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Voya Financial(VOYA) - 2024 Q3 - Earnings Call Transcript
VOYAVoya Financial(VOYA)2024-11-05 19:15
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Financial Data and Key Metrics Changes - The company reported adjusted operating EPS of 1.90,a91.90, a 9% increase compared to Q3 2023, driven by nearly 20% growth in Wealth Solutions and over 10% growth in Investment Management earnings [8][18] - Third quarter GAAP net income was below adjusted operating earnings primarily due to non-cash items [19] - Total capital return in the quarter was 193 million, including 149millioninsharerepurchases[31]BusinessLineDataandKeyMetricsChanges−WealthSolutionsearningswere149 million in share repurchases [31] Business Line Data and Key Metrics Changes - Wealth Solutions earnings were 211 million, an 18% increase year-over-year, with full-service sales up 25% year-over-year [26][24] - Investment Management achieved 3.8billioninnetinflows,markingthethirdconsecutivequarterofpositivenetflows,exceedingtheorganicgrowthtargetfortheyear[28][27]−HealthSolutionsreportedadjustedoperatingearningsof3.8 billion in net inflows, marking the third consecutive quarter of positive net flows, exceeding the organic growth target for the year [28][27] - Health Solutions reported adjusted operating earnings of 23 million, significantly impacted by unfavorable loss ratio developments in Stop Loss [22] Market Data and Key Metrics Changes - The company maintained a leading position in the government market by participants and assets, with full-service net outflows of 222million[24]−Retailclientassetsincreasedover20222 million [24] - Retail client assets increased over 20% year-over-year to 31 billion, supported by investments in the retail wealth management business [25] - The mid-market sales for the year were significantly higher than total sales in 2023, indicating strong commercial momentum [10] Company Strategy and Development Direction - The company is focused on improving Stop Loss margins by prioritizing higher margins over premium growth for the 2025 book, with targeted average rate increases of 100% for January 2025 renewals [12][21] - The acquisition of OneAmerica's retirement business is expected to close on January 1, 2025, contributing at least 75millionofadjustedpretaxoperatingearningsinthefirstyear[15][33]−ContinuedemphasisonprofitablegrowthandintegrationoftheOneAmericabusinessisexpectedtoenhancemarketshareandoperationalcapabilities[13][16]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpresseddisappointmentwithStopLossresultsbuthighlightedstrongperformanceinWealthandInvestmentManagement,indicatingarobustcapitalreturnstoryfortheyear[35]−Thecompanyisconfidentinitsabilitytoimproveunderwritingmarginsandachievetargetedlossratiosthroughactiverepricingandstrategicactions[82][39]−Managementanticipatessignificantimprovementsinexcesscapitalgenerationin2025,drivenbyStopLossrepricingandtheOneAmericaacquisition[17][33]OtherImportantInformation−ThecompanyhasastrongfocusonintegratingtechnologyfromOneAmericatoenhanceservicedeliveryandparticipantengagement[46][100]−Thecompanyissued75 million of adjusted pretax operating earnings in the first year [15][33] - Continued emphasis on profitable growth and integration of the OneAmerica business is expected to enhance market share and operational capabilities [13][16] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Stop Loss results but highlighted strong performance in Wealth and Investment Management, indicating a robust capital return story for the year [35] - The company is confident in its ability to improve underwriting margins and achieve targeted loss ratios through active repricing and strategic actions [82][39] - Management anticipates significant improvements in excess capital generation in 2025, driven by Stop Loss repricing and the OneAmerica acquisition [17][33] Other Important Information - The company has a strong focus on integrating technology from OneAmerica to enhance service delivery and participant engagement [46][100] - The company issued 400 million of senior debt at a 5% coupon rate, with plans to retire maturing debt in early 2025 [32] Q&A Session Summary Question: Can you provide more color on the underlying claim trends in Stop Loss? - Management noted disappointment with Stop Loss results, with elevated claims across all categories driving reserve assumptions. They are actively repricing the book to improve margins [36][37] Question: Will the loss ratio likely remain above the target in 2025? - Management is targeting a 77% to 80% loss ratio for 2025, with significant rate increases expected to improve margins [39][40] Question: What is the expected impact of the OneAmerica acquisition on retention? - Management expects lower persistency for the OneAmerica business, around 90%, but believes the transition to similar technology will help maintain service levels [44][46] Question: How should we think about EPS guidance for the next few years? - Management indicated that the guidance includes contributions from OneAmerica and expects organic growth from both Investment Management and Wealth Solutions to support future EPS growth [48] Question: Can you comment on the distribution expansion from the Allianz partnership? - Management expressed satisfaction with the flow picture, highlighting strong demand in both US and international markets, contributing to net inflows exceeding organic growth targets [51][52] Question: What is the expected participant growth in Wealth Solutions? - Management anticipates a 15% participant growth in Wealth Solutions for 2025, with strong momentum in both recordkeeping and full-service segments [58][59]