The Hartford Financial Services Group announced Thursday it is selling its life insurance business to Prudential Financial Inc., in a deal valued at $1.5 billion.
About 1,000 employees — including nearly 200 in Connecticut — work for The Hartford's Individual Life business. Most of the other employees work in Woodbury, Minn. The jobs will transfer when the deal is finalized, in early 2013, though it's not clear how many Prudential will need long term.
"There's not going to be any immediate layoffs as a result of the acquisition, but over the coming months, we'll be evaluating the needs of the business," said Prudential spokeswoman Sheila Bridgeforth. "Since that evaluation isn't done, it really would be premature to speculate about what's going to happen with the workforce until that process is completed."
Most of the Connecticut workers are in The Hartford's Simsbury office, which is home to group benefits, wealth management and consumer markets. The Simsbury office also has the annuity business that is being discontinued. The Hartford did not say how much the Simsbury-campus workforce will be diminished after the sale of retirement, annuities and life insurance units.
Approximately 700,000 of The Hartford's life insurance policies with a combined face value of $135 billion will transfer to Prudential. After the transaction closes, customers who have life insurance through The Hartford will pay premiums to Prudential, which will pay claims, too.
The deal is considered a reinsurance transaction that will free up capital that The Hartford had to keep on hand to support its life insurance business. That capital, combined with about $615 million in cash that Prudential is giving The Hartford, totals $1.5 billion.
The Hartford has sold various businesses since it announced its reorganization plans in March. The total value of all the transactions is about $2.2 billion in net statutory capital, including the sale of Woodbury Financial Services to AIG Advisor Group, announced in late July; Retirement Plans to MassMutual, announced earlier this month; and Individual Life to Prudential.
The Hartford's retirement business includes 1,300 workers total, of which 700 work in Connecticut. Those employees will become a part of MassMutual, which has major offices in Enfield and Springfield. MassMutual has said it's premature to speculate how many of those workers will be needed in the long run.
The sale of Woodbury Financial, based in Oakdale, Minn., doesn't significantly affect Connecticut employment. Woodbury employs about 200 in home offices in Minnesota. About 40 Connecticut workers in The Hartford's annuity business were offered jobs at Forethought, which bought the company's annuity products and related services.
"Today's announcement represents a significant milestone in the execution of The Hartford's strategy to deliver greater value to shareholders," said The Hartford's Chairman and CEO Liam E. McGee. "In about six months, we have completed three agreements, all executed at attractive valuations to strong financial institutions that have a strategic interest in the businesses. … The Hartford is taking the necessary actions, as outlined in March, to position the company for higher returns on equity, reduced sensitivity to capital markets, a lower cost of capital and increased financial flexibility."
The Asylum Hill-based insurer is focusing on more profitable business, such as property-casualty, group benefits and the mutual fund business.
The Hartford's Individual Life business had core earnings of $129 million for the 12-month period ending June 30, and a net income of about $105 million for the same period. The Hartford doesn't expect a material net income gain or loss on the closing of the transaction.
"The integration of Prudential's Individual Life Insurance business and that of The Hartford will create an organization with greater scale, enhanced product offerings and expanded distribution expertise to meet the life insurance needs of Americans and their families," Prudential Financial chairman and CEO John Strangfeld said in a prepared statement. "The Hartford's Individual Life Insurance business represents a unique opportunity for us to acquire a very high-quality life insurance business with talented people, complementary capabilities and financial performance consistent with our objectives."