Voya Financial to Reinsure Block of Term Life Policies
Voya Financial, Inc. (NYSE: VOYA), which has rebranded from ING U.S., announced today that its wholly owned subsidiaries – ReliaStar Life Insurance Company ("RLI") and Security Life of Denver Insurance Company – have entered into an agreement to transfer via reinsurance an in-force block of approximately 170,000 term life insurance policies to RGA Reinsurance Company, a subsidiary of Reinsurance Group of America, Inc. ("RGA"). RLI will continue to administer and service the policies.
The policies in the block represent approximately $100 billion of life insurance in force backed by over $1.3 billion of statutory reserves as of June 30, 2014.
"This is an opportunistic transaction for Voya Financial that aligns with our focus on improving the value of the company by increasing the operating return on capital of our Individual Life business and our Ongoing Business as a whole," said Rodney O. Martin, Jr., chairman and CEO, Voya Financial, Inc.
Based on financials as of June 30, 2014, Voya Financial expects the transaction will:
- Create excess capital of approximately $200 million;
- Create an immediate non-operating pre-tax GAAP loss of $100 million to $120 million and a deferred non-operating pre-tax GAAP loss that the company expects to recognize at an average rate of approximately $10 million a year over the next 20 years;
- Have minimal ongoing impact to operating earnings; and
- Reduce GAAP capital allocated to the company's Individual Life business by $350 million to $375 million.
On a pro forma, trailing 12-month basis as of June 30, 2014, the company expects the transaction would have added approximately 70 basis points to the operating return on capital (ROC) for Voya Financial's Individual Life segment and approximately 35 basis points to the operating ROC of the company's Ongoing Business.
All figures presented here are estimated based on a pro forma effect as of June 30, 2014. Actual amounts will differ at the time of closing. The transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close in the fourth quarter of 2014.
"Offering asset protection and accumulation products is a key part of our strategy and vision to be America's Retirement Company. In line with Voya Financial's continued transformation, we are targeting product segments of the life insurance market that best match our lower-capital, higher-returns approach, such as indexed life products. Over the past several quarters, we have successfully shifted sales to less capital-intensive products. For example, in the second quarter of 2014, indexed universal life products accounted for 53% of total sales, up from 25% in the second quarter of 2013," added Martin.
"We will continue to work closely with our distribution partners to provide individual insurance products that meet customer needs and provide solid returns for Voya Financial and its shareholders."
Barclays Capital Inc. served as sole financial advisor and Sutherland Asbill & Brennan served as legal advisor to Voya Financial on the transaction.
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About Voya Financial
Voya Financial, Inc. (NYSE: VOYA), which has rebranded from ING U.S., is composed of premier retirement, investment and insurance companies serving the financial needs of approximately 13 million individual and institutional customers in the United States. The company's vision is to be America's Retirement CompanyTM and its guiding principle is centered on solving the most daunting financial challenge facing Americans today — retirement readiness. Working directly with clients and through a broad group of financial intermediaries, independent producers, affiliated advisors and dedicated sales specialists, Voya provides a comprehensive portfolio of asset accumulation, asset protection and asset distribution products and services. With a dedicated workforce of approximately 7,000 employees, Voya is grounded in a clear mission to make a secure financial future possible — one person, one family, one institution at a time. For more information, visit http://voya.com or view our Voya Financial Interactive Company Profile. Follow Voya Financial on Facebook and Twitter @Voya.
Forward-Looking and Other Cautionary Statements
This press release contains forward-looking statements. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as "estimate," "expect," "plan," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance, and include our estimates relating to the financial effects of the transaction discussed herein upon and following its closing. Actual results, effects, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels, (v) persistency and lapse levels, (vi) interest rates, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations and (x) changes in the policies of governments and/or regulatory authorities. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors" and "Management's Discussion and Analysis of Results of Operations and Financial Condition—Trends and Uncertainties" in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on March 10, 2014, and our Quarterly Report for the three months ended March 31, 2014, filed with the Securities and Exchange Commission on May 12, 2014.
SOURCE Voya Financial, Inc.