8-K: Voya Financial Reports Lower Than Expected Alternative Investment Income and Prepayment Fees for Q1 2024

Voya Financial anticipates alternative investment income and prepayment fees to be $8 million to $18 million below long-term expectations for the first quarter of 2024.

Summary

• Voya Financial has released preliminary financial information regarding alternative investment income and prepayment fees for the first quarter of 2024.
• The company estimates that these income and fees will be approximately $35 million to $45 million (pre-tax).
• This range is $8 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 quarter, and actual results could differ materially.
• The preliminary results have not been audited or reviewed by Ernst & Young LLP.

Sentiment

Score: 4

Explanation: The sentiment is negative due to the lower-than-expected alternative investment income and prepayment fees, although the company is being transparent by releasing this information early.

Positives

• The company is providing preliminary financial information before the full quarterly earnings release.

Negatives

• Alternative investment income and prepayment fees are below long-term expectations by $8 million to $18 million.
• The preliminary results have not been audited or reviewed, and actual results could differ materially.

Risks

• The preliminary financial results are subject to change as the company completes its financial closing procedures.
• Actual results could be materially different from the preliminary estimates.
• Investors should exercise caution in relying on this preliminary information.

Future Outlook

The company's actual financial results for the quarter ended March 31, 2024, could be materially different from the preliminary estimates provided.

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 has not completed financial closing procedures for the three months ended March 31, 2024.

Industry Context

This announcement provides an early indication of Voya Financial's performance in alternative investments and prepayment fees, which are important metrics for financial services companies. It will be important to see how these results compare to peers when they report.

Comparison to Industry Standards

• It is difficult to make a direct comparison without knowing the specific alternative investments and prepayment fee structures of Voya's competitors.
• However, a 9% annual return target for alternative investments is a common benchmark in the industry, and a 10-basis-point annual contribution from prepayment fees is also a typical expectation.
• Companies like Prudential Financial, MetLife, and Lincoln National also have significant investment portfolios and will be useful comparables when they report their Q1 results.

Stakeholder Impact

• Shareholders may react negatively to the lower-than-expected investment income and prepayment fees.
• Analysts will likely adjust their models based on this preliminary information.

Next Steps

• The company will release its full quarterly earnings and financial supplement on April 30, 2024.
• The company will complete its financial closing procedures for the three months ended March 31, 2024.

Key Dates

Keywords

alternative investments, prepayment fees, financial results, investment income, Voya Financial, Q1 2024, earnings