The Hartford Financial Services Group (HIG) has agreed to sell its Retirement Plans business to Massachusetts Mutual Life Insurance Co. for $400 million, the Hartford, Conn.-based company announced Tuesday.
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 Hartford expects the transaction to have no material impact on its GAAP financial results and to benefit net statutory capital by approximately $600 million, including a ceding commission and a reduction in required risk-based capital, on closing.
Early this year, after a weak first-quarter earnings report and a 39% drop in HIG stock in 2011, the hedge fund manager John Paulson pressured The Hartford to sell off its units. Paulson & Co. retains an 8.4% stake in The Hartford, making it the largest shareholder. Paulson filed a Schedule 13D in February with the SEC in an effort to force The Hartford’s hand in taking quick action to break up its property and casualty and life insurance units. The life unit includes The Hartford’s wealth management, mutual funds and annuities operations.
“The agreement marks the second of three planned business sales as we continue to make good progress executing on our strategy,” said Liam McGee (left), chairman, president and CEO of The Hartford, in a statement released Tuesday. “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.”
The Hartford and American International Group announced in July that the insurance giants had signed a definitive agreement to make HIG’s independent broker-dealer, Woodbury Financial Services, part of AIG’s Advisor Group. The Hartford said on March 21 that it would exit the variable annuity and life insurance businesses to focus on its property and casualty insurance business.