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Hartford Life's Group Benefits Division races to the conclusion of its "core conversion" of acquired CNA books of business, on time and within budget.

At the end of February, Hartford Life (a division of The Hartford Financial Services, Hartford, Conn.) finalized its acquisition of CNA's (Chicago) group life, accident and disability insurance business by completing conversion of the acquired business onto The Hartford's systems. The deal, worth an estimated $500 million, closed Dec. 31, 2003.

The so-called "core conversion"—which involved merging former CNA systems with The Hartford's case management, billing, claims, commissions and data warehousing systems—began after a six-month period during which CNA provided interim services. During that period, The Hartford evaluated its post-acquisition systems options, designed its future state application profile and built the infrastructure required to support it, according to Jean Conaty, vice president, business technology solutions, Group Benefits Division (GBD), The Hartford. Upon hitting the interim services agreement deadline of June 30, 2004, "we essentially lifted and ported the roughly 120 applications that needed to be brought over," she says. "At the same time we were converting them from CNA infrastructure to The Hartford, we were moving 31 field sales offices."

The acquisition involved work in four key Hartford offices over 18 months, according to Conaty. Among key metrics of the project's magnitude were over 100 testers executing more than 5,000 test cases; the issuing of 500 pages of detailed requirements; 3,000 GBD employees engaged; 6,500 hours spent working through 143 data requirements gathering sessions. In total, Conaty relates, more than 22,000 cases and 134,000 claims were converted during the core conversion project. The precise costs of the project are difficult to calculate, according to Conaty, but she says that "the total organizational costs" surrounding the acquisition were about $75 million.

Conaty says that as part of due diligence for the project, The Hartford came up with a "straw-man" figure for cost. "We were able to better that during the course of the execution," she says.

One of the key challenges faced during the first year of the overall project was achieving the speed at which its objectives had to be accomplished, according to Conaty. The metaphor for the project, Conaty relates, was "The Amazing Race." The pressure began even before the close, since business considerations on the part of CNA determined that the deal close before the end of 2003. That meant, Conaty says, that The Hartford had to build the infrastructure for absorbing 1,200 employees by Jan. 1, 2004.

Minimal Impact
While keeping the project on time at a break-neck pace, Conaty faced a further challenge in ensuring that The Hartford's legacy customers would remain unaware of an undertaking that touched all major systems. "We had to make sure that system performance was maintained," Conaty recalls. "The goal was that no Hartford customers would ever know what happened and that [acquired] CNA customers were minimally impacted."

The Hartford's GBD used staff augmentation during the integration, but were able to avoid having a full-scale consulting engagement. One reason was that, Conaty says, "as part of the acquisition, we acquired an extremely talented IT team in Chicago from CNA." Although the team could not be retained within The Hartford permanently, the carrier was able to keep them engaged throughout the duration of the project. Conaty notes that some of the former CNA employees saw the project through, even working overtime a week before their end dates. Being able to retain that level of commitment from professionals of that caliber was "one of the key success factors" of the project, according to Conaty.

"I think it spoke to the quality of the staff and also to the way The Hartford treated them during the whole process," Conaty remarks. "We were very lucky to be able to do this internally."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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