VOYA - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to the Voya Financial’s Fourth Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Michael Katz, Senior Vice President of Investor Relations. you. Thank ahead. go Please

Michael Katz

good We to who appreciate this us and quarter have Financial's earnings for call. all call. morning. you, Voya Welcome fourth joined Thank of you

materials the webcast. on reminder, As are today's investors.voya.com via at available a or our for website call

X. to Slide Turning

comments this the to Some within more may information. statements conference slide contain you of the meaning I of refer call forward-looking the federal made during securities law. for

our GAAP be also certain today release reconciliations found are supplement referring on investors.voya.com. measures. will We non-GAAP on available to press website, financial and financial our

the Financial's we Financial remarks, on well Officer. Executive me as call and as prepared their will Joining are, take Rod Voya Officer; Chief After Chairman your Martin, Mike questions. Voya's Smith, Chief

our Management; Nelson, Christine as to Life. Slide For call that Q&A I Grubka, session, Rob With we to like have Carolyn specifically, of that, Hurtsellers, Retirement; businesses, Johnson, Investment also X, would Benefits; heads over Employee and invited turn Individual to Rod. the let's Charlie turn the

Rod Martin

Good morning.

begin businesses. decisions annuities Let's capital-light Voya, year, of our risk The with combination strengthened XXXX completed themes. we growth, transformation. last the with year simpler, key return, purposeful a high and some pivotal efficient further a organization over years, was advanced more that for the company. five we reduced Slide last our Today transaction made on X are with high

costs and These to to is record management. track in earnings led XXXX. savings clear from to achieving delivering proven significant managing our shareholder Our prudent have across value growth driving actions capital through growth businesses

in XX% earnings XX% of achieving each This confidence per of away share next growth reaffirming not high years. growth from are share we the XXXX year the from I momentum per organic year-over-year. bar least mentioned. will pre-tax we're $X.XX Today, positive We we adjusted to the in of the annual in continued We're in adjusted and continue versus businesses our Our we our for to normalized confident operating growth our in at achieved goal $X.XX full EPS XXXX. XXXX, achieved three EPS and our in grew our grow, while set the operating our was shying ability understand, part due be strong across the target. $X.XX just to

For institutional compared service adjusted Retirement, with full deposits we achieved year than earnings full flows Management, operating more net positive grew we record marked Investment fourth Benefits, we quarter In and by XXXX in XX% billion and In generated of and grew year-over-year. consecutive XX% XXXX. voluntary sales benefit $X XXth Employee full for delivered quarter year our record the XXXX net earnings flows. of institutional by recurring

In savings growth, end $XXX we addition the the annual to to run organic in by achieve on million track $XXX rate million remain cost XXXX. of our to

to strong approximately maintain We with of a capital position also $XXX million continue excess capital.

our will target delivered detail, to fourth greater $XXX Smith our of excess in shares of of the this reflects Mike on discuss As quarter repurchased We in repurchase $X.X RBC above ratio million during XXXX. and plan XXX%. our billion shares capital new

these form more of entered accelerated XX% repurchased our valuation we $XXX capital. our to repurchase we as remain to this the shares Additionally, repurchases shares of in back we share agreement committed outstanding Since use of XXXX, have repurchases. IPO into to levels, share and a buy an good share in $X our shareholder million quarter. returned billion shareholders of than At

Turning to X. slide

plans confident we're of in We with have at Day. the and complementary businesses the Investor shared you mix we right

mix revenues. must stop is We're tax that Our investment Investment of correlation market Life in growth. Benefits Benefits solutions a provider in-force future products collaborate cross-enterprise capital top and sizes quote diversified a of and to perform with provider well, earnings across greater Employee spread Together, for especially opportunities balance Employee attractive that businesses our our of and three loss diversification to block the high-growth, both offers with workplace growing volatility. capital-light all retirement to high-return will across provide risk equity a spectrum with and strategies and minimal times our are support partnerships Individual and businesses strong a our capabilities plan fee-based markets. voluntary customers. a business. through finding codes, fast brings further geographies Management five has institutional

slide to our helps X, brand the success building drive supports of character Turning performance. our and financial our

recognition we differentiate were external Work from us earning numerous year. Best named during culture consecutive fourth new XXXX, helping brand business. Investments to magazine by and win & Place for a Pension Our organizations us us the continue and recently, Most to

earned recognition the Gender-Equality also marks year third This on our Index. XXXX in index. consecutive We Bloomberg the

businesses inclusive our benefiting diversity Our promotes thought, culture our and of and perspectives expertise stakeholders.

the Cares Additionally, recognized us differentiating Also Voya employees, most brand with we investors with far associated significantly Americans proud committed and have program. financial invest grown Cares work we be ahead. the and is to of and awareness our brands protect We're of helps we're Voya to continue their one and retirement. we've customers, disabilities what plan, our and caregivers, their future. with accomplished so

on details the Now Mike for will performance provide our more quarter.

Mike Smith

year. strong operating of share and reported after organic tax $X.XX normalized savings the repurchases. were fourth year. On slide were operating share quarter per progressed basis, in share driven and targets the operating $X.XX adjusted for quarter X, On full growth, delivered We toward cost $X.XX Thank quarter earnings Rod. and share by adjusted you, results our earnings full per $X.XX share per for the a per the fourth for

was unfavorable prepayment our unlocking. quarter $X.XX above fourth expectations. DAC Combined of long-term and $X.XX included alternative results Our income

a to dividend the received and tax lower capital was effective short-term The XXXX. gains effective also one-time benefited from dividends XX.X% in benefit rate than We quarter tax reflecting expected due greater deduction in a rate. fourth

at this fully level. we estimate Investor at least slightly we full the the $X.XX per our EPS result from While shared above Day, year of XX% grow to normalized is share expect

XX.X% Moving of unlocking. and excluding $XXX income to portfolio grew the in and in delivered from of Retirement's earnings completed full month XX.X%, contributing year in trailing reflect crediting million XX was the minimum X, capital higher than spread million quarter, adjusted operating lower yield fee investment helped $XXX to actions spread by year. fourth Retirement return year prior up Full on we to record slide rates XXXX. higher results rate Investment reflecting interest guaranteed XXXX. earnings

as amortization benefited result from DAC of also We lower actions. those a

million primarily net quarter. flows Retirement we quarters shift which call. quarter the stable that This third exceeded $X.X our service expectations Overall in to was gross net net plan market, our corporate the a the on flows estimated Total equity value fourth to expect record-keeping and from deposits full generated plan the we this incurred quarter, During equity on $XX of service the positive consecutive of lower first of by due unfavorable surrender approximately in termination a markets we discussed due driven timing flows service the and assets, retention, in quarter, which were client quarter. and has markets large quarter had in unlocking, improved XX of higher now billion future profit. $XX lower inflows. DAC of strong impact now the full billion full assets of

$XXX from target to we our ahead, service full full year. the recurring XX, XXth of sales long-term expectations. XX% can Full net us fee and XXXX. inflows growth million in the Looking a for margin quarter; strong investment We fourth year quarter of quarter million capital. the and Investor XX.X%, in year-over-year, $XXX was that deposit Day operating our institutional in delivered including by institutional Investment businesses, fourth drove adjusted were are capital line Investment results pipeline confidence which achieve of growth we higher investment AUM net generated On encouraged Management of Management of flows. across in positive slide XX% gives earnings the consecutive new strong $XX operating million with

net of representing organic the full billion X%. we institutional had $X nearly more For inflows year, growth of than

to our credit commercial capabilities, During key growing significant and diverse the including private mortgage, private mandates. our was year, assets, investment which platform specialty led to equity

fund key this We continued fixed our investor including expand eligible the income billion income grow fund of to a will opportunity that strategic that our $X assets quarter, milestone base. core strategies surpassed

five average fees The year, a including with the one our CLO first of were We this basis our half by points. during second also European inflows XXXX. our first on quarter outflows CLOs expected those priced XX in of than the lower

outflows. our XX-month fees in with trailing our a line on However, inflows on were basis,

for we Looking sales healthy see pipeline XXXX. ahead, a

XXXX. Our continued X% as a flows we that of to excellent of confidence us can AUM achieve performance X% percentage net in beginning gives investment

loss XX%. excluding million fourth aggregate improved from XX.X% the finished in Turning XX, the unlocking. operating record on in Employee full return year total delivered our adjusted to XX-month in target Slide of ratio our stop of to $XX loss The ratio earnings loss remained quarter. $XXX to within million second for the range quarter for target and XXXX. range Trailing consecutive year XX.X% capital Benefits of earnings The XX%

We we the cycle continue to believe XXXX successful. during renewal the actions pricing took were

still full expect in-force to adjusted pricing Voya with you year and are the strengths drive assets. of will grew million is we We stop $XX XXXX, growth spread Investor X% while Savings On XX% Spending we quarter financial in-force to and driven XX% by grow also maintaining with Overall, while growth loss in Individual days expect will tailored us This line by we support operating overall premium wellness earnings expectations, outcome. on This position improved closer and voluntary. discipline. better example were strong Slide premium Account, January, businesses $XXX the in the we financial customers Mortality historical alternative fourth to to our X% unlocking. were leveraging this with to Life solutions. helped target levels in engagement allow for in rates In million earnings excluding great while improved premiums early shared at a customer favorable complementary how XXXX, Day. our at in results XX, were investment launched provide the to Health

a we unlock, quarter, our a expected million the higher updates reinsurance. unfavorable to reflecting for had assumption primarily cost DAC further adjustment recent During $XX of

we you business expect the of which received sales given through we XXXX, As end would new applications first at we recall, business year-end, new in That cease did. quarter quarter. the reported of meaningful number the may last announced said, we

underwriting Looking lower impact $XXX for net our than Life of is ahead, we expect Individual higher XXXX. of reduction savings to on to first the for positive share expect earnings due gains. first quarter reduction primarily reinsurance XX, of expectation, provide we XXXX minus consider We in meaningful In $XX or still offset the net items quarter, XXXX million EPS. to million in of Slide no are intangibles will as XXXX. gain, On expected the underwriting cost This annual plus costs. have expected repurchases additional a

Offsetting As to into the we repurchase in quarter have million accelerated we consider. highlight shares. entered already three $XXX repurchase an factors of highlighted repurchases, to earlier, share program first

calendar primarily cost Life First, Individual by expenses seasonally payroll higher savings. restart due taxes year, admin partially offset that with to the

dividends And third, net lower received tax Second, at not same effective one-time discussed fourth that quarter lowered as the the the rate Individual in to Life recur results deduction quarter. levels but in underwriting benefit earlier. expected our first

continues results. While strong. of course capital we first factors provided position our quarter be will Slide consider, items that XX, On some be there to have affect other to

RBC at December. of estimated XXX% ratio the was end Our

from includes the lower the impact formula RBC ratio changes industry to rates. of RBC Our corporate tax wide the

free to target generation. RBC annuities the our our capital target we from be what of The a reflects a result revised prudent substantially of in have to down cash tail and as light risk transaction level lower XXX% consider XXX%. strong flow We our reduced

by RBC capital changes repurchases excess to to the of than the tax target model the offset quarter more to increased fourth the revised formula corporate and were refinement and million Our rate our $XXX capital RBC end at as share retirement. in the

well year-end Additionally, capital was to ratio our our XX% XX.X%, below debt target.

of levels. quarter. the $XXX as billion As In attractive shares million was for share $X.X advantage above repurchased we Rod year we we mentioned, of fourth of anticipated the over of in quarter price shares $XXX This we last full million repurchased total, shares took XXXX.

launched highlight mentioned, we January. with managing our confidence the detail investment additional previously are XX, Slide portfolio in million as these holdings Finally, program a in market early to repurchase on we share the we $XXX On in have assets. accelerated provide

assets Our quality with or of holdings investment a composed rated majority grade vast X. investment high is portfolio our X NAIC of

Our investment exposures of NAIC represent X% only X portfolio. grade our to X below

of As industries. issuers our you on can X range slide, NAIC diversified to see holdings the X a across and are XXX

assets. while fixed-income internal The balanced Our defined exposure portfolio corporate by and investment managing returns public to was actively risk an risk assets adjusted subject to is by limits. team, optimize debt experienced strictly other overseen selecting

to tax net cash provide a we from projected Turning savings update assets. value of Slide our tax of here XX, present annual our deferred

As billion carry as significant loss due source our than forwards tax see, the is assets remain $X.X annuity Day for value XXXX. additional higher you Voya, of of transaction. our can This to Investor a net to slightly with deferred of related a value estimate present year-end

use to the within expect majority five We the our DTA of years. next

this period, During This to the cash a essentially receive also no paying seven expect should refund minimum years. Voya net alternative credits. taxes our result to we in next of for tax five

valuation. continue our Slide to to XX, we Turning an at trade attractive believe shares

Voya's we approximately times on share the depicted if slide, of assets earnings. consensus Voya on trades at adjust deferred our value into XXXX X, February seven price the As tax

see at we high-growth, We Investor opportunity prior XXXX. to of strong high-return our complementary of capital-light at earnings also given for with cash sale can in businesses, our we us, you is investors, a below attractive delivered this Voya offers traded Day. detail annuities our business. trading price in shared to our we ahead opportunities You the where an generation In multiple growth flow which the summary, and earnings high growth believe free

and at I sheet to in will our so questions. normalized your to growth XXXX that With expect the back take the position operator, call continue balance least and We can remains turn EPS we XX% strong. that, capital

Operator

Thank you.

is [Operator coming now the line begin question Instructions] first session. question-and-answer will Morgan Nigel the Stanley. of from Our with Dally We

Nigel Dally

on and good a some question saw Thanks outflows had Management. quarter. Great. We this acceleration retail I in the morning. Investment meaningful

the and color seeing get given are outflows, some So hoping you to rebound, some what as those to in January? market improvement drove

Rod Martin

Nigel, question. good first will take morning. the part the of It’s Rod. Christine

Christine Hurtsellers

Thank Yes. you, Nigel.

outflows what fourth the risk-off volatility related happening the we in of retail saw. in many that sentiment did as the investment an in markets, really outflows far like in to the see the managers was As quarter context we escalation and

So flows, think loans but would when see you in we so to bank performing that our rate market senior strategies, think think outflows. And volatility. and about, equity I fine about funds, in I we number have say our very relation a retail floating loans, some of was did episodic -- bank one,

to terms success income little a rebound of and in so the seeing retail sales. quarter And behind some are as performance, real you in fixed first ask, and we a flows that in our bit masked

So, the we inflows decile income top in fixed were net retail for year.

really a So think have that performance we're gaining market we share, due as as income fund. to strong strategic our well

a line bond, larger billion that to once And product wealth get fourth size hit will unconstrained think really So that's of firms decile performer threshold the that's that you quarter. to top you their because in mark the add up. the important management $X many

So, year. quarter, overall the fourth a momentum going volatile good into

Nigel Dally

but alternative think bit income got surprising, we That's in very which helpful. a second had quarter, for the fourth Thanks. I question Also on delay a reporting. run was I just ahead the

to results. into list in delay, pressure first modeling to should the on factors great? should expect that it color It anything be wasn't reading there now so factor we [ph] the would quarter consider, a consider that or be to Given be any of

Mike Smith

said, a to you're this is we us do going correct. on quarter good that generally take I'll basis. where read are any first alternatives. report early It's Nigel, have for Mike. quarter these out That question. for come too to We on on lag

whether what expectation into our be certainly market X%. performance to So below It's degree pressure whether our alternatives. will the long-term have of the of read some in could unclear through that or -- the

generally of XXX as next be these one S&P it's think think to -- should an the a to more they have you have we'll with but think I few could information fair there's definitely nature. one shouldn't we different pressure. some So, as weeks, over But there do

Operator

Our KBW. questions line are next Ryan from of with Krueger the

Ryan Krueger

big you this follow-up. Hi, 'XX? good you a on have say And XQ questions outflow morning. had in then how I I one, flows. could guess I of couple stable expect a value retirement

Rod Martin

we expected The revenue remind will our only a stable so in there. we're to retaining some of quarter quarter change in roughly again, it, that's that Sure. the of rap on now. And that $XXX but is the still you that occur, flow value about sub-advised we that portion is believe, billion I'd fourth business, going the first

Ryan Krueger

I a impact earnings if New York And pretty Thanks. more was plan, when pipeline that would could in that so secondly, then was hoping QX, just you it record-keeping talk be City looks XXXX? as generally how in closes? then comment much the retirement about of on entered and an from hoping there And you could large you've

Rod Martin

Sure.

kind in XX% the feel driven that's of of do recurring to as part strong our the your guidance very growth. some be some our question. take by I'll going and in and full general position margin the part that's the in higher service to we we First, XX% our sales. in very and about on We I recurring out large outlook expect in go our flows full by good the business of We certainly We healthy there deposit growth XXXX were underpinned service. deposits of think forward, set

of team corporate. look also job mid done and continuing know, in positive net of doing got relative -- a was you I quarters to exempt into our exempt on work, driving, we last sales. we've our thing, tax very you in we've our wonderful our is took the sales. quarter going If there. row second probably tax our we've build as our best And some I kind strong business, good in is years. quarter in saw also strong our XXXX fourth forward actually fourth That got, quarter, in The feelings think small our the a XX great a But flow XX

than made off of good job, in a first quarter year we year, team, think, of seen up and transfers. change last recall, XXXX. We fewer into that that. our plans We haven't the a kind that small bit little and our tail of providers with our second saw may you in as of half first half the singles Now for did and XXX[k] I the we -- of impacted we go more

I there. we've is got our really finally, underpinning good momentum we some that also then have. that retention And all So good think

confident of think, remain in overall, a just kind just there. I momentum targets general sales the on of kind our flavor, that markets So and we deposit recurring gives hitting why our you

Now around really, really relative York to City win. about your second New win, particular question we're that the pleased

think nice that we've a XXX,XXX of number XXXX. it's and that have participants actually had in I in record-keeping business, plus with tax wins early our corporate be $XX some assets. -- some and a plan this in over we will later implementing exempt our number hit and into billion But year

proposition So, done is in market, a we and is thrilled team about really work the think that's I and how in in of the our both And lot are great resonating value it's our with reinforced our that. executing been really corporate the and how exempt by particular, communicating tax brand.

have of So that XXXX more start we record in quarter fourth replace record-keeping than we strong you'll business. in build momentum outflow, as and impact the to our that in had certainly that see in XXXX, business I the and wins the we upon in implement outflow the that the keeping think

Operator

of are Barnidge from line questions O’ John Sandler next with Our the Neill.

John Barnidge

appear maybe the as Employee Does commentary Page presentation loss in to XX Benefits suggests the ratio? in flat on degradation the earnings in improvement sustainable, of some you. the Thank

Rod Martin

Rob?

Rob Grubka

really sustainability results forward we to and look XXXX, as moving Investor way the in progressing Day, Rob focus in renewal perspective the out solid remain X% one-one I'll Yeah, forward to our in line throughout good is we're think the activity results And a particular viewing Grubka. positive delivering both and and what From we're obviously top This and line, the we in. XX% into laid we drive gotten glimpse forward, on seeing. is very growth, as to and results. the and expected new get seeing, as XXXX. we we're jump we view feel loss at about and bottom in We've from sales a that stop good and

John Barnidge

what's business. this question, I the based New early expectation other on Year, the [technical flu difficulty] season only Thank you. My Great. weeks know results year into but your we're for five

Rob Grubka

forces would Yeah, nothing at I'll but any otherwise. we're than that outcome, to we us resist that think predicting stage differently have seeing this

Rod Martin

Yeah.

that and to life. respect weeks there’s Just Rob And check, learn group that With sense. it’s maybe think generally would point where there’s coming monitor have to want to in aware talking life and anything I to learn we’re of to few any to but John, we We certainly broadly, every that. I try nothing say from mortality early is regularly. individual from anything too and we’re of just there’s

Operator

Our Tom is the question with next from Evercore. Gallagher of line

Tom Gallagher

morning. Good

either is, I first to where the $XXX current one on in million what's and then million. of $XXX in was left? the where your to at one what's that want there's Can expensive First question and rate those at set level I we're the programs. just second you're million, you run terms on of mark know $XXX as to

Mike Smith

Tom, this is Mike.

to $XX business, thing new and Individual a it is $XXX expect terms the million sales. together, program, plus it you set we million let's Investor discontinue $XXX just that to overall realize mentioned, whole decision the Life all Day, to that's when that In up, our at two you components add in announced of we million of the result cost of as it the saves

are north a would the we fourth million of we're great say So $XXX bit cumulative progress. of I quarter, making through little sales.

We've the those very and midst get on to of wide million. confident by together we making how our I as the feel strong a initiatives, -- to we and to executing explicit think, of those put that we're range going in that confidence across of the there plans in ability the additional deliver have and are remainder achieve goal, we're of particularly fairly We end can $XXX XXXX.

already got Life a think number actions, line that sight to as taken I As well. we've good and of business, a it we've achieving relates the to of

about very of applied corporate, so come sale in feeling that of So, good thing is will be housed of as to is the the the stranded the everyone remind corporate saves The I'd cost drive a ability that to result our currently first through. and annuities one segment, in cost cost expect, And if we should balance be that reflected more to will the the of businesses. should saves savings the through XXXX, there corporate. things you think we some start then as in then as through will of see -- go directly

Tom Gallagher

Got Mike. it. it, Got

$XXX end it? So to XXXX. through, $XXX fair left a million think million to that of it, Is call the way about

Mike Smith

I think Yeah. that's close. pretty

Tom Gallagher

low then the terms of and And the like items in takes, is directionally Okay. XX% normalizing do to XQ me you're rate the looks puts of I to if it XX% your normalizing the that the tax toward into 'XX, right? end

Mike Smith

the range. at over benefit to low the guidance of we be XX% think year. we a in up still part to in it XXXX. should I for terms to that entirety we you course accruing the being XX% DRD than overall Yes, In of of there expect 'XX, the But of about higher If are were for catch on essentially the wound ETR. think was the up, that

the fourth of guiding you'll dots, to adjustment first quarter. to so a $X.XX in think people and I we benefit while help attributed also And we are $X.XX connect -- quarter, see only just the for

on persist rather one to than but all quarterly So basis that improved expecting a rate through we're quarter. basically

Tom Gallagher

fees. of outflows it has XX one The The was if basis higher in being just higher could a assume retail sneak And retail comment just in yield final than I business your revenue one, in. really on it. that outflow. points the inflows I terms XQ. Got

do going in So of expect continue on where that get can seeing yield or what some expect to or to in flow terms XXXX? you're we you pressure that's revenue you flows think abate trend you what on

Rod Martin

Christine?

Christine Hurtsellers

right. quarter. have points at did our look been But the basis you the year, XX the stable. yield has revenue differential you're if Tom, Yes, back fourth We take full a in

of you of a matching actually revenue you're see inflows in And take it's look, very if the think So time. over I sort stable going sort Investor XX outflows. yields to Page Supplement, multiple

we going and So, like fourth the you and higher our some in why margin But forward? as certainly of the quarter loans. the view very diversified that business did bank have a happen retail, and it when strong think you year, the we mean, move as into product of think products part it first of investment set beauty I the what's very was our was that I is equity performance. saw, about,

so, to see example, volatile episodic high you're we certainly, period. in And assets credit in in capture that to quality but this going have products volatility

higher accretive. margins basis income And They off so flows. quality highly some going those of margin quality fixed the of those some higher garner and flows, points, do to other lower still where things, safer we're risk is obviously have or they're but and scalable,

on trajectory but asset -- to up quarter we a yields. quarter, you're chalk our beginning see and this at of again, specialty overall, [ph] proven to classes, given we're the to revenue So stable mix the pipeline, asset pivots good our confident and would very going we've have year, given

Operator

with Research. Autonomous questions line Bass Erik next from the of Our are

Erik Bass

to you. nice seen have does Thank if year-to-date, rebound room just question first do the on expenses. costs impact tougher, in how if you offset but obviously we've the more become guess, and Hi. to revenue environment on it reduce equity much the And market earnings? further does I become challenging

Rod Martin

Erik, this Rod. is

at got activities we look of announced going that on. I very we being really have managed We've during three flat Day. company, nice think Mike two fundamentally since Investor the job public journey. Voya at inception, components entire expenses a a of you did what as if summarizing the

a the will additional of the decisions business reducing for as the know latitude to precision we Employee But portfolio associated is reasonable and I million push we the are forward. room to are gives You we are that $XXX we in the this retirement, made forward. I expenses and invest focus that in million, two agility Life happen Investment have manage things $XXX in Management, XXXX. million And lot end as our that around Benefits. and of creating the with by confidence the the million go think we $XX are businesses us that plus ongoing happening businesses, the that that $XXX And

Erik Bass

Thank you. in where Appreciate type you can the some switched both cases there big competitive a and growth coming going, and on common comment. in And you winning marketplace? you and about then that talk and out But in strong denominator you're stand environment is highlighted a I the Retirement, trends. business the of bit guess the the

Rod Martin

Sure. Charlie will take that.

Charlie Nelson

look, wins as full business mentioned the I all obviously our market call. excuse when corporate about able service in the where tax our as as to you been and market and both measuring our segments market earlier we exempt good new. markets our kind I pressure, go, think, in with and referred feel me, through that's and the our with think retention corporate quite across and navigate well business. and about our fee exempt, business we We So, as dynamics, and tax to we in nothing as of we've of of both we're are that, certainly, we competitiveness, competitive record-keeping And the

just there. consolidation. on So the in we've momentum kind consolidation is got organic going industry, going great on There some of

proposition have some in from we've in top ease providers. advisors we've that's digital talked articulate mentioned, why win kind of business we comes on non-top right on now as continue Rod think, awful individuals. in with would great And that both we've the providers I and if and We it's finance great mean, And about, made investments DC of now top savings well. XX over that really driving as keys our previous a XX that's providers, and that market our the think an of the plan and behavioral the for some improved share doing XX in focused are compete DC calls XX% value I technology. I well happening, done and sponsors. And work As, to both lot as our both resonating assets.

being this look that's during we've lot investing key, our the able it, strength business clients. well our I to a while recognized as been of kind be and you expenses clients just our earnings growth have our that in ability time when manage growth back has to of across as been and prospective by the had think and to So strong our of business able

Rod Martin

Eric, it's Rod.

that to out rebalancing XXXX, what enjoyed Management coming the built Retirement, build Investment we've of said, on Employee around the Benefits Just during portfolio our particularly Charlie decisions a little momentum and business.

think So workplace focus. about and institutional

Christine consultant gives go buy business they've results as And we for XXXX. you're robust as and ever that as of the into our Rob's and Charlie's and are business. us I pipelines that's Our part what confidence seeing business, in think been, ratings

Operator

Our from line Alex next coming Goldman question of with is Scott Sachs. the

Alex Scott

morning. good Hey,

money had I under like new just Retirement. was question in I much net just on First maybe as income pressure investment to related is it guess been as yield yields. portfolio looks being in And below it spreads the has

of more about of bottomed some or a So if we've level thinking I that could been it was spread? could funnels interested you of think kind of in done left there? kind help of there from GMIRs just what will compression a interacts tailwind any say, be how and you've in about how update much And it spread of sort out sort work forward? high kind there. and all rates with the provide of that's you going low is And us done how on pressure drag the And here,

Michael Katz

I'll is Charlie Mike. certainly to this invite weigh in. and Alex, take,

Retirement unless points standpoint, so First, we portfolio get below and is, to we're that's will to long time money the a the a thing. and good think things. I I money for breakeven we've a probably think somewhat from certainly points you're seeing One treasury. of rates new than closer continue be point in XX new what on so are a That yield the XX is to couple been said,

Second, continue ourselves on crediting the guaranteed that will increasingly that will side lower guarantee. better through of with effect assets, for value the bit as rate, net you the little in interest then room the of and And because so be yield a a in noted, more there of transaction you're redistribution more benefit minimum seeing of on little to bit actions that resulted Venerable well took created we've only finally, effect account get the income. investment as some we in and

the account in helps to will It And time. values guarantees crediting over because Right. existing tick so that but rate down down stay the doesn't continue fix the immediately weighted the only and problem are, they and old down. where

several we altogether see So things happening.

certainly which going done. we're dive And tell. unless So, rate the significant seems were. about But the a they rates historically good at that we've this at back will feeling be the the certainly prevailing point, forward, outlook in terms and spread to of there counter things where time will wisdom, is compression take seen than less to overall, we've

to with and tough I contributor equity think it the in big earnings the we're despite quarter. a a we Retirement's pretty stability saw was trend pleased

Alex Scott

I you've if us from And could for of that All if And sort number updated I which you on million on the the could thoughts had was I is in then whatever the also interested of update second and was whether excess in just your extent was through mentioned capital. come think right. come past use capital excess valuation any have XQ? you the there's excess question that's I to capital. wondering on guess through Venerable that included $XXX on the

Michael Katz

a was there, there lot Alex. So,

of -- second the I the annuity next first. Let That's think release to start business to reflected years. the you're that's the of in that degree with over several part -- the That excess capital. a me value development of referring

$XXX saw available, at capital, excess continue repurchases. us, bit have would uses tools million of that of I to million. beginning, quarter in see shareholder our well. $XXX focus terms all quarter a terms you last as increasing using this repurchase as bit since as And of in the leaned leaning we share we the characterize the including done In a ASR activity you'll value on in

So we'll end be little the we work at will our At through the $XXX under million. a existing way authorization. quarter, the of

our We situation that will time. at examine

macroeconomic authorization have for our we outlook we'll how question. just five way about what Board talk the our to on the a home, to the continue future for and additional drive that and time, and about environment, examine And we're the will that feeling to it's years. point will We maybe great may build last be the at appropriate

remarks, in tuned. now as company, public our of XX% repurchased shares, continue outstanding share of to very $X we've been we excess and mentioned opening since a repurchase capital. the in I excess we've a Stay an of billion, view As amount effective use

Alex Scott

Thank you.

Operator

Instructions] of [Operator are next the questions Andrew Kligerman with Credit Our Suisse. line from

Andrew Kligerman

good Hey, morning.

net just of management, -- has on that last presentation up three-year the could shows do was First institutional retail average it lower? strong, you Is the the or it were year? how out affiliated XXXX? the or And they performance slide the flows, the little net last a three-year to XX% commensurate your been see Where extremely in the asset given follow-up above million we that going it performance, is with number saw outflows. in at is you $XXX

A –Rod Martin

Christine?

Christine Hurtsellers

Okay.

First of lot all, overall performance, we investment performance about saw up in a of talking our through volatility, very market investment hold well.

active benchmark, our In of our XX% XX% in outperformed fourth active their fact, strategies. either the their equity -- quarter equity or peer strategies

when volatility. and in on benchmark outperformed Investor credit, active fixed fourth on that about into outperformed quarter underperformed quarter, the Day, down lot fixed about a the think income totally clients talked we fixed income dipped our what bias of market the and XX% And numbers, in expect income peers. it we but fourth you So delivered quality high and managers number

very performance, you're think on you slide. it the investment when relative about we well to seeing again, what So, overall held

continue So that to optimistic investment growth performance organic into targets. going translate to there is

As see, referenced, net you is flows far flows. sub-advisory a affiliate-sourced, stable as Charlie that value the

performance where whatsoever. that in-house, are asset in back a And manager we're a what multi-manager where we assets account has. the pool, the that sub-advised manager, billion stable $X well, seen a of is managers our want left option only a before, than talked as these seeing less for assets flows, fixed what in reflection plus about investment And stable we've if bringing those not between different asset it's Charlie a as manager there so is $XX fact the again size, in we're value that terms to when sub-advisor you exactly we a we're value trend billion, the have

stable in value. top-five we're So

target story. headwinds in the where in top We So, of yes, persistent business partner. date the strengths first little had What getting date is we've that? a our in net flows and sub-advised. the Target were XXXX. aside, Charlie Retirement a I quarter. cash XX do in that flows in real in seeing very by hidden mean distribution this the that important industry we're $X.X outflows laying that's billion But referenced

corporate the XX% of small Our intermediate plans to are up by bond market. over picked in funds being the mid

start value So tax the but a of part first get good we're seeing going things through of really year. that a stable the also this launching product going to exempt out lot point, happening. we're state approvals in soon. We're and at marketing We're

but got still flows. going that good of some beginning going think strengthen stable year, those fundamental in I to see things a of So, the again to lot are affiliate-sourced on value going we've headwinds the

Andrew Kligerman

second just then segment. Got question it. on And is the Individual Life

reinsurance higher So have looks going tax, to higher $XX it charge, like million you're DAC/VOBA you and after rate. had a

both a quarter. around Do had fourth 'XX, charges and questions and 'XX expect here around well? we the had we costs little are one done? the charges So and And DAC the that now reinsurance the recapture feel are the we that's in over like in are, you as of -- rising can over DAC XQ

Michael Katz

was see in -- back, Andrew, this activity answer that. is, The relates with fourth short few were come a is of quarter. reflection say not in but activity the XD adjustment reinsurers to We we anything the quarter, don't we an modeling with that or that discussions $XX you adjustment quarters saw fourth occurred and came as horizon we the on future the ago Mike. -- It's certainty utter were it a adjustment on the [ph] cannot the won't that sort. new million, that, to through it the we an made and for of it way any

over couple use to but we So I don't like would wouldn't XXXX. what the done, word to last anything expect hesitate the of say in years that we've see I experienced

Andrew Kligerman

doesn't it place the like [multiple surprises. and of have speakers] most taken feel you conversations So

Mike Smith

taken entirely. I and upcoming there the that we don't but think any none And beginning, are anticipate have we conversations don't place. control

Operator

questions Partners. Dowling line with Our Lee & Humphrey are next of from the

Humphrey Lee

Good morning, questions. for taking and thank my you

landscape seeing you of Charlie's and on a more are follow Retirement organic to on Just comment competitive kind about consolidation.

kind I of inorganic actually your fragmented is, you talk increasing of to can appetite talked a market Voya given think about that have how a consolidator couple area? appetite your of in possibility the front consolidate, being on to -- and the competitors that larger about

Rod Martin

I would changed, make that of our in hasn't answer scale sense to But, have prior we is That but up. periods. start would is to add we asked I'll Charlie to the dimension but exactly a our add and financial business seeing some open – similar of and that's number it this have in retirement and the one We've Charlie let platform, what associated adding consistent examples, a targets. pointed be with book answer which will of in pick question, been mean Sure. questions we're yes. Charlie, with I’ll we’ve yes, marketplace. to

Charlie Nelson

Thank you, Rod.

we that the if what echoing will consolidating, getting in into service the growth just I you consolidation of we is well as it's forward, in the there those, sub-segment total we as the where XX% very really momentum exciting our an I especially to both kind momentum organic very pleased with of I that winning got. kind non-top exempt we we're organically refer So and think we expand some And kind -- have we're we think marketplace, we we to go profitable the XX. providers, with the well we or market winning that lot growth are share gave, maybe as positioned expand just of extensions, XX%. areas where in get in the can mean as from look potentially is deposit of the on. we've and scale, the where top the and I talk where product we opportunities recurring know, really, share XX DC as we're mentioned, in distribution, strong, in the can Rod's XX as about be where that record-keeping where in our and that could have full top well you tax awful feel and we is in the can we sub-segments corporate some and the our maybe I for progress of that think, the is small-mid But some providers When or at, about there service, growth. guidance have I that say, certainly, good comments, think we we're And markets then

Rod Martin

Let at targets fully you call, to reaffirming me 'XX on obviously XX% And period we growth. of 'XX just are growth time. of organic are remind least just know this call the XXXX, those over based add thing maybe the on are comment, our that from and EPS one targets all to for that

that be might that parameters the anything of additive picture. outside to be would So financial considered

Operator

our comes line question And Nadel you. John Thank UBS. from Okay. with next the of

John Nadel

I I the of everybody. have couple we the couple against good through. get up hour, we're though, have -- I Hey, top a if can a know morning, them

has I much good the obligations changed credit spreads. loan don't market, conditions, in lot month period two in but in recovery be of a Rod from very or investors just of Voya want short all So definitely has Mike, time, ago, a heard downer, a a collateralized And market strong I just bounce too exposure. or and to right, was a

So the us some exposure, within spend in the all just want your confidence account minutes well the I to CLO markets, want both understand get on just it maybe hoping general have I Just better, bit hiccup Investment event investors in to as detail was Management providing you the issue. we do a that I again, in little have just the that help regarding side? as a few just could a --

Mike Smith

I’m going of that. take question. Christine? Fair to the beginning have Christine

Christine Hurtsellers

general account for Yeah, answer revenue with the Voya Management. the and I'll questions exposure then lenses, Investment exposure the two

take X. XX% It's million vertical in of equity, all fully part a are general of retention. risk bought that be in And high about CLOs that the think the NAIC $X.X $XXX of that not to of to with portfolio. Voya business. account if all want want as we a when have very Of the on We CLOs, fully terms are quality So CLO billion STACK investors have which we -- be side, we we aligned you slide. our

manageable. and of And outside Management, the and So business. general very important are the Investment is our very of successful lens bank of part sort then account for loans CLOs a

market we of And have so you portfolio of for I've and Voya XX% when balanced approximately to. CLO volatility We a Management of mid-December very told However, lower we we revenues, about given that that order fees the price few, good We're you products our able get have in of were that were go to of manager. to reputation didn't in our for in one incredibly high we before, Investment they to very a deal the that franchise. as deal quality proud think markets account been or and and anything peak done.

As European that did Mike we well had mentioned earlier our as first CLO.

year brand and the of one We CLO, the will again the best we two Year, I of the as competitors recognition win, do. quality Issuer But just the European other what have that. have you know, nominated we CLO this been think don't we that's who for know of of

John Nadel

laid second we X% out multi-year to wondering, in the guys earnings just growth the businesses. if relates of Okay, range you And for of about how the at Investment of I of the I'm appreciate think Management, market color. question Day, -- dynamics, you to is maybe it feel I do particular, then Investor appreciate each the as just, expectations sort X%?

Mike Smith

and then let in. John, Christine I'll chime start,

the Corporate of come They're XXXX to segment. It be talked the to show growth XX% up are a we in for may saves plus But of in a clear, any way pressure think that should in given that we in that the of or little -- earlier, the a businesses CAGR not is that something business Voya there range. to or effect, businesses each very all to going EPS overall setting think that the think on stranded is I of to expect in very go. be that aside, possibly as will year, the cost of in. to may we because related next going years, the I below about be goals over three confident may possible remain where is, business three-year above,

Operator

you. Thank for Martin turn like over closing question-and-answer I’d call any concludes Okay. back to Rod This to our session. comments. conference the

Rod Martin

summary, organic In XX, with concluded to continued commitment drive strong and growth value. that we on greater you. our slide demonstrate Thank profitable XXXX results creating

We capital management. set growth is on and organic value capital Voya high through of have investment and committed bar our delivering We growth, targets delivering and a we're proven the through savings value deployment. prudent track the to record driving managing proposition achieving across We've compelling. businesses, shareholder savings our believe costs, cost

pursue customer drive needs plans in as our company, we a As our and be positioned on -- to meet Thank -- great the vision institutions, achieve shareholder well our greater foothold great we remain high-return simpler we're and drive high-growth, workplace by we ensuring to strengthening both you America's and focused with to our to Company. and day. returns anticipate good Retirement a

Operator

conference concluded. you for Thank attending you. now today’s Thank The presentation. has

may disconnect. You now

Voya Financial (VOYA) 6 Feb 192018 Q4 Earnings call transcript