The MassMutual retirement plan business to be acquired includes 26,000 workplace savings plans under which close to 2.5 million participants have made savings of $167bn in assets
Empower Retirement, a subsidiary of Great-West Lifeco, has agreed to acquire the retirement services business of Massachusetts Mutual Life Insurance (MassMutual) in a deal worth around $3.35bn.
The consideration includes a reinsurance ceding commission of $2.35bn and $1bn of capital needed for supporting the acquired business, said the Canada-based Great-West Lifeco.
The MassMutual retirement plan business to be acquired includes 26,000 workplace savings plans under which close to 2.5 million participants have made savings of $167bn in assets.
The deal also gives Empower Retirement nearly 2,000 employees associated with MassMutual’s retirement services business who are said to provide support services for financial professionals, participants, and plan sponsors.
Claimed to be the second-largest retirement plan recordkeeper in the US in terms of total participants, Empower Retirement said that the acquisition will leverage both the firms’ expertise. By doing so, the enlarged company is expected to deliver technological excellence and have deep product capabilities to create a scale to the benefit of both the participants in the retirement schemes and their employers.
Empower Retirement president and CEO Edmund Murphy III said: “Together, Empower and MassMutual connect a broad spectrum of strength and experience with a shared focus on the customer. We are excited about the opportunity to reach new customers and serve even more Americans on their journey toward creating a secure retirement.”
As of 30 June 2020, the Denver-based Empower Retirement is said to administer $667bn in assets for over 9.7 million retirement plan participants.
The deal is expected to increase its participant base to more than 12.2 million and retirement services recordkeeping assets to nearly $834bn, which will be administered in close to 67,000 workplace savings plans.
The transaction with MassMutual follows Empower Retirement’s closing of its $1bn acquisition of Personal Capital, a digital-first registered investment adviser and wealth manager.
Empower Retirement said that through its latest transaction, business written by MassMutual will be reinsured by Great-West Life & Annuity Insurance. Simultaneously, MassMutual will retrocede the business it reinsures from a cedent, which it had assumed in a previous deal.
MassMutual CEO comments on the deal with Empower Retirement
MassMutual chairman, president, and CEO Roger Crandall said: “In Empower, we are pleased to have found a strong, long-term home for MassMutual’s retirement plan business, and believe this transaction will greatly benefit our policyowners and customers as we invest in our future growth and accelerate progress on our strategy.”
The transaction is subject to receipt of customary regulatory approvals and is expected to be completed in Q4 2020.