Empower Retirement is acquiring the retirement plan business of Massachusetts Mutual Life Insurance Co. for $3.4 billion, the record keeper announced in a news release Tuesday.
The acquisition will increase Empower’s reach to more than 12.2 million participants and retirement services record-keeping assets to $834 billion on behalf of 67,000 workplace savings plans.
The deal is expected to close in the fourth quarter pending regulatory approvals. The total value of $3.35 billion includes a reinsurance ceding commission of $2.35 billion and $1 billion of required capital to support the business.
Empower touted the deal as a way to capitalize on both firms’ expertise and create scale to the benefit of retirement plan participants and their employers. The combined businesses would serve mega, large, midsize and small corporate 401(k) plans, government plans, not-for-profit and religious organization 403(b) plans, as well as collectively bargained Taft-Hartley plans. The transaction also brings MassMutual’s defined benefit business under the umbrella of plans Empower serves.
“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, Empower’s president and CEO, in the news release.
Paul Mahon, president and CEO of Great-West Lifeco, Empower’s parent company, called attention to the deal’s synergistic opportunities. “This transaction is an excellent strategic fit and directly aligns with Lifeco’s long-term plans for growth and scale in the U.S. retirement market,” he said in the release. “It increases our scale advantages and strengthens Empower’s position as the second largest player in this growing segment of the U.S. market."
MassMutual’s retirement plan business serves 26,000 workplace retirement savings plans with about 2.5 million participants and some $167 billion in assets. While it serves all plan types, it has a significant presence in the small and medium corporate market segment, according to Empower.
“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’s chairman, president and CEO.
Empower and MassMutual intend to enter into a strategic partnership through which digital insurance products offered by Haven Life Insurance Agency and MassMutual’s voluntary insurance and lifetime income products will be made available to customers of Empower and Personal Capital, a digital wealth management company that Empower purchased in August.
The sale of MassMutual’s retirement plan business is the company’s second major divestment. In May 2019, it completed the sale of its OppenheimerFunds unit to Invesco for $5.7 billion.