Voya Financial, Inc. · NYSE:VOYA

Voya Financial — Q4 2015 Earnings Presentation

43 slides from Voya Financial's earnings presentation, Feb 10, 2016

  1. Slide 1: Voya Financial Fourth Quarter 2015 Investor Presentation

    Voya Financial Fourth Quarter 2015 Investor Presentation February 10, 2016

  2. Slide 2: Forward-Looking and Other Cautionary Statements

    Forward-Looking and Other Cautionary Statements This presentation and the remarks made orally contain forward-looking statements. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not i

  3. Slide 3: Agenda

    Agenda 1. Key Themes and Highlights  Rod Martin, Chairman and Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan  Alain Karaoglan, Chief Operating Officer and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operatin

  4. Slide 4: Key Themes

    Key Themes  12.2% Ongoing Business Adjusted Operating ROE in FY’15 vs. 11.7% in FY’14 ROE (excluding items we do not expect to recur at the same levels) Improvement  12.1% Ongoing Business Adjusted Operating ROE in FY’15 vs. 12.1% in Continued in FY’14 (including items we do not expect to recur at

  5. Slide 5: Fourth Quarter and Full Year 2015 Financial Highlights

    Fourth Quarter and Full Year 2015 Financial Highlights Fourth Quarter 2015 Full Year 2015 $196 million or $0.91 per diluted share $665 million or $2.92 per diluted share After-tax Operating $177 million or $0.82 per diluted share $711 million or $3.12 per diluted share Earnings1 excl. DAC and other

  6. Slide 6: Ongoing Business Key Sources of Value

    Key Sources of Value Tax Benefits Ongoing Business Excess Capital Potential CBVA Value 6

  7. Slide 7: Agenda

    Agenda 1. Key Themes and Highlights  Rod Martin, Chairman and Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan  Alain Karaoglan, Chief Operating Officer and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operatin

  8. Slide 8: Ongoing Business Adjusted Operating ROE and ROC Tracking to Target

    Ongoing Business Adjusted Operating Return on Equity and Return on Capital Tracking to Target Ongoing Business1 Adjusted Operating ROE2 Ongoing Business1 Adjusted Operating ROC3 13.5-14.5% 12.1% 12.2% 11.5-12.5% 10.3% 11.7% 12.1% 9.9% 10.1% 9.8% 8.6% 10.0% 9.6% 8.3% 8.2% 7.2% FY'12 FY'13 FY'14 FY'15

  9. Slide 9: ROC Increase Driven by Capital and Margin Improvements

    ROC Increase Driven by Capital and Margin Improvements Ongoing Business Adjusted Operating ROC1 Interest Rates Capital 10.1% 39 bps Growth 48 bps (23) bps (13) bps Margin 9.6% Equity market decline represented (10) bps of growth FY’14 FY’15 1. Ongoing Business includes Retirement, Annuities, Investm

  10. Slide 10: $350 Million Strategic Investment Program on Track

    $350 Million Strategic Investment Program on Track 2015 2016 2017 2018 Consolidate IT Platforms1 5% 30% 65% 100% Foundational work Migrate to Cloud built on-premise 3 Applications underway, remainder of Roadmap is under Environment1 cloud environment development Digitize Foundational Work, Processes

  11. Slide 11: Retirement – Expand Distribution and Increase Productivity

    Retirement – Expand Distribution and Increase Productivity Adjusted Operating ROC Growth Initiatives 11-12% Market 2015 2016 Continued focus on building our book of business in all markets through sales growth and retention of profitable clients 9.2% 8.9% 8.7%  Generated record deposits  Grow depo

  12. Slide 12: Annuities – Growing Distribution and Expanding Product Range

    Annuities – Growing Distribution and Expanding Product Range Adjusted Operating ROC Growth Initiatives 2015 2016  Rollout of volatility controlled Fixed Indexed Annuity 9.5-10.5% Expand the  Launched Preferred crediting strategy Advantage in Investment  Re-design flagship Secure 9.3% product port

  13. Slide 13: Investment Management – New Product Extensions and Productivity Improvements

    Investment Management – New Product Extensions and Productivity Improvements Operating Margin Growth Initiatives 2015 2016  Expand global distribution  Broadened solution set with relationships global distribution partners New distribution  Continue momentum in ($3.0B in sales) and markets Insura

  14. Slide 14: Employee Benefits – Mid-Market Expansion and Private Exchange

    Employee Benefits – Mid-Market Expansion and Private Exchange Potential Adjusted Operating ROC Growth Initiatives 2015 2016  Dedicated underwriting team fully operational to support growth Mid-market  Added 20 experienced sales  Improved customer 28.9% expansion representatives experience through

  15. Slide 15: Individual Life – Repositioning Through In-Force Actions

    Individual Life – Repositioning Through In-Force Actions Adjusted Operating ROC Initiatives 2015 2016 7.5%-8.5% Restore profit margins within  Continue to manage crediting rates and Non-Guaranteed 6.2% the in-force Elements block 5.3% 6.0% (Improve it) 4.9% Reduce 5.1% redundant  Secured long term

  16. Slide 16: Agenda

    Agenda 1. Key Themes and Highlights  Rod Martin, Chairman and Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan  Alain Karaoglan, Chief Operating Officer and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operatin

  17. Slide 17: 4Q’15 Business Segment Drivers

    4Q’15 Business Segment Drivers 4Q’15 Commentary  Positive net flows in all markets; Equity market improvement in the quarter was offset by recent case exits and a Retirement mix shift from variable to fixed accounts  Prepayments and alternative income: $3 million (post-DAC) above modeling expectat

  18. Slide 18: Retirement Positive Net Flows In All Markets in 4Q’15

    Retirement Positive Net Flows In All Markets in 4Q’15 Retirement Net Flows1 ($ million) $1,000 $800 $661 $585 $600 $92 $557 $475 $64 $159 $400 $395 $40 $38 $200 $475 $418 $371 $360 $174 $- 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 $(200) $(566) $(400) $(2,132) $(600) $(111) $(202) $(800) $(1,000) $(1,129) Corpo

  19. Slide 19: Annuities Flows Supported by Growth in Fixed Indexed Annuities

    Annuities Flows Supported by Growth in Fixed Indexed Annuities and Investment-Only Products, While Running off Less Profitable Business Annuities Net Flows1 ($ million) $53 $34 $11 $85 $198 $121 $133 $159 $173 $104 $(63) $(33) $(52) $(54) $(59) $(19) $(37) $(191) $(198) $(169) $(168) $(109) $(481) $

  20. Slide 20: Investment Management Net Outflows in 4Q’15 Driven by Lower Institutional Sales

    Investment Management Net Outflows in 4Q’15 Driven by Lower Institutional Sales Investment Management Third-Party Net Flows1 ($ billion) 4Q’14 1Q’15 2Q’15 3Q’15 4Q’15 $0.8 $0.7 $0.5 $(0.2) $(0.3) $(0.5) $(0.7) ($1.1) $(0.2) $(1.4) Sub-Advisor $0.8 $0.0 $0.0 $1.4 $0.0 Replacements Investment Manageme

  21. Slide 21: Individual Life 4Q’15 Favorable Mortality Driven by Frequency

    Individual Life 4Q’15 Favorable Mortality Driven by Frequency Actual-to-Expected Frequency Actual-to-Expected Mortality 140% 120% 100% 115% 110.6% 80% 110% 60% 40% 105% 115% 105% 103% 89% 84% 81% 76% 20% Between One and Two Standard Deviations 100% 96.9% 0% 95.7% 96.4% 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

  22. Slide 22: Employee Benefits Loss Ratios for Stop Loss and Group Life Remained Favorable

    Employee Benefits Loss Ratios for Stop Loss and Group Life Remained Favorable Sales1 ($ million) Loss Ratios (%) 85% 85% $254 78.7% 80% 78.7% 80% 76.9% 75.6% 76.1% 75.6% 74.2% 74.0% 75% 72.2% 75% 70% 70% 65% 65% 60% 60% 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 FY'12 FY'13 FY'14 FY'15 85% 85% 80% 80% 72.2% 75.9

  23. Slide 23: Active Hedge Program in Closed Block Variable Annuity

    Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge Resources 4Q’15 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability  Estimated Equity impacts increase (decrease) in hedge resources $1.1 available $0.7 resources of $5.

  24. Slide 24: Significant NPV of Projected Tax Savings

    Significant NPV of Projected Tax Savings Income Statement and Balance Sheet Metrics  TVA of $783 million related to Federal NOLs as of 12/31/15  2016 Ongoing Business operating tax rate of 32% NPV Analysis ($ million) Value of Tax Assets1,2,3 Value of DRD5 Nominal DTA Value NPV4 Years NPV6 as of 1

  25. Slide 25: Energy Investments – Highly Rated, Quality Bias

    Energy Investments1 – Highly Rated, Quality Bias  $7.3 billion of energy fixed income investments NAIC Ratings of Energy Investments  Constitutes less than 9% of total investment NAIC 3- portfolio 6  Highly rated with 92% rated investment grade 8% NAIC 1 according to NAIC scale 34%  Approximatel

  26. Slide 26: Below Investment Grade Investments – Diversified and Managed by Experienced Team

    Below Investment Grade Investments1 – Diversified and Managed by Experienced Team  $3.2 billion of below investment grade fixed income NAIC Ratings of Below Investment Grade investments Fixed Income Investments  Constitutes approximately 3.6% of total NAIC 5-6 investment portfolio, which is less t

  27. Slide 27: Estimated Combined RBC Ratio and Leverage Ratio Better Than Target

    Estimated Combined RBC Ratio1 and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 $7.8 Target 25% $7.5 Debt-to- Capital Ratio 21.8% 22.2% 22.5% 21.2% 21.5% $6.9 $6.7 547% $6.6

  28. Slide 28: Significant Excess Capital Available

    Significant Excess Capital Available Holding Company Liquidity1,2 Excess Capital Share Repurchases ($ million) ($ million) ($ million) $1,068 $1,490 $844 $XX $674 Estimated Statutory Surplus in $450 Liquidity Excess of 425% RBC Target Level Holding Co. Working $702 Capital Above Target2 $224 12/31/1

  29. Slide 29: Key Metrics Have Substantially Improved Since IPO

    Key Metrics Have Substantially Improved Since IPO, While Today’s Valuation Levels Are Below IPO Levels At IPO Today Change Book Value per share $40.301 $57.443 +43% ex AOCI Trailing 12 months Ongoing Business ROE (excluding items we 8.3%2 12.2%3 +390 bps do not expect to recur) Debt to capital ratio

  30. Slide 30: Evolve, Focus on Growth and ROE, Realize Sources of Financial Value

    Helping Americans Get Ready to Retire Better 1 Evolve to Deliver More Customer Value 2 Focus on Growth and Further ROE Improvement 3 Realize Sources of Financial Value 30

  31. Slide 31: Appendix

    Appendix a eeeeeslllclrlrllrrTC“‘(‘(’UNCOC;(él;.MSG VOYA. FINANCIAL PLAN | INVEST | PROTECT 31

  32. Slide 32: Reconciliation of 4Q’15 Ongoing Business Adjusted Operating Earnings to Net Income

    Reconciliation of 4Q’15 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $19 $251 $232 $1 $196 $(56) $(206) $(39) $8 $(66) $(107) Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 1 Other Tax- Net Income Busines

  33. Slide 33: Diversified Drivers of Operating Revenue

    Diversified Drivers of Operating Revenue Ongoing Business Sources of Revenue Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance 1 Other Revenue risks and incurred benefits $1,021 $962 $953 $937 $977 $231 $191 $197 $195 $214 I

  34. Slide 34: Illustration of Tax Asset Utilization

    Illustration of Tax Asset Utilization Federal Net Operating Loss Carry Forwards Illustration of Tax Asset Utilization1 ($ million)  Approximately $3.0 billion of federal NOLs as of 12/31/2015 with $0.2 billion Life Subgroup NL Subgroup Federal NOLs2 likely not utilized Deferred Losses Deferred Loss

  35. Slide 35: Seasonality of Financial Items

    Seasonality of Financial Items 1Q 2Q 3Q 4Q  Corporate Markets tends to  Education Tax-Exempt Markets  Corporate Markets typically have the highest recurring typically sees lowest recurring sees highest transfer / single Retirement deposits deposits deposits  Withdrawals also tend to  Withdrawal

  36. Slide 36: Analyst Modeling Considerations

    Analyst Modeling Considerations Prepayment  Prepayment income of $12 million per quarter for Ongoing Business in 2016 (pre-tax, pre-DAC): $6 million for Income and Retirement; $4 million for Annuities; $2 million for Individual Life Alternative Income  Approximately 9% annual long-term expected re

  37. Slide 37: 2015 Recognitions of Voya Financial

    2015 Recognitions of Voya Financial Newsweek Top Green Companies 2015 World’s Most Ethical Companies IFR Americas Review of the Year 2015 in the U.S. 2015 – Ranked #78 for the 2nd consecutive year Winner, Financial Bond category Investment Management business recognized on Pensions and Investments R

  38. Slide 38: Retirement – Leading Franchise Driving Long-Term Growth and Returns

    Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC Growth Initiatives 11-12%  Enhance distribution and market reach  Leverage cross-market relationships  Advance retirement focused solutions 9.2% 8.9% 8.7% Margin Initiatives 8.9% 8.7% 8.5%  Target clients

  39. Slide 39: Annuities – Expanding Product Range and Distribution Reach

    Annuities – Expanding Product Range and Distribution Reach Adjusted Operating ROC Growth Initiatives  Expand the Product Portfolio Capital Efficiently  Expand FIA Distribution to Growing Institutional Markets 9.5-10.5%  Enhance Customer and Distributor Experience Through Digital 9.0% 9.3% Tools 9

  40. Slide 40: Investment Management – Scalable Platform Leveraging Broad Capabilities

    Investment Management – Scalable Platform Leveraging Broad Capabilities and Long-term Investment Performance Operating Margin Growth Initiatives  Client Segments  Enterprise Retirement  Product Solutions & Capability Extensions 33-35%  Infrastructure Reinvestment 32.1% 1 27.7% 29.2% Examples of

  41. Slide 41: Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model

    Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model Adjusted Operating ROC Margin Initiatives  Manage non-guaranteed elements 7.5%-8.5%  Reduce redundant reserve financing cost and 6.2% capital usage 6.0%  Digitize operational processes 5.3% 4.9% Capital Initia

  42. Slide 42: Employee Benefits – High Return and Capital Generation

    Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC Growth Initiatives  Expand into Mid-Market  Grow private exchange sales and voluntary 28.9% participation rates 28.8% 26.6% 26.5% 23-25% Examples of Execution 18.8%  Enhanced customer experience by adding digit

  43. Slide 43: FINANCIAL

    ® FINANCIAL FINANCIAL PLAN | INVEST | PROTECT 43

Voya Financial — Q4 2015 Earnings Presentation on 6ix