The financial crisis has spurred some pretty significant personnel shakeups in the insurance industry. Notably, competitors large and small are targeting the ranks of some of the largest carriers in the world, hoping to lure the best of the best away from companies beleaguered by economic uncertainty.
Since AIG CEO Ed Liddy announced he'd accept a dollar a year in compensation, he's watched helplessly as competitors pick AIG's carcass clean of talent. These competitors are promising employees what AIG can't: stability. Promising to remain until a replacement can be found, even Liddy can't get out.
Staff "raiding" in the insurance industry is nothing new. In 2003, CNA Financial Corp. accused Thomas F. Taylor, CNA's EVP of property and liability until his forced departure in February 2001, of nabbing 11 key CNA executives to help start a rival insurance firm, Quanta Capital Holdings Ltd. Taylor was forced to resign his position with Quanta as a result.
Like CNA, The Hartford Financial Services Group doesn't like being picked on. A 200-year-old Fortune 500 company, the 31,000-employee-strong organization has a reputation as a stalwart insurer. Even its logo - a large sentinel, horned elk standing atop a rock - embodies a sense of fortification.
However, since last fall The Hartford has been on an unwanted financial rollercoaster ride. Last September, before the U.S. economic crisis became daily news, Forbes published reports that "Vultures" were already "Circling Hartford Financial," as its shares tumbled on fears that the company would fall prey to the credit crisis. Although expected, it didn't help when chairman and CEO Ramani Ayer announced he was stepping down after 36 years at the firm. Yet, since the carrier agreed to a definitive $3.4 billion perpetual preferred stock investment agreement for its participation in the United States Department of Treasury's Capital Purchase Program, most of the rating agencies raised The Hartford's financial standing outlook.
Nonetheless, the "vultures" swooped in. In a lawsuit filed in New York Supreme Court, The Hartford accuses Arch Insurance Group Inc., its parent, Burmuda-based Arch Capital Group Ltd., and three former Hartford executives, including its president, of convincing more than 60 of Hartford's 250 financial products employees to join Arch, including "the vast majority" of the division's underwriters.
In "Developing Strategies for Competitive Advantage," Patrick McNamee, professor of international business in the University of Ulster, Northern Ireland, writes: "In many industries, the established rules of the game no longer apply, and their continued use will most likely lead to failure, even for firms which appear to have unassailable positions of strength. It is not that strategic planning has failed, but rather that in a previous era of greater certainty and clearer boundaries, the unquestioning application of established strategic rules often worked."
Amidst global economic instability, localized financial crisis, erratic financial ratings and organizational and personnel shakeups, The Hartford has an opportunity to rewrite the rules. How the carrier will stabilize and fortify against its circumstances remains to be seen, but pummeled, bruised and battered, The Hartford is still kicking.
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