-
Third-quarter 2018 net income available to common shareholders of
$0.87 per diluted share
-
Third-quarter 2018 adjusted operating earnings
1
of $0.84 per diluted share, after-tax; Normalized for the following
items, third-quarter 2018 adjusted operating earnings were $1.34 per
diluted share, after-tax:
-
$(0.70) per diluted share, after-tax, of unfavorable deferred
acquisition costs and value of business acquired (“DAC/VOBA”) and
other intangibles unlocking — unfavorable annual assumption
updates in Individual Life were partially offset by favorable
assumption updates in Retirement and the company's legacy
annuities in Corporate; and
-
$0.20 per diluted share, after-tax and DAC/VOBA, of prepayment
fees and alternative investment income above the company’s
long-term expectations.
-
Board of directors authorizes an additional $500 million of share
repurchases
-
Voya completes strategic review of Individual Life business
-
Voya will cease new individual life insurance sales on Dec. 31,
2018 and retain the in-force block
-
Decision supports Voya’s focus on its higher-growth,
higher-return, capital-light businesses
-
Retaining the block provides value to shareholders, including
earnings and capital diversification and at least $1 billion of
expected free cash flow from Individual Life over the next five to
six years
-
Voya to hold investor day on Tuesday, Nov. 13
NEW YORK--(BUSINESS WIRE)--
Voya Financial, Inc. (NYSE: VOYA) today announced financial results for
the third quarter of 2018.
“During the third quarter, we continued to make strong progress on our
2018 priorities,” said Rodney O. Martin, Jr., chairman and CEO, Voya
Financial, Inc. “Our commitment to achieving our growth plans this year
was demonstrated in the third quarter by positive net flows in both
Retirement and Investment Management and an increase in annualized
in-force premiums in Employee Benefits. We also generated strong
bottom-line results. Excluding the negative impact of DAC/VOBA and other
intangibles unlocking and the benefit of prepayment fees and alternative
investment income above our long-term expectations, normalized
third-quarter 2018 adjusted operating earnings were $1.34 per diluted
share, after-tax. This demonstrates our commitment to improving our
adjusted operating earnings per share to reach $1.30 to $1.40 per share
by the end of the second quarter of 2019.
"In addition to organic growth, we continued to execute on our capital
initiatives as we repurchased $250 million of common stock in the third
quarter. We also received an additional share repurchase authorization
of $500 million from the board of directors, which will enable us to
continue to deliver further shareholder value through share repurchases.
Finally, we continued to focus on achieving cost savings and began to
take actions to lower our debt-to-capital ratio by the end of this year.
“We are looking forward to our upcoming Investor Day on Nov. 13, when
we'll share our long-term growth plans and opportunities to build upon
the profitable growth we've achieved over the past several years,
generate further shareholder value, expand our relationships with our
customers, and achieve our vision to be America's Retirement Company,”
added Martin.
Voya also announced today that the company has concluded the strategic
review of its Individual Life business. The company will cease all new
sales of individual life insurance on Dec. 31, 2018 and retain the
in-force block of policies.
“Following the sale of substantially all of our individual annuities
businesses earlier this year, we conducted a thorough review of our
Individual Life business to determine the best path forward. We
carefully considered our broader, go-forward strategy of largely
focusing on the workplace and institutional clients, analyzed the
options available to us, and concluded that ceasing new sales aligns
with our plans to focus on our higher-growth, higher-return,
capital-light businesses: Retirement, Investment Management and Employee
Benefits,” said Martin.
“Further, continuing to own the in-force block will benefit shareholders
in that it will provide earnings and capital diversification and
generate higher free cash flows. Specifically, we expect our Individual
Life business to increase free cash flow conversion to 70% to 80% and
generate meaningful free cash flow of at least $1 billion over the next
five to six years.
“Voya will continue to be good stewards of shareholder capital. As we
have over the past several years, we will continue to explore and pursue
opportunities to maximize the value of our in-force life insurance
business,” concluded Martin.
Voya will continue to report its Individual Life segment financial
results as part of the company’s adjusted operating earnings.
THIRD-QUARTER 2018 SUMMARY
|
|
Three Months Ended
|
|
|
September 30, 2018
|
|
September 30, 2017
|
|
|
($ in millions)
|
|
(per share)
|
|
($ in millions)
|
|
(per share)
|
Net income available to common shareholders
|
|
$142
|
|
$0.87
|
|
$149
|
|
$0.81
|
Adjusted operating earnings, after-tax
|
|
$139
|
|
$0.84
|
|
$29
|
|
$0.16
|
Common book value
|
|
|
|
$52.22
|
|
|
|
$75.98
|
Common book value, excluding AOCI
|
|
|
|
$47.28
|
|
|
|
$60.78
|
Weighted avg common shares outstanding (in millions):
|
|
|
|
|
|
|
|
|
Basic
|
|
160
|
|
|
|
180
|
|
|
Diluted
|
|
164
|
|
|
|
182
|
|
|
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 for the third quarter
of 2018 was $142 million, or $0.87 per diluted share, compared with $149
million, or $0.81 per diluted share in the third quarter of 2017. The
improvement on a per-share basis reflects the company's share
repurchases. Total third-quarter 2018 net income available to common
shareholders was lower due to higher income from continuing operations
in the third quarter of 2018 being more than offset by the benefit of
income from discontinued operations in the third quarter of 2017.
Adjusted operating earnings for the third quarter of 2018 were
$139 million, or $0.84 per diluted share, after-tax, up from $29
million, or $0.16 per diluted share, after-tax, in the third quarter of
2017. The increase was largely due to third-quarter 2018 results having
lower negative DAC/VOBA and other intangibles unlocking, higher
alternative investment income, lower expenses and higher fee-based
margins.
THIRD-QUARTER 2018 HIGHLIGHTS
-
Continued execution of the company's 2018 priorities, including
growth, capital and cost saving initiatives.
-
Capital initiatives:
-
Repurchased $250 million of Voya common stock during the third
quarter — the company plans to purchase an additional $250 million
of common stock in the fourth quarter and deliver on its
previously announced plan in December 2017 to repurchase $1.5
billion in shares by the end of 2018.
-
Issued $325 million of preferred shares in the third quarter, the
proceeds of which will be utilized to reduce outstanding senior
debt by $325 million in the fourth quarter of 2018.
-
Pro-forma for the expected debt repurchase in the fourth quarter
of 2018, excess capital was $813 million as of Sept. 30, 2018.
-
Strong performance from Voya's higher-growth, higher-return,
capital-light businesses:
- Retirement achieved record adjusted operating earnings
(excluding DAC/VOBA and other intangibles unlocking) of $203
million, largely driven by strong prepayment fees and alternative
investment income as well as higher fee-based margins. Retirement
Full Service recurring deposits were $2.3 billion, and Full
Service net flows were $99 million in the third quarter.
- Investment Management reported $48 million of adjusted
operating earnings and generated $1.4 billion of Institutional net
flows, reflecting strong commercial growth in the business.
Third-party sales were $5.5 billion during the quarter, and
third-party AUM grew to $155 billion as of Sept. 30, 2018.
- Employee Benefits generated adjusted operating earnings of
$50 million, including underwriting results that reflect an
improved loss ratio for Stop Loss. Annualized in-force premiums
increased 2% compared with the third quarter of 2017, reflecting
both continued pricing discipline and a strong increase in the
Voluntary business.
-
Total company assets under management and administration grew to $543
billion as of Sept. 30, 2018.
SEGMENT DISCUSSIONS
The following segment discussions compare the third quarter of 2018 with
the third quarter of 2017, unless otherwise noted. All figures are
presented before income taxes.
Retirement
Retirement adjusted operating earnings were $253 million, up from $107
million. The increase was largely due to:
-
$50 million of positive DAC/VOBA and other intangibles unlocking in
the third quarter of 2018 compared with $44 million of negative
DAC/VOBA and other intangibles unlocking in the third quarter of 2017;
-
$35 million of higher fee-based margin primarily due to higher average
AUM (driven by both equity market and business growth) as well as the
benefit of fees from the movement of certain investment-only products
to Retirement from Corporate;
-
$33 million of higher investment income, including prepayment fee and
alternative investment income that was, in aggregate, $27 million
above the company's long-term expectations (before the effect of
income taxes and DAC) in the third quarter of 2018; and
-
$20 million of higher administrative expenses largely due to the
movement of certain investment-only products and strategic investment
spending to Retirement from Corporate.
|
|
Trailing
|
|
|
Trailing
|
|
|
Trailing
|
|
|
twelve months ended
|
|
|
twelve months ended
|
|
|
twelve months ended
|
($ in millions)
|
|
Sept. 30, 2018
|
|
|
June 30, 2018
|
|
|
Sept. 30, 2017
|
Retirement — Full Service
|
|
|
|
|
|
|
|
|
Full Service recurring deposits
|
|
$
|
|
9,164
|
|
|
$
|
|
8,927
|
|
|
$
|
|
8,329
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
Three months ended
|
($ in millions)
|
|
Sept. 30, 2018
|
|
|
June 30, 2018
|
|
|
Sept. 30, 2017
|
Retirement
|
|
|
|
|
|
|
|
|
Total client assets
|
|
$
|
|
434,862
|
|
|
$
|
|
420,882
|
|
|
$
|
|
409,908
|
|
|
|
|
|
|
|
|
|
Retirement — Full Service
|
|
|
|
|
|
|
|
|
Full Service recurring deposits
|
|
$
|
|
2,267
|
|
|
$
|
|
2,376
|
|
|
$
|
|
2,030
|
Full Service net flows
|
|
$
|
|
99
|
|
|
$
|
|
126
|
|
|
$
|
|
925
|
Full Service client assets
|
|
$
|
|
128,641
|
|
|
$
|
|
124,702
|
|
|
$
|
|
118,600
|
Investment Management
Investment Management adjusted operating earnings were $48 million,
compared with $54 million. The decline was largely due to:
-
$6 million of lower fee-based revenues as smaller general account
average AUM resulting from the company's June 1, 2018 sale of
substantially all of its annuities businesses was partially offset by
growth in third-party management fees (driven by positive net flows
and higher third-party AUM);
-
$3 million of higher investment capital revenues, which were also $3
million above long-term expectations in the third quarter of 2018; and
-
$3 million of higher expenses primarily due to higher volume expenses
associated with higher revenue.
($ in millions)
|
|
3Q 2018
|
|
2Q 2018
|
|
3Q 2017
|
Investment Management AUM
|
|
|
|
|
|
|
External clients
|
|
$
|
154,553
|
|
|
$
|
151,535
|
|
|
$
|
139,616
|
|
General account
|
|
55,862
|
|
|
55,617
|
|
|
82,489
|
|
Total
|
|
$
|
210,415
|
|
|
$
|
207,152
|
|
|
$
|
222,105
|
|
|
|
|
|
|
|
|
Investment Management Net Flows
|
|
|
|
|
|
|
Institutional
|
|
$
|
1,392
|
|
|
$
|
1,291
|
|
|
$
|
1,723
|
|
Retail (including sub-advisor replacements)
|
|
(315
|
)
|
|
(548
|
)
|
|
736
|
|
Total (excluding divested annuities)
|
|
$
|
1,077
|
|
|
$
|
743
|
|
|
$
|
2,459
|
|
Divested annuities outflows
|
|
(600
|
)
|
|
(627
|
)
|
|
(948
|
)
|
Total
|
|
$
|
477
|
|
|
$
|
116
|
|
|
$
|
1,512
|
|
Total Investment Management AUM grew to $210 billion as of Sept. 30,
2018, up from $207 billion as of June 30, 2018. The decline from Sept.
30, 2017 reflects the sale of substantially all of the company's
individual annuities business on June 1, 2018. During the third quarter
of 2018, Investment Management net inflows of $477 million were driven
by strong Institutional net flows of $1.4 billion, primarily from fixed
income asset classes.
Employee Benefits
Employee Benefits adjusted operating earnings were $50 million, down
from $58 million. The decline was largely due to:
-
$5 million of lower underwriting results due to a non-recurring
favorable reserve adjustment of $25 million in the third quarter of
2017 — adjusting for the reserve change, underwriting results improved
by $20 million due to improvement in the loss ratio for Stop Loss and
growth in the Voluntary block, which were partially offset by a higher
Group Life loss ratio;
-
$4 million of higher administrative expenses to support growth in the
business; and
-
$2 million of higher investment income, including prepayment fee and
alternative investment income that was, in aggregate, $2 million above
the company's long-term expectations (before the effect of income
taxes and DAC) in the third quarter of 2018.
($ in millions)
|
|
3Q 2018
|
|
2Q 2018
|
|
3Q 2017
|
Employee Benefits Annualized In-Force Premiums
|
|
|
|
|
|
|
Group Life, Disability and Other
|
|
$
|
654
|
|
|
$
|
664
|
|
|
$
|
627
|
|
Stop Loss
|
|
953
|
|
|
938
|
|
|
989
|
|
Voluntary
|
|
309
|
|
|
312
|
|
|
257
|
|
Total
|
|
$
|
1,916
|
|
|
$
|
1,914
|
|
|
$
|
1,873
|
|
|
|
|
|
|
|
|
Employee Benefits Loss Ratios
|
|
|
|
|
|
|
Group Life
|
|
78.6
|
%
|
|
81.5
|
%
|
|
74.4
|
%
|
Stop Loss
|
|
77.0
|
%
|
|
81.7
|
%
|
|
80.6
|
%
|
|
|
|
|
|
|
|
|
|
Trailing
twelve months ended
Sept.
30, 2018
|
|
Trailing
twelve months ended
June
30, 2018
|
|
Trailing
twelve months ended
Sept.
30, 2017
|
Total Aggregate Loss Ratio
|
|
73.1
|
%
|
|
72.6
|
%
|
|
74.2
|
%
|
Compared with the third quarter of 2017, total Employee Benefits
in-force premiums increased 2%, reflecting strong growth in Voluntary
premiums and continued pricing discipline in Stop Loss. During the third
quarter of 2018, the Stop Loss and Group Life loss ratios were within
the company's targeted annual range of 77-80%.
Individual Life
Individual Life adjusted operating earnings were $(134) million compared
with $(66) million. The higher loss was due to:
-
$57 million of higher negative DAC/VOBA and other intangibles
unlocking driven by assumption changes, primarily related to increased
expected cost of reinsurance;
-
$11 million of higher investment income, including prepayment fee and
alternative investment income that was, in aggregate, $10 million
above the company's long-term expectations (before the effect of
income taxes and DAC) in the third quarter of 2018; and
-
$4 million of higher administrative expenses due to the reallocation
of strategic investment spending from Corporate into the business
segments.
Total Individual Life sales, which primarily consist of indexed life
insurance, were $20 million, up from $18 million.
Corporate
Corporate adjusted operating losses were $(54) million, including $5
million of positive DAC/VOBA and other intangibles unlocking, compared
with losses of $(110) million. The improvement was largely due to the
reallocation of strategic investment spending into the business
segments, revenue from the company's transition service agreements
associated with the sale of substantially all of its individual
annuities businesses on June 1, 2018, and higher earnings from the
company's legacy annuities business.
Share Repurchases
In the third quarter of 2018, Voya repurchased 5,056,422 shares of its
common stock at an average price per share of $49.44 for an aggregate
purchase price of approximately $250 million.
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.
This additional authorization increases the aggregate amount available
under the company’s share repurchase authorization to approximately $761
million as of Sept. 30, 2018. 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 Dec. 31, 2019 (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., Oct. 31, 2018, at 10 a.m. ET,
to discuss the company’s third-quarter 2018 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 Oct. 31, 2018.
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 14.3 million individual and
institutional customers in the United States, Voya is a Fortune 500
company that had $8.6 billion in revenue in 2017. The company had $543
billion in total assets under management and administration as of Sept.
30, 2018. 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
Adjusted operating earnings before income taxes is a measure used to
evaluate segment performance. We believe that Adjusted operating
earnings before income taxes provides a meaningful measure of its
business and segment performances 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
and/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 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 the comparable
U.S. GAAP 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,
or the attribution of results from consolidated VIEs or VOEs to which
we are not economically entitled;
-
Income (loss) related to early extinguishment of debt, which includes
losses incurred as a result of transactions where we repurchase
outstanding principal amounts of debt; these losses are excluded from
Adjusted operating earnings before income taxes since the outcome of
decisions to restructure debt are not indicative of normal operations;
-
Impairment of goodwill, value of management contract rights and value
of customer relationships acquired, which includes losses as a result
of impairment analysis; these represent losses related to infrequent
events and do not reflect normal, cash-settled expenses;
-
Immediate recognition of net actuarial gains (losses) related to our
pension and other postretirement benefit obligations and gains
(losses) from plan amendments and curtailments, which includes
actuarial gains and losses as a result of differences between actual
and expected experience on pension plan assets or projected benefit
obligation during a given period. We immediately recognize actuarial
gains and (losses) related to pension and other postretirement benefit
obligations and gains and losses from plan adjustments and
curtailments. These amounts do not reflect normal, cash-settled
expenses and are not indicative of current Operating expense
fundamentals; and
-
Other items not indicative of normal operations or performance of our
segments or may be related to infrequent events including capital or
organizational restructurings including certain costs related to debt
and equity offerings as well as stock and/or cash based deal
contingent awards; expenses associated with the rebranding of Voya
Financial, Inc.; severance and other third-party expenses associated
with restructuring. These items vary widely in timing, scope and
frequency between periods as well as between companies to which we are
compared. Accordingly, we adjust for these items as we believe that
these items distort the ability to make a meaningful evaluation of the
current and future performance of our segments. Additionally, with
respect to restructuring, these costs represent changes in operations
rather than investments in the future capabilities of our operating
businesses.
Adjusted operating earnings before income taxes for Corporate includes
Net investment gains (losses) and Net guaranteed benefit hedging gains
(losses) associated with the Retained Business in periods prior to 2018.
These retained amounts are insignificant and do not distort the ability
to make a meaningful evaluation of the trends of Corporate activities.
Income (loss) related to businesses exited through reinsurance or
divestment (including net investment gains (losses) on securities sold
and expenses directly related to these transactions) is excluded from
the results of operations from Adjusted operating earnings before income
taxes. When we present the adjustments to Income (loss) from continuing
operations before income taxes on a consolidated basis, each adjustment
excludes the relative portions attributable to businesses exited through
reinsurance or divestment.
The most directly comparable U.S. GAAP measure to Adjusted operating
earnings before income taxes is Income (loss) from continuing operations
before income taxes. For a reconciliation of Adjusted operating earnings
before income taxes to Income (loss) from continuing operations before
income taxes, see the tables that accompany this release, as well as our
Quarterly Investor Supplement.
Adjusted operating earnings - excluding unlocking is also a non-GAAP
financial measure. This measure excludes from Adjusted operating
earnings before income taxes the following items:
-
DAC/VOBA and other intangibles unlocking; and
-
The net gains included in Adjusted operating earnings from a
distribution of cash and securities in conjunction with a Lehman
Brothers bankruptcy settlement ("Lehman Recovery"), and losses as a
result of the decision to dispose of certain Low Income Housing Tax
Credit partnerships ("LIHTC") as a mean of exiting this asset class.
Because DAC/VOBA and other intangibles unlocking can be volatile,
excluding the effect of this item can improve period to period
comparability. The net gain from the Lehman Brothers bankruptcy
settlement and loss from the disposition of low-income housing tax
credit partnerships affected run-rate results and we believe that this
effect is not reflective of our ongoing performance. .
In addition to Net income (loss) per common share, we report Adjusted
operating earnings per common share (diluted) because we believe that
Adjusted operating earnings before income taxes provides a meaningful
measure of its business and segment performances 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 and/or other factors.
In addition to book value per common share including Accumulated other
comprehensive income (AOCI), we also report book value per common share
excluding AOCI and shareholders' equity excluding AOCI and preferred
stock. Included in AOCI are investment portfolio unrealized gains or
losses. In the ordinary course of business we do not plan to sell most
investments for the sole purpose of realizing gains or losses, and book
value per common share excluding AOCI and common shareholders' equity
excluding AOCI provide a measure consistent with that view. The Adjusted
debt to capital ratio includes a 25% equity treatment afforded to
subordinated debt, 100% equity treatment afforded to preferred stock and
excludes AOCI.
For a reconciliation of these non-GAAP measures to the most directly
comparable U.S. GAAP measures, refer to the tables that accompany this
release, as well as our Quarterly Investor Supplement.
We analyze our segment performance based on the sources of earnings. We
believe this supplemental information is useful in order to gain a
better understanding of our Adjusted operating earnings before income
taxes for the following reasons: (1) we analyze our business using this
information and (2) this presentation can be helpful for investors to
understand the main drivers of Adjusted operating earnings (loss) before
income taxes. The sources of earnings are defined as such:
-
Investment spread and other investment income consists of net
investment income and net realized investment gains (losses)
associated with swap settlements and accrued interest, less interest
credited to policyholder reserves.
-
Fee based margin consists primarily of fees earned on assets under
management ("AUM"), assets under administration ("AUA"), and
transaction based recordkeeping fees.
-
Net underwriting gain (loss) and other revenue contains the following:
the difference between fees charged for insurance risks and incurred
benefits, including mortality, morbidity, and surrender results,
contractual charges for universal life and annuity contracts, the
change in the unearned revenue reserve for universal life contracts,
and that portion of traditional life insurance premiums intended to
cover expenses and profits. Certain contract charges for universal
life insurance are not recognized in income immediately, but are
deferred as unearned revenues and are amortized into income in a
manner similar to the amortization of DAC.
-
Administrative expenses are general expenses, net of amounts
capitalized as acquisition expenses and exclude commission expenses
and fees on letters of credit.
-
Trail commissions are commissions paid that are not deferred and thus
recorded directly to expense.
-
For a detail explanation of DAC/VOBA and other intangibles
amortization/unlocking refer to our Annual Report on Form 10-K and our
Quarterly Report on Form 10-Q.
More details on these sources of earnings can be found in Voya
Financial’s Quarterly Investor Supplement, which is available on Voya
Financial’s investor relations website, investors.voya.com.
Forward-Looking and Other Cautionary Statements
This press release contains 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 involving a historical fact. Forward-looking statements
use words such as “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “plan,” and other words and terms of similar meaning in
connection with a discussion of future operating or financial
performance. Actual results, performance or events may differ materially
from those projected in any forward-looking statement due to, among
other things, (i) general economic conditions, particularly economic
conditions in our core markets, (ii) performance of financial markets,
including emerging markets, (iii) the frequency and severity of insured
loss events, (iv) mortality and morbidity levels, (v) persistency and
lapse levels, (vi) interest rates, (vii) currency exchange rates, (viii)
general competitive factors, (ix) changes in laws and regulations, such
as those relating to Federal taxation, state insurance regulations and
NAIC regulations and guidelines, including those affecting reserve
requirements for variable annuity policies and the use of and possible
application of NAIC accreditation standards to captive reinsurance
entities, those made pursuant to the Dodd-Frank Wall Street Reform and
Consumer Protection Act, and the U.S. Department of Labor’s final rules
and exemptions pertaining to the fiduciary status of providers of
investment advice, or any amendments thereto, (x) changes in the
policies of governments and/or regulatory authorities, and (xi) our
ability to successfully manage the separation of Venerable, including
the transition services, on the expected timeline and economic terms.
Factors that may cause actual results to differ from those in any
forward-looking statement also include those described under “Risk
Factors” and “Management’s Discussion and Analysis of Results of
Operations and Financial Condition - Trends and Uncertainties” in our
Annual Report on Form 10-K for the year ended Dec. 31, 2017, which the
company filed with the Securities and Exchange Commission on Feb. 23,
2018 and in our Quarterly Report on Form 10-Q for the three-month period
ended Sept. 30, 2018, which the company expects to file with the
Securities and Exchange Commission on or before Nov. 9, 2018.
VOYA-IR
Reconciliation of Net Income (Loss) to Adjusted Operating
Earnings - Quarter-to-Date
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions USD)
|
|
|
9/30/2018
|
|
9/30/2017
|
|
|
|
|
|
|
Net Income (loss) available to Voya Financial, Inc.'s common
shareholders
|
|
|
$
|
142
|
|
|
$
|
149
|
|
Plus: Net income (loss) attributable to noncontrolling interest
|
|
|
23
|
|
|
65
|
|
Net Income (loss)
|
|
|
165
|
|
|
214
|
|
Less: Income from Discontinued Operations, net of tax
|
|
|
—
|
|
|
134
|
|
Net Income (loss) from continuing operations
|
|
|
165
|
|
|
80
|
|
Less: Net Income (loss) attributable to noncontrolling interest
|
|
|
23
|
|
|
65
|
|
Less: Adjustments to adjusted operating earnings
|
|
|
|
|
|
Net Investment gains (losses) and related charges and adjustments
|
|
|
11
|
|
|
(12
|
)
|
Other adjustments (2) |
|
|
(11
|
)
|
|
(56
|
)
|
Total Adjustments to adjusted operating earnings before tax effect
|
|
|
—
|
|
|
(68
|
)
|
Income taxes on adjustments to adjusted operating earnings (1) |
|
|
—
|
|
|
22
|
|
Total Adjustments to adjusted operating earnings, after tax(1) |
|
|
—
|
|
|
(46
|
)
|
Less: Difference between actual tax (expense) benefit and assumed
tax rate
|
|
|
3
|
|
|
32
|
|
Adjusted Operating earnings, after-tax
(1)
|
|
|
139
|
|
|
29
|
|
Less: Income taxes (1) |
|
|
(24
|
)
|
|
(14
|
)
|
Adjusted operating earnings before income taxes
|
|
|
$
|
163
|
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income per Share to Adjusted Operating
Earnings per Share
|
|
|
|
|
|
|
|
Three Months Ended
|
(in USD per diluted share)
|
|
|
9/30/2018
|
|
9/30/2017
|
|
|
|
|
|
|
Net Income (loss) available to Voya Financial, Inc.'s common
shareholders
|
|
|
$
|
0.87
|
|
|
$
|
0.81
|
|
Less: Income from Discontinued Operations, net of tax
|
|
|
—
|
|
|
0.73
|
|
Net Income (loss) from continuing operations
|
|
|
0.87
|
|
|
0.08
|
|
Less: Net Investment gains (losses) and related charges and
adjustments, after-tax
|
|
|
0.05
|
|
|
(0.04
|
)
|
Less: Other adjustments, after-tax (2) |
|
|
(0.04
|
)
|
|
(0.20
|
)
|
Less: Effect of assumed tax rate vs. actual tax rate
|
|
|
0.02
|
|
|
0.16
|
|
Less: Adjustment due to antidilutive effect of net loss in the
current period
|
|
|
—
|
|
|
—
|
|
Adjusted Operating earnings, after-tax
(1)
|
|
|
$
|
0.84
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Fully Diluted Weighted Average Shares to
Adjusted Operating Diluted Weighted Average Shares
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions USD)
|
|
|
9/30/2018
|
|
9/30/2017
|
|
|
|
|
|
|
Fully Diluted weighted average shares outstanding
|
|
|
164
|
|
|
182
|
|
Dilutive effect of the exercise or issuance of stock based awards
|
|
|
—
|
|
|
—
|
|
Weighted average common shares outstanding - diluted (adjusted
operating)
|
|
|
164
|
|
|
182
|
|
(1)
Voya Financial assumes a 32% tax rate on adjusted
operating earnings and all components of adjusted operating earnings
described as "after tax" for 2017. For 2018, the adjusted operating
effective tax rate is based on the actual income tax expense for the
current period related to Income (loss) from continuing operations,
adjusted for estimated taxes on non-operating items and non-operating
tax impacts, such as those related to restructuring, changes in a tax
valuation allowance and changes to tax law, including the Tax Cuts and
Jobs Act. A 35% tax rate is applied to all non-operating items in 2017
and 21% in 2018. The 32% tax rate for 2017 adjusted operating earnings
and components reflects the estimated benefit of the dividend received
deduction related to the company's Retirement, Investment Management,
Employee Benefits and Individual Life segments.
(2) “Other adjustments” consists of net guaranteed benefit
hedging gains (losses) and related charges and adjustments; income
(loss) from business exited; immediate recognition of net actuarial
gains (losses) related to pension and other post-retirement benefit
obligations and gains (losses) from plan amendments and curtailments;
expenses associated with the rebranding of Voya Financial from ING U.S.;
and restructuring expenses (severance, lease write-offs, etc.).
Reconciliation of Book Value per Common Share to Book Value per
Share excluding AOCI
|
|
|
|
As of September 30, 2018
|
|
|
As of September 30, 2017
|
Book value per common share, including AOCI
|
|
|
$
|
52.22
|
|
|
|
$
|
75.98
|
|
Per share impact of AOCI
|
|
|
(4.94
|
)
|
|
|
(15.20
|
)
|
Book value per common share, excluding AOCI
|
|
|
$
|
47.28
|
|
|
|
$
|
60.78
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Investment Management Adjusted Operating Margin
to Adjusted Operating Margin Excluding Investment Capital
(1)
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions USD, unless otherwise indicated)
|
|
|
9/30/2018
|
|
|
6/30/2018
|
|
|
9/30/2017
|
|
|
|
|
|
|
|
|
|
Adjusted Operating revenues
|
|
|
$
|
168
|
|
|
$
|
171
|
|
|
$
|
171
|
|
Adjusted operating expenses
|
|
|
(120
|
)
|
|
(119
|
)
|
|
(117
|
)
|
Adjusted operating earnings before income taxes
|
|
|
$
|
48
|
|
|
$
|
52
|
|
|
$
|
54
|
|
Adjusted operating margin
|
|
|
28.9
|
%
|
|
30.7
|
%
|
|
31.3
|
%
|
|
|
|
|
|
|
|
|
Adjusted Operating revenues
|
|
|
$
|
168
|
|
|
$
|
171
|
|
|
$
|
171
|
|
Less:
|
|
|
|
|
|
|
|
Investment Capital Results
|
|
|
8
|
|
|
5
|
|
|
5
|
|
Adjusted operating revenues excluding Investment Capital
|
|
|
160
|
|
|
166
|
|
|
166
|
|
Adjusted operating expenses
|
|
|
(120
|
)
|
|
(119
|
)
|
|
(118
|
)
|
Adjusted operating earnings excluding Investment Capital
|
|
|
$
|
40
|
|
|
$
|
47
|
|
|
$
|
49
|
|
Adjusted operating margin excluding Investment Capital
|
|
|
25.4
|
%
|
|
28.7
|
%
|
|
29.2
|
%
|
(1) In our Investment Management business, adjusted operating
margin excluding Investment Capital results is reported because results
from Investment Capital can be volatile and excluding the effect of this
item can improve period-to-period comparability.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181030006092/en/
Media:
Christopher Breslin, 212-309-8941
Christopher.Breslin@voya.com
or
Bill
Sutton, 860-580-2626
William.Sutton@voya.com
or
Investors:
Michael
Katz, 212-309-8999
IR@voya.com
or
Billy
Cheung, 212-309-8984
IR@voya.com
Source: Voya Financial, Inc.