On Tuesday, Piper Sandler maintained its Overweight rating on Voya Financial (NYSE:NYSE:VOYA) shares, with a steady price target of $88.00. The firm's assessment followed Voya's pre-announcement of its third-quarter variable investment income (VII), which fell significantly below the company's long-term expectations. Voya Financial estimated its pre-tax VII to be approximately $22 to $32 million, which is around $29 million beneath its annual target of around 9%.
The reported VII figures show a decline from previous quarters, with the second quarter being $12 million below expectations and the first quarter down by $15 million. However, the current shortfall is an improvement compared to the fourth quarter of 2023, which saw a $46 million deficit due to annual marks. The third quarter of 2023 also experienced a similar shortfall of $28 million.
Voya's latest financial update indicates that the anticipated sequential improvement in VII did not materialize for the third quarter of 2024. The persistence of these headwinds is seen as a negative indicator for Voya, particularly for those invested in fee and spread earnings.
Furthermore, this trend is expected to have a broader impact on other companies within the same sector, including Brighthouse Financial (NASDAQ:BHF), CNO Financial (NYSE:CNO) Group, Corebridge Financial, FGL Holdings (NYSE:FG_old), Horace Mann Educators (NYSE:HMN) Corporation, Lincoln National Corporation (NYSE:LNC), MetLife (NYSE:MET), Principal Financial Group (NASDAQ:PFG), and Prudential Financial (NYSE:PRU). Piper Sandler's revised figures for Voya Financial reflect the impact of these ongoing challenges.
In other recent news, Lincoln National Corporation reported significant developments. The company's adjusted operating income reached $319 million, or $1.84 per share, with net income peaking at $884 million, or $5.11 per diluted share. The sale of its wealth management business has led to an increase in its Risk-Based Capital (RBC) ratio, which now exceeds 420%.
In further developments, Lincoln National has reduced its board size to eleven members as part of an internal restructuring. The company also mourns the loss of board member Michael Mee, whose contributions were acknowledged by executives.
Barclays has initiated coverage on Lincoln National, assigning an Equalweight rating and setting a price target of $35.00, influenced by the company's improved capital position. Lincoln National's executive severance plan has been revised to include the CEO among the participating officers, detailing a severance package equal to twice the CEO's annual base salary plus the target annual incentive bonus, distributed over 104 weeks following termination.
The company is also preparing for the launch of its Bermuda-based reinsurance subsidiary, Alpine, as part of its ongoing efforts to diversify its product offerings and fortify its capital foundation. These are some of the recent developments at Lincoln National Corporation.
InvestingPro Insights
To complement the analysis of Voya Financial's recent performance, let's take a closer look at Lincoln National Corporation (NYSE:LNC), another key player in the insurance and financial services sector. According to InvestingPro data, Lincoln National's market capitalization stands at $5.3 billion, with a price-to-earnings ratio of 3.21, suggesting the stock may be undervalued relative to its earnings.
InvestingPro Tips highlight that Lincoln National has maintained dividend payments for 54 consecutive years, demonstrating a commitment to shareholder returns despite industry challenges. This consistency could be particularly appealing to investors seeking stable income in the face of variable investment income pressures faced by companies like Voya.
Moreover, Lincoln National's stock price movements are noted to be quite volatile, which aligns with the sector-wide impacts of variable investment income fluctuations mentioned in the article. The company's ability to remain profitable over the last twelve months, as another InvestingPro Tip indicates, suggests resilience in the face of these industry headwinds.
For investors interested in a deeper dive into Lincoln National's financial health and prospects, InvestingPro offers 5 additional tips, providing a more comprehensive analysis of the company's position in this challenging market environment.
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