MassMutual Posts Net Loss on Accounting Impact of Hartford Retirement Plans Acquisition
April 14, 2014 by Fran Matso Lysiak
SPRINGFIELD, Mass. – MassMutual Financial Group posted a net loss in 2013, partly on its acquisition of Hartford Financial Services’ retirement plans business. For 2013, MassMutual reported a net loss of $113 million on a consolidated statutory basis, compared with net income of $872 million in 2012, according to its 2013 annual report.
The accounting impact of the company’s retirement plans business acquisition was the primary driver, said Mike McNamara, a spokesman for MassMutual.
The Hartford buy “complements existing businesses and positions the retirement services business well to continue to provide a full range of retirement plans products and services,” said McNamara.
In January 2013, MassMutual completed its Hartford acquisition for $400 million.
Massachusetts Mutual Life Insurance Co.’s acquisition of this business helped sales in that sector jump 60% and reach record levels in 2013 while the deal caused net earnings from operations to fall slightly. Earlier this year, MassMutual said its net gain from operations before policyowner dividends and taxes fell to $1.8 billion last year, compared with $2.1 billion in 2012 (Best’s News Service, Feb. 27, 2014).
MassMutual also reported net realized capital losses of $488 million in 2013 on a consolidated statutory basis, compared with net realized capital gains of $115 million in 2012, according to the annual report.
MassMutual Financial Group is the 12th-largest U.S. life/health insurer based on 2012 admitted assets of $167.57 billion, according to A.M. Best. Massachusetts Mutual Life Insurance Co. is the third-largest mutual life insurer in the United States.
Roger Crandall, MassMutual’s chairman, president and chief executive officer, in January said his company can take advantage of private investments like commercial mortgage loans, private placements and infrastructure loans.
Total revenues for MassMutual rose to $27.5 billion from $26.7 billion in 2012.
While MassMutual’s investment management capabilities are strong, A.M. Best Co. recently said it remains cautious about its exposure to the real estate market. This exposure is approximately 1.5 times total adjusted capital when residential and commercial mortgage-backed securities (excluding agency issued securities), whole commercial mortgage loans, equity real estate holdings and limited partnership equity holdings with underlying assets in real estate are combined.
Massachusetts Mutual Life Insurance Co. currently has a Best’s Financial Strength Rating of A++ (Superior).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
