While Boston’s financial district reels from the national economic plunge, 100 miles to the south, an entire capital city is questioning its future.
Hartford, Conn. is a town with insurance in its bones, where giants of the industry cluster together in a close corporate neighborhood.
The Travelers Cos. towers next to the Phoenix Cos., which is a stone’s throw from AIG-owned Hartford Steam Boiler. Buildings housing the Aetna and The Hartford employees are close enough on Farmington Avenue that if they were actual neighbors, they’d borrow sugar and eggs from each other.
Meanwhile, ING – with a major office in nearby Windsor – bedecks Hartford with its signature orange color when it hosts the local marathon in the fall. Locals watch college basketball in the XL Center during the winter months, within view of that insurer’s local offices.
Those companies are many of the same names that have been splashed across financial newswires in the past month, often associated with the words “plunge,” “sink” or “loss.”
It’s unwelcome news for not only those companies, but for the city itself, much of which is owned by Boston companies such as Northland Investment Corp. and New Boston Fund. Connecticut’s capital isn’t just known for insurance – within the state, it’s notorious for crime and poverty problems, even as it works toward redeveloping into a thriving urban center. With insurance such a major force here, local officials are preparing for more possible bumps as the economic retraction continues.
“You’d have to have your head in the sand not to be concerned,” said Oz Griebel, head of the MetroHartford Alliance.
The alliance is the regional chamber of commerce, and has worked with the city on education and anti-crime initiatives in addition to business expansion. But its latest heartbreak arrived earlier this year when Bradley International Airport lost a much-celebrated direct flight to Amsterdam only about a year after gaining it.
The alliance will simply have to scale back its projects, as well as its expectations for this year’s legislative session, Griebel said, while the alliance’s member companies ride out the storm.
Keeping hunkered down – while trying to manage their employees’ and investors’ fear level – is officials’ and executives’ favored strategy, even while companies go through very visible turbulence.
“Financial services has to be very guarded and very careful with not only how the economy is going, but also with how the consumer is [viewing] those industries,” said John Tirinzonie, state labor economist.
Employees for local companies like The Hartford, Aetna or The Phoenix Cos. have been coached to refer media questions to spokespeople, rather than talk freely about any fears buzzing around their cubicles.
Official statements from the companies themselves emphasize their financial sturdiness and optimism. Last week, Connecticut Insurance Commissioner Thomas Sullivan issued a statement reassuring the public that The Hartford’s financial strength remained “solid,” and in an interview, Sullivan said his regulators were actively monitoring insurers’ capital levels.
“The events of the day have necessitated that we look at all our insurance companies,” he said.
Hartford Steam Boiler, meanwhile, is up for sale from parent company American International Group. One spokesman said although employees were understandably concerned about their futures, the sale was viewed as “a new opportunity” by the management there.
Other companies bring further mixed news: This week, XL Capital, which has significant operations in Hartford, said it expected more than $1.65 billion in investment losses for the third quarter, while Travelers anticipates $1.05 billion in losses for the same period.
Tirinzonie said while Connecticut’s employment outlook is relatively strong, a continued economic downturn could hit hard for in-state financial services, which makes up an above-average 9 percent of its workforce.
Joan McDonald, commissioner of the Department of Economic and Community Development, said the state understood what was at stake: During the economic downturn of the early 1990s, Connecticut lost 10 percent of its workforce.
But the present-day Connecticut is a different animal, with a much more diverse workforce that includes manufacturing, aerospace, biotechnology and more than 350,000 small businesses.
For now, McDonald said, the state was taking active measures to shore up its finances and guide businesses through the downturn, such as a meeting in late September between the governor and 20 CEOs from Connecticut businesses.
“We don’t operate in worry,” she said. “We operate in realities.”
