The Hartford Financial Services Group agreed to sell its Retirement Plans business to Massachusetts Mutual Life Insurance Co. for $400 million in early September. The $400 million cash deal is structured as a reinsurance transaction and is expected to close by the end of 2012, according to The Hartford’s 8-K filing with the Securities and Exchange Commission (SEC).
“The agreement marks the second of three planned business sales as we continue to make good progress executing on our strategy,” said Liam McGee, chairman, president and CEO of The Hartford, in a statement. “With The Hartford’s sharper focus on its historical strength in insurance underwriting, along with efforts to improve expense efficiencies, increase capital generation and reduce market risks, we are on the right path to deliver greater shareholder value.”
Earlier this year, The Hartford signed a definitive agreement to sell its independent broker-dealer, Woodbury Financial Services, to AIG’s Advisor Group. This news came after The Hartford said it would exit the variable annuity and life insurance businesses to focus on its property and casualty insurance business.
The Hartford’s Retirement Plans business, which serves more than 33,000 plans and about 1.5 million participants, is primarily a defined-contribution business, with $54.9 billion in assets under management as of June 30. After the deal closes, The Hartford’s Retirement Plans employees will become part of MassMutual’s Retirement Services Division.
“Our Retirement Services Division has experienced record growth in recent years and is an important contributor to MassMutual’s overall profitability and success,” said MassMutual Chairman, President and CEO Roger Crandall in a statement. “This transaction enables us to accelerate growth into new sectors, add complementary distribution capabilities, and nearly double the number of retirement plan participants we serve.”
As part of the agreement, The Hartford will continue to sell new retirement plans during a transition period, and MassMutual will assume all expenses and risk for these sales through a reinsurance agreement. Between now and the close of the transaction, there are no planned changes with respect to the day-to-day interactions between The Hartford and its Retirement Plans’ distribution partners, plan sponsors and customers.