It’s official. The speculation that Prudential would purchase Hartford’s life insurance division turned out to be true. I want to briefly touch on how Hartford fits strategically and economically into Prudential and the implications of the purchase for product development and distribution.

But first, the price. General speculation a few months ago was that Hartford was looking for $1.5 billion and the market was pushing back with a $1 billion valuation. So why did Hartford let it go for $615 million in cash? That number might be a bit of a red herring. The sale will generate a total of $1.5 billion in freed statutory capital for the Hartford due to released reserves on the life block. Hartford arguably got much closer to its asking price than the $615 million cash consideration might suggest.