Hartford's New CEO: Competent, But Not Covered in Glory
Hartford Financial, one of the most troubled of the major insurers, went out of the box today and hired former Bank of America consumer and small business banking president Liam McGee as its new CEO.
McGee is an interesting choice for the 200-year old multi-line insurer, which got in trouble last year for wading into the variable annuities market, and getting both feet stuck in quicksand. Several top executives left after huge losses forced Hartford to take TARP money from the federal government's bailout program, and the rest were passed over by the board in favor of McGee, who is clearly an outsider to the insurance industry.
That may not be a disadvantage. McGee, by all accounts, had a brilliant career at BofA, both in Los Angeles and at the company's headquarters in Charlotte, North Carolina, and was rumored to be a successor to BofA CEO Ken Lewis.
But McGee himself was passed over earlier this year and left, publicly saying that he wanted to "run a company." Now he has his chance.
McGee isn't saying exactly what he wants to do at Hartford yet. The insurer, which handles both property casualty and life insurance, has seesawed back and forth this year, with rumors that both sides of the company were up for sale. A federal TARP infusion of $3.4 billion and a stock sale probably saved them from that unhappy choice.
McGee's first task will be to get Hartford out from behind the variable annuities eight ball. Hartford offered these insurance policies, based on the stock market, at prices and with guarantees that were too good to be true. The insurer then had to back them up when the market crashed. The result: a $2.7 billion annual loss last year.
Can McGee learn the business fast enough to keep Hartford's head above water? He has the advantage of a rising market, which has improved Hartford's position vis-Ã -vis these annuities. He also has the good sense to say he won't rush to pay back the federal government. Why not use the taxpayer's dime?
Local bankers in California describe McGee as "one of the few executives to rise through the ranks of Bank of America as it went through a succession of mergers." His career continued to soar when he handled the integration of FleetBoston's consumer business into BofA, according to BusinessWeek.
But somewhere along the line he apparently stumbled. His name got attached, deservedly or not, to negative news, such as expected losses in the home equity loans department and the acquisition of failing mortgage lender Countrywide Financial by BofA. By August of this year he was clearly no longer a contender, and left the bank.
But he was not out of work very long. And, with all the ongoing problems at Hartford, he will be very busy in the future.