The Hartford Financial Services Group of Simsbury, Conn. has agreed to purchase Fortis Financial Group, the variable life insurance, mutual fund and annuity arm of Fortis of Woodbury, Minn., for $1.12 billion in cash, Fortis has announced.

The acquisition will increase Hartford's mutual fund assets by more than 30 percent, according to Fortis. The Hartford will also acquire Fortis Advisors, a wholly-owned subsidiary of Fortis Financial Group.

Fortis is selling the subsidiary because growing competition in the variable universal life, mutual fund and variable annuity markets diminished Fortis Financial Group's share in those markets, said J. Kerry Clayton, president and CEO of Fortis. "Ongoing consolidation in the mutual fund and life insurance industry has made scale a vital determinant in achieving market leadership, and this scale advantage continues to increase," he said in a statement. "FFG will now be able to realize its full potential with Hartford Life, whose leading position in the U.S. variable annuities market and rising profile in the mutual fund business offer it a unique platform for future growth."

The transaction has been approved by both companies' boards of directors and will probably close in the second quarter of this year, according to Fortis.

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