Massachusetts Massachusetts Mutual Life Insurance Company has agreed to pay $400 million to acquire the Hartford Financial Services Group Inc. (NYSE:HIG) retirement plans business.
MassMutual, Springfield, Mass., says it hopes to close on the deal by the end of the year. It has focused on serving midsize plans and now manages about $66 billion in assets for 1.6 million participants in 7,600 plans.
Hartford Financial, Hartford, has served small and midsize retirement plans. It has been managing about $55 billion in assets for 1.5 million participants at 33,000 plans.
Hartford has a much bigger share of the government employer plan market than MassMutual does, MassMutual says.
Elaine Sarsynski, an executive vice president at MassMutual and head of the company’s retirement services division, would manage the integration of the Hartford retirement business into the MassMutual retirement services division, MassMutual says.
Roger Crandall, chairman of MassMutual, says completing the deal should help the company expand into new sectors, double the number of retirement plan participants it serves, and add complementary distribution capabilities.
Hartford has announced plans to sell both its retirement plans business and its individual life business.
Hartford recently agreed to sell its Woodbury Financial Services Inc. broker-dealer arm to Amercan International Group Inc., New York (NYSE:AIG).
Hartford Chairman Liam McGee says his company wants to focus more sharply on insurance underwriting, generate capital and cut expenses. Hartford says it is keeping its group benefits products business.
Barclays was MassMutual’s financial advisor and Skadden, Arps, Slate, Meagher & Flom L.L.P. was the legal advisor.
John Nadel and other analysts in the New York office of Sterne Agee say the price for the Hartford retirement plans unit is “modestly above” their expectations.
Hartford will probably announce the sale of the individual life business next, and it also could announce deals for its fixed annuity business and its Japanese variable annuity business, the analysts say.
Selling the retirement plans business could free up $600 million in statutory capital, and selling the life business could free up $1 billion in statutory capital, but Hartford will have to get permission from state regulators to use the freed-up capital to buy back stock or repay debt, the analysts say.