Massachusetts Mutual Life Insurance Company (MassMutual) is exploring a sale of its retirement services division, which has about $175 billion of assets under management and administration, people familiar with the matter said on Friday.
MassMutual’s retirement services business administers savings programs, such as 401(k) plans, for private and public sector employees. While the mutual company offers a variety of financial products such as annuities, it no longer considers the capital-intensive servicing of retirement plans core to its business, the sources said.
MassMutual could fetch about $2 billion for its retirement services business, said the sources, requesting anonymity because the sale process is confidential.
A spokeswoman for MassMutual declined to comment.
MassMutual’s retirement services unit has been providing investment management and administration to retirement plans since 1946. Its defined-contribution plan operation was launched in the early 1970s, and it has been in the 401(k) market since 1982.
The deal would be the second major divestment by the Springfield-based company in as many years. It completed the sale of its OppenheimerFunds unit to Invesco Ltd (IVZ.N) in May 2019 for $5.7 billion.
Financial firms have been shedding pieces of themselves to focus on products regarded as core to their offering. Scale has been seen as increasingly important to help manage the costs associated with investing in technology and compliance systems, while the decade-long run of low interest rates in the United States has squeezed providers’ ability to make money.
In April 2019, Wells Fargo & Co (WFC.N) announced it was selling its retirement plan services business to Principal Financial Group (PFG.O) for $1.2 billion.