Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q4 2018 Earnings Presentation
24 slides from Voya Financial's earnings presentation, Feb 6, 2019
Slide 1: Voya Financial Fourth Quarter 2018 Investor Presentation
Voya Financial Fourth Quarter 2018 Investor Presentation February 6, 2019
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. The company does not revise or update them to reflect new information, subsequent events or changes in strategy. Forward-looking statements include statements relating to
Slide 3: Agenda
Agenda 1. Key Themes and Strategic Priorities ■ Rod Martin, Chairman and Chief Executive Officer 2. Business Segment Performance and Financial Highlights ■ Mike Smith, Chief Financial Officer 3
Slide 4: Key Themes
Key Themes ■ Normalized FY’18 adjusted operating earnings of $4.88 per share1 Delivering on - Normalized pre-tax adjusted operating earnings grew 34% year-over-year1 Strong Earnings - Record full year earnings in Retirement and Employee Benefits Growth ■ On track to achieve 10%+ EPS growth in 2019 ■
Slide 5: Complementary Businesses with Presence in Multiple Markets Positioning Voya for Growth
Complementary Businesses with Presence in Multiple Markets Positioning Voya for Growth 4Q’18 TTM Adjusted Operating Earnings ■ High-growth, high-return, capital-light by Segment ($ million)1 businesses position Voya to grow earnings – Retirement: Leading provider across a Investment large and divers
Slide 6: 2018: Continued Recognition of Strong Culture and Brand
2018: Continued Recognition of Strong Culture and Brand Named one of the Best Places to Recognized on Bloomberg 2019 Named one of the World’s Most Work in Money Management by Gender-Equality Index Ethical Companies for the fifth Pension & Investments for four consecutive year consecutive years Joine
Slide 7: Agenda
Agenda 1. Key Themes and Strategic Priorities ■ Rod Martin, Chairman and Chief Executive Officer 2. Business Segment Performance and Financial Highlights ■ Mike Smith, Chief Financial Officer 7
Slide 8: Fourth Quarter and Full Year 2018 Results – Financial Highlights
Fourth Quarter and Full Year 2018 Results – Financial Highlights After-tax Adjusted Operating Net Income Available to Earnings Per Share¹ (Normalized) Common Shareholders 4Q’18 FY’18 4Q’18 FY’18 $1.40 $4.88 $121 $875 per diluted share per diluted share million million 4Q’18 Excludes FY’18 4Q’18 Incl
Slide 9: Retirement – Industry Leading Provider with Strong Momentum of Profitable Growth
Retirement – Industry Leading Provider with Strong Momentum of Profitable Growth Adjusted Operating Earnings1 $ millions Highlights Current Quarter Full Year $702 ■ Record full-year adjusted Included in Adjusted Operating Earnings1: 4Q’17 4Q’18 operating earnings driven by $593 Prepayment fees and a
Slide 10: Investment Management – Delivering Strong Investment Performance and Net Flows
Investment Management – Delivering Strong Investment Performance and Net Flows from Specialty Capabilities Adjusted Operating Earnings1 $ millions Highlights Current Quarter Full Year ■ 4Q’18 institutional sales grew $248 Included in Adjusted Operating Earnings1: 4Q’17 4Q’18 76% y-o-y $205 Prepaymen
Slide 11: Employee Benefits – Growing while Maintaining Underwriting Discipline
Employee Benefits – Growing while Maintaining Underwriting Discipline Adjusted Operating Earnings1 $ millions Highlights Current Quarter Full Year $161 ■ Record full-year adjusted Included in Adjusted Operating Earnings1: 4Q’17 4Q’18 operating earnings $129 Prepayment fees and alternative income abo
Slide 12: Individual Life – Disciplined Management of In-Force Block
Individual Life – Disciplined Management of In-Force Block Adjusted Operating Earnings1 $ millions Highlights Current Quarter Full Year $252 ■ FY’18 net underwriting gain $248 Included in Adjusted Operating Earnings1: 4Q’17 4Q’18 within guidance range Prepayment fees and alternative income above/(be
Slide 13: Adjusted Operating EPS Considerations
Adjusted Operating EPS Considerations 4Q’18 Financial Results Reported 4Q’18 Adjusted Operating EPS1 $1.32 Includes: ■ DAC/VOBA and other intangibles unlocking (0.18) ■ Prepayment fees and alternative income above long-term expectations 0.10 Normalized 4Q’18 Adjusted Operating EPS1 $1.40 1Q’19 Consi
Slide 14: Capital Position Remains Strong
Capital Position Remains Strong Estimated Combined Excess Capital Highlights Debt-to-Capital Ratio4 RBC Ratio¹ ($ millions)2,3,4 ■ New estimated combined RBC target ratio of 400%1 ■ Repurchased $275 million shares in 4Q’18 over $1.5 billion in FY’18. FY’18 includes: ■ Accelerated share 479% $871 26.
Slide 15: High Quality General Account Fixed Income Portfolio
High Quality General Account Fixed Income Portfolio Highlights ■ 95% of investments are NAIC 1–2 NAIC 1 – 2 95% NAIC 3 ■ NAIC 3 – 6 exposure: Structured 4% Securities2 ■ 300+ different issuers 4% ■ 30+ different industries Private Corp ■ Public corporate debt 38% exposure balanced by NAIC 3 – 6 priv
Slide 16: Tax Benefits Remain a Key Source of Value
Tax Benefits Remain a Key Source of Value Income Statement and Balance Sheet Metrics ■ TVA of $445 million related to Federal NOLs as of 12/31/18 ■ Pro forma tax rate of 16-19% NPV Analysis ($ million) Value of Tax Assets1,2,3 Nominal DTA Value NPV3 as of 12/31/18 Federal Operating Loss Carry Forwar
Slide 17: Voya’s Current Valuation Remains Attractive
Voya’s Current Valuation Remains Attractive Implied Voya Valuation ($ per share) Current VOYA Valuation Voya Today Trading at ~7x Below Pre-Transaction Levels ■ Complementary high growth, high return, capital-light, $46.96 $8.64 businesses 8.3x ■ High free cash flow generating $38.32 7.2x ability ■
Slide 18: Helping Americans Get Ready to Retire Better
Helping Americans Get Ready to Retire Better 1 Delivering on Strong Earnings Growth 2 Organic Growth and Cost Savings 3 Capital Position is Strong 18
Slide 19: Appendix
PLAN | INVEST | PROTECT 19 FINANCIAL
Slide 20: Reconciliation of 4Q’18 and FY’18 Adjusted Operating Earnings to Net Income
Reconciliation of 4Q’18 and FY’18 Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) 4Q’18 209 30 0 (30) (17) 121 (29) (37) (5) 2 Adjusted Net Investment Net Gains Net Guaranteed Loss Related to Income (Loss) on Immediate Other Net Income Operating Gains (Losses) (Losse
Slide 21: Growth Initiatives in 4Q’18
Growth Initiatives in 4Q’18 2018 Growth Metrics 2018 Results ■ Small/Mid Corporate: Deposits +5% to +10% ■ FY’18: -4% y-o-y Retirement ■ Tax-exempt: Deposits 0% to +5% ■ FY’18: 10% y-o-y ■ Institutional: Sales -5% to 0% ■ FY’18: -4% y-o-y Investment ■ Retail Intermediary: Sales 0% to +5% ■ FY’18: 10
Slide 22: Seasonality of Financial Items
Seasonality of Financial Items 1Q 2Q 3Q 4Q ■ Corporate Markets tends to have ■ Education Tax-Exempt ■ Corporate Markets typically see the highest recurring deposits Markets typically see lowest highest transfer / single deposits Retirement recurring deposits ■ Withdrawals also tend to ■ Withdrawals
Slide 23: Analyst Modeling Considerations
Analyst Modeling Considerations Prepayment Income ■ Long-term prepayment income expectation in 2019 (pre-tax, pre-DAC): $8 million for Retirement; $3 million for Individual Life and Alternative ■ Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) for alternative income Income ■ Fu
Slide 24: Continued Reliable Long-Term Investment Performance Will Lead to Future Success
Continued Reliable Long-Term Investment Performance Will Lead to Future Success % AUM Above Benchmark or Peer Median1 100 91 91 94 83 62 63 56 44 46 32 30 Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. As of 4Q’18. Metrics presented measure each investment product based on (i