Empower Achieves Record Quarterly Earnings of $211M for Q1 2024 Representing 29% Year-over-Year Growth
Empower reported record first-quarter earnings of $211 million for Q1 2024, showing a 29% year-over-year growth. The company administers over $1.6 trillion in assets for 18.6 million individuals. The integration of Prudential’s retirement business was successfully completed, resulting in increased defined contribution plan assets under administration (AUA) and personal wealth unit AUA. Empower achieved growth in fee income, higher surplus income, and dividend income, offset by lower spread income and increased marketing spending. The acquisition of Prudential allowed Empower to offer a broader suite of financial benefits and strengthen its market position.
Record first-quarter earnings of $211 million, representing a 29% year-over-year growth.
Successful integration of Prudential’s retirement business, resulting in increased defined contribution plan assets under administration and personal wealth unit assets under administration.
Achievement of base earnings due to rise in fee income, higher surplus income, and dividend income, offset by lower spread income and increased marketing spending.
Acquisition of Prudential enabled Empower to offer a broader suite of financial benefits and strengthen its market position.
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Insights
The recent announcement by Empower of $211 million in earnings for Q1 2024, which reflects a 29% year-over-year growth, presents a vigorous financial performance, especially considering the successful integration of Prudential's retirement business. The integration has likely contributed positively to Empower's revenue streams through the retention of significant client assets and participants, a factor of stability and potential future growth.
Investors should note the reported increase in Defined Contribution plan assets under administration by over 15% and the Personal Wealth unit's AUA by more than 25%. These figures suggest a robust organic growth bolstered by favorable market conditions and net inflows. The strategy of expanding its product offerings and integrating technological improvements may enhance the company's competitive positioning.
From a financial perspective, the balance between increased fee income, which benefits from higher market valuations, against higher marketing expenses is a pivotal point to consider. Investors should monitor how such expenses influence net margins and the company's capacity to leverage economies of scale from recent acquisitions.
The retirement services and consumer wealth management sectors are described as remaining strong despite a challenging macroeconomic environment. The 91% participant retention rate post-acquisition may be indicative of customer confidence and effective transition management. With Empower's administration of assets for 18.6 million individuals, market momentum in their Institutional Separate Accounts and recent sales in the Separate Account market, there appears to be a dynamic demand for diverse financial products.
Considering Empower’s historical performance post-acquisition and the integration of $657 billion in client assets, it's evident that the firm has experience in scaling operations efficiently. The growth in these sectors may favor investors seeking exposure to financial service providers with a diversified and expanding clientele base.
Empower's focus on acquiring and successfully integrating large retirement businesses, as seen with Prudential, suggests a strategic approach to growth through consolidation in the industry. With the financial services industry often characterized by economies of scale, such initiatives can be expected to deliver cost efficiencies and broaden customer reach in the long term.
For retail investors, the key takeaway is Empower's ability to not only retain but also grow its asset base in a period where many financial institutions are fighting to maintain their market share. The company's ability to manage multi-billion dollar acquisitions and maintain high retention rates of client assets signifies robust operational capability, which is a tangible indicator of management efficacy that could affect future stock performance.
Company completes successful integration of Prudential retirement business
Empower released results as part of a broader quarterly announcement by its parent company,
Empower announced that defined contribution plan assets under administration (AUA)1 increased more than
“The market for retirement services and consumer wealth management remains strong, even in the face of a macroeconomic climate presenting mixed messages,” said Empower President and CEO Edmund F. Murphy III. “The millions of individuals we serve are staying the course with strong support from their advisors, workplace retirement plans, and employers.”
Prudential Completion
Empower closed its acquisition of Prudential’s full-service retirement business in April 2022, intent on capitalizing on both firms’ expertise and scaling Empower’s technological excellence and product capabilities. A comprehensive integration program moving retirement plans from the Prudential recordkeeping system to Empower launched in early 2023 and completed in the second quarter of 2024.
Through the integration process, Empower has earned the trust of more than 2,500 Prudential clients and 3.6 million participants — a
“This program was focused on elevating the services available to millions of retirement investors, their employers and advisors while asking them to trust us,” said Empower President and Chief Operating Officer Rich Linton. “Our long history of successfully integrating new businesses has enabled us to complete complex onboarding processes while continuing to deliver for our customers. We are proud of the work we have accomplished on their behalf and the trust that legacy Prudential clients have shown us.”
Through the Prudential acquisition, Empower is leveraging a stronger suite of financial benefits beyond defined contribution plan services, including defined benefit and non-qualified plan offerings. In addition, the company has seen significant market momentum in Institutional Separate Accounts, an in-plan investment offering strengthened after acquiring Prudential’s business. In 2023, Empower achieved approximately
A legacy of integration success
Empower has successfully integrated 48,000 plans and 6.7 million participant accounts from 10 different platforms beginning with the 2014 acquisition of J.P. Morgan’s retirement business. In subsequent years, Empower integration programs have included the acquired MassMutual business (2021), Prudential and other smaller acquisitions. In total, Empower has integrated
The combined firm will continue to serve retirement plans sponsored by a broad spectrum of employers. These include mega, large, mid-size and small corporate 401(k) plans; government plans ranging in scale from state-level plans to municipal agencies; not-for-profits such as hospitals and religious organizations’ 403(b) plans. In addition, Empower serves collectively bargained Taft-Hartley plans.
About Empower
Recognized as the second-largest retirement services provider in the
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As of March 31, 2024. Assets under Administration (AUA) refers to the assets administered by Empower. AUA does not reflect the financial stability or strength of a company. |
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Pensions & Investments DC Recordkeeper Survey (2024). Ranking measured by total number of participants as of December 31, 2023. |
Securities, when presented, are offered and/or distributed by Empower Financial Services, Inc., Member FINRA/SIPC. EFSI is an affiliate of Empower Retirement, LLC; Empower Funds, Inc.; and registered investment adviser Empower Advisory Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal, or tax recommendations or advice.
Empower refers to the products and services offered by Empower Annuity Insurance Company of America and its subsidiaries. “EMPOWER” and all associated logos and product names are trademarks of Empower Annuity Insurance Company of America.
©2024 Empower Retirement, LLC. All rights reserved. WF-3267103-0324 RO-DATE24
Learn more:
To learn more about how we’re empowering plan sponsors and their participants to be more engaged in their retirement plans than ever before, call us on 800-719-9914.
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Media contacts:
Stephen Gawlik - Stephen.Gawlik@empower.com
Mandy Cassano - Mandy.Cassano@empower.com
Source: Empower
