Voya Financial to Halt Sales of Life Insurance to Individuals
November 1, 2018 by Frank Klimko
NEW YORK – Voya Financial Inc. said it plans to discontinue new individual life-insurance sales at the end of the year and will focus on selling policies through the workplace and institutional clients. Existing life-insurance policies would be paid as they come due.
The decision was based on a strategic review of the company’s individual life business, Rodney O. Martin Jr., company chairman and chief executive officer, said in a statement.
“We carefully considered our broader, go-forward strategy of largely focusing on the workplace and institutional clients, analyzed the options available to us,” Martin said, “and concluded that ceasing new sales aligns with our plans to focus on our higher-growth, higher-return, capital-light businesses: retirement, investment management and employee benefits.”
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“Further, continuing to own the in-force block will benefit shareholders in that it will provide earnings and capital diversification and generate higher free cash flows,” Martin said. “Specifically, we expect our individual life business to increase free cash flow conversion to 70% to 80% and generate meaningful free cash flow of at least $1 billion over the next five to six years.”
Voya is not the only insurer in the past 18 months to change its approach to individual life insurance sales. Last year, MetLife Inc., completed the spin-off of the bulk of its U.S. retail life-insurance operations into a new company named Brighthouse Financial Inc., which became a publicly traded company in August of 2017 (Best’s News Service, Aug. 7, 2017).
For the third quarter, total individual life sales — which primarily consisted of indexed life insurance — were $20 million, up from $18 million, Voya said in a statement. The unit has contributed about 20% of operating earnings in recent quarters, it said.
Overall, the company showed a healthy third quarter, Martin said. Third-quarter net income available to common shareholders fell slightly to $142 million, from $149 million.
“During the third quarter, we continued to make strong progress on our 2018 priorities,” Martin said. “Our commitment to achieving our growth plans this year was demonstrated in the third quarter by positive net flows in both retirement and investment management and an increase in annualized in-force premiums in employee benefits. We also generated strong bottom-line results.”
Last year, Voya began to divest its closed-block variable annuity and individual fixed and fixed indexed annuity businesses as part of its attempt to focus on higher growth and capital-light lines. At the time, Martin called it a “landmark transaction that will open a new chapter” for the company (Best’s News Service, Dec. 21, 2017).
Voya Retirement Insurance and Annuity Co. currently has a Best’s Financial Strength Rating of A (Excellent).
On the afternoon of Oct. 31, shares of Voya Financial (NYSE: VOYA) were trading at $43.76, up 5.78% from the previous close.
(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)
BN-NJ-10-31-2018 1608 ET #