Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q2 2017 Earnings Presentation
30 slides from Voya Financial's earnings presentation, Aug 2, 2017
Slide 1: Voya Financial Second Quarter 2017 Investor Presentation
Voya Financial Second Quarter 2017 Investor Presentation August 2, 2017
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 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 3. Business Operating and Balance Sheet Metrics Mike Smith, Chief Financial Officer 3
Slide 4: Key Themes
Key Themes Ongoing Business Adjusted Operating ROE at 14.3% ROE Continues to Strategic investments enabling business growth Improve Cost savings continuing to build Excess capital of $877 million Capital Position is Repurchased $225 million of shares in 2Q’17 and closed $150 million discou
Slide 5: Second Quarter 2017 Financial Highlights
Second Quarter 2017 Financial Highlights Second Quarter 2017 $125 million or $0.67 per diluted share • Includes: After-tax Operating • $(0.39) of deferred acquisition costs and value of business acquired (“DAC/VOBA”) and Earnings1 other intangibles unlocking • $0.11 of prepayment fees and alternativ
Slide 6: 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 3. Business Operating and Balance Sheet Metrics Mike Smith, Chief Financial Officer 6
Slide 7: 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 14.3% 13.5-14.5% 11.7% 11.5-12.5% 12.1% 12.1% 12.3% 10.0% 10.2% 9.9% FY'14 FY'15 FY'16 2Q'17 2018 FY'14 FY'15 FY'16 2Q'17
Slide 8: Momentum on Growth Initiatives in 2Q'17
Momentum on Growth Initiatives in 2Q’17 1Q’17 2Q’17 2017 Growth Metrics1 Commentary Scorecard Scorecard Small/Mid Corporate: Deposits +5% to • 2Q’17: +33% y-o-y +10% • YTD’17: +40% y-o-y Retirement • 2Q’17: 0% y-o-y Tax-Exempt: Deposits 0% to +5% • YTD’17: +20% y-o-y • 2Q’17: +82% y-o-y
Slide 9: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC1 Initiatives Focus on customer retirement outcomes by encouraging greater employee participation, raising participant savings 9.5-10.5% rates, and optimizing asset allocation 9.6% 9.2% Expand advisor distr
Slide 10: Investment Management – Continued Strong Performance Across Broad Capabilities
Investment Management – Continued Strong Performance Across Broad Capabilities Operating Margin1 Initiatives Expand client solutions with new products Improve distributor productivity by leveraging enhanced 34.2%2 33-35% 32.1% digital capabilities and tools and upscaling talent 29.2% 28.2% Bro
Slide 11: Annuities – Expanding Product and Distribution Reach
Annuities – Expanding Product and Distribution Reach Adjusted Operating ROC1 Initiatives Improve customer and distributor experience and 10.9% lower unit costs by simplifying operations through 9.8% 9.5-10.5% Annuities and Individual Life combination 9.3% 9.0% Address evolving and diverse client
Slide 12: Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model
Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model Adjusted Operating ROC1 Initiatives Improve customer and distributor experience and 7.5%-8.5% lower costs by simplifying operations through 7.5% Individual Life and Annuities combination 6.6% 6.2% Improve pro
Slide 13: Employee Benefits – High Return and Capital Generation Business
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC1 Initiatives Improve block performance in Stop Loss to ensure 28.9% profitable growth 26.5% 23-25% 23.3% 20.8% Improve customer and distributor experience and lower unit costs by simplifying operations Solve
Slide 14: 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 3. Business Operating and Balance Sheet Metrics Mike Smith, Chief Financial Officer 1
Slide 15: Operating EPS Considerations
Operating EPS Considerations 2Q’17 Financial Results Reported 2Q’17 Operating EPS1 $0.67 Includes: DAC/VOBA and other intangibles unlocking $(0.39) Prepayment fees and alternative income above long-term expectations $0.11 3Q’17 Considerations2 Potential Beneficial Items: Lower operating losses
Slide 16: 2Q'17 Business Segment Financial Considerations
2Q’17 Business Segment Financial Considerations Investment Employee Retirement Annuities Individual Life Corporate Management Benefits Prepayment fees and alternative income above/(below) long-term $(2) million $30 million1 $3 million In-line In-line expectations (pre-tax, pre-DAC) Strateg
Slide 17: Retirement Corporate and Tax-exempt Inflows Partially Offset by Stable Value and Other Outflows
Retirement Corporate and Tax-exempt Inflows Partially Offset by Stable Value and Other Outflows Retirement Net Flows1 ($ million) $1,500 $280 $1,000 $68 $653 $291 $205 $500 $71 $940 $82 $845 $406 $423 $441 $0 $(247) $(83) $(633) $(2,132) ($500) $(2,132) ($1,000) 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 Corpora
Slide 18: Investment Management Net Inflows in 2Q'17 Driven by Institutional Sales
Investment Management Net Inflows in 2Q’17 Driven by Institutional Sales Investment Management Third-Party Net Flows1 ($ billion) 2Q’16 3Q’16 4Q’16 1Q’17 2Q’17 $1.6 $2.4 $0.5 $0.1 $0.6 $0.2 ($0.1) ($0.3) ($0.5) Investment Management $(0.7) $(0.8) $(0.9) $(1.4) $(0.7)3 VA Net Flows Total $(0.2) $(0.3
Slide 19: Positive Investment-Only Flows and Fixed Indexed Annuities Flows Offset Run Off
Positive Investment-Only Flows and Fixed Indexed Annuities Flows Offset by Continued Run Off of Less Profitable Business Annuities Net Flows1 ($ million) $116 $74 $80 $39 $89 $81 $90 $51 $62 $(9) $(43) $(56) $(57) $(59) $(61) $(165) $(125) $(117) $(108) $(151) 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 Annual Re
Slide 20: Employee Benefits Group Life Loss Ratio Favorable While Stop Loss Above Annual Target
Employee Benefits Group Life Loss Ratio was Favorable While Loss Ratio for Stop Loss Above Annual Target Loss Ratios (%) 95% 95% 90% 90% 83.2% 85% 85% 78.7% 77.2% 80% 80% 75% 77.9% 75% 76.1% 75.6% 70% 72.9% 73.4% 70% 65% 70.5% 65% 60% 60% 55% 55% 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 FY'13 FY'14 FY'15 FY'16
Slide 21: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in CTE95 Standard Relative to Hedge Assets 2Q’17 Results ($ billion) Equity impacts (increase) decrease in CTE95 standard Interest impacts (increase) decrease in CTE95 standard Equity impacts increase (decrease) in hedge assets Interest im
Slide 22: 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 • After dividends of $770 million • Pre-dividend Target 25% RBC= 537% Debt-to-Capital • Pre-d
Slide 23: Established Track Record of Capital Return
Established Track Record of Capital Return Holding Company Liquidity1 Excess Capital Share Repurchases ($ million) ($ million) ($ million) $877 $581 $450 Liquidity $3972 Target Share Estimated Repurchases $746 Statutory Surplus in Remaining Excess of Repurchase 425% RBC $225 Authorization Level $211
Slide 24: ROE Continues to Improve; Capital Position is Strong; CBVA De-Risking Continues
Helping Americans Get Ready to Retire Better 1 ROE Continues to Improve 2 Capital Position is Strong 3 CBVA Additional De-Risking Continues 24
Slide 25: Appendix
Appendix ee VOYA. PLAN | INVEST | PROTECT 25 FINANCIAL
Slide 26: Reconciliation of 2Q'17 Operating Earnings to Net Income
Reconciliation of 2Q’17 Operating Earnings to Net Income ($ million; all figures are after-tax) $45 $167 $125 $(18) $13 $2 Operating Earnings Closed Block Variable Annuity Net Realized Gains (Losses) Other 1 Other Tax-Related 2 Net Income (Loss) Available to Common Shareholders 1. Other, after-tax c
Slide 27: Ongoing Business Key Sources of Value
Key Sources of Value Tax Benefits Ongoing Business Excess Capital Potential CBVA Value 27
Slide 28: Seasonality of Financial Items
Seasonality of Financial Items 9. 1Q 2Q 3Q 4Q Corporate Markets tends to Education Tax-Exempt Markets Corporate Markets typically see have the highest recurring typically see lowest recurring highest transfer / single Retirement deposits deposits deposits Withdrawals also tend to Withdrawa
Slide 29: Analyst Modeling Considerations
Analyst Modeling Considerations Long-term prepayment income expectation of $15 million per quarter for Ongoing Business Prepayment Income in 2017 (pre-tax, pre-DAC): $7 million for Retirement; $5 million for Annuities; $3 million for and Alternative Individual Life Income Approximately 9% annual
Slide 30: Voya Financial
® FINANCIAL FINANCIAL PLAN | INVEST | PROTECT 30