The Hartford has completed the sale of its run-off life and annuity business, Talcott Resolution, to an investor group led by Cornell Capital, Atlas Merchant Capital, TRB Advisors, Global Atlantic Financial Group, Pine Brook and J. Safra Group.
The Hartford has received a total consideration of $2.75bn, which includes cash paid by the buyers, pre-closing cash dividend, debt as part of the sale and a 9.7% ownership stake in the new company.
The Hartford will also retain tax benefits of Talcott Resolution, estimated to be about $700m. This amount will be available for realization subject to the level and timing of The Hartford’s taxable income, the company stated.
The Hartford chairman and CEO Christopher Swift said: “This completes our exit from the run-off life and annuity businesses and significantly reduces our capital markets exposure.
“We now have greater financial flexibility and a business mix that will improve our ROE and earnings growth profile over time.”
The investor group stated that Talcott Resolution will now function as an independent stand-alone insurance company and will be headquartered in Windsor, Connecticut, with an office in Woodbury, Minnesota.
As part of the deal, about 375 employees of The Hartford will now become part of Talcott Resolution. After the closing is complete, Talcott expects to reinsure about $9bn of its fixed annuity, payout annuity and structured settlement businesses with one of Global Atlantic Financial Group’s subsidiaries.
Talcott Resolution chairman and independent director Richard Carbone said: “We are pleased to have successfully completed this acquisition.
“In addition to continuing to manage the Company’s existing businesses, we expect that over time Talcott Resolution will explore opportunities to acquire legacy blocks from other insurers, enter into reinsurance agreements and evaluate the potential to be a service provider for the life and annuity insurance industry.”
The Hartford’s investment management group, Hartford Investment Management Company (HIMCO) has a five year contract to manage a significant portion of Talcott Resolution’s investment portfolio.
The Hartford will also offer to and be reimbursed by Talcott Resolution for some specific transition services for up to two years.