Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q2 2020 Earnings Presentation
29 slides from Voya Financial's earnings presentation, Aug 6, 2020
Slide 1: Voya Financial Second Quarter 2020 Investor Presentation
Voya Financial Second Quarter 2020 Investor Presentation August 6, 2020
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: Voya Continues to Address the Challenges of COVID-19
Voya Continues to Address the Challenges of COVID-19 Employees Customers Communities Over 95% of Voya employees Supporting plan sponsors and Maintaining Voya employee benefit continuing to work remotely and participants with coronavirus-related that provides 40 hours of paid time leveraging Vo
Slide 5: Our Commitment to Addressing Racial Injustice
Our Commitment to Addressing Racial Injustice Activating Communicating Partnering Voya will continue building upon Increased and active engagement Across all existing 2019 Voya actions – such as serving people with with our employees and the public, Foundation programs, which benefitted specia
Slide 6: Key Themes
Key Themes ■ Normalized 2Q’20 adjusted operating earnings of $1.09 per share1, excluding: ■ $(0.79) of prepayment and alternative income below our long-term expectations EPS Growth ■ $0.05 of DAC/VOBA and other intangibles unlocking Despite Pandemic ■ $(0.20) of stranded costs2 from the sale of Indi
Slide 7: 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 8: Recent Enterprise Accomplishments
Recent Enterprise Accomplishments Named to FTSE4Good Index for Recognized as a Best Place to Work for meeting globally-recognized Disability Inclusion on the 2020 ESG practices Disability Equality Index Earned the 2020 Marketplace Innovator of The Year Award 8
Slide 9: 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 9
Slide 10: Second Quarter 2020 Results – Financial Highlights
Second Quarter 2020 Results – Financial Highlights After-tax Adjusted Operating Net Income (Loss) Available to Earnings Per Share¹ (Normalized) Common Shareholders 2Q’20 2Q’20 $1.09 $(71) per diluted share million Excludes 2Q’20 Includes 2Q’20 ■ Prepayment fees and alternative income below (0.79) ■
Slide 11: Retirement – Industry Leading Provider of Retirement Solutions
Retirement – Industry Leading Provider of Retirement Solutions across all Plan Sizes and Markets Adjusted Operating Earnings1 ($ millions) Full Service Client Assets ($ billions) Current Quarter TTM Spread-based Fee-based $142 $686 $134 $125 $486 $103 $93 $110 Includes Prepayments and $31 $32 $32 $1
Slide 12: Investment Management – Delivering Strong Investment Performance and Net Flows
Investment Management – Delivering Strong Investment Performance and Net Flows Adjusted Operating Earnings1 ($ millions) Assets Under Management ($ billions) Current Quarter TTM General Account External Clients $230 $214 $211 $167 $164 $158 $154 $173 Includes Prepayments and $41 $56 $57 $57 Alternat
Slide 13: Employee Benefits – Growing while Maintaining Underwriting and Expense Discipline
Employee Benefits – Growing while Maintaining Underwriting and Expense Discipline Adjusted Operating Earnings1 ($ millions) Annualized In-Force Premiums ($ millions) Current Quarter TTM Group Life & Disability Stop Loss Voluntary $2,271 $2,268 $2,152 $210 $483 $477 $180 $392 $1,045 $1,084 $1,075 Inc
Slide 14: Adjusted Operating EPS Considerations
Adjusted Operating EPS Considerations 2Q’20 Financial Results Reported 2Q’20 Adjusted Operating EPS1 $0.15 Includes: ■ Prepayment fees and alternative income below long-term expectations (0.79) ■ DAC/VOBA and other intangibles unlocking 0.05 ■ Stranded costs from Individual Life transaction (0.20) N
Slide 15: Alternatives Portfolio Has Delivered Favorable Investment Performance Over Time
Alternatives Portfolio Has Delivered Favorable Investment Performance Over Time Details of $1.3 Billion Calendar Year Net Returns1,2 (%) Alternatives Portfolio Profile2 (as of 06/30/20) Long-term Return Target: 9.0% Diversified across traditional Private Equity, Infrastructure, Real Estate, Credit
Slide 16: Investment Portfolio COVID-19 Exposure and Stress Tests
Investment Portfolio COVID-19 Exposure and Stress Tests COVID-19 Sector Exposure1 Investment Portfolio Stress Test1 Impact to Excess Capital Remaining from Rating Migration and Impairments GA 89% Stress Case One Stress Case Two ~$300 million ~$600 million COVID-19 Impacted Scenarios project potent
Slide 17: Strong Capital Position
Strong Capital Position Estimated Combined Excess Capital Debt-to-Capital Ratio3 Adjusted RBC Ratio¹ ($ millions)2 468% $668 32.4% Target: Target: 400% 30% Deployable capital expected in 3Q’20 at $0.15 Per share dividend maintained 1%+ Dividend yield maintained $1.5B close of Individual Life transac
Slide 18: Helping Americans Get Ready to Retire Better
Helping Americans Get Ready to Retire Better 1 EPS Growth Despite Pandemic Headwinds 2 Continued Momentum Across All Businesses 3 On Track to Close Individual Life Transaction by 3Q’20 4 Prudent Capital Management 18
Slide 19: Appendix
PLAN | INVEST | PROTECT 19 FINANCIAL
Slide 20: Reconciliation of 2Q'20 Adjusted Operating Earnings to Net Income
Reconciliation of 2Q’20 Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) 2Q’20 $34 $20 $30 $(93) $(43) $(18) $(71) Adjusted Operating Net Investment Income (Loss) from Net Guaranteed Income (Loss) Other Net Income (Loss) Earnings 1 Gains (Losses) Discontinued Benefit
Slide 21: Valuation Metrics Underline High Free Cash Flow Conversion and Value of DTA
Valuation Metrics Underline High Free Cash Flow Conversion and Value of DTA 2 3, 4 3, 4, 5 Peer P/E P/FCF FCF Yield Company A 4.0x 7.3x 13.8% Company B 6.3x 12.7x 7.9% Company C 5.5x 8.5x 11.8% Company D 3.8x 7.3x 13.7% Traditional Peer Average6 4.9x 8.9x 11.2% Company E 7.1x 9.4x 10.6% Company F 8.
Slide 22: Well-Diversified Investment Portfolio Built for Through-The-Cycle Risk Adjusted Returns
Well-Diversified Investment Portfolio Built for Through-The- Cycle Risk Adjusted Returns $59 Billion $38 Billion (Post Life Estimate) General Account Investment Portfolio1 General Account Investment Portfolio2 Munis Short 2% LP/Equity Term/Treas 3% Munis LP/Equity ury 2% 3% 3% Short Term/Treasury 2%
Slide 23: Spotlight: Commercial Mortgage Loans
Spotlight: Commercial Mortgage Loans Key Message: ~$5.6 billion allocation1 with weighted average debt service coverage ratio (DSCR) of 2.3x 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 24: 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. 97% rated NAIC 1 / 2 with all NAIC 2 and below holdings in Voya-issued transactions. Generic CLO Structure4 • Collateral losses are alloca
Slide 25: Spotlight: Energy Exposure
Spotlight: Energy Exposure Key Message: ~$2.0 billion portfolio1 is 84% rated NAIC 1 / 2. Exposure has been steadily declining as a percentage of fixed maturity assets, estimated post Life to be 6.4%. 65%/35% split between Public and Private Credit. Energy Exposure Concentrated in Midstream 9.0% 11.
Slide 26: Spotlight: BBB Exposure
Spotlight: BBB Exposure Key Message: ~$13 billion NAIC 2 portfolio1,2 is approximately 56%/44% 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% 15.5%
Slide 27: 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 28: Analyst Modeling Considerations
Analyst Modeling Considerations Prepayment Income ■ Long-term prepayment income quarterly expectation in 2020 (pre-tax, pre-DAC): $8 million for Retirement and Alternative ■ Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) for alternative income; 3Q’20 performance expected Incom
Slide 29: Reliable Long-Term Investment Performance Critical to Future Success
Reliable Long-Term Investment Performance Critical to Future Success % AUM Above Benchmark or Peer Median1 98 98 85 71 72 72 72 62 60 41 37 26 Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. Voya Investment Management calculations as of June 30, 2020. Metrics presented are bas