Voya Offloads $100 Billion of Life Policies, Freeing Capital

Aug 15, 2014 9:37 am ET

(Updates with share gains in the sixth paragraph.)

Aug. 15 (Bloomberg) -- Voya Financial Inc. struck a deal to transfer life insurance policies with a face value of about $100 billion to Reinsurance Group of America Inc., freeing up funds for the former U.S. arm of ING Groep NV.

The deal for about 170,000 term-life policies will create about $200 million of excess capital, New York-based Voya said today in a statement.

Chief Executive Officer Rod Martin, 62, is working to improve profitability by shifting the mix of business at Voya. He’s retreated from sales of term-life insurance and other products that tie up large amounts of funds to back future payouts, while focusing on retirement products.

“We are targeting product segments of the life insurance market that best match our lower-capital, higher-returns approach,” Martin said today in the statement. “This is an opportunistic transaction for Voya Financial that aligns with our focus on improving the value of the company.”

Voya said it will record an immediate loss of $100 million to $120 million on the deal, which it expects to be completed in the fourth quarter. Barclays Plc was Voya’s financial adviser and Sutherland Asbill & Brennan LLP provided legal advice. ING Groep, the biggest Dutch lender, owns about 43 percent of Voya after reducing its stake through three public offerings.

Voya climbed 0.4 percent to $38.01 at 9:32 a.m. in New York trading, bringing its advance for the year to 8.1 percent. Reinsurance Group gained 0.1 percent to $81.79 and is up 5.7 percent since Dec. 31.

Servicing Policies

RGA, the reinsurer that was spun off from MetLife Inc., has built a business by taking on obligations from other carriers. The Chesterfield, Missouri-based company will earn premiums on the insurance and pay claims while a Voya subsidiary will administer and service the policies.

“This transaction leverages RGA’s deep expertise and understanding of the U.S. mortality market,” Reinsurance Group CEO Greig Woodring said in a separate statement.

--With assistance from Matthew Monks in New York.