Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q3 2017 Earnings Presentation
32 slides from Voya Financial's earnings presentation, Nov 1, 2017
Slide 1: Voya Financial Third Quarter 2017 Investor Presentation
Voya Financial Third Quarter 2017 Investor Presentation November 1, 2017
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 3. Business Operating and Balance Sheet Metrics Mike Smith, Chief Financial Officer 3
Slide 4: Key Themes
Key Themes Ongoing Business Adjusted Operating ROE at 15.5% ROE Continues to Positive Retirement and Investment Management flows reflect impact of strategic Improve investments and execution of growth initiatives Cost savings continuing to be realized Excess capital of $944 million Capital P
Slide 5: Third Quarter 2017 Financial Highlights
Third Quarter 2017 Financial Highlights Third Quarter 2017 $94 million or $0.51 per diluted share • Includes: After-tax Operating $(0.65) of deferred acquisition costs and value of business acquired (“DAC/VOBA”) and Earnings1 other intangibles unlocking $0.03 of prepayment fees and alternative i
Slide 6: 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 3. Business Operating and Balance Sheet Metrics Mike Smith, Chief Financial Officer 6
Slide 7: Ongoing Business Adjusted Operating ROE and ROC Above Target Ranges
Ongoing Business Adjusted Operating Return on Equity and Return on Capital Above Target Ranges Ongoing Business1 Adjusted Operating ROE2 Ongoing Business1 Adjusted Operating ROC3 15.5% 12.5% 13.5-14.5% 11.5-12.5% 12.1% 12.1% 12.3% 9.9% 10.0% 10.2% FY'14 FY'15 FY'16 3Q'17 2018 FY'14 FY'15 FY'16 3Q'17
Slide 8: Continued Momentum on Growth Initiatives in 3Q'17
Continued Momentum on Growth Initiatives in 3Q’17 1Q’17 2Q’17 3Q’17 2017 Growth Metrics1 Commentary Scorecard Scorecard Scorecard Small/Mid Corporate: Deposits +5% to • 3Q’17: +14% y-o-y +10% • YTD’17: +31% y-o-y Retirement • 3Q’17: -8% y-o-y Tax-Exempt: Deposits 0% to +5% • YTD’17: +8
Slide 9: Retirement – Leading Franchise Driving Long-Term Growth and Returns
Retirement – Leading Franchise Driving Long-Term Growth and Returns Adjusted Operating ROC1 Initiatives Focus on customer retirement outcomes by encouraging greater employee participation, raising 9.9% 9.5-10.5% participant savings rates, and optimizing asset 9.2% allocation 8.7% 8.8% Expand adv
Slide 10: Investment Management – Continued Strong Performance Across Broad Capabilities
Investment Management – Continued Strong Performance Across Broad Capabilities Operating Margin1 Initiatives Broaden client choices by increasing number of consultant recommend strategies Support high growth market segments with 34.3%2 33-35% additional sales resources 32.1% 29.2% 28.2% 28.8%
Slide 11: Annuities – Expanding Product and Distribution Reach
Annuities – Expanding Product and Distribution Reach Adjusted Operating ROC1 Initiatives Improve customer and distributor experience and lower unit costs by simplifying operations 11.2% through Annuities and Individual Life 9.8% 9.5-10.5% combination 9.0% 9.3% Address evolving and diverse client
Slide 12: Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model
Individual Life – Repositioning Through In-Force Actions and Aligned Distribution Model Adjusted Operating ROC1 Initiatives 9.5% Improve customer and distributor experience and lower costs by simplifying operations through Individual Life and Annuities 7.5%-8.5% combination 6.2% 6.6% Improve pro
Slide 13: Employee Benefits – High Return and Capital Generation Business
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC1 Initiatives Improve block performance in Stop Loss to ensure 28.9% profitable growth 26.5% 23.3% 24.3% 23-25% Improve customer and distributor experience and lower unit costs by simplifying operations Solve
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 3. Business Operating and Balance Sheet Metrics Mike Smith, Chief Financial Officer 1
Slide 15: Operating EPS Considerations
Operating EPS Considerations 3Q’17 Financial Results Reported 3Q’17 Operating EPS1 $0.51 Includes: DAC/VOBA and other intangibles unlocking $(0.65) Prepayment fees and alternative income above long-term expectations $0.03 4Q’17 Considerations2 Potential Beneficial Items: Additional cost saving
Slide 16: 3Q'17 Business Segment Financial Considerations
3Q’17 Business Segment Financial Considerations Investment Retirement Annuities Individual Life Employee Benefits Corporate Management Prepayment fees and $3 million $3 million $2 million $1 million alternative income above/(below) long- term expectations (pre-tax, pre-DAC) Strategic investm
Slide 17: Annual Assumptions Review Had Modest Capital Impact
Annual Assumptions Review Had Modest Capital Impact Main drivers of assumption updates: Updated prospective impact of current yield environment on portfolio earned rates Valuation model adjustments Guaranteed minimum interest rate initiative (“GMIR”) impact for Retirement Reinsurance cost
Slide 18: Continued Positive Retirement Net Flows in 3Q'17
Continued Positive Retirement Net Flows in 3Q’17 Retirement Net Flows1 ($ million) $1,500 $280 $1,000 $166 $68 $653 $358 $291 $500 $71 $940 $845 $567 $423 $441 $0 $(247) $(83) $(633) $(2,132) ($500) $(2,132) ($1,000) 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Corporate Markets Tax-Exempt Markets Stable Value and
Slide 19: Investment Management Net Inflows in 3Q'17 Driven by Institutional and Retail Sales
Investment Management Net Inflows in 3Q’17 Driven by Institutional and Retail Sales Investment Management Third-Party Net Flows1 ($ billion) 3Q’16 4Q’16 1Q’17 2Q’17 3Q’17 $1.2 $2.4 $1.6 $1.2 $0.1 $0.6 $0.2 ($0.1) ($0.3) ($0.5) Investment Management $(0.8) $(0.9) $(1.4) $(0.7) $(0.9)2 VA Net Flows To
Slide 20: Positive Investment-Only Flows Offset by Fixed Indexed Annuities Outflows
Positive Investment-Only Flows Offset by Fixed Indexed Annuities Outflows and Continued Run Off of Less Profitable Business Annuities Net Flows1 ($ million) $116 $80 $39 $81 $90 $62 $87 $51 $(9) $(56) $(57) $(59) $(61) $(87) $(125) $(117) $(108) $(61) $(151) $(105) 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Annu
Slide 21: Employee Benefits Group Life Loss Ratio Favorable While Stop Loss Above Target
Employee Benefits Group Life Loss Ratio was Favorable While Loss Ratio for Stop Loss Above Annual Target Loss Ratios (%) 95% 95% 90% 90% 83.2% 85% 85% 78.7% 77.2% 80% 80% 75% 77.9% 75% 76.1% 75.6% 70% 73.4% 74.4% 70% 70.5% 65% 65% 60% 60% 55% 55% 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 FY'13 FY'14 FY'15 FY'16
Slide 22: Active Hedge Program in Closed Block Variable Annuity Continues to Perform as Designed
Active Hedge Program in Closed Block Variable Annuity Continues to Perform as Designed 3Q’17 Change in CTE95 Standard Relative to Hedge Assets 3Q’17 Results ($ billion) 3Q’17 Net Impact = $0 Sufficient at CTE95 Estimated available resources of $3.6 $0.4 billion CTE 95 $0.0 Statutory reserves o
Slide 23: Estimated Combined RBC Ratio and Leverage Ratio Better Than Target
Estimated Combined RBC Ratio1 and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 Target 25% Debt-to-Capital $7.1 Ratio $6.8 24.4% 24.5% 24.5% 24.2% $6.5 $6.5 $6.6 23.3% 526%
Slide 24: Established Track Record of Capital Return
Established Track Record of Capital Return Holding Company Liquidity1 Excess Capital Share Repurchases ($ million) ($ million) ($ million) $944 $1,011 $599 $450 Liquidity Target $623 Share $800 Repurchases $795 Estimated Statutory Balance of Surplus in Previous Excess of Repurchase 425% RBC Authoriz
Slide 25: ROE, Capital Position and CBVA De-Risking Summary
Helping Americans Get Ready to Retire Better 1 ROE Continues to Improve 2 Capital Position Continues to Be Strong 3 CBVA Additional De-Risking Continues 25
Slide 26: Appendix
Appendix ee VOYA. PLAN | INVEST | PROTECT 26 FINANCIAL
Slide 27: Reconciliation of 3Q'17 Operating Earnings to Net Income
Reconciliation of 3Q’17 Operating Earnings to Net Income ($ million; all figures are after-tax) $92 $(9) $(60) $32 $149 $94 Operating Earnings Closed Block Variable Annuity Net Realized Gains (Losses) Other 1 Other Tax-Related 2 Net Income (Loss) Available to Common Shareholders 1. Other, after-tax
Slide 28: Track Record of Active Hedge Program Protecting CBVA Capital
Track Record of Active Hedge Program Protecting Closed Block Variable Annuity Capital Change in CTE95 Standard Relative to Hedge Assets ($ billion) Equity impacts (increase) decrease in CTE95 standard Interest impacts (increase) decrease in CTE95 standard Equity impacts increase (decrease) in hedge
Slide 29: Ongoing Business Key Sources of Value
Key Sources of Value Tax Benefits Ongoing Business Excess Capital Potential CBVA Value 29
Slide 30: Seasonality of Financial Items
Seasonality of Financial Items 9. 1Q 2Q 3Q 4Q Corporate Markets tends to Education Tax-Exempt Markets Corporate Markets typically see have the highest recurring typically see lowest recurring highest transfer / single Retirement deposits deposits deposits Withdrawals also tend to Withdrawa
Slide 31: Analyst Modeling Considerations
Analyst Modeling Considerations Long-term prepayment income expectation of $15 million per quarter for Ongoing Business Prepayment Income in 2017 (pre-tax, pre-DAC): $7 million for Retirement; $5 million for Annuities; $3 million for and Alternative Individual Life Income Approximately 9% annual
Slide 32: Voya Financial
® FINANCIAL FINANCIAL PLAN | INVEST | PROTECT 32