Pru selling retirement biz to Empower in $3.55 billion deal

Empower Retirement has reached a deal to buy Prudential’s retirement plan business, the companies announced Wednesday.

Empower will pay $3.55 billion for the business, along with $2.1 billion to support it, with the latter coming from Prudential Retirement’s balance sheet and the capital from Empower, according to the announcement.

The deal includes Prudential’s defined-contribution, defined-benefit, nonqualified and rollover IRA, stable value and separate accounts businesses.

The transaction will create one of the biggest U.S. retirement plan entities, leaving Empower with a combined business of about $1.4 trillion in assets and 71,000 plans. Prudential oversees about $314 billion in retirement plan assets among more than 4,300 plans, while Empower has about $1 trillion in its book, representing more than 12 million plan participants. Empower is already the second biggest in the U.S. by number of participants, behind Fidelity Investments.

It had been rumored for months that Prudential was considering a sale. In June, the company confirmed that the retirement business’s head of sales and strategic relations, Michael Domingos, was leaving for another firm, OneAmerica.

The deal is expected to close in the first quarter of 2022, subject to regulatory approval, according to the announcement. The acquisition includes a share purchase and a reinsurance transaction.

Prudential will not be out of the retirement business following the sale — the company is retaining its lines in the institutional and individual retirement market, and its retirement business after the transaction will include pension risk transfer, international reinsurance, structured settlements and institutional stable value wrap products, the companies stated.