Voya Financial, Inc. · NYSE:VOYA
Voya Financial — ING U.S. — Q2 2013 Earnings Presentation
28 slides from Voya Financial's earnings presentation, Aug 7, 2013
Slide 1: ING U.S. Second Quarter 2013 Investor Presentation
ING U.S. Second Quarter 2013 Investor Presentation August 7, 2013 RETIREMENT • INVESTMENTS • INSURANCE
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 Retir
Slide 4: Second Quarter 2013 Highlights
Second Quarter 2013 Highlights After-tax operating earnings of $177 million, or $0.71 per share Ongoing Business adjusted operating earnings before income taxes increased to $303 million from $279 million in 2Q’12 Ongoing Business 6M’13 annualized adjusted operating return on equity improved t
Slide 5: Premier Franchise with Diverse Earnings
Premier Franchise with Diverse Earnings 6M’13 Ongoing Business Adjusted Operating Earnings Before Income Taxes1: $581 million 75% from Retirement Investment Solutions and Investment Management: 12% Management Top 20 manager of institutional Inv. Mgmt. 12% tax exempt assets2 Retirement Retirement Sol
Slide 6: Ongoing Business Annualized Adjusted Operating ROE On Track to Meet Target
Ongoing Business Annualized Adjusted Operating ROE On Track to Meet Target Ongoing Business Adjusted Operating ROE1 12.0-13.0% 9.9% 8.3% 7.6% FY'11 FY'12 6M'13 2016 Target 1. Ongoing Business includes Retirement, Annuities, Investment Management, Individual Life, and Employee Benefits segments; the
Slide 7: 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 Retir
Slide 8: Return on Capital Improved 110 bps in 6M'13
Return on Capital Improved 110 bps in 6M’13 Adjusted Operating ROC Key Drivers of 6M’13 ROC Improvement 10.0-11.0% Retirement, Annuities, Investment Management, and Individual Life all contributed to ROC improvement 8.3% Benefited from higher fee based margin on 7.2% 6.6% higher assets Lower i
Slide 9: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC ROC Initiatives Adjusting crediting rates in response to 10.0-11.0% changes in the external rate environment Margin Increasing returns on Full Service and 9.1% Recordkeeping businesses Managing costs act
Slide 10: Annuities – Selective Growth while Running Off Less Profitable Business
Annuities – Selective Growth while Running Off Less Profitable Business Adjusted Operating ROC ROC Initiatives 7.0-9.0% Running off Annual Reset / Multi-Year Margin Guarantee Annuities (products with high 7.0% fixed rate crediting levels) 5.9% Growing Mutual Fund Custodial Growth sales Capital
Slide 11: Investment Management – Scalable Platform Leveraging Strong Investment Performance
Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin1 Initiatives Improving sales force productivity 30.0-34.0% Margin Reducing retail outflows Increasing third-party business 24.6% 25.4% Growing in high-fee asset classes 22.9% 17.8% Winning D
Slide 12: Individual Life – Repositioning Toward More Capital Efficient Products
Individual Life – Repositioning Toward More Capital Efficient Products Adjusted Operating ROC ROC Initiatives Reducing expense and commission structures Margin 6.0-8.0% Adjusting crediting rates in response to 7.9% changes in the external rate environment Executing reinsurance transactions Cap
Slide 13: Employee Benefits – Higher Return and Capital Generation with Less Interest Rate Sensitivity
Employee Benefits – Higher Return and Capital Generation with Less Interest Rate Sensitivity Adjusted Operating ROC ROC Initiatives Margin Improving loss ratio for Stop Loss policies 18.0-22.0% Increasing persistency and sales in the Growth Group Life business 16.9% 16.8% Expanding the Volunta
Slide 14: 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 Retir
Slide 15: Reconciliation of 2Q'13 Operating Earnings to Net Income (Loss)
Reconciliation of 2Q’13 Operating Earnings to Net Income (Loss) ($ mn) Nonperformance risk $197 $2 $199 ($34) $12 $177 ($79) ($141) ($220) $1 ($40) ($82) Ongoing DAC, VOBA, Ongoing Corporate Closed Operating Closed Net Other, Net Business and Other Business Operating Block ISP Earnings, Block Realiz
Slide 16: Diversified Drivers of Operating Earnings
Diversified Drivers of Operating Earnings Investment Primarily consists of spread Ongoing Business Sources of Revenues ($ mn) Spread and between yield and credited Other interest and investment Investment income on capital supporting Income the business $922 FY 2012 $915 $929 $887 $828 Fee Based Pri
Slide 17: Rising Interest Rates Are Positive
Rising Interest Rates Are Positive Higher new money and reinvestment yields Approx. $60mn annual operating earnings after-tax lift by 2016 Reduces ROC walk interest rate drag by approx. half (initial estimate was 110-130 bps) Potential greater product demand and higher IRRs Annuities Key B
Slide 18: Improvement in Year-Over-Year Operating Earnings, Administrative Expenses Flat
Improvement in Year-Over-Year Operating Earnings, Administrative Expenses Flat Ongoing Business Adjusted Operating Earnings Before Income Taxes1 ($ mn) 9% $296 $303 $279 $278 $278 2Q'12 3Q'13 4Q'12 1Q'13 2Q'13 Ongoing Business Administrative Expenses ($ mn) 0% $415 $411 $422 $413 $132 $416 $400 2Q'1
Slide 19: Retirement Net Flows Positive and Priced At or Above 12% Targeted IRR
Retirement Net Flows Positive and Priced At or Above 12% Targeted IRR Retirement Net Flows1 ($ mn) $1,781 $1,285 $1,419 $481 $938 $620 $557 $208 $508 $239 $442 $240 $496 $412 $191 $318 $268 $251 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 Net Flows excl. Stable Value Stable Value Net Flows 1. Excludes recor
Slide 20: Growing in Focused Profitable Areas, Running Off Unprofitable Business
Growing in Focused Profitable Areas, Running Off Unprofitable Business Annuities Net Flows ($ mn) $134 $140 $169 $115 $106 $107 ($28) ($59) ($59) ($56) ($43) ($46) ($59) ($34) ($62) ($76) ($82) ($88) ($242) ($284) ($359) ($559) ($1,240) ($593) Total Net Flows: ($512) ($1,217) ($607) ($396) ($220) ($
Slide 21: Sustained Commercial Momentum in Investment Management
Sustained Commercial Momentum in Investment Management Investment Management Third-Party Net Flows1 ($ bn) $4.5 $0.6 $3.7 $1.2 $3.2 $3.1 $2.5 $0.6 $0.5 $0.6 $3.9 $2.4 $3.3 $3.1 $2.4 $0.2 $0.3 $0.3 ($0.2) ($0.4) ($0.8) ($0.3) ($0.5) ($0.5) ($0.6) ($0.5) ($0.6) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 Inve
Slide 22: Individual Life Sales Reflect Shift to Less Capital Intensive Products and Pricing Actions
Individual Life Sales Reflect Shift to Less Capital Intensive Products and Pricing Actions Universal Life and Variable Life Sales Term Sales ($ mn) ($ mn) $41 $1 $7 $35 $35 $35 $34 $1 $2 $6 $9 $7 $28 $26 $2 $5 $8 $5 $28 $19 $26 $14 $23 $15 $13 $14 $12 $3 $25 $2 $22 $4 $19 $18 $4 $15 $14 $8 $7 $7 $8
Slide 23: Employee Benefits Loss Ratios Within Expectations
Employee Benefits Loss Ratios Within Expectations Sales1 Loss Ratios ($ mn) (%) $144 $144 85.4% 82.8% $7 $10 78.4% 77.0% 75.4% 69.5% $90 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 $112 76.2% 77.6% 75.5% 72.1% $32 70.3% $30 69.5% $5 $4 $18 $44 $18 $19 $13 $25 $8 $4 $8 $12 $8 $13 $2 $2 1Q'12 2Q'12 3Q'12 4Q'1
Slide 24: Demonstrated Effectiveness of Hedge Program in Closed Block Variable Annuity
Demonstrated Effectiveness of Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge1 Guaranteed ($ bn) Living Benefit Statutory Reserves Equity impacts (increase) decrease in stat reserve liability Equity impacts increase (decrease) in hedge assets declined to
Slide 25: Combined Estimated RBC Ratio Above 425% Target
Combined Estimated RBC Ratio Above 425% Target Statutory Total Adjusted Capital ($ bn) & Combined Estimated RBC Ratio $8.3 $7.8 $7.9 $7.4 2 $6.7 $6.7 500% 516% 526% 1 2 449% 451% 454% Target 425% RBC Ratio 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 Stat. Total Adj. Capital Combined Estimated RBC Ratio 1. 4
Slide 26: Completed Recapitalization Efforts Have Extended Our Debt Maturity Profile
Completed Recapitalization Efforts Have Extended Our Debt Maturity Profile Pro forma Debt Maturity Profile as of June 30, 20131,2,3 ($ mn) $400 $1,000 $851 $859 $406 $139 0-1 1-4 4-7 7-10 10-15 15-20 21+ Prior Debt 30-yr Senior Note Years to Maturity 1. Pro forma for $150 million repayment of ING Ve
Slide 27: Debt To Capital Ratio Improving Through Recapitalization Efforts
Debt To Capital Ratio Improving Through Recapitalization Efforts Debt to Total Capital Ratio ex. AOCI 27.2% Target 26.2% 25.4% 25% Debt Junior to Capital Subordinated Ratio Debt 5.4% Senior Debt 20.0% 1Q'13 2Q'13 2Q'13 Pro Forma1 1. Pro forma for $150 million repayment of ING Verzekeringen N.V. loan
Slide 28: Premier Franchise, Experienced Management, Solid Foundation
America’s Retirement CompanyTM 1 Premier Franchise with Leading Positions in Attractive Markets Experienced Management Team With a 400-500 bps ROE 2 Improvement Goal by 2016 3 Solid Foundation Based on a Re-Capitalized and De-Risked Balance Sheet Retirement • Investments • Insurance 28