Voya Financial, Inc.

Good morning. Welcome to Voya Financial's third quarter 2024 earnings conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then the one on your touchtone phone. To withdraw your question, please press star two. Participants are limited to one question and one follow-up. Please note this event is being recorded. I would now like to turn the conference over to Mei-Ni Chu, Head of Investor Relations. Please go ahead.

Thank you and good morning. We appreciate you joining us this morning for Voya Financial's third quarter 2024 earnings conference call. As a reminder, materials for today's call are available on our website at investors.voya.com. Joining me on our call this morning are Heather Lavalle, our Chief Executive Officer, and Don Templin, our Chief Financial Officer. Following their remarks, we will take your questions. For the Q&A session, we will also be joined by our incoming CFO, Mike Katz, and the heads of our businesses, specifically Rob Grupka, CEO of Workplace Solutions, and Matt Toms, CEO of Investment Management. Turning to our earnings presentation materials that are available on our website. On slide two, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found in our investor relations website. And now I will turn the call over to Heather. Thank you, Minnie.

Good morning and thank you for joining us today. Turning to slide four for key themes for the quarter. First, we delivered strong business results in wealth solutions and investment management this quarter. This is the outcome of actions we've implemented throughout the year to drive stronger than expected revenue and margin improvement. Second, adverse stop loss results led to a disappointing result in health solutions. We are actively repricing the stop loss business to materially improve margins next year. Third, we are on track to close our acquisition of One America's full-service retirement business on January 1st. This is an outstanding transaction for Voya, both in terms of strategic fit and financial attractiveness. Finally, we continue to deliver strong free cash flows. We remain on track to return $800 million in excess capital to shareholders in 2024 and are well positioned to significantly improve excess capital generation in 2025. Turning to third quarter results on slide five, we reported adjusted operating EPS of $1.90. Our EPS is 9% higher compared to the third quarter of 2023, supported by almost 20% growth in wealth solutions and more than 10% growth in investment management earnings. Strength in wealth and investment management was offset by adverse stop loss results in the quarter. In retrospect, we underpriced our 2024 book, which has resulted in the elevated loss ratios we are experiencing this year. We are taking decisive actions to address weakness in the business. Don and I will provide more details in a few moments. In Wealth Solutions, Revenue growth and adjusted operating margin are on pace to be above our 2024 targets. Underlying commercial momentum across key full-service segments continue to build in the quarter. While we had full-service net outflows, participant surrender rates were within expectations, and full-service sales are up 25% year-over-year, at the highest level we've delivered since fourth quarter 2022. Reported outflows were largely driven by higher average account values that have resulted from the recent run-up in equity markets. In the mid-market, this year's known sales are already significantly higher than total sales in 2023, and we continue to maintain market-leading positions in the government markets by participants and assets. Avoya Investment Management delivered a third consecutive quarter of positive net flows exceeding our organic growth target for the year. Our continuing strength in institutional fixed income and further expansion within the third-party insurance channel have been key drivers of net inflows in 2024. And our growth in retail markets continues to build, with net inflows across both domestic and international channels. In both wealth and investment management, we have grown margins year over year. As shown on the slide, This quarter's disappointing health results takes us off course from achieving our full year EPS target. Despite this adversity, positive results and our other businesses keep us on track to return 800 million to shareholders this year. Turning to slide six, our top priority in the immediate term is to significantly improve stop loss margins. We are prioritizing higher margins over premium growth for the 2025 book. We are executing on substantial rate increases across both renewals and new business. Don will provide more specific details in his remarks. We're also focused on integrating the One America business. We remain on track to close on January 1st. Our execution on these two key priorities, combined with our continued emphasis on profitable growth, will allow us to generate even higher levels of excess capital in 2025. And we continue to execute on the investments that will drive our future growth. As our retirement participant base continues to expand, we are extending our presence and reach in the workplace and growing out of plan assets and revenues. Retail client assets were up over 20% year over year as we continue to invest in this model and build our team. And as we told you last quarter, we are making strategic investments in lead management that will enhance our competitive position in group life and voluntary. We are on track to launch our new solution early next year. Turning to slide seven. In September, we announced our acquisition of One America's Retirement Business. This transaction is both strategically important and financially accretive. The acquisition adds meaningful scale to our retirement platform a broader set of strategic capabilities, and new opportunities for distribution partnerships. The transaction will deliver at least $75 million of pre-tax operating earnings and over $200 million of net revenue in the first year. One America's significant presence in the emerging and mid-market segments advances our strategy to increase market share and grow our full-service retirement business further defining our position as a leading retirement provider across all market segments and tax codes. We're thrilled to welcome the talented team from One America to Voya. Turning to slide eight, determined actions we are taking to execute on our key priorities will expand free cash flows in 2025 beyond the levels we're delivering this year. We expect that stop loss repricing, The One America acquisition and continued profitable growth across our businesses will significantly increase our excess capital generation in 2025. With that, Don will now provide more details on our performance and results.