Empower Retirement to acquire retirement plan business of MassMutual

Combines talent and expertise in key growth areas to provide customer service focus, technological excellence, deep product capabilities

Expands firm’s capabilities across retirement services market to more than 12.2 million individuals and 67,000 retirement plans

GREENWOOD VILLAGE, Colo. and SPRINGFIELD, Mass., Sept. 8, 2020 — Empower Retirement and Massachusetts Mutual Life Insurance Company (MassMutual) today announced that 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.¹ 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.

“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, President and Chief Executive Officer 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.”

“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 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 transaction, which is 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 recordkeeping assets to approximately $834 billion administered in approximately 67,000 workplace savings plans.²

The acquisition will be a benefit to retirement plan participants who will gain the outcome-oriented client focus and deep retirement expertise of both firms while benefiting from a state-of-the-art technology platform.

The combined firm will serve retirement plans sponsored by a broad spectrum of employers. These 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.

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.⁴ Empower provides retirement services, managed accounts, financial wellness and investment solutions to plans of all types and sizes, including private-label recordkeeping clients. Empower has annually grown at more than twice the rate of the industry average⁵ fueled by integrated financial technology tools, a commitment to customer service and an advisor-centric offering that have been the hallmarks of the company’s highly successful retirement plan solutions.

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 robust suite of products and services to individual retirement account and brokerage customers.

MassMutual’s retirement plan business is highly regarded in the retirement industry for its robust defined contribution, defined benefit and nonqualified plan offerings; deep commitment to participants, financial professionals and plan sponsors; and innovative solutions to achieve financial wellness. The MassMutual 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.

Through this transaction, business written by MassMutual will be reinsured by Great-West Life & Annuity Insurance Company. Concurrently, MassMutual will retrocede business it reinsures from a cedent, which MassMutual assumed in a previous transaction. Any New York business will be reinsured by Great-West Life & Annuity Insurance Company of New York.

Eversheds Sutherland served as legal counsel, and Goldman Sachs and Rockefeller Capital Management served as financial advisors to Empower. Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel, and Lazard served as exclusive financial advisor to MassMutual.