HARTFORD, Conn.—Hartford Financial Services Group Inc. has brought in a new perspective on the insurer's problems with its selection of a new leader from outside the industry, many analysts say.

Former banking executive Liam E. McGee's experience heading a complex financial services organization also is expected to benefit Hartford, which observers say is much improved from its situation of a few months ago but still faces significant challenges.

Mr. McGee, who last week was named Hartford's chairman and chief executive officer, previously was president of Charlotte, N.C.-based Bank of America Corp.'s consumer and small-business bank operations (see box, page 35). He succeeds Ramani Ayer, who in June announced plans to retire.

In an interview, Mr. McGee said he has already spent a lot of time with Mr. Ayer to learn about the company and the insurance industry.

“I've been working hard to avail myself of his experience and insights,” Mr. McGee said. “The transition will be seamless and very constructive.” As a newcomer to insurance, “I have things to learn, without doubt, but I'm a quick study.”

While some observers are concerned about Mr. McGee's lack of insurance industry experience, many say it is not necessarily a problem.

“I think it's good to get an outside perspective—someone outside the insurance industry to take a look at the company's profile a little bit differently,” said Mark Lane, a principal and research analyst with William Blair & Co. L.L.C. in Chicago.

Mr. McGee “has a very strong consumer-oriented background,” which is the thrust of Hartford's life business, Mr. Lane said. But it may take longer for Mr. McGee to make a decision on Hartford's direction than someone who has been in the insurance business and has “a view with more conviction,” he said.

“He does have experience in a complex financial situation, which will probably suit him well at the Hartford,” said Drew Woodbury, an associate analyst with Morningstar Inc. in Chicago. “Some of the distribution for the Hartford's annuity and life insurance products is done through a bank channel, so maybe he has some experience” in that area.

John Wicher, principal of John Wicher & Associates of San Francisco, said at this point, “you need somebody coming in who has real expertise in complex financial institutions,” which Mr. McGee has.

Cliff Gallant, an analyst with Keefe, Bruyette & Woods Inc. in New York, said KBW banking analysts liked Mr. McGee. They “thought he was a guy who spoke his mind, has strong opinions, knows how to measure and handle risk, seems like a good leader,” Mr. Gallant said.

According to a Securities and Exchange Commission filing last week, Mr. McGee will receive an annual base salary of $1.1 million plus deferred units under the Hartford Deferred Stock Unit plan at an annual rate of $4.4 million. In addition, when the insurer makes long-term incentive awards to other employees in 2010, he is to receive another $2.7 million in restricted units under the plan.

Analysts say Hartford appears to have stabilized its financial situation, although challenges remain.

While the company all along has been considered to have strong property/casualty operations, financial market turbulence hit its life business—in particular its variable annuity business—as well as its investments in both its property/casualty and life investment portfolios.

Hartford reported a $2.75 billion loss for 2008 and a $1.22 billion loss for this year's first half. To improve its capital, Hartford has received $3.4 billion in federal Troubled Asset Relief Program funds, a $2.5 billion capital infusion from Munich, Germany-based Allianz S.E., and raised $900 million in an August equity offering.

“They're in a much better capital position, just given the government funds they've received,” said Brian Schneider, an analyst with Fitch Ratings in Chicago.

The company has reported that its net unrealized losses declined 29% in July and August, to $8.2 billion before taxes and deferred acquisition costs.

“The company has been pretty clear about wanting to derisk,” including reducing its exposure to the equity markets, which includes no longer writing new variable annuity business in Japan and cutting back on this business in the United States, said Shellie Stoddard, an analyst with Standard & Poor's Corp. in New York.

E. Stewart Johnson, a portfolio manager with Stamford, Conn.-based investment bank Philo Smith & Co., said that while Hartford's capital position has improved, “they've gone through some pains to achieve that. They seem to be extremely aware of the exposure that their annuity business exposed the P/C business to. The capital problem that they're going through right now, that was a tough lesson, but it seems to be a lesson learned.”

Paul Bauer, senior credit officer with Moody's Investors Service in New York, said while he is not yet willing to say Hartford has stabilized, “over the last few months, things have generally been more positive than negative” for the insurer, including raising equity capital and naming a new CEO.

However, Brett Howlett, an S&P securities analyst in New York, had a slightly different view.

“Certainly, they face a lot more challenges than others, just based on the damage” that Hartford brands suffered the past year with the government involvement in the business, he said.

“They generally have a pretty deep bench, but they've lost quite a few good people over the last year,” Mr. Schneider said. “The CEO will certainly have to gain the confidence of management that they're willing to continue to do the work of the turnaround.”

Hartford's stock closed Friday at $25.11, down from the previous week's close of $25.84. Its 52-week low was $3.33.

Editor Regis Coccia contributed to this article.