“After much review, planning and change over the past year, we determined that Pan-American could not reach the critical asset scale needed to reach profitability in the small to mid-sized plan market,” said Jan Jobe, president and CEO, Pan-American Life in a press release. “Securian is well respected and highly rated. Our clients are in good hands.”
The deal between the New Orleans-based Pan American and the St. Paul, Minnesota-based Securian is expected to close in November, the companies said in an announcement. With 1,100 plans, about 50,000 participants and assets under management of about $800 million, the Pan American retirement unit had focused on mid-sized and small plan clients.
The move was the latest in a renewed wave of consolidation in the industry. In recent months, Minneapolis-based US Bank opted to hire out its recordkeeping to BISYS , Wachovia picked up some 4,100 plans and 1.3 million participants with its acquisition of PFPC’s recordkeeping and third-party servicing business, Lincolnshire, Illinois-based Hewitt Associates added some 200 clients and one million participant accounts to its growing book of business with the acquisition of Atlanta-based Northern Trust Retirement Consulting (NTRC), and payroll giant ADP agreed to acquire recordkeeping operations from Scudder Investments as part of a new joint unit called the Benefits Services Alliance (see Squeezed “Box”? ).
“Pan-American’s retirement plan business has all the characteristics we look for in an acquisition,” Robert Senkler, Minnesota Life chairman, president, and CEO, said in a statement “Our client profiles are similar and our marketing and service systems are structured similarly. Moreover, this acquisition gives us opportunities to benefit from economies of scale.” Securian is a unit of Minnesota Life.
If all of Pan-American’s clients agree to move to Securian, the acquisition would give Securian a total of 3,600 plans. Securian’s existing business has 180,000 participants and has about $5.7 billion under management.
Minnesota Life said it expects to add up to 40 positions, including sales, service, and operations positions, some of which will be filled from within. State regulators in Minnesota and Louisiana must approve the transaction.