Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q3 2015 Earnings Presentation
31 slides from Voya Financial's earnings presentation, Nov 4, 2015
Slide 1: Voya Financial Third Quarter 2015
Voya Financial Third Quarter 2015 Investor Presentation November 4, 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 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 ROE to 2018 target of 13.5-14.5% Remain On Track Example of execution in 3Q'15: Sale of life insurance block will improve to Meet 2018 returns of Individual Life and Ongoing Business by 10-20 ba
Slide 5: Third Quarter 2015 Financial Highlights
Third Quarter 2015 Financial Highlights $93 million or $0.42 per diluted share After-tax Operating Earnings1 $156 million or $0.70 per diluted share excl. DAC and other intangibles unlocking Net Income Available to $40 million Common Shareholders1 Ongoing Business Adjusted Operating $303 million Ear
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% 12.3% 11.5-12.5% 12.3% 10.3% 11.7% 9.9% 10.2% 9.8% 8.6% 10.1% 9.6% 8.3% 8.2% 7.2% FY'12 FY'13 FY'14 3Q'15
Slide 9: 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% Enhance distribution and market reach Leverage cross-market relationships Advance retirement focused solutions 9.2% 8.9% 9.0% Margin Initiatives 8.9% 8.9% 8.5% Target clients
Slide 10: Annuities – Expanding Product Range and Distribution Reach
Annuities – Expanding Product Range and Distribution Reach Adjusted Operating ROC Growth Initiatives Expand product line 9.5-10.5% Grow less capital-intensive investment only products 9.7% 9.0% Expand FIA distribution to growing institutional 9.6% markets 8.6% 7.3% Margin Initiatives Continu
Slide 11: Investment Management – Scalable Platform
Investment Management – Scalable Platform Leveraging Broad Capabilities and Long-term Investment Performance Operating Margin Growth Initiatives Further develop channel-specific investment offerings and product extensions leveraging broad investment capabilities and strong performance Advance th
Slide 12: Individual Life – Repositioning Through In-Force Actions
Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model Adjusted Operating ROC Margin Initiatives Manage non-guaranteed elements 7.5-8.5% Reduce redundant reserve financing cost Digitize operational processes 5.3% 5.2% 4.9% Capital Initiatives 5.1% 5.0% 4.5% F
Slide 13: Employee Benefits – High Return and Capital Generation Business
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC Growth Initiatives Expand into Mid-Market 32.6%1 Grow private exchange participation 32.5% 28.9% Leverage Stop Loss market position 28.8% 23-25% Examples of Execution 18.8% Enhanced customer experience by
Slide 14: 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 15: 3Q'15 Business Segment Drivers
3Q’15 Business Segment Drivers 3Q’15 Commentary Fee-based margin affected by market volatility and recent case exits; administrative expenses Retirement sequentially declined Prepayments and alternative income: in line with plan Underwriting income results benefitted from $12 million (post-DAC
Slide 16: Annual Assumptions Review had Modest Ongoing Business and CBVA Impact
Annual Assumptions Review had Modest Ongoing Business and CBVA Impact Main drivers of assumption updates 25 bps reduction in long-term risk free rate Asset and unit cost updates Valuation model adjustments Effects of Assumptions and Model Updates ($ million) CBVA Ongoing Business Policyholde
Slide 17: Retirement Net Flows
Retirement Corporate Markets and Pension Risk Transfer Inflows Offset by Expected Outflows in Tax-Exempt Markets Retirement Net Flows1 ($ million) $92 $661 $64 $585 $475 $40 $395 $475 $371 $418 $245 $174 $(287) $(566) $(66) $(25) $(202) $(111) $(2,132) $(1,129) 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 Corporat
Slide 18: Annuities Flows Supported by Investment-Only and Fixed Indexed Annuities
Annuities Flows Supported by Growth in Investment-Only Accounts and Fixed Indexed Annuities, While Running off Less Profitable Business Annuities Net Flows1 ($ million) $34 $11 $85 $122 $133 $159 $173 $121 $(40) $(63) $(33) $(54) $(59) $(1) $(19) $(37) $(191) $(169) $(168) $(481) $(109) $(104) $(704
Slide 19: Investment Management Outflows in 3Q'15
Investment Management Outflows in 3Q’15 Driven by Client Portfolio Reallocations and Retirement Tax-Exempt Non-Renewals Investment Management Third-Party Net Flows1 ($ billion) 3Q’14 4Q’14 1Q’15 2Q’15 3Q’15 $0.8 $0.7 $0.5 $(0.2) $(0.3) $(0.4) $(0.5) $(1.1) $(0.5) $(1.4) Sub-Advisor $2.1 $0.8 $0.0 $0
Slide 20: Individual Life 3Q'15 Results Impacted by Elevated Mortality
Individual Life 3Q’15 Results Impacted by Elevated Mortality Actual-to-Expected Frequency Actual-to-Expected Mortality 140% 120% 115% 110.6% 100% 110% 80% 60% 105% 40% Between One and Two Standard Deviations 105% 103% 115% 92% 89% 84% 81% 100% 96.9% 20% 95.7% 96.4% 0% 93.7% 95% 92.4% 1Q'14 2Q'14 3Q'
Slide 21: Employee Benefits Loss Ratios Remained Favorable
Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable Sales1 Loss Ratios ($ million) (%) $254 78.7% 77.5% 75.4% 75.6% 76.1% 74.2% 74.0% 72.2% 76.9% 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 FY'11 FY'12 FY'13 FY'14 82.9% 75.3% 72.1% 70.4% 72.2% 69.6% $34 $39 $40 67.3% 72.9% $26 61.9% 3Q'1
Slide 22: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge Resources 3Q’15 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated Equity impacts increase (decrease) in hedge resources available resources of $6.3 $1.0 $1.
Slide 23: Estimated Combined RBC Ratio and Leverage Ratio Better Than Target
Estimated Combined RBC Ratio1 and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 After ordinary dividends of $7.8 $930 million After extraordinary Target 25% and $7.5 extraor
Slide 24: Excess Capital Deployed Primarily to Repurchase Shares
Excess Capital Deployed Primarily to Repurchase Shares Holding Company Liquidity1,2 Excess Capital Share Repurchases ($ million) ($ million) ($ million) Includes $100 $753 million share $555 repurchase arrangement entered in September $450 Liquidity Target $631 $581 Estimated $1003 Statutory $648 Su
Slide 25: Helping Americans Get Ready to Retire Better
Helping Americans Get Ready to Retire Better 1 Evolve to Deliver More Customer Value 2 Focus on Growth and Further ROE Improvement 3 Realize Sources of Financial Value 25
Slide 26: Appendix
Appendix ee PLAN | INVEST | PROTECT VOYA. FINANCIAL 26
Slide 27: Reconciliation of 3Q'15 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 3Q’15 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $206 $(63) $143 $(52) $2 $93 $(5) $(42) $(40) $34 $40 Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 1 Other Tax- Net Income Business (
Slide 28: Diversified Drivers of Operating Revenue
Diversified Drivers of Operating Revenue Ongoing Business Sources of Revenue Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance 1 Other Revenue risks and incurred benefits $1,021 $966 $962 $953 $937 $182 $231 $191 $197 $195 I
Slide 29: 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 30: Analyst Modeling Considerations
Analyst Modeling Considerations Prepayment $12 million per quarter for Ongoing Business in 2015 (pre-tax, pre-DAC): $6 million for Retirement; $4 million for Income Annuities; $2 million for Individual Life Alternative Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) Income Empl
Slide 31: FINANCIAL
® FINANCIAL PLAN | INVEST | PROTECT FINANCIAL 31