Voya Financial, Inc. VOYA and Allianz Global Investors (AllianzGI) intend to ink a long-term strategic partnership. Per the memorandum of understanding (MOU), Allianz will transfer its U.S. business (AGI U.S.) to Voya Investment Management, the asset management business of VOYA. On the other hand, AllianzGI will have a 24% stake in Voya IM as consideration.
Rodney O. Martin, Jr., chairman and chief executive officer of VOYA stated, ”We believe this to be a unique opportunity to acquire highly complementary investment management teams and assets, at scale, while preserving our strong excess capital position for additional value-creation actions, such as continued share repurchases and dividends along with further investments in our businesses.”
AGI U.S.’ $120 billion assets under management (AUM) consists of income and growth, fundamental equity, and private placement assets, which, when combined with VOYA, will increase Voya IM’s AUM to about $370 billion.
Per the MOU, AllianzGI would make Voya IM’s investment strategies available outside the United States, leveraging its international presence. VOYA noted that this transaction complements its focus on private strategies and alternative investments for institutional investors and advisors.
Voya Financial earlier took strategic steps to ramp up growth at its Investment Management segment. Voya acquired a leading third-party administrator of health savings and spending accounts, Benefit Strategies, LLC in July 2021. With this buyout, new capabilities, products and clients are added to Voya’s existing health and wealth solutions. The deal will further enable Voya to harness its skills and abilities in its Investment Management business, which currently manages invested assets in Voya’s health savings accounts. It will accelerate its presence in the fast-growing HSA market and expand on a range of solutions offered through the workplace.
In January 2022, Investment Management closed the acquisition of the investment advisory business and certain other assets of small-cap growth specialist, Tygh Capital Management. This deal is likely to ensure Voya’s continued investment in its equity capabilities.
Voya’s earnings are driven by solid performance across Wealth Solutions, Investment Management and Health Solutions. These businesses are higher-growth, higher-return, capital-light businesses boasting a solid presence. Expansion of the distribution network and achievement of efficiencies through automation should help the company outperform the industry.
Strategic steps thus in turn should help VOYA achieve net annual revenue growth of 7-10% in the Investment Management segment to contribute to total net revenue growth by 2024.
Shares of this Zacks Rank #3 (Hold) retirement, investment, and employee benefits company have lost 1.6% compared with the industry’s decrease of 12% year to date.
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Acquisitions in the Insurance Space
Arthur J. Gallagher & Co. AJG has acquired Hruska Insurancenter, Inc. to enhance the acquirer’s presence, and widen its markets and expertise in the habitational and commercial real estate market. Arthur J. Gallagher boasts an impressive inorganic story. The recent buyout marked the sixth acquisition in the second quarter of 2022. The company has a strong merger and acquisition pipeline. A solid capital position supports AJG in its growth initiatives. The company remains focused on continuing its tuck-in mergers and acquisitions. Revenue growth rates generally ranged from 5% to 10% for 2022 acquisitions.
Brown and Brown Inc.’s BRO subsidiary Brown & Brown of Massachusetts, LLC has acquired substantially all the assets of Claim Technologies Incorporated. Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues.
Aon plc AON purchased the actuarial software platform, Tyche to boost its insurance consulting capabilities. Aon undertakes strategic buyouts every now and then to boost its capabilities and provide advanced solutions to clients. AON spent $14 million on buyouts in 2021 and sealed many acquisition deals over the past few years. Its acquisitions mainly aim at expanding its health and benefits business, flood insurance solutions, and risk and insurance solutions operations.
Shares of Arthur J. Gallagher, Brown and Brown and Aon have lost 3.2%, 17% and 7.1% year to date.
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