Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q3 2020 Earnings Presentation
27 slides from Voya Financial's earnings presentation, Nov 5, 2020
Slide 1: Voya Financial Third Quarter 2020 Investor Presentation
Voya Financial Third Quarter 2020 Investor Presentation November 5, 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: Key Themes
Key Themes ■ Normalized 3Q’20 adjusted operating earnings of $1.19 per share1 (8.2% growth year-over- EPS Growth year), excluding: ■ $0.37 of prepayment and alternative income above our long-term expectations Despite Pandemic ■ $(1.05) of DAC/VOBA and other intangibles unlocking, largely reflecting
Slide 5: Advancing our Culture and Values
Advancing our Culture and Values Ranked 2nd in ESG metrics for the Named a Great Place to Work® by the Capital Markets1 Sector Great Place to Work Institute for the fifth consecutive year 1.Capital Markets sector includes Alternative & Traditional Asset Managers, Broker-Dealers, Exchanges, and Retai
Slide 6: 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 6
Slide 7: Third Quarter 2020 Results – Financial Highlights
Third Quarter 2020 Results – Financial Highlights After-tax Adjusted Operating Net Income (Loss) Available to Earnings Per Share¹ (Normalized) Common Shareholders 3Q’20 3Q’20 $1.19 $(333) per diluted share million Excludes 3Q’20 Includes 3Q’20 ■ Prepayment fees and alternative income above ■ After-t
Slide 8: Retirement – Industry Leading Provider of Retirement Solutions
Retirement – Industry Leading Provider of Retirement Solutions across all Plan Sizes and Markets Adjusted Operating Earnings1 ($ millions) Full Service Client Assets ($ billions) Current Quarter TTM Spread-based Fee-based $142 $153 $135 $629 $537 $110 $120 $104 Includes Prepayments and $197 $31 $32
Slide 9: Investment Management – Delivering Strong Investment Performance and Net Flows
Investment Management – Delivering Strong Investment Performance and Net Flows Adjusted Operating Earnings1 ($ millions) Assets Under Management ($ billions) Current Quarter TTM General Account External Clients $230 $238 $217 $165 $166 $161 $173 $180 Includes Prepayments and $46 $47 $56 $57 $58 Alte
Slide 10: Employee Benefits – Growing while Maintaining Underwriting and Expense Discipline
Employee Benefits – Growing while Maintaining Underwriting and Expense Discipline Adjusted Operating Earnings1 ($ millions) Annualized In-Force Premiums ($ millions) Current Quarter TTM Group Life & Disability Stop Loss Voluntary $2,268 $2,267 $2,144 $392 $477 $474 $208 $188 $1,037 $1,075 $1,091 Inc
Slide 11: GAAP Impact Driven by Material Reduction in Long Term Interest Rate Assumption
GAAP Impact Driven by Material Reduction in Long Term Interest Rate Assumption Business To US GAAP Pre-Tax Other-Non Gain / (Loss) Retirement Be Exited Via Total Operating Reinsurance Long Term Interest Rate Assumption $(121)2 $(219)3 $0 $(340) Lowered to 2.00%1 Other Assumptions Update $(54)4 $(154
Slide 12: Adjusted Operating EPS Considerations
Adjusted Operating EPS Considerations 3Q’20 Financial Results Reported 3Q’20 Adjusted Operating EPS1 $0.30 Includes: ■ Prepayment fees and alternative income above long-term expectations 0.37 ■ DAC/VOBA and other intangibles unlocking (1.05) ■ Stranded costs from Individual Life transaction (0.21) N
Slide 13: Investment Portfolio COVID-19 Exposure and Updated Stress Tests
Investment Portfolio COVID-19 Exposure and Updated Stress Tests COVID-19 Sector Exposure1 Investment Portfolio Stress Test1 Updated Expected Impact to Excess Capital Remaining from Rating Migration and Impairments GA 89% Stress Case One Stress Case Two ~$300 million ~$450 million COVID-19 Scenario
Slide 14: Strong Capital Position
Strong Capital Position Estimated Combined Excess Capital Debt-to-Capital Ratio3 Adjusted RBC Ratio¹ ($ millions)2 455% $642 33.7% Target: Target: 400% 30% $1.5B Deployable capital expected post $0.15 Per share dividend 1%+ Dividend yield maintained close of Individual Life transaction 1. Estimated
Slide 15: Helping Americans Get Ready to Retire Better
Helping Americans Get Ready to Retire Better 1 EPS Growth Despite Pandemic Headwinds 2 Continued Momentum Across All Businesses 3 Individual Life Regulatory Process Expected to Conclude in 4Q20 4 Prudent Capital Management 15
Slide 16: Appendix
PLAN | INVEST | PROTECT 16 FINANCIAL
Slide 17: Reconciliation of 3Q'20 Adjusted Operating Earnings to Net Income
Reconciliation of 3Q’20 Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) 3Q’20 $23 $39 $12 $(140) $2 $(270) $(333) Adjusted Operating Net Investment Income (Loss) from Net Guaranteed Income (Loss) Other Net Income (Loss) Earnings 1 Gains (Losses) Discontinued Benefit
Slide 18: 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 19: 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 $39 Billion (Post Life Estimate) General Account Investment Portfolio1 General Account Investment Portfolio2 Munis LP/Equity 2% 3% Munis LP/Equity Short 2% Short Term/Treasury Term/Treasury 4% 2% 3%
Slide 20: Alternatives Portfolio Has Delivered Favorable Investment Performance Over Time
Alternatives Portfolio Has Delivered Favorable Investment Performance Over Time Details of $1.4 Billion Calendar Year Net Returns1,2 (%) Alternatives Portfolio Profile2 (as of 09/30/20) Long-term Return Target: 9.0% Diversified across traditional Private Equity, Infrastructure, Real Estate, Credit
Slide 21: Spotlight: Commercial Mortgage Loans
Spotlight: Commercial Mortgage Loans Key Message: ~$5.6 billion allocation1 with weighted average debt service coverage ratio (DSCR) of 2.2x 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 22: 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. 96% rated NAIC 1 / 2 with all NAIC 2 and below holdings in Voya-issued transactions. Generic CLO Structure4 • Collateral losses are alloca
Slide 23: Spotlight: Energy Exposure
Spotlight: Energy Exposure Key Message: ~$2.0 billion portfolio1 is 83% rated NAIC 1 / 2. Exposure has been steadily declining as a percentage of fixed maturity assets, estimated post Life to be 6.4%. 64%/36% split between Public and Private Credit. Energy Exposure Concentrated in Midstream 9.0% 11.
Slide 24: Spotlight: BBB Exposure
Spotlight: BBB Exposure Key Message: ~$13.5 billion NAIC 2 portfolio1,2 is approximately 59%/41% 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.
Slide 25: 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 26: 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 Income ■ Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) for alternative income ■ FY’20 administrative exp
Slide 27: 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 93 89 76 74 77 70 70 57 44 38 1 Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. Voya Investment Management calculations as of September 30, 2020. Metrics presented are