Column: Atlanta Life going back to the fundamentals
By Maria Saporta
Friday, May 25, 2012
Atlanta Life Financial Group, a 107-year-old African-American-owned company, is going back to its roots.
The financial services firm plans to refocus its business strategy on its insurance business. That is part of a new strategic plan that’s being implemented by Bill Taggart, who became Atlanta Life’s new CEO in July 2011.
“We plan to recapitalize our insurance company,” Taggart said. “It’s time for us to get back to the fundamentals — our insurance business.”
At the company’s annual meeting on May 16, Atlanta Life Chairman Egbert Perry chimed in: “We are very much focused on our core business.”
But Atlanta Life will not be returning to selling life insurance door-to-door to African-American families. Instead, it will focus its business model on being an aggregator of insurance products from a variety of sources. It also has been successful in the reinsurance business.
That’s not all. One of its business units — Herndon Capital Management — has been extremely successful with its funds, and that has been an area of growth for the company.
“Herndon Capital Management has really done an outstanding job,” Taggart said. “It has four products, and they are all performing in the top quartile. It’s all about performance and competency.”
One unit, however, that has been struggling is Jackson Securities, the bond underwriting firm that was founded by the late, Atlanta Mayor Maynard Jackson 25 years ago and was sold to Atlanta Life in 2007.
Taggart said that both the insurance company and Jackson Securities had experienced financial losses in 2011.
“We are looking at all our strategic options for Jackson Securities,” Taggart said in an interview following Atlanta Life’s annual meeting. “Last year was a tough year for the municipal bond market.”
Taggart went on to say that Jackson Securities is undercapitalized. The options include “recapitalizing it ourselves or partnering with other firms.”
Without going into details, Taggart said he is in conversations with potential partners, and he plans to make a recommendation to the board “sooner rather than later” on which option will be best for Atlanta Life.
“This is a very competitive business,” Taggart said. “We are going through a strategic review. This is a perfect time for us to make a strategic call in regards to the future direction of Jackson Securities. Timing is of the essence.”
Already, Atlanta Life has entered into an agreement to sell its headquarters at the corner of Courtland and Auburn avenues to Georgia State University, a move that recently was approved by the University System of Georgia’s Board of Regents. The proceeds from that sale will be reinvested in the insurance business.
Taggart said that the company is looking at office space in three or four downtown buildings, and it is quite likely that Atlanta Life will end up on Peachtree, which is where Atlanta Life was founded by legendary business leader Alonzo Herndon in 1905.
In fact, the Alonzo F. and Norris B. Herndon Foundation continues to own 73 percent of Atlanta Life’s stock, and the boards of the company and the foundation have at least two overlapping directors.
Perry said plans are to increase the number of Atlanta Life’s directors from six to nine, and it is currently considering attorney W. Pitts Carr as a new board member. Carr would be the second non-African-American director to serve on Atlanta Life’s board. Former Georgia Gov. Roy Barnes joined the board late last year.
That is part of the company’s broader strategy — to serve diverse populations.
UPS CEO Davis speaks
The Georgia Council on Economic Education celebrated its 40th birthday in style. The organization held its annual meeting May 18 at the Federal Reserve Bank of Atlanta, and several of its closest friends attended.
The keynote guest was Scott Davis, CEO of United Parcel Service Inc. (ranked No. 52 on the Fortune 500 list).
Davis previously had served as chairman of the Georgia Council. He also has been chairman of the Atlanta Federal Reserve board.
Current Georgia Council Chairman Gary Price asked Davis about his views of the economy.
“We move about 6 percent of U.S. GDP every day and 2 percent of world GDP every day,” Davis said. “We are doing OK in the United States. We have got to get unemployment down. Asia’s export volume has been the weakest area for us. Challenges come from consumer demand. Surprisingly, our business in Europe is strong.”
When asked about the nation’s tax policy and budget deficit, Davis said he hopes there will be some movement on the Simpson-Bowles recommendations by early or mid-2013. Davis also said that corporate tax reform is on the horizon, and that will help make the country more competitive.
When asked about the economic issues facing the U.S. Postal Service, Davis said it was a sensitive topic because the service is both a customer and competitor. One of its problems is that it has layers of bureaucracy and that impacts its efficiency and decision-making.
“I think they do have to make changes,” Davis said. “In a year or two, you won’t see Saturday service.”
Home Depot annual meeting
At the annual meeting of The Home Depot Inc. on May 17 at the Cobb Galleria, shareholders appeared relatively content and respectful.
Home Depot CEO Frank Blake showed charts on how Home Depot has been able to improve its financial profile at the very time when U.S. consumers are investing less money in their homes.
There were several shareholder proposals, many reintroduced from previous years, but all were defeated. They included the company disclosing more of its equal opportunity data, having more transparency on its charitable contributions and the company adopting a stormwater management policy for its lawn centers.
Blake politely listened to several comments and questions, and his answers were brief and to the point.
There was a shareholder who talked about a boycott against the company because it did not oppose the legalization of gay marriage.
To that, Blake responded: “We are and remain committed to an inclusive work environment.”
Then shareholder Christine Jantz of North Star Asset Management stepped up to the mic and said: “As a married lesbian from Massachusetts, I would like to express thanks for that statement.”
Overall, shareholders were pleased with the direction of the company.
Darden Foundaton gifts
The Darden Foundation, the charitable arm of Darden Restaurants Inc., recently awarded more than $1.7 million to nearly 900 nonprofit organizations in communities across the country.
The “Inaugural Restaurant Community Grants” program awarded a total of $78,000 grants to 30 organizations in metro Atlanta.
The Boys & Girls Clubs of Metro Atlanta received $24,000; and the Atlanta Community Food Bank received a grant for $7,000. Other grants went to the Food Bank of Northeast Georgia, North Fulton Community Charities, the Gwinnett County Public Schools Foundation and the Elachee Nature Science Center.
Darden’s restaurants locally include Olive Garden, Red Lobster, Longhorn Steakhouse and Seasons 52.
GHCC names officers
The Georgia Hispanic Chamber of Commerce has new officers.
The new chairman is Rick Perez, senior vice president and general manager of TBS Latin America. He succeeds Rene Diaz, chairman and CEO of Diaz Foods.
The chair-elect is Gabriel Vaca, director of strategic account sales international products at United Parcel Service Inc.
The vice chair is Louis Besses, who is in charge of multicultural marketing for American Family Insurance.