Voya Financial, Inc. · NYSE:VOYA

Voya Financial — Q1 2013 Earnings Presentation

30 slides from Voya Financial's earnings presentation, May 23, 2013

  1. Slide 1: First Quarter 2013 Investor Presentation

    ING U.S. First Quarter 2013 Investor Presentation May 23, 2013 RETIREMENT • INVESTMENTS • INSURANCE

  2. Slide 2: Forward-Looking and Other Cautionary Statements

    Forward-Looking and Other Cautionary Statements This presentation contains 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 involving a historical fact.

  3. Slide 3: Agenda

    Agenda 1. Key Highlights ƒ Rod Martin, Chairman and Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan ƒ Alain Karaoglan, Chief Operating Officer 3. Business Operating and Balance Sheet Metrics ƒ Ewout Steenbergen, Chief Financial Officer Retir

  4. Slide 4: Progress Made in 2013

    Progress Made in 2013 ƒ On track to achieve targeted ROE improvement of 400-500 bps by 2016 ƒ $600 million of primary proceeds from Initial Public Offering ƒ Termed out debt maturity profile ƒ $1 billion 5-year senior notes offering ƒ $750 million junior subordinated debt offering ƒ Debt to capital

  5. Slide 5: First Quarter 2013 Highlights

    First Quarter 2013 Highlights ƒ Ongoing Business pre-tax adjusted operating earnings increased to $278 million from $241 million in 1Q’12 ƒ Ongoing Business annualized adjusted return on equity improved to 9.5% from 8.3% in FY’12 ƒ Closed Block Variable Annuity (CBVA) hedge program insulated regulat

  6. Slide 6: Premier Franchise with Diverse Earnings

    Premier Franchise with Diverse Earnings 1Q’13 Ongoing Business Pre-Tax Adjusted Operating Earnings1: $278 million 76% of earnings from Investment Retirement Solutions and Management: 11% Investment Management Top 20 manager of institutional Inv. Mgmt. tax exempt assets2 Retirement 11% Retirement Sol

  7. Slide 7: Ongoing Business Annualized ROE On Track to Meet Targets

    Ongoing Business Annualized ROE On Track to Meet Targets Ongoing Business Adjusted Operating ROE1 12.0-13.0% 9.5% 8.3% 7.6% FY'11 FY'12 1Q'13 2016 Target 1. Ongoing Business reflects Retirement, Annuities, Investment Management, Individual Life, and Employee Benefits segments; the ROE for the Ongoin

  8. Slide 8: Agenda

    Agenda 1. Key Highlights ƒ Rod Martin, Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan ƒ Alain Karaoglan, Chief Operating Officer 3. Business Operating and Balance Sheet Metrics ƒ Ewout Steenbergen, Chief Financial Officer Retirement • Inves

  9. Slide 9: Return on Capital Improved 80 bps in 1Q'13

    Return on Capital Improved 80 bps in 1Q’13 Return on Capital (ROC) Key Drivers of ROC Improvement 10.0-11.0% ‰ Retirement and Annuities were the largest contributors 8.0% ‰ $766 million reduction in capital in the 7.2% Ongoing Business in 1Q’13 due to 6.6% recapitalization initiatives and investment

  10. Slide 10: Retirement – Leading Franchise Driving Long-Term Growth and Returns

    Retirement – Leading Franchise Driving Long-Term Growth and Returns Return on Capital (ROC) Key Drivers of ROC Improvement 1Q’13 ROC 10.0-11.0% Contributions Initiatives ‰ 90% of the book at ‰ Reducing crediting rates in 9.2% minimum guarantee conjunction with the low rate, up from 86% as interest r

  11. Slide 11: Annuities – Selective Growth while Running Off Less Profitable Business

    Annuities – Selective Growth while Running Off Less Profitable Business Return on Capital (ROC) Key Drivers of ROC Improvement 7.0-9.0% 1Q’13 ROC Contributions Initiatives 6.9% ‰ Annual Reset / Multi- ‰ Running off Annual 5.9% Margin Year Guarantee Reset / Multi-Year Annuities net outflows Guarantee

  12. Slide 12: Investment Management – Scalable Platform Leveraging Strong Investment Performance

    Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin1 Key Drivers of ROC Improvement 1Q’13 ROC 30.0-34.0% Contributions Initiatives ‰ Normalization of ‰ Improving sales force investment capital productivity 24.7% results ‰ Reducing retail 22.8% Margin ‰

  13. Slide 13: Individual Life – Repositioning Toward More Capital Efficient Products

    Individual Life – Repositioning Toward More Capital Efficient Products Return on Capital (ROC) Key Drivers of ROC Improvement 1Q’13 ROC Contributions Initiatives ‰ Expense reductions ‰ Reducing expense and 6.0-8.0% commission structures 7.9% ‰ Over 70% of book at minimum crediting ‰ Reducing crediti

  14. Slide 14: Employee Benefits – Higher Return and Capital Generation

    Employee Benefits – Higher Return and Capital Generation with Less Interest Rate Sensitivity Return on Capital (ROC) Key Drivers of ROC Improvement 1Q’13 ROC Contributions Initiatives 18.0-22.0% ‰ Group Life loss ratio ‰ Improving loss ratio for reflecting seasonality stop loss policies (loss ratio

  15. Slide 15: Agenda

    Agenda 1. Key Highlights ƒ Rod Martin, Chief Executive Officer 2. Executing Our Return on Equity (ROE) / Return on Capital (ROC) Improvement Plan ƒ Alain Karaoglan, Chief Operating Officer 3. Business Operating and Balance Sheet Metrics ƒ Ewout Steenbergen, Chief Financial Officer Retirement • Inves

  16. Slide 16: 1Q'13 Operating Earnings and Net Income Difference From Closed Block Variable Annuity

    1Q’13 Operating Earnings and Net Income (Loss) Difference Largely From Closed Block Variable Annuity $181 $5 $186 ($33) $14 $167 ($310) $27 ($96) ($212) Ongoing DAC, VOBA, Ongoing Corporate Closed Operating Closed Net Other, Net Business and Other Business Operating Block ISP Earnings, Block Realize

  17. Slide 17: Drivers of Operating Earnings

    Drivers of Operating Earnings Investment Primarily consists of spread Ongoing Business Sources of Operating Spread and between yield and credited Earnings Before Income Taxes ($ mn) Other interest and investment Investment Spread and Other Investment Income Investment income on capital supporting Fe

  18. Slide 18: Improvement in Year-Over-Year Operating Earnings and Administrative Expenses

    Improvement in Year-Over-Year Operating Earnings and Administrative Expenses Ongoing Business Pre-tax Adjusted Operating Earnings1 ($ mn) 15% $279 $296 $278 $278 $241 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 Ongoing Business Administrative Expenses ($ mn) -5% $422 $415 $411 $422 $400 1Q'12 2Q'12 3Q'12 4Q'12 1Q

  19. Slide 19: Retirement Net Flows Well Above Prior Year Quarter

    Retirement Net Flows Well Above Prior Year Quarter Retirement Net Flows1 ($ mn) $1,781 $1,285 $1,419 $1,284 $481 $693 $1,001 $499 $938 $620 $557 $208 $508 $424 $591 $239 $501 $240 $496 $206 $412 $318 $268 $219 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 Net Flows excl. Stable Value1 Stable Value

  20. Slide 20: Positive Mutual Fund Custodial Net Flows in Annuities

    Positive Mutual Fund Custodial Net Flows in Annuities; Run-off of Multi-Year Guarantee Annuities Continued Annuities Net Flows ($ mn) $129 $18 $207 $164 $134 $115 $106 $107 $140 $60 ($40) ($59) ($34) ($62) ($88) ($80) ($45) ($59) ($88) ($76) ($28) ($59) ($43) ($56) ($363) ($242) ($369) ($359) ($559)

  21. Slide 21: Sustained Commercial Momentum in Investment Management

    Sustained Commercial Momentum in Investment Management Investment Management Third-Party Net Flows1 ($ bn) $4.5 $0.6 $3.7 $1.2 $3.2 $2.5 $0.6 $2.2 $0.6 $0.2 $3.9 $2.4 $3.3 $2.4 $0.7 $2.4 $0.5 $0.8 $0.2 $0.4 $0.2 $0.3 $0.3 ($0.2) ($0.4) ($0.7) ($0.8) ($0.3) ($0.4) ($0.5) ($0.3) ($0.3) ($0.5) ($0.5) (

  22. Slide 22: Individual Life Sales Declining Due to Shift to Less Capital Intensive Products

    Individual Life Sales Declining Due to Shift to Less Capital Intensive Products and Pricing Actions Universal Life and Variable Life Sales Term Sales ($ mn) ($ mn) $41 $42 $1 $40 $38 $2 $7 $36 $35 $35 $35 $10 $9 $34 $32 $31 $8 $1 $2 $8 $8 $3 $6 $7 $28 $3 $9 $7 $26 $6 $5 $2 $5 $10 $5 $8 $5 $6 $19 $7

  23. Slide 23: Employee Benefits Sales Flat; Group Life Loss Ratio Reflecting Seasonality

    Employee Benefits Sales Flat; Group Life Loss Ratio Reflecting Seasonality Sales1 Loss Ratios ($ mn) (%) $144 $144 82.8% 85.4% $7 77.1% $10 78.6% 78.4% 74.4% 74.0% 69.5% $90 $112 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 85.6% 81.2% 81.3% 75.5% 77.6% $36 $32 $30 $5 $28 76.2% $20 $5 $4 $9 $18 $

  24. Slide 24: Demonstrated Effectiveness of Hedge Program in Closed Block Variable Annuity

    Demonstrated Effectiveness of Hedge Program in Closed Block Variable Annuity 1Q’13 Equity1Q’13 Change in Statutory Change Reserves in Statutory Reserves Relative to Hedge Guaranteed Relative to Hedge1,2 ($ bn) Living Benefit ($ mn) Statutory Reserves Equity impacts (increase) decrease in stat reserv

  25. Slide 25: Estimated RBC Ratio Above 425% Target

    Estimated RBC Ratio Above 425% Target Statutory Total Adjusted Capital ($ bn) & Combined Estimated RBC Ratio $8.3 $8.1 $7.9 $7.9 $7.8 $7.9 $7.4 $7.4 $6.7 2 500% 526% 493% 495% 488% 1 456% 448% 452% 451%2 Target 425% RBC Ratio 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 Stat. Total Adj. Cap

  26. Slide 26: Continued Recapitalization Efforts Have Extended Our Debt Maturity Profile

    Continued Recapitalization Efforts Have Extended Our Debt Maturity Profile Debt Maturity Profile as of March 31, 20131,2,3 ($ mn) $750 $1,000 $851 $346 $146 $515 $175 $246 $- $154 0-1 1-2 2-3 3-4 4-7 7-10 10+ Prior Debt Repayment from Junior Subordinated Debt Junior Subordinated Debt Years to Maturi

  27. Slide 27: Debt To Capital Ratio Improving Through Recapitalization Efforts

    Debt To Capital Ratio Improving Through Recapitalization Efforts Debt-to-Total Capital Ratio ex. AOCI 27.3% 27.2% Target 25.0-26.0% 25% Debt Junior to Capital Subordinated Ratio Debt 5% Senior Debt 20-21% 1 4Q'12 1Q'13 1Q'13 Pro-Forma 1. Pro forma for $600 million of primary proceeds in initial publ

  28. Slide 28: America's Retirement Company: Key Investment Messages

    America’s Retirement CompanyTM 1 Premier Franchise with Leading Positions in Attractive Markets Experienced Management Team Executing a 400-500bps ROE 2 Improvement Plan by 2016 3 Solid Foundation Based on a Re-Capitalized and De-Risked Balance Sheet Retirement • Investments • Insurance 28

  29. Slide 29: Q&A

    Q&A Retirement • Investments • Insurance 29

  30. Slide 30: Appendix: Pro Forma Calculations

    Appendix: Pro Forma Calculations As of 3/31/13 Pro Forma1 ($ million, except per share amounts) Total ING US Shareholder Equity - Excluding AOCI $9,938 $10,508 Book Value Per Share – Excluding AOCI $43.21 $40.30 Basic and Diluted Weighted Average Shares Outstanding 230 261 Operating Earnings Before

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