Hartford Skips December Investor Day Amid CEO Review (Update2)

By Andrew Frye
Bloomberg News
December 14, 2009

Dec. 14 (Bloomberg) -- Hartford Financial Services Group Inc., the insurer that took a $3.4 billion U.S. bailout, is skipping its annual December investor presentation as new management plans its strategy.

Chief Executive Officer Liam McGee, who joined the company in October, is reviewing Hartford's businesses and plans to lay out his approach in "early 2010," Shannon Lapierre, a Hartford spokeswoman, said in an e-mail, citing the CEO's comments on the firm's third-quarter conference call in November.

Hartford hosted an analyst meeting or conference call for at least four straight Decembers through last year, providing earnings projections and answering questions. This year, Hartford, based in the Connecticut city of the same name, is regrouping under the leadership of McGee, a former Bank of America Corp. executive, and deciding which businesses to focus on, following five straight quarterly losses.

"I guess they didn't feel they were ready" to present the strategy this month, said Drew Woodbury, an analyst with Morningstar Inc. in Chicago. "If you're retooling an entire business you should take your time and get it right rather than impose some sort of false deadline in December."

Hartford has advanced 48 percent on the New York Stock Exchange this year after falling 81 percent in 2008. The insurer gained 12 cents to $24.24 at 4:15 p.m. in composite trading. That compares with more than $90 at the end of 2006.

MetLife Inc., the biggest U.S. life insurer, and No. 2 Prudential Financial Inc. both held meetings in New York this month where they explained 2010 targets and responded to questions about capital, possible mergers and acquisitions and changes in regulation.

Capital Ratios

Hartford used last December's conference to give forecasts on the size of a capital cushion that was depleted by mortgage- related losses. The company's forecasts beat analysts' expectations and the stock more than doubled on Dec. 5, 2008, the day former CEO Ramani Ayer and Chief Financial Officer Lizabeth Zlatkus met with investors in New York. Two months later Hartford said it missed those targets and the shares sank.

McGee has promised to reduce risk at Hartford, which sells property and casualty coverage as well as life insurance and retirement products like equity-linked variable annuities. He's moving Zlatkus to head risk management and is searching outside the firm for a new CFO. The reshuffle raises the profile of the risk officer, who will now report to McGee instead of the CFO.

"They took too much risk with their variable annuities," said Woodbury. "There probably should have been someone inside the company waving a flag."

AIG's Benmosche

McGee took questions from analysts on Hartford's third- quarter conference call on Nov. 4. Robert Benmosche, CEO of insurer American International Group Inc., hasn't spoken with investors in an open forum since his hiring in August. AIG, which got a bailout valued at $182.3 billion, has skipped analyst question-and-answer sessions after posting second- and third-quarter results.

Principal Financial Group Inc., the Des Moines, Iowa-based life insurer, hosted a Webcast with investors on Dec. 3 rather than send executives to New York to meet analysts, which would have been more expensive. The stock fell the most in almost seven months after Principal's 2010 profit forecast fell short of analysts' estimates. Philadelphia-based Lincoln National Corp. hosted a conference on Nov. 17.

Genworth Financial Inc., the seller of life insurance and mortgage guarantees, is scheduled to have a conference in New York tomorrow.

Lehman Brothers

Hartford Chief Investment Officer Gregory McGreevey reduced the insurer's financial-industry a after taking over last year following a $2.63 billion third-quarter loss on writedowns of assets including securities in Lehman Brothers Holdings Inc. McGee, who headed Bank of America's consumer and small-business banking, said in November he was halting sales of some life insurance products to companies.

"We will communicate our plan in early 2010, including details on our business portfolio, capital strategy, risk management, and how we will deliver sustainable profitable growth over the long term," McGee told analysts in on the November earnings conference call.

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