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Voya Financial Announces Second-Quarter 2019 ResultsVoya Financial, Inc. (NYSE: VOYA) today announced financial results for the second quarter of 2019. "During the second quarter, we once again delivered strong bottom-line growth with normalized second-quarter 2019 adjusted operating earnings of $1.30 per diluted share, after tax, up 11% compared with the second quarter of 2018," said Rodney O. Martin, Jr., chairman and CEO, Voya Financial, Inc. "Our results in the quarter reflect continued strong organic growth in each of our core businesses. Retirement full-service recurring deposits for the trailing 12 months ended June 30 grew 9% over the prior-year period; Investment Management generated $1.1 billion in positive net flows (excluding divested annuities); and Employee Benefits grew in-force premiums 12% compared with the second quarter of 2018. "In addition to organic growth, we continue to execute on our capital-deployment plans. In the second quarter, we completed the previously announced $236 million accelerated share repurchase agreement and entered into a new agreement to repurchase $200 million of our common stock. While share repurchases are core to our capital management, we also announced last week that our board of directors increased the third-quarter 2019 common stock dividend to $0.15 per share, which is consistent with our plans. In total, we have returned approximately $5.7 billion of capital to our shareholders through share repurchases and dividends. In addition to providing shareholder value, our share repurchases and our increased dividend demonstrate our ability to continue to generate strong free cash flows and our confidence in our plans. "At the same time, we continue to make progress toward achieving our cost-savings targets as stranded costs associated with last year's sale of substantially all of Voya's individual annuities once again declined in the second quarter. "We are confident that our plans to drive organic growth, effectively deploy capital and deliver cost savings will create significant shareholder value, and we remain committed to achieving our target of at least 10% annual adjusted operating earnings per share growth over the next three years, on a normalized basis," added Martin. 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. SECOND-QUARTER 2019 SUMMARY
Net income available to common shareholders in the second quarter of 2019 was $226 million, or $1.51 per diluted share, compared with $166 million, or $0.96 per diluted share, in the second quarter of 2018. The increase reflects higher alternative investment income in the second quarter of 2019 and unfavorable DAC/VOBA and other intangible unlocking in the second quarter of 2018. On a per-share basis, the increase reflects the company's share repurchases. Adjusted operating earnings in the second quarter of 2019 were $229 million, or $1.52 per diluted share, after tax, up from $195 million, or $1.13 per diluted share, after tax, in the second quarter of 2018. Second-quarter 2019 results included $1 million, after tax, of unfavorable DAC/VOBA and other intangibles unlocking as well as prepayment fees and alternative investment income that was $35 million, after tax, above the company's long-term expectations. Second-quarter 2018 results included $22 million, after tax, of unfavorable DAC/VOBA and other intangibles unlocking as well as prepayment fees and alternative investment income that was $10 million, after tax, above the company's long-term expectations. On a per-share basis, the increase reflects the company's share repurchases. Normalized adjusted operating earnings (which excludes DAC/VOBA and other intangibles unlocking; prepayment fees and alternative investment income above or below the company's long-term expectations; and Investment Management adjusted operating earnings associated with the annuities business that was sold on June 1, 2018) in the second quarter of 2019 were $195 million, or $1.30 per diluted share, after tax, compared with $202 million, or $1.17 per diluted share, after tax, in the second quarter of 2018. Higher normalized adjusted operating earnings in Employee Benefits and a decrease in Corporate losses were offset by lower normalized adjusted operating earnings in Retirement, Investment Management and Individual Life. On a per-share basis, the increase reflects the company's share repurchases. SECOND-QUARTER 2019 HIGHLIGHTS
SEGMENT DISCUSSIONS The following segment discussions compare the second quarter of 2019 with the second quarter of 2018, unless otherwise noted. All figures are presented before income taxes. Retirement Retirement adjusted operating earnings were $180 million, up from $169 million. The increase primarily reflects:
For the TTM ended June 30, 2019, Retirement full-service recurring deposits grew 9% compared with the prior period to $9.8 billion and reflect growth in both Small-Mid Corporate and Tax-Exempt Markets. Retirement total client assets for the three months ended June 30, 2019, were $402 billion, up 3% compared with the three months ended March 31, 2019. The decline in total client assets compared with June 30, 2018, reflects a previously announced termination of a large recordkeeping plan of approximately $40 billion of plan assets in the fourth quarter of 2018. Investment Management Investment Management adjusted operating earnings were $41 million, compared with $52 million. The decline primarily reflects:
During the second quarter of 2019, Investment Management net flows (excluding divested annuities) of $1,089 million included $772 million in Institutional net inflows (primarily from fixed income asset classes and CLO issuances) and $317 million in Retail net inflows (primarily from sub-advisor replacements, which were partially offset by net outflows in certain equity strategies). Total Investment Management AUM was $214 billion as of June 30, 2019. The increase from March 31, 2019 and June 30, 2018, primarily reflects higher equity markets and total net flows. Employee Benefits Employee Benefits adjusted operating earnings were $49 million, up from $35 million. The increase primarily reflects:
Compared with the second quarter of 2018, total Employee Benefits in-force premiums increased 12%, reflecting strong growth in all products, particularly in the Voluntary business. The Total Aggregate Loss Ratio improved to 71.6% for the TTM ended June 30, 2019, within the company's target range of 71% to 74%. Individual Life Individual Life (which ceased new sales on Dec. 31, 2018) had adjusted operating earnings of $47 million compared with $41 million. The increase primarily reflects:
Corporate Corporate adjusted operating losses were $39 million compared with losses of $59 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. Share Repurchases During the second quarter of 2019, Voya completed the previously announced ASR agreement entered into with a third-party to repurchase an aggregate of $236 million of Voya's common stock. Under this agreement, approximately 4.47 million shares of common stock were repurchased. Also during the second quarter of 2019, Voya entered into a new ASR agreement with a third-party to repurchase an aggregate of $200 million of Voya's common stock. The final number of shares to be repurchased will be based on the volume-weighted average stock price of Voya's common stock, less a discount and subject to potential adjustments pursuant to the terms of the ASR agreement. Final settlement of the transaction under the ASR agreement is expected to occur in the third quarter of 2019. After consideration of the upfront payment made upon entering into the most recent ASR agreement, the company has approximately $300 million remaining under its current share repurchase authorization. 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., Aug. 7, 2019, at 10 a.m. ET, to discuss the company's second-quarter 2019 results. The call and slide presentation can be accessed via the company's investor relations website at investors.voya.com. A replay of the call will be available on the company's investor relations website at investors.voya.com starting at 1 p.m. ET on Aug. 7, 2019. About Voya Financial Voya Financial, Inc. (NYSE: VOYA), helps Americans plan, invest and protect their savings - to get ready to retire better. Serving the financial needs of approximately 13.8 million individual and institutional customers in the United States, Voya is a Fortune 500 company that had $8.5 billion in revenue in 2018. The company had $560 billion in total assets under management and administration as of June 30, 2019. With a clear mission to make a secure financial future possible - one person, one family, one institution at a time - Voya's vision is to be America's Retirement Company®. Certified as a "Great Place to Work" by the Great Place to Work® Institute, Voya is equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has been recognized as one of the 2019 World's Most Ethical Companies® by the Ethisphere Institute; as a member of the Bloomberg Gender Equality Index; and as a "Best Place to Work for Disability Inclusion" on the Disability Equality Index by Disability:IN. 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:
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. Normalized adjusted operating earnings excludes from Adjusted operating earnings before income taxes the following items:
Because DAC/VOBA and other intangibles unlocking can be volatile, excluding the effect of this item can improve period to period comparability.. In addition to Net income (loss) per common share, we report Adjusted operating earnings per common share (diluted) and Normalized 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:
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 within the meaning of the Private Securities Litigation Reform Act of 1995. 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, (x) changes in the policies of governments and/or regulatory authorities, and (xi) our ability to successfully manage the separation of the fixed and variable annuities businesses that we sold to VA Capital LLC on June 1, 2018, 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," "Management's Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties" in the Annual Report on Form 10-K for the year ended Dec. 31, 2018, which we filed with the Securities and Exchange Commission on Feb. 22, 2019 and "Risk Factors," in our Quarterly Report on Form 10-Q for the three-month period ended June 30, 2019, which we expect to file with the Securities and Exchange Commission on or before Aug. 9, 2019. VOYA-IR
(1) 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 21% tax rate. (2) "Other adjustments" primarily consists of restructuring expenses (severance, lease write-offs, etc.) and tax adjustments.
(1) In our Investment Management business, normalized and adjusted operating margins excluding investment capital results are reported because the results from investment capital can be volatile and excluding the effect of these items can improve period-to-period comparability. View source version on businesswire.com: https://www.businesswire.com/news/home/20190806005937/en/ |