AM Best Comments on Credit Ratings of Great-West Lifeco Inc. and Its Subsidiaries Following Announced Acquisition of Prudential’s Retirement Business
AM Best notes that Empower Retirement has a favorable track record of successfully acquiring and integrating prior acquisitions and the acquisition of Prudentials retirement business will significantly increase the companys scale and market share in the full-service retirement space.
AM Best has commented that the Credit Ratings (ratings) of Great-West Lifeco Inc. (Lifeco) and its subsidiaries remain unchanged following the July 21, 2021 announcement that its U.S. subsidiary, Empower Retirement (legally known as Great West Life & Annuity Insurance Company) has reached a definitive agreement to acquire Prudential Financial, Inc.’s (Prudential) full-service retirement business for approximately CAD 4.45 billion (USD 3.55 billion).
Lifeco expects to fund the acquisition with approximately USD 1.15 billion of limited recourse capital notes and USD 1.0 billion of short-term debt, in addition to existing resources. While Lifeco’s financial leverage will initially increase to just over 30%, AM Best expects financial leverage and interest coverage ratios to improve relatively quickly as the acquisition is expected to be immediately accretive to earnings and short-term borrowings are paid down. AM Best notes that Empower Retirement has a favorable track record of successfully acquiring and integrating prior acquisitions and the acquisition of Prudential’s retirement business will significantly increase the company’s scale and market share in the full-service retirement space.
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