8-K: Voya Financial Announces Lower Than Expected Alternative Investment Income and Prepayment Fees for Q2 2024

Voya Financial estimates its alternative investment income and prepayment fees for the second quarter of 2024 to be $7 million to $18 million below long-term expectations.

Summary

• Voya Financial has released preliminary financial results for the second quarter of 2024, ahead of its full earnings release.
• The company estimates that its alternative investment income and prepayment fees will be between $36 million and $48 million (pre-tax).
• This range is approximately $7 million to $18 million below the company's long-term expectations, before variable and incentive compensation.
• The long-term expectation for alternative investments is a 9% annual return.
• The long-term expectation for prepayment fees is a 10-basis-point annual contribution to yield.
• These figures include alternative investment income and prepayment fees in the general account and investment capital returns in the Investment Management segment.
• The company has not completed its financial closing procedures for the three and six months ended June 30, 2024, and actual results could differ materially.
• The preliminary results have not been audited or reviewed by Ernst & Young LLP, the company's independent auditor.

Sentiment

Score: 4

Explanation: The sentiment is negative due to the lower than expected alternative investment income and prepayment fees. The lack of audit or review of the preliminary results also adds to the negative sentiment.

Negatives

• Alternative investment income and prepayment fees are below long-term expectations by $7 million to $18 million.
• The preliminary financial results have not been audited or reviewed by the company's independent auditor.

Risks

• The actual financial results for Q2 2024 could be materially different from the preliminary estimates.
• The preliminary results should not be viewed as a substitute for full financial statements prepared in accordance with U.S. GAAP.
• The preliminary results are not necessarily indicative of future performance.

Future Outlook

The company will release its full quarterly earnings and financial supplement on July 30, 2024, which will provide a more complete picture of its financial performance.

Management Comments

• The preliminary financial results are the responsibility of management and have been prepared in good faith on a consistent basis with prior periods.
• Management acknowledges that actual results could be materially different from these preliminary financial results.

Industry Context

This announcement provides an early indication of Voya Financial's performance in the second quarter of 2024, which may be of interest to investors and analysts tracking the financial services sector. The lower than expected alternative investment income and prepayment fees may be a concern for investors.

Comparison to Industry Standards

• It is difficult to make a direct comparison to industry standards without knowing the specific alternative investments and prepayment fee structures of Voya's competitors.
• However, a 9% annual return expectation for alternative investments is a common benchmark in the industry, and a 10-basis-point annual contribution to yield for prepayment fees is also a typical target.
• Companies like Prudential Financial, MetLife, and Lincoln National also have significant investment portfolios and would be comparable, but their specific results would need to be reviewed to make a direct comparison.

Stakeholder Impact

• Shareholders may react negatively to the lower than expected alternative investment income and prepayment fees.
• Analysts and investors will be closely watching the full quarterly earnings release on July 30, 2024.

Next Steps

• The company will complete its financial closing procedures for the three and six months ended June 30, 2024.
• The company will release its full quarterly earnings and financial supplement on July 30, 2024.

Key Dates

Keywords

alternative investments, prepayment fees, financial results, earnings, investment income, Voya Financial