Voya Financial Boosts Forward Earnings Outlook with Acquisition of OneAmerica’s Retirement Plan Business

Evercore ISI analysts increased their price target for Voya Financial (NYSE:VOYA) to $82, up from $79, while maintaining an Outperform rating on the stock.

Shares rose more than 5% intra-day today following Voya's announcement of its definitive agreement to acquire OneAmerica Financial's full-service retirement plan business, which is expected to close by January 1, 2025. This acquisition will bring Voya an additional $47 billion in assets from the emerging and middle market full-service sector and $15 billion in recordkeeping assets.

Voya anticipates the deal will generate over $75 million in pretax earnings and more than $200 million in net revenue within the first year following the closure. The company plans to use $200 million from its $400 million excess capital to fund the upfront cost, with no impact on its debt refinancing or capital return plans. The upfront expenses include a $50 million purchase price along with RBC capital and transaction costs. Additionally, there could be a $160 million earnout payable by Q2 2026, bringing the total capital outlay for the acquisition to $360 million.

Voya estimates the unlevered internal rate of return (IRR) on the deal to exceed 30%, which should contribute around 7% to forward earnings—higher than the 5% impact from stock buybacks at current valuations. The analysts view the acquisition as a net positive, seeing it as a financially accretive move that expands Voya’s higher-margin, full-service retirement and fee-based assets under management (AUM), while improving the balance between fee-based and spread-based AUM.

While the analysts did not adjust the 2025 EPS estimates yet, anticipating a larger impact in 2026, they raised the price target to reflect the expected return on capital and earnings growth from the acquisition. The analysts noted there are potential risks from interest rate declines or equity market corrections, but believe OneAmerica's lower-risk portfolio could offer opportunities for repositioning, with the 2026 earnout providing additional protection against any sudden disruptions.