A.M. Best has reiterated the Long-Term Issuer Credit Ratings (Long Term ICR) of “bbb+” and Long-Term Issue Credit Ratings of Voya Financial Inc. (VOYA). Concurrently, the rating agency affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” of the key life insurance entities of Voya Financial. The outlook is stable.
The rating affirmations of the life insurance entities came on the back of strong balance sheet, operational excellence, favorable business profile and effective enterprise risk management. Voya Financial’s risk-based capital ratio of 479% in 2018 was above the new target of 400%. The company exited 2018 with excess capital of $871 million.
The rating also takes into account Voya Financials’ decision to discontinue new individual life insurance sales effective Dec. 31, 2018, and divest closed block variable annuity and individual fixed annuity segments. This, in turn, reduced the company’s exposure to insurance risks. In fact, Voya Financial estimates $110 to $130 million of cost savings by the middle of 2019 from the closure of the annuity transaction and $20 million of expected savings from its decision to discontinue sales of individual life insurance.
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence as well as in maintaining credit worthiness. On the flip side, rating downgrades damage business, apart from increasing the cost of future debt issuances. We believe the ratings will help Voya Financial to retain investor confidence and write more businesses, going forward.
Shares of this Zacks Rank #2 (Buy) insurer have rallied 32.4% year to date, outperforming the industry’s increase of 21.8%. Focus on high-growth, high-return, capital-light businesses should help the company retain the bull run.
Other Stocks to Consider
Some other top-ranked insurers include Health Insurance Innovations, Inc. HIIQ, Manulife Financial Corp. MFC and Berkshire Hathaway Inc. BRK.B.
Health Insurance Innovations operates as a cloud-based technology platform and distributor of individual and family health insurance plans, and supplemental products in the United States. The company delivered four-quarter average positive surprise of 9.02%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Manulife Financial provides financial advice, insurance, and wealth and asset management solutions for individuals, groups, and institutions in Asia, Canada, and the United States. The company delivered four-quarter average positive surprise of 6.06%. The stock carries a Zacks Rank #2.
Berkshire Hathaway engages in insurance, freight rail transportation and utility businesses. The company delivered four-quarter average positive surprise of 11.26%. The stock carries a Zacks Rank #2.
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