Integrity 'Paramount' The Hartford's CEO Says
By DIANE LEVICK
Hartford Courant (CT)
May 18, 2006
The Hartford's chief executive touted company integrity twice in a brief speech to shareholders Wednesday, responding to long-running industry investigations that have alleged legal and ethical violations at his and other companies.
Chairman and CEO Ramani Ayer also told the annual meeting at The Hartford Financial Services Group Inc.'s headquarters that he sees "a world of opportunities'' and that "my confidence in the future of this company has never been stronger.''
But, he noted, the company faces a marketplace "increasingly shaped by unanticipated events and a changing industry landscape.''
"Paramount, of course, is The Hartford's reputation for integrity,'' Ayer told the sparsely attended meeting. "Nothing matters more to us, as trust is embedded in every product we sell.''
However, the company embedded kickbacks to brokers in customers' premiums for group annuities, Connecticut and New York attorneys general alleged last week.
The Hartford settled the case for $20 million without admitting the accusations, but apologized for not telling customers -- typically pension plan sponsors -- about the bonus commissions. The Hartford paid the extra fees to encourage brokers to steer more business its way, and got inside information from them that helped the company win more bids, the states said.
The Hartford was also implicated in New York Attorney General Eliot Spitzer's bid-rigging lawsuit against broker Marsh & McLennan Cos. in October 2004. The company wasn't named a defendant, and no public enforcement action has been taken against it in connection with that case.
Also, The Hartford expects that it will have to pay millions to settle investigations involving aspects of its mutual fund and individual annuity businesses.
In a short interview after Wednesday's meeting, Ayer wouldn't talk about any discipline of employees that might have resulted from the probes, saying it is company policy not to discuss personnel matters. The company did confirm in November 2004 that it had fired two Los Angeles employees for failing to fully cooperate with Spitzer's bid-rigging investigation.
Ayer praised The Hartford's employees in general. "Their passion for execution, innovation, teamwork and integrity is making The Hartford a standout national and international enterprise,'' he told Wednesday's meeting.
Ayer said in the interview that the company has substantially strengthened its compliance practices to make sure all employees are following its code of conduct, and government laws and regulations.
The aim, he said, is "to make sure we're doing everything that is within the letter and the spirit of what is expected by our customers and our regulators. The Hartford continues to raise the bar on itself.''
"That's our 200-year history,'' Ayer added. "I don't see that changing. That's why we've been around.''
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