Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q3 2014 Earnings Presentation
31 slides from Voya Financial's earnings presentation, Nov 5, 2014
Slide 1: Voya Financial Third Quarter 2014 Investor Presentation
Voya Financial Third Quarter 2014 Investor Presentation November 5, 2014
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
Slide 3: Agenda
Agenda 1. Key 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 3. Business Operating and Balance Sheet Metrics Ewout Steenbergen, Chief Financial Officer 3
Slide 4: Key Developments
Key Developments ROE Improvement 3Q’14 TTM Ongoing Business Adjusted Operating ROE of 11.2% demonstrates continued progress toward 2016 goal of 12-13% Individual Life Reinsurance Transaction Creates excess capital and improves ROC for both Individual Life and Ongoing Business by approximately 70
Slide 5: Third Quarter 2014 Financial Highlights
Third Quarter 2014 Financial Highlights $191 million or $0.75 per diluted share After-tax Operating Earnings1 $205 million or $0.81 per diluted share excl. DAC and other intangibles unlocking Net Income Available to $401 million driven by Ongoing Business operating earnings Common Shareholders1 Ongo
Slide 6: Premier Franchise with Diverse Earnings
Premier Franchise with Diverse Earnings 3Q’14 TTM1 Ongoing Business Adjusted Operating Earnings Before Income Taxes2: $1,309 million 75% from Retirement Solutions and Investment Management Prominent multi-asset, multi-channel Investment Management Inv. Mgmt. active asset manager for institutions 17%
Slide 7: Three Key Sources of Value
Three Key Sources of Value Ongoing Potential Tax Business CBVA Value Benefits 7
Slide 8: Agenda
Agenda 1. Key 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 3. Business Operating and Balance Sheet Metrics Ewout Steenbergen, Chief Financial Officer 8
Slide 9: Ongoing Business Adjusted Operating ROE and ROC Remain on Track to Meet 2016 Target
Ongoing Business Adjusted Operating Return on Equity and Return on Capital Remain on Track to Meet 2016 Target Ongoing Business1 Adjusted Operating ROE2 Ongoing Business1 Adjusted Operating ROC3 12.0-13.0% 10.0-11.0% 11.2% 9.3% 10.3% 8.6% 10.6% 8.8% 9.8% 8.2% 8.3% 7.2% 7.6% 6.6% FY'11 FY'12 FY'13 3Q
Slide 10: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC ROC Initiatives Margin Adjust crediting rates in response to changes in the external rate environment 10.5% 10.0-11.0% Increase returns on Full Service business Improve Full Service retention rates 8.9%
Slide 11: Annuities – Selective Growth While Running Off Less Profitable Business
Annuities – Selective Growth While Running Off Less Profitable Business Adjusted Operating ROC ROC Initiatives Margin Run off Annual Reset / Multi-Year Guarantee Annuities (products with high 8.6% fixed rate crediting levels) 8.0% 7.0-9.0% Manage crediting rates 7.3% 8.1% Growth Grow sales of
Slide 12: Investment Management – Scalable Platform Leveraging Strong Investment Performance
Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin Initiatives Margin Improve sales force productivity 1 32.6% 32.0% 30.0-34.0% Reduce retail outflows 27.7% 1 Growth Increase third-party business Grow in higher-fee asset classes 28.9% 24.6%
Slide 13: Individual Life – Repositioning Toward More Capital Efficient Products
Individual Life – Repositioning Toward More Capital Efficient Products Adjusted Operating ROC ROC Initiatives Margin Continue to manage expenses relative to sales volume Manage non-guaranteed elements of in- 7.9% force contracts 7.0% 6.0-8.0% Capital Shift sales focus to indexed products Exe
Slide 14: Transaction Improves ROC for Individual Life and Ongoing Business
Transaction Improves ROC for Individual Life and Ongoing Business Transaction Highlights Adjusted Operating ROC Improvement $200 million increase in regulatory capital above 425% RBC target Approx. Minimal impact to operating 35 bps earnings Immediate non-operating pre-tax GAAP loss at closing
Slide 15: Employee Benefits – High Return on Profitable Growth
Employee Benefits – High Return on Profitable Growth Adjusted Operating ROC ROC Initiatives 24.3% Margin Improve loss ratio for Stop Loss policies 23.9% 22.0% 18.0-22.0% Growth Increase persistency and sales in the Group business 18.8% Expand the Voluntary business 16.9% 18.1% 13.2% Examples o
Slide 16: Agenda
Agenda 1. Key Highlights Rod Martin, Chairman and Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan Alain Karaoglan, Chief Operating Officer 3. Business Operating and Balance Sheet Metrics Ewout Steenbergen, Chief Financial Officer 16
Slide 17: 3Q'14 Business Segment Drivers
3Q’14 Business Segment Drivers 3Q’14 relative to 2Q’14 Retirement Higher prepayment and alternative income; increased full service fees; lower expenses Higher prepayment and alternative income; normalization of mortality; lower credited Annuities interest Investment Higher fee income from average AU
Slide 18: Annual Assumptions Review had Modest Ongoing Business Impact and Favorable CBVA Impact
Annual Assumptions Review had Modest Ongoing Business Impact and Favorable CBVA Impact Annual review of assumptions and projection model inputs completed during 3Q’14 Effects of Assumptions and Model Updates ($ million) Ongoing Business CBVA Policyholder Total Company Operating Total Other3 Behavi
Slide 19: Retirement Net Flows Reflect Continued Repricing Discipline
Retirement Net Flows Reflect Continued Repricing Discipline & Competitive Stable Value Marketplace Retirement Net Flows1 ($ million) $363 $234 $148 $319 $44 $215 $104 $122 $(85) $(60) $(42) $(24) $(145) $(66) $(22) 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Net Flows excl. Stable Value Stable Value Net Flows 1.
Slide 20: Annuities Focused on Growing Mutual Fund Custodial and Fixed Indexed Products
Annuities Focused on Growing Mutual Fund Custodial and Fixed Indexed Products, Running Off Less Profitable Business Annuities Net Flows1 ($ million) $55 $23 $31 $120 $8 $82 $137 $153 $146 $126 $122 $(26) $(41) $(40) $(73) $(1) $(233) $(259) $(330) $(332) $(704) $(92) $(172) $(261) $(623) 3Q'13 4Q'13
Slide 21: Investment Management Aided by Sizeable Sub-advisor Replacements in 3Q'14
Investment Management Aided by Sizeable Sub-advisor Replacements in 3Q’14 Investment Management Third-Party Net Flows1 ($ billion) 3Q’13 4Q’13 1Q’14 2Q’14 3Q’14 $0.9 $1.3 $1.3 $0.7 $(0.3) $(0.4) $(0.6) $(0.5) $(0.4) Sub-Advisor $0.9 $0.0 $4.7 $0.0 $2.1 Replacements Investment Management $(0.6) $(0.7
Slide 22: Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable
Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable Sales1 Loss Ratios ($ million) (%) $242 82.0% 82.1% 78.7% 77.5% 77.3% 74.7% 75.4% 76.9% 72.0% 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 FY'11 FY'12 FY'13 9 Mos. '14 82.9% 78.4% 75.3% $49 72.8% 72.4% 72.2% 72.1% $29 $34 72.3% $18 72.9%
Slide 23: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge 3Q’14 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated available Equity impacts increase (decrease) in hedge assets resources of $4.9 billion $1.2 $1.0 $1.
Slide 24: Estimated Combined RBC Ratio Strengthened and Leverage Ratio Better than Target
Estimated Combined RBC Ratio1 Strengthened and Leverage Ratio Better than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI3 Combined RBC Ratio1 $7.8 24.5% $7.6 Target 25% Debt-to- $7.3 Capital Ratio $7.0 $7.1 $7.1 23.5% 23.5
Slide 25: Robust Capital Position
Robust Capital Position Corporate & Closed Blocks GAAP Holding Company Liquidity1 YTD Share Buybacks ($ million) Capital ($ million) ($ million) $186 $2,691 Estimated remaining Statutory authorization Surplus in $1,230 Excess of 425% RBC $614 Level repurchased3 Holding Co $474 Working Capital Other2
Slide 26: Premier Franchise, Experienced Management, Solid Foundation
America’s Retirement Company™ 1 Premier Franchise with Leading Positions in Attractive Markets Experienced Management Team With a Goal of 400-500 bps ROE 2 Improvement from 2012 to 12-13% in 2016 3 Solid Foundation Based on a Re-Capitalized and De-Risked Balance Sheet 26
Slide 27: Appendix
Appendix a eeeeeslllclrlrllrrTC“‘(‘(’UNCOC;(él;.MSG RETIREMENT |! INVESTMENTS | INSURANCE 27 VOYA FINANCIAL™
Slide 28: Reconciliation of 3Q'14 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 3Q’14 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $117 $401 $28 $85 $(20) $229 $215 $7 $191 $(14) $(31) Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 1 Other Tax- Net Income Business (
Slide 29: Diversified Drivers of Operating Revenues
Diversified Drivers of Operating Revenues Ongoing Business Sources of Revenues Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance Other Revenue risks and incurred benefits 1 1 $947 $917 $967 $966 $913 $181 $219 $182 Investmen
Slide 30: 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
Slide 31: Voya Financial
FINANCIAL RETIREMENT |! INVESTMENTS | INSURANCE 31 FINANCIAL™