Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q2 2014 Earnings Presentation
31 slides from Voya Financial's earnings presentation, Aug 6, 2014
Slide 1: Voya Financial Second Quarter 2014 Investor Presentation
Voya Financial Second Quarter 2014 Investor Presentation August 6, 2014
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 Improvement Continued progress toward 2016 Ongoing Business Adjusted Operating ROE goal of 12-13% Share Repurchase An additional $500 million authorization for share buybacks; $289 million repurchased as of June 30, 2014 under original $300 million authorization CBVA Strat
Slide 5: Second Quarter 2014 Financial Highlights
Second Quarter 2014 Financial Highlights $213 million or $0.83 per diluted share After-tax Operating Earnings1 $207 million or $0.81 per diluted share ex-DAC unlocking Net Income Available to $246 million driven by strong Ongoing Business operating earnings Common Shareholders1 Ongoing Business Adju
Slide 6: Premier Franchise with Diverse Earnings
Premier Franchise with Diverse Earnings 2Q’14 TTM1 Ongoing Business Adjusted Operating Earnings Before Income Taxes2: $1,264 million 74% from Retirement Solutions and Investment Management Prominent multi-asset, multi-channel Investment Management Inv. Mgmt. active asset manager for institutions 16%
Slide 7: Three Key Sources of Value
Three Key Sources of Value Ongoing Potential Tax Business CBVA Value Benefits 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 Remain on Track to Meet 2016 Target
Ongoing Business Adjusted Operating Return on Equity and Return on Capital Remain on Track to Meet 2016 Target Ongoing Business1 Adjusted Operating ROE2 Ongoing Business1 Adjusted Operating ROC3 12.0-13.0% 10.0-11.0% 10.7% 10.3% 8.9% 8.6% 10.3% 8.6% 9.8% 7.2% 8.2% 8.3% 7.6% 6.6% FY'11 FY'12 FY'13 2Q
Slide 10: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC ROC Initiatives Margin Adjust crediting rates in response to changes in the external rate environment 10.5% 10.0-11.0% Increase returns on Full Service business Improve Full Service retention rates 8.9%
Slide 11: Annuities – Selective Growth While Running Off Less Profitable Business
Annuities – Selective Growth While Running Off Less Profitable Business Adjusted Operating ROC ROC Initiatives Margin Run off Annual Reset / Multi-Year Guarantee Annuities (products with high fixed rate crediting levels) 7.8% 8.0% 7.0-9.0% Manage crediting rates 7.3% Growth Grow sales of highe
Slide 12: Investment Management – Scalable Platform Leveraging Strong Investment Performance
Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin Initiatives Margin Improve sales force productivity 31.1%1 30% 30.0-34.0% Reduce retail outflows 27.7%1 Growth Increase third-party business Grow in higher-fee asset classes 24.6% 27.7% Incr
Slide 13: Individual Life – Repositioning Toward More Capital Efficient Products
Individual Life – Repositioning Toward More Capital Efficient Products Adjusted Operating ROC ROC Initiatives Margin Continue to manage expenses relative to sales volume Manage non-guaranteed elements of in- 7.9% 8.0% 6.0-8.0% force contracts Capital Shift sales focus to indexed products Exe
Slide 14: Employee Benefits – High Return and Capital Generation Business
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC ROC Initiatives Margin Improve loss ratio for Stop Loss policies 21.8% 22.0% 18.0-22.0% Growth Increase persistency and sales in the Group business 21.5% 18.8% Expand the Voluntary business 16.9% 18.1% 13.2%
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: 2Q'14 Business Segment Drivers
2Q’14 Business Segment Drivers 2Q’14 relative to 1Q’14 Retirement Higher fee income and lower seasonal expenses, offset in part by reinsurance transaction Annuities Higher prepayment income and favorable mortality Investment Higher fee income from higher AUM levels Management Individual Life Favorab
Slide 17: Retirement Net Flows Reflect Continued Repricing Discipline
Retirement Net Flows Reflect Continued Repricing Discipline Retirement Net Flows1 ($ million) $442 $363 $191 $234 $148 $319 $44 $251 $215 $104 $122 $(85) $(60) $(145) $(22) 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 Net Flows excl. Stable Value Stable Value Net Flows 1. Excludes recordkeeping 17
Slide 18: Annuities Growing in Mutual Fund Custodial and Fixed Indexed Products
Annuities Growing in Mutual Fund Custodial and Fixed Indexed Products, Running Off Less Profitable Business Annuities Net Flows1 ($ million) $55 $31 $120 $8 $82 $169 $146 $137 $153 $126 $23 $(46) $(26) $(41) $(73) $(82) $(233) $(259) $(330) $(332) $(284) $(92) $(172) $(244) $(261) 2Q'13 3Q'13 4Q'13
Slide 19: Investment Management Sourced Net Flows in 2Q'14 Driven By Institutional Mandate Variability
Investment Management Sourced Net Flows in 2Q’14 Driven By Institutional Mandate Variability Investment Management Third-Party Net Flows1 ($ billion) 2Q’13 3Q’13 4Q’13 1Q’14 2Q’14 $3.1 $0.9 $1.3 $1.3 $0.7 ($0.3) ($0.6) ($0.4) Sub-Advisor $0.5 $0.9 $0.0 $4.7 $0.0 Replacements Investment 2 Management
Slide 20: Individual Life Sales and Expenses Reflecting Business Repositioning
Individual Life Sales and Expenses Reflecting Business Repositioning Indexed Universal Life Sales Expanding Continued Administrative Expense Focus ($ million) 2Q’13 2Q’14 $70 $64 25% 47% 53% 75% Indexed Universal Life Sales Other Individual Life Sales 2Q'13 2Q'14 20
Slide 21: Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable
Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable Sales1 Loss Ratios ($ million) (%) $242 82.1% 82.0% 78.7% 75.4% 77.5% 76.9% 72.0% 74.7% 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 FY'11 FY'12 FY'13 82.9% 78.4% $49 75.3% 72.8% 72.4% 72.2% 72.9% 72.1% $29 $18 $18 2Q'13 3Q'13 4Q'13 1Q'1
Slide 22: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge 2Q’14 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated available Equity impacts increase (decrease) in hedge assets resources of $4.6 $1.2 billion $1.0 $1.
Slide 23: Proactive Management Actions in CBVA
Proactive Management Actions in CBVA 1 Enhanced Annuitization Offer prospectus supplement declared effective by the SEC in July Enhancement Offer applies to the 2005 Guaranteed Minimum Income Benefit Rider Series * Those annuitizing during the 60 day Offer window will receive a 10% increase in G
Slide 24: Estimated Combined RBC Ratio Strengthened and Leverage Ratio Better than Target
Estimated Combined RBC Ratio1 Strengthened and Leverage Ratio Better than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI3 Combined RBC Ratio1 $7.8 26.2% $7.6 24.5% Target 25% Debt-to- 23.5% 23.5% 23.2% $7.0 $7.1 $7.1 Capit
Slide 25: Robust Capital Position
Robust Capital Position Corporate & Closed Blocks GAAP Holding Company Liquidity1 Share Buybacks ($ million) Capital ($ million) ($ million) $879 $2,825 Additional $500 Authorization Estimated Statutory $1,082 Surplus in Excess of 425% RBC Level Holding Co Working Capital $450 Liquidity Other2 Targe
Slide 26: Premier Franchise, Experienced Management Team, Solid Foundation
America’s Retirement Company™ 1 Premier Franchise with Leading Positions in Attractive Markets Experienced Management Team With a Goal of 400-500 bps ROE 2 Improvement from 2012 to 12-13% in 2016 3 Solid Foundation Based on a Re-Capitalized and De-Risked Balance Sheet 26
Slide 27: Appendix
Appendix ee RETIREMENT | INVESTMENTS | INSURANCE 27 VOYA FINANCIAL™
Slide 28: Reconciliation of 2Q'14 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 2Q’14 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $83 $246 $225 $7 $231 $7 $213 $48 $(25) $(55) $(43) Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 1 Other Tax- Net Income Business (Lo
Slide 29: Diversified Drivers of Operating Revenues
Diversified Drivers of Operating Revenues Ongoing Business Sources of Revenues Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance Other Revenue risks and incurred benefits $947 1 $967 $929 $9131 $917 $204 $181 $174 $219 Inves
Slide 30: 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 31: Voya Financial
FINANCIAL RETIREMENT | INVESTMENTS | INSURANCE 31 FINANCIAL™