Empower Acquires Milliman's Retirement Plan Business to Expand Capabilities

Empower, the U.S. subsidiary of Great-West Lifeco, has finalized its acquisition of Milliman's retirement plan and benefits administration business, enhancing its capabilities with approximately 400 defined benefit plans and managing an additional US$80 billion in assets.

This strategic acquisition, initially announced on June 30, significantly expands Empower's operational scale. It now manages over US$2.3 trillion in client assets, serving more than 22 million individuals across 96,000 workplace plans. The acquisition also adds over 1,100 defined contribution plans, encompassing roughly 750,000 participants. With this move, Empower aims to strengthen its competitive edge in offering a full spectrum of retirement solutions, an assertion made by CEO Edmund F. Murphy III when the acquisition was first revealed.

Empower's approach to funding this acquisition—spending US$340 million from its existing cash resources—demonstrates its robust enterprise strategy. While US$244 million was paid at the closing, the remaining balance will be stretched over five years. Great-West has reassured stakeholders that, despite this investment, the holding company’s financial standing remains unaffected. Importantly, the integration of Milliman’s business is fully compliant with U.S. regulatory standards, maintaining operational harmony within Empower's expanding portfolio.

Implications for the Retirement Industry

This acquisition illuminates several trends within the retirement plan industry, particularly the continued importance of defined benefit (DB) plans. While many financial entities have transitioned focus toward defined contribution (DC) plans, Empower's bolstering of its DB administration capabilities suggests a sustained demand for expert management in this field. The complexity and scale of large, legacy pension schemes necessitate enhanced, specialized services, which Empower is poised to provide following this acquisition.

Canadian Insurers' Global Growth Strategies

Empower's acquisition aligns with a broader trend among Canadian insurers seeking international expansion to enhance their market presence. In the context of this strategy, Great-West Lifeco aims to balance its earnings between its operations in Canada and its growing U.S. segment. The latter already contributes approximately 26% of Great-West's adjusted earnings, marking a growth trajectory that mirrors efforts by Canadian financial institutions to diversify beyond domestic borders. Concurrently, Great-West's Canada Life subsidiary demonstrates this strategy with its recent acquisition activities in Canada.

The strategic foresight by Empower and its parent, Great-West Lifeco, illustrates a calculated move to capture greater market share within the U.S. retirement services landscape. As the industry continues to evolve, such acquisitions will likely play a key role in shaping service offerings and competitive dynamics among the leading financial service providers.