Empower Achieves Record $1 Billion (CAD) Base Earnings in 2023
- Empower achieved record earnings in 2023, with after-tax base earnings of $749 million (US) or $1 billion (CAD).
- The firm administers over $1.5 trillion in assets for 18.5 million individuals.
- Empower's base earnings have grown by 400% in three years, with a doubled base return on equity in the U.S. over the same period.
- Acquisitions and organic growth have led to a doubling of assets and participants since 2020, resulting in higher market share and gains in scale.
- Empower's Empower Personal Wealth offering has driven annual net inflows of 21% over the last three years.
- The Prudential integration program achieved pretax run-rate cost synergies of $80 million at the end of 2023.
- None.
Insights
The reported earnings and growth trajectory of Empower reflect a robust expansion strategy in the retirement and wealth management sector. The 17% year-over-year increase in defined contribution plan assets and the 31% growth in Personal Wealth assets are indicative of a strong market presence and an effective business model. The strategic acquisitions, notably of the Prudential retirement business and the organic growth underscore a significant consolidation within the industry.
Empower's growth metrics, such as the 400% increase in base earnings over three years and the doubling of base return on equity in the U.S., suggest a competitive advantage that may appeal to investors. The company's commitment to digital innovation, combined with human advisory, aligns with current consumer demand for tech-enabled financial services. The 21% annual net inflows in the Personal Wealth segment highlight the efficacy of this approach.
Furthermore, the announcement of a 7% dividend increase by Great-West Lifeco could be seen as a positive signal to shareholders, reflecting confidence in the firm's financial health and future prospects. However, investors should consider the broader economic conditions, such as interest rate trends and market volatility, which could impact the retirement and wealth management industry.
Empower's financial performance, particularly the $749 million in after-tax base earnings, is a critical indicator of its profitability and operational efficiency. The increase in earnings and assets under administration (AUA) suggests that the firm has effectively leveraged its scale and market position to enhance shareholder value. The reported pretax run-rate cost synergies of $80 million from the Prudential acquisition demonstrate a strategic focus on cost management and integration success.
Investors should note the potential for further cost synergies as the integration completes in the first half of 2024. This could lead to improved margins and potentially higher profitability. Additionally, the firm's Compound Annual Growth Rate (CAGR) of 54% in wealth clients over a three-year period is remarkable and could be a harbinger of sustained revenue growth.
Given the firm's performance and strategic positioning, stakeholders may anticipate a favorable impact on the stock price of Great-West Lifeco. However, it is essential to monitor the execution of ongoing integration efforts and the company's ability to maintain client retention and asset growth in a competitive landscape.
The expansion of Empower's business, particularly in the context of the broader economic environment, reflects a strategic response to demographic trends and the increasing demand for retirement planning and wealth management services. The firm's ability to double its customer base and assets since 2020, during a period marked by economic uncertainty and market fluctuations, suggests resilience and adaptability.
The integration of the Prudential retirement business and the anticipation of full completion later in the year could further solidify Empower's market position. High retention levels post-acquisition indicate customer confidence and successful transition strategies. However, it is critical to remain vigilant about potential economic headwinds, such as inflationary pressures and shifts in monetary policy, which could affect consumer financial behavior and investment patterns.
An in-depth analysis of the firm's performance should also consider the broader industry's response to regulatory changes and technological advancements, as these factors will continue to shape the competitive landscape and influence Empower's long-term growth trajectory.
Firm has doubled customer base and assets under administration since 2020
Empower, a leading provider of retirement and wealth management services, released results as part of a broader quarterly announcement by its parent company,
Highlights from Empower’s reported results at the close of 2023 include:
Empower Workplace Solutions (EWS):
-
Defined contribution plan assets under administration (AUA)1 increased
17% year over year to$1.5 trillion - Participants served: a record 17.9 million.
-
Funded sales1 of
$54 billion $2 trillion
Empower Personal Wealth™ (EPW):
-
AUA1 was
$72 billion 31% over the prior year as a result of both strong net inflows and positive markets. -
Wealth clients are up
268% , or a Compound Annual Growth Rate (CAGR)1 of54% , over the three-year period.
With this combination of increased scale and growth, Empower’s base earnings1 have grown by
“We delivered a strong quarter at Empower, with positive cash flows and strong organic growth across both Workplace Solutions and Personal Wealth,” said Empower President and CEO Edmund F. Murphy III. “This continues an extended period of expansion that has been our hallmark since Empower was created in 2014.”
Acquisitions + organic growth
Since its inception in 2014, Empower has grown through a combination of strategic acquisitions and organic growth. Today, Empower Workplace Solutions is the second-largest retirement services provider in the
This combination has led to a doubling of assets and participants since 2020, resulting in higher market share and material gains in scale. Organic net flows1 in Empower’s defined contribution business have averaged
“Through our investment, Empower has made a significant commitment to the retirement services market, and our intent is to build on that through continual service to employers, plan participants and the advisors who serve them,” said Murphy.
Empower Personal Wealth’s offering, which combines a powerful and unique digital experience with human advice, has driven annual net inflows1 of
“Empower is extending its legacy of being a valued provider of financial services to more people who want financial advice, education and investment expertise,” said Murphy. “The last year proved that we are positioned to grow this business and help our clients seize opportunities to build the financial security they want.”
Prudential integration
In 2022, Empower closed on its acquisition of the full-service retirement business it acquired from Prudential. The integration of that business is currently underway and slated for completion later this year. “Retention levels of the clients, participants and assets from the Prudential business remain high and exceed original expectations,” said Murphy.
The Prudential integration program achieved pretax run-rate cost synergies of
ABOUT EMPOWER
Recognized as the second-largest retirement services provider in the
1 This is an unaudited non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures and Ratios” section in the Great-West Lifeco 2023 Annual Management Discussion and Analysis (MD&A) for additional details. Please visit Financial reports - Great-West Lifeco Inc. (greatwestlifeco.com).
2 On January 1, 2024, Great-West Lifeco completed the sale of substantially all of Putnam Investments to Franklin Resources, Inc., operating as “Franklin Templeton.” Great-West Lifeco retained a controlling interest in PanAgora Asset Management, a leading quantitative asset manager, as well as certain other aspects of the Putnam business. The 2023 results presented herein include these results as Empower will assume these retained operations in 2024.
3 Pensions & Investments 2022 Defined Contribution Survey. Ranking measured by total number of participants as of September 2022.
4 As of December 31, 2023. Information refers to all retirement business of Empower Annuity Insurance Company of America (EAICA) and its subsidiaries, including Empower Retirement, LLC; Empower Life & Annuity Insurance Company of
On August 1, 2022, Empower announced that it is changing the names of various companies within its corporate group to align the names with the Empower brand. For more information regarding the name changes, please visit empower.com/name-change.
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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.
Advisory services are provided for a fee by Empower Advisory Group, LLC (EAG). EAG is a registered investment adviser with the Securities and Exchange Commission (SEC) and subsidiary of Empower Annuity Insurance Company of America. Registration does not imply a certain level of skill or training. Investing involves risk. Past performance is not indicative of future returns. You may lose money. All visuals are illustrative only. Actors are not EAG clients.
On April 1, 2022, Empower Annuity Insurance Company of America, an affiliate of Empower Retirement, LLC (Empower) acquired the retirement services business of Prudential Financial, Inc. (Prudential). EAICA acquired Prudential’s retirement services businesses with both a share purchase and a reinsurance transaction. EAICA acquired the shares of Empower Annuity Insurance Company (formerly Prudential Retirement Insurance and Annuity Company), and business written by The Prudential Insurance Company of America was reinsured by EAICA and Empower Life & Annuity Insurance Company of America of
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Stephen Gawlik - Stephen.Gawlik@empower.com
Alex Goss - agoss@stantonprm.com
Source: Empower
FAQ
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