Empower Retirement has entered into an agreement to acquire the retirement plan business of Massachusetts Mutual Life Insurance Company, a move that will increase Empower’s participant base to more than 12.2 million and retirement services recordkeeping assets to about $834 billion administered in about 67,000 workplace savings plans, the companies announced today.
The terms of the agreement, which is subjected to regulatory approvals, will allow Empower to acquire the retirement plan business of MassMutual in a reinsurance transaction for a ceding commission of $2.35 billion, according to a press release. 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.
The press release added that pending customary regulatory approvals, the transaction is expected to close in the fourth quarter. The companies said 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.
“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,” Empower president and CEO Edmund F. Murphy III said in a statement. “Together, Empower and MassMutual connect a broad spectrum of strength and experience with a shared focus on the customer.
Roger Crandall, MassMutual chairman, president and CEO, said they are pleased to have found a “strong, long-term home for MassMutual’s retirement plan business, and believe this transaction will greatly benefit our the policyowners and customers as we invest in our future growth and accelerate progress on our strategy.”
The release said the combined firm will serve retirement plans sponsored by a broad spectrum of employers. They 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.
Headquartered in Greenwood Village, Colo., Empower administers $667 billion in assets on behalf of 9.7 million American workers and retirees through approximately 41,000 workplace savings plans.
In August, the company announced it had completed the acquisition of Personal Capital, a registered investment advisor and wealth manager. The deal netted up to $1 billion in enterprise value, composed of $825 million on closing and up to $175 million for planned growth. The Personal Capital platform offers personalized financial advice, financial planning and goal setting, providing insights and tools for plan participants and individual investors.
MassMutual offers a wide range of financial products and services, including life insurance, disability income insurance, long-term care insurance, annuities, retirement plans and other employee benefits. The press release said the company’s retirement plan business has grown substantially over the past decade, with the number of participants served doubling to over 2.5 million and assets under management more than quadrupling from $34 billion to over $160 billion.