Voya Financial, Inc. (VOYA - Free Report) has agreed to sell substantially all its individual life and other legacy non-retirement annuities businesses to Resolution Life Group Holdings. The deal, following the fulfillment of certain approvals and conditions, is expected to be completed in the third quarter of 2020.
Soon after the agreement, shares of Voya Financial rose 5.8% in pre-market trading on Wednesday. Per the agreement terms, the transaction will provide the company with approximately $1.7 billion of deployable capital. This amount is higher than Voya's earlier announced target of generating at least $1 billion of free cash flow from its individual life business through 2024.
To pay its existing debt, the company will use $600 million to $800 million of the proceeds. Voya plans to repurchase $1 billion worth of its stock in 2020 with proceeds of $900 million to $1.1 billion. Voya Financial will also hold a $225 million stake in Resolution Life.
The divestiture will enable Voya to realize significant value for the legacy blocks and to focus on its high-growth, high-return, capital-light businesses. The deal will further enable it to expand its leadership position in the United States and to generate greater value for its stakeholders. Voya will also benefit from its diverse revenue and earnings sources and will have an improved risk profile with reduced interest rate, credit and mortality risk. After the deal is completed, Voya will have a general account of approximately $38 billion.
Last week, another insurer Genworth Financial, Inc. divested the majority of its interest in Genworth MI Canada Inc. to Brookfield Business Partners.
Shares of the Zacks Rank #3 (Hold) company have outperformed the industry year to date. The stock has gained 53.8% compared with the industry’s increase of 29.4%.
Stocks to Consider
Some better-ranked stocks from the same space are American Equity Investment Life Holding Company (AEL - Free Report) and Primerica Incorporation (PRI - Free Report) . While American Equity Investment sports a Zacks Rank #1 (Strong Buy), Primerica carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Equity Investment Life Holding Company provides life insurance products and services in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 47.63%.
Primerica provides financial products to middle-income households in the United States and Canada. It underwrites individual term life insurance products. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 4.10%
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