OneAmerica Exec: Pending Retirement Services Acquisition Presents Appealing Unique Niche
June 28, 2014 by Fran Matso Lysiak
OLDWICK, N.J. – OneAmerica agreed to acquire City National Bank’s San Diego retirement services record-keeping business because it has a “unique niche” and some “unique capabilities” that appeal to OneAmerica from a distribution standpoint, according to Bill Yoerger, president, retirement services division of the OneAmerica companies.
The business tends to have a niche with professional services firms, law firms and physician groups, Yoerger said, adding the law firms, in particular, are some of the “most prestigious, largest well-known” firms in the nation.
The retirement services record-keeping business, with $6.5 billion in assets under administration, manages more than 240 plans with 40,000 participants (Best’s News Service, June 26, 2014). The Los Angeles-based bank is a subsidiary of City National Corp. (NYSE: CYN), which has $29.7 billion in assets.
This transaction represents an acquisition of a recordkeeper as opposed to a fund manager, Yoerger said. Overall, it’s a small acquisition in terms of plans and participants but $6.5 billion in assets under administration “is meaningful for us,” he said. OneAmerica would receive record-keeping fees and fees that are billed to the client, the employer plan sponsor, Yoerger said.
The business being acquired primarily includes defined-contribution 401(k) retirement plans but there are some cash-balance plans, Yoerger said. It includes individual directed accounts, which are an investment option under a 401(k) plan “where you can have a self-directed brokerage account at the participant level,” he said.
OneAmerica’s retirement-services businesses serve more than 10,000 plans with 680,000 participants and have more than $24 billion in retirement assets. OneAmerica and City National Bank also would enter into an alliance in which City National will sell OneAmerica retirement products and provide directed trustee services to certain OneAmerica retirement customers.
In addition to retirement plans and services, the products of the Indianapolis-based OneAmerica companies include individual life insurance, annuities, long-term care and employee benefit plans.
The transaction is expected to close later this year. At that time, the business will adopt the name OneAmerica Retirement Services LLC. OneAmerica will continue to do business from the San Diego location and clients will continue to work with their current service team.
The retirement business of the OneAmerica companies comprises 60% of assets under administration and 70% of the top-line sales number, Yoeger said. The primary growth engines for OneAmerica are retirement services and asset-based long-term care, he said
American United Life Insurance Co., and its affiliates, The State Life Insurance Co. and Pioneer Mutual Life Insurance Co., all of which comprise the OneAmerica Group, each currently has a Best’s Financial Strength Rating of A+ (Superior).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
