Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q3 2022 Earnings Presentation
33 slides from Voya Financial's earnings presentation, Nov 2, 2022
Slide 1: Voya Financial Third Quarter 2022 Investor Presentation
Voya Financial Third Quarter 2022 Investor Presentation November 2, 2022
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 ■ Rod Martin, Chairman and Chief Executive Officer 2. Executing on our Strategy ■ Heather Lavallee, President and CEO-elect 3. Business Segment Performance and Financial Highlights ■ Mike Smith, Vice Chairman and Chief Financial Officer 3
Slide 4: Key Themes
Key Themes Strong EPS Growth ■ 3Q'22 adjusted operating earnings of $2.30 per share1 or $7.31 on a TTM basis ■ 3Q’22 adjusted operating earnings, excluding notable items, of $2.19 per share or $6.92 on a On Track for 12–17% TTM basis, up 28% and 17% year-over-year, respectively in FY’22 ■ Stranded c
Slide 5: Recognition of Culture and Values
Recognition of Culture and Values 80%+ Voya employee participation rate Donated $1.5 million, supporting more than 1,900 Teamed up to raise awareness for charities and making a difference in our National Disability Employment Awareness Month communities Named a Great Place to Work® by the Earned rec
Slide 6: Agenda
Agenda 1. Key Themes ■ Rod Martin, Chairman and Chief Executive Officer 2. Executing on our Strategy ■ Heather Lavallee, President and CEO-elect 3. Business Segment Performance and Financial Highlights ■ Mike Smith, Vice Chairman and Chief Financial Officer 6
Slide 7: Strategic acquisition of Benefitfocus accelerates Health and Wealth strategy
Strategic acquisition of Benefitfocus accelerates Health and Wealth strategy Acquisition accelerates Voya’s strategy in health and wealth solutions by adding broad-based benefits administration capabilities that extend Voya’s reach across workplace benefits and savings Benefitfocus presents a strong
Slide 8: Benefitfocus accelerates revenue growth opportunities
Benefitfocus accelerates revenue growth opportunities Deepens adoption of existing solutions by connecting benefits and savings experience allowing employees to make more informed and Deepen existing confident decisions relationships Expands distribution partnerships and adds over 25 Revenue million
Slide 9: Employers choose Voya to deliver innovative and integrated benefits and savings experiences
Employers choose Voya to deliver innovative and integrated benefits and savings experiences Employer Reactions Launched Sept. ‘22 ▪ Voya’s personalized enrollment guidance tool “integrates all benefit offerings into a fully personalized financial picture that makes the process much easier and more m
Slide 10: AllianzGI Transaction – Integration accelerates business growth and international reach
AllianzGI Transaction – Integration accelerates business growth and international reach Diversified AUM base Alts & Other 6% ✓ 6 – 8% cash accretion on full-year basis, By Asset Class Equity before revenue synergies 25% ✓ Meaningful scale added to franchise: Fixed Income (Private) AUM 25% $317B1 Fix
Slide 11: Agenda
Agenda 1. Key Themes ■ Rod Martin, Chairman and Chief Executive Officer 2. Executing on our Strategy ■ Heather Lavallee, President and CEO-elect 3. Business Segment Performance and Financial Highlights ■ Mike Smith, Vice Chairman and Chief Financial Officer 11
Slide 12: Third Quarter 2022 Results – Financial Highlights
Third Quarter 2022 Results – Financial Highlights After-tax Adjusted Operating Net Income (Loss) Available to Earnings Per Share¹ Common Shareholders 3Q’22 3Q’22 $2.30 $193 per diluted share million Notable Items 3Q’22 Includes 3Q’22 ■ Net alternative investment income and ■ Adjusted operating earni
Slide 13: Wealth Solutions – Diverse business mix and revenue streams
Wealth Solutions – Diverse business mix and revenue streams have driven results in various business cycles Adjusted Operating Earnings1 ($ millions) Full Service Client Assets ($ billions) Current Quarter TTM Spread-based Fee-based $1,127 $180 $159 $153 $800 3Q’22 Full-Service $147 $125 $119 Net Flo
Slide 14: Health Solutions – Continuing diverse growth in revenue and premiums
Health Solutions – Continuing diverse growth in revenue and premiums while maintaining strong pricing discipline Adjusted Operating Earnings1 ($ millions) Annualized In-Force Premiums ($ millions) Voluntary Stop Loss Group Life & Disability Current Quarter TTM $2,722 $2,760 $2,515 $251 $221 $811 $81
Slide 15: Investment Management – Scaled and diverse platform
Investment Management – Scaled and diverse platform across geographies, asset classes, and client mix Adjusted Operating Earnings1 ($ millions) Assets Under Management ($ billions) Current Quarter TTM Privates and Alternatives Equity Fixed Income - Public & Other 3 $317 $271 $189 $253 $236 $140 $115
Slide 16: Disciplined and Opportunistic Capital Management
Disciplined and Opportunistic Capital Management 3Q’22 Capital Deployed Debt Extinguishment $172 million $743 million Year-to-Date Capital Deployed $1.2 billion $1.9 billion TTM Capital Deployed Dividends $83 million Excess Capital1 as of 9/30/22 $700 million Share Repurchases 37.4% Financial Levera
Slide 17: Voya is a Leading Institutional and Workplace Benefits and Savings Company
Voya is a Leading Institutional and Workplace Benefits and Savings Company 1 Strong EPS Growth On Track for 12–17% in FY’22 2 Momentum across Diverse Revenue Streams and Markets 3 Disciplined and Opportunistic Capital Management 17
Slide 18: Appendix
PLAN | INVEST | PROTECT 18 FINANCIAL
Slide 19: Benefitfocus transaction overview
Benefitfocus transaction overview ◼ Adds benefits administrative capabilities that simplify the benefits process for employers, health Accelerates plans and brokers Voya’s ◼ Adds 25 million lives on platform through employer and health plan customers Health & Wealth ◼ Enables the capability to furth
Slide 20: Benefitfocus at a Glance
Benefitfocus at a Glance Benefitfocus is an industry-leading cloud-based benefits administration technology company that serves employers, health plans and brokers. COMPANY OVERVIEW FINANCIALS (FY’21)1 SERVICES AND SOLUTIONS Founded in 2000 $263M revenues ✓ Core Benefits Administration 1000+ associa
Slide 21: Emphasis on ESG and Leading ESG Practices
Emphasis on ESG and Leading ESG Practices Environmental Social Governance Encouraging Aligned social purpose Robust, independent sustainable practices and empowering oversight aligning at home and the individuals business with workplace shareholder interests • Energy use down • Socially responsible
Slide 22: 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 Wealth Solutions the highest recurring deposits days in quarter Markets typically see lowest highest transfer / single deposits recurr
Slide 23: Analyst Modeling Considerations
Analyst Modeling Considerations Note: Teal font denotes change from 3Q’22. Prepayment ■ Long-term prepayment income quarterly expectation in 2022 (pre-tax, pre-DAC): $9 million for Wealth Solutions and Alternative ■ Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) for alternativ
Slide 24: 3Q'22 and 3Q'21 Notable Items Impacts
3Q'22 and 3Q'21 Notable Items Impacts Prepays and Alt Adjusted Operating Adjusted Operating Income Above/(Below) Other Notables3 Earnings (ex. Earnings1 3Q'22 Expectations2 notables) Wealth Solutions $168 $(70) $50 $188 Health Solutions 149 (7) 59 97 Investment Management 51 (16) – 67 Corporate (57)
Slide 25: Reconciliation of 3Q'22 Adjusted Operating Earnings to Net Income
Reconciliation of 3Q'22 Adjusted Operating Earnings to Net Income ($ millions; all figures are after-tax) (30) 245 (11) 193 (10) 2 Net Income (Loss) Available Net Investment and Income (Loss) Related to Other Adjustments Adjusted Operating Earnings to Common Shareholders Guaranteed Benefit Gains Bus
Slide 26: Reliable Long-Term Investment Performance Critical to Future Success
Reliable Long-Term Investment Performance Critical to Future Success 3Q 2022 % AUM Above Benchmark or Peer Median1 100 Note: AllianzGI fund performance2 will be 90 included with 4Q’22 results 83 78 78 70 70 66 54 55 42 9 Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. Voya Inv
Slide 27: Well-Diversified Investment Portfolio Built for Through-The-Cycle Risk Adjusted Returns
Well-Diversified Investment Portfolio Built for Through-The- Cycle Risk Adjusted Returns General Account Investment Portfolio1 $41 Billion Munis LP/Equity 2% 6% Short Term/Treasury 2% 4% 44% Public CML 13% Corporate 32% Securitized 51% 25% Private Credit 19% 1 Ratings2 Fixed Maturity NAIC 1 NAIC 2 B
Slide 28: Well-Balanced, High-Quality Rating Mix
Well-Balanced, High-Quality Rating Mix ❑ 96% of fixed maturity assets are investment grade ❑ 45% of the fixed maturity assets3 in the investment portfolio are NAIC 21 ▪ Approximately 67% / 33% split between Public and Private ❑ Minimal allocation to below investment grade is opportunistic % of Fixed
Slide 29: Private Credit Provides Income, Diversification and Downside Protection
Private Credit Provides Income, Diversification and Downside Protection ❑ 20% 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 30: Low Leverage Commercial Mortgage Loan Portfolio
Low Leverage Commercial Mortgage Loan Portfolio ❑ 13% allocation in the investment portfolio, of which 79% is rated CM 1 ❑ Weighted average debt service coverage ratio (DSCR) of 2.0x ❑ Weighted average loan-to-value (LTV) ratio of 46%1 Diversified Portfolio Exposure Hotel, 2% Mixed Use, 2% Manufactu
Slide 31: CMBS is Tilted Toward Agency and Loss Remote Credit
CMBS is Tilted Toward Agency and Loss Remote Credit ❑ 11% allocation in the investment portfolio, of which 96% is NAIC 1 or 2 ❑ 31% of exposure is Agency with no credit risk ❑ 30% is to directly underwritten Single Asset Single Borrower (SASB) ❑ 36% is to Conduit/CRE CLO with meaningful structural c
Slide 32: CLO Portfolio is Modestly Sized and Highly Rated
CLO Portfolio is Modestly Sized and Highly Rated ❑ 4% allocation1 in the investment portfolio, of which 92% 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 Portfolio Generic CL
Slide 33: Alternatives Portfolio Has Delivered Favorable Investment Performance Over Time
Alternatives Portfolio Has Delivered Favorable Investment Performance Over Time Key Characteristics of $1.8 Billion GA Calendar Year Net Returns1,2 (%) Alternatives Portfolio Profile2 (as of 09/30/22) Long-term Return Target: 9.0% ❑ Diversified across traditional Private Equity, Infrastructure, Real