Property and casualty insurer The Hartford has announced the completion of the previously announced sale of its run-off life and annuity businesses Talcott Resolution to a group of investors led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group, Effective May 31 2018.
Commenting on the announcement, The Hartford’s Chairman and Chief Executive Officer (CEO) Christopher Swift said, “This completes our exit from the run-off life and annuity businesses and significantly reduces our capital markets exposure.”
Adding, “We now have greater financial flexibility and a business mix that will improve our ROE and earnings growth profile over time.”
Cash paid by the buyers, a pre-closing cash dividend, debt included as part of the sale and 9.7% ownership stake in the new company means total consideration to The Hartford is approximately $2.05 billion.
Additionally, The Hartford will retain Talcott Resolution tax benefits with an estimated GAAP book value of approximately $700 million, which will be available for realisation subject to the level and timing of The Hartford’s taxable income. Total value of the sale is $2.75 billion, including the total consideration and carrying value of the retained tax benefits.
The Hartford’s investment management group Hartford Investment Management Company (HIMCO) has a five-year contract to manage a sizeable percentage of Talcott Resolution’s investment portfolio. While The Hartford will provide to and be reimbursed by Talcott Resolution for certain transition services for up to two years.
Operating under Talcott Resolution, approximately 375 of The Hartford’s employees are set to join the new company, which will be located in offices in Windsor, Connecticut, and Woodbury, Minnesota.
“We believe Talcott Resolution is well positioned for continued success with an experienced and talented team with proven operational capabilities, supported by an accomplished investor group,” The Hartford’s Chief Financial Officer (CFO), Beth Bombara, concluded.
Global Atlantic Financial Group recently said that it will provide reinsurance to back a $9 billion portfolio of fixed annuities and other spread-based reserves following the completion of this sale arrangement.