MassMutual Picks Up The Hartford’s Retirement Plans Business

Massachusetts Mutual Life Insurance Company has agreed to purchase The Hartford’s retirement plans business for $400 million.

As part of the agreement, The Hartford will continue to sell new retirement plans during a transition period, and MassMutual will assume all expenses and risk for these sales through a reinsurance agreement. Between now and the close of the transaction, expected by the end of 2012, there are no planned changes with respect to the day-to-day interactions or processes between The Hartford and its Retirement Plans’ distribution partners, plan sponsors and customers, the companies said.

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. 

“This is a win-win for both MassMutual and The Hartford’s Retirement Plans business, their clients, distribution partners and employees,” said Sarsynski.  “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.”  The Hartford’s retirement plans employees will become part of MassMutual’s retirement services division. 

In an email communication to financial advisers late this afternoon, Sarsynski and Hugh O’Toole, senior vice president, sales and client management in MassMutual’s retirement services division, wrote “we remain and will operate as two distinct companies until the regulatory and contractual steps associated with the transaction are finalized, which may take several months to complete. In the meantime, you and your clients and participants can expect a ‘business as usual’ experience with the same level of service excellence you have enjoyed in the past.”

The notice linked to communications for MassMutual’s plan sponsor clients and participants in retirement plans recordkept by MassMutual.

The Hartford’s Retirement Plans business is primarily a defined contribution business with $54.9 billion in assets under management as of June 30, 2012. The business 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. It also provides administrative services for defined-benefit programs.  

Once the transaction is completed, the combined retirement businesses are projected to have approximately $120 billion in assets under management and three million participants. MassMutual said The Hartford’s Retirement Plans’ tax exempt business will strengthen MassMutual’s foothold in this segment.   

According to PLANSPONSOR’s 2012 Recordkeeping Survey,in 2011, The Hartford had $41.5 billion in 401(k) assets, $2 billion in 403(b) assets and $9.6 billion in 457 plan assets. MassMutual had $36.2 billion in 401(k) assets, $1.8 billion in 403(b) assets, $70 million in 457 plan assets and $976 million in profit sharing plan assets.

“Clients from The Hartford’s Retirement Plans business will benefit from MassMutual’s industry leadership in many areas, including our participant communication and education programs, comprehensive tools that help plan sponsors and plan participants measure retirement readiness, and award winning customer service,” Sarsynski said. “Together, we will create enhanced value for our advisers and plan sponsors, and work collectively toward our goal of helping our participants retire on their own terms.” 

The Hartford announced in March a new strategy that would put its Retirement Plans business up for sale (see “The Hartford Puts Retirement on the Block”). 

“The agreement marks the second of three planned business sales as we continue to make good progress executing on our strategy. 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,” said The Hartford’s chairman, president and CEO Liam E. McGee.