Power Corp. executives are keeping a close eye on the U.S retirement-savings business as they look to expand their presence south of the border through acquisitions.
Already the second-largest U.S. provider of defined-contribution plans – often called 401(k)s – Power Corp. is looking to boost its U.S.-based-Empower Retirement division.
The insurance and investment giant’s U.S growth plan comes at at time when major financial-service companies are looking to expand outside the Canadian market. Power Corp. – through its main subsidiary, Power Financial – is parent company to Great-West Lifeco, IGM Financial and robo-adviser Wealthsimple.
“We look at everything that comes up in [the U.S retirement business],” co-chief executive Paul Desmarais Jr. said during a news conference following the company’s annual general meeting in Toronto. “We feel it is a business that could be consolidated and we want to be a big player in that business."
Mr. Desmarais Jr., along with his brother, André Desmarais, also co-CEO of Power Corp., pointed to the U.S. retirement industry as a “strategically strong position” to grow in. (Power Corp. is also present in the U.S mutual-fund market through asset manager Putnam Investments.)
In the 2018 annual general meeting, Mr. Desmarais Jr. estimated the company would spend $10-billion over the next five years to continue to look for consolidation opportunities in the U.S market.
Power Corp. first became a consolidator in the U.S. retirement-savings business in 2014 when Great-West Financial completed the acquisition of J.P. Morgan Retirement Plan Services’ record-keeping business. As a result, the “Empower Retirement" brand was launched to consolidate the retirement-services businesses of Great-West Financial, J.P Morgan and mutual-fund provider Putnam Investments.
Earlier this year, Great-West Life sold its U.S. individual life-insurance and annuity business for $1.6-billion, shedding a stable, but capital-heavy, division. Expected to close in the second quarter of 2019, the transaction will allow Power to more heavily focus on the defined-contribution retirement market and its Empower Retirement brand.
“I think if you are going to succeed over the long term, given our position in Canada, we need to be successful in the U.S.,” André Desmarais said. “It will make a big difference for the corporation.”
In addition to its growth in the United States, Power Corp. and its subsidiary IGM Management combine to own 28 per cent of China Asset Management, the largest mutual-fund provider in China with $174.5-billion under management as of Dec. 31, 2018.
Several Canadian competitors – such as Manulife Financial Corp. and Sun Life Financial Inc. – have begun to see significant growth in Asian markets. When asked if Power Corp. was “reconsidering” its Asian plans as a result of the recent U.S.-China trade wars, André Desmarais said no, but said they would continue to “monitor the overall situation because politics can have a big effect on what happens economically in a country.”