Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q1 2017 Earnings Presentation
32 slides from Voya Financial's earnings presentation, May 3, 2017
Slide 1: Voya Financial First Quarter 2017 Investor Presentation
Voya Financial First Quarter 2017 Investor Presentation May 3, 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 ROE continued to improve Business growth from strong net flows, distribution expansion, and increased Continued Progress Towards distribution productivity 2018 ROE Target Realizing benefit from capital efficiencies Executing previously announced $100 million cost
Slide 5: First Quarter 2017 Financial Highlights
First Quarter 2017 Financial Highlights First Quarter 2017 $157 million or $0.81 per diluted share • Includes: After-tax Operating • $0.04 of deferred acquisition costs and value of business acquired (“DAC/VOBA”) and Earnings1 other intangibles unlocking • $0.03 of prepayment fees and alternative in
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 Return on Equity and Return on Capital 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% 13.2% 11.5-12.5% 12.1% 12.1% 12.3% 10.8% 9.9% 10.0% 10.2% FY'14 FY'15 FY'16 1Q'17 2018 FY'14 FY'15 FY'16 1Q'17
Slide 8: Favorable Progress on Growth Initiatives in 1Q'17
Favorable Progress on Growth Initiatives in 1Q’17 1Q’17 2017 Growth Metrics1 Commentary Scorecard Small/Mid Corporate: Deposits +5% to +10% • 1Q’17: +46% y-o-y Retirement Tax-exempt: Deposits 0% to +5% • 1Q’17: +40% y-o-y Institutional: Sales -5% to 0% • 1Q’17: +3% y-o-y Investment Manag
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 participant savings 9.5-10.5% rates, and optimizing asset allocation 9.2% 9.3% 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 Expand client solutions with new products 33-35% Improve distributor productivity by leveraging enhanced 32.1% digital capabilities and tools and upscaling talent 29.2% 28.2% 29.3%2 Bro
Slide 11: Annuities – Expanding Product and Distribution Reach
Annuities – Expanding Product and Distribution Reach Adjusted Operating ROC1 Initiatives Improve customer and distributor experience and 10.6% 9.5-10.5% lower unit costs by simplifying operations through 9.8% 9.3% Annuities and Individual Life combination 9.0% 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 Improve customer and distributor experience and 7.5%-8.5% lower costs by simplifying operations through Individual Life and Annuities combination 6.6% 6.6% 6.2% 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% 23-25% Improve customer and distributor experience and lower 23.3% unit costs by simplifying operations 21.6% 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: 1Q'17 Financial Considerations
1Q’17 Financial Considerations 1Q’17 Financial Considerations Investment Spread and Other Investment Income (Pre-Tax, Pre-DAC) Prepayment and Alternative Income vs. LT Expectations Other Favorable Variances (1) Retirement + $3 million + $11 million Investment Management + $4 million NA Annuities In-
Slide 16: Positive Retirement Net Flows in 1Q'17
Positive Retirement Net Flows in 1Q’17 Retirement Net Flows1 ($ million) $1,500 $280 $1,000 $732 $653 $291 $205 $500 $71 $940 $82 $10 $406 $423 $441 $340 $- $(247) $(83) $(2,132) $(500) $(2,132) $(1,000) 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 Corporate Markets Tax-Exempt Markets Other Total $1,082 $693 $1,35
Slide 17: Investment Management Net Inflows in 1Q'17 Driven by Institutional Sales
Investment Management Net Inflows in 1Q’17 Driven by Institutional Sales Investment Management Third-Party Net Flows1 ($ billion) 1Q’16 2Q’16 3Q’16 4Q’16 1Q’17 $1.6 $0.5 $0.5 $0.1 $0.6 $0.2 ($0.1) ($0.3) Investment Management $(0.7) $(0.7) $(0.8) $(0.9) $(1.4)3 VA Net Flows Total $(0.2) $(0.2) $(0.3
Slide 18: Positive Investment-Only Flows and Fixed Indexed Annuities Flows Offset by Run Off
Positive Investment-Only Flows and Fixed Indexed Annuities Flows Offset by Continued Run Off of Less Profitable Business Annuities Net Flows1 ($ million) $172 $116 $74 $80 $66 $89 $81 $90 $51 $(9) $(35) $(43) $(57) $(59) $(56) $(153) $(165) $(125) $(117) $(151) 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 Annual R
Slide 19: Employee Benefits Group Life Loss Ratio Consistent with Seasonality
Employee Benefits Group Life Loss Ratio in 1Q’17 Consistent with Seasonality And Stop Loss Slightly Above Annual Target Sales1 ($ million) Loss Ratios (%) 95% 95% 90% 90% $323 84.5% 83.2% 85% 85% 78.7% 77.2% 80% 80% 76.1% 75.6% 75% 75% 77.9% $245 70% 72.9% 73.4% 70% 65% 65% 1Q'16 2Q'16 3Q'16 4Q'16 1
Slide 20: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in CTE95 Standard Relative to Hedge Assets 1Q’17 Results ($ billion) Equity impacts (increase) decrease in CTE95 standard Interest impacts (increase) decrease in CTE95 standard Sufficient at CTE95 Equity impacts increase (decrease) in he
Slide 21: CBVA Living Benefits AUM And Policy Count Has Declined Since IPO
CBVA Living Benefits AUM And Policy Count Has Declined Since IPO Living Benefits AUM and Policy Count 35,000 $33 500,000 $32 $31 450,000 30,000 $26 400,000 25,000 $24 350,000 $24 308 296 266 300,000 20,000 240 250,000 215 15,000 199 200,000 10,000 150,000 100,000 5,000 50,000 0 0 At IPO YE 2013 YE 2
Slide 22: Extreme Stress Scenario Present Value Has Improved
Extreme Stress Scenario Present Value Has Improved PV of Cash The scenarios provide PV of Cash PV of Cash Flows as of an illustrative Flows as of Flows as of Year End 2016 presentation of how Scenario Assumptions Year End 2015 Year End 2016 (at 3.75% the CBVA segment is ($ billion) ($ billion) Dis
Slide 23: Fewer Negative Scenarios Compared to 4Q'15 Stochastic Distribution
Fewer Negative Scenarios Compared to 4Q’15 Stochastic Distribution Reflecting Adjustment to Interest Rate Hedging 4Q’16 Cash Flow Results vs. Distribution of Stochastic Scenario Results ($ billion) Scenario 3 PV of Cash Flow results for 40% $1.4 billion Scenario 2 the four deterministic $1.0 billi
Slide 24: Estimated Combined RBC Ratio and Leverage Ratio Better Than Target
Estimated Combined RBC Ratio1 and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 Target 25% $7.0 $7.1 Debt-to-Capital $6.8 24.5% $6.4 $6.5 24.4% Ratio 23.0% 23.3% 22.4% 526%
Slide 25: $949 Million of Excess Capital Available with Track Record of Capital Return
$949 Million of Excess Capital Available with Established Track Record of Capital Return Holding Company Liquidity1 Excess Capital Share Repurchases ($ million) ($ million) ($ million) $949 $436 $397 $454 $450 Liquidity $150 Target Share Estimated Repurchases $945 Statutory Remaining Surplus in Exce
Slide 26: Continued Progress Towards 2018 ROE Target; Capital Position Strong; CBVA De-Risking
Helping Americans Get Ready to Retire Better 1 Continued Progress Towards 2018 ROE Target 2 Capital Position is Strong 3 CBVA Additional De-Risking Actions Taken 26
Slide 27: Appendix
Appendix ee VOYA. PLAN | INVEST | PROTECT 27 FINANCIAL
Slide 28: Reconciliation of 1Q'17 Operating Earnings to Net Income
Reconciliation of 1Q’17 Operating Earnings to Net Income ($ million; all figures are after-tax) $157 $14 $(252) $(17) $(46) $(144) 1 2 Operating Earnings Closed Block Variable Annuity Net Realized Gains (Losses) Other Other Tax-Related Net Income (Loss) Available to Common Shareholders 1. Other, aft
Slide 29: 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