Voya Financial Announces Strong Q3 2024 Earnings

Voya Financial, Inc. (NYSE: VOYA) reported robust third-quarter earnings in 2024, with significant contributions from its Wealth Solutions and Investment Management segments. CEO Heather Lavallee noted a 9% increase in adjusted operating earnings per share (EPS), reaching $1.90, compared to the same quarter last year. Although the Health Solutions sector faced challenges, Voya is optimistic about future growth driven by the acquisition of OneAmerica's retirement business and a strategy to return substantial capital to shareholders.

Key Takeaways

• Adjusted operating EPS rose to $1.90, a 9% increase from Q3 2023.
• Wealth Solutions and Investment Management reported growth of nearly 20% and over 10%, respectively.
• Health Solutions faced challenges, prompting a repricing strategy to enhance margins by 2025.
• The acquisition of OneAmerica is projected to enhance pretax operating earnings by at least $75 million in its first year.
• Voya plans to return $800 million in excess capital to shareholders in 2024 and anticipates significant capital generation growth in 2025.

Company Outlook

• The integration of OneAmerica is expected to add at least $75 million to pretax operating earnings and over $200 million in net revenue by 2025.
• Voya aims to enhance margins in Stop Loss and expects continued growth in retail client assets.

Bearish Highlights

• Health Solutions experienced adverse results in Stop Loss, necessitating a repricing strategy for improved margins.
• The Stop Loss segment anticipates modest declines in premiums for 2025, targeting a loss ratio of 77% to 80%.

Bullish Highlights

• Adjusted operating earnings increased 18% year-over-year to $211 million in Q3 2023.
• Investment Management achieved net inflows exceeding $9 billion year-to-date, surpassing the 2% organic growth target.
• Wealth Solutions showed strong growth, particularly in the mid-market and government sectors.

Misses

• The Stop Loss segment reported an 86% loss ratio for January 2024 business, which will affect the first half of 2025.
• Elevated claims and underpricing may lead to lower premium rates in 2025.

Q&A Highlights

• The company discussed the impact of competitive pressures and claims trends on the Stop Loss business.
• Despite a lower plan retention rate of around 90% with OneAmerica, Voya is optimistic about growth through new partnerships and service delivery improvements.

Voya Financial's third-quarter earnings call underscored its strong performance and strategic initiatives aimed at growth and shareholder value enhancement. Even in the face of challenges in the Health Solutions segment, Voya's capital generation and acquisition strategies position the company favorably for future opportunities.

InvestingPro Insights

Voya Financial's third-quarter performance highlights revenue growth of 11.07% over the last year, aligning with reported segment growth. The company has steadily raised its dividend for six consecutive years and maintained payments for the past twelve.

Full transcript – Voya Financial Inc (VOYA) Q3 2024

Operator: Good morning. Welcome to Voya Financial's Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Mei Ni C., Head of Investor Relations. Please go ahead.

Mei Ni C: Thank you, and good morning. We appreciate your joining us today. Joining me are CEO Heather Lavallee, CFO Don Templin, and others. We will begin with remarks on our performance before addressing questions.

Heather Lavallee: Thank you, Mei Ni. Good morning, everyone. In the third quarter, we saw strong business results and positive revenue momentum in Wealth Solutions and Investment Management. However, we encountered some challenges in Health Solutions which we are addressing through repricing efforts. Additionally, our acquisition of OneAmerica's full-service retirement business will be a game changer for Voya.

Don Templin: Let's dive into our results on Slide 10. We delivered $1.90 in adjusted operating earnings per share for the third quarter, a 9% increase from the prior year.

Heather Lavallee: Our key priority remains the continuous improvement of Stop Loss margins, alongside integrating OneAmerica effectively.

Operator: We will now begin the question-and-answer session.

Ryan Krueger: My first question was on Stop Loss. Could you provide more color on claims trends?

Heather Lavallee: Currently, we are addressing elevated claims and underpricing, focusing on margin improvement over premium growth.

Voya Financial remains resolute in enhancing shareholder value through strategic initiatives, despite facing sector-specific challenges. The integration of OneAmerica is expected to provide substantial growth potential for the company.