Voya Financial, Inc. · NYSE:VOYA
Voya Financial — Q2 2015 Earnings Presentation
30 slides from Voya Financial's earnings presentation, Aug 5, 2015
Slide 1: Voya Financial Second Quarter 2015 Investor Presentation
Voya Financial Second Quarter 2015 Investor Presentation August 5, 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 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 Operating and Balan
Slide 4: Key Developments in 2Q'15
Key Developments in 2Q’15 Raised Ongoing Business Adjusted Operating ROE to 13.5 – 14.5% for 2018 Investor Day Incremental investment plans detailed: $50 – 70 million for 2015; $110 – 130 Announcements million for 2016; $80 – 100 million in 2017; $60 – 80 million in 2018 $750 million new share
Slide 5: Second Quarter 2015 Financial Highlights
Second Quarter 2015 Financial Highlights $179 million or $0.78 per diluted share After-tax Operating Earnings1 $183 million or $0.80 per diluted share excl. DAC and other intangibles unlocking Net Income Available to $285 million driven by Ongoing Business operating earnings Common Shareholders1 Ong
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 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 Operating and Balan
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% 12.6% 12.1% 11.5-12.5% 12.2% 10.3% 10.3% 11.7% 9.9% 9.8% 8.6% 10.0% 9.6% 8.3% 8.2% 7.2% FY'12 FY'13 FY'14 2Q'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 Enhancing distribution and market reach 11-12% Leveraging cross-market relationships Advancing retirement focused solutions 9.2% 9.3% 8.9% Margin Initiatives 8.9% 9.0% 8.5% Target cl
Slide 10: Annuities – Selective Growth While Running Off Less Profitable Business
Annuities – Selective Growth While Running Off Less Profitable Business Adjusted Operating ROC Growth Initiatives Continued product development / expansion 9.5-10.5% Continued growth of less capital-intensive mutual fund 9.5% 9.0% custodial product 9.1% Expand distribution to underserved marke
Slide 11: Investment Management – Scalable Platform Leveraging Strong Investment Performance
Investment Management – Scalable Platform Leveraging Strong Investment Performance Operating Margin Growth Initiatives Further development of channel-specific investment offerings and product extensions leveraging broad investment capabilities and strong performance Continued development of cros
Slide 12: Individual Life – Repositioning Toward Aligned Distribution Model
Individual Life – Repositioning Toward Aligned Distribution Model Adjusted Operating ROC Margin Initiatives Improve in-force profit metrics 7.5-8.5% Manage non-guaranteed elements Reduce redundant reserve financing cost 5.6% Digitize operational processes 5.3% 4.9% Capital Initiatives 5.1% 5
Slide 13: Employee Benefits – High Return and Capital Generation Business
Employee Benefits – High Return and Capital Generation Business Adjusted Operating ROC Growth Initiatives Mid-Market expansion 31.5% Private exchange market growth 28.9% 31.3% Leveraging Stop Loss market position 28.8% 23-25% Examples of Execution 18.8% Hired a dedicated team (sales, underwr
Slide 14: 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 and Chief Executive Officer of Retirement and Investment Solutions 3. Business Operating and Balan
Slide 15: 2Q'15 Business Segment Drivers
2Q’15 Business Segment Drivers 2Q’15 Commentary Retirement 2Q’15 adjusted operating earnings provides baseline level for growth in 2H’15 Annuities In-line with our plans Investment Light on investment capital results Management Individual Life Slightly unfavorable mortality due to severity Employee
Slide 16: Positive Net Flows Across All Retirement Markets in 2Q'15
Positive Net Flows Across All Retirement Markets in 2Q’15 Retirement Net Flows1 ($ million) $661 $92 $475 $64 $395 $40 $475 $371 $188 $245 $174 $(94) $(117) $(287) $(22) $(25) $(566) $(66) $(111) $(202) 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 Corporate Markets Tax-Exempt Markets Stable Value and Retail Wealth
Slide 17: Growing Mutual Fund Custodial, Maintaining Discipline on Fixed Indexed Annuities
Growing Mutual Fund Custodial, Maintaining Discipline on Fixed Indexed Annuities, and Running Off Less Profitable Business Annuities Net Flows1 ($ million) $11 $82 $126 $122 $121 $133 $159 $(41) $(40) $(63) $(37) $(54) $(59) $(1) $(19) $(259) $(169) $(168) $(481) $(109) $(104) $(92) $(704) $(411) $(
Slide 18: Continued Positive Investment Management Sourced Flows
Continued Positive Investment Management Sourced Flows Investment Management Third-Party Net Flows1 ($ billion) 2Q’14 3Q’14 4Q’14 1Q’15 2Q’15 $0.8 $0.7 $0.5 $(0.2) $(0.3) ($0.4) $(0.5) ($0.6) $(0.5) $(0.4) Sub-Advisor $0.0 $2.1 $0.8 $0.0 $0.0 Replacements Investment Management $(0.9) $(1.0) $(1.2) $
Slide 19: Individual Life Results Impacted by Elevated Mortality
Individual Life Results Impacted by Elevated Mortality Individual Life Sales Actual-to-Expected Mortality ($ million) 2Q’14 Sales 115% 110% Above One Standard Deviation $8 105% $13 100% 96.4% 95.6% 93.7% $2 95% $2 92.4% 89.8% 90% 2Q’15 Sales 85% 84.8% $5 80% 80.8% 75% $2 73.6% $1 70% $16 Below One S
Slide 20: Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable
Employee Benefits Loss Ratios for Group Life and Stop Loss Remained Favorable Sales1 Loss Ratios ($ million) (%) $254 78.7% 77.5% 75.4% 76.1% 74.7% 74.2% 74.0% 72.2% 76.9% 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 FY'11 FY'12 FY'13 FY'14 82.9% 75.3% 72.2% 72.1% 72.2% 70.4% 69.6% $34 $39 72.9% $26 $18 61.9% 2Q'1
Slide 21: Active Hedge Program in Closed Block Variable Annuity
Active Hedge Program in Closed Block Variable Annuity Change in Statutory Reserves Relative to Hedge Resources 2Q’15 Results ($ billion) Equity impacts (increase) decrease in stat reserve liability Estimated available Equity impacts increase (decrease) in hedge resources resources of $4.8 $1.0 bil
Slide 22: Estimated Combined RBC Ratio and Leverage Ratio Better Than Target
Estimated Combined RBC Ratio1 and Leverage Ratio Better Than Target Statutory Total Adjusted Capital ($ billion) and Estimated Debt to Total Capital Ratio ex. Minority Interest and AOCI2 Combined RBC Ratio1 After ordinary $7.8 dividends of Target 25% $930 million and $7.5 extraordinary Debt-to- $7.3
Slide 23: Excess Capital Deployed Primarily to Repurchase Shares
Excess Capital Deployed Primarily to Repurchase Shares Holding Company Liquidity1,2 Excess Capital Share Repurchases ($ million) ($ million) ($ million) $1,119 $773 $752 $631 Estimated Statutory $450 Liquidity $796 Surplus in Target Excess of 425% RBC Level Holding Co. Working Capital Above Target2
Slide 24: Evolve to Deliver More Customer Value; Focus on Growth and ROE; Realize Financial Value
Helping Americans Get Ready to Retire Better 1 Evolve to Deliver More Customer Value 2 Focus on Growth and Further ROE Improvement 3 Realize Sources of Financial Value 24
Slide 25: Appendix
Appendix a eeeeeslllclrlrllrrTC“‘(‘(’UNCOC;(él;.MSG PLAN | INVEST | PROTECT VOYA. FINANCIAL 25
Slide 26: Reconciliation of 2Q'15 Ongoing Business Adjusted Operating Earnings to Net Income
Reconciliation of 2Q’15 Ongoing Business Adjusted Operating Earnings to Net Income ($ million; all figures are after-tax) $117 $(6) $(19) $14 $285 $217 $(5) $212 $(36) $3 $179 Ongoing Net Gain Ongoing Corporate Closed Block Operating Closed Block Net Realized Other 1 Other Tax- Net Income Business (
Slide 27: Diversified Drivers of Operating Revenue
Diversified Drivers of Operating Revenue Ongoing Business Sources of Revenue Net Primarily consists of ($ millions) Underwriting difference between premiums Gain (Loss) and or fees charged for insurance 1 Other Revenue risks and incurred benefits $1,021 $967 $966 $962 $953 $182 $231 $219 $191 $197 I
Slide 28: 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 29: Analyst Modeling Considerations
Analyst Modeling Considerations Prepayment $12 million per quarter for Ongoing Business in 2015 (pre-tax, pre-DAC): $6 Income million for Retirement; $4 million for Annuities; $2 million for Individual Life Alternative Approximately 9% annual long-term expected returns (pre-tax, pre-DAC) Income Empl
Slide 30: FINANCIAL
® FINANCIAL PLAN | INVEST | PROTECT FINANCIAL 30