Hartford CEO Steps Down After 'Most Challenging Year' (Update3)
By Andrew Frye and Erik Holm
June 4, 2009
June 4 (Bloomberg) -- Ramani Ayer, the chief executive officer who presided over Hartford Financial Services Group Inc.'s most difficult year in two centuries, will step down from running the money-losing insurer by the end of December.
The board will begin an external search for a replacement for Ayer, 62, the Hartford, Connecticut-based insurer said today in a statement. He is also resigning as chairman.
Ayer said last week the insurer is "finalizing details" with the government about a capital injection from the federal bailout fund of as much as $3.4 billion. Earlier in May, he said he would keep U.S. property-casualty and life businesses rather than break up the company.
"We have recently made a series of important decisions about The Hartford's path forward, setting the company on a new strategic course," Ayer said in the statement.
Hartford lost $2.7 billion in 2008 as the company wrote down the value of mortgage-linked assets and corporate debt. The insurer posted about $12.4 billion in writedowns and unrealized losses linked to the subprime collapse since the beginning of 2007, second among insurers to American International Group Inc., which received four U.S. bailouts.
Hartford slipped 17 cents to $14.71 at 9:39 a.m. in New York Stock Exchange composite trading. The stock has plunged about 80 percent in the past 12 months.
Ayer follows top deputies who have left the insurer in the past 18 months. The company said in February that Thomas Marra, once a candidate to succeed Ayer, was resigning. Marra became president in 2007 in a move the company said was part of a transition plan.
Chief Investment Officer David Znamierowski stepped down in October and Neal Wolin announced his departure in January as head of the property-casualty business to join President Barack Obama's administration. David Johnson left the chief financial officer post last year.
Hartford was downgraded this year by Standard & Poor's, Moody's Investors Service and Fitch Ratings after a measure of financial strength called the risk-based capital ratio missed a target set by the company in December. Hartford's life insurance unit has leaked capital as losses on mortgage-backed securities and guaranteed-return retirement products depleted assets.
Ayer cut jobs, slashed the dividend and applied for U.S. aid after Hartford's "overweight positions" in financial firms, including Lehman Brothers Holdings Inc. and AIG, soured last year. In October, he secured a $2.5 billion investment from Germany's Allianz SE.
Last year "was clearly the most challenging year in our company's nearly 200-year history," Ayer said in February when the company announced a fourth-quarter loss.
Ayer, who has been CEO and chairman since February 1997, joined the company after graduating from Drexel University in 1973. He was named staff assistant to the CEO six years after being hired and rose in Hartford's property and casualty operations before he was appointed president and chief operating officer of that division.
The CEO's compensation fell 72 percent last year to $4.47 million, the company said in April.
Michael Morris, the company's lead independent director, praised Ayer's "strong leadership" and said the executive "worked closely with the board to develop a strategy that has put The Hartford on the right path for the future," according to the statement.
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