Empower Retirement Buys MassMutual’s Retirement Plan Business
Posted on 09/08/2020
Owned by Winnipeg-based Great-West Lifeco Inc., Denver-based Empower Retirement administers US$ 667 billion in assets for more than 9.7 million retirement plan participants as of June 30, 2020. Empower Retirement signed a deal to buy a business from Massachusetts Mutual Life Insurance Company (MassMutual). Empower is buying the MassMutual retirement plan business. Based on the terms of the agreement and subject to regulatory approvals, Empower will acquire the retirement plan business of MassMutual in a reinsurance transaction for a ceding commission of US$ 2.35 billion. In addition, the balance sheet of the transferred business would be supported by US$ 1 billion of required capital when combined with Empower’s existing U.S. business. The MassMutual retirement plan business comprises 26,000 workplace savings plans through which approximately 2.5 million participants have saved $167 billion in assets. It also includes approximately 2,000 employees affiliated with MassMutual’s retirement plan business who provide a full range of support services for financial professionals, plan sponsors and participants.
Empower and MassMutual intend to enter into a strategic partnership through which digital insurance products offered by Haven Life Insurance Agency, LLC3 and MassMutual’s voluntary insurance and lifetime income products will be made available to customers of Empower Retirement and Personal Capital.
The transaction value for the deal is C$ 4.4 billion, which includes the commission. The transaction, which is expected to close in the fourth quarter of 2020 pending customary regulatory approvals.
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.
The combined company will serve retirement plans sponsored by a broad spectrum of employers. These include mega, large, midsize and small corporate 401(k) plans; government plans ranging in scale from state-level plans to municipal agencies; not-for-profits such as hospital and religious organization 403(b) plans; and collectively bargained Taft-Hartley plans. The transaction will also bring MassMutual’s defined benefit business under the umbrella of plans Empower serves.
Advisors
Eversheds Sutherland served as legal counsel, and Goldman Sachs & Co. LLC and Rockefeller Capital Management served as financial advisors to Empower. Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel, and Lazard served as exclusive financial advisor to MassMutual.