Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q4 2022 Earnings Presentation
32 slides from Voya Financial's earnings presentation, Feb 8, 2023
Slide 1: Voya Financial Fourth Quarter 2022 Investor Presentation
Voya Financial Fourth Quarter 2022 Investor Presentation February 8, 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: Agenda
Agenda 1. Opening Remarks ■ Heather Lavallee, Chief Executive Officer ■ Rod Martin, Executive Chairman 2. Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer 3. Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer 3
Slide 4: Completed CEO Transition, Focused on Execution of Strategy and Building on a Track Record of Success
Completed CEO Transition, Focused on Execution of Strategy and Building on a Track Record of Success 2013 - 2022 2023 + ▪ Divested capital-intensive businesses, focused on profitable growth across Workplace Solutions and Investment Management ▪ High free cash flow generation positions Voya well to b
Slide 5: Agenda
Agenda 1. Opening Remarks ■ Heather Lavallee, Chief Executive Officer ■ Rod Martin, Executive Chairman 2. Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer 3. Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer 5
Slide 6: Key Themes
Key Themes ■ 4Q’22 adjusted operating earnings per share of $2.18 2022 EPS Growth ■ 4Q’22 adjusted operating earnings per share, ex notables1, of $2.05, representing 31% Of 24% Exceeded growth on 4Q’21 Full Year Target of ■ Full Year adjusted operating earnings per share of $7.58 12-17% ■ Full Year
Slide 7: AllianzGI Acquisition and International Distribution Partnership Outperforming Expectations
AllianzGI Acquisition and International Distribution Partnership Outperforming Expectations Expands Distribution, Diversifies Revenues, Increases Capabilities in Key Asset Classes, & Enhances Earnings Growth ■ Significantly diversified our asset management business, transforming Voya into a Strategi
Slide 8: Benefitfocus Accelerates Voya's Workplace Strategy
Benefitfocus Accelerates Voya’s Workplace Strategy Capabilities to Connect Workplace Health & Wealth and Deliver Best-in-Class User Experience ■ Benefits administration capabilities that will allow Voya to deliver a market-leading workplace benefits and savings solution Strategic ■ Through innovativ
Slide 9: Our Culture and the Character of Our Brand Are a Differentiator
Our Culture and the Character of Our Brand Are a Differentiator Recognized by Newsweek as one Named to the 2022 Dow Jones Recognized by Bloomberg’s of “America’s Greatest Sustainability Index – earning Gender Equality Index for the 8th Workplaces 2023 for Diversity” recognition for the consecutive y
Slide 10: Agenda
Agenda 1. Opening Remarks ■ Heather Lavallee, Chief Executive Officer ■ Rod Martin, Executive Chairman 2. Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer 3. Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer 10
Slide 11: Fourth Quarter and Full Year 2022 Financial Results
Fourth Quarter and Full Year 2022 Financial Results After-tax Adjusted Operating Net Income (Loss) Available to Earnings Per Share¹ Common Shareholders 4Q’22 FY’22 4Q’22 FY’22 $2.18 $7.58 $190 $474 per diluted share per diluted share million million 4Q’22 Notable Items FY’22 4Q’22 Includes FY’22 ■ N
Slide 12: Wealth Solutions – Diverse business mix and revenue streams have driven results
Wealth Solutions – Diverse business mix and revenue streams have driven results in various business cycles Adjusted Operating Earnings1 ($ millions) Full Service Client Assets ($ billions) Current Quarter TTM Spread-based Fee-based $188 $1,110 $163 $153 $707 $155 Record Full-Service $119 $129 Net Fl
Slide 13: Health Solutions – Continuing diverse growth in revenue and premiums
Health Solutions – Continuing diverse growth in revenue and premiums while maintaining strong pricing discipline Adjusted Operating Earnings1 ($ millions) Annualized In-Force Premiums ($ millions) Voluntary Stop Loss Group Life & Disability Current Quarter TTM $291 $2,760 $2,780 $2,510 $817 $833 $20
Slide 14: Investment Management – Scaled and diverse platform
Investment Management – Scaled and diverse platform across geographies, asset classes, and client mix Adjusted Operating Earnings1 ($ millions) Assets Under Management ($ billions) Current Quarter TTM Privates and Alternatives Equity Fixed Income - Public & Other 2 $317 $321 $239 $264 $158 $140 $138
Slide 15: Balanced and Disciplined Capital Return
Balanced and Disciplined Capital Return Debt Extinguishment Estimated Excess Capital1 as of 12/31/22 $360 million $0.9 billion Estimated Combined Adjusted RBC Ratio2 $1.2 billion FY’22 Capital Deployed 488% Dividends Target 375% $80 million Financial Leverage Ratio New: Financial Leverage Ratio 29.9
Slide 16: Executing Above Expectations - Adjusted EPS ex notables Trending Higher than Targets
Executing Above Expectations - Adjusted EPS ex notables Trending Higher than Targets 2023 10%+ Expected Adjusted EPS Growth With a path to 12-17% EPS growth including Benefitfocus 2022 24% Adjusted EPS1 Growth $7.41 12 – 17% Annual Adjusted EPS1 Growth $5.991 2021 Investor Day 2021A 2022A 2023 2024
Slide 17: Voya Focused on Execution of Strategy and Building on a Track Record of Success
Voya Focused on Execution of Strategy and Building on a Track Record of Success 1 2022 EPS Growth of 24% exceeded target of 12-17% 2 Commercial Momentum Across All Business Lines 3 Disciplined and Balanced Capital Management 17
Slide 18: Appendix
PLAN | INVEST | PROTECT 18 FINANCIAL
Slide 19: Achieving Investor Day Targets in 2022
Achieving Investor Day Targets in 2022 Investor Day 2022 Metric1 Result Target Actual Annual EPS growth 12-17% 23.7% ✓ Consolidated Free cash flow conversion 90-100% 90%+2 ✓ Net revenue growth 2-4% 2.8% ✓ Wealth Solutions Adjusted operating margin 34-36% 37.5% ✓ Full Service recurring deposits growt
Slide 20: Seasonality of Financial Items
Seasonality of Financial Items Note: Teal font denotes change from 3Q’22. 1Q 2Q 3Q 4Q ■ Corporate Markets tends to have ■ 91 fee and crediting interest ■ Education Tax-Exempt Markets ■ Corporate Markets typically see Wealth Solutions the highest recurring deposits days in quarter typically see lowes
Slide 21: Analyst Modeling Considerations
Analyst Modeling Considerations Note: Teal font denotes change from 3Q’22. Prepayment & ■ Long-term prepayment and other investment fee income, quarterly expectation in 2023 (pre-tax, pre-DAC): $9 million for Wealth Solutions Alt. Income ■ Approximately 9% annual long-term expected returns (pre-tax,
Slide 22: 4Q'22 and 4Q'21 Notable Items Impacts
4Q'22 and 4Q'21 Notable Items Impacts Prepays and Alt Income Adjusted Operating Adjusted Operating Other Above/(Below) Earnings (ex. Earnings1 Notables3 4Q'22 Expectations2 notables) Wealth Solutions $148 $(50) $14 $184 Health Solutions 74 (5) – 79 Investment Management 57 (7) – 64 Corporate (52) –
Slide 23: FY'22 and FY'21 Notable Items Impacts
FY'22 and FY'21 Notable Items Impacts Prepays and Alt Income Adjusted Operating Adjusted Operating Other Above/(Below) Earnings (ex. Earnings1 Notables3 FY’22 Expectations2 notables) Wealth Solutions $707 $(76) $44 $738 Health Solutions 291 (7) 18 280 Investment Management 186 (24) – 210 Corporate (
Slide 24: Reconciliation of 4Q'22 and FY'22 Adjusted Operating Earnings to Net Income
Reconciliation of 4Q’22 and FY’22 Adjusted Operating Earnings to Net Income ($ millions; all figures are after-tax) 4Q’22 (24) (10) 233 190 (10) Net Income (Loss) Available Net Investment and Income (Loss) Related to Other Adjustments 2 Adjusted Operating Earnings to Common Shareholders Guaranteed B
Slide 25: Reliable Long-Term Investment Performance
Reliable Long-Term Investment Performance 4Q 2022 % AUM Above Benchmark or Peer Median1 100 78 76 69 67 62 60 54 54 46 49 12 Equity Multi-Asset Fixed Voya IM Income Total 2 3 Year 5 Year 10 Year 1. Voya Investment Management calculations as of December 31, 2022. Metrics presented are based on a pres
Slide 26: 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% 45% Public CML 13% Corporate 32% Securitized 52% 26% Private Credit 19% 1 Ratings2 Fixed Maturity NAIC 1 NAIC 2 B
Slide 27: Well-Balanced, High-Quality Rating Mix
Well-Balanced, High-Quality Rating Mix ❑ 96% of fixed maturity assets1 are investment grade ❑ 45% of the fixed maturity assets in the investment portfolio are NAIC 22 ▪ Approximately 64% / 36% split between Public and Private ❑ Minimal allocation to below investment grade is opportunistic % of Fixed
Slide 28: Private Credit Provides Income, Diversification and Downside Protection
Private Credit Provides Income, Diversification and Downside Protection ❑ 20% allocation in the investment portfolio, of which 93% 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 29: Low Leverage Commercial Mortgage Loan Portfolio
Low Leverage Commercial Mortgage Loan Portfolio ❑ 13% allocation in the investment portfolio, of which 78% is rated CM 1 ❑ Weighted average debt service coverage ratio (DSCR) of 1.9x ❑ Weighted average loan-to-value (LTV) ratio of 45%1 Diversified Portfolio Exposure Hotel, 2% Mixed Use, 1% Manufactu
Slide 30: 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 97% is NAIC 1 or 2 ❑ 32% of exposure is Agency with no credit risk ❑ 30% is to directly underwritten Single Asset Single Borrower (SASB) ❑ 34% is to Conduit/CRE CLO with meaningful structural c
Slide 31: 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 32: 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 12/31/22) Long-term Return Target: 9.0% ❑ Diversified across traditional Private Equity, Infrastructure, Real