OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with developing implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of the key life insurance entities of Voya Financial, Inc. (Voya) (headquartered in New York, NY) [NYSE: VOYA]. Concurrently, A.M. Best has removed from under review with developing implications and affirmed the Long-Term ICR of “bbb+” of Voya, as well as its existing Long-Term Issue Credit Ratings (Long-Term IR). The outlook assigned to these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the companies and ratings.)
The rating actions are in response to the closing of Voya’s previously announced agreement to sell their closed block variable annuity (CBVA) and individual fixed indexed annuity (FIA) segments to a consortium of investors led by Apollo Global Management, LLC. A.M. Best has withdrawn the FSR of A (Excellent) and the Long-Term ICR of “a+” of Voya Insurance and Annuity Company (VIAC), one of the aforementioned life insurance subsidiaries of Voya, as the company’s new owner has requested to no longer participate in A.M. Best’s interactive rating process.
A.M. Best also has removed from under review with developing implications and upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” from “a-” of Midwestern United Life Insurance Company (MULIC). The outlook assigned to these Credit Ratings (ratings) is stable. The upgrade reflects the full rating enhancement MULIC now receives as a part of the Voya Financial Group, driven by the guaranty in place with Security Life of Denver Insurance Company.
The ratings of Voya’s life insurance entities reflect their balance sheet strength, which A.M. Best categorizes as strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
Under the terms of the transaction, Voya will divest VIAC, the insurance subsidiary that has primarily issued the variable, fixed and fixed indexed annuities to Venerable HoldCo, Inc., a newly formed investment vehicle owned by the consortiums. VIAC’s variable annuity account value represents approximately $35 billion. In addition, Voya will sell via reinsurance to Athene Holding Ltd. approximately $19 billion of fixed and indexed annuity policies. The transaction is expected to result in approximately $1.1 billion of value to Voya, which includes a $400 million ceding commission paid to Athene Holding Ltd.
These transactions are expected to reduce Voya’s future earnings volatility. The CBVA segment has been susceptible to earnings volatility and substantial statutory reserve charges due to revisions in policyholder behavior assumptions. While the transaction reduces Voya’s shareholder’s equity by about $1.8 billion, it also lessens their exposure to policyholder behavior and market volatility. This transaction also changes the business profile of the company, given that 80% of its earnings would be generated from its retirement, investment management and employee benefits businesses. Voya also will be conducting a strategic review of its individual life business during 2018.
The FSR of A (Excellent) and Long-Term ICRs of “a+” have been removed from under review with developing implications and affirmed with stable outlooks for the following life insurance subsidiaries of Voya Financial, Inc.:
- Voya Retirement Insurance and Annuity Company
- ReliaStar Life Insurance Company
- ReliaStar Life Insurance Company of New York
- Security Life of Denver Insurance Company
The following Long-Term IRs have been removed from under review with developing implications and affirmed:
Voya Financial, Inc.—
-- “bbb+” on $850 million 5.50% senior unsecured notes, due 2022
-- “bbb+” on $400 million 3.125% senior unsecured notes, due 2024
-- “bbb+” on $500 million 3.65% senior unsecured notes, due 2026
-- “bbb+” on $400 million 5.70% senior unsecured notes, due 2043
-- “bbb+” on $300 million 4.80% senior unsecured notes, due 2046
-- “bbb-” on $350 million 4.7% fixed-to-floating junior subordinated notes, due 2048
-- “bbb-” on $750 million 5.65% fixed-to-floating junior subordinated notes, due 2053
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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