Voya Financial, Inc. 8-K Summary
Business Context and Reporting Period
This Form 8-K, dated December 20, 2017, reports a material definitive agreement entered into by Voya Financial, Inc. (Voya). The filing details a strategic divestiture of substantially all of Voya's variable annuity and fixed/fixed indexed annuity businesses.
Key Financial Metrics and Transaction Value
- Transaction Value: Voya expects to realize approximately $1.1 billion in value from the transaction.
- Ceding Commission: The value includes a $400 million ceding commission paid by Athene for the fixed and fixed indexed annuities business.
- Deployable Capital: Upon closing, Voya expects immediately deployable capital of more than $500 million, net of transaction costs and illiquid assets.
- Equity Stake: Voya will acquire a 9.99% equity interest in the acquiring entity, VA Capital Company LLC.
- Debt Retention: Affiliates of Voya will continue to own surplus notes issued by the divested subsidiary (VIAC) with an aggregate principal amount of $350 million.
- Asset Management: Voya Investment Management (Voya IM) will manage approximately $10 billion of general account assets and $22 billion of variable annuity funds platform assets (as of Sept. 30, 2017) for the new entity.
Material Changes and Transaction Structure
Voya entered into a Master Transaction Agreement with VA Capital Company LLC (a newly formed entity backed by Apollo Global Management, Athene, Reverence Capital Partners, and Crestview Advisors) and Athene Holding Ltd. The transaction involves the sale of Voya Insurance and Annuity Company (VIAC) and Directed Services LLC (DSL). Prior to closing, VIAC will transfer out-of-scope businesses (life insurance and employee benefits) to other Voya affiliates and recapture variable annuity business currently ceded to a reinsurer. The divested entity will rebrand as "Venerable."
Outlook, Risks, and Contingencies
- Closing Timeline: The transaction is expected to close in the second or third quarters of 2018.
- Conditions Precedent: Closing is subject to regulatory approvals and conditions regarding the capital funding required at closing.
- Termination Fee: The agreement includes a $105 million reverse termination fee payable by VA Capital to Voya if the agreement is terminated under certain circumstances, guaranteed by the Sponsors.
- Future Services: Voya IM is committed to serving as the preferred asset management partner for Venerable for a minimum of five years post-closing.
Investor Verification Checklist
- Verify the final closing date and confirmation of all regulatory approvals.
- Confirm the final purchase price and the actual amount of deployable capital realized after transaction costs.
- Review the terms of the surplus notes ($350 million) retained by Voya affiliates.
- Monitor the execution of the asset management agreements and the rebranding to "Venerable."
- Assess the impact of the divestiture on Voya's remaining balance sheet and liquidity position.