(November 27, 2013) – Verizon Investment Management—one of the most innovative and active corporate pensions in America—has promoted from within to replace retiring CIO Ron Lataille.
Brady Connor, previously the pension’s chief operating officer, has been promoted to president and CIO effective immediately. Connor has been with Verizon since 1996 in a variety of executive leadership positions. He holds a BA in finance from New Mexico State University, and an MBA from Oklahoma State University.
Lataille had led the pension system since 2010.
Verizon has long been known as a pension innovator and talent incubator. Before Britt Harris led the massive Teacher Retirement of System of Texas, he oversaw Verizon’s billions in employee benefit assets as CIO. Harris is set to be awarded aiCIO’s Lifetime Achievement Award next month. Another award winner—2012’s Innovator of the Year Robin Diamonte—cut her teeth under him at the telecom firm.
Few corporate pension plans in America has de-risked as fast or as fully as Verizon. In August 2012, it emerged that the telecom giant had hired Goldman Sachs Asset Management (GSAM) to handle its nearly-$11 billion private equity and real estate portfolio. GSAM, which had managed pension assets for Verizon since 1992, was given a mandate encompassing manager selection, portfolio construction, and risk management.
“The partnership with Verizon gave us the opportunity to really extend our team,” said Chris Kojima, GSAM’s head of alternatives, in a 2012 video. “It gave us the opportunity to provide our people, our process, our technology—really our scale—so that they could have an efficient solution in private equity.” The contract was a major win for GSAM, the firm’s head of institutional business Craig Russell acknowledged in the same video: “Verizon, given the size of what they were looking to do, and the context of what they wanted us to do, gave us a great opportunity to take a leading role in the advisory business.”
Two months after the news it had outsourced its private equity portfolio, Verizon announced a deal with Prudential to offload $7.5 billion in liabilities through a bulk annuity purchase.
“Upon closing, which is subject to certain conditions and expected by December 2012, the Verizon Management Pension Plan will purchase a group annuity contract from the Prudential Insurance Company of America,” the firm said in a release. “Prudential will then assume responsibility for making payments to the approximately 41,000 retirees covered by the agreement.”
Verizon’s deal followed close on the heels of Prudential’s blockbuster $26 billion pension buyout from GM, making it one of the largest annuity purchases ever made.
No deals on a similar scale have materialized in the US corporate pension space since then, but there was much talk at the time of a new paradigm beginning. However, the litigation ignited by Verizon’s deal may have made the strategy less appealing to prospective plan sponsors. The suit was filed by plan members in late November 2012, just days before the pension-risk transfer to Prudential was set to go through. The attempt to block the deal failed, and a judge dismissed the class action suit in the months after.
In the wake of de-risking, litigation, and landmark deals, Connor will take over a plan on relatively steady ground.
—Kip McDaniel & Leanna Orr