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Foy has risen to the top finance job at Hartford Life--and he's not even 35. Here's how he did it.
Jennifer Caplan, CFO.com | US
December 14, 2001
David Foy, chief financial officer at Hartford Life (part of the Hartford Financial Services group and the third largest insurance company in the U.S.), is by no means a traditional CFO. For starters, Foy stayed away from accounting in college, chosing instead to focus on math and applied statistics. He didn't work for a Big Five accounting firm, either, and he's not a CPA. Foy says he "caught the financial bug" while working as a staff assistant to the CFO of the New Hampshire housing finance authority, a post he held while still in college. After graduating from the Institute of Technology in Rochester, New York, Foy joined the Washington office of Milliman & Robertson, a national consulting firm, where he worked primarily on pension fund investment and asset-liability management consulting.
Despite taking a less-traveled route to the CFO's desk, Foy has been able to reach his goal at a tender age (he's in his early 30's.) His career really started to take off in 1993, when he left Milliman & Robertson to take a job in Hartford Life's fledgling individual annuity business. There, Foy oversaw product development and financial analysis. The year before he took on those tasks, the individual annuities operation at Hartford Life earned $19 million (after-tax). In 2000, that figure was more like $337 million. Indeed, Hartford Life is now the leading seller of individual annuities in the country-- and observers give Foy much of the credit for jump-starting that business.
In 1995, Foy made the switch from operations to Hartford Life's finance department. In 1997, as assistant vice president, he assumed responsibility for investor relations, helping coordinate the company's successful initial public offering. In 1998, he was promoted to senior vice president and treasurer. Less than a year later, he was promoted to CFO at Hartford Life.
Foy recently spoke with CFO.com's Jennifer Caplan about his rapid rise up the corporate ladder--or more specifically, how a pricer of annuities ends up running the finance department at an insurer with over $155 billion in assets under management.
You took a relatively non-traditional path up the financial ladder. Also, you did not join Hartford Life's finance department right away, but rather opted to go in on the operational side of the business. Was that an intentional choice, knowing you would ultimately move over to the financial side?
I definitely knew I wanted to be a chief financial officer at some point. But you are right, I was initially playing a role in the business, developing products and pricing them. Over time, I moved into the corporate finance area and only later became CFO. I think that approach has proven to be a real advantage, particularly when I meet with investors. In my other roles as CFO, it has really given me a better understanding of the economic model that drives our product. That understanding is crucial for being an effective chief financial officer.
When I moved over to corporate finance in 1995, the old financial shop within Hartford Life was very disconnected from the businesses. All they did was collect the data and report it. What I was asked to do was to connect the businesses with the corporate finance sides so that there was an understanding of what drove the numbers. That seemed interesting to me.
By better connecting to the businesses, we have been able to create a financial organization that is better prepared to deliver timely, accurate and useful information. That has really been my calling here, and it is what I came in to accomplish.
Can you give some specific examples of how you have accomplished those things at Hartford?
When I first got into the corporate finance group, we were a traditional insurance company that took over a month to close its quarterly books, and the monthly information was basically garbage data. We are now at the point where we get the full close of the books within the first two weeks after the close of the quarter. We have been able to produce expense information on the last day of the month, and I am able to get head-count information pretty much on call. That is really important, particularly in a year like this when we've had back-to-back declines in equity markets, and a recession. Having access to timely and accurate information has allowed us to better manage our expenses, avoid layoffs, grow earnings, and still foster the development of our business.
But I don't want to focus purely on getting the books closed, although that is very important. Getting information all throughout the quarter is just as significant. I get daily cash flow information on all of our major sales lines, and weekly reports on the headcount situation.
Most CFOs would probably like to have their pulse on information as it comes in throughout the quarter. The problem, of course, is that in reality, that's easier said than done. What concrete steps can CFOs take to move closer to achieving that goal?
You have to set your mind to it and have patience. Honestly you can't go from an old company attitude to quickly having data overnight. I always try to push further and ask 'Can I get this piece of information any faster than I do now', and just keep asking that question. Another advantage I have is having a partner who wants the information as badly as I do. When you have a guy running the business, like [Hartford Life COO] Tom Marra, who also wants access to daily cash flow information, for instance, that is really what makes things click and move forward. I know many CFOs who don't have that, and that can hold them back.
In 1997 you helped take Hartford Life public. Had you ever managed an IPO before, and what lessons did you take from that experience?
No, I had never done an IPO before. That was the greatest project I have ever worked on in my career because I really got to learn about everything. It was completely on- the-job learning for me. One moment I was working with a big law firm debating a sentence in our disclosure; the next moment I was on the phone with the chief accountant at the SEC talking about how the accounting worked for one of our documents; then I was dealing with a top insurance analyst on a statistical supplement and creating a financial model; and later I was working with the investment bankers to structure the finances of the deal. I really learned more in those eight months than I did at any point in my career until then. It was truly an incredible experience.
One of the challenges for a CFO when his or her company goes public is developing credibility on Wall Street, and doing everything possible to meet analysts' expectations. How do you think CFOs can best manage the balance between pleasing the analysts and maintaining financial integrity?
Trying to go into major-league spin control, at the end of the day, makes you lose credibility. You can always put a PR hat on, but in the long run, that strategy just doesn't pay off. If you try to chase the Street you'll end up in a dead-end. It's really a loser's game. It is absolutely essential to be as straight-forward and honest as possible.
In 1998, you were named treasurer at Hartford Life before landing the CFO position there. What do you think is required of a treasurer who wants to step up to the CFO position?
Understanding the ins and outs of the business is absolutely key. If you are viewed as someone who can just raise capital when it is needed, that's great, but that alone won't get you to the CFO position. You want to help the business and get actively involved with it. I would encourage anybody in that role to jump on any opportunity they can to help come up with solutions for their business.
You are relatively young to be the CFO of one of the largest insurance companies in the country. What do you think have been the keys to your success?
I have been very fortunate. I joined an organization with really good people who not only let me get involved, but wanted me to play a role in helping them make the business better. The fact that I had the opportunity to do the IPO in 1997,… well, that gave me the chance to show what I could accomplish when faced with a mammoth project. We then did an acquisition of a wholesale distribution network, which I also got to lead. That deal was an absolute homerun for us. It was also another major opportunity for me to show what I was capable of.
The final piece of the puzzle was that our president at the time, Lon Smith, a guy in his late 50's, had no problem tapping me to run the IPO and a major acquisition. Then in 1999 he selected me to run the financial organization and put me before the board for the CFO position. He was able to look past my age, and really focus on the ability to get the job done.
The insurance industry was particularly hard-hit by the events of 9/11. Hartford Life posted a $440 million loss in the third quarter related to the terrorist attack. In addition, Hartford Life held a net carrying value of about $92 million of Enron securities in its investment portfolio, and was significantly affected by the energy-trader's collapse. How have you been able to manage through unexpected events of this magnitude?
Fortunately we had good risk management in place before these events occurred. From a financial perspective, we were therefore able to mitigate the effects quite well.
But from a management perspective, we have just had to keep focusing on our growth opportunities. Even when things are not going so well on a macro basis, there are a lot of micro opportunities. Our 401(k) business, for example, is up 64 percent this year. We also made our entry in Japan this year, and are going to sell over half a million dollars there. I then look to next year and beyond. So you can wine and complain about all the negative stuff, or you can stabilize your core businesses, continue to invest, capitalize on the micro-opportunities and look at the next areas of growth.