Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q1 2016 Earnings Presentation
35 slides from Voya Financial's earnings presentation, May 4, 2016
Slide 1: Voya Financial First Quarter 2016 Investor Presentation
Voya Financial First Quarter 2016 Investor Presentation May 4, 2016
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 Themes and 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 and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operatin
Slide 4: Key Themes
Key Themes Continuing to execute on growth, margin, and capital initiatives to drive Ongoing Business Adjusted Operating ROE to 2018 target of 13.5-14.5% Remain on Track 12.1% Ongoing Business Adjusted Operating ROE in 1Q’16 TTM vs. 12.2% in 4Q’15 TTM to Meet 2018 ROE (excluding items we do not
Slide 5: First Quarter 2016 Financial Highlights
First Quarter 2016 Financial Highlights First Quarter 2016 $115 million or $0.55 per diluted share After-tax Operating Earnings1 $116 million or $0.55 per diluted share excluding DAC and other intangibles unlocking Net Income Available to $192 million driven by Ongoing Business operating earnings an
Slide 6: Ongoing Business Key Sources of Value
Key Sources of Value Tax Benefits Ongoing Business Excess Capital Potential CBVA Value 6
Slide 7: Agenda
Agenda 1. Key Themes and 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 and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operatin
Slide 8: Ongoing Business Adjusted Operating ROE and ROC Tracking to Target
Ongoing Business Adjusted Operating Return on Equity and Return on Capital Tracking to Target Ongoing Business1 Adjusted Operating ROE2 Ongoing Business1 Adjusted Operating ROC3 13.5-14.5% 12.1% 12.2% 11.5-12.5% 12.1% 10.3% 11.7% 12.1% 11.4% 10.1% 10.0% 9.9% 9.8% 8.6% 9.6% 10.0% 9.5% 8.2% FY'13 FY'1
Slide 9: Growth Initiatives Execution Off to a Good Start
Growth Initiatives Execution Off to a Good Start 2016 Growth Metrics1 Commentary Small/Mid Corporate: 1Q’16 deposits of $1.9-$2.1 billion 1Q’16 deposits of $2.1 billion within Grow full year deposits by 5%-10% range provided in February Retirement Tax-Exempt: 1Q’16 deposits of $1.0-$1.2
Slide 10: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC Growth Initiatives 11-12% Expand advisor distribution and market reach to generate higher sales Increase sales force productivity to win more mandates 9.2% Retain profitable clients 8.9% 8.7% 8.9% 8.5% 8
Slide 11: Annuities – Expanding Product Range and Distribution Reach
Annuities – Expanding Product Range and Distribution Reach Adjusted Operating ROC Growth Initiatives Expand product line Grow less capital-intensive investment only products 9.5-10.5% Expand FIA distribution to growing institutional 9.3% 9.0% 9.0% markets 9.2% 8.6% 8.7% Margin Initiatives 7.3%
Slide 12: Investment Management – New Product Extensions and Productivity Improvements
Investment Management – New Product Extensions and Productivity Improvements Operating Margin Growth Initiatives New distribution and markets New products and solutions 33-35% 32.1% Productivity enhancements 1 27.7% 29.2% 29.0% 30.0% 29.1% 26.7% Examples of Execution 24.7% Continued strong i
Slide 13: Employee Benefits – High Return and Capital Generation
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC Growth Initiatives Expand into mid-market Grow private exchange participation and voluntary 28.9% sales 28.8% 26.6% In-force premium growth 26.5% 23.4% 23-25% 23.1% 18.8% Examples of Execution 18.1% 1Q’16
Slide 14: Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model
Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model Adjusted Operating ROC Margin Initiatives Restore profit margins within the in-force block 7.5%-8.5% 6.8% Reduce redundant reserve financing cost 6.2% 6.6% 6.0% Capital Initiatives 5.3% 4.9% 5.1% Reduce cap
Slide 15: Agenda
Agenda 1. Key Themes and 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 and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operatin
Slide 16: 1Q’16 Business Segment Drivers
1Q’16 Business Segment Drivers 1Q’16 Commentary Positive net flows in all markets; Lower fee income due to equity market decline and recordkeeping; Retirement Higher seasonal administrative expenses Prepayments and alternative income: $15 million (pre-tax, post-DAC) below long-term expectations
Slide 17: Alternatives Portfolio Has Track Record of Exceeding 9% Annual Long-Term Expectation
Alternatives Portfolio Has Track Record of Exceeding 9% Annual Long-Term Expectation Calendar Year Net Returns1,2 Alternatives Portfolio Profile at 3/31/16 16% Real Estate & 14.7% Other 3% 14% Private Credit 12.0% 12.1% 3% 12% IM Investment 10% Capital Target: 9% 16% 8% Private Equity 53% 6% Hedge F
Slide 18: Retirement Positive Net Flows In All Markets in 1Q’16
Retirement Positive Net Flows In All Markets in 1Q’16 Retirement Net Flows1 ($ million) $1,000 $800 $585 $732 $600 $92 $64 $159 $400 $395 $40 $38 $10 $200 $371 $418 $360 $340 $174 $- 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 $(200) $(400) $(600) $(2,132) $(800) $(1,000) Corporate Markets Tax-Exempt Markets Stab
Slide 19: Annuities Flows Supported by Fixed Indexed Annuities and Investment-Only Products
Annuities Flows Supported by Fixed Indexed Annuities and Investment- Only Products, While Continuing to Run Off Less Profitable Business Annuities Net Flows1 ($ million) $85 $198 $172 $159 $173 $133 $104 $66 $(19) $(37) $(33) $(35) $(52) $(54) $(59) $(153) $(191) $(169) $(198) $(168) 1Q'15 2Q'15 3Q'
Slide 20: Investment Management Net Inflows in 1Q’16 Driven by Higher Institutional Sales
Investment Management Net Inflows in 1Q’16 Driven by Higher Institutional Sales Investment Management Third-Party Net Flows1 ($ billion) 1Q’15 2Q’15 3Q’15 4Q’15 1Q’16 $0.7 $0.5 $0.5 $(0.2) $(0.3) $(0.7) $(1.1) $(0.2) $(1.4) Sub-Advisor $0.0 $0.0 $1.4 $0.0 $0.0 Replacements Investment Management $(0.
Slide 21: Individual Life 1Q’16 Unfavorable Mortality
Individual Life 1Q’16 Unfavorable Mortality Actual-to-Expected Frequency Actual-to-Expected Mortality 140% 120% 100% 115% 80% 110.6% 110% 60% 40% 105% 103% 115% 84% 81% 76% 89% 20% Between One and Two Standard Deviations 100% 98.5% 0% 95.7% 96.4% 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 93.7% 95% 92.4% 9
Slide 22: Employee Benefits Loss Ratios for Stop Loss Remained Favorable
Employee Benefits Loss Ratios for Stop Loss Remained Favorable Sales1 ($ million) Loss Ratios (%) 95% 95% $254 $245 90% 90% 85% 84.5% 85% 78.7% 80% 80% 78.7% 75.6% 76.1% 75.6% 74.2% 74.0% 75% 75% 70% 70% 65% 65% 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 FY'13 FY'14 FY'15 95% 95% 90% 90% 85% 85% 80% 80% $39 $40
Slide 23: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge Resources 1Q’16 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated available Equity impacts increase (decrease) in hedge resources resources of $6.6 $1.1 $0.
Slide 24: Closed Block Variable Annuity Cash Flows are Largely Unchanged from a Year Ago
Closed Block Variable Annuity Cash Flows are Largely Unchanged from a Year Ago PV of Cash PV of Cash Change Flows as of Flows as of Scenario Assumptions Year End 2014 Year End 2015 over Full The scenarios provide an Year 2015 illustrative presentation of ($ billions) ($ billions) how the CBVA segm
Slide 25: CBVA Cash Flow Scenario is a Significant Outlier Compared to Scenarios 2, 3, and 4
CBVA Cash Flow Scenario 1 is a Significant Outlier Compared to Scenarios 2, 3, and 4 4Q’15 Cash Flow Results vs. Distribution of Stochastic Scenario Results ($ billion) Scenario 3 $2.0 billion PV of Cash Flow results for the four deterministic Scenario 2 Scenario 4 scenarios are mapped $1.1 billio
Slide 26: Energy Investments – Highly Rated, Quality Bias
Energy Investments1 – Highly Rated, Quality Bias $6.9 billion of energy fixed income investments NAIC Ratings of Energy Investments Constitutes 7% of total investment portfolio NAIC 3-6 Highly rated with 89% rated investment grade 11% according to NAIC scale NAIC 1 32% Approximately 48% of e
Slide 27: Estimated Combined RBC Ratio and Leverage Ratio Better Than Target
Estimated Combined RBC Ratio1 and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 $7.8 Target 25% Debt-to- Capital Ratio 21.7% 22.0% 22.4% 22.4% 21.3% $6.9 $7.0 $6.7 $6.6 547%
Slide 28: Significant Excess Capital Available
Significant Excess Capital Available Holding Company Liquidity1,2 Excess Capital Share Repurchases ($ million) ($ million) ($ million) $817 $1,490 $556 $XX $500 Estimated Statutory Surplus in Excess of $450 Liquidity $711 425% RBC Target Level3 Holding Co. Working Capital Above $220 Target2 $106 3/3
Slide 29: Evolve to Deliver More Customer Value; Focus on Growth and ROE; Realize Sources of Value
Helping Americans Get Ready to Retire Better 1 Evolve to Deliver More Customer Value 2 Focus on Growth and Further ROE Improvement 3 Realize Sources of Financial Value 29
Slide 30: Appendix
Appendix a eeeeeslllclrlrllrrTC“‘(‘(’UNCOC;(él;.MSG VOYA. FINANCIAL PLAN | INVEST | PROTECT 30
Slide 31: Reconciliation of 1Q’16 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 1Q’16 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $31 $192 $163 $163 $55 $30 $2 $115 $(50) $(39) $- Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 1 Other Tax- Net Income Business (Loss
Slide 32: Diversified Drivers of Operating Revenue
Diversified Drivers of Operating Revenue Ongoing Business Sources of Revenue Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance Other Revenue risks and incurred benefits $962 $953 $937 $977 $883 $191 $197 $195 $214 Investment
Slide 33: Seasonality of Financial Items
Seasonality of Financial Items 1Q 2Q 3Q 4Q Corporate Markets tends to Education Tax-Exempt Markets Corporate Markets typically see have the highest recurring typically see lowest recurring highest transfer / single Retirement deposits deposits deposits Withdrawals also tend to Withdrawals
Slide 34: Analyst Modeling Considerations
Analyst Modeling Considerations Prepayment Income Prepayment income of $12 million per quarter for Ongoing Business in 2016 (pre-tax, pre- and Alternative DAC): $6 million for Retirement; $4 million for Annuities; $2 million for Individual Life Income Approximately 9% annual long-term expected r
Slide 35: FINANCIAL
® FINANCIAL FINANCIAL PLAN | INVEST | PROTECT 35