Voya Financial said Thursday that it plans to divest “substantially” all of its Closed Block Variable Annuity (CBVA) segment and its individual fixed and fixed indexed annuity business so that it can focus on “higher-growth, higher-return, capital-light” retirement, investment management and employee benefits businesses.
Voya will divest its annuity business through an agreement with a consortium of investors led by affiliates of Apollo Global Management LLC, Crestview Partners and Reverence Capital Partners.
The move is also intended to “significantly reduce market and insurance risk” for Voya.
“Through this transaction, we are further demonstrating our commitment to delivering shareholder value by eliminating the risk associated with the CBVA segment and securing significant value for our Annuities business,” said Rodney O. Martin Jr., chairman and CEO of Voya.
“Since we became a standalone company in 2013, we have focused on growing our capital-light businesses — specifically, Retirement, Investment Management and Employee Benefits. This transaction accelerates that focus and positions Voya to expand its leadership position as one of the foremost retirement, asset management and employee benefits companies in the United States.”
Voya will retain some of its annuity business, including approximately $6 billion in investment-only products.
The firm will divest Voya Insurance and Annuity Co. (VIAC), the insurance subsidiary that has primarily issued Voya’s variable, fixed and fixed indexed annuities. VIAC will be acquired by Venerable Holdings Inc., a newly formed investment vehicle owned by a consortium of investors led by Apollo, Crestview and Reverence.
Athene Holding Ltd. and Voya also will participate in this consortium, with Voya having a 9.9% equity stake in Venerable.
Voya has “a clearly defined roadmap to grow our bottom-line results following the transaction, and we expect to increase Voya’s quarterly operating earnings per share to between $1.10 and $1.20 within 12 months of the transaction closing,” Martin said.
“To achieve this, we will execute on growth initiatives in Retirement, Investment Management and Employee Benefits.”
Martin added that Voya will also “undertake further efforts to reduce expenses associated with the businesses involved in this transaction, and in corporate and shared services functions,” with the “cumulative effect of these efforts will be to realize $110 to $130 million in cost savings in the 12 months following the close of the transaction.”
The deal, which has been unanimously approved by Voya’s board of directors, is expected to close in the second or third quarter of 2018.
Voya, Martin added, “also will continue with our share-repurchase plans, including our intent to repurchase $1 billion of our common stock by June 30, 2018.”
As a result of its planned exit from the individual annuities business, Voya intends to conduct a strategic review of its Individual Life business during the first half of 2018.
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