Hartford Financial Services Group Inc (NYSE:HIG) entered into a definitive agreement with Berkshire unit Columbia Insurance Company to sell its subsidiary, Hartford Life International Limited (HLIL), in a cash transaction for approximately $285 million. The only asset on the table will be the Hartford Life (HLIL) subsidiary, which is a Dublin-based company selling variable annuities in the U.K. from 2005 to 2009.hartford

Christopher J. Swift, executive vice president and chief financial officer for Hartford, said that the company has come a long way by reducing the size and risk of Talcott Resolution’s legacy variable annuity blocks. He said that business unit is now capable enough from a capital point of view.

“Selling the U.K. business is another meaningful step forward. We are pleased with the outcome of the competitive bidding process, which reflects our criteria of executing transactions on terms that are attractive to The Hartford.”

Transaction Price

Transaction price is almost equal to the statutory surplus of HLL calculated, as per Irish accounting standards as of March 31, 2013. The U.S. statutory surplus plummeted by around $150 million in the second quarter of 2013. A net loss of around $110 million after tax (calculated under U.S. GAAP), will be posted in the second quarter of 2013, after transaction.

Hartford Announced Exit of Annuity Business

Hartford Financial Services Group Inc (NYSE:HIG) said in a statement in March that it will quit the annuity business in order to edge more toward the property and casuality business, group benefits and mutual funds. The company said that it has approached the issue from all perspectives before zeroing in to sell HLIL to Berkshire Hathaway’s Columbia Insurance Co.

As of March 31, 2013, the U.K. variable annuity business had $1.75 billion in assets under management.

Annuities are one of the most useful components of retirement plans. They can be designed in a manner to provide beneficiaries with  fixed payments at definite intervals.

Pressure from Shareholders

Pressure from shareholders compelled Hartford Financial Services Group Inc (NYSE:HIG) to sell its assets. Last year during an earnings call, hedge fund manager John Paulson asked management to apply something “drastic” to increase the low valuation of the company, says a report from Reuters.

The agreement will be concluded towards the end of the year after customary closing conditions and regulatory approvals.

Another Deal by Berkshire

In a separate deal, Berkshire’s Oriental Trading Co. acquired “brainy toys for kids of all ages,” MindWare Holdings Inc, in a deal without a price. Oriental Trading is the direct seller of party supplies, toys and other randomness.