Voya To Partner With Allianz Global As Firm Settles SEC Charges For $1B

Voya Financial, Inc. VOYA has entered into a memorandum of understanding with Alliaz Global Investors, whose parent company is Allianz SE ALIZY.

The agreement will involve Allianz transferring the majority of its U.S. business to Voya’s asset management business.

What Happened: In Tuesday's announcement, Voya said the planned strategic partnership comes ahead of a definitive purchase agreement that will be finalized in the coming weeks.

“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,” said Rodney O. Martin, Jr., Voya Financial’s chairman and chief executive officer.

“We will also continue to execute on the organic growth plans that we shared at our Investor Day in November 2021 so that we can build upon our already strong commercial momentum.”

Martin said Voya will likely use the money saved through the partnership for continued share buybacks and dividends, along with making further investments in the company’s businesses.

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What It Means: Voya says the planned long-term strategic-distribution partnership would see Allianz Global distributing Voya’s investment strategies outside the U.S.

“We are very excited about this potential transaction and all of the benefits that it would enable Voya IM to bring to our clients, our distribution partners, and our talented investment professionals and employees,” said Christine Hurtsellers, CEO of Voya Investment Management. “We have long identified increased scale and broader international distribution as attractive growth priorities.”

Allianz Global would receive a stake of up to 24% in Voya in the acquisition deal, which is not expected to require external financing or use of Voya’s excess capital.

SEC Charges Settled: The news comes on the same day the Securities and Exchange Commission announced that Allianz Global has agreed to pay more than $1 billion to settle a case involving "a massive fraudulent scheme that concealed the immense downside risks of a complex options trading strategy they called 'Structured Alpha.'"

The SEC says Allianz Global sold the strategy to about 114 institutional investors. Those impacted by the fraud included pension funds for teachers, clergy, bus drivers and engineers.

Three former senior portfolio managers were also charged in the scheme, which the SEC says came to light after the COVID-19 market crash of March 2020. Allianz Global, along with its parent, Allianz SE, will pay out over $5 billion in restitution to victims.

The SEC notes that: "As a consequence of the guilty plea, AGI US is automatically and immediately disqualified from providing advisory services to US registered investment funds for the next ten years, and will exit the business of conducting these fund services."