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Voya Financial (VOYA) Q3 Earnings Beat Estimates, Fall Y/Y
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Voya Financial (VOYA - Free Report) reported third-quarter 2022 adjusted operating earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 84%. The bottom line however decreased 10.5% year over year.
Voya Financial’s results reflected lower alternative investment income. In Investment Management, lower investment capital revenues were partially offset by higher underwriting results in Health Solutions and a favorable change in DAC/VOBA and other intangibles unlocking in Wealth Solutions.
Voya Financial, Inc. Price, Consensus and EPS Surprise
Total revenues amounted to $1.3 billion, which decreased 33.4% year over year. Net investment income declined 22.4% year over year to $522 million. Meanwhile, fee income of $435 million decreased 10.7% year over year. Premiums totaled $607 million, up 11.6% from the year-ago quarter.
Total expenses were $1.2 billion, down 10% from the year-ago quarter.
As of Sep 30, 2022, VOYA’s assets under management and assets under administration & advisement totaled $710.9 billion.
Segmental Update
Wealth Solutions reported adjusted operating earnings of $168 million, which decreased 47.3% year over year. The downside was due to lower investment income, lower fee-based margin, unfavorable change in DAC/VOBA and other intangibles unlocking, partially offset by lower administrative expenses. Wealth Solutions however generated positive full-service net flows of $555 million in the reported quarter, up 56.3% year over year.
Health Solutions’ adjusted operating earnings amounted to $149 million, which increased 109.9% year over year in the third quarter, accounting for the higher underwriting results, partially offset by lower overall investment income and higher net expenses. Total annualized in-force premiums were $2.8 billion, up 9.7% year over year. The increase reflects growth across all product lines, including a 22% increase in Voluntary.
Investment Management posted adjusted operating earnings of $38 million, which plunged 39.7% year over year, attributable to lower investment capital revenues and higher administrative expenses. Total assets under management were $317.3 billion as of Sep 30, 2022, up 25.6% year over year. Institutional net outflows for the quarter were $889 million.
Corporate incurred an adjusted operating loss of $56 million, narrower than the prior-year quarter’s loss of $65 million, attributable to lower incentive compensation and lower interest expense due to debt extinguishments.
Financial Update
Voya Financial exited the third quarter with cash and cash equivalents of $840 million, which decreased 40.1% year over year. Total investments amounted to $39.5 billion, down 13.3% year over year.
Long-term debt at third-quarter end declined 19.3% year over year to $2.1 billion. The financial leverage ratio deteriorated 980 basis points (bps) year over year to 37.4%. As of Sep 30, 2022, book value per share (excluding AOCI) was $56.24, which increased 9.4% year over year.
Voya Financial exited the third quarter with about $700 million in excess capital.
Voya had an accelerated share repurchase (ASR) agreement to repurchase $250 million worth shares — $200 million of which were delivered during the second quarter. The remaining $50 million was received in the third quarter of 2022. VOYA had $271 million remaining under its share repurchase authorization as of Sep 30, 2022.
Acquisitions
On Nov 1, 2022, Voya inked a definitive agreement to acquire Benefitfocus, Inc. Pending approval, the transaction will close in the first quarter of 2023. The transaction is expected to ramp up Voya’s workplace-centered strategy and increase capacity to meet the growing demand for comprehensive benefits and savings solutions at the workplace. The transaction is expected to be immediately accretive, on a cash basis, to Voya’s adjusted operating earnings per share.
Voya Financial also closed the Czech Asset Management, L.P. buyout on Nov. 1. Czech Asset is a leading private credit asset manager dedicated to the U.S. middle market. The addition supports VOYA’s focus on the expansion of its private and alternative capabilities, which is a key growth initiative in Investment Management.
Guidance
Banking on organic growth, margin expansion and capital management initiatives, VOYA is on track to achieve 12% to 17% adjusted operating earnings per share growth in 2022.
Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross premiums written increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.
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Voya Financial (VOYA) Q3 Earnings Beat Estimates, Fall Y/Y
Voya Financial (VOYA - Free Report) reported third-quarter 2022 adjusted operating earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 84%. The bottom line however decreased 10.5% year over year.
Voya Financial’s results reflected lower alternative investment income. In Investment Management, lower investment capital revenues were partially offset by higher underwriting results in Health Solutions and a favorable change in DAC/VOBA and other intangibles unlocking in Wealth Solutions.
Voya Financial, Inc. Price, Consensus and EPS Surprise
Voya Financial, Inc. price-consensus-eps-surprise-chart | Voya Financial, Inc. Quote
Behind the Headlines
Total revenues amounted to $1.3 billion, which decreased 33.4% year over year. Net investment income declined 22.4% year over year to $522 million. Meanwhile, fee income of $435 million decreased 10.7% year over year. Premiums totaled $607 million, up 11.6% from the year-ago quarter.
Total expenses were $1.2 billion, down 10% from the year-ago quarter.
As of Sep 30, 2022, VOYA’s assets under management and assets under administration & advisement totaled $710.9 billion.
Segmental Update
Wealth Solutions reported adjusted operating earnings of $168 million, which decreased 47.3% year over year. The downside was due to lower investment income, lower fee-based margin, unfavorable change in DAC/VOBA and other intangibles unlocking, partially offset by lower administrative expenses. Wealth Solutions however generated positive full-service net flows of $555 million in the reported quarter, up 56.3% year over year.
Health Solutions’ adjusted operating earnings amounted to $149 million, which increased 109.9% year over year in the third quarter, accounting for the higher underwriting results, partially offset by lower overall investment income and higher net expenses. Total annualized in-force premiums were $2.8 billion, up 9.7% year over year. The increase reflects growth across all product lines, including a 22% increase in Voluntary.
Investment Management posted adjusted operating earnings of $38 million, which plunged 39.7% year over year, attributable to lower investment capital revenues and higher administrative expenses. Total assets under management were $317.3 billion as of Sep 30, 2022, up 25.6% year over year. Institutional net outflows for the quarter were $889 million.
Corporate incurred an adjusted operating loss of $56 million, narrower than the prior-year quarter’s loss of $65 million, attributable to lower incentive compensation and lower interest expense due to debt extinguishments.
Financial Update
Voya Financial exited the third quarter with cash and cash equivalents of $840 million, which decreased 40.1% year over year. Total investments amounted to $39.5 billion, down 13.3% year over year.
Long-term debt at third-quarter end declined 19.3% year over year to $2.1 billion. The financial leverage ratio deteriorated 980 basis points (bps) year over year to 37.4%. As of Sep 30, 2022, book value per share (excluding AOCI) was $56.24, which increased 9.4% year over year.
Voya Financial exited the third quarter with about $700 million in excess capital.
Voya had an accelerated share repurchase (ASR) agreement to repurchase $250 million worth shares — $200 million of which were delivered during the second quarter. The remaining $50 million was received in the third quarter of 2022. VOYA had $271 million remaining under its share repurchase authorization as of Sep 30, 2022.
Acquisitions
On Nov 1, 2022, Voya inked a definitive agreement to acquire Benefitfocus, Inc. Pending approval, the transaction will close in the first quarter of 2023. The transaction is expected to ramp up Voya’s workplace-centered strategy and increase capacity to meet the growing demand for comprehensive benefits and savings solutions at the workplace. The transaction is expected to be immediately accretive, on a cash basis, to Voya’s adjusted operating earnings per share.
Voya Financial also closed the Czech Asset Management, L.P. buyout on Nov. 1. Czech Asset is a leading private credit asset manager dedicated to the U.S. middle market. The addition supports VOYA’s focus on the expansion of its private and alternative capabilities, which is a key growth initiative in Investment Management.
Guidance
Banking on organic growth, margin expansion and capital management initiatives, VOYA is on track to achieve 12% to 17% adjusted operating earnings per share growth in 2022.
Zacks Rank
Voya Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross premiums written increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.