AM Best comments on the credit ratings of Great-West Lifeco Inc. and its subsidiaries following the announcement of the acquisition of the retirement business of Prudential
OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best indicated 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 entered into a definitive agreement to acquire the full retirement business of Prudential Financial, Inc. (Prudential) for approximately 4.45 billion CAD (3.55 billion USD).
Lifeco expects to finance the acquisition with approximately $ 1.15 billion of limited recourse bonds and $ 1.0 billion of short-term debt, in addition to existing resources. While Lifeco’s leverage will initially increase to just over 30%, AM Best expects the leverage and interest coverage ratios to improve relatively quickly, as the acquisition is expected to be immediately accretive to profits and short-term loans will be repaid. AM Best notes that Empower Retirement has a favorable track record of successfully acquiring and integrating past acquisitions and that the acquisition of Prudential’s retirement business will significantly increase the scale and market share of the Company. company in the full-service retirement space.
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