Property and casualty insurance firm The Hartford has reached an agreement to sell its run-off life and annuity businesses Talcott Resolution to a group of investors led by Cornell Capital for $1.443bn in an all-cash deal.
The total transaction amount, which would come to $2.05bn, would comprise cash from the investor group, a pre-closing cash dividend and assumption of debt.
Following the transaction, Hartford will also be given a 9.7% stake, valued at $164, in the acquiring investment group that also features Atlas Merchant Capital, TRB Advisors, Global Atlantic Financial Group, Pine Brook and J. Safra Group.
The Hartford chief financial officer Beth Bombara said: “We believe that this transaction provides an excellent outcome for shareholders, although it results in a GAAP loss. It accelerates the return of capital from Talcott Resolution compared with the gradual run-off of the business.
“We are evaluating opportunities to deploy proceeds from the sale and currently expect to use approximately $400 million for additional debt repayment, on top of the $500 million we previously announced we would repay in 2018.”
Under the terms of the agreement, the investor group will create a new company that will buy Hartford Life (HLI), the holding company for the Talcott Resolution operating subsidiaries.
The transaction will not include Hartford’s Group Benefits and Mutual Funds subsidiaries.
The two businesses are subsidiaries of HLI, which will be transferred to another subsidiary of the company prior to the closing of the deal.
As part of the deal, nearly 400 Hartford employees will be moved into the new company and will be based at offices owned or leased currently by The Hartford in Windsor, Connecticut, and Woodbury, Minnesota.
The transaction is expected to be completed in the first half of 2018 and would need receipt of regulatory approval while meeting other closing conditions.
Image: Hartford will exit from life and annuity business with Talcott sale. Photo: courtesy of adamr/ FreeDigitalPhotos.net.