A.M. Best Affirms Ratings of Voya Financial, Inc. and Its Subsidiaries

OLDWICK, N.J.--()--A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a” of the key life insurance entities of Voya Financial, Inc. (Voya) (headquartered in New York, NY) [NYSE:VOYA]. The outlook for the FSR is stable while the outlook for the ICR remains positive.

Concurrently, A.M. Best has affirmed Voya’s ICR of “bbb” as well as its existing issue ratings. The outlook for these ratings remains positive. (Please see below for a detailed listing of the companies and issue ratings.)

The ratings reflect Voya’s favorable market position in selected life insurance and retirement markets, solid risk-adjusted capital position and well-developed enterprise risk management framework that has benefited the company during its separation from ING Groep N.V. (ING Group) [NYSE:ING], which was completed in the first quarter of 2015. The continuation of the positive outlook recognizes Voya’s overall improved credit risk profile in recent years due to reduced financial leverage, a reduction in higher risk assets in the general account investment portfolio, stable earnings and the discontinuation of more capital intensive lines of business. A.M. Best notes that Voya’s balance sheet remains strong with relatively low intangible assets to equity and more than adequate liquidity at the holding company. Financial flexibility was recently enhanced by the establishment of a $500 million contingent capital facility. A.M. Best also views favorably the growth of the employee benefit segment, which provides good earnings diversity for the company.

Partially offsetting these positives factors is the impact on earnings of Voya’s closed block variable annuity (CBVA) segment and susceptibility of future earnings to spread compression and fluctuations in the equity markets. A.M. Best notes that Voya has maintained interest rate spreads by reducing crediting rates in recent periods. However, A.M. Best believes the company may be challenged to maintain current spreads over the near to medium term as over 80% of interest sensitive account values are at the guaranteed minimum interest rate. Moreover, while A.M. Best acknowledges that Voya’s hedge program protects statutory capital against movements in the financial markets, the company has taken substantial statutory reserve charges over the past several years due to revisions to policyholder behavior assumptions on its CBVA. While revisions to these assumptions were favorable in 2014, there is still much uncertainty over whether current assumptions will remain in line with actual results going forward. As a result, Voya remains susceptible to additional and potentially significant reserve charges over the near to medium-term.

A.M. Best notes the continued high utilization of internal and external reinsurance for capital management and risk mitigation purposes. The group’s risk-adjusted capital levels benefit from the extensive use of capital solutions. Finally, A.M. Best notes the declining life insurance premiums in recent periods and increased claims volatility in this segment during the first half of 2015, which will need to be monitored over the next several quarters.

The FSR of A (Excellent) and ICRs of “a” has been affirmed for the following life/health insurance subsidiaries of Voya Financial, Inc. The outlook for the FSR is stable while the outlook for the ICR remains positive.

  • Voya Insurance and Annuity Company
  • Voya Retirement Insurance and Annuity Company
  • ReliaStar Life Insurance Company
  • ReliaStar Life Insurance Company of New York
  • Security Life of Denver Insurance Company

The FSR of A- (Excellent) and ICR of “a-” have been affirmed for Midwestern United Life Insurance Company with a stable outlook.

The following issue ratings have been affirmed with a positive outlook:

Voya Financial, Inc.

-- “bbb” on $1.0 billion 2.90% senior unsecured notes, due 2018
-- “bbb” on $850 million 5.50% senior unsecured notes, due 2022
-- “bbb” on $400 million 5.70% senior unsecured notes, due 2043
-- “bb+” on $750 million 5.65% fixed-to-floating junior subordinated notes, due 2053

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Michael Adams, 908-439-2200, ext. 5133
Senior Financial Analyst
michael.adams@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Stephen Irwin, 908-439-2200, ext. 5454
Vice President
stephen.irwin@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best Company
Michael Adams, 908-439-2200, ext. 5133
Senior Financial Analyst
michael.adams@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Stephen Irwin, 908-439-2200, ext. 5454
Vice President
stephen.irwin@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com