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Analyst Blog

On Aug 19, 2014, shares of Voya Financial, Inc. (VOYA - Snapshot Report) scaled a 52-week high of $38.88 on a solid second-quarter earnings beat. With about 1.01 billion shares exchanging hands in the last trading session, shares closed at $38.79, gaining 0.6%.

The year-to-date return from the stock came in at 10.5%, which was ahead of S&P return of 7.2%.

With respect to earnings performance, this life insurer delivered positive earnings surprises in three of last four quarters with an average beat of 19.7%. In the last reported quarter, Voya Financial delivered operating earnings of 83 cents per share outperforming the Zacks Consensus Estimate by 18.6%. Net income of 96 cents per share also rebounded from the year-ago net loss. This improvement came on the back of better performance at Retirement Solutions and Investment Management Business.

The company engages in share buybacks that in turn aid the bottom line. With $30.5 million spent for buyback in the last quarter, Voya Financial’s board of directors increased the authorization by $500 million.

Voya Financial expects a $500–$700 million block of multi-year guaranteed annuities to flow out in third-quarter 2014, favoring the performance as the block has low returns. The life insurer also hopes to make investments in order to drive business growth in the rest of the year. Voya Financial also expects Retirement’s return on capital to increase over next four quarters due to the reinsurance agreement entered with a third-party reinsurer for a block of deferred fixed annuities. The adjusted return on equity is targeted at 12–13% for 2016.

In its consistent effort to improve the financial position and increase return on capital, Voya Financial has struck a deal to transfer 0.17 million term life policies with a face value of $100 billion to Reinsurance Group of America Inc. (RGA - Analyst Report), creating excess capital of $200 million.

The life insurer also scores strongly with the credit rating agencies. Early July, A.M. Best has upgraded the outlook of Voya Financial to positive from stable.

This Zacks Rank #2 (Buy) stock has been witnessing upward revisions in the Zacks Consensus Estimate in the last 30 days. For 2014, the Zacks Consensus Estimate moved north by 4% to $2.86 per share as 7 of 8 estimates moved up, while for 2015, it rose 1.3% to $3.17 as all of the 8 estimates moved north.
 
Other Stocks to Consider


Investors interested in life insurance companies could consider stocks like Fidelity & Guaranty Life Common (FGL - Snapshot Report) and Health Insurance Innovations, Inc. (HIIQ - Snapshot Report). While Fidelity & Guaranty Life Common sports a Zacks Rank #1 (Strong Buy), Health Insurance Innovations has a Zacks Rank #2 (Buy).  

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