Empower Retirement and Massachusetts Mutual Life Insurance Co. (MassMutual) announced they have entered into a definitive agreement for Empower to acquire the MassMutual retirement-plan business. 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.
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 $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.
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 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 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.”
“We believe this transaction will greatly benefit our policy owners and customers as we invest in our future growth and accelerate progress on our strategy.”
The transaction, 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 record-keeping 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 we believe this transaction will greatly benefit our policy owners 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 MassMutual retirement-plan business has grown substantially over the past decade, with the number of participants served doubling to more than 2.5 million and assets under management more than quadrupling from $34 billion to more than $160 billion.
The combined firm will serve retirement plans sponsored by a broad spectrum of employers. These include mega, large, mid-size, 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.
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.
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 record-keeping 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. In addition, Empower’s retail business provides a suite of products and services to individual retirement-account and brokerage customers.