Michael Kalen, president and chief executive of Hartford Life, the European division of the US investment and insurance giant, is a fan of extreme sports. The New Yorker says part of the attraction to move from the States in April was to be closer to the slopes of Switzerland. Kalen counts white water rafting, deep sea sport fishing and snowboarding among his pursuits.
He says: “Being able to snowboard when you are 40 is quite an accomplishment. Once the tip of your board goes over the edge of that mountain, you are committed. It is just like white water rafting. You go through some easy rapids and then come to a risky stretch of water and there is no turning back.”
Kalen gains satisfaction from achieving something outside of his comfort zone and he draws parallels with business. “I like to run businesses that have a challenge attached to them.”
The Columbia MBA graduate was flattered to be asked to speak at the Gleneagles financial services conference this year, having worked in the European market for just six months. He says he was impressed with the dialogue between the regulator, government and industry. “It was a point of validation that when I spoke and made some comments, they were value-added to the discussion. Those who spoke are not engaged in just window dressing, they actually want to improve things.
“The titles and terminology may be different but I find the issues in the UK are not all that different to the US. I think the industry can do better around professional standards and the form of incentives that are offered. Continuing to work on transparency for the client will yield better results.”
During his first three months at the helm of Hartford Life – which has offices in Dublin and London – Kalen cleared his schedule to talk to advisers and customers about the market. “I love to learn and pride myself on being a good listener. I did not feel I could lead the organisation in they way I want without speaking to the people who help distribute our products and to find out what customers want.”
Kalen brings a depth of experience. When he took over the life insurance business for Hartford in the US, it had seen two years of sales declines. The business model needed to be changed but there was no guarantee that the decline could be turned round.”
His tenure saw the division grow by double digits over four years. The individual life division generated $1.2bn in revenue and $170m in earnings in 2006, with 235 sales professionals and the biggest adviser-based sales network in the US. “I took a lot of pride from that. We managed a lot of change.”
With a history going back197 years, the Fortune 100-listed company is the secondoldest life insurance firm in the US but in the UK it is a new player. Success depends on persistence and assuring customers that it is here to stay. “If we say we are here for your retirement, we are here for 30 years. We have to demonstrate that we are staying.”
He says there are a number of things that Europe and the UK can learn from America, particularly on customer service. The company has brought over a model founded on technology and principles that allow “first-call resolution”.
Kalen says: “If you call someone in the States, within a second of authenticating, your entire case file is in front of the call centre representative. The hours, too, that call centres work in the UK are not quite what we have in the States.”
The Hartford is perhaps best known for its embrace of so-called third-way products, already a feature in America for around 15 years. Modestly popular in the mid to late 1990s, the product really took off after 2001. “The stockmarket was rocketing and people were comfortable putting lots of money into it but when 9/11 came along it reminded people of volatility.”
Third-way products offer the best of the two worlds of annuities and drawdown. “They give exactly the same investment performance as a drawdown product while getting the certainty of an annuity but in the case of early death you get your fund value back and customers’ income can grow through retirement.”
Third way allows customers to control their own investment decisions, which is critical, says Kalen, but also guarantee that, regardless of what happens to client accounts, they can withdraw money from their fund.
Kalen says the prospect to promote third way in Europe was too attractive to turn down. “Being able to do that in a new country and a new market is very exciting.”
Born: 1960, Paterson, New Jersey, US
Lives: Malahide, Dublin, Ireland
Education: MBA from Columbia University, New York
Career: 2007-present – president and chief executive officer, Hartford Life; 2005-07 – executive vice-president, Hartford Individual Life; 2003-04 – senior vice-president, sales, Hartford Individual Life; 1982-2003 – starting as financial analyst and leaving as vice-president, sales and marketing, Prudential Securities
Likes: Outdoor sports, snowboarding, white-water rafting, barbecues, pancakes and big breakfasts
Dislikes: Laziness, lateness, failing to realise potential
Drives: Infinity M45
Favourite book: Harry Potter and the Deathly Hallows by JK Rowling
Favourite film: On the Waterfront
Favourite album: A Night at the Opera by Queen
Career ambition: Being number one in the business
Life ambition: Snowboarding on every major continent
If I wasn’t doing this I would be… Captain of a deep-sea sport fishing boat somewhere off the coast of Costa Rica