Insurer Voya Halts Individual Life Sales -- WSJ
October 31 2018 - 2:02AM
Dow Jones News
By Leslie Scism
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 31, 2018).
Voya Financial Inc. is the latest U.S. life insurer to exit a
business that was once a core part: life insurance sold to
individuals.
The company, spun out of Dutch giant ING Groep in 2013, on
Tuesday said it would cease new individual life-insurance sales at
year-end. It will keep its existing block of life-insurance
policies and pay out claims as they come due.
The move follows the withdrawal by MetLife Inc. from sales of
new life policies to individuals last year. Then the largest U.S.
life insurer by assets, MetLife hived off much of its U.S. retail
life-insurance operations into a new company named Brighthouse
Financial Inc. Brighthouse became a publicly traded company in
August of 2017.
Both Voya and MetLife continue to sell life insurance to
employers through group-benefit arrangements. But those and many
other insurers face a sluggish environment for selling these
policies directly to American families, many of whom are more
concerned about outliving their savings than dying prematurely.
Voya has a large business selling 401(k) and other tax-advantaged
retirement-savings programs.
Voya's chief executive, Rodney O. Martin Jr., said in its
third-quarter earnings release that the move to quit selling new
life-insurance policies to individuals is in line with the
company's "strategy of largely focusing on the workplace and
institutional clients" through retirement, investment-management
and employee-benefits offerings. He added that these are
"higher-growth, higher-return, capital-light businesses."
Industrywide, sales of policies to individuals began declining
in the 1980s, as many Americans began investing in
then-proliferating mutual funds. Up to then, the insurance
industry's combination death-benefit and savings products -- known
as permanent or cash-value insurance -- had been the cornerstone of
many households' finances.
Since the 1980s, sales of individual life-insurance policies
have dropped 45%, according to industry-funded research firm Limra.
Over the past few years, sales largely flattened, but policy sales
were 4% lower in 2017 and down 1% for the first half of this
year.
Insurers are struggling with low interest rates, which have made
turning a profit on life insurance tougher. Insurers invest
customers' premiums, mostly in high-quality bonds, until they need
to pay claims.
For the third quarter, total individual life sales, which
primarily consist of indexed life insurance, were $20 million, up
from $18 million, Voya said. The unit has contributed about 20% of
operating earnings in recent quarters.
As recently as 2012, Voya's annual individual life-insurance
sales totaled $250 million.
For the quarter, Voya reported net income of $142 million, or 87
cents a share, down from $149 million, or 81 cents a share, in the
year-earlier quarter.
The company's operating earnings, which exclude realized capital
gains and losses and other nonrecurring items, tallied $139
million, up from $29 million, aided by higher investment and fee
income, among other factors, ahead of consensus expectations.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
October 31, 2018 02:47 ET (06:47 GMT)
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