The company, spun out of Dutch giant ING Groep INGA -0.29% 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.
Voyaâ€™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 companyâ€™s â€śstrategy of largely focusing on the workplace and institutional clientsâ€ť through retirement, investment-management and employee-benefits offerings. He added that these are â€śhigher-growth, higher-return, capital-light businesses.â€ť
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 industryâ€™s combination death-benefit and savings productsâ€”known as permanent or cash-value insuranceâ€”had been the cornerstone of many householdsâ€™ 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 customersâ€™ 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, Voyaâ€™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.Â
The companyâ€™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 [email protected]