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VOYA to Strengthen Wealth Solutions With Buyout, Shares Rise
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Shares of Voya Financial, Inc. (VOYA - Free Report) gained 0.5% in the last trading session after the insurer agreed to buy OneAmerica Financial, Inc.’s full-service retirement plan business for an upfront purchase price of $50 million. The transaction, upon materialization, will strengthen the acquirer’s full-service retirement business within Wealth Solutions. This segment accounted for about 41% of total adjusted operating revenues in 2023.
OneAmerica Financial is a diversified mutual insurance organization. Its full-service retirement plan business comprises 401(k), 403(b), 457, non-qualified deferred compensation plans and employee stock ownership plans.
Pending regulatory approvals and other customary closing conditions, the transaction is expected to be completed by Jan. 1, 2025.
Financial Considerations for VOYA
Apart from the upfront payment, Voya will have to pay a deferred consideration of up to $160 million, payable in the second quarter of 2026, depending on plan persistency and transition incentives.
Voya will fund the upfront price, transaction expenses of about $200 million with the existing excess capital of $0.4 billion as of June 30, 2024.
Voya Financial will use the earnings and cash flows of the acquired business to pay the maximum portion of the deferred component of the purchase price.
Acquisition Rationale Favoring VOYA
The addition of OneAmerica Financial’s full-service retirement plan business to VOYA’s portfolio will enhance the latter’s full-service retirement business by adding a broader set of capabilities as well as creating new opportunities for distribution partnerships. It will also help it serve workplace benefits and savings plans in a better way. It will also increase Voya’s Defined Contribution client assets to $580 billion from $519 billion currently, as well as total plan and participant count to 0.06 million and 7.9 million, respectively.
The acquisition will add $47 billion of assets in the emerging and mid-market and expand Voya’s general account to nearly $38 billion by adding about $4 billion of spread-based assets under management. Also, it will extend its top positions in large markets by adding about $15 billion of recordkeeping assets.
This Zacks Rank #3 (Hold) insurer expects to generate not less than $75 million of pre-tax adjusted operating earnings and more than $200 million of net revenues in the first year post-closing.
On the other hand, OneAmerica stands to benefit from gaining access to Voya’s market-leading customer digital experience and core recordkeeping services.
Voya’s Inorganic Growth
Voya Financial has pursued strategic acquisitions that have helped gain new product and distribution capabilities. In January 2023, Voya acquired Benefitfocus, Inc. The deal has expanded Voya’s ability to deliver innovative solutions for employers and better health plans to improve the financial, physical and emotional well-being of their employees. Benefitfocus provides Voya with new capabilities, access to new employer markets and a platform to advance a strategic vision for workplace benefits and savings.
Voya Financial and Allianz Global Investors’ (AllianzGI) long-term strategic partnership has added scale and diversification to Voya Investment Management and continues to deliver outstanding financial results.
Strategic acquisitions bode well for long-term growth.
Voya’s Price Performance
Shares of Voya Financial have gained 3.2% year to date, lagging the industry’s increase of 15.5%.
Image Source: Zacks Investment Research
VOYA shares are trading well above the 50-day moving average, indicating a bullish trend.
VOYA Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
Voya Financial’s core businesses are higher-growth, higher-return and capital-light businesses and boast a solid presence. Expansion of the distribution network and achievement of efficiencies through automation are expected to drive performance. It boasts a solid capital position supporting effective capital deployment. Consistent cash flow and sufficient cash balances continue to boost liquidity. All these together should help VOYA shares trend higher.
Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 3.76%.
Year to date, BHF’s stock has lost 20%. The Zacks Consensus Estimate for BHF’s 2024 and 2025 earnings indicates 29.8% and 9.4% year-over-year growth, respectively.
Unum Group delivered a four-quarter average earnings surprise of 2.96%. The stock has gained 20.5% year to date.
The Zacks Consensus Estimate for UNM’s 2024 and 2025 earnings implies a 10.4% and 5.4% year-over-year increase, respectively.
Primerica earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 1.74%.
Year to date, PRI’s stock has gained 23.1%. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings implies 11.7% and 11.6% year-over-year growth, respectively.
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VOYA to Strengthen Wealth Solutions With Buyout, Shares Rise
Shares of Voya Financial, Inc. (VOYA - Free Report) gained 0.5% in the last trading session after the insurer agreed to buy OneAmerica Financial, Inc.’s full-service retirement plan business for an upfront purchase price of $50 million. The transaction, upon materialization, will strengthen the acquirer’s full-service retirement business within Wealth Solutions. This segment accounted for about 41% of total adjusted operating revenues in 2023.
OneAmerica Financial is a diversified mutual insurance organization. Its full-service retirement plan business comprises 401(k), 403(b), 457, non-qualified deferred compensation plans and employee stock ownership plans.
Pending regulatory approvals and other customary closing conditions, the transaction is expected to be completed by Jan. 1, 2025.
Financial Considerations for VOYA
Apart from the upfront payment, Voya will have to pay a deferred consideration of up to $160 million, payable in the second quarter of 2026, depending on plan persistency and transition incentives.
Voya will fund the upfront price, transaction expenses of about $200 million with the existing excess capital of $0.4 billion as of June 30, 2024.
Voya Financial will use the earnings and cash flows of the acquired business to pay the maximum portion of the deferred component of the purchase price.
Acquisition Rationale Favoring VOYA
The addition of OneAmerica Financial’s full-service retirement plan business to VOYA’s portfolio will enhance the latter’s full-service retirement business by adding a broader set of capabilities as well as creating new opportunities for distribution partnerships. It will also help it serve workplace benefits and savings plans in a better way. It will also increase Voya’s Defined Contribution client assets to $580 billion from $519 billion currently, as well as total plan and participant count to 0.06 million and 7.9 million, respectively.
The acquisition will add $47 billion of assets in the emerging and mid-market and expand Voya’s general account to nearly $38 billion by adding about $4 billion of spread-based assets under management. Also, it will extend its top positions in large markets by adding about $15 billion of recordkeeping assets.
This Zacks Rank #3 (Hold) insurer expects to generate not less than $75 million of pre-tax adjusted operating earnings and more than $200 million of net revenues in the first year post-closing.
On the other hand, OneAmerica stands to benefit from gaining access to Voya’s market-leading customer digital experience and core recordkeeping services.
Voya’s Inorganic Growth
Voya Financial has pursued strategic acquisitions that have helped gain new product and distribution capabilities. In January 2023, Voya acquired Benefitfocus, Inc. The deal has expanded Voya’s ability to deliver innovative solutions for employers and better health plans to improve the financial, physical and emotional well-being of their employees. Benefitfocus provides Voya with new capabilities, access to new employer markets and a platform to advance a strategic vision for workplace benefits and savings.
Voya Financial and Allianz Global Investors’ (AllianzGI) long-term strategic partnership has added scale and diversification to Voya Investment Management and continues to deliver outstanding financial results.
Strategic acquisitions bode well for long-term growth.
Voya’s Price Performance
Shares of Voya Financial have gained 3.2% year to date, lagging the industry’s increase of 15.5%.
Image Source: Zacks Investment Research
VOYA shares are trading well above the 50-day moving average, indicating a bullish trend.
VOYA Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
Voya Financial’s core businesses are higher-growth, higher-return and capital-light businesses and boast a solid presence. Expansion of the distribution network and achievement of efficiencies through automation are expected to drive performance. It boasts a solid capital position supporting effective capital deployment. Consistent cash flow and sufficient cash balances continue to boost liquidity. All these together should help VOYA shares trend higher.
Stocks to Consider
Some top-ranked stocks from the insurance space are Brighthouse Financial (BHF - Free Report) , Unum Group (UNM - Free Report) and Primerica (PRI - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 3.76%.
Year to date, BHF’s stock has lost 20%. The Zacks Consensus Estimate for BHF’s 2024 and 2025 earnings indicates 29.8% and 9.4% year-over-year growth, respectively.
Unum Group delivered a four-quarter average earnings surprise of 2.96%. The stock has gained 20.5% year to date.
The Zacks Consensus Estimate for UNM’s 2024 and 2025 earnings implies a 10.4% and 5.4% year-over-year increase, respectively.
Primerica earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 1.74%.
Year to date, PRI’s stock has gained 23.1%. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings implies 11.7% and 11.6% year-over-year growth, respectively.