2Q 2026 Voya Financial Earnings Call

Good morning. Welcome to Voya Financial's second quarter 2026 earnings conference call. All participants will be in a 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 then 1 on your touchtone phone. To withdraw your question, press star 2. Participants are limited to one question and one follow-up. Please note this event is being recorded. I would now like to turn the call over to Maynichu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining our second quarter earnings conference call. We will begin with prepared remarks by Heather LaVallee, our Chief Executive Officer, and Mike Katz, our Chief Financial Officer. Following their prepared remarks, we will take your questions. Also joining the call are Jay Kaderson, CEO of Workplace Solutions, and Matt Toms, our CEO of Investment Management. As a reminder, materials for today's call are available on our website at investors.voya.com. As noted on slide two of our analyst presentation, 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. Gap reconciliations are available in our press release and financial supplement found on our investor relations website. And now I will turn the call over to Heather. Thank you, Mayne.

Good morning and thank you for joining us today. Let's turn to slide four. Our businesses performed well in the second quarter. Strong underlying results were affected by lower alternative investment performance and by severance costs we incurred to reduce our expense base. For the quarter, we delivered adjusted operating earnings of $1.51 per share, generated approximately $150 million of excess capital, and returned approximately $200 million to shareholders through repurchases and dividends. As Mike will cover in more detail, fundamental performance trends and the immediate payback from these expense actions gives us a clear line of sight to increase earnings and cash generation in the second half. Our performance this quarter highlighted continued execution of our strategic priorities. We delivered strong commercial results in retirement and investment management. We're stabilizing and growing margins and employee benefits, and we are expanding wealth management capabilities to drive future revenue growth. Turning to our business results, in retirement, we generated over $8 billion of defined contribution net inflows in the quarter, supported by continued high client retention and large plan implementations in government and corporate markets. In government markets, where Voya leads the industry, we've added more than $30 billion in assets and approximately 1 million participants in the past 18 months through organic growth. We're also driving strong full-service growth in key segments, with emerging market sales up over 30% year-over-year. We completed the final phase of our One America integration during the quarter, marking the conclusion of a highly successful acquisition and integration effort that has significantly exceeded the financial goals we set. We continue to build momentum in wealth management, with year-over-year revenue growth of approximately 12%. Our retirement franchise now exceeds 10 million participant accounts, and wealth management allows us to deepen those participant relationships and serve customers in a more comprehensive way. Our results this quarter demonstrate VOIA's leadership position in the retirement market. Our business is delivering consistent flows, high client retention, and significant growth in participant accounts. Our presence across markets in expansive distribution footprint provides a durable foundation for sustainable growth. As we further develop our wealth management capabilities, we are building a platform that can serve an expanding customer base with the solutions they need for a confident financial future. In investment management, we generated positive net flows for both the quarter and the year, supported by client demand across a broad range of investment strategies and distribution channels. We expanded our product offerings during the quarter, including the launch of two multi-manager collective investment trusts that enhanced the private and alternative asset solutions we bring to retirement plan clients. Our investment performance remains a clear strength, with 83% of assets outperforming peers or benchmarks over three years and 85% outperforming over 10 years. The strong outcomes we deliver for clients are driving continued commercial success and strengthen the role investment management plays in Boya's broader workplace and wealth management strategy. In employee benefits, we continue to improve and strengthen the business. In stop-loss, we have stabilized loss ratios and margins across the entire book while maintaining the strength of our reserves. Early 2026 experience reinforces our confidence that the actions we've taken will continue to drive higher margins and restore the business to its historical earnings power. Across the portfolio, discipline pricing, underwriting, and risk selection are improving margins and allowing us to focus on business that meets our return expectations. I'll now turn it over to Mike to walk through the financials in more detail.

Thank you, Heather. Turning to slide six, in the quarter, adjusted operating earnings were $140 million or $1.51 per diluted share. That result includes an approximate $0.90 per share impact from alternative investment performance below expectations, as well as severance actions. The alternative investment impact was driven primarily by macro market conditions affecting our private equity portfolio, which are reported on a one-quarter lag. Year-to-date returns remain positive, and we expect results to improve in the third quarter. On severance, we expect the resulting expense savings to fully offset the upfront costs by year end. These actions improve efficiency, reduce ongoing expenses, and allow us to invest in long-term growth. While these items affected second quarter EPS, the underlying business trends remain strong. Continued commercial momentum in retirement and investment management, along with improving margins and employee benefits, support our confidence in meaningfully higher earnings in the second half. With that, let me turn to the segment results. Starting with retirement on slide seven, adjusted operating earnings were $190 million in the quarter. Results were impacted by lower spread income, reflecting alternative investment performance below expectations. Excluding the alternative investment impact, of course, spread income remained resilient, supported by reinvestment at higher rates. On a trailing 12-month basis, adjusted operating earnings increased 6 percent. Fee-based revenue increased 10 percent year-over-year, now representing over 60 percent of revenue, and margins remained healthy at 38 percent. Defined contribution net flows were $8.1 billion in the quarter, supported by continued high client retention and large plan implementations in both government and corporate markets. Our platform now serves more than 10 million participant accounts, providing meaningful scale to drive future fee-based revenue growth. Stepping back, robust flows, high client retention, and growth in participant accounts reinforce the strength of our retirement franchise. Turning to investment management on slide eight. Adjusted operating earnings increased 12% year-over-year to $57 million, driven by higher advisory fees across institutional and retail channels. On a trailing 12-month basis, adjusted operating earnings increased 11%, reflecting both those higher advisory fees as well as disciplined expense management. Net inflows were $1.2 billion in the quarter and now $6.3 billion over the last 12 months. Looking ahead, we continue to see healthy client demand for our differentiated investment capabilities and robust investment performance. At the same time, the second half will include the wind down of a legacy relationship, which will modestly offset momentum in actively distributed products. Importantly, the revenue impacts from this are expected to be immaterial in 2026. Overall, investment management delivered solid earnings growth supported by positive flows, healthy client demand, and strong investment performance. Turning to employee benefits on slide nine, adjusted operating earnings were $22 million in the quarter and $122 million over the last 12 months. In the quarter, we released $8 million of reserves and stop loss while continuing to hold reserves at the high end of our best estimate range. Early claims experience on 2026 business is encouraging and is emerging favorably relative to both 2024 and 2025 business. We also continue to see favorable underwriting conditions as we complete the non-January 2026 selling season and begin pricing for January 2027. In group life, results continue to benefit from favorable mortality consistent with broader industry trends. This helped to offset higher voluntary loss ratios in the quarter, which were elevated in part due to non-recurring items. For voluntary, while one-time items contributed to higher loss ratios in the quarter, the broader trend remains consistent with our expectations, as expense actions are supporting our plan to maintain net margins. Stepping back, the underlying fundamentals across the portfolio remain strong, highlighted by the five-point improvement in aggregate loss ratios over the last 12 months. Our discipline approach to risk selection, pricing, and expense management reinforces our ability to deliver further margin expansion and earnings growth in employee benefits. Turning to slide 10, we generated approximately $150 million of excess capital in the second quarter and $350 million year to date, with cash conversion above 100% in the quarter. We remain on track for 2026 cash generation to exceed 2025 levels, supported by strong cash conversion, the second half earnings outlook, and the expense actions we've discussed. On capital deployment, we repurchased $150 million of shares in the second quarter and $300 million year to date. We ended the quarter with approximately $200 million of excess capital, preserving flexibility while continuing to return capital to shareholders. For the third quarter, we expect to deploy at least $100 million towards share repurchases, and the second half cash generation outlook gives us flexibility to deploy additional capital in the fourth. Return on equity was impacted by alternative investment and severance items, which is why we are explicitly calling them out rather than leaving investors to reconcile the effect on their own. Stepping back, the second half outlook is supported by business momentum, expense discipline, and improving fundamentals. Most importantly, cash generation remains strong, and we remain on track for 2026 to exceed 2025 levels. With that, I'll turn it back to Heather.

Let me close on slide 11, which brings together the key points from today's discussion we're carrying strong commercial momentum into the second half particularly in retirement and investment management we continue to improve margins and employee benefits supported by the pricing and underwriting actions we've taken across the portfolio the expense actions we took in the second quarter alongside a more constructive macro environment provided tailwind for increased earnings in the second half our cash generation remains strong with 2026 on track to exceed 2025 levels and conversion rates above our 90 percent target we continue to be disciplined in deploying capital we return more than 380 million dollars to shareholders in the first half of 2026 we are maintaining our commitment to return capital to shareholders in the second half with our repurchase program active in the market and at least 100 million dollars of buybacks plan for the third quarter together these actions reinforce our confidence in our strategy and position voya to deliver continued earnings growth strong test generation and shareholder value before we go to questions i want to thank our employees across voya every day they help our customers navigate some of life's most important financial decisions with greater confidence their focus and commitment continue to drive our success with that i'll turn it over to

operator so we can take your questions thank you we will now begin the question and answer session to ask a question you may press star the one on your touchtone phone if you are using a speaker phone please pick up the handset before pressing the star keys to withdraw your question please press star 2 as a reminder participants are limited to one question and one follow-up question our first question is from ken lee with rbc capital please proceed hey good morning and thanks for taking my question um just one on on the investment management side the the

institutional net inflows in the quarter um one of these talk a little bit more about some of the drivers there and perhaps also the any kind of color or composition of the of the pipeline thanks Yeah, good morning, Ken.

Matt, we'll take your question.

Yeah, I'm happy to unpack that for you, Ken. So first quarter, sorry, second quarter strong, that $1.2 billion we're happy with. That's an annualized growth rate of about 1.6 percent. Importantly, within that, the revenue yield was up as well. I think that's a counter-industry trend, and that's supporting the broader fee revenue growth, and it shows the quality of those flows. You referenced institutional specifically, that's $1.6 billion, so providing the flows for the quarter. I would continue to call out the insurance strength we have that's backed by both our fixed income and our private credit capabilities that continue to resonate in the marketplace. That's both backward-looking and forward-looking, to your question about the forward look. Overall, our demand for institutional retail products remains attacked. And look, we like the competitive position in those fixed income international markets, which we believe are poised for continued growth. And that's what drives that long-term expectation of 2-plus percent.

Great. Very helpful there. And one follow-up, if I may. Any color around what you're seeing in terms of plan RFP activity within the retirement business there? Thanks.

Yeah, Ken. Jay will take your question. Thanks.

Hi, Kent. Yeah, if you think about RFP volumes themselves, and they do differ across markets, if you think about our emerging market, you should think in terms of that mid-single digits, that 6% or 7% growth, double-digit growth in mid-market where we're seeing a lot of activity and finding a lot of success. In that large mega, it's been very consistent in prior years, low single-digit, very healthy, and, you know, overall, really, really pleased with the RFP volumes that are, you know, really helping us through our commercial momentum.

And I think the broader step back, Ken, is that we continue to be very pleased with the commercial momentum in retirement and the overall performance in our largest and highest margin business.

Very helpful there. Thanks again.

Thanks, Ken.

Our next question is from Tom Gallagher with Evercore ISI. Please proceed.

Good morning. A few on stop loss. Heather, I know you mentioned the early 26 experience gives you confidence that margins will improve in stop loss. Any sort of quantification that you can share on how we should think about that? the, and is 3Q at all a possibility to change your 87 loss pick for 26, or is it more likely need to be more season that we would have to expect that to come through and have enough evidence to wait until Q4?

Yeah, good morning, Tom. I'll let Mike start on the question.

Hey, Tom. Yeah, look, I think it's remotely possible in the third quarter, but I would circle the fourth quarter is really the more likely opportunity for that. Why is that? You know, we're a third complete coming out of the third quarter. We're two-thirds complete coming out of the fourth. And, you know, we just really have zero interest in trying to accelerate outcomes. You know, that said, when we look at what we're seeing in the 26 business so far, it's running meaningfully better than what we saw in both 24 and 25 coming out of August. Now, to get to completion here, we're about 15% to 20% complete coming out of the second quarter. But we're still going to think about this at the high end of best estimate reserve ranges. I think we've been very consistent about that. But what's important here is the work we did last year. When you look at the underwriting team that we put in place, the leadership we put in place, which has really been all about how we quote, how we review and select risk. The other thing is just our ability to get rate. we got 21% rate increase coming into 25. We got 24% rate increase coming into 26. And frankly, we're getting even more rate in what we're pricing in 26. So I think the step back here is we feel really good, but we don't want to accelerate any outcomes here, Tom.

Yeah, Tom, it's Heather. And if I can just add a little more explicit points on the 26 book, not only are we seeing better claims experience than the 24 and 25. Again, it's early. We're also seeing a lower number of high severity claims, and we're seeing a lower number of frequency. So it's a combination of those in addition to the pricing, the reserve level. So that's just a little more color on the 26 book.

That's really helpful color. And just to follow up, and just if you don't mind bearing with me to follow my logic on this question. So the interesting thing to me was the 24 accident year, which I would have thought had no juice left in it at all, actually had favorable development of two points between mid 25 to now. But so that that seemed favorable. But then the 25 accident year has only improved one point versus your reset 90% loss ratio versus Q425. So I guess my question is, I would have thought these would have all seasoned by now, but it seems like it's taking longer. Is there something about these claims pattern that are stretching out the development for longer? Is that actually a trend? And what should we infer from that if that is in fact happening?

Yeah, Tom, we'll let Mike hit more of the technical aspects of the question. I'll let Jay build a little bit more of what he's seeing in the marketplace.

Yeah, Tom, look, following the logic, I think what we talked about last quarter was there was a pending reserve cleanup that affected the reserve release in the first quarter. So when you think about how much reserve release was happening from the 25 book in Q1, it was about 7 million. And so the big balance of that was that pending reserve cleanup in 24 and 23. And so I think you're thinking about that, right? I think we did see an acceleration of when claims were being reported. That's why we were careful at the end of last year. But there's not a new normal where it's taking over two years for this to season. I think what we talked about with respect to 25, I see that as 90 to 95 percent complete at this point, so it's getting pretty firmed up. And we expect a similar pattern for the 26 business. Jay?

Hi, Tom. Yeah, I think if you take a step back and you think about since Q1 of 25, You know, we've made real substantive changes to the stop loss leadership team and really the operating model itself. So we've got seasoned leaders in risk and pricing, underwriting, distribution, and they've been focused on advancing this risk and operating model improvement with a clear focus. You know, we've been very consistent on this margin over growth, and we're seeing the early results come through in our 26 book. You know, we're pricing every piece of business to get back to our target loss ratios. You know, right now the market demand is up over 13 percent, and quite frankly, the supply, Tom, isn't keeping up with the pace. And so more employers are looking for stop-loss solutions, and with the market starting, you know, continuously hardening, we're confident in achieving the desired rate actions and, importantly, the persistency targets that we've set for 26. You know, all this speaks to the strength right now of our clients and intermediary relationships, very active dialogue with them. And we remain focused right now on that discipline, pricing, and risk selection, and underwriting as we look to grow the business.

Thanks, Tom. Appreciate your questions.

Our next question is from Joe Hurwitz with Dowling. Please proceed.

Hey, good morning. Wanted to touch base first on the expense actions. How much of the improvement in expenses in your back half outlook is driven by those? And do you think those are sustainable as we move into 2027?

Hey, good morning, Joel. Michael, take your question.

Hey, Joel. Yeah, no, we, as we were getting it across in some of the prepared remarks that we do expect a six-month payback, and for this to drop to the bottom line, you know, we talked about very early in the year that we, Heather, myself, the team, were very much focused on self-funding growth investments, and so you're seeing these actions is why we had so much confidence around that. We do give a sense in the appendix of the materials on how to think about the split between retirement and employee benefits. To your question around looking beyond this year, we view the actions that we took here as resetting the baseline, heading into 2027. We're just entering in the planning season here as we think about everything that we want to accomplish in 27 and beyond. And really the mindset that Heather, myself, and the team has is operating leverage, full stop. And so it's also why we have so much confidence in the cash generation outlook. When we look at, you know, the actions this year, including severance, we still expect cash generation to increase, and we expect it to increase again next year. And that's partly due to these actions on expenses, but also the commercial momentum that we've talked about, as well as the margin expansion within employee benefits.

Got it. That's helpful. And then just shifting to voluntary, can you unpack the experience you saw in the quarter, just quantify the unusual items that you had? And I guess, where do you expect the loss ratio to go from here on that business? Is it still low 50% or are we creeping more towards like the mid-50s?

Yeah, Joel, we'll let Mike speak to the loss ratio, and then Jay can speak a little bit more to what we're seeing commercially in the market on voluntary.

Yeah, sure, Joel. So just first, we did – there were a couple unusual items in the quarter. There were some billing true-ups that came out of the first quarter into the second quarter, so there's some normalization between those two quarters as well as some reserve adjustments through legacy products that get reported in that line because we have voluntary disability and other all in the same line. And, you know, if I cut through all of that to your question, I would think of those having about a two-and-a-half-point effect in the quarter, and so a more normalized number for voluntary in the 54 percent range year-to-date, 53 percent. So that's kind of what I would expect in the second half of the year. Now, remember, you know, we're putting up IB&R with those loss ratios as well, and the fourth quarter is really important for voluntary. So we'll see how this ultimately shakes out, but I think that's a reasonable starting point. And I think the broader message that – and we talked about this even earlier in the year and late last year – was that we did expect higher loss ratios because we're getting after customer value here with these products. But we expect to do that while maintaining very stable net margins. And, again, I think this is a nod to the expense actions we took in the quarter.

Yeah, just to build, if you think about right now our position, Joel, as a top three voluntary provider, the strength sits in our distribution, really enhanced service model, which matters in the market right now, and our deep product expertise. And so the market demand is up year over year across all size segments for us, and sales are up 7% on a trailing 12-month basis. So the commercial minimum results are there. In addition, you know, our voluntary persistency over the last 12 months that we really focus on has been extremely solid. It's really a strong persistency business for us. And so the overall business fundamentals remain strong, and we really like our market position as we continue to grow the voluntary sales. We appreciate the question here.

Our next question is from Ryan Kruger with KBW. Please proceed.

Hey, thanks. One question on stop loss, just when you put everything together on the trends that you're seeing, do you feel like you can get back to your target margins in that business in 2027 at this point?

Yeah, Ryan, it's Heather. Maybe I'll start and then Mike can build. That's absolutely what our plan is. And as you've heard us talk about all the pricing actions we've taken, the discipline around underwriting, when we're pricing business, we are pricing it to be within the target range in 2027. So certainly the ambition, right, early, we like what we're seeing on 26. We still have the reserve set at the high end of the range, but that is absolutely our objective, Ryan.

Yeah, the only thing I would add, Heather, like you step back and look at the big picture here, Ryan. You know, when you look at late 2024, we came in to get as much rate as we possibly could. 2025, as Jay talked about, you know, we put our teams in place. We were able to get more premium or get more rate and still hold premium flat. That's really that Jan-26 business. What we're seeing in the middle of this year is getting even more rate. And that's just, I think, a nod to the market coming to us. You know, we've seen that margins are deteriorating in the industry. That's a calendar year 25 to 24 comparison. And that's what's really allowing us to go get that rate. We've got a lot of confidence in what we're seeing early as we head into the fall and price Jan-27. But every piece of business, to Heather's point, that we've been pricing this year, last year, was with the goal of getting this back to target margins.

And then just a quick one on record-keeping fees. They were flat sequentially despite the strong flows you had this quarter. I was just curious, is that more timing-related on when the flows came in? And as a result, should we see some tailwind there in the second half of the year?

Yeah, thanks, Ryan. We'll let Mike start and Jake and Edson call her.

Yeah, you alluded to it, Ryan. It's just timing. When you look at kind of the timing of when flows came in and when flows came out in the first quarter. So we expect really healthy fee-based margins in the second half of the year. And part of that is due to the organic commercial momentum in the second quarter. And then obviously, we feel really good about the macro heading into third quarter from second quarter, much different than what it was from second to first.

Yeah, Ryan, you know, as we expected and we kind of shared last quarter, we expected to have strong commercial momentum in Q2, and we did. We generated over $8 billion of total defying contribution net inflows. And given the visibility we have in the pipeline, we remain positive on the second half of 26. You know, while the flows do matter on this commercial momentum, and we're also focused on our continued revenue growth. And so if you look at a trailing 12-month revenue being up 10 percent, high 38 percent margin fee income is up 16 percent, as Mike referenced. And that fee income continues to be an important part of our growth story. It now represents, as you heard, 60 percent of our operating revenue. We also completed the final phase of the One America integration during the quarter. Not only did that provide additional for-service flows, but it enhanced our distribution scale and overall capabilities in certain product areas. And so, as I think about our position as a top five defined contribution provider, if you look at it by participant accounts, you know, we exceeded $10 million in Q2. That reflects the strength of the distribution, as I referenced, you know, our service model, enhancements we've been making, and overall the ability to deliver consistent growth in our largest business.

Our next question is from Dee Chen with Morgan Stanley. Please proceed.

Hey, good morning. I'm calling for Bob. I just want to ask about the retirement flows. So if we look at the quarter, the record-keeping flows are quite strong, and full-service flows are improving from 1Q. So I'm just curious, is that like still like the 1 America integration still impacting the surrenders, and are you expecting the surrenders to trend down in the second half?

Yeah, good morning. Thank you for the question. I'll let Jay add color, but it's really two primary things. You are still seeing the effect of One America flows in the second half, which we expect to moderate. And we do see the impact on higher participant account balances from equity markets. But, you know, Jay, please add more color.

Yeah, that's right. I mean, if you think about the broader industry, there is this equity market effect of full service flows in Q2. I mean, participant surrenders are really common in this high equity market environment. And, you know, as you heard in Heather's opening, all first service sales in a really important market for us, emerging markets, is up 30 percent. You know, kind of that broader step back is pretty clear. This was another quarter, another example of delivering strong results, as I said, in our largest business. We do, again, that visibility into the pipeline, you know, we do remain highly positive on the second half of the year. Just to kind of answer your One America question, that integration is complete, right? So we completed the final phase during the quarter, and that transaction has really validated, you know, I'll say is our discipline acquisition strategy, and it's establishing us really as a strategic acquirer in the retirement space. You know, the benefits of that transaction continue to materialize. We've added new capabilities, as I referenced, broader distribution opportunities, and right now incremental sales momentum we're getting from that acquisition, you know, supported by strategic relationships. Those capabilities are in areas you can think of like ESOP and self-directed accounts and tax-exempt capabilities. So really happy with both the talent we acquired, the financial results, and the new capabilities that are driving additional commercial momentum.

Okay, that sounds good. And the second one, just want to follow up on the strong pipeline on the record-keeping in the rest of the year. So just wondering if you have any update on the pipeline since, like, 1Q. Yeah.

Yeah, I'll take it. Just really building on what Jay talked about is we've got visibility into large plan implementations in the second half of the year. As we talked about on the first quarter call, we are confident in our ability to deliver positive flows. And as Jay broadened the point, we think, you know, retirement, our business, our margins have held up well. We're driving fee-based revenue. So it's more than a flow story in retirement. Our largest business continues to be our most profitable and is, you know, set up for us to be a strong leader in the retirement market. But, you know, all in all, a very strong outlook for the year.

Our next question is from Wes Carmichael with Wells Fargo. Please proceed.

Hey, good morning. So alts were a bit of a headwind in the quarter. It's kind of bounced around maybe the past few quarters, but just wondering if you have any color on how you're thinking about alts' performance in the back half of this year.

Sure. Morning, Wes. Matt will take your question.

Yeah, Wes, let me unpack that a little bit for you. So you're right. Second quarter alternative income was a modest loss, 2.5% annualized. That's a weak result. It compares unfavorably to the first quarter return, which was just over 8% and our long-term expectation of 9%. Some context on that. Our alt portfolio, as you know, is focused on buyout private equity. And this quarter's result was impacted both by the consistently lower realizations within the industry that's been well publicized, along with the volatility in broader equity markets at Q1, which informs the valuation period. That's coupled, of course, with the push higher in interest rates. So that's the valuation backdrop. Importantly, our diversified private equity holdings within this portfolio continue to be in harvest mode. We look to moderate the size of the portfolio and focus more on income-oriented and fee-generative opportunities going forward. And that's nothing new. That's been a path over multiple years, so expect that to continue. Also importantly, looking forward, the strength of the broader market in 2Q and moving into 3Q does provide a favorable backdrop. So we do think moving forward, Mike alluded to this in his remarks, that there's a scope for an improved result in the next quarter. Long-term, not adjusting the 9% target, we well outachieve that over time, but obviously some volatility from quarter to quarter.

Thanks, that's helpful. And then just wanted to come back to the broader discussion on expenses. I know you're always managing expenses, but if I think back, it sounds like coming into maybe 2025 and 2026, admin expenses were going to be a bit elevated with some investments into the business. But, you know, with this announcement this quarter, it seems like there's real explicit actions for savings. So just wondering, has anything really changed, and what drove the decision on severance actions now?

Yeah, Wes, it's Heather. I'll start. You know, really, this is just part of the discipline and DNA of us as a firm is always being focused on discipline expense management. You know, here we took operating efficiencies across our business, you know, specifically within workplace. If you go back, Mike and I had been signaling earlier in the year of our plan to self-fund the growth investments. And so think about us as really being very disciplined with not only capital, but our operating overall operating expenses. And so, within the organization, we've been focused on reallocating expenses into our higher growth areas, still managing our business to targeted unit cost levels, and operating efficiency. And that's just really how we operate. This is not part of any special program, but we think this is just part of, you know, how good management teams run companies.

Thank you. Sure.

Our next question is from Josh Shanker with Bank of America, Maryland. Please proceed.

Yeah, thank you. Good morning, everybody. You talked about really seeing the fruits of going after price in the stop-loss market. But obviously, 2Q is not that important a quarter for sales and benefits. But all the lines of business tend to have weaker sales than a year ago. Price may be part of the reason. Maybe you're not as competitive as you were before. Can you go product by product and talk about what's happening in sales on the benefit side?

Yeah, Josh, I'll let Jay unpack that for you. But if you think about when we've been talking about the margin improvement employee benefits, it's been beyond stop loss. We've been focusing in on improving margins across every line of business within. But yet we still believe we're very, very well positioned for continued growth in this business. But, Jay, please.

And I'll start here, Josh. I mean, as Mike referenced, you know, look, start as a step back. The total aggregate loss ratio improved five points to 74% year over year. So we like, you know, the team's really been focused around the execution on our pricing actions for the portfolio, and that's translated into that overall loss ratio improvement. You know, I talked about voluntary, specifically sales being up 7% on a trailing 12-month basis, being a top three provider there. Really happy with that business fundamentals and the feedback we're getting in the marketplace, whether it be on a standalone basis or in a bundle, is really, really strong. In group life, you know, historically, Q2 isn't a big sales quarter for group life, right? We manage that business on full-year results. With that said, you know, in group life, sales are up 5% on a trailing 12-month basis. And when I look at life and the broader employee benefits portfolio that you're referencing, you know, our brokers and employers are starting to look for these bundle solutions, and our leave administration sits at the center of that bundle. So through Q2, 48% of all of our new life and absence and disability cases were bundled with supplemental health. We're a market leader, and that's up from 42% last year. You know, a little bit of a step back. While our leave administration continues in Q2, it's in early days. You know, this solution is helping to broaden, you know, if I think about our value proposition across the entire portfolio. So, you know, as a reminder, we launched that integrated leave and disability claim solution in January of this year. You should think about it as bringing together an AI-enabled end-to-end workflow, which is something our customers were really looking for. And this simplifies the experience for our employees. Right now, it's improving the compliance for our employers, which is really important. And then overall, it threatens our ability to bundle and retain clients. And I talked about the importance of bundle. So, you know, overall in the portfolio, I don't look at Q2 as a point in time. I look at full-year results, and I look at our trailing 12 months, and the business is growing.

Can we say that business that was a year ago written is renewing in a different quarter than 2Q today? Or the business that you wrote in 2Q last year doesn't meet your pricing appetite this year, which explains part of the reason for the decline?

Hey, Josh, can I ask you just a clarifying question? Are you asking across the broader employee benefit portfolio or specific to a certain product line?

No, across the portfolio, I mean, we don't have so much detail, but there's three or four lines, and they're down. I understand we should measure over a 12-month basis, but I assume there were renewals that were done in 2Q25 that came up for renewal in 2Q26, or maybe they're renewing in a different quarter this year.

Yeah. Hey, Josh, it's Mike. And you can see in the enforced premium, I get to your point on renewals. Jay was talking about sales. The voluntary line is up. I think what you're seeing is in group life with the renewal premiums being down. And as Heather mentioned, we've had this broad thinking around making sure that we're growing margins. That's going to be the most impactful piece on overall cash generation increase, earnings increases in EB. Group life, you know, the puck's moving here. We've talked about this. We've had a handful of quarters here now where the loss ratios have been well below 77% to 80%. So we're adjusting for that. I think in some ways group life is like on this kind of a year or two ahead of where stop loss was coming out of COVID. So there is a little bit of adjustment for that as we're working through some of the renewals. You see that in the results, but I think the step back is we feel good about where we're heading into the fall. Jay and team are making some adjustments around how we think about pricing. we think that'll make us a little more competitive on that product line. Thanks, Josh.

Our next question is from Pablo Singsan with J.P. Morgan. Please proceed.

Hi, good morning. I had questions about the investment management business. So I think if you look historically, flows in institutional have been quite good for the past few years, but in retail they were positive, but they're negative the past two quarters. So just hoping you could provide perspective of what's going on there.

Good morning, Pablo. Matt will unpack that for you.

Hi, Pablo. Happy to have to unpack that. So retail, you're right, strong quarter, mostly driven by institutional as a reference. Within retail, it's really two different stories. In the U.S., happy to see positive momentum around key products, particularly in our fixed income franchise, as well as in specialty equity components like our small cap growth, a really standout product with strong demand. And in general, happy with the fee rate we're getting on that mix of business. The overall result for the quarter was actually dampened by some redemption activity overseas. If we think about the first half of the year, market volatility and some macro uncertainty in the international arena, we think that's what's causing higher redemption rates. Sales levels, gross sales levels, still very strong. That's an important indicator as well. So as we look into the second half, we have reason to believe that some of that redemption activity will moderate and the top line sales growth will persist. And that could drive an improved outlook for the second half of the year in retail specifically.

Got it. And just as a follow-up on investment management, I think previously you had laid out a 2% organic growth target for the year. I think through the first half, you're running below that. And, you know, Mike has referenced, I think, a legacy plan that might run off the back half of the year. So I guess if you put everything together, how comfortable are you, sir, if, like, you know, hitting the 2% and effectively, you know, seeing growth accelerate in the second half of the year?

Yeah, so let me unpack that a little bit for you. I'll go to the runoff business first. Like, we're never certain exactly how the future will play out second half of the year, but it is important to call out. We do think some headwinds. This is sub-advisor-related business in the U.S., not currently distributed by Voya. And the asset base has been in rundown mode, and we'd like the opportunity to be able to revive that with our own distribution channels moving forward. So in sub-advisor space, you'll have some lumpy ins and lumpy outs. We want to signal that we, while not finalized, want to put that out as far as a headwind. So that leans against that long-term growth rate. Importantly, as Mike referenced, not a meaningful revenue impact in 26, and we have a broad array of strategies and products that are performing well that are positioned to grow and can provide growth into the second half of the year and beyond. More broadly, as far as that 2% level, that's a long-term number. last year quite a bit above it, just shy of 5%. We're still out kicking the industry quite meaningfully with our organic growth rate. There'll be some ebbs and flows. We like the pipeline. We like the top line. And as you referenced, we like the revenue we're getting. So while net cash flows is super important, our revenue delta year over year, prior quarter year is up 8%. And that shows that we're not just getting net cash flows, we're getting revenue that comes with that. That's ultimately what's driving that double-digit operating income growth.

Thanks, Pablo. Our next question is from Sunit Kamath with Jeffries. Please proceed.

Thanks. I wanted to ask about the wealth management business. Heather, I think you alluded to 10 million accounts, but I was wondering if you could give some data on the AUM that you have in that strategy and what is sort of the average account size?

Yeah, happy to, Sunit. I'll let Jay talk about that, but what you can see in the supplement is about $33 billion of assets within wealth management, and as I referenced, 12% of revenue growth. But we'll have Jay talk a little bit more about what we're seeing within the wealth management buildup.

Yeah. Suneet, if you think about that AUM number, to answer your question, that's 16% up year over year. Heather referenced a revenue growth of 12%. If you think about the increasing demand right now from plan sponsors and employers, you know, they are asking for retail advice and guidance at the workplace. Think about three, four, five years ago, that gateway wasn't as open as it is now. And so, you know, given our position in the workplace, you know, we are positioned really well to continue to think about growth from wealth management. It gives us just quite frankly, a stronger way to retain and recapture and even deepen the relationships with our plan sponsors and employers by providing the solutions at the right moment for their employees. You know, our advisor count year to date, just to give you a little bit, is up 20%. We've now got over 650 advisors. Primarily, that growth is in the licensed sales desk advisors, which is supporting our growing customer base. And while there's, you think about that 10 million, you know, participants in our retirement business, you know, I'm also really pleased with the productivity of these advisors. So we are getting through our and achieving our productivity targets, which, you know, gets to the experienced management team we've been recruiting and the training that sits there and, quite frankly, the experienced advisors we've been able to bring over from other sales desks. You know, in addition to that, as you think about this, we've made some tech enhancements that are elevating the productivity of our advisors. So, we just continue to optimize the business and our position for growth.

Okay. Thanks for that. And then, Heather, I wanted to ask about benefit focus because, you know, you did the deal a couple of years ago. I think there was a lot of enthusiasm around it. And I don't know if you've just changed the name of it or whatever, but you don't really talk about it anymore. So I was just wondering, like, what's going on with that business post acquisition? And part of the reason I ask is I think some other companies that made similar acquisitions ended up either exiting the business or taking some goodwill charges. And I just want to get an update in that from you guys. Thanks.

Yeah. Oh, yeah. Thanks, Cindy, for the question. And I'll start is we continue to like the strategic importance of benefits administration across our workplace and employee benefit capability. You know, we'll say that it has taken us longer to get to the economics that we expected within benefit focus. But we feel like we're really stabilizing and moving into the next chapter. And, you know, why am I so confident in this is that we've seen the revenues have been stable. They've been roughly $200 million. Jay will talk a little bit about the look forward since we acquired, but we've seen real significant improvement in client retentions. We've also seen improvement in client satisfaction, both when we're doing onboarding and ongoing servicing, and I'll toss it to Jay, but we think that this is a significant avenue of our workplace to wealth management strategy. So, Jay?

Yeah, I couldn't agree more. As you think about, you know, benefit focus, you know, very much in market, very much a core part of our workplace business. As you think right now about employers, right, they're increasingly asking us for integrated solutions. And so we're leveraging that benefits administration platform to connect our clients with other complementary Voya capabilities like wealth management, where we can create what I would say is a stronger growth engine across, you know, entire enterprise. More specifically, benefit focus from a pipeline perspective through Q2 is up 32% over a prior period. Sales are tracking ahead of last year by over 8%. And more importantly, our average sole case size is up 80% year over year. And more broadly, benefit focus, if you think about what it's actually doing, it's helping customers right now. And we think about this a lot, then the health care cost curve, which is critically important. You know, it's guiding employees really to effective health and savings decisions, which is one of the more important decisions you're seeing at the workplace. And it increases that financial protection as you adopt greater adoption of those voluntary benefits that are offered through that platform. Overall, this fits really well into our workplace portfolio and a business we look forward to continuing to grow.

And, Suneet, just one other piece so, you know, you can follow along with us. when you look at the benefit business, the fee-based margin line, I mean, that's basically benefit-focused Ben Admin. You can see that at $227 million over the last 12 months. So just if you want to follow along with Ben Admin as we move forward, that's where that sits.

Our next question is from Wilma Burgess with Raymond James. Please proceed.

Hey, good morning. How do you see the long-term pricing trend for stop loss? Realize it's been over 20% for the last few years, but are you seeing any indications is starting to normalize more toward longer-term high teens. Thanks.

Hey, Wilma, yeah. Right now, it's, you know, very consistent. I think, you know, over time, absolutely, I think, you know, you would expect this to normalize. Again, if things go through cycles, we're at this part of the cycle. And I talked about the market coming to us. We got more rate when we came into this year. We're getting more rate this year. That, you know, as far as we look at first-dollar inflation leverage trend, you know, we expect it to be at similar elevated levels. So the key thing, and Jay talked about this too, it's not changing the demand for this product. I mean, RFPs are up double digits. They're probably doubled over the last five to six years because it's even more expensive what companies are dealing with with respect to first dollar if you want to be fully insured. So this is a really valuable product in the marketplace. And that's why we've been able to get rate. And our expectation is we're going going to be able to do that again in the fall. And it's why you hear us talking a little bit more about modest premium growth versus more of that kind of flat premium growth we saw coming into this year.

Thank you. And it seems like there's more industry interest in growing 401ks, whether that's, you know, to add private to 401ks or for other reasons. And the last 10 years or so has been very focused on annuities. So it seems like that's shifting a little bit. What do you think is underappreciated about the opportunity in 401ks and in your business? Thanks.

Yeah, Wilma, I guess I would – I'll start and just say I think one of the things that's underappreciated is the leadership position we hold in this market. If you think about, you know, both in our prepared remarks and our follow-on is that we have been growing in every segment we serve, both in terms of top line. We've had very strong client retention. You know, you look at the results that we've demonstrated from a margin perspective for well over a decade. We have been consistently within our target margins and even on the high end, if not above, for a period of time, and that just goes to good expense discipline, how we have been running the business, and that what we're super excited about and I think why there continues to be interest is what Jay has been talking about with wealth management. There is a significant opportunity in the shift from our clients where they are now expecting these services from their retirement providers, because at the end of the day, most American workers don't have access to a financial advisor. And the retirement provider and what we're building in wealth management is a great avenue to be able to provide that financial guidance directly through the workplace. So that's one of the reasons why we're increasingly bullish about our largest and most profitable business.

Thank you.

Thanks, Wilma. Our final question is from Andrew Klingerman with TD Cowan. Please proceed.

Last but not least. Kind of a more nuanced follow-up on flows. Could you, you know, Jay, could you talk to full service in retirement? It sounds like you're saying, based on what you said in earlier questions, that you can see that flow reversing to positive in the not-too-distant future. And likewise to Matt on investment management with retirement down the last two quarters, you know, it's been a little choppy. But do you think – I mean, it sounds like you're not going to get to the 2% net flow contribution to assets this year in the back half. But longer term, that's what you see. So just kind of more nuanced on the flows in each of the big businesses.

Yeah, I think maybe, Andrew, I'll try to summarize what I think we heard from both Matt and Jay this morning is on the retirement side, you heard us talk about positive flows for the full year in full service. as you kind of flavored a little nuance because you saw still a continuation of some of the outflows from the One America. We knew that expected. We expect that to moderate. You also saw higher participant outflows as a result of higher equity markets. But overall, we feel very positive. And the point we want to hit home is this is beyond a flow story. This really is also a revenue growth story for both businesses. And as Matt referenced, You know, we think that the 2% organic growth rate is the right long-term rate. We've had a couple years of really outkicking that, you know, well above. You know, this year a little bit stay tuned just given the headwind, but more importantly, margins up, the revenue has been solid. And so when we think about these two businesses combined, you're talking about significant scale, close to $1.2 trillion in assets between both businesses, growing a lot of commercial momentum in both retirement and investment management.

Got it. And then just finally, there was a lot of talk about following the whole Tom's Capital situation about your stance on whether Voya would consider an offer for the company. And then the same thing on the med stop loss. It seems like you were disinclined toward both, but I'm wondering if there's any change or any update you would make on that.

Yeah, I appreciate the question, Andrew. And I'll hit maybe three key points. First, we don't comment on rumors or headlines, nor do we allow ourselves to get distracted by it. At the end of the day, the board and management, we're always going to do what is in the best long-term interest of shareholders. That includes restoring the stop-loss business to the target margins that we have talked about. It also includes us executing on the organic growth plan that we've laid out. And I think as you've heard this morning, Andrew, I'll kind of reiterate why we continue to have such confidence and conviction in our growth strategy is we are delivering shareholder value today. We've got a lot of levers to be able to do that from the growth in retirement and investment management, the growth we're seeing in wealth management, the restorations and margins and employee benefits. And all of those combined generate a significant amount of cash. You think about us as a cash generation machine above 90 percent, and that gives us a lot of flexibility in how we deploy that. We've been returning a significant amount of capital back to shareholders through share buybacks and dividends, and we still have the availability to invest in our business and pursue retirement roll-ups, which we have a high bar for. So at the end of the day, Andrew, I think it's a great opportunity to close is got a lot of confidence and conviction in how we deliver value for shareholders today as well as into the future.

We have reached the end of our question and answer session. That will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.