Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q4 2023 Earnings Presentation
33 slides from Voya Financial's earnings presentation, Feb 7, 2024
Slide 1: Fourth Quarter 2023 Investor Presentation
Voya Financial Fourth Quarter 2023 Investor Presentation February 7, 2024
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. The company does not assume any obligation to revise or update these statements to reflect new information, subsequent events or changes in strategy. Forward-looking stat
Slide 3: Key Themes & Executing on our Strategy
Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer
Slide 4: Key Themes
Key Themes ■ FY’23 adjusted operating earnings per share of $7.02, including $1.63 in 4Q’23 EPS Growth ■ 4Q’23 included $(0.34) of prepayment & alternative income below long-term expectations and $0.15 of favorable compensation accrual of 10%+ in adjustment in Corporate 2025 and ■ FY’24 adjusted ope
Slide 5: Workplace Strategy Creating Commercial Momentum
Workplace Strategy Creating Commercial Momentum ✓ Scale and credibility across all markets and employer sizes Land ✓ Strength in Wealth and Health Solutions creates a distinct Net client growth through presence in the market increased sales and improved retention ✓ Extensive relationships with inter
Slide 6: Strategic Execution in Investment Management Driving Growth
Strategic Execution in Investment Management Driving Growth ✓ 76% of AUM above the benchmark or peer median on a 5- Strong Investment and 10-year basis Performance ✓ 1-year performance very strong across all asset classes, particularly in Fixed Income1 Well diversified $10 billion ✓ $95B Privates &
Slide 7: Voya Culture – Living our Purpose and Vision
Voya Culture – Living our Purpose and Vision Delivering for our Giving back to our Supporting our Customers Communities Colleagues During benefit administration open enrollment1, customer satisfaction scores increased by 40 points. In addition,100% of service level agreements were met, and 98% call
Slide 8: Business Segment Performance and Financial Highlights
Key Themes & Executing on our Strategy ■ Heather Lavallee, Chief Executive Officer Business Segment Performance and Financial Highlights ■ Don Templin, Chief Financial Officer
Slide 9: Fourth Quarter & Full Year 2023 Financial Results
Fourth Quarter & Full Year 2023 Financial Results (Millions, except EPS) 4Q’22 4Q’23 FY’22 FY’23 Earnings Drivers ▪ 4Q'23 adjusted operating earnings and EPS lower than 4Q’22, Adjusted primarily due to tax benefit that did not repeat Operating ▪ 4Q’23 included $(0.34) of prepayment & alternative inc
Slide 10: Wealth Solutions
Wealth Solutions Growing and diverse pipeline of $15B supports positive net flows outlook in 2024 (Billions) Full Service – Client Assets Full Service – Recurring Deposits 5-Years Positive Flows Target 10 – 12% Growth 4Q’23 Net Flows1 4Q’23: Spread-Based Fee-Based Full Service ($3.5) 10.4% YoY $188
Slide 11: Wealth Solutions
Wealth Solutions Diverse revenue streams and strong operating margins (Millions) Adjusted Operating Earnings Summary ▪ FY’23 adjusted operating earnings of $632 million, including Earnings ex Notables Notables prepayment & alternative income experience below long-term expectations $697 $632 ▪ FY’23
Slide 12: Health Solutions
Health Solutions Strong in-force premium growth while maintaining pricing discipline (Millions) Annualized In-Force Premium & Fees Aggregate Loss Ratio1 Target 7-10% Growth FY’23: +20% YoY3 73% 73% 11.4% $3.3B FY’24 Target Range CAGR3 70% 70% 69 - 72% $2.8B 69% $905 $2.5B $2.3B 67% $2.1B $833 $1.9B
Slide 13: Health Solutions
Health Solutions Record revenue and core earnings results in 2023 (Millions) Adjusted Operating Earnings Summary ▪ FY’23 adjusted operating earnings of $315 million, including Earnings ex Notables Notables prepayment & alternative income experience below long- term expectations Record Core Earnings
Slide 14: Investment Management
Investment Management Strong long-term investment performance has supported organic growth ahead of industry over a full market cycle Assets Under Management Organic Growth Rate Versus Peers1 (Billions) 4Q’23 Net Flows3 5.0% Institutional $(5.4) 4.2% Retail $(0.0) $321 $322 Total $(5.4) $264 1.8% $2
Slide 15: Investment Management
Investment Management Revenue growth driven by strong sales in international markets (Millions) Adjusted Operating Earnings Summary Excludes AllianzGI NCI ▪ FY’23 adjusted operating earnings of $177 million Earnings ex Notables Notables ▪ FY’23 Net revenue growth2 of 16.9% $158 $177 ▪ Higher managem
Slide 16: Strong Cash Flow Generation and Disciplined Capital Return
Strong Cash Flow Generation and Disciplined Capital Return Expect to generate and deploy $800 million of capital in FY’24 4Q’23 capital generation in-line with 90%+ target Highlights (Billions) ▪ Strong balance sheet 90%+ ▪ Excess capital1 of $0.4 billion Free Cash Flow ▪ Leverage ratio of 27.8%; RB
Slide 17: 2024 Assumptions and Outlook
2024 Assumptions and Outlook Profitable growth, strong margins and high free cash flow generation drives EPS growth 2023 Actual 2024 Outlook1 2025 and Beyond Outlook1 Net revenue growth2,3 13.1% 2 – 4% 4 – 6% Adjusted operating margins2,3 31.8% 30 – 33% 30%+ Adjusted operating EPS $7.02 $8.25 – $8.4
Slide 18: Focused on Executing our Strategy and Achieving our Financial Targets
Focused on Executing our Strategy and Achieving our Financial Targets EPS Growth 10%+ in ■ EPS growth of 10%+ in 2025 and beyond 2025 and Beyond ■ Profitable growth, strong margins and high free cash flow generation drive EPS growth ■ Robust pipelines across all three businesses will propel our grow
Slide 19: Appendix
Appendix
Slide 20: 4Q’23 Adjusted Operating to Net Income Walk
4Q’23 Adjusted Operating to Net Income Walk (Millions) Primarily Primarily Primarily Primarily Non-Cash Non-Cash Cash Non-Cash 1 4 5 3 2 1. Includes $(53) due to the absence of the 4Q'22 favorable tax adjustments primarily related to foreign tax credits. 2. Losses from businesses exited primarily in
Slide 21: FY’23 Adjusted Operating to Net Income Walk
FY’23 Adjusted Operating to Net Income Walk (Millions) Primarily Primarily Primarily Primarily Non-Cash Non-Cash Cash Non-Cash 1 5 3 4 2 1. Losses from businesses exited primarily includes the impact of our 3Q annual assumption update, amortization of intangibles and other non-cash adjustments, part
Slide 22: 2024 Segment Outlook
2024 Segment Outlook FY 2023 FY 2024 Metric1 2024 Considerations Actual Outlook Lower spread-based asset levels in 2024 with favorable offset Net revenue growth 1.2% 1 – 2% in fee-based margins Wealth Solutions Adjusted operating margin 37.3% 35 – 39% Full Service recurring deposits growth 10.4% 10
Slide 23: Guidance and Assumptions
Guidance and Assumptions Note: Teal font denotes change from 3Q’23 Wealth ■ 1Q’24 seasonally higher administrative expenses of $(240) - $(250) million Solutions ■ FY’24 targeted total aggregate loss ratio between 69 – 72% Health ■ 1Q’24 (QTD) aggregate loss ratio of 70% to 72% due to seasonally high
Slide 24: Seasonality
Seasonality Note: Teal font denotes change from 3Q’23 Wealth Health IM Corporate & Other All Segments ▪ Admin expenses tend to be the ▪ Corporate tends to have the highest ▪ Group Life loss highest recurring deposits ratio tends to be highest ▪ Seasonally higher ▪ Payroll taxes and long-term 1Q ▪ Wi
Slide 25: 4Q'23 Notable Items Impacts
4Q'23 Notable Items Impacts Note: Totals may not sum due to rounding Alternative Income Above/(Below) Adjusted Operating Earnings (ex. Adjusted Operating Earnings2 4Q'23 (Millions) Expectations1 and other notables3 Notables) Wealth Solutions $147 $(39) $187 Health Solutions 44 (5) 48 Investment Mana
Slide 26: FY'23 Notable Items Impacts
FY'23 Notable Items Impacts Note: Totals may not sum due to rounding Alternative Income Above/(Below) Adjusted Operating Earnings (ex. Adjusted Operating Earnings1 FY'23 (Millions) Expectations2 and other notables3 Notables) Wealth Solutions $632 $(110) $742 Health Solutions 315 (26) 341 Investment
Slide 27: Reliable Long-Term Investment Performance Critical to Future Success
Reliable Long-Term Investment Performance Critical to Future Success 4Q 2023 % AUM Above Benchmark or Peer Median1 94 92 96 92 89 81 84 74 78 74 76 77 68 68 59 58 57 45 49 37 Equity Multi-Asset Fixed Income & Growth Voya IM Income Total 1 Year 3 Year 5 Year 10 Year Represents >64% 3rd Party AUM 1. V
Slide 28: Well-Diversified Investment Portfolio Built for Through-the-Cycle Risk Adjusted Returns
Well-Diversified Investment Portfolio Built for Through-the- Cycle Risk Adjusted Returns $38 Billion General Account Investment Portfolio1 96%+ Investment Grade2 Fixed Maturity NAIC Rating Distribution Commercial Limited 1% Mortgage Loans Partnerships 14% 4% Private Credit Municipals 3% 1A (AAA) 21%
Slide 29: Well Diversified and High-Quality CML Portfolio
Well Diversified and High-Quality CML Portfolio CML Portfolio: Exposure by Property Type1 High Quality CMLs Weighted Average DSCR of 1.9x and LTV ratio of 45%2 2% 2% 1% Multifamily 3% Debt Service Coverage Ratio (DSCR) Industrial/Warehouse >1.25- >1.00 – Retail >1.50X <1.00X Total 9% 1.50X 1.25X Loa
Slide 30: Near Term CML Office Maturity Amounts are Modest and Manageable
Near Term CML Office Maturity Amounts are Modest and Manageable Office exposure underweight to ACLI industry benchmark (Millions) Office Loan Portfolio Maturing by Year1 CML Office: Average Weighted LTV of 44%2 and DSCR of 2.1x $249 million maturing over the next 5-years Debt Service Coverage Ratio
Slide 31: CMBS Portfolio Highly Rated and Well Diversified
CMBS Portfolio Highly Rated and Well Diversified $4.0B1 11% of General Account Credit Book CMBS Enhancement2 Value % NAIC 1B-G CMBS Government 34% 19% Agency Guaranteed Remaining General Account Agency or IO 4% CMBS IO Limited Credit Risk 3% 89% NAIC 1A NAIC 2 Conduit/CRE CLO 3% SASB 3% (AAA 13% SAS
Slide 32: Private Credit Provides Income, Diversification and Downside Protection
Private Credit Provides Income, Diversification and Downside Protection ▪ 21% allocation in the investment portfolio, of which 92% is Investment Grade ▪ Covenant structures in Private Credit provide more protections than Public Investment Grade Bonds ▪ Voya Investment Management is a Tier One invest
Slide 33: CLO Portfolio is Modestly Sized and Highly Rated
CLO Portfolio is Modestly Sized and Highly Rated ▪ 5% allocation1 in the investment portfolio, of which 94% is rated NAIC 1 ▪ Below Investment Grade and Equity exposure exclusively in Voya issued transactions ▪ Significant Credit Enhancement (CE)2 mitigates the risk of loss Voya Portfolio Generic CL