Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q1 2014 Earnings Presentation
33 slides from Voya Financial's earnings presentation, May 7, 2014
Slide 1: Voya Financial First Quarter 2014 Investor Presentation
Voya Financial First Quarter 2014 Investor Presentation May 7, 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: Recent Achievements
Recent Achievements Deconsolidation ING Group’s secondary offering closed on March 25, 2014 reducing its ownership stake to approximately 43% Higher Expected Raised our expected capital generation to more than $1.7 billion over the 2013 Capital – 2016 period from $1.2 to $1.4 billion Generation
Slide 5: First Quarter 2014 Financial Highlights
First Quarter 2014 Financial Highlights $150 million or $0.57 per diluted share After-tax Operating Earnings1 $163 million or $0.62 per diluted share ex DAC unlocking $258 million driven by Ongoing Business operating earnings and Closed Block Net Income Available to Variable Annuity results Common S
Slide 6: Premier Franchise with Diverse Earnings
Premier Franchise with Diverse Earnings 1Q’14 TTM1 Ongoing Business Adjusted Operating Earnings Before Income Taxes2: $1,221 million 75% from Retirement Solutions and Investment Management Prominent multi-asset, multi-channel Investment Management Inv. Mgmt. active asset manager for institutions 15%
Slide 7: Ongoing Business Adjusted Operating Return on Equity on Track to Meet Target
Ongoing Business Adjusted Operating Return on Equity on Track to Meet Target Ongoing Business Adjusted Operating ROE1 12.0-13.0% 12.5% 10.3% 10.3% 10.1% 9.8% 8.3% 7.6% FY'11 FY'12 FY'13 1Q'14 TTM 2 2016 Target Items that we do not expect to recur at the same levels 1. Ongoing Business includes Retir
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 Return on Capital Sequentially Improved
Ongoing Business Adjusted Operating Return on Capital Sequentially Improved; Remains on Track to Meet 2016 Target Adjusted Operating ROC Key Drivers of 1Q’14 Results 10.0-11.0% Retirement, Annuities, Investment Management, and Employee Benefits all contributed to 1Q’14 TTM1 ROC improvement 8.6% 8.
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 Adjusting crediting rates in response to changes in the external rate environment 10.0-11.0% 10.5% Increasing returns on Full Service business 8.9% 8.7% Improving Full Service rete
Slide 11: Retirement Solutions – Tax-Exempt Markets Continues Re-pricing
Retirement Solutions – Tax-Exempt Markets Continues Re-pricing Strategy and Leverages Rebuilt Sales Force Key Points Results From Sales Force Rebuilding Net flows can vary significantly from quarter to Increasing field advisors quarter due to our focus on large clients Recruitment of advisor spe
Slide 12: Annuities – Selective Growth While Running Off Less Profitable Business
Annuities – Selective Growth While Running Off Less Profitable Business Adjusted Operating ROC ROC Initiatives Margin Running off Annual Reset / Multi-Year Guarantee Annuities (products with high fixed rate crediting levels) 7.0-9.0% 8.0% Ongoing management of crediting rates 7.3% 7.5% Growth
Slide 13: Investment Management – Scalable Platform Leveraging Strong Investment Performance
Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin Initiatives Margin Improving sales force productivity 30.0-34.0% 30% Reducing retail outflows 1 27.7% 29.6% 1 Growth Increasing third-party business Growing in higher-fee asset classes 24.6%
Slide 14: Individual Life – Repositioning Toward More Capital Efficient Products
Individual Life – Repositioning Toward More Capital Efficient Products Adjusted Operating ROC ROC Initiatives Margin Continuing to manage expenses relative to sales volume Managing non-guaranteed elements of in- 7.9% 6.0-8.0% 8.0% force contracts Capital Shifting sales focus to indexed product
Slide 15: Employee Benefits – High Return and Capital Generation Business
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC ROC Initiatives Margin Improving loss ratio for Stop Loss policies 18.0-22.0% 22.0% Growth Increasing persistency and sales in the 20.6% Group business 18.8% Expanding the Voluntary business 20.1% 16.9% 18.1
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: Reconciliation of 1Q'14 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 1Q’14 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $71 $258 $37 $187 $174 $13 $(13) $(13) $1 $150 $(24) Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 2 Other Tax- Net Income Business (L
Slide 18: Underlying Improvement in Operating Earnings from 4Q'13 to 1Q'14
Underlying Improvement in Operating Earnings from 4Q’13 to 1Q’14 ($ million; all figures are pre-tax and post-DAC) 4Q’13 1Q’14 $305 $(53) $2 $30 $231 $(20) $(4) $(4) $(18) $(8) 4Q'13 4Q'13 Items 1Q'14 DAC 1Q'14 1Q'14 Group 1Q'14 IM 1Q'14 1Q'14 1Q'14 1Q'14 Operating Disclosed in Unlocking Prepayment,
Slide 19: Diversified Drivers of Operating Revenues
Diversified Drivers of Operating Revenues Ongoing Business Sources of Revenues Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance Other Revenue risks and incurred benefits $929 1 $947 1 $887 $913 $917 $204 $181 $174 Investmen
Slide 20: Retirement Net Flows Reflect Continued Repricing Discipline
Retirement Net Flows Reflect Continued Repricing Discipline Retirement Net Flows1 ($ million) $1,419 $283 Large Stable Value Government Plan $198 $376 Large Healthcare Plan $442 $363 $234 $191 $148 $562 $319 $44 $251 $215 $104 $(85) $(60) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 Net Flows excl. Stable Value St
Slide 21: Annuities Growing in Mutual Fund Custodial and Fixed Indexed Products
Annuities Growing in Mutual Fund Custodial and Fixed Indexed Products, Running Off Less Profitable Business Annuities Net Flows1 ($ million) $55 $23 $31 $120 $8 $140 $169 $137 $153 $146 $(43) $(46) $(73) $(26) $(76) $(82) $(233) $(330) $(242) $(332) $(284) $(220) $(172) $(244) $(261) 1Q'13 2Q'13 3Q'
Slide 22: Investment Management Net Flows Benefitted from Sub-Advisor Replacements
Investment Management Net Flows Benefitted from Significant Sub-Advisor Replacements in 1Q’14 Investment Management Third-Party Net Flows1 ($ billion) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 1Q’13 2Q’13 3Q’13 4Q’13 1Q’14 $0.6 $3.1 $0.9 $2.4 $1.3 $1.3 $0.7 $(0.3) Sub-Advisor $0.6 $0.5 $0.9 $0.0 $4.7 Replacemen
Slide 23: Employee Benefits Loss Ratios for Group Life and Stop Loss Improved Over 1Q'13
Employee Benefits Loss Ratios for Group Life and Stop Loss Improved Over 1Q’13 Sales1 Loss Ratios ($ million) (%) $242 85.4% 82.1% 82.0% 78.7% 77.5% 76.9% 75.4% 72.0% $144 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 FY'11 FY'12 FY'13 82.9% 78.4% 77.6% $49 75.3% 72.8% 72.4% 72.9% 72.1% $29 $18 1Q'13 2Q'13 3Q'13 4Q
Slide 24: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge 1Q’14 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated available Equity impacts increase (decrease) in hedge assets resources of $4.6 $1.0 $1.2 billion1 $0
Slide 25: Estimated Combined RBC Ratio Strengthened, While Leverage Ratio is In-Line with Plan
Estimated Combined RBC Ratio1 Strengthened, While Leverage Ratio is In-Line with Plan Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI4 Combined RBC Ratio1 $7.6 3 $7.0 $7.1 27.2% 26.2% $6.7 2 $6.7 24.5% 23.5% 23.5% 3 Target 25% 525
Slide 26: Robust Capital Position
Robust Capital Position Holding Company Liquidity1 Corporate & Closed Blocks GAAP Capital ($ million) ($ million) $462 $2,676 Estimated Statutory $450 Liquidity Surplus in Target Excess of 425% RBC Level $1,434 Holding Co Working Capital Other2 Statutory Surplus Supporting Other $462 Closed Blocks $
Slide 27: America's Retirement Company: Premier Franchise with Leading Positions
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 2016 3 Solid Foundation Based on a Re-Capitalized and De-Risked Balance Sheet 27
Slide 28: Appendix
Appendix Oo ae RETIREMENT |! INVESTMENTS | INSURANCE 28 VOYA FINANCIAL™
Slide 29: 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 30: Closed Block Variable Annuity Cash Flow Scenarios Improved Over Past Year
Closed Block Variable Annuity Cash Flow Scenarios Improved Over Past Year ($ billion) Time Zero Equivalent PV of Cash Flows PV of Cash Flows The scenarios provide Scenario Assumptions as of Year End as of Year End as of Year End an illustrative 20122 20132 20121 presentation of how Equity return d
Slide 31: Significant NPV of Projected Tax Savings
Significant NPV of Projected Tax Savings SLDI Related Life Subgroup Non-Life Subgroup Op. Loss Carry Forwards Deferred Losses Deferred Losses Deferred Losses Non-Life federal net Losses incurred on VA Losses incurred on VA Tax-based goodwill operating loss carry hedge program resident hedge
Slide 32: Illustration of Tax Asset Utilization
Illustration of Tax Asset Utilization Operating Loss Carry Forwards Illustration of Tax Asset Utilization at Section 382 event1 ($ million) $2.8 billion of federal NOLs as of YE 2013, with $0.3 billion likely not utilized Op. Loss Carry Life Subgroup NL Subgroup SLDI Forwards2 Deferred Losses3 Def
Slide 33: FINANCIAL”
FINANCIAL” RETIREMENT |! INVESTMENTS | INSURANCE 33 FINANCIAL™