After 164 Years, Aetna Is Leaving Connecticut For New York

Tyler Durden's picture

While the public's attention is keenly focused on whether Illinois will reach a budget deal in the next 2 days ahead of the next fiscal year which begins on July 1, avoiding the first ever downgrade to junk for a US state as the state piles up some $15 billion in unpaid bills and now oews more than $800 million in interest on the unpaid balances alone, the financial peril facing Connecticut is just as dire.

We laid out the big picture one month ago in "Connecticut State Capital Prepares For Bankruptcy Amid Collapse In Hedge Fund Revenue." And now, as the state rushes to iron out its own budget deal ahead of the June 30 deadline, another major hit for the fiscally challenged state has emerged because one of the state's most reliable sources of corporate tax revenue, Aetna, is leaving Hartford and moving to New York.

According to the NYT, Aetna, the insurance giant founded in Hartford, where it has been for the past 164 years, announced Thursday that it would move its headquarters to New York City despite intensive lobbying efforts by Connecticut officials. The move is a blow to the company’s hometown, which is facing severe financial problems, and a potential boon for Aetna, which stands to receive $24 million in tax breaks over the next decade, among other benefits, for its new headquarters in the Chelsea neighborhood of Manhattan.

The relocation, which involves 250 current and new executive and digital jobs, bolsters New York City’s vision of itself as an emerging digital powerhouse, but also continues the erosion in Connecticut of an industry that has long been an economic engine there. The number of workers employed in the insurance industry in Hartford and the surrounding area has plunged to 37,000 this year from over 60,000 in 1990, according to federal statistics.

According to Empire State Development, New York State’s economic development agency, Aetna will invest $89 million to transform 145,000 square feet in a building on Ninth Avenue into its new home.

The decision to move from CT was likely not easy, although in the end NY provided enough incentives to management to make the switch: efforts to lure the company were highly competitive — Aetna considered numerous cities for its new home, but in the end New York offered one of the most attractive deals. Besides the state tax credits, which are based on the number of new jobs Aetna creates, the New York City Economic Development Corporation will provide nearly $10 million worth of incentives through a combination of property and sales tax credits, among other benefits.

The move is a coup for Mayor Bill de Blasio who said that “New York City is where talent and technology come together" adding that "we’ve never been stronger.’’

The decision comes as a double blow to Hartford, which had agreed to match the package after news broke this year about Aetna’s plan to move, according to the administration of Connecticut’s governor, Dannel P. Malloy. But it was not meant to be: "the company places greater emphasis on creating digital tools for people to manage their health care, being in New York City, with its large reservoir of talent, seemed vital to the company’s future" said Mark T. Bertolini, Aetna’s chairman and CEO.

New York provides “the ecosystem of having people in the knowledge economy, working in a town they want to be living in, and we want to attract those folks, and we want to have them on our team,” Mr. Bertolini said in an interview. “It’s very hard to recruit people like that to Hartford.”

 

"It is a difficult decision,” Mr. Bertolini added. “We have continued to work with the governor and mayor of Hartford to try and improve the quality of life in the Hartford area, but that is too slow in coming.”

While Aetna is moving its headquarters out of the state, about 5,000 employees will remain in Connecticut, although it is unlikely they will remain in their seats for long.

Meanwhile, realizing just how precarious the situation is for the troubled state, a spokeswoman for Gov. Malloy quickly came to Hartford’s defense.

“While Hartford may not be New York City, we are proud of the city’s revitalization,’’ the spokeswoman, Meg Green, said. “Hartford provides a strong foundation for any company in the insurance sector, large or small. From a very deep bench of top insurance talent, to incredible school systems and a high quality of life for employees, Connecticut remains the insurance capital of the world for good reason.”

For Hartford, losing Aetna, a company with a history closely linked to the city (a son of the founder served as the city’s mayor), is not just a crushing blow in terms of revenue, but leaves it with just one major insurance company.

That company, the Hartford Financial Services Group, which has been in Hartford for more than 200 years, isn’t going anywhere, according to its chairman and chief executive, Christopher J. Swift, unless of course some Chinese conglomerate comes in and swoops it up once the moratorium on outbound M&A ends.

The good news, at least for now, is that Hartford remains "bullish on the city", where recent real estate developments could help reverse its economic slide. “We are encouraged by the early signs of revitalization in the city and the more honest assessment and discussion of priorities in light of fiscal realities at the city and state level.” Mr. Swift said. “We are committed to the city, and the state of Connecticut.”

He may change his mind soon, especially if - as some have speculated - a bankruptcy for Connecticut is imminent.

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Too-Big-to-Bail's picture

Connecticut should have had insurance to hedge against this possibility

knukles's picture

Leaving CT for NYC?
You gotta be kidding me.
Years ago the financial industry was flocking to CT due to significantly lower taxes.
CT, like CA has managed to fuck up a gold rush.

froze25's picture

Quick CT keep doing more of what you have been, surely this time it will work.

spastic_colon's picture

yep maybe they should raise their taxes more..............

Stuck on Zero's picture

Maybe the state can "eminent domain" anyone trying to leave.

pods's picture

Ct to NY?  Not exactly a windfall of a move.  Come down South, really good business conditions down here.

pods

playit's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobproplan.com

Endgame Napoleon's picture

Ohhhh, top insurance talent is what they want. Unmmm, really, they just left my state, and they were hiring a constant influx of temps, paying them $10.40/hr, with the permanent staff paid $11/hr.

For years, I got an email every month from multiple, foreign-based and US temp agencies, hiring for the same exact position, suggesting that the turnover was nothing short of extreme.

Most of the insurance companies I have seen hire a combination of unlicensed moms with spousal incomes and unlicensed moms with rent and groceries financed by welfare/taxfare who, likewise, get those yearly Child Taxfare Credits between $3,337--$6,269 to bump up the low pay.

Sometimes, they listed the position at $12/hr. I was the only licensed person in my division and one of a handful with a degree. There were a few good, fastidious workers who worked through the whole day, with no leaving for baby pick up without returning and so forth......

Raymond K Hessel's picture

The days of working like a slave for a corporation are long over. Spend time with your kids. You worked hard and they still left Hartford. Those back office jobs are going to Arizona, Texas or some other low cost, low tax state.

ParkAveFlasher's picture

knukles, the financial industry moving was a (veiled) pretext to obsoleting the human traders.  The same will go for insurers.  The insurance industry is about 30 years overripe for technological upgrade.  It will downsize and modernize with this move. 

Chuck Walla's picture

I guess if you keep machete whacking the Golden Goose like it's an Uber driver, it finally succumbs to the effort.

Endgame Napoleon's picture

Yup, they are automating most of the work, and that is the explanation for the amazing amount of excused absenteeism allotted to mommas who can work for low wages due to rent and groceries covered by spouses, ex husbands or welfare and taxfare. They are not needed at work, hence the reason the momma cliques can leave work a ton with no firing, while bullying out the people who come to work every day and stay all day. That place was not the worst I have seen, though. Some of these so-called workplaces are absolute zoos. The ones that amaze me the most are the sales and sales-related jobs. I always thought sales numbers, including generating accounts, retaining accounts and sales with high margins, were important. They tell you they are. I think it is just important for your boss' bonus, explaining why they compliment you for awhile to keep you selling a lot and then churn you. Individual, non-managerial salespeople are a dime a dozen and are, likewise, quickly being automated out of jobs for the most part. Beyond management, the salespeople who get paid anything are often the ones involved in generating business and jobs overseas.

AGuy's picture

I am sure Aetna move is also because of Hartford soaring crime rate. Not a safe place to work.

I agree NYC is a dumb place to relocate to. NYC seems to have a lot of problems running its subway this year. NYC has some severe infrastructure problems that are only getting worse.

I think CT will soon have more high profile companies leaving. CT is another Detroit in the making.

Endgame Napoleon's picture

There are tons of females in NYC, including mommas who do not need high enough pay to cover housing costs. New York City is majority female. Why do you think so many women can afford the exorbitant rent in that city: pay per birth from Uncle Sam and the US Treasury Department in cases where there is no spousal income or insufficient child support to cover the momma-clique workers' major household bills.

Free Section 8 rent

OR an amount off of rent in nicer, safer areas of the city, available in so-called mixed-income units

Free EBT groceries

Energy assistance

Cash assistance, although the insurance employees who work more than the required 20 hours per week, which is the work requirement for welfare, would go over income limits for this freebie

Child Tax Credit ($3,337--$6,269) -- lump-sum cash reproduction reward each April

Their low insurance wages

Daycare assistance, making it nearly free

Help from a boyfriend with untraceable income

Help from grandbaby-fever grandparents

A variety of charitable giving for working families

Unlike the childless women, like me, who get none of that free stuff, the momma-clique employees also do not have the recurring expense of insurance licensing. The insurance companies or, specifically, the states dump that requirement on the people they pay straight commission with no benefits.

Producing more workers to compete with robots for future jobs pays a lot more than hard work.

JRobby's picture

CT is D & D (done and delusional)

If you walk into the tax office (Branford, CT) to get the forms to protest your "assessment" they mock you. Filthy bastard cunts.

They think that some other $$$$$ (offshore, stolen, laundered) will swoop in and scrape your old house and put up something they can tax at $50k vs. the $25k they are hitting you for, mocking you for. So that their "boss" stays in power and gives you a raise.

Bigly's picture

Branford?  Creeker?

ZH is a small world...

MagicalUnicornFarts's picture

Why don't we offer IL and CT to China to pay off the debt? Hell, throw in Detroit! We can make a big, beautiful wall around all three areas

 

 

CheapBastard's picture

Wait until some of the Big Companies exit Shitcago.

 

It's still a mystery why Boeing moved from Seattle to Shitcago? They could have chosen a more hospitable place like Houston.

And all those HQ's lof various meidcal and legal groups. Why Shitcago? It's a dying city.

Vardaman's picture

Boeing moved to shitcago because their execs didn't want to have to fly up from Tulsa to suck Bath House Barry's dick...

scraping_by's picture

No mystery. Same reason Con Agra moved from Omaha. It's the CEO's home.

I mean, what's the point of being the boss if you have to move to take a job. like some plebe. A lot easier to move a few thousand worker bees than to look for a new house.

Tom Servo's picture

That shitstain Charter Communications moved their corporate presence from St. Louis to Stamford CT for the exact same reason.  CEO wanted a 10 minute limo ride to the office instead of moving to god forsaken Missouri.

youngman's picture

I worked hard to get United to Denver.....now I laugh..and I have not flown them for over 20 years

 

Anon2017's picture

Lots of dying going on in Chiraq. Latest homicide count as of 6/28: 333 vs 330 same time in 2016 and last year was the worst year for homicides in about 2 decades.

AGuy's picture

"It's still a mystery why Boeing moved from Seattle to Shitcago? They could have chosen a more hospitable place like Houston."

Houston. I recall back from the 1970s a famous transmission: "Houston, We have a problem". Houston isn't an improvement over Chicago, and that god awful stench in Houston.

If I recall correctly, Boeing relocated to Chicago because the CEO at the time had familiy there, or something like that.

Never One Roach's picture

But Houston has only 2-3 homicides/night, 90% dindu on dindu whereas Chicago has 5-6/night.

AGuy's picture

LOL! Yeah that does sound better /sarc

COSTA.RICA.RIC's picture

YUP. BOEING IS NEXT TO LEAVE.

Vardaman's picture

The ol "We still care for each other a lot" amicable divorce.  Har...

2ndamendment's picture

Yeah, because New York City is so much cheaper to do business in than Hartford. Aetna, you should have chosen Des Moines, Dallas, or Charlotte.

koaj's picture

NYC and NY State gave them 10s of millions in incentives. makes it cheaper. Hartford is a shit hole anyway

ParkAveFlasher's picture

It's cheaper after you downsize, consolidate, and standardize via technological upgrades, hint hint

Omen IV's picture

commuting from a home in CT to NYC is easy so the staff remains intact - easier managment decision for continuity than a Dallas or NC

Bigly's picture

Hartford is not commutable to nyc. Drive in 1-2 times a week.. yes. 

No high speed rail. This is what Hartford needed. A bullet train BOS HFD NYC. One stop in HFD. This effectively would have made it part of commutable jobs in 2 other mkts.

Instead there was a hfd to New Britain bus. Morons 

markitect's picture

Because its not a dying city.  The doomtards around here are mindnumbingly ignorant.

Juggernaut x2's picture

surrounded by jews and Puerto Ricans- fantastic

ddtrader's picture

left CT 7 years ago...haven't looked back...they are finally running out of other peoples money

onewayticket2's picture

People in FFLD County are waking up....and leaving.  I've been saying it for years, but people are now openly discussing the game of musical chairs that is on....and they are realizing that all the State's probelms are going to be paid for....by them.

it's not far from "stampede" status.

shovelhead's picture

You'll know it's really bad when people in Bridgeport start leaving...

onewayticket2's picture

no.  that's just it.  Bport is growing.  Greenwich is shrinking.  a bad combo.

 

the State touts aggregate numbers as "not bad", but break it down and the story is DISASTEROUS from a revenue standpoint AND a cost standpoint.  both going in the wrong directions.

Dumpster Elite's picture

I'm thinking that the solution for Conn. is to raise taxes (and redistribute the money). That'll make people happy.

RICKYBIRD's picture

Yup. See my post above. They did it 4-5 years ago.

AGuy's picture

"I'm thinking that the solution for Conn. is to raise taxes (and redistribute the money). That'll make people happy."

They are still doing it. Malloy is pressing for a Hospital tax on the assumption that Hospitals can't leave the state. State is also dumping its pension deficits on cities & towns, so they will be forced to raise property taxes.

also coming are more retro taxes where they start billing people and companies for income that were previously taxed:
http://www.yankeeinstitute.org/2017/04/connecticut-bill-would-retroactiv...

Bigger sales tax too:
https://ctmirror.org/2017/06/22/sales-tax-hike-remains-in-play-as-ct-bud...

In CT, the sky is the limit when it comes to tax increases. The phrase "Its going to the moon" does apply to CT taxes.

As the taxes pile on its creating a feedback loop as more people and business leave the state, forcing even more tax hikes.

I think CT will be the next state after Illinois that is forced to file for bankruptcy, but it will be a close race betweeen CT,NJ,PA,WV. I am pretty certain that IL will be the first to file Bankruptcy protection.

RagaMuffin's picture

Not far enough south, me thinks

Ban KKiller's picture

CT, too corrupt for an insurance company? That's the laugh of the day! 

brushhog's picture

Its funny how Liberals understand tax breaks as econmic incentives only when it comes to multi-million dollar businesses. For the rest of us, it's "Fuck you, pay me".

Juggernaut x2's picture

So where does NY make up the difference on tax breaks to corporations- by fucking homeowners on property taxes and jacking up income taxes

AGuy's picture

"So where does NY make up the difference on tax breaks to corporations- by fucking homeowners on property taxes and jacking up income taxes"

NY will a higher revenue as business relocate. Atnea will still pay some taxes and will create new Jobs, thus helping NY finances. The only way to cut over all taxes in NY is to lower spending.

That said NY is fighting a losing battle, since People and Business already located in NY are leaving at a faster pace than CT companies relocating to NY. Siphoning off CT companies is just delaying the exodus from NY.

MedicalQuack's picture

Hey they get more access to hire quants in NYC, Quants are running the health insurance business folks.  Said that in 2014, they model the policies, actuaries died.  It's all about connecting the value of the stock to the policies we buy. 

http://ducknetweb.blogspot.com/2014/10/data-scientistsquants-in-health.html

Cardinal Fang's picture

In other words, the CEO said "There are a lot more pajama bois and unstable transgendered in NYC who will work for nothing to be close to their gay cultural nirvana"

CT showcases the propaganda about how the republican party is the party of the rich, yet all the rich motherfuckers are democrats and so are their lackeys on the street collecting subsistence wages and /or welfare, while the middle class is trapped in a shithole spiral of out of control .gov tax and spend economy.