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Wednesday, June 14, 2017

What’s the Insurance Capital Without Aetna? Hartford May Find Out

What’s the Insurance Capital Without Aetna? Hartford May Find Out

Hartford has long been known as the world’s insurance capital. Aetna was founded there more than 150 years ago. Credit Jessica Hill for The New York Times
HARTFORD — Very little is going right for this once proud New England capital.

Hartford’s finances are such a shambles that it is on the verge of bankruptcy. In a city already plagued by violence, murders are on the rise this year. Even the minor league baseball stadium, which opened to much fanfare two months ago, is the subject of an F.B.I. investigation over its hefty price tag.

Now comes the latest and perhaps most painful blow: Aetna, the insurance giant, announced last month that it was planning to move its headquarters out of the city it has called home since it was founded more than 150 years ago.

State and city leaders have spent months pleading with the company to stay. Aetna was negotiating with several states for a location of its new headquarters and hoped to have a decision by early summer.

Aetna helped elevate Hartford to international recognition as the world’s insurance capital. Word that it may be packing boxes shows how far the city’s fortunes have fallen.

“In some ways, of all the companies that could move their headquarters out of the state, symbolically this may be the most painful,” said Walter Woodward, Connecticut’s historian and an associate professor at the University of Connecticut. “This is not just a corporate loss. It’s a cultural loss.”

Hartford was once so intertwined with insurance that even Mark Twain, its most famous resident, not only celebrated the city’s lifeblood, but also was a director of the Hartford Accident Insurance Company. In a speech to the a group of insurers in Hartford, which included executives from 10 companies, Twain spoke of Hartford as “a city whose fame as an insurance center has extended to all lands.”

Mayor Luke Bronin has cut Hartford’s payroll and negotiated additional savings with labor unions since he took 
office last year but said there were limits to such actions. Credit Jessica Hill for The New York Times 
But that reputation has been disappearing for decades as insurance companies have shrunk, consolidated or moved to the suburbs or bigger cities. The number of people who work in the insurance industry in the metropolitan area has plummeted to 37,000 in 2017 from more than 
60,000 in 1990, according to the United States Bureau of Labor Statistics.

In the early 1980s, more than three dozen insurance companies had their home offices in the 
Hartford area. Now, other than Aetna, The Hartford is the only major insurer based in the city.

Aetna’s history is deeply linked with the state: Morgan Gardner Bulkeley, a son of Aetna’s 
founder, served several terms as Hartford’s mayor before he was elected governor of 
Connecticut. Throughout his political career, he remained president of the insurance company.

The company does plan to keep most of its approximately 6,000 Connecticut employees in the
state. And it will keep the colonial revival office building it owns downtown, which was known 
for its amenities, including squash and handball courts, bowling alleys, and a state-of-the-art cafeteria.

While Connecticut is home to some of the nation’s wealthiest suburbs, its cities have struggled. Hartford faces a potential bankruptcy filing if it is unable to secure assistance from the state. 
The city’s median household income is $30,000, less than half the state’s, and many of its neighborhoods are plagued by poverty, drugs and gun violence. Murders have ticked up this
 year after a drop in 2016.

The mayor, Luke Bronin, has cut the city’s payroll and negotiated additional savings with labor unions since he took office last year, but he said that “there is a limit to how much you can 
tax an overtaxed city and how much you can cut an underserved city.”

Aetna said it was negotiating with several states for a location of its new headquarters and hoped to have a decision by 
early summer. Credit Jessica Hill for The New York Times

Moody’s downgraded Hartford’s credit rating to junk status last fall, and said it was considering another reduction. A significant factor will be how much additional aid the state will give to Hartford, but state lawmakers have struggled to pass their own budget amid soaring pension payments and declining tax revenue.

Without help from the state, Hartford will have “a hard time paying what they need to pay,” said Leonard Jones, head of local government ratings for Moody’s. “Their wiggle room is bare.”

Aetna’s announcement underscored how Hartford’s deep-seated problems contribute to another: The midsize city finds itself struggling to maintain appeal for young professionals lured by the pull of larger and more dynamic cities.

“Hartford is not ever going to be New York or Boston,” Gov. Dannel P. Malloy, a Democrat, said in a statement in response to the company’s potential move.

Mr. Malloy, who has written two letters to Aetna lobbying it not to leave Hartford, said he had repeatedly made clear how much the company meant to the state and was willing to match any incentives offered by another state.

“It is my own opinion that this has more to do with their desire to have executive leadership operate in a larger, more vibrant urban center than Connecticut can currently offer,” the governor has said.


A street artist who calls himself ARCY worked on a mural of Mark Twain, who once spoke of Hartford as “a city whose fame as an insurance center has extended to all lands.” Credit Jessica Hill for The New York Times

The Hartford Courant, in a sharply worded editorial after Aetna’s announcement, called on elected officials to provide a plan to end the state’s financial troubles and ensure a more thriving future.
“The state’s persistent financial woes and refusal to recalibrate to 21st-century realities have been pushing out people and businesses for years,” the editorial said. “If anyone is still dreaming that all of the state’s problems will be solved with a drive-by casino, legalized marijuana and a few highway toll cameras, they need to wake up.”

Not everyone has given up hope.

Christopher J. Swift, the chief executive of The Hartford, an insurance company whose history dates back over 200 years, pointed to some initiatives that he believed could begin to revitalize the city. They included the construction of new apartments and a proposed new campus for the state university downtown.

“I don’t know if ‘Insurance Capital of the World’ is really necessary or needed for us to carry on our mission,” he said. “I’m bullish on people being attracted to a smaller version of New York or Boston if they want an urban life.”

Bill Breetz, 76, a retired lawyer, spoke with a reporter at the stately stucco house in the city’s West End where his family has lived for nearly 50 years.

“You can’t walk down the street or go to a party without meeting someone who works in the insurance industry,” he said.

Still, he said his wife had never fully taken to the city, even as they raised three children here.

“So it would be easy to convince her that it’s time to get out,” he said. “But we’ve got a wonderful neighborhood. There are all kinds of folks we’ve known forever.”

A version of this article appears in print on June 12, 2017, on Page A19 of the New York edition with the headline: Aetna’s Relocation Plan Cuts Deeply in Hartford.

1 comment:

  1. Just another example of mandates, employees cost and an unwillingness to modernize setting another area of the country in distress.
    This is going to continue as unfunded pension plans, over-promised under-delivered services and an over privileged school system are killing this country.