Empower Retirement continues to expand with the announcement Tuesday that it will acquire MassMutual’s retirement plan business.
Based on the terms of the definitive agreement and subject to regulatory approvals, Empower will acquire the retirement plan business of MassMutual in a reinsurance transaction for a ceding commission of $2.35 billion. In addition, the balance sheet of the transferred business would be supported by $1 billion of required capital when combined with Empower’s existing U.S. business.
In a joint statement announcing the deal, Denver-based Empower says the acquisition will “capitalize on both firms’ expertise, provide technological excellence and deep product capabilities, and create scale to the benefit of retirement plan participants and their employers.”
The MassMutual retirement plan business comprises 26,000 workplace savings plans through which approximately 2.5 million participants have saved $167 billion in assets. It has grown substantially over the past decade, doubling the number of participants served and more than quadrupling assets under management.
The deal also includes approximately 2,000 employees affiliated with MassMutual’s retirement plan business who provide a full range of support services for financial professionals, plan sponsors and participants. MassMutual is highly regarded in the retirement industry for its defined contribution, defined benefit and nonqualified plan offerings; deep commitment to participants, financial professionals and plan sponsors; and innovative solutions to achieve financial wellness.
“With today’s announcement, Empower is taking the next step toward addressing the complex and evolving needs of millions of workers and retirees through the combination of expertise, talent and business scale being created,” said Edmund F. Murphy III, President and CEO of Empower Retirement. “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.”
The transaction, which is expected to close in the fourth quarter of 2020 pending customary regulatory approvals, will increase Empower’s participant base to more than 12.2 million and retirement services recordkeeping assets to approximately $834 billion administered in approximately 67,000 workplace savings plans.
“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,” said Roger Crandall, MassMutual Chairman, President and CEO. “This includes strengthening our leading position in the U.S. protection and accumulation industry by expanding our wealth management and distribution capabilities; investing in our global asset management, insurance and institutional businesses; and delivering a seamless digital experience—all to help millions more secure their future and protect the ones they love.”
The announcement says the acquisition will be a benefit to retirement plan participants who will gain the outcome-oriented client focus and deep retirement expertise of both firms while benefiting from a state-of-the-art technology platform.
The combined firm will serve retirement plans sponsored by a broad spectrum of employers. These include mega, large, midsize and small corporate 401k plans; government plans ranging in scale from state-level plans to municipal agencies; not-for-profits such as hospital and religious organization 403b plans; and collectively bargained Taft-Hartley plans. The transaction will also bring MassMutual’s defined benefit business under the umbrella of plans Empower serves.
Through this transaction, business written by MassMutual will be reinsured by Great-West Life & Annuity Insurance Company. Concurrently, MassMutual will retrocede business it reinsures from a cedent, which MassMutual assumed in a previous transaction. Any New York business will be reinsured by Great-West Life & Annuity Insurance Company of New York.
Also announced on Tuesday is that Empower and MassMutual intend to enter into a strategic partnership through which digital insurance products offered by Haven Life Insurance Agency, LLC and MassMutual’s voluntary insurance and lifetime income products will be made available to customers of Empower Retirement and Personal Capital.
Empower today administers $667 billion in assets on behalf of 9.7 million American workers and retirees through approximately 41,000 workplace savings plans. Empower provides retirement services, managed accounts, financial wellness and investment solutions to plans of all types and sizes, including private-label recordkeeping clients.
In August, Empower announced it had completed the acquisition of Personal Capital, a registered investment adviser and wealth manager. The Personal Capital platform offers personalized financial advice, financial planning and goal setting, providing insights and tools for plan participants and individual investors.
• SEE ALSO: Empower Acquiring Personal Capital in Bid to Boost 401k Participant Financial Wellness