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Voya Financial (VOYA) Q1 Earnings, Revenues Miss Estimates

Voya Financial VOYA reported first-quarter 2023 adjusted operating earnings of $1.69 per share, which missed the Zacks Consensus Estimate by 1.7%. The bottom line however increased 15% year over year. Our estimate was $1.71.

The increase reflects the benefits of diverse revenue streams and strong margins across Voya’s businesses.

Voya Financial, Inc. Price, Consensus and EPS Surprise

Voya Financial, Inc. price-consensus-eps-surprise-chart | Voya Financial, Inc. Quote

Behind the Headlines

Adjusted operating revenues amounted to $261 billion, which decreased 4.4% year over year. The top line also missed the Zacks Consensus Estimate by 9.4%. Our estimate was $274.1 million.

Net investment income declined 13.9% year over year to $545 million. Our estimate was $2519.2 million. Meanwhile, fee income of $464 million increased 7.2% year over year. Our estimate was $410.8 million. Premiums totaled $685 million, up 12.7% from the year-ago quarter. Our estimate was $836.2 million.

Total benefits and expenses were $1.7 billion, up 22.4% from the year-ago quarter. Our estimate was $1.3 billion.

As of Mar 31, 2023, VOYA’s assets under management, assets under administration and advisement totaled $771.2 million.

Segmental Update

Wealth Solutions reported adjusted operating earnings of $132 million, which decreased 42.1% year over year, primarily due to lower alternative investment income. Full-service recurring deposits grew 9.6% to $13.6 billion.

Health Solutions adjusted operating earnings amounted to $94 million, which increased more than four-fold year over year due to strong sales growth, favorable underwriting results and the positive impact of the Benefitfocus acquisition, which closed in January 2023. Annualized in-force premiums and fees grew 22% to $3.3 billion. The strong increase reflects growth across all product lines and the positive impact of the Benefitfocus acquisition.

Investment Management posted adjusted operating earnings of $33 million, which plunged 15.4% year over year, due to higher expenses, reflecting timing and elevated seasonal impacts. Net outflows were $0.9 billion during the trailing 12 months ended Mar 31, 2023.

Corporate incurred an adjusted operating loss of $69 million, flat year over year.

Financial Update

Voya Financial exited the quarter with cash and cash equivalents of $724 million, which decreased 21.2% year over year. Total investments amounted to $38.7 billion, down 1% year over year.

Long-term debt at quarter-end was flat from 2022 end at $2.1 billion. The financial leverage ratio deteriorated 630 basis points year over year to 36.1%. As of Mar 31, 2023, book value per share (excluding AOCI) was $59.95, which increased 17.2% year over year.

Voya Financial exited the first quarter with more than $0.5 billion in excess capital.

Acquisition Update

On Jan 24, 2023, Voya completed the acquisition of Benefitfocus, Inc., an industry leader in benefits administration technology, which will help accelerate Voya’s workplace-centered strategy.

Capital Deployment

As of Mar 31, 2023, VOYA had $275 million remaining under its share-repurchase authorization effective through Sep 30, 2023. It expects to resume share repurchase activity in the second quarter of 2023 and plans to increase the common stock dividend to an annual yield of approximately 2% in the second half of 2023.

Zacks Rank

VOYA 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 first-quarter 2023 adjusted earnings of 83 cents per share, which outpaced the Zacks Consensus Estimate by 25.8% and our estimate of 56 cents per share. The bottom line improved 1.2% year over year. Operating revenues improved 4.1% year over year to $76.8 million. The top line beat the consensus mark by 3.2% and was higher than our estimate of $71.4 million.

Net premiums earned by AMERISAFE amounted to $69.2 million, which increased 2.4% year over year in the first quarter. The net combined ratio of 82.2% deteriorated 210 basis points (bps) year over year. The figure was lower than the consensus mark of 89% and our estimate of 89.8%.

Aflac Incorporated AFL reported first-quarter 2023 adjusted earnings per share of $1.55, which beat the Zacks Consensus Estimate by 12.3% and our estimate by 17.4%. The bottom line increased 7.6% year over year. AFL’s revenues declined 7.2% year over year to $4,800 million in the quarter under review. The top line beat the consensus mark by 4.4% and our estimate by 6%.

Aflac estimates improved sales in its Japan business for 2023, buoyed by improving pandemic conditions, product launches and updates. Management also remains optimistic about strong sales results within its U.S. business. Improving productivity, contributions from platforms like network dental and vision and group life, and disability are expected to continue supporting the results.

Unum Group’s UNM first-quarter 2023 operating net income of $1.87 per share beat the Zacks Consensus Estimate by 13.3% and our estimate of $1.64. The bottom line increased 37.5% year over year. Total operating revenues of Unum Group were $3 billion, up 1.3% year over year, as higher premium income and other income were offset by lower net investment income. The top line beat the Zacks Consensus Estimate by 0.8%, Our estimate was $3.1 billion.

Premium increased 2.4% from the prior-year quarter to $2.5 billion and was in line with our estimate.  UNM expects adjusted operating income per share to increase 20% to 25%, up from the prior guidance of an 8-12% increase.

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