Reading Time: 13 minutes

First-quarter 2019 net income available to common shareholders of
$0.42 per diluted share

First-quarter 2019 adjusted operating earnings1 of
$1.07 per diluted share, after-tax; Normalized for the following items,
first-quarter 2019 adjusted operating earnings were $1.22 per diluted
share, after-tax:

  • $0.01 per diluted share, after-tax, of favorable deferred acquisition
    costs and value of business acquired (“DAC/VOBA”) and other
    intangibles unlocking; and
  • $(0.16) per diluted share, after-tax and DAC/VOBA, of prepayment fees
    and alternative investment income below the company’s long-term
    expectations.

Voya completes previously announced accelerated share repurchase
agreement for $250 million of Voya common stock; enters into new
agreement to repurchase an additional $236 million of shares beginning
in the second quarter of 2019 — upon completion of the new agreement,
Voya will have utilized its previous share repurchase authorization

Board of directors authorizes the repurchase of an additional $500
million of Voya common stock — new authorization expires on June 30, 2020

NEW YORK–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24VOYA&src=ctag” target=”_blank”gt;$VOYAlt;/agt;–Voya Financial, Inc. (NYSE: VOYA) today announced financial results for
the first quarter of 2019.

“During the first quarter, we continued to execute on our plans to
achieve organic growth and cost savings as well as effectively deploy
excess capital,” said Rodney O. Martin, Jr., chairman and CEO, Voya
Financial, Inc. “Our normalized first-quarter 2019 adjusted operating
earnings were $1.22 per diluted share, after-tax, up 23% compared with
the first quarter of 2018. Our results reflect several notable
achievements in our organic growth plans, including an 11% increase in
Retirement full service recurring deposits for the trailing twelve
months ended March 31, 2019; more than $1 billion in Institutional net
flows in Investment Management; and a 14% increase in annualized
in-force premiums in Employee Benefits compared with the first quarter
of 2018.

“We also concluded the first quarter with over $700 million in excess
capital, which demonstrates the continued strong free cash flows
generated by Voya’s businesses and will enable us to continue to execute
on our capital deployment plans. Following the completion of the $250
million accelerated share repurchase agreement that we entered into
during the first quarter, we entered into a new, $236 million agreement
early during the second quarter, which, when completed, fully utilizes
our existing share repurchase authorization. Subsequently, we’ve
received from the board of directors an additional $500 million share
repurchase authorization.

“As we previously announced, we intend to increase our common stock
dividend to a yield of at least 1% and we expect to do so beginning in
the third quarter of 2019. As we continue to execute on share
repurchases given the current attractive valuation levels of our common
shares, providing a higher-yielding dividend will enable us to attract
new investors to Voya.

“Overall, we are on track to achieve the plans that we shared during our
Investor Day in November 2018, and we remain committed to achieving our
target of at least 10% annual adjusted operating earnings per share
growth over the next three years, on a normalized basis. With our
strong, established presence in the workplace and focus on institutional
clients, we remain well positioned to achieve our vision to be America’s
Retirement Company,” added Martin.

FIRST-QUARTER 2019 SUMMARY

 
Three Months Ended
March 31, 2019   March 31, 2018
($ in millions)   (per share)   ($ in millions)   (per share)
Net income available to common shareholders $64 $0.42 $446 $2.50
Adjusted operating earnings, after-tax $163 $1.07 $137 $0.77
Normalized adjusted operating earnings, after-tax $186 $1.22 $178 $0.99
 
Common book value $59.13 $54.65
Common book value, excluding AOCI $45.84 $45.84
 
Weighted avg common shares outstanding (in millions):
Basic 147 172
Diluted 151       178    

1 This press release includes certain non-GAAP financial
measures, including adjusted operating earnings and book value,
excluding accumulated other comprehensive income. More information on
non-GAAP measures and reconciliations to the most comparable U.S. GAAP
measures can be found in the “Use of Non-GAAP Financial Measures”
section of this release and in the company’s Quarterly Investor
Supplement.

Net income available to common shareholders were $64 million, or
$0.42 per diluted share in the first quarter of 2019, compared with $446
million, or $2.50 per diluted share in the first quarter of 2018. The
decline is largely due to higher income from discontinued operations in
the first quarter of 2018. Income (loss) from discontinued operations in
the first quarter of 2019 includes a $79 million charge related to a
proposed settlement of purchase price true-up amounts payable by the
company in connection with the sale of its fixed and variable annuities
businesses, which it completed in 2018. Voya does not anticipate further
material charges in connection with the sale.

Adjusted operating earnings in the first quarter of 2019 were
$163 million, or $1.07 per diluted share, after-tax, up from $137
million, or $0.77 per diluted share, after-tax, in the first quarter of
2018. First-quarter 2018 results included $56 million, after-tax, of
unfavorable DAC/VOBA and other intangibles unlocking as well as
prepayment fees and alternative investment income that was $8 million,
after-tax, above the company’s long-term expectations. Conversely,
first-quarter 2019 results included $1 million, after-tax, of favorable
DAC/VOBA and other intangibles unlocking as well as prepayment fees and
alternative investment income that was $24 million, after-tax, below the
company’s long-term expectations.

Normalized adjusted operating earnings (which excludes DAC/VOBA
and other intangibles unlocking; prepayment fees and alternative
investment income above or below the company’s long-term expectations;
and Investment Management adjusted operating earnings associated with
the annuities business that was sold on June 1, 2018) in the first
quarter of 2019 were $186 million, or $1.22 per diluted share,
after-tax, up from $178 million, or $0.99 per diluted share, after-tax,
in the first quarter of 2018. The increase reflects higher adjusted
operating earnings in Employee Benefits and Individual Life, which were
partially offset by lower fee-based revenues in Retirement and
Investment Management. On a per-share basis, the improvement also
reflects the company’s share repurchases.

FIRST-QUARTER 2019 HIGHLIGHTS

  • Business results:

    • Retirement reported first-quarter 2019 adjusted operating
      earnings of $129 million. For the trailing twelve months (TTM)
      ended March 31, 2019, full service recurring deposits increased
      11% to $9.6 billion compared with $8.6 billion for the TTM ended
      March 31, 2018. Total full service net flows were $584 million,
      with the first quarter of 2019 marking the 22nd
      consecutive quarter of positive full service net flows for
      Corporate Markets.
    • Investment Management reported first-quarter 2019 adjusted
      operating earnings of $34 million. Institutional net flows were
      $1.1 billion in the first quarter of 2019 and $4.5 billion for the
      TTM ended March 31, 2019, reflecting strong commercial growth in
      the business. The first quarter of 2019 was the company’s 13th
      consecutive quarter of positive Institutional net flows.
    • Employee Benefits increased first-quarter 2019 adjusted
      operating earnings to $38 million, up 19% compared with the first
      quarter of 2018 and reflecting a total aggregate loss ratio of
      72.3% for the TTM ended March 31, 2019. In the first quarter of
      2019, annualized in-force premiums exceeded $2 billion for the
      first time and were up 14% compared with the first quarter of
      2018, reflecting both continued pricing discipline and continued
      growth in the voluntary business.
  • Capital deployment:

    • Completed the company’s previously announced $250 million
      accelerated share repurchase agreement and entered into a new,
      $236 million accelerated share repurchase agreement.
    • Board of directors authorizes an additional $500 million in share
      repurchases; new authorization expires on June 30, 2020.
    • Voya intends to increase its common stock dividend to a yield of
      at least 1% beginning in the third quarter of 2019.
    • Excess capital* of $705 million as of March 31, 2019, which is the
      amount above the company’s holding company liquidity target of
      $200 million and estimated statutory surplus in excess of a 400%
      combined RBC ratio. As of March 31, 2019, Voya’s estimated RBC
      ratio* was 475%. (*Proforma for the estimated purchase price
      true-up amounts payable by the company in connection with the sale
      of its fixed and variable annuities businesses.)
  • Total company assets under management and administration of $547
    billion as of March 31, 2019.

SEGMENT DISCUSSIONS

The following segment discussions compare the first quarter of 2019 with
the first quarter of 2018, unless otherwise noted. All figures are
presented before income taxes.

Retirement

Retirement adjusted operating earnings were $129 million, up from $109
million. The increase primarily reflects:

  • $4 million of positive DAC/VOBA and other intangibles unlocking in the
    first quarter of 2019 compared with $41 million of negative DAC/VOBA
    and other intangibles unlocking in the first quarter of 2018, which
    was driven by changes in guaranteed minimum interest rate provisions
    for certain retirement plan contracts;
  • $9 million of lower fee-based margin primarily due to lower average
    asset balances, which were impacted by equity market declines in the
    fourth quarter of 2018;
  • $5 million of lower investment income, including prepayment fee and
    alternative investment income that was, in aggregate, $16 million
    below the company’s long-term expectations (before the effect of
    income taxes and DAC) in the first quarter of 2019;
  • a $6 million improvement in net underwriting gain (loss) and other
    revenue; and
  • $21 million of higher administrative expenses, largely due to costs
    associated with the onboarding of new plans, expansion of
    distribution, higher pension expenses and a legal accrual.
($ in millions)  

Trailing twelve
months ended
Mar. 31,
2019

 

Trailing twelve
months ended
Dec. 31,
2018

 

Trailing twelve
months ended
Mar. 31,
2018

Retirement — Full Service
Full Service recurring deposits $ 9,619 $ 9,343 $ 8,634
 
($ in millions)

Three months
ended Mar. 31,
2019

Three months
ended Dec. 31,
2018

Three months
ended Mar. 31,
2018

Retirement
Total client assets $ 391,856 $ 361,575 $ 417,007
 
Retirement — Full Service
Full Service recurring deposits $ 2,803 $ 2,173 $ 2,527
Full Service net flows $ 584 $ 1,315 $ 47
Full Service client assets $ 129,976 $ 119,219 $ 122,604

Retirement total client assets for the three months ended March 31, 2019
increased to $392 billion compared with the three months ended Dec. 31,
2018 due to equity market growth and positive net flows in Corporate
Markets. The decline in total client assets compared with March 31, 2018
reflects a previously announced termination of a large recordkeeping
plan of approximately $40 billion of plan assets in the fourth quarter
of 2018.

Investment Management

Investment Management adjusted operating earnings were $34 million,
compared with $61 million. The decline primarily reflects:

  • $24 million of lower fee-based margin driven by $9 million of lower
    fee income resulting from the company’s June 1, 2018 sale of
    substantially all of its annuities businesses, lower Retail fee
    income, and higher private equity and performance-based fees earned in
    the first quarter of 2018.
  • $13 million of lower investment capital revenues driven by lower
    private equity earnings, as first-quarter 2019 investment capital
    results were $7 million below long-term expectations, largely
    reflecting fourth-quarter 2018 valuations; and
  • $10 million of lower expenses as a decline in variable compensation
    expenses associated with lower adjusted operating earnings and a
    one-time legal recovery were partially offset by higher pension
    expenses.
($ in millions)   1Q, 2019   4Q, 2018   1Q, 2018
Investment Management AUM
External clients $ 153,660 $ 147,176 $ 140,558
General account   56,021     56,288     81,893  
Total   $ 209,681     $ 203,464     $ 222,451  
 
Investment Management Net Flows
Institutional $ 1,105 $ 694 $ 14
Retail (including sub-advisor replacements)   (494 )   (1,120 )   (465 )
Total (excluding divested annuities)   $ 611     $ (426 )   $ (451 )
Divested annuities outflows   (550 )   (578 )   (714 )
Total   $ 61     $ (1,004 )   $ (1,165 )

During the first quarter of 2019, Investment Management net flows
(excluding divested annuities) of $611 million included $1,105 million
in Institutional net inflows (primarily from fixed income asset classes
and CLO issuances) and $494 million in Retail net outflows (primarily
from certain equity strategies and partially offset by fixed income net
inflows).

Total Investment Management AUM was $210 billion as of March 31, 2019.
The increase from Dec. 31, 2018 primarily reflects higher equity markets
and total net flows, while the decline from March 31, 2018 is largely
due to the reduction in the company’s general account that resulted from
the sale of substantially all of the company’s individual annuities
businesses on June 1, 2018.

Employee Benefits

Employee Benefits adjusted operating earnings were $38 million, up from
$32 million. First-quarter 2018 results reflected $1 million of negative
DAC/VOBA and other intangibles unlocking.

The increase primarily reflects:

  • $19 million of higher underwriting results largely driven by an
    improvement in the loss ratio for Stop Loss and growth in the
    Voluntary block;
  • $7 million of higher administrative expenses to support growth in the
    business; and
  • $1 million of lower investment income, including prepayment fee and
    alternative investment income that was, in aggregate, $2 million below
    the company’s long-term expectations (before the effect of income
    taxes and DAC) in the first quarter of 2019.
($ in millions)   1Q, 2019   4Q, 2018   1Q, 2018

Employee Benefits Annualized
In-Force Premiums

Group Life, Disability and Other $ 720 $ 659 $ 663
Stop Loss 1,053 969 925
Voluntary   390     311     303  
Total   $ 2,163     $ 1,939     $ 1,891  
 

Trailing twelve
months ended
Mar. 31,
2019

Trailing twelve
months ended
Dec. 31,
2018

Trailing twelve
months ended
Mar. 31,
2018

Total Aggregate Loss Ratio 72.3 % 72.5 % 72.9 %

Compared with the first quarter of 2018, total Employee Benefits
in-force premiums increased 14%, reflecting strong growth in all
products, especially Voluntary. The Total Aggregate Loss Ratio improved
to 72.3% for the TTM ended March 31, 2019, within the company’s target
range of 71% to 74%, and driven largely by continued pricing discipline
and significant improvement in the loss ratio for Stop Loss.

Individual Life

Individual Life adjusted operating earnings were $48 million compared
with $17 million. The increase primarily reflects:

  • $26 million of lower negative DAC/VOBA and other intangibles
    unlocking, which reflects improved mortality experience compared with
    the first quarter of 2018;
  • flat investment income, including prepayment fee and alternative
    investment income that was, in aggregate, $5 million below the
    company’s long-term expectations (before the effect of income taxes
    and DAC) in the first quarter of 2019; and
  • $2 million of lower administrative expenses due to the discontinuance
    of new sales.

Total Individual Life sales, which primarily consist of indexed life
insurance, were $34 million. Sales recorded in the first quarter of 2019
reflect the completion of most new business applications that were
received through year-end 2018, when Voya stopped accepting new
applications for individual life products.

Corporate

Corporate adjusted operating losses were $55 million compared with
losses of $56 million. First-quarter 2019 results reflect a decline in
the stranded costs that resulted from the company’s sale of
substantially all of its individual annuities businesses on June 1,
2018, largely offset by the semi-annual preferred stock dividend in the
first quarter of 2019, slightly lower earnings from the company’s legacy
annuities business, and several favorable items in the first quarter of
2018 that did not recur.

Share Repurchases

Early in the second quarter of 2019, Voya completed the previously
announced accelerated share repurchase (“ASR”) agreement entered into
with a third-party during the first quarter of 2019 to repurchase an
aggregate of $250 million of Voya’s common stock. Under this agreement,
approximately 5.35 million shares of common stock were repurchased.

Early in the second quarter of 2019, Voya entered into a new ASR
agreement with a third-party to repurchase an aggregate of $236 million
of Voya’s common stock. The final number of shares to be repurchased
will be based on the volume-weighted average stock price of Voya’s
common stock less a discount and subject to potential adjustments
pursuant to the terms of the ASR agreement. Final settlement of the
transaction under the ASR agreement is expected to occur by the
beginning of the third quarter of 2019. Giving effect to the completion
of this most recent ASR agreement, the company has utilized its previous
share repurchase authorization.

The company announced today that its board of directors has increased
the amount of the company’s common stock authorized for repurchase under
the company’s share repurchase program by an additional $500 million.
Under its share repurchase program, the company may, from time to time,
purchase shares of its common stock through various means, including
open market transactions, privately negotiated transactions, forward,
derivative, accelerated repurchase, or automatic repurchase
transactions, or tender offers. The additional $500 million share
repurchase authorization expires on June 30, 2020 (unless extended), and
does not obligate the company to purchase any shares. The authorization
for the share repurchase program may be terminated, increased or
decreased by the board of directors at any time.

Supplementary Financial Information

More detailed financial information can be found in the company’s
Quarterly Investor Supplement, which is available on Voya’s investor
relations website, investors.voya.com.

Earnings Call and Slide Presentation

Voya will host a conference call on Wed., May 8, 2019, at 10 a.m. ET, to
discuss the company’s first-quarter 2019 results. The call and slide
presentation can be accessed via the company’s investor relations
website at investors.voya.com.
A replay of the call will be available on the company’s investor
relations website at investors.voya.com
starting at 1 p.m. ET on May 8, 2019.

About Voya Financial

Voya Financial, Inc. (NYSE: VOYA), helps Americans plan, invest and
protect their savings — to get ready to retire better. Serving the
financial needs of approximately 13.8 million individual and
institutional customers in the United States, Voya is a Fortune 500
company that had $8.5 billion in revenue in 2018. The company had $547
billion in total assets under management and administration as of March
31, 2019. With a clear mission to make a secure financial future
possible — one person, one family, one institution at a time — Voya’s
vision is to be America’s Retirement Company®. Certified as a
“Great Place to Work” by the Great Place to Work® Institute,
Voya is equally committed to conducting business in a way that is
socially, environmentally, economically and ethically responsible. Voya
has been recognized as one of the 2018 World’s Most Ethical Companies®
by the Ethisphere Institute, one of the 2018 World’s Most Admired
Companies by Fortune magazine and one of the Top Green Companies
in the U.S. by Newsweek magazine. For more information, visit voya.com.
Follow Voya Financial on Facebook,
LinkedIn
and Twitter @Voya.

Use of Non-GAAP Financial Measures

We believe that Adjusted operating earnings before income taxes provides
a meaningful measure of its business and segment performance and
enhances the understanding of our financial results by focusing on the
operating performance and trends of the underlying business segments and
excluding items that tend to be highly variable from period to period
based on capital market conditions or other factors. We use the same
accounting policies and procedures to measure segment Adjusted operating
earnings before income taxes as we do for the directly comparable U.S.
GAAP measure, which is Income (loss) from continuing operations before
income taxes.

Adjusted operating earnings before income taxes does not replace Income
(loss) from continuing operations before income taxes as a measure of
our consolidated results of operations. Therefore, we believe that it is
useful to evaluate both Income (loss) from continuing operations before
income taxes and Adjusted operating earnings before income taxes when
reviewing our financial and operating performance. Each segment’s
Adjusted operating earnings before income taxes is calculated by
adjusting Income (loss) from continuing operations before income taxes
for the following items:

  • Net investment gains (losses), net of related amortization of DAC,
    VOBA, sales inducements and unearned revenue, which are significantly
    influenced by economic and market conditions, including interest rates
    and credit spreads, and are not indicative of normal operations. Net
    investment gains (losses) include gains (losses) on the sale of
    securities, impairments, changes in the fair value of investments
    using the FVO unrelated to the implied loan-backed security income
    recognition for certain mortgage-backed obligations and changes in the
    fair value of derivative instruments, excluding realized gains
    (losses) associated with swap settlements and accrued interest;
  • Net guaranteed benefit hedging gains (losses), which are significantly
    influenced by economic and market conditions and are not indicative of
    normal operations, include changes in the fair value of derivatives
    related to guaranteed benefits, net of related reserve increases
    (decreases) and net of related amortization of DAC, VOBA and sales
    inducements, less the estimated cost of these benefits. The estimated
    cost, which is reflected in operating results, reflects the expected
    cost of these benefits if markets perform in line with our long-term
    expectations and includes the cost of hedging. Other derivative and
    reserve changes related to guaranteed benefits are excluded from
    operating results, including the impacts related to changes in
    nonperformance spread;
  • Income (loss) related to businesses exited through reinsurance or
    divestment that do not qualify as discontinued operations, which
    includes gains and (losses) associated with transactions to exit
    blocks of business (including net investment gains (losses) on
    securities sold and expenses directly related to these transactions)
    and residual run-off activity; these gains and (losses) are often
    related to infrequent events and do not reflect performance of
    operating segments. Excluding this activity better reveals trends in
    our core business, which would be obscured by including the effects of
    business exited, and more closely aligns Adjusted operating earnings
    before income taxes with how we manages our segments;
  • Income (loss) attributable to noncontrolling interest, which
    represents the interest of shareholders, other than those of Voya
    Financial, Inc., in the gains and (losses) of consolidated entities,

Contacts

Media Contacts:
Christopher Breslin
212-309-8941
Christopher.Breslin@voya.com

Bill Sutton
860-580-2626
William.Sutton@voya.com

Investor Contacts:
Michael Katz
212-309-8999
IR@voya.com

Mei Ni Chu
212-309-8929
IR@voya.com

Read full story here