BofA downgrades Voya to Neutral on worsening medical stop-loss

BofA downgraded Voya Financial (VOYA) to Neutral from Buy with a price target of $83, down from $91, after the company announced that its medical stop-loss business would operate at a 90-105% combined ratio for FY24, which implies a 100-160% loss ratio for Q4 and an 80c-$3.00 per share hit to EPS. Previously on November 4, management guided investors to an already elevated 86% loss ratio for FY24, but now argues that significant acceleration in October/November claims experience requires an even more severe estimate for the full year, notes the analyst, who argues that Voya’s delayed understanding of its worsening claims trends in the stop-loss business, in addition to the departure of its CFO, could cause investors to be less inclined to own shares and sees the stock performance as “likely to stagnate near term.”