Empower to buy MassMutual’s 401(k) business

The deal will bump the plan provider's assets under administration to $834 billion, the companies announced

Empower Retirement is buying MassMutual’s retirement plan business, the companies announced Tuesday.

The deal is a reinsurance transaction with a ceding commission of $2.35 billion along with a $1 billion capital contribution to the balance sheet of the transferred business, according to the announcement.

The acquired business will add about 26,000 employer-sponsored retirement plans, representing 2.5 million participant and $167 billion in assets, the companies stated. After the deal, Greenwood Village, Colo.-based Empower’s business would include 67,000 plans and 12.2 million participants, representing $834 billion in assets, the companies stated.

The sale is expected to close during the fourth quarter of 2020, pending regulatory approval.

“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,” MassMutual CEO Roger Crandall said in the announcement. “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.”

News of the deal follows last month’s announcement that Empower had purchased robo-adviser and wealth manager Personal Capital.

[More on the acquisition: MassMutual 401(k) deal wins Empower valuable clients]