Hartford Financial Services Group Inc., the struggling insurer that received $3.4 billion in government aid, is expected to name Liam McGee, a former head of consumer banking at Bank of America Corp., as its new chief executive.
McGee, once considered a candidate to head Bank of America, takes over a 199-year-old firm that has been hit hard due to its sales of variable annuities, tax-advantaged mutual fund products that have caused Hartford and its investors great pain during the financial crisis.
McGee will replace Ramani Ayer, who joined Hartford after graduating from college in 1973 and became CEO in 1997. Ayer announced in June that he would retire at the end of 2009. A number of other executives have already left the insurer amid the turmoil.
Variable annuities are often sold with guarantees of minimum returns, which posed problems when markets plunged last year. Regulators wanted annuity sellers to put up more money to back up the promises, putting strain on Hartford and other firms.
At the start of 2008, the company's share price was over $80, but it dipped into single digits at various points in the past year, most recently in late April, though it has since bounced back. Shares closed Tuesday at $27.44, down $1.18, or 4.12%.
In order to bolster its finances, Hartford applied for assistance through the Troubled Asset Relief Program and received approval for $3.4 billion in aid earlier this year.
Hartford has moved to make the annuities less risky for the company, which also sells life insurance and as property/casualty coverage for individuals and businesses. Ayer told an investor conference this month that the firm had restructured its annuity business.
"Five years ago you would have considered us as an annuity dominant franchise," he said, according to a transcript. "But going forward we have really positioned ourselves as an insurance-focused franchise with a participation in the annuity business."
Consumer banking is Bank of America's core business, and McGee at one time was considered a contender to succeed Chief Executive Officer Kenneth Lewis. But he left the firm in early August after realizing that he was no longer in the running. "This is an ideal time for me to begin the next chapter of my career and to pursue my goal of running a company," he said on Aug. 3.
The son of a Los Angeles bus driver, McGee, 55, was born in Ireland and arrived in the U.S. as a child. He was a teller in college and worked for Wells Fargo & Co., Security Pacific Corp. and San Francisco-based BankAmerica Corp. before 1998, when Charlotte, N.C.-based NationsBank Corp. purchased BankAmerica and took its name.
McGee survived the merger as head of the bank's California operations. He was named head of the retail bank in 2001. Before he left, McGee was involved with a review of the bank's retail footprint and overall retail strategy.
McGee also was being pursued for the CEO spot at E-Trade Financial Corp., according to someone familiar with the situation. The courtship was cut short this week when it became clear he had accepted a position elsewhere, according to this person.