John Hancock Acquires New York Life Retirement Business

Acquisition of New York Life’s RPS business accelerates John Hancock’s expansion into the mid-case and large-case retirement plan markets.

Manulife Financial Corporation announced that its U.S. Division, John Hancock Financial, and New York Life have entered into an agreement under which John Hancock will acquire New York Life’s Retirement Plan Services (RPS) business.

The acquisition will increase John Hancock’s RPS assets under administration by approximately 60%, accelerate its expansion into the mid-case to large-case private sector retirement plan markets, and add both scale and expertise to John Hancock in a strategically significant line of business, the company said.

The resulting combined RPS businesses will consist of approximately $135 billion in assets under administration, 55,000 retirement plans and 2.5 million plan participants. The firm says the combined business will create a top-15 provider of retirement plan services in the mid-case plan market. John Hancock RPS, a provider to small plans, ranked fourth by total recordkeeping plans in PLANSPONSOR’s Recordkeeping Survey.

Peter Gordon, SVP and president of John Hancock RPS, told PLANSPONSOR, the business will be almost exclusively private sector retirement plans—anything from start-ups to very large plans in excess of $1 billion in assets. The business will include private-sector small to large defined contribution (DC) plans, defined benefit (DB) plans, as well as Taft-Hartley plans. They are all adviser-distributed, he says.

According to Gordon, both companies’ RPS business locations, service teams, systems and relationships will remain in place to support clients. As part of the transaction, John Hancock expects to offer all New York Life RPS staff a position with John Hancock RPS.

One reason every employee with New York Life RPS is being offered job with John Hancock is there will be no conversion of recordkeeping systems. “Clients of both companies will see business as usual, other than branding over time,” Gordon says.

He explains that the deal reflects two companies viewing the same business in two ways. “We are very interested in retirement plans and wealth management, so we want to expand our RPS business as a way to fulfill our strategic goals. New York Life has concluded they want to focus on their core insurance and wealth management business.” Gordon notes that strategic goals evolving and going in different directions has been happening more often among companies in the retirement plan industry, and he says he thinks this trend will continue.

It was also announced that New York Life has agreed to assume, on a reinsurance basis, 60% of certain John Hancock life insurance policies. The reinsurance agreement with John Hancock is part of New York Life’s strategy to grow its core book of individual life insurance business. “Upon closing, New York Life will be focused on a select group of complementary businesses: life insurance and annuities, which are core to our mission,” said Ted Mathas, chairman and CEO of New York Life.

Both transactions are expected to close in the first half of 2015.