A list of the leading U.S. issuers of life and annuity business created in 2005 would have looked pretty much like a similar list compiled a century earlier
Established distribution networks, complicated regulations and sheer size built formidable moats around the big gorillas.
MetLife Inc. put its individual life and annuity operations in a separate, stand-alone company, Brighthouse Financial Inc. Some other big players have sold or realigned their annuity operations.
Now, Hartford Financial Services Group Inc. has announced plans to sell Talcott Resolution, the unit that holds its runoff annuity business, for $2.05 billion, to an investor group led by Henry Cornell and Cornell Capital L.L.C., by June 30, 2018.
Talcott Resolution oversees three life insurers that were once major sellers of new individual annuities, and which continue to oversee blocks of annuities with a total of about $149 billion in account value: Hartford Life Inc., Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company.
In regulatory filings, Hartford Financial shows that, officially, the investor group consists of three “Hopmeadow” companies: Hopmeadow Acquisition Inc., Hopmeadow Holdings L.P. and Hopmeadow Holdings Group L.L.C.
Representatives from Cornell Capital and the Hopmeadow companies were not immediately available to comment on the deal announcement, and they did not participate in a conference call Hartford Financial held to discuss the impact of the pending deal on Hartford Financial.
Here are five open questions about the deal.
1. What is Hopmeadow?
Henry Cornell is a former vice chairman of the Goldman Sachs merchant banking division.
He started Cornell Capital in 2013, and another company in the Hopmeadow group is TRB. TRB was part of the group that acquired XL Group’s life reinsurance business in 2014.
Rating analysts at S&P Global Ratings say they want to learn more about the proposed new ownership before weighing in on how it might affect the finances of the life insurance issuers involved in the deal.
2. What does the Hopmeadow group want to do with Talcott Resolution?
Hartford Financial says that the new owner would inherit about 400 of its employees in Windsor, Connecticut, and Woodbury, Minnesota, and that the arrangement would help provide continuity for its annuity holders and employees.
But Hartford Financial did not include any statement from Henry Cornell or other individuals or entities associated with the Hopmeadow group in the deal announcement.
S&P says in its comment on the announcement that it wants to get an understanding of the Hopmeadow group’s intended strategy and capital adequacy.
3. Could the Hopmeadow group ever get the business it acquired back into the business of writing new annuities?
Bloomberg reported that Henry Cornell says the investor group could make more deals, but Cornell and other group members do not seem to be talking about whether they have any interest in actively writing new life insurance policies or annuity contracts.
—Read Fed Policies Aren’t to Blame for Distorted Asset Prices on ThinkAdvisor.