Great-West Life & Annuity Insurance Company (GWL&A) has reached an agreement to sell through reinsurance substantially all of its individual life insurance and annuity business to Protective Life Insurance Company, the primary subsidiary of Protective Life Corporation (Protective).
The business to be transferred, which is marketed under the Great-West Financial brand, includes bank-owned and corporate-owned life insurance (BOLI and COLI), single premium life insurance, individual annuities and closed block life insurance and annuities. GWL&A will retain a small block of participating life insurance policies which will be administered by Protective following the close of the transaction.
GWL&A’s retirement and investment management divisions, Empower Retirement, Great-West Investments and Putnam, are not affected by this transaction. A Great-West representative told PLANSPONSOR there were numerous reasons for the decision, but the firm’s focus now is on the Empower Retirement business and Great-West Investments.
In 2014 GWL&A established Empower Retirement. Empower Retirement is the third largest recordkeeper based on total defined contribution assets, according to the PLANSPONSOR 2018 Recordkeeping Survey.
“Through Empower Retirement and Great-West Investments, we will have the opportunity to further our leadership position in the defined contribution retirement market and bolster our position in markets for investments and wealth management,” the spokesperson said. “As more Americans save for retirement through workplace savings plans, external market forces are simultaneously creating new opportunities for plan providers. These factors present significant near and long-term future opportunities to deliver a robust spectrum of retirement services to more plan sponsors, financial intermediaries and participants.”
Empower Retirement serves approximately 9 million retirement plan participants through 38,000 employer-sponsored retirement plans from all segments of the defined contribution retirement plan market, including government 457 plans, corporate 401(k) clients, non-profit 403(b) entities, private-label recordkeeping clients and individual retirement account (IRA) customers. Great-West Investments serves the market for retirement investments through its sub-advised investment platform and creates an array of value-added products for clients including mutual funds, managed accounts, capital preservation products and retirement income solutions.
“We will continue to focus on Empower Retirement and seize the opportunity to further advance our leadership position in the expansive retirement services market,” said Robert L. Reynolds, chief executive officer of GWL&A, in a press release. “Empower has demonstrated a commitment to its clients, distribution and investment partners as a means of ultimately helping more Americans create the financial security they deserve.”
“This transaction allows us to focus on the retirement market and asset management in the U.S.,” said Paul Mahon, president and chief executive officer, Great-West Lifeco. “We continually evaluate capital deployment opportunities at Great-West Lifeco. With the strengthened capital position resulting from this transaction, we will also consider other capital management activities, including potential share repurchases, to mitigate the earnings impact of the sale.”
Empower has previously announced a number of strategic initiatives. In February 2017, it introduced Dynamic Retirement Manager, which allows plan sponsors to direct their employees’ retirement deferrals first into target-date funds (TDFs) during the early portion of their working years. Later on, when a pre-determined set of criteria are triggered, the participant’s assets will automatically shift into a managed account.In March 2017, Empower Retirement and health services provider Optum launched a health savings account (HSA) for retirement plan participants—The Empower Health Savings Account. In March 2018, Empower Retirement launched an end-to-end retirement management experience for plan participants designed to help an individual from the goal-setting stage at the start of the one’s career through a withdrawal strategy that’s implemented when their working years conclude, called My Total Retirement.