8-K: Voya Financial Announces Lower Than Expected Alternative Investment Income and Prepayment Fees for Q4 2024

Voya Financial estimates its Q4 2024 alternative investment income and prepayment fees to be $8 million to $16 million below long-term expectations.

Summary

• Voya Financial has released preliminary estimates for its alternative investment income and prepayment fees for the fourth quarter of 2024.
• The company expects these combined figures to be between $40 million and $48 million before tax.
• This is approximately $8 million to $16 million below the company's long-term expectations.
• 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 income from the general account and investment capital returns from the Investment Management segment.
• The company has not completed its financial closing procedures for the quarter and year ended December 31, 2024.
• Actual results could be materially different from these preliminary estimates.
• The company's independent auditor has not reviewed these preliminary results.

Sentiment

Score: 4

Explanation: The sentiment is negative due to the lower than expected alternative investment income and prepayment fees. The company is also cautioning investors about the preliminary nature of the results.

Negatives

• The alternative investment income and prepayment fees are below long-term expectations by $8 million to $16 million.
• The preliminary results are subject to change as the financial closing procedures are not yet complete.
• The independent auditor has not reviewed the preliminary results.

Risks

• The actual financial results for Q4 2024 could be materially different from the preliminary estimates.
• Investors should exercise caution when relying on these preliminary figures.
• The preliminary results should not be viewed as a substitute for full financial statements prepared in accordance with U.S. GAAP.
• These preliminary results are not necessarily indicative of future performance.

Future Outlook

The company's actual financial results for Q4 2024 could be materially different from these preliminary estimates, and these results are not necessarily indicative of future performance.

Management Comments

• The preliminary financial results presented above are the responsibility of management and have been prepared in good faith on a consistent basis with prior periods.
• We have not completed our financial closing procedures for the three months and year ended December 31, 2024, and our 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 alternative investments and prepayment fees, which are important components of their overall financial results. The deviation from long-term expectations may be of interest to investors and analysts tracking the company's performance in these areas.

Comparison to Industry Standards

• It is difficult to make a direct comparison without knowing the specific alternative investments and prepayment fee structures of Voya Financial's competitors.
• However, companies like Prudential Financial, MetLife, and Lincoln National also have significant investment portfolios and are likely to have similar exposure to alternative investments and prepayment fees.
• A comparison of the actual results against these peers will be important when they release their Q4 results.
• The 9% long-term return target for alternative investments is a common benchmark in the industry, but actual results can vary significantly based on market conditions and investment strategies.

Stakeholder Impact

• Shareholders may react negatively to the lower than expected investment income.
• Analysts will likely revise their models based on this preliminary information.
• Employees may be impacted by changes in variable and incentive compensation.

Next Steps

• The company will release its full quarterly earnings and financial supplement on February 4, 2025.
• The company will complete its financial closing procedures for the three months and year ended December 31, 2024.

Key Dates

Keywords

alternative investments, prepayment fees, financial results, Voya Financial, Q4 2024, investment income