Hartford Financial Services Group is selling its retirement plan business to
MassMutual Life Insurance Co. for $400 million as part of a larger restructuring it embarked on earlier this year.
“The agreement marks the second of three planned business sales as we continue to make good progress executing on our strategy,” Liam McGee, president and chief executive of the Connecticut-based insurer, said in a release. “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 announced in March it would be focusing on its core businesses of property and casualty insurance, group benefits and mutual funds. The carrier announced in July that it was selling Woodbury Financial Services Inc., its independent broker-dealer subsidiary, to American International Group Inc. That followed the offloading of its annuity business to Forethought Financial Group in April.
The Hartford is also reportedly close to selling its individual life insurance business to
Prudential Financial Inc. That transaction could be worth as much as $1 billion, according to Bloomberg.
The restructuring resulted from pressure applied by hedge funder John Paulson, the largest shareholder of The Hartford Ticker:(HIG). The carrier's shares were trading at just under $18 as of Sept. 4, down 18% from when the restructuring was announced.
The latest deal, which is expected to close in the fourth quarter, will give
MassMutual's retirement plan business a big boost. The company, owned by policyholders and members, will see assets in its plans grow to $120 billion in assets under management, from $66 billion.
MassMutual will service 40,000 retirement plans, a dramatic rise from 7,600. Plan participants will about double to 3.1 million.
The Hartford's strength in the small plan and 403(b) markets were viewed as a good fit with
MassMutual's focus on midsize to large retirement plans.
“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,” Roger Crandall, CEO of
MassMutual, said in a press release.
Elaine Sarsynski, head of
MassMutual's retirement services division, will oversee the transition.
