Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q4 2020 Earnings Presentation
27 slides from Voya Financial's earnings presentation, Feb 10, 2021
Slide 1: Voya Financial Fourth Quarter 2020 Investor Presentation
Voya Financial Fourth Quarter 2020 Investor Presentation February 10, 2021
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: 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 4Q’20 adjusted operating earnings of $1.44 per share1 (21% growth year-over-year), excluding: Delivered Strong EPS ■ $0.49 of prepayment and alternative income above our long-term expectations2 Growth in Challenging ■ $0.18 of DAC/VOBA and other intangibles unlocking Year ■ $
Slide 5: Advancing our Culture and Values
Advancing our Culture and Values Named a Best Place to Work for LGBTQ Equality for the Investment Management Member of the 2021 16th consecutive year named a 2020 Best Bloomberg Gender-Equality Place to Work Index Named to Newsweek’s 2021 Named Caregiving.com’s list of America’s Most 2020 Caregiving
Slide 6: 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 6
Slide 7: Fourth Quarter 2020 Results – Financial Highlights
Fourth Quarter 2020 Results – Financial Highlights After-tax Adjusted Operating Net Income (Loss) Available to Earnings Per Share¹ (Normalized) Common Shareholders2 4Q’20 FY’20 4Q’20 FY’20 $1.44 $4.81 $341 $(158) per diluted share per diluted share million million 4Q’20 Excludes FY’20 4Q’20 Includes
Slide 8: Retirement – Industry Leading Provider of Retirement Solutions
Retirement – Industry Leading Provider of Retirement Solutions across all Plan Sizes and Markets Adjusted Operating Earnings1 ($ millions) Full Service Client Assets ($ billions) Current Quarter TTM Spread-based Fee-based $165 $618 $592 $153 $144 $120 $133 $112 Includes Prepayments and $172 $228 $31
Slide 9: Investment Management – Delivering Strong Investment Performance and Net Flows
Investment Management – Delivering Strong Investment Performance and Net Flows Adjusted Operating Earnings1 ($ millions) Assets Under Management ($ billions) Current Quarter TTM General Account External Clients $238 $246 $197 $223 $180 $167 $180 $187 $90 Includes Prepayments and $59 $57 $58 $58 Alte
Slide 10: Employee Benefits – Growing while Maintaining Underwriting and Expense Discipline
Employee Benefits – Growing while Maintaining Underwriting and Expense Discipline Adjusted Operating Earnings1 ($ millions) Annualized In-Force Premiums ($ millions) Current Quarter TTM Group Life & Disability Stop Loss Voluntary $2,267 $2,282 $2,138 $474 $472 $390 $199 $204 $1,038 $1,091 $1,096 Inc
Slide 11: Tax Benefits Remain a Key Source of Value
Tax Benefits Remain a Key Source of Value Deferred Tax Asset Attributes1,2,3 Voya Implied Valuation ex-DTA ■ Nominal DTA Value of $1,804 million as of $57.98 $8.47 12/31/20 $49.51 ■ NPV of DTA of $1,050 million as of 12/31/20 Implied forward 8.9x ■ Effective tax rate of 15 – 18% P/E multiple6 ■ Expe
Slide 12: Adjusted Operating EPS Considerations
Adjusted Operating EPS Considerations 4Q’20 Financial Results Reported 4Q’20 Adjusted Operating EPS1 $1.90 Includes: ■ Prepayment fees and alternative income above long-term expectations 0.49 ■ DAC/VOBA and other intangibles unlocking 0.18 ■ Stranded costs from Individual Life transaction (0.21) Nor
Slide 13: Guidance 2021
Guidance 2021 Target Metrics 2021 Guidance1 4Q’21 YoY Voya Normalized Adjusted Operating EPS Growth2 8 – 12% growth expected to be 12 – 18% Full Service Recurring Deposits Growth, TTM 6 – 8% Retirement Pre-tax Normalized Adjusted Operating Earnings Growth2 8 – 12% AUM Organic Growth Rate3 2 – 4% Inv
Slide 14: Investment Portfolio COVID-19 Exposure and Stress Tests
Investment Portfolio COVID-19 Exposure and Stress Tests COVID-19 Sector Exposure1 Investment Portfolio Stress Test1 Prospective Impact to Excess Capital Remaining GA from Rating Migration and Impairments in 20212 89% Stress Case One Stress Case Two ~$200 million ~$350 million COVID-19 Prospective
Slide 15: Strong Pro Forma Capital Position
Strong Pro Forma Capital Position Estimated Combined Excess Capital Financial Leverage Ratio3 Adjusted RBC Ratio¹ ($ billions)2 498% $1.8+ 30.2% Target: Target: 400% 30% $1.4B+ Deployable capital from Individual $0.165 Per share dividend 90%+ Free Cash Flow Life transaction4 Note: On February 8, 202
Slide 16: Helping Americans Get Ready to Retire Better
Helping Americans Get Ready to Retire Better 1 Delivered Strong EPS Growth in Challenging Year 2 Continued Momentum Across All Businesses 3 Improved Earnings and Risk Profile post-Life 4 Sale of Independent Financial Planning Channel 5 Prudent Capital Management 16
Slide 17: Appendix
PLAN | INVEST | PROTECT 17 FINANCIAL
Slide 18: Reconciliation of 4Q’20 and FY’20 Adjusted Operating Earnings to Net Income
Reconciliation of 4Q’20 and FY’20 Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) 4Q’20 36 2 11 341 46 251 (32) 27 Adjusted Operating Net Investment Income (Loss) from Net Guaranteed Income (Loss) Immediate Other 2 Net Income (Loss) Earnings1 Gains (Losses) Discontin
Slide 19: Emphasis on ESG and Leading ESG Practices
Emphasis on ESG and Leading ESG Practices Governance Social Environmental Robust, independent Aligned social purpose Encouraging oversight aligning and empowering sustainable practices business with individuals at home and the shareholder interests workplace • Socially responsible • Board Gender par
Slide 20: 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 (Post Life) General Account Investment Portfolio1 Munis 2% LP/Equity Short 4% Term/Treasury 2% 6% 43% Public CML Corporate 14% 31% Securitized- 52% NonAgency 14% Private Credit Securitized- Fixed Mat
Slide 21: Spotlight: Commercial Mortgage Loans
Spotlight: Commercial Mortgage Loans Key Message: ~$5.6 billion allocation1 with weighted average debt service coverage ratio (DSCR) of 2.2x and weighted average loan-to-value (LTV) ratio of 46%2. Retail focus on need driven properties, such as grocery anchored. No material exposure to real estate e
Slide 22: Spotlight: Collateralized Loan Obligations
Spotlight: Collateralized Loan Obligations Key Message: ~$1.2 billion allocation1,2 with significant Credit Enhancement (CE)3 to mitigate the risk of par losses. 96% rated NAIC 1 with all NAIC 2 and below holdings in Voya-issued transactions. Generic CLO Structure4 • Collateral losses are allocated
Slide 23: Spotlight: Energy Exposure
Spotlight: Energy Exposure Key Message: ~$2.0 billion portfolio1 is 80% rated NAIC 1 / 2. Exposure has been steadily declining as a percentage of fixed maturity assets, estimated post Life to be 6.3%. 64%/36% split between Public and Private Credit. Energy Exposure Concentrated in Midstream 9.0% 11.
Slide 24: Spotlight: BBB Exposure
Spotlight: BBB Exposure Key Message: ~$13.8 billion NAIC 2 portfolio1,2 is approximately 59%/41% split between Public and Private. Private exposure provides combination of structural protections and attractive value. Minimal BIG allocation is opportunistic. % of Fixed Maturity Assets4 11.6% 6.4% 15.
Slide 25: Seasonality of Financial Items
Seasonality of Financial Items 1Q 2Q 3Q 4Q ■ Corporate Markets tends to have ■ 91 fee and crediting interest ■ Education Tax-Exempt ■ Corporate Markets typically see the highest recurring deposits days in quarter Markets typically see lowest highest transfer / single deposits Retirement recurring de
Slide 26: Analyst Modeling Considerations
Analyst Modeling Considerations Prepayment Income ■ Long-term prepayment income quarterly expectation in 2021 (pre-tax, pre-DAC): $8 million for Retirement and Alternative Income ■ Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) for alternative income ■ Recurring deposit TTM gr
Slide 27: Reliable Long-Term Investment Performance Critical to Future Success
Reliable Long-Term Investment Performance Critical to Future Success % AUM Above Benchmark or Peer Median1 96 98 90 86 81 78 80 69 63 50 32 18 Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. Voya Investment Management calculations as of December 31, 2020. Metrics presented are