Canadian-Owned Empower Retirement Buys Full Service Retirement Biz of Prudential Financial

Posted on 07/21/2021

Empower Retirement is buying the full-service retirement business of Prudential Financial, Inc. Subject to regulatory approvals, Empower will acquire Prudential’s full-service retirement plan recordkeeping and administration business for a total transaction value of US$ 3.55 billion. The business will be supported by US$ 2.1 billion of capital through a combination of the balance sheet of the transferred business and Empower capital and surplus.

Prudential’s full-service retirement recordkeeping business comprises more than 4,300 workplace savings plans, through which approximately 4 million plan participants have saved US$ 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.

In 2020, Empower Financial bought Personal Capital.

Prudential expects to use the proceeds from the transaction for general corporate purposes. Prudential now expects to return US$ 11 billion to shareholders through 2023, up from the US$ 10.5 billion announced in May 2021, and intends to reduce financial leverage and enhance its financial flexibility.The transaction, which is expected to close in the first quarter of 2022 pending customary regulatory approvals, will increase Empower’s participant base to 16.6 million and its retirement services recordkeeping assets to approximately US$ 1.4 trillion administered in approximately 71,000 workplace savings plans.

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).

Great-West Life & Annuity Insurance Company owns Empower Financial.

Eversheds Sutherland served as legal counsel and Goldman Sachs & Co. LLC and Rockefeller Capital Management served as financial advisors to Empower. Debevoise & Plimpton served as legal counsel and Lazard served as exclusive financial advisor to Prudential.

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