(Reuters) – Canadian insurer Great-West Lifeco Inc (Lifeco) said on Wednesday its U.S. unit would buy Prudential Financial Inc’s full-service retirement business for about C$4.45 billion ($3.51 billion) in one of its biggest deals yet as it accelerates its expansion.

FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao

The acquisition by Empower Retirement, the second-largest retirement plan provider in the U.S., will expand the subsidiary’s contribution to earnings to 30% by the end of 2023, from 10% in 2020, according to Lifeco, adding about $325 million in after-tax earnings by the end of 2023, Lifeco said.

Lifeco shares climbed 1.5% to C$37.11 in morning trading in Toronto, compared with a 0.9% gain in the Toronto stock benchmark. Prudential shares jumped 3.3% to $102.31, versus a 0.6% increase in the S&P 500 index.

Winnipeg, Manitoba-based Lifeco has spent billions of dollars on a raft of U.S. acquisitions in recent years, including the retirement plan business of MassMutual, which closed in January, and financial technology company Personal Capital, which it completed in mid-2020.

The Prudential deal underscores continued interest among Canadian insurers in expanding overseas amid rising premiums and high levels of capital. Overseas acquisitions by Canadian insurers reached a 20-year high last year, according to Refinitiv data.

While rivals Manulife Financial Corp and Sun Life Financial have been expanding more in Asia, Great-West is focused on growing in the U.S., as the population of Americans aged 65 and over is expected to more than double in the next 40 years.

The deal will expand Empower’s customer base to more than 16.6 million, from over 12 million in 2020, Lifeco said in a statement, boosting assets under administration to $1.4 trillion, from $1 trillion in January.

The deal value includes about $2.1 billion of capital to support the business, and the purchase will be financed with a combination of debt and existing resources, it said.

The deal, which is expected to close in the first quarter of 2022, will include a share repurchase and a reinsurance transaction.

Prudential’s full-service retirement business covers about 4 million participants, 4,300 workplace savings plans and $314 billion in assets under administration.

$1 = 1.2682 Canadian dollars

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