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Buying Binge

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The Hartford is on a buying spree. In December, Simsbury, Connecticut-based The Hartford Financial Services Group acquired three businesses–TopNoggin, Sun Life Retirement Services, and Princeton Retirement Group–to beef up its retirement plan services business.

Jim Davey, senior VP and managing director of the Hartford Retirement Plans Group, says that while The Hartford has rapidly grown its retirement business organically over the last five or six years, the financial services firm just couldn’t pass up the chance to grab the three companies because they not only helped add scale to its retirement plan business, but they also helped enhance the company’s product offerings while also injecting it into a new market.

For instance, purchasing TopNoggin, a Powell, Ohio-based defined benefit and administrative consulting firm, allows The Hartford to offer defined benefit capabilities. TopNoggin has 50 defined benefit plan clients spanning $4 billion in defined benefit plan assets and touching 375,000 retirement plan participants.

While large firms are over all trying to rid themselves of DB plans, the administrative side of the DB business is actually growing, Davey says. Large firms that have closed their DB “plan to their [existing] employees and new employees still have the administration of the existing plan,” he notes. Also, on the smaller business end, cash balance plans, which are a hybrid form of DB plan, are growing as well.

The Hartford now has access to TopNoggin’s proprietary technology that tackles the expensive, time-consuming, and cumbersome tasks of data management, administration, and benefit calculations. The technology allows The Hartford to provide its clients with the ability to provide plan administration and connectivity to their DB and DC benefits for their employees on one platform, Davey says.

Tom Foster, national retirement plans spokesperson for The Hartford, adds that most advisors have, for instance, typically offered their small business owner clients a straight profit sharing plan. Going forward, if advisors want to provide retirement plan solutions to these small business clients, he says, they must align with providers like The Hartford that have the services and can help them develop a strategy that provides support for both defined benefit and defined contribution plans.

As it stands now, The Hartford’s Retirement Plans Group is one of the company’s fastest growing business segments, with 2006 deposits of $5.5 billion, an increase of 23% over the prior year, and net income of $109 million, an increase of 45% over the prior year. In 2007, The Hartford “had almost 4,000 advisors do a 401(k) plan with us,” Davey says.

Adding Admin and Private-Label Expertise

With the acquisition of Boston-based Sun Life Retirement Services (U.S.), Inc. from the U.S. division of Sun Life Financial Inc., a provider of recordkeeping and administrative services to defined contribution plans (formerly known as MFS Retirement Services), The Hartford adds $17 billion in retirement plan assets across 6,000 plans and 465,000 retirement plan participants to its business. “I believe [Sun Life] has great advisor loyalty in that business group,” Davey says. “This acquisition has a very good distribution in the 401(k) space–in the small, mid, and large market, which was very attractive,” he adds. Plus, “in one move we gained 400 experienced retirement plan administrative folks.” The Hartford also gains an administrative office in Phoenix, he says, noting that the company “hasn’t had a West Coast presence for administration; that was attractive for our multi-site strategy.”

Eventually both the Sun Life and TopNoggin brands will be re-named and fall under The Hartford Retirement Plans Group. But the Princeton Retirement Group (PRG) will be rebranded under another name besides The Hartford so that “it’s a standalone business,” Davey says. In acquiring the defined contribution recordkeeping alliance business of Atlanta-based PRG, The Hartford now has “the private label capability,” Davey says, which allows the financial services firm to be the back office for large institutions’ 401(k) products. The alliance business of PRG is owned by Merrill Lynch, and The Hartford says the close of the transaction is expected to occur during the first quarter of 2008. The approximately 200 alliance business employees will be offered positions with The Hartford. In addition, the company intends to maintain its current offices in Atlanta and Winston-Salem, North Carloina. With the PRG transaction, The Hartford adds an additional $7 billion in retirement plan assets across more than 720 plans and approximately 170,000 plan participants.

All three of the acquisitions “helps us fill out our ‘no-gap strategy’ for advisors,” Davey says. “Any opportunity that presents itself to advisors, The Hartford has the ability to service that client with you.”

Washington Bureau Chief Melanie Waddell can be reached at [email protected].


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