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Conning, The Old-Line Hartford Insurance Consultancy, Looks To Europe, Asia

By MATTHEW STURDEVANT

May 28, 2012

HARTFORD — With little public fanfare over the last decade, Conning & Co., a Hartford insurance services firm long known for its research, has tripled the amount of insurers' assets it manages — helping to lead an industry shift toward outsourcing.

Conning now manages $88.3 billion in assets for companies in property-casualty, life, and health care, and for pension funds.

The vast majority of the company's holdings are in North America and Bermuda, with small percentages in the United Kingdom, Europe and elsewhere. But now, Conning is on the verge of a global expansion that could raise its corporate profile from Hong Kong to Hartford.

"Our strategy is actually quite simple," said Conning & Co. CEO Woody E. Bradford. "And that is to take a company that only a few years ago was very North American-focused and very focused on a fairly narrow set of investment capabilities, and we've globalized the company with a significant presence in Europe and Asia now."

Conning, perhaps best known for its reports on industry trends and its consulting work, is extending its reach as it celebrates 100 years in business this month. Headquartered in the Gold Building at One Financial Plaza in downtown Hartford, the company was founded in 1912 by William Smith Conning, a native of Slingerlands, N.Y., near Albany.

William Conning moved to Hartford in 1904 to work as an office manager for the investment firm Hornblower & Weeks.

Over the last seven years, the company has grown its Connecticut workforce from 190 to 230 and it also has offices in New York, London, Dublin, Cologne and Hong Kong.

Conning has had some common principles throughout its history, Bradford said. "We're investors; we're focused on the insurance industry and we're passionate about service."

"We are trying to adapt those principles in a set of changing markets, and the changing backdrop is, our clients are becoming more global, and the capital markets that we compete in are more global," Bradford said. "Everything is more connected than it was 10, 20, 30, 50 years ago."

Conning has grown and kept a consistent employee base in Hartford despite changes in ownership. MetLife acquired Conning in 2000 and took the company private. Swiss Reinsurance Co. bought the firm the following year. In October 2009, Swiss Re sold Conning to Aquiline Capital Partners, the current owner.

A sluggish economy, ultra-low interest rates, turmoil in Europe and resistance to austerity measures leading to political unrest have all left investors scrambling to find new ways to get a better return on their investments.

The effect of political upheaval on economies and markest is the focus of two client conferences that Conning is holding for insurers.

"It used to be that many years ago, elections were often determined by how the economy was doing, and so you could often gauge, based on whether or not the local economy was performing well, whether or not an incumbent would do well," Bradford said.

Now, the converse is true, decisions made in elections are influencing local economies and stock markets, he said.

But despite the great uncertainty in Europe, Conning is moving forward on its global strategy.

"We've had good success building our geography," Bradford said. "We have our business launched in Asia. We have a broadening of our business in Europe with a team that joined us there . . . we had a full investment team join us in Europe."

Conning got its license in February from Hong Kong regulators and opened an office in the city's central district. The company's staff there includes two new hires: Mark Konyn as CEO of the Hong Kong joint venture between Cathay Financial Holdings Co. and Conning; and Timothy Matson, formerly head of investments at ING Retirement Services in Connecticut, as chief investment officer for Cathay Conning Asset Management Limited.

The big task before the company is establishing investment potential in equities and bonds for both Europe and Asia. Conning also hopes to offer a new class of investment products, which it plans to announce and describe later this year.

"There are a series of other investment product ideas that we are spending a lot of time on that are specifically tailored to the needs of insurance companies — products that help them address the low-rate environment and products that help them improve their risk-adjusted returns on capital," Bradford said.

Even as the company focuses on international investing and new products, it has large holdings in instruments that have been problematic for other investors since the recession — such as the company's $18.1 billion in mortgage-backed securities as of March 31.

They have not caused problems, the company said.

"Our portfolios hold securities backed by pools of residential mortgages, the payments from which have continued uninterrupted through the financial crisis," said Rich Sega, Conning's chief investment officer on mortgage-backed securities. "We have been and continue to be active investors in this asset class. We have avoided significant exposure to the sub-prime and Alt-A sectors. We are not pulling out of the asset class, but rather we continue to seek out opportunities there."