Prudential Financial hopes to raise $3.55 billion by selling its retirement plan recordkeeping administration operations to Empower Retirement.
An arm of Great-West Lifeco, Empower Retirement is based in Greenwood Village, Colorado. In the sale, it would get Prudential's defined contribution plan, defined benefit plan, non-qualified and rollover IRA businesses, along with related separate account investment products and platforms.
Prudential would keep its individual annuity operations.
The Newark, New Jersey-based company says its Prudential Retirement business also would continue to offer international reinsurance, structured settlements, institutional stable value wrap products, and the group annuities and services used in pension risk transfer arrangements.
Prudential's PGIM unit would still manage money for retirement plans and other customers.
Prudential and Empower hope to close on the deal by March 31, 2022.
The Background
Publicly traded U.S. insurers are facing very low interest rates on their bond portfolios and new accounting rules that increase the volatility of quarterly earnings reports. Many of those insurers have been splitting off or reducing the size of the businesses affected the most by the low rates and the new accounting rules.
Prudential's announcement comes on the heels of American International Group's move to sell a 9.9% stake in its AIG Life & Retirement business to The Blackstone Group for $2.2 billion. AIG said it was making that move to increase its financial flexibility as it prepares to separate AIG Life & Retirement from the rest of AIG.
Principal Financial Group said in June that it would reduce risk by dropping its retail fixed annuity and retail life products, while keeping life and annuity lines aimed at employers and corporate executives.
Prudential is preparing to release its earnings for the second quarter Aug. 3.
