand’s Hartford office prior to joining HSB in 1995, understands the value of a public accounting role from both inside and outside the industry. A CFO with public accounting experience, he said, gains a depth of knowledge through his or her business exposure, not only for example, in areas like IT, which a CFO always had to understand, but also in operations and process flow.
“Most of the CFOs I know are pretty knowledgeable in those areas because they came out of public accounting backgrounds.”
Over the years, Basch said, he has seen the overall responsibilities of today’s CFO increase, and the necessary skill sets one must bring to the role broaden beyond traditional financial reporting to include all aspects of the strategic and operational issues of the company. However, he added, since joining HSB, his particular role hasn’t changed as much since the combined CFO and treasury duties at HSB have always been structured as a very broad function with a very “open portfolio,” a direction, in which most CFO roles have now expanded.
Among the biggest changes Basch said he has seen as a CFO is the level of scrutiny by regulators and other interested parties.
“The world’s a lot more complex now,” he said.
Basch’s broad based finance and accounting background and expertise helped HSB adjust to a changed corporate environment during times when the company needed it most. In 2000, the company was acquired by New York-based insurance giant AIG. Until then, HSB was an independent, publicly traded company, as it had been since its founding in 1866. In 2009, AIG sold HSB to German insurance company Munich Re as part of its strategy to repay the federal government for the financial bailout it received following the 2008 financial collapse. As a subsidiary of Munich Re, HSB is now a global company with annual revenue of more than $1 billion and 2,500 employees, 1,400 of whom are based in the United States.
Douglas Elliot, president and CEO of HSB, stressed the importance of Basch’s versatility and depth as important for the company’s continued success.
“Saul Basch continues to be a tremendous business partner for the HSB leadership team. His considerable industry experience provides breadth beyond the typical CFO role. HSB has had very strong performance over the past decade and Saul has played an integral part in that success,” he said.
Going from being a CFO of a relatively well known publicly traded U.S. company to being a CFO of a subsidiary of a foreign insurance company has been a major change for him, Basch said. As the company has grown in this way, he explained, it has been critical for HSB’s success to appropriately manage relationships with the parent company, keep up with rapidly changing dynamics of a global economy and ensuring HSB maintains its talent base.
“We’re very stable,” he said, “but we work hard at it everyday to maintain our stability. We have had the highest profit margins of any insurance company, when you look at our track record over the last 10 years. It may not mean we’re the biggest or most profitable, but pound for pound, we’re the most profitable.”
Most of the company’s employment growth in recent years has been overseas, he said, because those markets are growing. While employment levels in the U.S. are stable and not declining, Basch conceded that a prolonged difficult economy in the U.S. over the past two years has meant fewer businesses nationally, as many closed their doors or retrenched during the recession. For HSB, this has meant less insurance to sell, he explained, though HSB has offset this somewhat through new products and a search for new business.
“HSB is synonymous with excellence in our industry. We’re viewed as best in class by most people in our industry and most observers. The satisfaction I get is being a part of that legacy and improving on it.”
Name: Saul Basch
Title: Vice chairman, treasurer, and CFO
Company: HSB Group (Hartford Steam Boiler)
Company headquarters: Hartford
Annual Revenue: $1 billion
Age: 64
Hometown: Wilbraham, MA
Education/credentials: B.S., State University of New York at Albany; CPA
