Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q2 2023 Earnings Presentation
30 slides from Voya Financial's earnings presentation, Aug 2, 2023
Slide 1: Voya Financial Second Quarter 2023 Investor Presentation
Voya Financial Second Quarter 2023 Investor Presentation August 2, 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: Key Themes & Executing on our Strategy
Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer
Slide 4: Delivered Strong 2Q'23 Financial Performance
Delivered Strong 2Q’23 Financial Performance Execute & ■ 2Q'23 adjusted operating earnings1 per share grew 30% to $2.21, from $1.70 in 2Q’22 Achieve ■ Reflects strength of Voya’s diversified business model and prudent expense management - segment administrative expenses reduced Financial by $43M fro
Slide 5: Revenue Diversification Provides Balance Across Various Macro Environments
Revenue Diversification Provides Balance Across Various Macro Environments 2Q’23 TTM Revenue Mix1 Diversified Revenue Mix in Businesses Participant-driven / 23% ■ Spread income has been benefiting from higher fee-for-service rate environment 27% ■ Net underwriting expanding due to outstanding Equiti
Slide 6: Focused on Integration & Execution on Strategic Opportunities while Optimizing Operating Model
Focused on Integration & Execution on Strategic Opportunities while Optimizing Operating Model Integration Updates Operating Model AllianzGI Benefitfocus Voya India • Providing scale, product offerings, & • On track for 2023 Adjusted Operating • Became a wholly-owned subsidiary in access to internat
Slide 7: Living our Purpose and Vision Everyday
Living our Purpose and Vision Everyday Client Outcomes Supporting Colleagues Serving Communities2 ❑ Positive outcomes with myVoyage, a first- ❑ Voya’s workforce diversity statistics ❑ Voya was ranked #2 in volunteer of-its-kind personalized, financial-guidance and continue to exceed peers highlighti
Slide 8: Key Themes & Executing on our Strategy
Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer
Slide 9: Second Quarter 2023 Financial Results
Second Quarter 2023 Financial Results 2Q’22 2Q'23 Earnings Drivers Adjusted ▪ 2Q'23 adjusted operating earnings of $243M, up 29% from 2Q’22 Operating $1.70 $2.21 ▪ Adjusted operating EPS of $2.21, growth of 30% over the prior Per Diluted Per Diluted year quarter, primarily driven by favorable net un
Slide 10: Wealth Solutions
Wealth Solutions Continued momentum to drive business growth and scale (Billions) Full Service – Client Assets Full Service – Recurring Deposits 2Q’23 Full Target 10 – 12% Growth Service 2Q’23: Spread-Based Fee-Based Inflows of +9.5% YoY $403M $188 $178 9.5% CAGR $165 $163 2018 to 2Q23 TTM $144 $14.
Slide 11: Wealth Solutions
Wealth Solutions Diverse revenue streams providing balanced growth in fee and spread-based income (Millions) Adjusted Operating Earnings Summary Earnings ex Notables Notables ▪ 2Q'23 pre-tax adjusted operating earnings of $174M $990 reflects lower alternative income below long-term expectations $579
Slide 12: Health Solutions
Health Solutions Premium growth while maintaining pricing discipline (Millions) Annualized In-Force Premium & Fees Aggregate Loss Ratio1 Target 7-10% Growth Target 70 – 73% 2Q’23: +22% YoY 80% 12.7% 75% 73% 73% CAGR $925 70% 70% 69% $833 70% $752 $714 64% $710 65% $659 $1,461 $1,258 60% $1,181 $1,09
Slide 13: Health Solutions
Health Solutions Strong top-line growth and favorable underwriting experience (Millions) Adjusted Operating Earnings Summary Earnings ex Notables Notables ▪ 2Q'23 adjusted operating earnings of $124M are higher than 2Q'22 due to in-force premium growth, favorable net $450 underwriting gains and fee-
Slide 14: Investment Management
Investment Management Long-term track record of AUM growth though industry-wide headwinds (Billions) Assets Under Management Organic Growth Rate1 2Q’23 Net Flows: Institutional: $(3.8) $321 $324 Retail2: $ 0.1 5.0% Total: $(3.7) 4.2% $264 $246 $223 $204 1.8% 0.6% 1.1% 0.5% -1.2% -2.6% Net Flows TTM3
Slide 15: Investment Management
Investment Management Revenue growth driven by AllianzGI acquisition & strong sales in international markets (Millions) Adjusted Operating Earnings Summary Excludes AllianzGI NCI ▪ 2Q'23 adjusted operating earnings of $50M, excluding AllianzGI noncontrolling interest (“NCI”) of $14M, improved from p
Slide 16: Capital Rollforward
Capital Rollforward Balanced capital return and strong cash flow generation (Billions) 12-month Excess Capital Rollforward Highlights 90%+ ▪ Strong balance sheet at 6/30/23 & excess capital1 of $0.5B FCF Conversion2 ▪ Leverage ratio of 29.2% and RBC ratio of 405% ▪ Generated $0.2B of excess capital1
Slide 17: Focused on Executing our Strategy and Building on our Track Record of Success
Focused on Executing our Strategy and Building on our Track Record of Success Execute and ■ On target for 12% to 17% EPS CAGR over the three-year period ending in 2024 Achieve Financial ■ Voya’s diversified business model and prudent expense management continue to drive results Targets despite macro
Slide 18: Appendix
Appendix
Slide 19: Adjusted Operating to Net Income Walk
Adjusted Operating to Net Income Walk (Millions) Primarily Primarily Primarily Non-Cash Non-Cash Non-Cash Cash 2 3 4 1 1. Losses from Businesses exited include amortization of intangibles. 2. Primarily Lease impairment and amortization of acquisition intangibles. 3. Ongoing integration costs related
Slide 20: Guidance and Assumptions
Guidance and Assumptions Note: Teal font denotes change from 1Q’23 Prepayment & ■ Long-term prepayment and other investment fee income, quarterly ■ Approximately 9% annual long-term expected returns (pre-tax) for Alt. Income expectation in 2023 (pre-tax): $9M for Wealth Solutions alternative income
Slide 21: Seasonality
Seasonality Wealth Health IM Corporate All Segments ▪ Admin expenses tend to be the ▪ Corporate tends to have the highest ▪ Group Life loss highest recurring deposits ratio tends to be highest ▪ Seasonally higher ▪ Payroll taxes and long-term 1Q ▪ Withdrawals tend to increase preferred dividend ince
Slide 22: 2Q'23 Notable Items Impacts
2Q'23 Notable Items Impacts Alternative Income Above/(Below) Adjusted Operating Earnings (ex. Adjusted Operating Earnings1 2Q'23 (Millions) Expectations2 notables) Wealth Solutions $174 $(14) $188 Health Solutions 124 (0) 125 Investment Management 63 1 62 Corporate (54) – (54) Adjusted Operating Ear
Slide 23: Reliable Long-Term Investment Performance Critical to Future Success
Reliable Long-Term Investment Performance Critical to Future Success 2Q 2023 % AUM Above Benchmark or Peer Median1 99% 87% 87% 87% 78% 78% 61% 62% 64% 68% 48% 47% Equity Multi-Asset Fixed Voya IM Income Total 3 Year 5 Year 10 Year 1. Voya Investment Management calculations as of June 30, 2023. Metri
Slide 24: General Account
General Account Built to deliver through-the-business cycle returns $39Bn 96%+ 3,000+ General Account Investment Grade1 Issuers diversified across a range of Industries THROUGH THE CYCLE, RISK- HIGH-QUALITY AND CREDIT ADJUSTED RETURNS DIVERSIFIED RISK-MANAGEMENT ✓ Trailing 20-yr loss rate on CML por
Slide 25: Well-Diversified Investment Portfolio Built for Through the Cycle Risk Adjusted Returns
Well-Diversified Investment Portfolio Built for Through the Cycle Risk Adjusted Returns $39 Billion General Account Investment Portfolio1 96%+ Investment Grade2 Munis LP/Alts Other 2% 5% 1% Short 4% Term/Treasury 2% 45% Public Corporate 30% CML 13% Private Securitized 51% Credit 27% 20% 1 Ratings2 F
Slide 26: 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 27: Well Diversified and High-Quality CML Portfolio
Well Diversified and High-Quality CML Portfolio CML Portfolio: Exposure by Property Type1 2% 2% 1% 3% Multifamily Debt Service Coverage Ratio (DSCR) Retail >1.25- >1.00 – 9% >1.50X <1.00X Total Loan To Value (LTV2) Industrial/Warehouse 1.50X 1.25X 29% Office <50% 43.9% 8.2% 8.4% 6.4% 67.0% 15% $5.3B
Slide 28: Office Loan Exposure - CML
Office Loan Exposure - CML Direct Exposure Represents 2% of Total General Account % of Office Loan Portfolio Maturing by Year1 $155M maturing over the next 5-years 6.5% 6.3% Debt Service Coverage Ratio (DSCR) >1.25- >1.00 – >1.50X <1.00X Total Loan To Value (LTV) 1.50X 1.25X 3.0% <50% 56.4% 7.8% 12.
Slide 29: CMBS Portfolio Highly Rated and Well Diversified
CMBS Portfolio Highly Rated and Well Diversified $4.2B1 11% of General Account Credit Book CMBS Enhancement2 Value % CMBS Government 32% Remaining Agency Guaranteed NAIC 1B-G General 19% Account Agency or IO 4% CMBS IO Limited Credit Risk 3% 89% Conduit/CRE CLO 3% NAIC 2 NAIC 1A SASB 4% 14% NAIC 3 S
Slide 30: CLO Portfolio is Modestly Sized and Highly Rated
CLO Portfolio is Modestly Sized and Highly Rated (As of 6/30/2023) ▪ 4% allocation1 in the investment portfolio, of which 93% 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 Po