Posted on 12 Jun 2009
Hartford Financial Services Group Inc. Chairman and Chief Executive Officer Ramani Ayer said there was no pressure from the company's board of directors or federal officials behind his announcement that he will retire by the end of 2009.
"I've been talking to the board for some time about retirement," Ayer, who has led Hartford for 12 years, said in an interview with BestWire. "We started that conversation in 2007."
Ayer said, despite careful planning, Hartford had not anticipated the combination of the "dramatic" decline in equity markets and the crippling credit freeze during the second half of 2008.
"Where we clearly got surprised" was the enormous correlation between the equity and credit markets, to the degree that we saw credit markets fall, both in terms of liquidity and asset prices," he said. "That was very, very dramatic. The combination of the two was pretty severe for the company."
Ayer's retirement announcement came after three consecutive quarters of losses, and a $2.75 billion loss for 2008, and shortly after Hartford received preliminary approval for $3.4 billion in federal assistance.
He said, however, that he is at the helm now only because he agreed to stay while the company worked through its financial difficulties.
"I originally contemplated retiring at the end of 2008, but with the financial crisis in full bloom by the fall, I put my plans on hold," Ayer said.
Ayer said "we started to sense the market was absolutely going sideways" in the third quarter of 2008. "And then in the fourth quarter, the market really cratered in a dramatic way," he said.
"Now that the company's on a sure footing, it's time for me to move forward with my plans. "¦ I've worked with the company for 36 years," said Ayer. "I'm 62 years old. It's time to give somebody else a chance and a crack at this fabulous enterprise."
Pressure on the equity and credit markets pressured Hartford's investment portfolio, which included investments in financial services companies and in mortgage-back securities.
"In our businesses, we clearly had exposure on the asset side, to both financials and commercial mortgages," he said.
The company also faced losses through its variable annuities business. As stock prices plummeted, Hartford had to make up losses in equity-linked variable annuities under income guarantee riders.