Prudential Sells Retirement Business To Empower In $3.55B Deal

Empower will acquire Prudential’s defined contribution, defined benefit, non-qualified and rollover IRA business in addition to its stable value and separate account investment products and platforms in a $3.55 billion deal.

Empower Retirement, a Great-West Life entity, plans to combine the two companies’ retirement plan on a single technology platform when the deal closes in the first quarter of 2022.

“The acquisition will allow Empower to expand services to the broadening spectrum of workplace savings plans it now serves, which includes mega, large, mid-size and small corporate 401(k) plans; government plans ranging in scale from state-level plans to municipal agencies; not-for-profit 403(b) plans; and collectively bargained Taft-Hartley plans,” according to the company’s statement.

Empower built a retirement platform with the help of last year’s $1 billion acquisition of Personal Capital, a digital-first registered investment adviser and wealth manager. Empower expects the deal to increase its participant base to 16.6 million and its retirement services recordkeeping assets to approximately $1.4 trillion administered in approximately 71,000 workplace savings plans.

The sale had been rumored for the past few months.

'Significant Milestone'

Prudential Financial is expected to participate in the institutional and individual retirement market, serving retirees, annuitants and employers through its institutional investment products business, as well as through income and investments solutions provided by its individual annuities business and PGIM, a top 10 global asset management firm. Following the close of the transaction, Prudential’s Retirement business will consist of pension risk transfer, international reinsurance, structured settlements and institutional stable value wrap product lines.

“Today’s announcement is a significant milestone in Prudential’s transformation and the execution of our strategy to become a higher growth, less market sensitive, more nimble business,” said Prudential Chairman and CEO Charles Lowrey. “In Empower, we have found a partner that, like Prudential, is passionate about expanding financial opportunity for more people, and that has the scale and expertise to ensure the long-term success of the full-service retirement business.”

Empower will acquire Prudential’s retirement services businesses with both a share purchase and a reinsurance transaction. Great-West Life & Annuity Insurance Company will acquire the shares of Prudential Retirement Insurance and Annuity Company and business written by The Prudential Insurance Company of America will be reinsured by Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York (for New York business).

Prudential’s full-service retirement recordkeeping business comprises more than 4,300 workplace savings plans, through which approximately 4 million plan participants have saved $314 billion in assets. It also includes more than 1,800 employees who provide a comprehensive suite of retirement recordkeeping and administration services to financial professionals, plan sponsors and participants.

Prudential expects to use the proceeds from the transaction for general corporate purposes, according to its statement. Prudential now expects to return $11 billion to shareholders through 2023, up from the $10.5 billion announced in May 2021, and intends to reduce financial leverage and enhance its financial flexibility.

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].

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