Prudential Financial Completes $615 Million Acquisition of Hartford Financial's Individual Life Business
January 4, 2013 by Fran Matso Lysiak
Best’s News Service – January 03, 2013 03:30 PM
NEWARK, N.J. – Prudential Insurance Company of America has completed its $615 million acquisition of the individual life insurance business of Hartford Financial Services Inc.
Under the agreement, first announced in September, Prudential Financial Inc. (NYSE: PRU) paid $615 million in cash to acquire this business, and the sale was structured as a reinsurance transaction (Best’s News Service, Sept. 28, 2012). It marked the last of the planned three sales of Hartford’s business units since the company announced last year that it would exit some businesses to focus on property/casualty, group benefits and mutual funds.
In March 2012, Hartford said it would sell off three units: its life insurance business; its retirement plans business and Woodbury Financial Services Inc., an independent broker-dealer as Hartford announced plans to focus on businesses that take insurance risk — and reduce its exposure to market risk (Best’s News Service, May 3, 2012). Paulson & Co. Inc., Hartford’s largest shareholder, had pressured the company to split its property/casualty insurance division from its life and annuity operations, plus run off its stock market-linked variable annuity business, to increase shareholder value (Best’s News Service, March 21, 2012).
Earlier this week, Massachusetts Mutual Life Insurance Co. completed its acquisition of Hartford’s retirement plans business for $400 million (Best’s News Service, Jan, 2012) and in December, American International Group Inc.’s (NYSE: AIG) life insurance and retirement business closed on its acquisition of Woodbury for an undisclosed sum (Best’s News Service, Dec. 3, 2012).
In a statement, Hartford (NYSE: HIG) said it completed the sales of the three businesses, including the individual annuity new business to Forethought Financial Group Inc.
“Completing these transactions on favorable financial terms with a significant capital benefit represents an important milestone in the execution of the Hartford’s transformation,” Liam E. McGee, Hartford’s chairman, president and chief executive officer said in the statement.
Due to the timing of the closings, however, Hartford said it expects a modest realized capital loss in the fourth quarter, and gain in the first quarter of 2013.
Prudential of America Group was the second-largest U.S. life/health writer based on 2011 admitted assets of $424.1 billion, according to BestLink, A.M. Best’s online financial system.
The acquisition “strengthens our position among the largest life insurance companies in the U.S.,” said Kent Sluyter, incoming CEO of Prudential’s individual life insurance business, in the statement, noting the deal boosts Prudential’s leadership positions in universal, term and variable life insurance.
Last September, Prudential said it was to receive about $7 billion of general account investment assets and corresponding reserves, and rights and obligations with respect to about $5 billion in separate account assets and corresponding liabilities based on statutory balance sheet values as of June 30, 2012 (Best’s News Service, Sept. 28, 2012).
Shares of Prudential were trading at $55.65 the afternoon of Jan. 3, down 0.66% from the previous close. Shares of Hartford were trading at $24.06, up 1.46%.
Prudential Insurance Company of America currently has a Best’s Financial Strength Rating of A+ (Superior). Hartford Life Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com) BN-NJ-01-03-2013 1530 ET #