Great-West Lifeco’s Canadian unit buys Prudential retirement business for $ 3.5 billion
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The acquisition by Empower Retirement, the second-largest pension provider in the United States, brings the subsidiary’s contribution to profits to 30% by the end of 2023, from 10% in 2020, according to Lifeco. It will contribute about $ 325 million in after-tax profits by the end of 2023, Lifeco said.
Lifeco, based in Winnipeg, Manitoba, has spent billions of dollars on a series of U.S. acquisitions over the past few years, including the pension plan business of MassMutual, which closed in January, and financial technology firm Personal Capital, which it completed in mid-2020.
The Prudential deal underscores Canadian insurers’ continued interest in expanding overseas, as rising premiums and high levels of capital push them to look for options to deploy them. Acquisitions by Canadian insurers abroad hit a 20-year high last year, according to data from Refinitiv.
While rivals Manulife Financial Corp and Sun Life Financial have grown further in Asia, Great-West Life is focused on growing in the United States, as the population of Americans aged 65 and over is expected to more than double in the United States. over the next 40 years.
The deal will expand Empower’s customer base to more than 16.6 million participants, up from more than 12 million in 2020, Lifeco said in a statement and will bring assets under administration to $ 1.4 trillion, from $ 1.00 billion. Trillion dollars in January.
The deal’s value includes around $ 2.1 billion in capital, and the purchase will be funded by a combination of debt and existing resources, he said.
The deal, which is expected to be finalized in the first quarter of 2022, will include a share buyback and reinsurance deal.
Prudential’s full-service retirement business covers approximately 4 million members, 4,300 workplace savings plans and manages $ 314 billion in assets.
Prudential shares rose about less than 1% in pre-market trading.
($ 1 = 1.2682 Canadian dollars)
Reporting by Nichola Saminather and Sohini Podder; Editing by Sriraj Kalluvila, Aditya Soni and Bernadette Baum