Voya Financial(VOYA) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Voya Financial reported adjusted operating EPS of $2.21 for Q2 2023, a 30% increase year-over-year [6][13] - The company generated approximately$ 200 million of excess capital in the quarter, with a free cash flow conversion rate above 90% [8][26] - GAAP net income for the second quarter was $154 million [13] Business Line Data and Key Metrics Changes - Wealth Solutions saw full-service net flows of$ 400 million, with recurring deposits growing 9.5% year-over-year [6][14] - Health Solutions reported annualized in-force premiums and fees up 22% year-over-year, with adjusted operating earnings of $124 million [6][18] - Investment Management experienced net outflows of$ 3.8 billion, primarily due to softer client demand, although international retail net flows exceeded $5 billion [7][20][23] Market Data and Key Metrics Changes - The company noted strong performance in the Asian markets, particularly in Investment Management, contributing to positive retail net inflows [10][22] - Institutional net outflows were impacted by strategic decisions to strengthen the active equity team [20][21] Company Strategy and Development Direction - Voya Financial is focused on achieving a 12% to 17% EPS CAGR target through 2024, emphasizing organic growth and integration of new businesses [5][29] - The acquisition of the remaining 51% of Voya India is expected to enhance operational efficiency and innovation [28] - The company is leveraging its diversified business model to navigate varying economic conditions and drive profitability [9][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business and its ability to generate profitable growth despite economic challenges [5][29] - The strong results in Health Solutions are expected to contribute positively to EPS growth, potentially pushing it into low double digits [37][38] - Management anticipates continued growth in fee-based revenues and a focus on maintaining profitability across business lines [16][19] Other Important Information - Voya Financial has resumed share repurchases, deploying$ 162 million in Q2 2023, and has doubled its common stock dividend to $0.40 [8][26] - The company is actively managing its capital allocation strategy, balancing debt retirement and share repurchases [72][76] Q&A Session Summary Question: Can you help with the run rate earnings power in Health Solutions? - Management indicated that the favorable stop loss loss ratio is expected to continue, with confidence in maintaining margins around the traditional guidance of 77% to 80% [32][34] Question: What is the outlook for Investment Management flows? - Management acknowledged challenges in institutional flows but expressed optimism for future growth driven by international retail and strategic partnerships [39][41] Question: How much did NNIP impact institutional outflows? - NNIP was part of the outflows in Q2, and management expects it to continue as a headwind into Q3, but sees growing momentum in the pipeline [45][46] Question: What is the strategy behind acquiring the India JV? - The acquisition is seen as a logical step to enhance operational capabilities and improve margins, contributing to long-term growth [54][55] Question: What is the outlook for record keeping business? - Management expressed excitement about the strong pipeline and ongoing opportunities in the record keeping market, indicating continued growth [56][57] Question: What is the impact of divestitures on future outflows? - Management indicated that while there may be some remaining outflows from divestitures, they are manageable and expected as part of the strategic transition [59][66]