Massachusetts Mutual Life Insurance Co. announced Monday it will buy the Hartford's retirement plans business for $400 million.
The transaction, which is expected to close by the end of this year, is expected to significantly increase the size of MassMutual's retirement business and strengthen its position as a leading retirement plan provider.
"This acquisition represents an important step for MassMutual and underscores our long-standing commitment to the retirement market," said Rioger Crandall, MassMutual's chairman, president and chief executive officer. "Following the closing of the transaction, we look forward to combining the best of our two organizations to offer enhanced capabilities and greater overall value across a broader retirement market. Our Retirement Services Division has experienced record growth in recent years and is an important contributor to MassMutual's overall profitability and success. 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."
Liam E. McGee, the Hartford's chairman, president and CEO, said the announced deal "recognizes the strength of The Hartford's Retirement Plans business and the innovation, dedication and talent of the team."
"The agreement marks the second of three planned business sales as we continue to make good progress executing on our strategy," McGee said. "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."
MassMutual said that under the leadership of Elaine Sarsynski, Executive Vice President and head of MassMutual's retirement services division and chairman and CEO of MassMutual International LLC, "a plan will be implemented to ensure an orderly integration of this acquisition over the coming year."
MassMutual's retirement services division offers a range of products and services for corporate, union, nonprofit and governmental employers' defined benefit, defined contribution and nonqualified deferred compensation plans. With a strong focus on the mid-size market, it provides retirement plan services to more than 7,600 plans, serves more than 1.6 million participants, and has more than $66.2 billion in assets under management (as of June 30, 2012).
When the deal closes, MassMutual plans to use the Hartford's retirement plans distribution network to increase sales to mid-size to larger corporate plans. "Additionally, The Hartford's Retirement Plans' tax exempt business, including its position as a top provider of governmental plans, will strengthen MassMutual's foothold in this segment," MassMutual said in a press release.
The Hartford's Retirement Plans business is primarily a defined contribution business with $54.9 billion in assets under management as of June 30. It serves more than 33,000 plans with more than 1.5 million participants, and has a strong presence in the small to mid-sized corporate 401(k) and tax-exempt markets.
Once the transaction is completed, the combined retirement businesses are projected to have approximately $120 billion in assets under management and 3 million participants.
"Importantly, this is a win-win for both MassMutual and The Hartford's Retirement Plans business, their clients, distribution partners and employees," Sarsynski said. "The addition of this business will enable us to broaden and deepen our product offerings and relationships with valued distribution partners. We look forward to welcoming the talented team of professionals at The Hartford's Retirement Plans business to MassMutual."