The MassMutual headquarters in Springfield at night. ((DAVE ROBACK / THE REPUBLICAN).)

This story updates and expands upon: ‘A milestone event in the 165-year history of MassMutual’: Springfield insurance giant buys sales network from MetLife

SPRINGFIELD — MassMutual Financial Group’s purchase of MetLife’s distribution network of sales representatives could make the Springfield-based financial services giant the largest writer of new life insurance policies in the country.

MassMutual sold $483 million in whole life insurance in 2015 while Metlife sold $290 million worth of all types of life insurance, including $90 million in whole life policies, MassMutual said Monday following the announcement of the deal.

The combination of the two agent networks will make MassMutual No. 1 for life insurance sales in the country and No. 2, behind Northwestern Mutual Life, when it comes to the whole life policies MassMutual considers its core business, said Michael R. Fanning, executive vice president of MassMutual’s U.S. Insurance Group.

Whole life is an insurance policy that provides for insurance coverage of the contract holders for their entire lives. This is different from term life, which covers the contract holder up to a specific age limit. A whole life policy never runs out.

“It really is a once in a lifetime opportunity,” he said of the MetLife deal.

The purchase represents roughly 20 percent growth for MassMutual. “This is clearly a growth story for us,” Fanning said. “It is a transition that reposition’s our business for decades to come. It truly is a distribution powerhouse.”

MetLife, a publicly traded company based in New York City, announced earlier this year that it would divest itself of part of its business in order to avoid being labeled as “too big to fail” by federal regulators, according to published reports.

If labeled too big to fail, MetLife would have to carry more capital to back up its business operations, something it did not want to do. The regulations grew from the 2008 financial crisis.

In the MetLife transaction announced Monday, MassMutual gets more than 40 local sales and advisory operations and approximately 4,000 advisers across the country.

They will add to MassMutual’s network of 5,800 Career Agency System advisers. These are not MassMutual employees, but independent contractors with the ability to sell MassMutual products. The same will be true of the agents coming from MetLife.

Also under the deal, MassMutual will get MetLife’s affiliated broker-dealer, MetLife Securities Inc., and certain assets associated with the MetLife Premier Client Group, including employee contracts.

Fanning said the combined sales network will be used to sell other MassMutal products, like retirement accounts and annuities.

“We believe we are the best company in terms of delivering holistic, insurance-based financial planning to customers,” Fanning said.

The MetLife purchase is also MassMutual’s way of preparing for new fiduciary rules the federal Department of Labor is expected to put out later in March. Those rules may change the way advice can be provided to retirement customers, Fanning said.

It’s is a major issue for MassMutual, leading MassMutual chairman, president and CEO Roger Crandall to write an op-ed on the topic in late December.

On a combined basis, MSI and MassMutual’s existing broker-dealer, MML Investors Services, LLC, will be among the nation’s largest insurance company-owned broker-dealers. Additionally, as part of the agreement, approved MassMutual financial professionals will provide individual life insurance and annuity products through the MetLife PlanSmart Financial Education Series.

Some of the agencies share the same geographic market,  but Fanning said it won’t be a problem because no life insurer commands 10 percent of the market.

“There is plenty of opportunity in the local markets,” he said.

Fanning didn’t provide specifics when asked what impact this deal will have on MassMutual operations here in Springfield and in Enfield other than to say it will grow MassMutual as a whole.

“It is a transition that prepositions our business for decades to come,” Fanning said. “It truly is a distribution powerhouse.”

This MetLife deal is unrelated to news last week that MassMutual laid off approximately 5 percent of its 7,200-person workforce in Springfield and Enfield. The company said the cutbacks are part of a regular review of its business operations.

According to a news release, the MetLife transaction is expected to close by mid-2016 and is subject to certain closing conditions, including regulatory approval.

Founded in 1851, MassMutual is one of the region’s largest private employers.