Voya Financial (VOYA) Plans Transfer of 170K Term Life Policies to RGA Unit

Voya Financial (NYSE: VOYA) announced that its wholly owned subsidiaries – ReliaStar Life Insurance Company ("RLI") and Security Life of Denver Insurance Company – have entered into an agreement to transfer via reinsurance an in-force block of approximately 170,000 term life insurance policies to RGA Reinsurance Company, a subsidiary of Reinsurance Group of America, Inc. (NYSE: RGA). RLI will continue to administer and service the policies.

The policies in the block represent approximately $100 billion of life insurance in force backed by over $1.3 billion of statutory reserves as of June 30, 2014.

"This is an opportunistic transaction for Voya Financial that aligns with our focus on improving the value of the company by increasing the operating return on capital of our Individual Life business and our Ongoing Business as a whole," said Rodney O. Martin, Jr., chairman and CEO, Voya Financial, Inc.

Based on financials as of June 30, 2014, Voya Financial expects the transaction will:

• Create excess capital of approximately $200 million;
• Create an immediate non-operating pre-tax GAAP loss of $100 million to $120 million and a deferred non-operating pre-tax GAAP loss that the company expects to recognize at an average rate of approximately $10 million a year over the next 20 years;
• Have minimal ongoing impact to operating earnings; and
• Reduce GAAP capital allocated to the company's Individual Life business by $350 million to $375 million.

On a pro forma, trailing 12-month basis as of June 30, 2014, the company expects the transaction would have added approximately 70 basis points to the operating return on capital (ROC) for Voya Financial's Individual Life segment and approximately 35 basis points to the operating ROC of the company's Ongoing Business.

All figures presented here are estimated based on a pro forma effect as of June 30, 2014. Actual amounts will differ at the time of closing. The transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close in the fourth quarter of 2014.

"Offering asset protection and accumulation products is a key part of our strategy and vision to be America's Retirement Company. In line with Voya Financial's continued transformation, we are targeting product segments of the life insurance market that best match our lower-capital, higher-returns approach, such as indexed life products. Over the past several quarters, we have successfully shifted sales to less capital-intensive products. For example, in the second quarter of 2014, indexed universal life products accounted for 53% of total sales, up from 25% in the second quarter of 2013," added Martin.

"We will continue to work closely with our distribution partners to provide individual insurance products that meet customer needs and provide solid returns for Voya Financial and its shareholders."

Barclays Capital Inc. served as sole financial advisor and Sutherland Asbill & Brennan served as legal advisor to Voya Financial on the transaction.

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