Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q1 2015 Earnings Presentation
33 slides from Voya Financial's earnings presentation, May 6, 2015
Slide 1: Voya Financial First Quarter 2015 Investor Presentation
Voya Financial First Quarter 2015 Investor Presentation May 6, 2015
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 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 3. Business Operating and Balance Sheet Metrics Ewout Steenbergen, Chief Financial Officer 3
Slide 4: Key Developments
Key Developments ROE Progress 1Q’15 TTM Ongoing Business Adjusted Operating ROE of 12.6% Public Float ING Group’s March 2015 secondary offering eliminated its common equity Increased ownership stake; exit completed before December 2016 deadline Share $631 million repurchased during the quarter, incl
Slide 5: First Quarter 2015 Financial Highlights
First Quarter 2015 Financial Highlights $197 million or $0.82 per diluted share After-tax Operating Earnings1 $194 million or $0.80 per diluted share excl. DAC and other intangibles unlocking Net Income Available to $186 million driven by strong Ongoing Business operating earnings Common Shareholder
Slide 6: Premier Franchise with Diverse Earnings
Premier Franchise with Diverse Earnings 1Q’15 TTM Ongoing Business Adjusted Operating Earnings Before Income Taxes1: $1,410 million Retirement and Investment Solutions Leading provider of retirement and investment management solutions in the United States Retirement and Insurance Investment Solution
Slide 7: Key Sources of Value
Key Sources of Value Potential Ongoing Tax Excess CBVA Business Benefits Capital Value 7
Slide 8: Agenda
Agenda 1. Key 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 3. Business Operating and Balance Sheet Metrics Ewout Steenbergen, Chief Financial Officer 8
Slide 9: Ongoing Business Adjusted Operating ROE and ROC Improved Sequentially
Ongoing Business Adjusted Operating Return on Equity and Return on Capital Improved Sequentially Ongoing Business1 Adjusted Operating ROE2 Ongoing Business1 Adjusted Operating ROC3 13.0-14.0% 12.6% 11.0-12.0% 12.1% 12.1% 10.3% 11.7% 10.4% 9.9% 10.0% 9.8% 8.6% 9.6% 8.3% 7.2% 8.2% FY'12 FY'13 FY'14 1Q
Slide 10: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC 2015 Priorities Expand distribution footprint Strengthen market position in Tax-Exempt Markets Increase participant engagement through further rollout of Retirement Readiness offerings 9.2% 9.3% 8.9% D
Slide 11: Annuities – Selective Growth While Running Off Less Profitable Business
Annuities – Selective Growth While Running Off Less Profitable Business Adjusted Operating ROC 2015 Priorities Introduce new products to meet evolving customer 9.5% 9.0% retirement needs and risk profiles Expand wholesale strategy that broadens distribution into 8.9% 8.6% new institutions, such
Slide 12: Investment Management – Scalable Platform Leveraging Strong Investment Performance
Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin 2015 Priorities Continued strong investment performance 32.1% Continued expansion of third-party business and 31.5% 1 improved institutional and retail distribution 27.7% 30.0% 29.5% Product ext
Slide 13: Individual Life – Repositioning Toward Aligned Distribution Model
Individual Life – Repositioning Toward Aligned Distribution Model Adjusted Operating ROC 2015 Priorities Launch of Aligned Distribution strategy Grow sales of indexed universal life products Continue to seek in-force solutions 5.7% Manage non-guaranteed elements of in-force contracts 5.3% 4.
Slide 14: Employee Benefits – High Return on Profitable Growth
Employee Benefits – High Return on Profitable Growth Adjusted Operating ROC 2015 Priorities Leverage breadth of product portfolio to drive package solutions 32.2% Expand target market focus to include mid-sized 28.9% employers, along with continued focus on private 28.8% exchange partnerships
Slide 15: Agenda
Agenda 1. Key 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 3. Business Operating and Balance Sheet Metrics Ewout Steenbergen, Chief Financial Officer 15
Slide 16: 1Q'15 Business Segment Drivers
1Q’15 Business Segment Drivers 1Q’15 relative to 4Q’14 Lower recordkeeping fee income reflecting exit of defined benefit administration business and non- Retirement renewal of certain plans; higher seasonal administrative expense Annuities Lower alternative investment income; higher seasonal adminis
Slide 17: Retirement Net Flows Positive in 1Q'15 Across All Markets
Retirement Net Flows Positive in 1Q’15 Across All Markets Retirement Net Flows1 ($ million) $661 $92 $44 $395 $475 $340 $245 $188 $174 $(94) $(282) $(117) $(287) $(22) $(566) $(14) $(25) $(66) $(111) $(202) 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 Corporate Markets Tax-Exempt Markets Stable Value and Retail We
Slide 18: Growing Mutual Fund Custodial, Maintaining Discipline on Fixed Indexed Annuities
Growing Mutual Fund Custodial, Maintaining Discipline on Fixed Indexed Annuities, and Running Off Less Profitable Business Annuities Net Flows1 ($ million) $55 $23 $120 $82 $146 $126 $122 $121 $11 $133 $(41) $(40) $(63) $(54) $(1) $(19) $(233) $(259) $(169) $(109) $(92) $(481) $(704) $(411) $(623) 1
Slide 19: Positive Investment Management Sourced Flows in 1Q'15
Positive Investment Management Sourced Flows in 1Q’15 Investment Management Third-Party Net Flows1 ($ billion) 1Q’14 2Q’14 3Q’14 4Q’14 1Q’15 $1.3 $0.8 $0.7 $(0.2) $(0.3) ($0.4) $(0.5) ($0.6) $(0.5) $(0.4) Sub-Advisor $4.7 $0.0 $2.1 $0.8 $0.0 Replacements Investment Management $(0.8) $(0.9) $(1.0) $(
Slide 20: Individual Life Results Impacted by Slightly Elevated Mortality
Individual Life Results Impacted by Slightly Elevated Mortality Individual Life Sales¹ Actual-to-Expected Mortality 2014 Sales 115% 110% 30% Above One Standard Deviation 105% 52% 100% 96.9% 96.4% 8% 95.7% 93.7% 95% 10% 92.4% 89.8% 90% 1Q’15 Sales 85% 84.8% 22% 80% 80.8% 5% 75% 7% Below One Standard
Slide 21: Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable
Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable Sales1 Loss Ratios ($ million) (%) $254 $242 82.0% 78.7% 77.5% 75.4% 76.1% 74.7% 74.2% 72.2% 76.9% 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 FY'11 FY'12 FY'13 FY'14 82.9% 75.3% 72.4% 72.2% 72.1% 70.4% 69.6% 72.9% $34 $26 $18 61.9% 1Q'
Slide 22: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge 1Q’15 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated available Equity impacts increase (decrease) in hedge assets resources of $5.5 billion $1.0 $1.0 $0.
Slide 23: Closed Block Variable Annuity Cash Flows are Positive Except in the Extreme Stress Scenario
Closed Block Variable Annuity Cash Flows are Positive Except in the Extreme Stress Scenario PV of Cash Flows The scenarios provide Scenario Assumptions as of Year End an illustrative 2014 ($ billion) presentation of how the Equity return down 25% in first year, CBVA segment is Scenario 1 then 0% t
Slide 24: 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’14 Cash Flow Results vs. Distribution of Stochastic Scenario Results ($ billion) 25% PV of cash flow results for the four Scenario 3 $2.0 billion deterministic scenarios are mapped against the distribution of r
Slide 25: Estimated Combined RBC Ratio Strengthened and Leverage Ratio Better Than Target
Estimated Combined RBC Ratio1 Strengthened and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 Target 25% $7.8 Debt-to- $7.6 $7.5 Capital Ratio $7.3 23.5% 23.2% 23.0% $7.1 21.
Slide 26: Excess Capital Deployed Primarily to Repurchase Shares
Excess Capital Deployed Primarily to Repurchase Shares Holding Company Liquidity1 Excess Capital2 Share Repurchases ($ million) ($ million) ($ million) $789 $1,243 Estimated $130 $462 $1,231 Statutory Surplus in Excess of $450 Liquidity 425% RBC Target Level2 Holding Co. Working Capital Above Target
Slide 27: Premier Franchise, Experienced Management Team, Potential for Further ROE Improvement
America’s Retirement Company™ 1 Premier Franchise with Leading Positions in Attractive Markets 2 Experienced Management Team With a Track Record of Execution 3 Flow Potential for Further Significant ROE Improvement, Free Cash Generation, and Earnings Growth 27
Slide 28: Appendix
Appendix ee RETIREMENT | INVESTMENTS | INSURANCE 28 VOYA. FINANCIAL
Slide 29: Reconciliation of 1Q'15 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 1Q’15 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $217 $3 $220 $33 $10 $197 $27 $186 $(33) $(22) $(49) Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other1 Other Tax- Net Income Business (Lo
Slide 30: Diversified Drivers of Operating Revenue
Diversified Drivers of Operating Revenue Ongoing Business Sources of Revenue Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance 1 Other Revenue risks and incurred benefits $1,021 $967 $966 $962 $917 $231 $219 $182 $191 Invest
Slide 31: Illustration of Tax Asset Utilization
Illustration of Tax Asset Utilization Federal Net Operating Loss Carry Forwards Illustration of Tax Asset Utilization1 ($ million) Approximately $2.9 billion of federal NOLs as of 12/31/2014 with $0.2 billion Life Subgroup NL Subgroup Federal NOLs2 likely not utilized Deferred Losses Deferred Loss
Slide 32: Seasonality of Financial Items
Seasonality of Financial Items 1Q 2Q 3Q 4Q Corporate Markets tends to Education Tax-Exempt Markets Corporate Markets typically have the highest recurring typically sees lowest recurring sees highest transfer / single Retirement deposits deposits deposits Withdrawals also tend to Withdrawal
Slide 33: FINANCIAL
® FINANCIAL RETIREMENT | INVESTMENTS | INSURANCE 33 FINANCIAL