UPDATE: Hartford President, Operating Chief Marra To Step Down

   DOW JONES NEWSWIRES 
 

Hartford Financial Services Group Inc. (HIG) President and Chief Operating Officer Thomas Marra will retire in July as part of a "mutually agreed separation," becoming the second high-level executive to leave the company since the financial crisis hit the insurance industry last autumn.

In early October, Hartford announced the appointment of a new chief investment officer on the same day that the company announced a $2.5 billion capital infusion from German insurer Allianz SE to shore up its balance sheet.

That executive change came roughly three weeks before the company posted a $2.6 billion third-quarter loss that showed some of the steepest investment-portfolio losses of the major life insurers. The company followed that up with a $806 million loss in the fourth quarter on more investment woes.

Hartford said Wednesday in a filing with the Securities and Exchange Commission that Marra, a 29-year veteran of the company who assumed the roles in June 2007, will retire effective July 3 and leave the company's board immediately. Chairman and Chief Executive Ramani Ayer will now directly oversee the company's property-and-casualty and life operations, and Hartford doesn't have plans to fill the president and COO positions at this time.

"From a business perspective, the timing is right," Marra said of his retirement. "The new reporting structure will allow for more streamlined and decisive management and enable The Hartford to continue meeting the challenges of this dynamic, turbulent market."

Life insurers, in particular Hartford, have been pounded by concerns that mounting losses on investments and in their variable annuities businesses will force them to raise capital to shore up their financial base. Last month, Hartford was granted a thrift charter, which would make it eligible for federal funds under the Troubled Asset Relief Program.

Hartford has been one of the leading players in the annuities field for much of this decade. In 2002, it had one of the industry's biggest innovations: It introduced an easier way for customers to start and stop withdrawals from their annuities. Most annuities didn't allow such flexibility.

Marra had been leading a team at Hartford to revamp the life-insurance unit's variable annuity, to "de-risk" the annuities book in the words of the company. Variable annuities are a tax-advantaged type of mutual fund typically sold with guarantees of minimum investment returns. The products have been a huge hit with baby boomers in recent years. Variable annuities bought by individuals accounted for more than 20% of Hartford's $3 billion in profit during 2007.

Andrew Kligerman, an insurance stock analyst at UBS Investment Research, said of Marra: "He is respected, he did some really innovative stuff in the variable-annuity business. He was a part of Hartford getting on the map and growing the (variable-annuity) business internationally. But in the end, the life business got hurt miserably" because of investment-portfolio losses and gaps in the risk-management program, including hedging, that meant Hartford had to find hundreds of millions of dollars of additional capital to back its life-insurance business.

In October, Hartford named Greg McGreevey chief investment officer and president of Hartford Investment Management Co., succeeding Dave Znamierowski, who left the company. At the time, Ayer said it was a good idea to bring in a "fresh perspective," given the unprecedented turmoil in the financial markets and its effect on the company's investment portfolio.

Hartford shares fell 15% to $6.81 in recent trading amid a broad market decline and have lost about 90% of their value since August. Since then, Hartford has cut its dividend twice, the latest reduction being 84% earlier this month to 5 cents a share.

-By Lauren Pollock, Dow Jones Newswires; 201-938-5964; [e-mail]

-By Leslie Scism, The Wall Street Journal; 609-520-4938; [e-mail]