Massachusetts Mutual Life Insurance said Tuesday that it would acquire the defined contribution record-keeping business of Hartford Financial Services Group for about $400 million.
In March, Hartford Financial said it would sell or pursue “other strategic alternatives” for its record-keeping unit and several other businesses. Hartford executives said the record-keeping business didn’t fit with the company’s long-term strategic goals.
The transaction is expected to close by the end of 2012.
In buying Hartford Financial’s record-keeping unit, MassMutual will have to digest a DC business that has more record-keeping assets, more participants and more clients than does MassMutual.
According to the Pensions & Investments research center, Hartford Financial had $53.3 billion in record-keeping assets by year-end 2011 compared to MassMutual’s $45.1 billion.
Also, Hartford Financial had 33,160 DC record-keeping clients at the end of 2011 compared to 6,342 for MassMutual, and Hartford Financial’s DC business covered 1.52 million participants vs. 1.24 million for MassMutual, according to P&I data.
“This acquisition represents an important step for MassMutual and underscores our long-standing commitment to the retirement market,” Roger Crandall, chairman, president and CEO of MassMutual, said in a news release.
“Our retirement services division has experienced record growth in recent years and is an important contributor to MassMutual’s overall profitability and success,” Mr. Crandall added. “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.”
The news release said that as of June 30, MassMutual’s retirement services division — which provides products and services for corporate, union, non-profit and governmental employers’ defined benefit, defined contribution and non-qualified deferred compensation plans — had more than 7,600 plan clients with more than 1.6 million participants. MassMutual said it has a total of more than $66.2 billion in retirement assets under management.
The news release said Hartford’s retirement plans business, which provides administrative services for DC and defined benefit plans, had a total of $54.9 billion in assets under management as of June 30, serving more than 33,000 plans with more than 1.5 million participants.
“Once the transaction is completed, the combined retirement businesses are projected to have approximately $120 billion in assets under management and 3 million participants,” the news release said.