[February 05, 2019] |
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Voya Financial Announces Fourth-Quarter and Full-Year 2018 Results
Voya Financial, Inc. (NYSE: VOYA) today announced financial results for
the fourth quarter of 2018 and the full-year 2018.
"We concluded 2018 with strong results that demonstrate our continued
commitment to driving profitable organic growth and creating greater
value for our shareholders," said Rodney O. Martin, Jr., chairman and
CEO, Voya Financial, Inc. "We demonstrated continued momentum across our
businesses with Retirement Full Service recurring deposits for 2018
increasing 10% compared with 2017; $694 million of positive
Institutional net flows in Investment Management in the fourth quarter
of 2018; and a 5% increase in Employee Benefits annualized in-force
premiums compared with the fourth quarter of 2017.
"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 fourth-quarter 2018
adjusted operating earnings were $1.40 per diluted share, after-tax,
which is at the high-end of our previously shared target range of $1.30
to $1.40 earnings per share that we had aimed to achieve by the end of
the second quarter of 2019.
"Normalized full-year 2018 adjusted operating earnings - which exclude
DAC/VOBA and other intangibles unlocking, the benefit of prepayment fees
and alternative investment income above our long-term expectations, and
Investment Management adjusted operating earnings associated with the
fixed and variable annuities business that was sold on June 1, 2018 -
were $4.88 per diluted share, after-tax.
"We also further executed on our capital deployment plans and
repurchased $275 million of Voya common shares in the fourth quarter of
2018. Including the accelerated share repurchase agreement that we
executed at the end of 2017, we delivered on our previously-announced
plan to repurchase at least $1.5 billion of Voya common shares in 2018.
"We also concluded 2018 with $871 million in excess capital and, in the
first quarter of 2019, we entered into a new accelerated share
repurchase agreement to buy back an additional $250 million of our
common shares. We remain committed to our capital deployment plans,
which continue to emphasize share repurchases, so that - along with our
organic growth and cost savings initiatives - we can achieve our target
of at least 10% annual adjusted operating earnings per share growth over
the next three years, on a normalized basis.
"As a simpler, more focused company, Voya remains well positioned to
achieve its plans to drive greater shareholder returns by ensuring we
continue to both anticipate and meet our customers' needs, which will
also enable us to achieve our vision to be America's Retirement
Company," added Martin.
FOURTH-QUARTER 2018 SUMMARY
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Three Months Ended
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December 31, 2018
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December 31, 2017
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($ in millions)
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(per share)
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($ in millions)
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(per share)
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Net income available to common shareholders
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$121
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$0.76
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$(3,165)
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$(17.64)
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Adjusted operating earnings, after-tax
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$209
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$1.32
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$158
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$0.87
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Common book value
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$52.28
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$58.19
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Common book value, excluding AOCI
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$48.26
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$42.31
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Weighted avg common shares outstanding (in millions):
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Basic
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154
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179
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Diluted
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158
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183
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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 in the fourth quarter
of 2018 was $121 million, or $0.76 per diluted share, compared with
$(3,165) million, or $(17.64) per diluted share in the fourth quarter of
2017. Net income available to common shareholders in the fourth quarter
of 2017 included a $2.6 billion loss from discontinued operations
related to the company's sale of the majority of its individual
annuities businesses and a $679 million one-time loss related to the
reduction in the carrying value of deferred tax assets due to the lower
corporate tax rate established by the Tax Cuts and Jobs Act.
Adjusted operating earnings in the fourth quarter of 2018 were
$209 million, or $1.32 per diluted share, after-tax, up from $158
million, or $0.87 per diluted share, after-tax, in the fourth quarter of
2017. The increase was driven by improved underwriting results in
Employee Benefits, higher investment income, and lower expenses in
Corporate, which were partially offset by higher negative DAC/VOBA and
other intangibles unlocking as well as lower fee-based margins due to
the company's June 1, 2018 sale of substantially all of its annuities
businesses and the fourth quarter of 2017 benefiting from higher
performance-based fees in Investment Management.
In addition, fourth-quarter 2018 adjusted operating earnings benefited
from a change in the effective tax rate from 32.0% in the fourth quarter
of 2017 to 12.2% in the fourth quarter of 2018. The fourth-quarter 2018
tax rate reflected a benefit of $11 million, or $0.07 per diluted share,
due to a greater dividends received deduction than previously estimated.
FULL-YEAR 2018 SUMMARY
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Twelve Months Ended
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December 31, 2018
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December 31, 2017
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($ in millions)
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(per share)
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($ in millions)
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(per share)
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Net income available to common shareholders
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$875
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$5.20
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$(2,992)
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$(16.25)
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Adjusted operating earnings, after-tax
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$680
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$4.04
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$359
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$1.92
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Common book value
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$52.28
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$58.19
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Common book value, excluding AOCI
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$48.26
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$42.31
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Weighted avg common shares outstanding (in millions):
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Basic
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163
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184
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Diluted
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168
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187
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Net income available to common shareholders in the full-year 2018
was $875 million, or $5.20 per diluted share, compared with $(2,992)
million, or $(16.25) per diluted share in the full-year 2017. Net income
available to common shareholders in the full-year 2017 includes the
previously mentioned fourth-quarter 2017 loss from discontinued
operations related to the company's sale of the majority of its
individual annuities businesses and the one-time loss related to the
reduction in the carrying value of deferred tax assets.
Adjusted operating earnings in the full-year 2018 were $680
million, or $4.04 per diluted share, after-tax, up from $359 million, or
$1.92 per diluted share, after-tax, in the full-year 2017. The increase
was driven by lower negative DAC/VOBA and other intangibles unlocking,
higher investment income, improved underwriting results in Employee
Benefits, higher fee-based margins, and lower expenses in Corporate.
FOURTH-QUARTER AND FULL-YEAR 2018 HIGHLIGHTS
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Continued execution of the company's long-term plan to drive organic
growth, cost savings and capital deployment.
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Capital deployment:
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Repurchased $275 million of Voya common stock in the
fourth-quarter of 2018 and delivered on the previously announced
plan to repurchase $1.5 billion in shares by the end of 2018.
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Reduced outstanding senior debt by $325 million.
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Excess capital of $871 million as of Dec. 31, 2018, 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 Dec. 31, 2018, Voya's estimated RBC
ratio was 479% and includes the impact of the industry-wide
changes to the factors affecting the RBC formula that were driven
by a change in the corporate tax rate. During the fourth quarter
of 2018, Voya also established a new RBC ratio target of 400%,
which the company believes is appropriate given its simpler
portfolio of higher-growth, higher-return, capital-light
businesses and actions taken during 2018 to lower balance sheet
risk, including divestment of its variable and fixed annuities
businesses.
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Organic growth:
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Retirement reported fourth-quarter 2018 adjusted operating
earnings (excluding DAC/VOBA and other intangibles unlocking) of
$183 million, up 14% compared with the fourth quarter of 2017,
largely driven by higher investment income and fee-based margins.
For the full-year 2018, Retirement achieved record adjusted
operating earnings (excluding DAC/VOBA and other intangibles
unlocking) of $702 million, up 18% compared with full-year 2017.
For 2018, Full Service recurring deposits grew 10% compared with
the prior year period to reach $9.3 billion.
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Investment Management reported fourth-quarter 2018 adjusted
operating earnings of $44 million and generated $694 million of
Institutional net flows, reflecting strong commercial growth in
the business and the 12th consecutive quarter of positive
Institutional net flows. External client sales were $7.3 billion
in the fourth quarter of 2018. Investment Management full-year
2018 adjusted operating earnings were $205 million and reflect a
6% increase in external client fee revenues compared with
full-year 2017.
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Employee Benefits increased fourth-quarter 2018 adjusted
operating earnings to $43 million, up 39% compared with the fourth
quarter of 2017 and driven by an improved loss ratio for Stop
Loss. For the full-year 2018, Employee Benefits achieved record
adjusted operating earnings (excluding DAC/VOBA and other
intangibles unlocking) of $161 million, up 26% compared with
full-year 2017. The Employee Benefits total aggregate loss ratio
improved to 72.5% for 2018, compared with 74.0% for 2017. In the
fourth quarter of 2018, annualized in-force premiums increased 5%
compared with the fourth quarter of 2017, reflecting both
continued pricing discipline and a strong increase in the
Voluntary business.
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Total company assets under management and administration of $467
billion as of Dec. 31, 2018.
SEGMENT DISCUSSIONS
The following segment discussions compare the fourth quarter of 2018
with the fourth quarter of 2017, unless otherwise noted. All figures are
presented before income taxes.
Retirement
Retirement adjusted operating earnings were $170 million, up from $168
million. The increase primarily reflects:
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$13 million of negative DAC/VOBA and other intangibles unlocking in
the fourth quarter of 2018 compared with $7 million of positive
DAC/VOBA and other intangibles unlocking in the fourth quarter of 2017;
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$19 million of higher fee-based margin primarily due to the benefit of
fees from the movement of certain investment-only products to
Retirement from Corporate;
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$17 million of higher investment income, including prepayment fee and
alternative investment income that was, in aggregate, $11 million
above the company's long-term expectations (before the effect of
income taxes and DAC) in the fourth quarter of 2018; and
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$23 million of higher administrative expenses largely due to the
movement of certain investment-only products and strategic investment
spending to Retirement from Corporate.
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($ in millions)
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Trailing twelve months ended Dec. 31,
2018
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Trailing twelve months ended Sept. 30,
2018
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Trailing twelve months ended Dec. 31,
2017
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Retirement - Full Service
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Full Service recurring deposits
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$
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9,343
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$
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9,164
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$
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8,478
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($ in millions)
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Three months ended Dec. 31, 2018
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Three months ended Sept. 30, 2018
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Three months ended Dec. 31, 2017
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Retirement
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Total client assets
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$
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361,575
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$
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434,862
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$
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432,341
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Retirement - Full Service
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Full Service recurring deposits
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$
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2,173
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$
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2,267
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$
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1,994
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Full Service net flows
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$
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1,315
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$
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99
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$
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(27
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Full Service client assets
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$
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119,219
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$
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128,641
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$
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122,565
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The decline in Retirement total client assets for the three months ended
Dec. 31, 2018 compared with the prior periods 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 $44 million,
compared with $60 million. The decline primarily reflects:
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$23 million of lower fee-based revenues driven by lower general
account average AUM (resulting from the company's June 1, 2018 sale of
substantially all of its annuities businesses) and the fourth quarter
of 2017 benefiting from higher performance-based fees;
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$3 million of lower investment capital revenues, however
fourth-quarter 2018 investment capital results were in-line with
long-term expectations; and
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$10 million of lower expenses primarily due to lower volume expenses
associated with lower revenue during the quarter.
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($ in millions)
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4Q 2018
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3Q 2018
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4Q 2017
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Investment Management AUM
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External clients
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$
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147,176
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$
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154,553
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$
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142,280
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General account
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56,288
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55,862
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82,006
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Total
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$
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203,464
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$
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210,415
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$
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224,286
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Investment Management Net Flows
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Institutional
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$
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694
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$
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1,392
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$
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528
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Retail (including sub-advisor replacements)
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(1,120
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)
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(315
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)
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(223
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)
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Total (excluding divested annuities)
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$
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(426
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)
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$
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1,077
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$
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305
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Divested annuities outflows
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(578
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)
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(600
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)
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(1,443
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)
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Total
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$
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(1,004
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)
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$
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477
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$
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(1,137
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)
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During the fourth quarter of 2018, Investment Management (IM) net
outflows (excluding divested annuities) were $426 million. This included:
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$694 million in Institutional net inflows, primarily from fixed
income asset classes and senior loans, and reflecting $1.6 billion of
net inflows from IM-sourced channels, partially offset by $884 million
of net outflows from Affiliate-sourced channels.
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$1.1 billion in Retail net outflows, reflecting outflows in
both IM-sourced (primarily senior loan and real estate strategies) and
Affiliate-sourced channels.
Total Investment Management AUM was $203 billion as of Dec. 31, 2018.
The decline from Sept. 30, 2018 primarily reflects lower equity markets
and total net flows, while the decline from Dec. 31, 2017 primarily
reflects 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 $43 million, up from
$31 million. The increase primarily reflects:
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$18 million of higher underwriting results driven by an 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;
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$3 million of higher administrative expenses to support growth in the
business; and
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$1 million of higher investment income, including prepayment fee and
alternative investment income that was, in aggregate, $1 million above
the company's long-term expectations (before the effect of income
taxes and DAC) in the fourth quarter of 2018.
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($ in millions)
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4Q 2018
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3Q 2018
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4Q 2017
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Employee Benefits Annualized In-Force Premiums
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Group Life, Disability and Other
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$
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659
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$
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654
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$
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623
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Stop Loss
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969
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953
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969
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Voluntary
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311
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309
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|
257
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Total
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$
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1,939
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$
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1,916
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$
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1,849
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Employee Benefits Loss Ratios
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Group Life
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78.7
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%
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78.6
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%
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76.1
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%
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Stop Loss
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77.5
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%
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77.0
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%
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83.9
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%
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Trailing twelve months ended Dec. 31,
2018
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Trailing twelve months ended Sept. 30,
2018
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Trailing twelve months ended Dec. 31,
2017
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Total Aggregate Loss Ratio
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72.5
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%
|
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|
73.1
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%
|
|
|
74.0
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%
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Compared with the fourth quarter of 2017, total Employee Benefits
in-force premiums increased 5%, reflecting strong growth in Voluntary
premiums and continued pricing discipline in Stop Loss. The Total
Aggregate Loss Ratio improved to 72.5% for 2018, within the company's
target range of 71% to 74% and driven largely by significant improvement
in the loss ratio for Stop Loss.
Individual Life
Individual Life adjusted operating earnings were $43 million compared
with $64 million. The decline primarily reflects:
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$13 million of higher negative DAC/VOBA and other intangibles
unlocking due to unfavorable unlocking related to assumption updates
on cost of reinsurance, somewhat offset by favorable unlocking due to
timing of reinsurance premiums in the period.
-
$8 million of higher investment income, including prepayment fee and
alternative investment income that was, in aggregate, $6 million above
the company's long-term expectations (before the effect of income
taxes and DAC) in the fourth 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 $26 million. Voya ceased new sales of individual life
insurance on Dec. 31, 2018.
Corporate
Corporate adjusted operating losses were $62 million, including $1
million of negative DAC/VOBA and other intangibles unlocking, compared
with losses of $90 million. The improvement was largely due to 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
and the reallocation of strategic investment spending into the business
segments. Earnings from the company's legacy annuities business were
largely unchanged.
Share Repurchases
In the fourth quarter of 2018, Voya repurchased 6,169,463 shares of its
common stock at an average price per share of $44.51 for an aggregate
purchase price of approximately $275 million.
In the first quarter of 2019, Voya entered into an accelerated share
repurchase ("ASR") agreement with a third-party to repurchase an
aggregate of $250 million of Voya's common stock. Under the terms of the
ASR agreement, approximately 5 million shares were received by Voya in
January 2019. 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 no later than the beginning of the second
quarter of 2019.
Giving effect to the completion of the ASR agreement, the aggregate
amount remaining under the company's share repurchase authorization
would be approximately $236 million.
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., Feb. 6, 2019, at 10 a.m. ET,
to discuss the company's fourth-quarter and full-year 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 Feb. 6, 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 $8.6 billion in revenue in 2018. The company had $467
billion in total assets under management and administration as of Dec.
31, 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
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,
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 events such as capital or organizational
restructurings undertaken to achieve long-term economic benefits,
including certain costs related to debt and equity offerings and
severance and other expenses associated with such activities. 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.
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, 2018, which the
company expects to file with the Securities and Exchange Commission on
or before March 1, 2019.
VOYA-IR
|
Reconciliation of Net Income (Loss) to Adjusted Operating
Earnings - Quarter-to-Date
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions USD)
|
|
|
12/31/2018
|
|
12/31/2017
|
|
|
|
|
|
|
Net Income (loss) available to Voya Financial, Inc.'s common
shareholders
|
|
|
$
|
121
|
|
|
$
|
(3,165
|
)
|
Plus: Net income (loss) attributable to noncontrolling interest
|
|
|
56
|
|
|
82
|
|
Net Income (loss)
|
|
|
177
|
|
|
(3,083
|
)
|
Less: Income from Discontinued Operations, net of tax
|
|
|
-
|
|
|
(2,616
|
)
|
Net Income (loss) from continuing operations
|
|
|
177
|
|
|
(467
|
)
|
Less: Net Income (loss) attributable to noncontrolling interest
|
|
|
56
|
|
|
82
|
|
Less: Adjustments to adjusted operating earnings
|
|
|
|
|
|
Net Investment gains (losses) and related charges and adjustments
|
|
|
(37
|
)
|
|
(54
|
)
|
Other adjustments (2)
|
|
|
(95
|
)
|
|
(41
|
)
|
Total Adjustments to adjusted operating earnings before tax effect
|
|
|
(132
|
)
|
|
(95
|
)
|
Income taxes on adjustments to adjusted operating earnings (1)
|
|
|
28
|
|
|
33
|
|
Total Adjustments to adjusted operating earnings, after tax(1)
|
|
|
(104
|
)
|
|
(62
|
)
|
Less: Difference between actual tax (expense) benefit and assumed
tax rate
|
|
|
16
|
|
|
(645
|
)
|
Adjusted Operating earnings, after-tax (1)
|
|
|
209
|
|
|
158
|
|
Less: Income taxes (1)
|
|
|
(29
|
)
|
|
(75
|
)
|
Adjusted operating earnings before income taxes
|
|
|
$
|
238
|
|
|
$
|
233
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted Operating
Earnings - Year-to-Date
|
|
|
|
|
|
|
|
Year-to-Date
|
(in millions USD)
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
Net Income (loss) available to Voya Financial, Inc.'s common
shareholders
|
|
|
$
|
875
|
|
|
|
$
|
(2,992
|
)
|
Plus: Net income (loss) attributable to noncontrolling interest
|
|
|
137
|
|
|
|
200
|
|
Net Income (loss)
|
|
|
1,012
|
|
|
|
(2,792
|
)
|
Less: Income from Discontinued Operations, net of tax
|
|
|
457
|
|
|
|
(2,580
|
)
|
Net Income (loss) from continuing operations
|
|
|
555
|
|
|
|
(212
|
)
|
Less: Net Income (loss) attributable to noncontrolling interest
|
|
|
137
|
|
|
|
200
|
|
Less: Adjustments to adjusted operating earnings
|
|
|
|
|
|
|
Net Investment gains (losses) and related charges and adjustments
|
|
|
(127
|
)
|
|
|
(84
|
)
|
Other adjustments (2)
|
|
|
(202
|
)
|
|
|
(116
|
)
|
Total Adjustments to adjusted operating earnings before tax effect
|
|
|
(329
|
)
|
|
|
(200
|
)
|
Income taxes on adjustments to adjusted operating earnings (1)
|
|
|
70
|
|
|
|
70
|
|
Total Adjustments to adjusted operating earnings, after tax(1)
|
|
|
(259
|
)
|
|
|
(130
|
)
|
Less: Difference between actual tax (expense) benefit and assumed
tax rate
|
|
|
(3
|
)
|
|
|
(641
|
)
|
Adjusted Operating earnings, after-tax (1)
|
|
|
680
|
|
|
|
359
|
|
Less: Income taxes (1)
|
|
|
(122
|
)
|
|
|
(169
|
)
|
Adjusted operating earnings before income taxes
|
|
|
$
|
802
|
|
|
|
$
|
528
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income per Share to Adjusted Operating
Earnings per Share - Quarter-to-Date
|
|
Three Months Ended
|
(in USD per diluted share)
|
12/31/2018
|
12/31/2017
|
|
|
|
Net Income (loss) available to Voya Financial, Inc.'s common
shareholders
|
$
|
0.76
|
|
$
|
(17.64
|
)
|
Less: Income from Discontinued Operations, net of tax
|
-
|
|
(14.58
|
)
|
Net Income (loss) from continuing operations
|
0.76
|
|
(3.06
|
)
|
Less: Net Investment gains (losses) and related charges and
adjustments, after-tax
|
(0.19
|
)
|
(0.19
|
)
|
Less: Other adjustments, after-tax (2)
|
(0.47
|
)
|
(0.15
|
)
|
Less: Effect of assumed tax rate vs. actual tax rate
|
0.10
|
|
(3.53
|
)
|
Less: Adjustment due to antidilutive effect of net loss in the
current period
|
-
|
|
(0.06
|
)
|
Adjusted Operating earnings, after-tax (1)
|
$
|
1.32
|
|
$
|
0.87
|
|
|
Reconciliation of Net Income per Share to Adjusted Operating
Earnings per Share - Year-to-Date
|
|
|
|
|
|
|
|
Year-to-Date
|
(in USD per diluted share)
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
Net Income (loss) available to Voya Financial, Inc.'s common
shareholders
|
|
|
$
|
5.20
|
|
|
|
$
|
(16.25
|
)
|
Less: Income from Discontinued Operations, net of tax
|
|
|
2.72
|
|
|
|
(14.01
|
)
|
Net Income (loss) from continuing operations
|
|
|
2.48
|
|
|
|
(2.24
|
)
|
Less: Net Investment gains (losses) and related charges and
adjustments, after-tax
|
|
|
(0.61
|
)
|
|
|
(0.29
|
)
|
Less: Other adjustments, after-tax (2)
|
|
|
(0.94
|
)
|
|
|
(0.40
|
)
|
Less: Effect of assumed tax rate vs. actual tax rate
|
|
|
(0.01
|
)
|
|
|
(3.43
|
)
|
Less: Adjustment due to antidilutive effect of net loss in the
current period
|
|
|
-
|
|
|
|
(0.04
|
)
|
Adjusted Operating earnings, after-tax (1)
|
|
|
$
|
4.04
|
|
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Fully Diluted Weighted Average Shares to
Adjusted Operating Diluted Weighted Average Shares
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions USD)
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
Fully Diluted weighted average shares outstanding
|
|
|
158
|
|
|
|
179
|
Dilutive effect of the exercise or issuance of stock based awards
|
|
|
-
|
|
|
|
4
|
Weighted average common shares outstanding - diluted (adjusted
operating)
|
|
|
158
|
|
|
|
183
|
|
|
|
|
|
|
|
|
|
Reconciliation of Fully Diluted Weighted Average Shares to
Adjusted Operating Diluted Weighted Average Shares
|
|
|
|
|
|
|
|
Twelve Months Ended
|
(in millions USD)
|
|
|
12/31/2018
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
Fully Diluted weighted average shares outstanding
|
|
|
168
|
|
|
|
184
|
Dilutive effect of the exercise or issuance of stock based awards
|
|
|
-
|
|
|
|
3
|
Weighted average common shares outstanding - diluted (adjusted
operating)
|
|
|
168
|
|
|
|
187
|
|
|
|
|
|
|
|
|
(1) Voya Financial assumed 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. For non-operating items, we
apply a 35% tax rate in 2017 and 21% in 2018. The 32% tax rate for
2017 adjusted operating earnings and components reflects the
estimated benefit of the dividends 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 December 31, 2018
|
|
As of December 31, 2017
|
Book value per common share, including AOCI
|
|
|
$
|
52.28
|
|
|
$
|
58.19
|
|
Per share impact of AOCI
|
|
|
|
(4.02
|
)
|
|
|
(15.88
|
)
|
Book value per common share, excluding AOCI
|
|
|
$
|
48.26
|
|
|
$
|
42.31
|
|
|
|
|
|
|
|
|
Reconciliation of Investment Management Adjusted Operating Margin
to Adjusted Operating Margin Excluding Investment Capital (1)
|
|
|
|
|
|
|
|
Three Months Ended
|
(in millions USD, unless otherwise indicated)
|
|
|
12/31/2018
|
|
|
|
9/30/2018
|
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating revenues
|
|
|
$
|
159
|
|
|
|
$
|
168
|
|
|
|
$
|
186
|
|
Adjusted operating expenses
|
|
|
(115
|
)
|
|
|
(120
|
)
|
|
|
(125
|
)
|
Adjusted operating earnings before income taxes
|
|
|
$
|
44
|
|
|
|
$
|
48
|
|
|
|
$
|
61
|
|
Adjusted operating margin
|
|
|
27.7
|
%
|
|
|
28.9
|
%
|
|
|
32.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating revenues
|
|
|
$
|
159
|
|
|
|
$
|
168
|
|
|
|
$
|
186
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Investment Capital Results
|
|
|
5
|
|
|
|
8
|
|
|
|
8
|
|
Adjusted operating revenues excluding Investment Capital
|
|
|
154
|
|
|
|
160
|
|
|
|
178
|
|
Adjusted operating expenses
|
|
|
(115
|
)
|
|
|
(120
|
)
|
|
|
(125
|
)
|
Adjusted operating earnings excluding Investment Capital
|
|
|
$
|
39
|
|
|
|
$
|
40
|
|
|
|
$
|
53
|
|
Adjusted operating margin excluding Investment Capital
|
|
|
25.5
|
%
|
|
|
25.4
|
%
|
|
|
29.3
|
%
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
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