The Hartford transfers $1.6bn US pension liabilities to Prudential

The Hartford, a US-based property/casualty insurer, has entered into an agreement to transfer $1.6 billion, or 29 percent of its $5.6 billion in US qualified pension plan liabilities, to Prudential Financial.

Under the agreement, about 38 percent of The Hartford’s US pension plan participants' (about 16,000 former employees) current and future pension benefits will be transferred to Prudential through a group annuity contract.

According to the statement, there will be no change to the pension benefits for any plan participants as a result of this transaction.

"We are pleased that this transaction preserves these pension benefits while reducing the company’s long-term pension obligations," said The Hartford’s chief human resources officer Marty Gervasi. "We are grateful for the contributions The Hartford’s former employees have made to the company, and the provider selected is a highly-rated, experienced retirement benefits provider in the industry."

The company stated that as a result of the transaction, The Hartford expects to recognise in the second quarter of 2017 a pension settlement charge to net income of approximately $485 million, after-tax, and a reduction to stockholder’s equity of approximately $140 million, or $0.37 per diluted share based on March 31, 2017 shares outstanding. In order to maintain the plan’s pre-transaction-funded status, The Hartford intends to make a contribution of approximately $300 million by year-end 2017.

It added that the participants who are being transferred to Prudential will receive initial notice from The Hartford by the end of July and will receive detailed information from Prudential in mid-October. All transferred plan participants will continue to receive their benefits from The Hartford’s pension plan until November 1, 2017, after which the payment and administration will transition to Prudential.

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