By the end of the year, Voya Financial Inc. will no longer sell individual life insurance in order to focus on higher-growth business lines.
Voya, which was spun off from Dutch parent ING Groep in a 2013 initial public offering, decided to exit the individual life business following a strategic review, said CEO Rodney O. Martin Jr. during an earnings call Tuesday night.
Moving forward, the firm will focus on its retirement, investment management and employee benefits units, which are “higher-growth, higher-return, capital-light businesses,” Mr. Martin said.
Voya’s exit follows the sale of the vast majority of its individual annuity business earlier this year to a trio of private-equity investors. It divested around $56 billion in variable and fixed annuities to Venerable Holdings Inc., which encompasses investors Apollo Global Management, Crestview Partners and Reverence Capital Partners.
Voya will continue to service and pay claims to existing life insurance customers. The firm has roughly $310 billion in total policies in force among 785,000 customers.
Although two-thirds of its business on the books is from individual term insurance, the vast majority of its new sales have come from indexed universal life insurance. Voya sold $55 million in individual life policies this year through the third quarter, down 11% from the same period in 2017.
Voya joins other large insurers to have recently exited the life insurance business. MetLife Inc. spun off much of its individual life and annuity business into Brighthouse Financial Inc. last year and stopped writing new retail business. Liberty Life Assurance Co. of Boston announced earlier this year that it was selling the bulk of its individual life and annuity business to Protective Life Corp., via reinsurance, for $1.17 billion.
Life insurance is less profitable for insurers than it used to be, said Samantha Chow, senior life insurance and annuity analyst at Aite Group. Margins are small, partly because of costly overhead, maintenance and legacy systems, as well as the low interest rate environment, she said.
“I think those margins will increase in the future when these carriers start to become more digital, both internally with automation as well as externally to the customer when servicing,” Ms. Chow said. “It’ll be a less costly product in terms of overhead and expense for the company.”