Hartford Financial Services Group Inc. is working to reduce its retirement obligations by paying former employees to give up their pensions.
Last month, the insurer offered voluntary lump-sum payments to about 13,500 workers who had left the company and hadn’t yet started receiving pension payments, Hartford said today in its quarterly filing. The former workers have until November to make a decision, and will get the payouts the following month.
Hartford has divested life insurance and retirement units to focus on property-casualty coverage. The firm has also offered payments to clients to give up some retirement products it sold in prior periods in an effort to limit future obligations.
“We delivered margin expansion across the business lines and top-line growth in P&C,” Chief Executive Officer Christopher Swift said today in a statement announcing third- quarter results. “Looking ahead, our primary objectives are to drive return-on-equity improvement and growth in book value per share.”
A high acceptance rate on the offer disclosed today may trigger a fourth-quarter settlement charge of as much as $140 million, Hartford said. The cost would be cushioned by adjustments to other accounts that aren’t included in net income.
Hartford had $5.52 billion in retirement benefit obligations and $4.63 billion of assets as of Dec. 31., leaving a shortfall of $886 million, according to the company’s annual report with the U.S. Securities and Exchange Commission. The company froze the pension plan as of Dec. 31, 2012, limiting the ability of employees to accrue further benefits.
The insurer said today that it added $100 million last month to its U.S. pension plan.
–With assistance from Laura Davison in New York.