Voya Financial (VOYA) Q3 Earnings Lag, Underwriting Results Soft
Voya Financial VOYA reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income.
Behind the Headlines
Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Voya Financial, Inc. Price, Consensus and EPS Surprise
Voya Financial, Inc. price-consensus-eps-surprise-chart | Voya Financial, Inc. Quote
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter.
Total benefits and expenses were $1.7 billion, up 29.6% from the year-ago quarter.
As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Segmental Update
Wealth Solutions recorded adjusted operating earnings of $179 million, which increased 39.8% year over year, primarily due to higher alternative investment income as well as favorable equity market impacts to fee-based margins — all partially offset by lower investment spreads. Full-service recurring deposits grew 10.2% to $14.4 billion, driven by growth in Corporate markets.
Health Solutions adjusted operating earnings amounted to $53 million, which declined 65.6% year over year. Annualized in-force premiums and fees grew 21.1% to $3.3 billion, reflecting growth across all product lines, favorable retention and the positive impact of the Benefitfocus acquisition, which closed in January 2023. Excluding Benefitfocus, annualized in-force premiums and fees grew 14.7%.
Investment Management posted adjusted operating earnings, excluding Allianz's noncontrolling interest, of $49 million, which increased 28.9% year over year. Earnings were driven by higher fee revenues from the Allianz Global Investors (AllianzGI) transaction, which closed in July 2022, and positive investment capital returns. Net outflows were $8.4 billion during the trailing 12 months ended Sep 30, 2023.
Corporate incurred an adjusted operating loss of $52 million, narrower than $65 million loss incurred in the year-ago quarter.
Financial Update
Voya Financial exited the quarter with cash and cash equivalents of $0.8 billion, which decreased 9.8% year over year. Total investments amounted to $36.3 billion, down 7.3% year over year.
Long-term debt at quarter-end was $2.1 billion, up 0.05% from 2022 end. The financial leverage ratio deteriorated 10 basis points year over year to 40%. As of Jun 30, 2023, book value per share (excluding AOCI) was $57.55, which decreased 3.4% year over year.
Voya Financial exited the third quarter with more than $0.4 billion in excess capital.
Capital Deployment
Voya Financial deployed $0.3 billion in excess capital in third-quarter 2023, including $140 million in debt redemption, $50 million to acquire an interest in the India joint venture and $96 million in share repurchases and dividends.
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
AMERISAFE, Inc. AMSF reported third-quarter 2023 adjusted earnings per share (EPS) of 61 cents, which missed the Zacks Consensus Estimate by 4.7%. The bottom line declined 16.4% year over year. Operating revenues deteriorated 0.1% year over year to $74.8 million. The top line missed the consensus mark by 0.2%.
Net premiums earned by AMERISAFE amounted to $66.6 million, which decreased 1.7% year over year in the third quarter. The figure missed the Zacks Consensus Estimate by 0.7%. Pre-tax underwriting profit of $6.3 million plunged 35.9% year over year. The net combined ratio of 90.6% increased from 85.4% a year ago and was higher than our estimate of 89.5% due to an increased net underwriting expense ratio.
Unum Group’s UNM third-quarter 2023 operating net income of $1.94 per share beat the Zacks Consensus Estimate by 1%. The bottom line increased 17.6% year over year. Total operating revenues of Unum Group were $3.1 billion, up 5.4% year over year, driven by higher premium income, other income and improved net investment income. The top line beat the Zacks Consensus Estimate by 0.7%.
Premium increased 5.7% from the prior-year quarter to $2.5 billion, which matched our estimate as well as the Zacks Consensus Estimate.
UNM expects after-tax adjusted operating income per share to increase 20% to 25%.
Prudential Financial, Inc. PRU reported third-quarter 2023 adjusted operating income of $3.44 per share, which beat the Zacks Consensus Estimate by 8.9%. Moreover, the bottom line rose 45% year over year. Total revenues of $10.1 billion decreased 52% year over year and missed the Zacks Consensus Estimate by 21.5%. The decline in revenues was due to lower premiums, policy charges and fee income, asset management fees, commissions and other income.
Total benefits and expenses amounted to $8.5 billion, which declined 57.2% year over year in the third quarter. This decrease was due to lower insurance and annuity benefits and amortization of acquisition costs. The figure was lower than our estimate of $11.2 billion.
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