Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q3 2023 Earnings Presentation
29 slides from Voya Financial's earnings presentation, Nov 1, 2023
Slide 1: Voya Financial Third Quarter 2023 Investor Presentation
Voya Financial Third Quarter 2023 Investor Presentation November 1, 2023
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 assume any obligation to revise or update these statements to reflect new information, subsequent events or changes in strategy. Forward-looking stat
Slide 3: Key Themes & Executing on our Strategy
Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer
Slide 4: Key Themes
Key Themes ■ 3Q'23 adjusted operating earnings1 per share of $1.74, or $7.51 on a TTM basis On Track to Achieve ■ Includes $(0.21) of prepayment & alternative income below long-term expectations and $(0.12) of one-time other notable2 Health items Investor Day ■ Expect to achieve 12% to 17% EPS growt
Slide 5: Focused on Integration & Execution while Building on our Technology Capabilities
Focused on Integration & Execution while Building on our Technology Capabilities Integration Updates Advancing Technology AllianzGI Benefitfocus Voya India ✓ Generated positive net flows each ✓ FY’23E adjusted operating ✓ Enables further expense quarter since closing1 earnings slightly below our $25
Slide 6: Voya Culture – Living our Purpose and Vision
Voya Culture – Living our Purpose and Vision Delivering for our Supporting our Giving back to our Clients Colleagues Communities Earned multiple recognitions Expanded product offerings to as a Best Place to Work support growing client demand for mental health challenges with new critical illness & a
Slide 7: Business Segment Performance and Financial Highlights
Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer
Slide 8: Third Quarter 2023 Financial Results
Third Quarter 2023 Financial Results (Millions) 3Q’22 3Q'23 Earnings Drivers ▪ 3Q’23 adjusted operating EPS of $1.74 includes $(0.21) of prepayment Adjusted and alternative income below our long-term expectations and $(0.12) of Operating $1.97 $1.74 other notable items1 Per Diluted Per Diluted EPS S
Slide 9: Wealth Solutions: Strong commercial momentum driving business growth
Wealth Solutions Strong commercial momentum driving business growth (Billions) Full Service – Client Assets Full Service – Recurring Deposits Target 10 – 12% Growth 3Q’23 Net Flows Spread-Based Fee-Based 3Q’23: Full Service $0.1 $188 +10.2% YoY $165 $174 Recordkeeping $3.0 $163 9.6% CAGR $144 2018 t
Slide 10: Wealth Solutions: Diverse revenue streams and strong operating margins
Wealth Solutions Diverse revenue streams and strong operating margins (Millions) Adjusted Operating Earnings Summary ▪ 3Q'23 adjusted operating earnings of $179 million and $630 Earnings ex Notables Notables million TTM ▪ Net revenue growth1 of 1.4% (TTM) $798 $630 ▪ Slightly below target due to str
Slide 11: Health Solutions: Strong top-line growth while maintaining pricing discipline
Health Solutions Strong top-line growth while maintaining pricing discipline (Millions) Annualized In-Force Premium & Fees Aggregate Loss Ratio1 Target 7-10% Growth Lowering target to 69-72%5 3Q’23: +21% YoY3 12.2% 73% 73% CAGR4 70% $917 70% 69% Target Range 67% $833 66% 66% $752 64% $714 $710 $659
Slide 12: Health Solutions: Significant earnings growth at strong margins
Health Solutions Significant earnings growth at strong margins (Millions) Adjusted Operating Earnings Summary Earnings ex Notables Notables $349 ▪ 3Q’23 adjusted operating earnings1 of $53 million and $349 million TTM $256 ▪ Net revenue growth1 of 35.8% (TTM) reflects strong in-force premium growth
Slide 13: Investment Management: Long-term track record of AUM growth
Investment Management Long-term track record of AUM growth (Billions) Assets Under Management Organic Growth Rate4 3Q’23 Net Flows1 International Legacy2 $(3.3) 5.0% $321 5.0% 4.2% Over 50% of Institutional $(2.0) $312 outflows year- Retail $1.0 4.0% to-date are due Total $(4.3) $264 3.0% to transit
Slide 14: Investment Management: Revenue growth driven by international sales
Investment Management Revenue growth driven by strong sales in international markets (Millions) Adjusted Operating Earnings Summary Excludes AllianzGI NCI Earnings ex Notables Notables ▪ 3Q'23 adjusted operating earnings of $49 million and $174 million TTM $176 $174 ▪ Net revenue growth2 of 21.8% (T
Slide 15: Strong cash flow generation and disciplined capital return
Strong cash flow generation and disciplined capital return (Billions) Capital generation in-line with 90%+ target Highlights 90%+ ▪ Strong balance sheet FCF Conversion2 ▪ Excess capital1 of $0.4 billion ▪ Leverage ratio of 27.8%; RBC ratio of 403% ▪ Generated $0.2 billion of excess capital1 in 3Q’23
Slide 16: Focused on Executing our Strategy and Meeting our Financial Targets
Focused on Executing our Strategy and Meeting our Financial Targets ■ On target for 12% to 17% EPS CAGR over the three-year period ending in 2024 On Track to Achieve Investor Day EPS ■ Voya’s diversified business model and disciplined expense management protects margins while Target investing for gr
Slide 17: Appendix
Appendix
Slide 18: Adjusted Operating to Net Income Walk
Adjusted Operating to Net Income Walk (Millions) Primarily Primarily Primarily Primarily Non-Cash Non-Cash Cash Non-Cash 4 3 5 1 2 1. Net investment gains primarily driven by $45 million gain on Voya India. 2. Gains from Businesses exited includes a one-time tax benefit of $92 million related to a d
Slide 19: Guidance and Assumptions
Guidance and Assumptions Note: Teal font denotes change from 2Q’23 Prepayment & ■ Long term prepayment and other investment fee income, quarterly ■ Approximately 9% annual long-term expected returns (pre-tax) for alternative Alt. Income expectation in 2023 (pre-tax): $9 million for Wealth Solutions
Slide 20: Seasonality
Seasonality Note: Teal font denotes change from 2Q’23 Wealth Health IM Corporate All Segments ▪ Admin expenses tend to be the ▪ Corporate tends to have the highest ▪ Group Life loss highest recurring deposits ratio tends to be highest ▪ Seasonally higher ▪ Payroll taxes and long-term 1Q ▪ Withdrawal
Slide 21: 3Q'23 Notable Items Impacts
3Q'23 Notable Items Impacts Alternative Income Above/(Below) Adjusted Operating Earnings (ex. Adjusted Operating Earnings1 3Q'23 (Millions) Expectations2 and other Notables3 notables) Wealth Solutions $179 $(24) $202 Health Solutions 53 (18) 71 Investment Management 63 (3) 66 Corporate (52) – (52) A
Slide 22: Reliable Long-Term Investment Performance Critical to Future Success
Reliable Long-Term Investment Performance Critical to Future Success 3Q 2023 % AUM Above Benchmark or Peer Median1 100 85 83 81 78 77 71 63 56 59 54 49 Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. Voya Investment Management calculations as of September 30, 2023. Metrics pre
Slide 23: General Account
General Account Built to deliver through-the-business-cycle returns $39 Billion1 96%+ 3,000+ General Account Investment Grade1,2 Issuers diversified across a range of Industries THROUGH-THE-CYCLE, RISK- HIGH-QUALITY AND CREDIT ADJUSTED RETURNS DIVERSIFIED RISK-MANAGEMENT ✓ Trailing 20-year loss rate
Slide 24: Well-Diversified Investment Portfolio Built for Through-the-Cycle Risk Adjusted Returns
Well-Diversified Investment Portfolio Built for Through-the- Cycle Risk Adjusted Returns $39 Billion General Account Investment Portfolio1 96%+ Investment Grade2 Munis LP/Alts Other 2% 5% 1% Short 4% Term/Treasury 2% 45% Public Corporate 29% CML 14% Private Securitized 51% Credit 26% 21% 1 Ratings2
Slide 25: Private Credit Provides Income, Diversification and Downside Protection
Private Credit Provides Income, Diversification and Downside Protection ▪ 21% allocation in the investment portfolio, of which 92% is Investment Grade ▪ Covenant structures in Private Credit provide more protections than Public Investment Grade Bonds ▪ Voya Investment Management is a Tier One invest
Slide 26: Well Diversified and High-Quality CML Portfolio
Well Diversified and High-Quality CML Portfolio CML Portfolio: Exposure by Property Type1 2% 2% 1% Debt Service Coverage Ratio (DSCR) 3% Multifamily >1.25- >1.00 – Retail >1.50X <1.00X Total 1.50X 1.25X Loan To Value (LTV2) 9% Industrial/Warehouse 29% <50% 46.8% 6.7% 8.1% 5.5% 67.0% Office 15% 50% -
Slide 27: Office Loan Exposure - CML
Office Loan Exposure - CML Direct Exposure Represents 2% of Total General Account % of Office Loan Portfolio Maturing by Year1 $215 million maturing over the next rolling 5-years Debt Service Coverage Ratio (DSCR) 9.8% >1.25- >1.00 – >1.50X <1.00X Total Loan To Value (LTV) 1.50X 1.25X 6.0% <50% 59.0
Slide 28: CMBS Portfolio Highly Rated and Well Diversified
CMBS Portfolio Highly Rated and Well Diversified $4.1 Billion1 11% of General Account Credit Book CMBS Enhancement2 Value % CMBS Government 33% Agency Guaranteed Remaining NAIC 1B-G General 19% Account Agency or IO 4% CMBS IO Limited Credit Risk 3% 89% Conduit/CRE CLO 3% NAIC 2 NAIC 1A SASB 3% 14% S
Slide 29: CLO Portfolio is Modestly Sized and Highly Rated
CLO Portfolio is Modestly Sized and Highly Rated (As of 9/30/2023) ▪ 5% allocation1 in the investment portfolio, of which 93% is rated NAIC 1 ▪ Below Investment Grade and Equity exposure exclusively in Voya issued transactions ▪ Significant Credit Enhancement (CE)2 mitigates the risk of loss Voya Po