At the end of February, Hartford Life (a division of The Hartford Financial Services; Hartford) finalized its estimated $500 million acquisition of CNA's (Chicago) group life, accident and disability insurance business by completing conversion of the acquired business onto The Hartford's systems.
This "core conversion" -- which involved merging former CNA systems with The Hartford's case management, billing, claims, commissions and data warehousing systems -- began in June 2004 after a six-month period during which The Hartford evaluated its post-acquisition systems options, designed its future state application profile and built the infrastructure required to support it, says Jean Conaty, vice president, business technology solutions, Group Benefits Division (GBD), The Hartford. Then "we essentially lifted and ported the roughly 120 applications that needed to be brought over," she says. "[At the same time], we were moving 31 field sales offices." Over the course of 18 months, more than 22,000 cases and 134,000 claims were converted, says Conaty. And though the precise costs are difficult to calculate, "the total organizational costs" surrounding the acquisition were about $75 million, 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 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.
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 GBD's staff increased during the integration, but it was able to avoid engaging a full-scale consultant. 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. "We were very lucky to be able to do this internally." -- Anthony O'Donnell
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