UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 13, 2014
ING U.S., INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35897 | No. 52-1222820 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
| 230 Park Avenue New York, New York |
10169 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 309-8200
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 8.01 | Other Events |
Share Repurchase Program and Direct Share Buyback
On March 13, 2014, ING U.S., Inc.’s (“the Company”) Board of Directors authorized a share repurchase program (the “Share Repurchase Program”), pursuant to which the Company may, from time to time, purchase shares of its common stock for an aggregate repurchase price not to exceed $300 million. Share repurchases may be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or tender offers. The Share Repurchase Program does not have an expiration date and does not obligate the Company to purchase any shares. The authorization for the Share Repurchase Program may be terminated, increased or decreased by the Company’s Board of Directors at any time.
The Direct Share Buyback from ING Groep N.V. (“ING Group”), the Company’s current majority stockholder, that is described and defined below is expected to be made pursuant to the Share Repurchase Program. The aggregate purchase price for the shares to be acquired by the Company in the Direct Share Buyback will decrease the amount available for repurchase under the Share Repurchase Program. Giving effect to the Direct Share Buyback, the remaining authorization under the Share Repurchase Program would permit future repurchases by the Company of shares of common stock having an aggregate purchase price of up to $50 million.
Share Repurchase Agreement with ING Group
The Company intends to enter into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with ING Group, pursuant to which the Company will acquire from ING Group, subject to certain terms and conditions, shares of the Company’s common stock having an aggregate purchase price of $250 million (the “Direct Share Buyback”).
The Company expects to fund the Direct Share Buyback from existing cash on hand.
| Item 7.01 | Regulation FD Disclosure |
The Company announces the following:
| • | A list of financial items in the fourth quarter of 2013 that the Company does not expect to recur or that are subject to significant variability which deviated from the Company’s long-term expectations, and a list of seasonal factors that could affect the first quarter of 2014 results, as described in Exhibit 99.1 hereto; and |
| • | the following statement updating the Company’s capital plan: |
“Maintaining a financial leverage-to-capital ratio in line with our targeted level of approximately 25%, we expect to generate over $1.7 billion of excess capital, after funding new business strain and holding company expenses, during the period of 2013 to 2016 that could be available for redeployment, including for return to shareholders.”
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits |
| 99.1 | Regulation FD disclosure (information furnished and not filed as part of this Current Report on Form 8-K) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ING U.S., Inc. (Registrant) | ||
| By: | /s/ Harris Oliner | |
| Name: | Harris Oliner | |
| Title: | Senior Vice President and Corporate Secretary | |
Dated: March 18, 2014
Exhibit 99.1
First Quarter of 2014
The following information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The trends discussed below may or may not be realized, because they are based on information for a partial reporting period as well as on judgments or assumptions that may prove incorrect. As a result, our results for the first quarter of 2014 may vary significantly from those which would be expected based on the discussion below. See “Risk Factors” in our Form 10-K for a discussion of some of the factors that may adversely impact these or other future results.
As discussed in connection with the announcement of our financial results for the fourth quarter of 2013, our results for that quarter included certain higher-than-expected income and certain better-than-expected underwriting results which, in the aggregate, increased our operating earnings before income taxes for that quarter. The net effect of these variances from expectations was that fourth quarter 2013 operating earnings before income taxes of $304.9 million were higher than our expected run rate due to factors which, in our models, are not expected to recur at the same levels.
These items in the fourth quarter of 2013 included the following items that we do not expect to recur:
| • | A $9 million net gain from a Lehman Brothers bankruptcy settlement and losses from disposal of certain Low Income Housing Tax Credit partnerships, net of applicable amortization of DAC/VOBA and other intangibles; and |
| • | A $14 million prepayment expense that reduced earnings in our Closed Block Institutional Spread Products segment as a result of early termination of certain Federal Home Loan Bank funding agreements; for the full year 2014 we expect Closed Block Institutional Spread Products segment operating earnings before income taxes to be in the range of $7 to $12 million. |
These items in the fourth quarter of 2013 also included items subject to significant variability which deviated from our long term expectations:
| • | Prepayment fee income for the ongoing business was approximately $7 million higher than expected, prior to related amortization of DAC/VOBA and other intangibles; |
| • | Alternative investment income for the ongoing business was approximately $24 million higher than the long term expected return of 9%; |
| • | Approximately $8 million in higher underwriting income due to the group life loss ratio of 72%, when compared to the long-term expected range of 77% to 80%; and |
| • | Approximately $22 million in favorable DAC/VOBA and other intangibles unlocking. |
As it relates to expected first quarter of 2014 performance, we have not prepared any consolidated financial statements as of any date or for any period subsequent to December 31, 2013. We have limited information about January and February 2014 results, which is incomplete, and minimal to no information related to March 2014 performance. We observed that the variances from expectations we experienced during the fourth quarter of 2013 do not appear to be recurring in the first quarter of 2014. In the case of prepayment fee income, we observed approximately $2 million of income through February 28, 2014, below the pro rata income we expected to realize over this period based on our average quarterly prepayment fee income expectation of approximately $15 million.
Our results are subject to seasonality. In general, the first quarter of each year experiences certain seasonal items that result in lower revenues and higher expenses. During January and February, we observed seasonality effects largely consistent with the trends noted below.
Administrative expenses in the first quarter typically include the effect of higher payroll taxes and other annual expenses that are concentrated in the first quarter. These incremental expenses typically add approximately $10 to $15 million to our operating expenses in the first quarter.
Loss ratios in our group life business are generally higher in the first quarter as compared to the full year, which tends to lower operating earnings in our Employee Benefits segment.
Income on alternatives is usually lower in the first quarter as compared to the full year average, due to first quarter delays in the reporting from and the valuation cycle associated with the alternative investment limited partnerships.
Performance fees in our Investment Management business in the fourth quarter is typically higher than in other quarters based on our current contracts.
As we complete the first quarter, the effects of seasonality may vary significantly and the notable variances experienced during the fourth quarter of 2013 may yet recur, or other positive or negative developments may arise.
We continue to execute on our ROE improvement plan and to grow our businesses. We continue to expect to achieve our Operating ROC and Operating ROE goals. In addition, we continue to believe that we remain on track, making steady progress towards our 2016 ROE and ROC goals over the course of 2014.
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