Voya Financial(VOYA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted operating earnings per share for Q4 2024 were reported at $1.40, contributing to a full-year result of$7.25 [23] - Full-year alternative income returns were approximately 7%, which was below long-term expectations by $0.53 [24] - Free cash flow conversion was approximately 90$40 million for the year, impacted by unfavorable claims experience in Stop Loss [30] Market Data and Key Metrics Changes - Wealth Solutions generated $2 billion of defined contribution net flows in 2024, demonstrating strong commercial momentum [11] - Voya Investment Management recorded total net inflows of$12.5 billion for 2024, with a significant portion coming from institutional clients [38] - Defined contribution retention rate was 98.5%, up 60 basis points year-over-year [34] Company Strategy and Development Direction - The company aims to improve Stop Loss margins through increased pricing and improved risk selection actions [14] - Integration of the OneAmerica transaction is a strategic priority, expected to contribute $200 million in revenue and$75 million in incremental operating earnings in 2025 [16] - Focus on enhancing capabilities in leave management and disability administration to drive competitiveness in bundled Health Solutions [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the adequacy of reserves to cover future claims based on January experience [9] - The company anticipates significant improvement in Stop Loss margins and overall profitability in 2025 and 2026 [46] - Management highlighted the importance of maintaining a balanced approach to capital return and growth investments [45] Other Important Information - The company returned 800 million of excess capital to shareholders in 2024 through share repurchases and dividends [12] - The acquisition of Sconset Re is expected to yield attractive investment returns and strengthen Voya's position in the insurance asset management market [21] - The company plans to maintain a strategic approach to capital management, with expectations for increased excess capital generation in 2025 and 2026 [46] Q&A Session Summary Question: What are the factors affecting the ROE guidance for 2025? - Management acknowledged the impact of weaker Stop Loss results, investments in leave management, and lower prepayment income on the ROE guidance of 12% to 13% for 2025 [51][52] Question: Will the 50 million strategic spend on leave management recur in 2026? - Management indicated that the strategic spend is primarily expected to impact 2025, with a breakeven expectation for 2026 and positive earnings anticipated in 2027 [64][65] Question: What gives confidence in improved risk selection for Stop Loss? - Management emphasized a focus on known claims and improved pricing strategies, along with a commitment to margin over premium growth [66][70] Question: How will OneAmerica's acquisition impact wealth flows in 2025? - Management noted that while there may be volatility in flows due to OneAmerica, the fundamentals of the wealth business remain strong, with a solid pipeline of plans [78][79] Question: What actions are being taken to improve the voluntary business loss experience? - Management highlighted the importance of increasing utilization of voluntary products and improving administrative capabilities to drive higher participation rates [102][104]