Wealth management will continue to be a prime business for Hartford Financial Services Group Inc., the company’s new chief executive officer says.
Liam E. McGee, who is taking over as Hartford’s CEO today, says that, despite a decline in the company’s variable annuities sales, variable annuities will continue to be part of its wealth management business.
Hartford has taken steps “to align risk and reward more appropriately” in its VA operations, McGee said in an interview.
“Annuity products would have to be part of our offerings, so you can expect to see new and innovative product in our annuities,” he said. “They won’t be as big as they had been, but to be in wealth management, you have to offer them.”
McGee said one of his biggest priorities is to use Hartford’s “iconic” brand image to help the company rise above the financial troubles it has faced in the past year.
Hartford reported a $1.2 billion net loss for the first half of the year on $13 billion in revenue, and it has had to accept federal bailout funds.
“Like many financial services firms, Hartford has had its challenges recently, but it reacted very strongly to them,” McGee said.
McGee said it was too early for him to spell out his plans in detail, but he said he expects to spend much of the first couple of months in his new position looking at improving the ways the company allocates capital.
“We need to assure we have adequate capital and improve our risk management to avoid mistakes,” McGee said. “We need to be sure the Hartford continues to provide competitive products with appropriate risks and rewards.
In view of the company’s heavy investment losses last year, McGee also plans to “intensely review and manage investment decisions,” he said..
He said he is concerned about recent downgrades in the company’s credit ratings, but he said the combination of a seamless CEO succession, an enhanced capital position and improvements in risk management will lay a trail toward improving the company’s evaluation in the eyes of the rating agencies.
McGee said he left Bank of America Corp., Charlotte, N.C., because he concluded that the possibility of his advancement to the top job was blocked.
“I wanted to run a company, and my assessment was [Bank of America CEO] Ken Lewis was going to stay, so the likelihood of me being the CEO was unlikely.”
Ironically, around the same time McGee was being interviewed, Bank of America announced that Lewis intends to retire from that company’s CEO post at the end of the year.
On paper, the division that McGee ran at Bank of America was larger than Hartford. But, “in terms of the breadth of my responsibilities, the Hartford position is bigger,” Mc Gee said.