Voya Financial Announces Second-Quarter 2020 Results
Second-quarter 2020 net income (loss) available to common shareholders of $(0.55) per diluted share, including a $0.72 per diluted share, after tax, loss from discontinued operations1 (which includes a $0.60 per diluted share unfavorable adjustment to the write down of assets of businesses held for sale to fair value less costs to sell) related to Voya's previously announced divestment of its Individual Life business and other closed blocks. Voya is required to remeasure the estimated fair value and loss on sale at the end of each quarter until closing.
Second-quarter 2020 adjusted operating earnings2 of $0.15 per diluted share, after tax; Normalized for the following items, second-quarter 2020 adjusted operating earnings were $1.09 per diluted share, after tax:
•$0.05 per diluted share, after tax, of favorable deferred acquisition costs and value of business acquired (“DAC/VOBA”) and other intangibles unlocking;
•$(0.79) per diluted share, after tax, of prepayment fees and alternative investment income below the company’s long-term expectations; and
•$(0.20) per diluted share, after tax, of stranded costs associated with Individual Life business and other closed blocks being divested.
Voya continues to demonstrate financial strength, with $668 million in excess capital as of June 30, 2020
Previously announced sale of Voya's Individual Life and other legacy non-retirement annuities businesses expected to close by Sept. 30, 2020 and provide $1.5 billion in deployable capital
NEW YORK, Aug. 5, 2020 — Voya Financial, Inc. (NYSE: VOYA) today announced financial results for the second quarter of 2020.
1 Assets and liabilities related to the business to be sold have been classified as held for sale and the related results of operations have been classified as discontinued operations. Revenues and net results of the business that will be divested via reinsurance at closing of the divestment transaction are reported in businesses exited or to be exited through reinsurance or divestment and are excluded from adjusted operating earnings. All prior periods have been revised to reflect these changes.
2 This press release includes certain non-GAAP financial measures, including adjusted operating earnings, normalized adjusted operating earnings, and book value, excluding accumulated other comprehensive income. Normalized adjusted operating earnings excludes DAC/VOBA and other intangibles unlocking; prepayment fees and alternative investment income above or below the company's long-term expectations; and stranded costs associated with the divestment of the Individual Life business and other closed blocks. More information on non-GAAP measures and reconciliations to the most comparable U.S. GAAP measures can be found in the “Use of Non-GAAP Financial Measures” section of this release and in the company’s Quarterly Investor Supplement.
"We delivered solid results in the second quarter and grew normalized adjusted operating earnings per share (EPS) compared with the second quarter of 2019," said Rodney O. Martin, Jr., chairman and CEO, Voya Financial, Inc. "We achieved further organic growth in each of our businesses despite the economic, health and operational challenges that COVID-19 has created as we remain focused on best serving our workplace and institutional clients. In Retirement, full-service recurring deposits increased 10.4% compared with the trailing 12 months ended June 30, 2019. In Investment Management, we generated $6.8 billion in positive net flows (excluding divested annuities and sub-advisor replacements) in the second quarter of 2020 driven by a significant new insurance asset management client mandate. Combined, Retirement and Investment Management generated $26.8 billion in total deposits and inflows during the second quarter. And in Employee Benefits, we grew in-force premiums 5.4% compared with the prior-year period due to continued demand for our protection solutions, particularly in the Voluntary business.
"With a strong balance sheet, Voya remains well positioned and continues to demonstrate our financial strength. We had $668 million of excess capital as of June 30, 2020, and we continue to benefit from our high free cash flow business mix. In addition, we have now achieved the $250 million in cost savings we had previously targeted by the end of 2020. Our prior success in achieving cost savings gives us momentum as we begin to address the stranded costs associated with the Individual Life and other legacy non-retirement annuities businesses transaction. We continue to expect that transaction will provide approximately $1.5 billion in deployable capital and it is on track to be completed by Sept. 30, 2020.
"Voya continues to stand apart in our industry because of the emphasis we have placed on our core values. Diversity, inclusion, and equality are foundational elements of the Voya culture — this has earned us a number of recognitions that help set us apart in the industry, however, we are committed to doing more. At a time when the societal challenges can seem daunting, we have an obligation to help — to combat racism, injustice, and discrimination, while setting an example for the greater community. Our commitment to caring for our employees, clients and all of the communities that we serve is core to our culture and we look forward to sharing our continued efforts and progress," added Martin.
SECOND-QUARTER 2020 SUMMARY
| | | | | | | | | | | | | | |
| Three Months Ended | | | |
| June 30, 2020 | | June 30, 2019 | |
| ($ in millions) | (per share) | ($ in millions) | (per share) |
| Net income (loss) available to common shareholders | $(71) | $(0.55) | $226 | $1.51 |
| Adjusted operating earnings, after tax | $20 | $0.15 | $159 | $1.06 |
| Normalized adjusted operating earnings, after tax | $140 | $1.09 | $159 | $1.06 |
| Common book value | | $70.86 | | $67.37 |
| Common book value, excluding AOCI | | $38.83 | | $46.94 |
Weighted avg. common shares outstanding (in millions): | | | | |
| Basic | 126 | | 144 | |
| Diluted | 128 | | 150 | |
Net income (loss) available to common shareholders in the second quarter of 2020 was $(71) million, or $(0.55) per diluted share, compared with $226 million, or $1.51 per diluted share, in the second quarter of 2019. The decline primarily reflects alternative investment losses in the second quarter of 2020 (compared with alternative investment gains in the second quarter of 2019) and the previously mentioned unfavorable adjustment to the estimated loss on sale. The adjustment had minimal impact on the company's estimated deployable capital at transaction closing, and Voya continues to expect the final loss on sale at closing to be at the lower end of the range of $250 million to $750 million due to the current rate and spread environment. Finally, intent impairments, unfavorable mortality, and DAC unlocking in the Individual Life business, which is reported in discontinued operations and businesses to be exited through reinsurance, also contributed to the year-over-year decline in net income available to common shareholders.
Adjusted operating earnings in the second quarter of 2020 were $20 million, or $0.15 per diluted share, after tax, compared with $159 million, or $1.06 per diluted share, after tax, in the second quarter of 2019. Second-quarter 2020 results included $7 million, after tax, of favorable DAC/VOBA and other intangibles unlocking as well as prepayment fees and alternative investment income that was $102 million, after tax, below the company's long-term expectations and driven by unfavorable equity markets in the first quarter of 2020. Conversely, second-quarter 2019 results included $4 million, after tax, of favorable DAC/VOBA and other intangibles unlocking as well as prepayment fees and alternative investment income that was $21 million, after tax, above the company's long-term expectations.
Normalized adjusted operating earnings in the second quarter of 2020 were $140 million, or $1.09 per diluted share, after tax, compared with $159 million, or $1.06 per diluted share, after tax, in the second quarter of 2019. Higher normalized adjusted operating earnings in Investment Management and a lower loss in Corporate were offset by lower normalized adjusted operating earnings in Retirement. On a per-share basis, the increase reflects the company's share repurchases.
SECOND-QUARTER 2020 HIGHLIGHTS
•Business results:
◦Retirement reported second-quarter 2020 adjusted operating earnings of $37 million. Normalized adjusted operating earnings were $120 million. For the trailing 12 months (TTM) ended June 30, 2020, full-service recurring deposits increased 10.4% to $10.8 billion compared with the TTM ended June 30, 2019. Total full-service net inflows in the second quarter of 2020 were $73 million.
◦Investment Management reported second-quarter 2020 adjusted operating earnings of $20 million. Normalized adjusted operating earnings were $46 million. Institutional net inflows were $7,114 million in the second quarter of 2020 and reflect strong sales in the company's insurance asset management business. Retail had net outflows (excluding sub-advisor replacements and divested annuities) of $288 million in the second quarter of 2020.
◦Employee Benefits reported adjusted operating earnings of $36 million in the second quarter of 2020, reflecting a total aggregate loss ratio of 69.3% for the quarter ended June 30, 2020. Normalized adjusted operating earnings were $46 million. In the second quarter of 2020, annualized in-force premiums were $2.3 billion, up 5% compared with the prior-year period, reflecting strong growth in the Voluntary business.
•Capital:
◦Voya had excess capital of $668 million as of June 30, 2020, which is the amount above the company’s holding company liquidity target of $200 million and estimated statutory surplus in excess of a 400% combined risk-based capital (RBC) ratio.
◦As of June 30, 2020, Voya’s estimated combined RBC ratio was 468%.
•Total company assets under management and administration3 were $606 billion as of June 30, 2020.
SEGMENT DISCUSSIONS
The following segment discussions compare the second quarter of 2020 with the second quarter of 2019, unless otherwise noted. All figures are presented before income taxes.
Retirement
Retirement adjusted operating earnings were $37 million, compared with $180 million. The decrease primarily reflects:
•$9 million of positive DAC/VOBA and other intangibles unlocking in the second quarter of 2020 compared with $5 million of positive DAC/VOBA and other intangibles unlocking in the second quarter of 2019;
•$24 million of lower fee-based margin, driven in part by lower bank sweep revenue, credited hardship distribution and loan fees associated with coronavirus-related distributions allowed under the CARES Act, and a one-time adjustment;
3 Includes assets under management balances related to businesses held for sale, for which a substantial portion of the assets will continue to be managed by Investment Management.
•$106 million of lower investment income driven by lower alternative investment income — prepayment fee and alternative investment income (on a pre-DAC basis) were, in aggregate, $92 million below the company's long-term expectations in the second quarter of 2020 due to unfavorable equity markets in the first quarter of 2020; and
•$22 million of higher administrative expenses, largely due to a legal accrual during the second quarter of 2020.
| | | | | | | | | | | |
| Trailing 12 months ended | Trailing 12 months ended | Trailing 12 months ended |
| ($ in millions) | 6/30/2020 | 3/31/2020 | 6/30/2019 |
| Retirement — Full Service | | | |
| Full Service recurring deposits | $ | 10,772 | | $ | 10,639 | | $ | 9,761 | |
| | | |
| Three months ended | Three months ended | Three months ended |
| ($ in millions) | 6/30/2020 | 3/31/2020 | 6/30/2019 |
| Retirement | | | |
| Total client assets | $ | 437,290 | | $ | 385,877 | | $ | 401,756 | |
| | | |
| Retirement — Full Service | | | |
| Full Service recurring deposits | $ | 2,651 | | $ | 3,098 | | $ | 2,518 | |
| Full Service net flows | $ | 73 | | $ | 329 | | $ | (19) | |
| Full Service client assets | $ | 141,584 | | $ | 125,066 | | $ | 133,726 | |
For the TTM ended June 30, 2020, Retirement full-service recurring deposits grew 10.4% compared with the prior-year period to $10.8 billion and reflect growth in both Corporate and Tax-Exempt Markets.
Retirement total client assets as of June 30, 2020 were $437 billion, up 9% compared with June 30, 2019, and up 13% compared with March 31, 2020.
Investment Management
Investment Management adjusted operating earnings were $20 million, compared with $41 million. The decrease primarily reflects:
•$6 million of lower fee-based margin primarily driven by lower Retail fee revenues, including the impact of market depreciation;
•$28 million of lower investment capital revenues primarily due to lower private equity earnings in the second quarter of 2020 (second-quarter 2020 investment capital results were $27 million below the company's long-term expectations due to unfavorable equity markets in the first quarter of 2020); and
•$13 million of lower administrative expenses, primarily due to lower volume expenses associated with lower revenues and AUM.
| | | | | | | | | | | |
| ($ in millions) | 2Q 2020 | 1Q 2020 | 2Q 2019 |
| Investment Management AUM | | | |
| External clients | $ | 172,932 | | $ | 153,830 | | $ | 158,305 | |
| General account | 56,997 | | 56,873 | | 55,921 | |
| Total | $ | 229,929 | | $ | 210,703 | | $ | 214,226 | |
| | | |
| Investment Management Net Flows | | | |
| Institutional | $ | 7,114 | | $ | 3,083 | | $ | 772 | |
| Retail | (288) | | (909) | | (580) | |
| Total (excluding sub-advisor replacements and divested annuities) | $ | 6,826 | | $ | 2,175 | | $ | 192 | |
| Sub-advisor replacements | — | | — | | 897 | |
| Divested annuities outflows | (520) | | (702) | | (616) | |
| Total | $ | 6,306 | | $ | 1,473 | | $ | 473 | |
During the second quarter of 2020, total Investment Management net flows (excluding sub-advisor replacements and divested annuities) of $6,826 million included $7,114 million in Institutional net inflows (primarily from fixed income asset classes) and $288 million of Retail net outflows.
Total Investment Management AUM was $230 billion as of June 30, 2020. The increase from March 31, 2020 and June 30, 2019 reflects market appreciation as well as positive Institutional net flows.
Employee Benefits
Employee Benefits adjusted operating earnings were $36 million, compared with $49 million. The decrease primarily reflects:
•$5 million of higher underwriting results as growth in the Voluntary block and an improved loss ratio for Stop Loss more than offset a higher Group Life loss ratio;
•$12 million of lower investment income, including prepayment fee and alternative investment income that was, in aggregate, $10 million below the company's long-term expectations (before the effect of income taxes and DAC) in the second quarter of 2020 due to unfavorable equity markets in the first quarter of 2020; and
•$3 million of higher administrative expenses driven by growth in the business.
| | | | | | | | | | | |
| ($ in millions) | 2Q 2020 | 1Q 2020 | 2Q 2019 |
| Employee Benefits Annualized In-Force Premiums | | | |
| Group Life, Disability and Other | $ | 716 | | $ | 704 | | $ | 715 | |
| Stop Loss | 1,075 | | 1,084 | | 1,045 | |
| Voluntary | 477 | | 483 | | 392 | |
| Total | $ | 2,268 | | $ | 2,271 | | $ | 2,152 | |
| | | |
| Trailing 12 months ended | Trailing 12 months ended | Trailing 12 months ended |
| 6/30/2020 | 3/31/2020 | 6/30/2019 |
| Total Aggregate Loss Ratio | 69.3 | % | 69.1 | % | 71.6 | % |
In the second quarter of 2020, annualized in-force premiums were $2.3 billion, up 5% compared with the prior year period, reflecting strong growth in the Voluntary business. The Total Aggregate Loss Ratio was 69.3% for the quarter ended June 30, 2020, below the company's target range of 70% to 73%.
Corporate
Corporate adjusted operating losses were $75 million compared with adjusted operating losses of $80 million. The removal of stranded costs associated with the company's sale of the majority of its annuities businesses and lower pension and incentive costs during the second quarter of 2020 was partially offset by a quarterly dividend payment on the additional preferred stock issued by Voya in the second quarter of 2019 and lower revenue from transition services agreements.
Supplementary Financial Information
More detailed financial information can be found in the company’s Quarterly Investor Supplement, which is available on Voya’s investor relations website, investors.voya.com.
Earnings Call and Slide Presentation
Voya will host a conference call on Thursday, Aug. 6, 2020, at 11 a.m. ET, to discuss the company’s second-quarter 2020 results. The call and slide presentation can be accessed via the company’s investor relations website at investors.voya.com. A replay of the call will be available on the company’s investor relations website at investors.voya.com starting at 2 p.m. ET on Aug. 6, 2020.
Media Contact: Investor Contact:
Christopher Breslin Michael Katz
212-309-8941 212-309-8999
About Voya Financial
Voya Financial, Inc. (NYSE: VOYA), helps Americans plan, invest and protect their savings — to get ready to retire better. Serving the financial needs of approximately 13.8 million individual and institutional customers in the United States, Voya is a Fortune 500 company that had $7.5 billion in revenue in 2019. The company had $606 billion in total assets under management and administration as of June 30, 2020. With a clear mission to make a secure financial future possible — one person, one family, one institution at a time — Voya’s vision is to be America’s Retirement Company®. Certified as a “Great Place to Work” by the Great Place to Work® Institute, Voya is equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has been recognized as a 2020 World’s Most Admired Company by Fortune magazine; one of the 2019 World’s Most Ethical Companies® by the Ethisphere Institute; as a member of the Bloomberg Gender Equality Index; and as a “Best Place to Work for Disability Inclusion” on the Disability Equality Index by Disability:IN. For more information, visit voya.com. Follow Voya Financial on Facebook, LinkedIn and Twitter @Voya.
Use of Non-GAAP Financial Measures
We believe that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performance and enhances the understanding of our financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions or other factors. We use the same accounting policies and procedures to measure segment Adjusted operating earnings before income taxes as we do for the directly comparable U.S. GAAP measure, which is Income (loss) from continuing operations before income taxes.
Adjusted operating earnings before income taxes does not replace Income (loss) from continuing operations before income taxes as a measure of our consolidated results of operations. Therefore, we believe that it is useful to evaluate both Income (loss) from continuing operations before income taxes and Adjusted operating earnings before income taxes when reviewing our financial and operating performance. Each segment’s Adjusted operating earnings before income taxes is calculated by adjusting Income (loss) from continuing operations before income taxes for the following items:
•Net investment gains (losses), net of related amortization of DAC, VOBA, sales inducements and unearned revenue, which are significantly influenced by economic and market conditions, including interest rates and credit spreads, and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest;
•Net guaranteed benefit hedging gains (losses), which are significantly influenced by economic and market conditions and are not indicative of normal operations, include changes in the fair value of derivatives related to guaranteed benefits, net of related reserve increases (decreases) and net of related amortization of DAC, VOBA and sales inducements, less the estimated cost of these benefits. The estimated cost, which is reflected in operating results, reflects the expected cost of these benefits if markets perform in line with our long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from operating results, including the impacts related to changes in nonperformance spread;
•Income (loss) related to businesses exited or to be exited through reinsurance or divestment, which includes gains and (losses) associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold and expenses directly related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions). Excluding this activity, which also includes amortization of
intangible assets related to businesses exited or to be exited, better reveals trends in our core business and more closely aligns Adjusted operating earnings before income taxes with how we manages our segments;
•Income (loss) attributable to noncontrolling interest, which represents the interest of shareholders, other than those of Voya Financial, Inc., in the gains and (losses) of consolidated entities, or the attribution of results from consolidated VIEs or VOEs to which we are not economically entitled;
•Dividend payments made to preferred shareholders are included as reductions to reflect the Adjusted operating earnings that is available to common shareholders;
•Income (loss) related to early extinguishment of debt, which includes losses incurred as a result of transactions where we repurchase outstanding principal amounts of debt; these losses are excluded from Adjusted operating earnings before income taxes since the outcome of decisions to restructure debt are not indicative of normal operations;
•Impairment of goodwill, value of management contract rights and value of customer relationships acquired, which includes losses as a result of impairment analysis; these represent losses related to infrequent events and do not reflect normal, cash-settled expenses;
•Immediate recognition of net actuarial gains (losses) related to our pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. We immediately recognize actuarial gains and (losses) related to pension and other postretirement benefit obligations and gains and losses from plan adjustments and curtailments. These amounts do not reflect normal, cash-settled expenses and are not indicative of current Operating expense fundamentals; and
•Other items not indicative of normal operations or performance of our segments or may be related to events such as capital or organizational restructurings undertaken to achieve long-term economic benefits, including certain costs related to debt and equity offerings, acquisition / merger integration expenses, severance and other third-party expenses associated with such activities. These items vary widely in timing, scope and frequency between periods as well as between companies to which we are compared. Accordingly, we adjust for these items as we believe that these items distort the ability to make a meaningful evaluation of the current and future performance of our segments.
Income (loss) related to businesses exited or to be exited through reinsurance or divestment (including net investment gains (losses) on securities sold and expenses directly related to these transactions, and insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions) are excluded from Adjusted operating earnings before income taxes. When we present the adjustments to Income (loss) from continuing operations before income taxes on a consolidated basis, each adjustment excludes the relative portions attributable to businesses exited or to be exited through reinsurance or divestment.
The most directly comparable U.S. GAAP measure to Adjusted operating earnings before income taxes is Income (loss) from continuing operations before income taxes. For a reconciliation of Adjusted operating earnings before income taxes to Income (loss) from continuing operations before income taxes, see the tables that accompany this release, as well as our Quarterly Investor Supplement.
As a result of the 2018 Transaction and the Individual Life Transaction, the historical revenues and certain expenses of the sold businesses have been classified as discontinued operations. Historical revenues and certain expenses of the businesses that will be divested via reinsurance at closing of the Individual Life Transaction (including an insignificant amount of Individual Life and closed block non retirement annuities that are not part of the transaction) are reported within continuing operations, but are excluded from adjusted operating earnings as businesses exited or to be exited through reinsurance or divestment. Expenses classified within discontinued operations and businesses exited or to be exited through reinsurance include only direct operating expenses incurred by these businesses and then only to the extent that the nature of such expenses was such that we would cease to incur such expenses upon the close of the 2018 Transaction and the Individual Life Transaction. Certain other direct costs of these businesses, including those which relate to activities for which we have or will provide transitional services and for which we have or will be reimbursed under transition services agreements (“TSAs”) are reported within continuing operations along with the associated revenues from the TSAs. Additionally, indirect costs, such as those related to corporate and
shared service functions that were previously allocated to the businesses sold or divested via reinsurance, are reported within continuing operations. These costs ("Stranded Costs") and the associated revenues from the TSAs are reported within continuing operations in Corporate, since we do not believe they are representative of the future run-rate of revenues and expenses of our continuing operations. The Stranded Costs related to the 2018 Transaction were removed in the fourth quarter of 2019 and we plan to address the Stranded Costs related to the Individual Life Transaction through a cost reduction strategy.
Normalized adjusted operating earnings excludes from Adjusted operating earnings before income taxes the following items:
•DAC/VOBA and other intangibles unlocking;
•The amount by which Investment income from prepayment fees and alternative investments exceeds or is less than our long-term expectations reported on a pre-DAC basis;
•For periods ended on or prior to June 30, 2018, Investment Management adjusted operating earnings related to our fixed and variable annuities businesses, which we sold in a transaction that closed on June 1, 2018; and
•For periods ended on or prior to the closing of the Individual Life Transaction, stranded costs associated with the Individual Life Transaction where the corresponding revenue is now reported in discontinued operations or in businesses exited or to be exited through reinsurance or divestment; for periods after the closing of the Individual Life Transaction any remaining stranded costs and the associated revenues from future TSAs will be reported in normalized adjusted operating earnings.
Because DAC/VOBA and other intangibles unlocking can be volatile, excluding the effect of this item can improve period to period comparability.
In addition to Net income (loss) per common share, we report Adjusted operating earnings per common share (diluted) and Normalized adjusted operating earnings per common share (diluted) because we believe that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performances and enhances the understanding of our financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions and/or other factors.
In addition to book value per common share including Accumulated other comprehensive income (AOCI), we also report book value per common share excluding AOCI and shareholders' equity excluding AOCI and preferred stock. Included in AOCI are investment portfolio unrealized gains or losses. In the ordinary course of business we do not plan to sell most investments for the sole purpose of realizing gains or losses, and book value per common share excluding AOCI and common shareholders' equity excluding AOCI provide a measure consistent with that view. The Adjusted debt to capital ratio includes a 25% equity treatment afforded to subordinated debt, 100% equity treatment afforded to preferred stock and excludes AOCI.
For a reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures, refer to the tables that accompany this release, as well as our Quarterly Investor Supplement.
We analyze our segment performance based on the sources of earnings. We believe this supplemental information is useful in order to gain a better understanding of our Adjusted operating earnings before income taxes for the following reasons: (1) we analyze our business using this information and (2) this presentation can be helpful for investors to understand the main drivers of Adjusted operating earnings (loss) before income taxes. The sources of earnings are defined as such:
•Investment spread and other investment income consists of net investment income and net realized investment gains (losses) associated with swap settlements and accrued interest, less interest credited to policyholder reserves.
•Fee based margin consists primarily of fees earned on assets under management ("AUM"), assets under administration and advisement ("AUA"), and transaction based recordkeeping fees.
•Net underwriting gain (loss) and other revenue contains the following: the difference between fees charged for insurance risks and incurred benefits, including mortality, morbidity, surrender results, and contractual charges for annuity contracts.
•Administrative expenses are general expenses, net of amounts capitalized as acquisition expenses and exclude commission expenses and fees on letters of credit.
•Net commissions are commissions paid that are not deferred and thus recorded directly to expense.
•For a detail explanation of DAC/VOBA and other intangibles amortization/unlocking refer to our Annual Report on Form 10-K and our Quarterly Report on Form 10-Q.
More details on these sources of earnings can be found in Voya Financial’s Quarterly Investor Supplement, which is available on Voya Financial’s investor relations website, investors.voya.com.
Forward-Looking and Other Cautionary Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company does not assume any obligation to revise or update these statements to reflect new information, subsequent events or changes in strategy. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, (iii) the frequency and severity of insured loss events, (iv) the effects of natural or man-made disasters, including pandemic events and specifically the current COVID-19 pandemic event, (v) mortality and morbidity levels, (vi) persistency and lapse levels, (vii) interest rates, (viii) currency exchange rates, (ix) general competitive factors, (x) changes in laws and regulations, such as those relating to Federal taxation, state insurance regulations and NAIC regulations and guidelines, (xi) changes in the policies of governments and/or regulatory authorities, and (xii) our ability to successfully manage the separation of our individual life and legacy variable annuities businesses on the expected timeline and economic terms. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under “Risk Factors” and “Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) – Trends and Uncertainties” in our Annual Report on Form 10-K for the year ended Dec. 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on Feb. 21, 2020, and in our Quarterly Report on Form 10-Q for the three months ended June 30, 2020, to be filed with the SEC on or before Aug. 10, 2020.
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Reconciliation of Net Income (Loss) to Normalized Adjusted Operating Earnings and Earnings Per Share (Diluted) Quarter-to-Date | | | | | | | | | |
| Three Months Ended | | | | | | | | |
| (in millions USD, except per share) | 6/30/2020 | | | | | 6/30/2019 | | | |
| Pre-tax | Tax Effect (1) | After-tax | Per share | | Pre-tax | Tax Effect (1) | After-tax | Per share |
| | | | | | | | | |
| Net Income (loss) available to Voya Financial, Inc.'s common shareholders | | | $ | (71) | | $ | (0.55) | | | | | $ | 226 | | $ | 1.51 | |
| Less: Preferred stock dividends | | | (4) | | (0.03) | | | | | — | | — | |
| Net Income (loss) available to Voya Financial, Inc. | | | (67) | | 0.52 | | | | | 226 | | 1.51 | |
| Plus: Net income (loss) attributable to noncontrolling interest | | | (79) | | (0.61) | | | | | 26 | | 0.17 | |
| Net Income (loss) | | | (146) | | (1.13) | | | | | 252 | | 1.68 | |
| Less: Income (loss) from discontinued operations, net of tax | | | (93) | | (0.72) | | | | | 42 | | 0.28 | |
| Income (loss) from continuing operations | (48) | | 5 | | (53) | | (0.41) | | | 243 | | 33 | | 210 | | 1.40 | |
| Less Adjustments | | | | | | | | | |
| Net Investment gains (losses) and related charges and adjustments | 42 | | 9 | | 34 | | 0.26 | | | 45 | | 9 | | 36 | | 0.24 | |
| Net guaranteed benefit hedging gains (losses) and related charges and adjustments | 38 | | 8 | | 30 | | 0.23 | | | (6) | | (1) | | (5) | | (0.03) | |
| Income (loss) related to businesses exited or to be exited through reinsurance or divestment | (55) | | (12) | | (43) | | (0.34) | | | 40 | | 8 | | 31 | | 0.21 | |
| Net income (loss) attributable to noncontrolling interest | (79) | | — | | (79) | | (0.61) | | | 26 | | — | | 26 | | 0.17 | |
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| Dividend payments made to preferred shareholders | 4 | | — | | 4 | | 0.03 | | | — | | — | | — | | — | |
Other adjustments (2) | (15) | | 3 | | (18) | | (0.14) | | | (52) | | (14) | | (38) | | (0.26) | |
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| Adjusted operating earnings | 17 | | (3) | | 20 | | 0.15 | | | 190 | | 31 | | 159 | | 1.06 | |
| Less Adjustments | | | | | | | | | |
| DAC, VOBA and other intangibles unlocking | 9 | | 2 | | 7 | | 0.05 | | | 5 | | 1 | | 4 | | 0.02 | |
| Prepayment fees and alternative investment income above (below) long-term expectations | (129) | | (27) | | (102) | | (0.79) | | | 26 | | 5 | | 21 | | 0.14 | |
| Individual Life transaction stranded costs | (32) | | (7) | | (25) | | (0.20) | | | (31) | | (7) | | (25) | | (0.16) | |
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| Normalized adjusted operating earnings | $ | 169 | | $ | 29 | | $ | 140 | | $ | 1.09 | | | $ | 190 | | $ | 31 | | $ | 159 | | $ | 1.06 | |
(1) The normalized adjusted operating tax expense is based on the actual income tax expense for the current period related to Income (loss) from continuing operations, adjusted for estimated taxes on non-operating items and non-operating tax impacts, such as those related to restructuring, changes in a tax valuation allowance and changes to tax law. For non-operating items, we apply a 21% tax rate.
(2) “Other adjustments” primarily consists of restructuring expenses (severance, lease write-offs, etc.) and tax adjustments.
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| Reconciliation of Basic Weighted Average Shares to Normalized Adjusted Operating Diluted Weighted Average Shares | | | | |
| Three Months Ended | | | |
| (in millions USD) | 6/30/2020 | 6/30/2019 | | |
| | | | |
| Weighted-average common shares outstanding - Basic | 126 | | 144 | | | |
| Dilutive effect of warrants | — | | 2 | | | |
Other dilutive effects (1) | 2 | | 4 | | | |
| Fully Diluted weighted average shares outstanding | 128 | | 150 | | | |
| Dilutive effect of the exercise or issuance of stock based awards | — | | — | | | |
| Weighted average common shares outstanding - diluted | 128 | | 150 | | | |
(1) Includes stock-based compensation awards such as restricted stock units (RSU), performance stock units (PSU), or stock options.
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| Reconciliation of Book Value per Common Share to Book Value per Share excluding AOCI | | | |
| | As of June 30, 2020 | As of June 30, 2019 |
| | | |
| Book value per common share, including AOCI | | $ | 70.86 | | $ | 67.37 | |
| Per share impact of AOCI | | (32.03) | | (20.43) | |
| Book value per common share, excluding AOCI | | $ | 38.83 | | $ | 46.94 | |
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Reconciliation of Investment Management Adjusted Operating Margin to Normalized Adjusted Operating Margin Excluding Investment Capital (1) | | | |
| Three Months Ended | | |
| (in millions USD, unless otherwise indicated) | 6/30/2020 | 3/31/2020 | 6/30/2019 |
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| Adjusted Operating revenues | $ | 129 | | $ | 166 | | $ | 163 | |
| Adjusted operating expenses | (109) | | (126) | | (122) | |
| Adjusted operating earnings before income taxes | $ | 20 | | $ | 40 | | $ | 41 | |
| Adjusted operating margin | 15.2 | % | 23.9 | % | 25.3 | % |
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| Adjusted Operating revenues | $ | 129 | | $ | 166 | | $ | 163 | |
| Less: | | | |
| Investment Capital Results | (22) | | 3 | | 7 | |
| Adjusted operating revenues excluding Investment Capital | 151 | | 163 | | 156 | |
| Adjusted operating expenses | (109) | | (126) | | (122) | |
| Adjusted operating earnings excluding Investment Capital | $ | 42 | | $ | 37 | | $ | 34 | |
| Adjusted operating margin excluding Investment Capital | 27.4 | % | 22.4 | % | 21.9 | % |
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| Adjusted Operating revenues | $ | 129 | | $ | 166 | | $ | 163 | |
| Less: | | | |
| Investment Capital Results above (below) long-term expectations | (27) | | (2) | | 2 | |
| | | |
| Normalized adjusted operating revenues | 156 | | 168 | | 161 | |
| Adjusted operating expenses | (109) | | (126) | | (122) | |
| Normalized adjusted operating earnings excluding Investment Capital above (below) long-term expectations | $ | 46 | | $ | 42 | | $ | 39 | |
| Normalized adjusted operating margin excluding Investment Capital above (below) long-term expectations | 29.7 | % | 24.8 | % | 24.4 | % |
(1) In our Investment Management business, normalized and adjusted operating margins excluding investment capital results are reported because the results from investment capital can be volatile and excluding the effect of these items can improve period-to-period comparability.
Quarterly Investor Supplement
June 30, 2020
This report should be read in conjunction with Voya Financial, Inc.'s Quarterly Report on Form 10-Q for the Three Months Ended June 30, 2020. Voya Financial's Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q, can be accessed upon filing at the Securities and Exchange Commission’s website at www.sec.gov, and at our website at investors.voya.com. All information is unaudited.
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| Corporate Offices: | | Media Contact: | | Investor Contact: |
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| Voya Financial | | Christopher Breslin | | Michael Katz |
| 230 Park Avenue | | 212-309-8941 | | 212-309-8999 |
| New York, New York 10169 | | [email protected] | | [email protected] |
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| NYSE Ticker: | | | | Web Site: |
| VOYA | | | | investors.voya.com |
Table of Contents
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| Page | | | Page |
| Consolidated | | | Corporate | |
| Explanatory Note on Non-GAAP Financial Information | 3 - 5 | | Adjusted Operating Earnings | |
| Key Metrics | | | Investment Information | |
| Normalized Adjusted Operating Earnings by Segment | | | Portfolio Composition | |
| Normalized Effective Tax Rate | | | Portfolio Results | |
| Consolidated Statements of Operations | | | Alternative Investment Income | |
| Consolidated Adjusted Earnings Before Income Taxes | | | Reconciliations | |
| Adjusted Operating Earnings by Segment (QTD) | | | Reconciliation of Consolidated Statements of Operations | |
| Adjusted Operating Earnings by Segment (YTD) | | | Reconciliation of Adjusted Operating Revenues | |
| Consolidated Balance Sheets | | | Reconciliation of Adjusted Operating Earnings - excluding Unlocking; | |
| DAC/VOBA Segment Trends | | | Adjusted Return on Capital | 38 - 39 |
| Consolidated Capital Structure | | | Prepayments and Alternative Income Above (Below) Long-Term | |
| Consolidated Assets Under Management, Assets Under Administration | | | Expectations | |
| and Advisement | | | Reconciliation of Normalized Adjusted Operating Earnings and Earnings | |
| Retirement | | | Per Common Share (Diluted) (QTD) | |
| Sources of Normalized Adjusted Operating Earnings and Key Metrics | | | Reconciliation of Normalized Adjusted Operating Earnings and Earnings | |
| Client Assets Rollforward by Product Group | 19 - 20 | | Per Common Share (Diluted) (YTD) | |
| Investment Management | | | Reconciliation of Book Value Per Common Share, Excluding AOCI | |
| Sources of Normalized Adjusted Operating Earnings | | | Reconciliation of Investment Management Normalized Adjusted | |
| Analysis of AUM and AUA | | | Operating Margin, Excluding Investment Capital | |
| Account Value Rollforward by Source | | | | |
| Account Value by Asset Type | | | | |
| Employee Benefits | | | | |
| Sources of Normalized Adjusted Operating Earnings | | | | |
| Key Metrics | | | | |
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Explanatory Note on Non-GAAP Financial Information
On December 18, 2019, we entered into an agreement to dispose of substantially all of our Individual Life and other closed block non-retirement annuities businesses (the "Individual Life Transaction"). As a result, the assets and liabilities of the businesses to be sold have been classified as held for sale and the results of operations have been classified as discontinued operations for all periods presented in this Quarterly Investor Supplement. For the quarter ended June 30, 2020, Income (loss) from discontinued operations, net of tax included $77 million additional estimated loss on sale, net of tax. As of June 30, 2020, the total estimated loss on sale, net of tax was $1.3 billion, which represents the the excess of the estimated carrying value of the businesses held for sale over the estimated purchase price less cost to sell. Revenues and net results of the business that will be divested via reinsurance at closing of the Individual Life Transaction (including insignificant number of Individual Life, Annuities and Closed Block Variable Annuities ("CBVA") policies that were not part of the Individual Life and 2018 Transactions) are reported in businesses exited or to be exited through reinsurance or divestment and are excluded from adjusted operating earnings. All prior periods have been revised to reflect these changes. Refer to Business Held for Sale and Discontinued Operations in Part I, Item 1. of our Quarterly Report on Form 10-Q for further detail on discontinued operations.
Adjusted Operating Earnings Before Income Taxes
We believe that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performance and enhances the understanding of our financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions or other factors. We use the same accounting policies and procedures to measure segment Adjusted operating earnings before income taxes as we do for the directly comparable U.S. GAAP measure, which is Income (loss) from continuing operations before income taxes.
Adjusted operating earnings before income taxes does not replace Income (loss) from continuing operations before income taxes as a measure of our consolidated results of operations. Therefore, we believe that it is useful to evaluate both Income (loss) from continuing operations before income taxes and Adjusted operating earnings before income taxes when reviewing our financial and operating performance. Each segment’s Adjusted operating earnings before income taxes is calculated by adjusting Income (loss) from continuing operations before income taxes for the following items:
▪Net investment gains (losses), net of related amortization of DAC, VOBA, sales inducements and unearned revenue, which are significantly influenced by economic and market conditions, including interest rates and credit spreads, and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest;
•Net guaranteed benefit hedging gains (losses), which are significantly influenced by economic and market conditions and are not indicative of normal operations, include changes in the fair value of derivatives related to guaranteed benefits, net of related reserve increases (decreases) and net of related amortization of DAC, VOBA and sales inducements, less the estimated cost of these benefits. The estimated cost, which is reflected in operating results, reflects the expected cost of these benefits if markets perform in line with our long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from operating results, including the impacts related to changes in nonperformance spread;
•Income (loss) related to businesses exited or to be exited through reinsurance or divestment, which includes gains and (losses) associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold and expenses directly related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions). Excluding this activity, which also includes amortization of intangible assets related to businesses exited or to be exited, better reveals trends in our core business and more closely aligns Adjusted operating earnings before income taxes with how we manages our segments;
•Income (loss) attributable to noncontrolling interest, which represents the interest of shareholders, other than those of Voya Financial, Inc., in the gains and (losses) of consolidated entities, or the attribution of results from consolidated VIEs or VOEs to which we are not economically entitled;
•Dividend payments made to preferred shareholders are included as reductions to reflect the Adjusted operating earnings that is available to common shareholders;
•Income (loss) related to early extinguishment of debt, which includes losses incurred as a result of transactions where we repurchase outstanding principal amounts of debt; these losses are excluded from Adjusted operating earnings before income taxes since the outcome of decisions to restructure debt are not indicative of normal operations;
•Impairment of goodwill, value of management contract rights and value of customer relationships acquired, which includes losses as a result of impairment analysis; these represent losses related to infrequent events and do not reflect normal, cash-settled expenses;
Explanatory Note on Non-GAAP Financial Information
•Immediate recognition of net actuarial gains (losses) related to our pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. We immediately recognize actuarial gains and (losses) related to pension and other postretirement benefit obligations and gains and losses from plan adjustments and curtailments. These amounts do not reflect normal, cash-settled expenses and are not indicative of current Operating expense fundamentals; and
•Other items not indicative of normal operations or performance of our segments or may be related to events such as capital or organizational restructurings undertaken to achieve long-term economic benefits, including certain costs related to debt and equity offerings, acquisition / merger integration expenses, severance and other third-party expenses associated with such activities. These items vary widely in timing, scope and frequency between periods as well as between companies to which we are compared. Accordingly, we adjust for these items as we believe that these items distort the ability to make a meaningful evaluation of the current and future performance of our segments.
Income (loss) related to businesses exited or to be exited through reinsurance or divestment (including net investment gains (losses) on securities sold and expenses directly related to these transactions, and insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions) are excluded from Adjusted operating earnings before income taxes. When we present the adjustments to Income (loss) from continuing operations before income taxes on a consolidated basis, each adjustment excludes the relative portions attributable to businesses exited or to be exited through reinsurance or divestment.
The most directly comparable U.S. GAAP measure to Adjusted operating earnings before income taxes is Income (loss) from continuing operations before income taxes. For a reconciliation of Adjusted operating earnings before income taxes to Income (loss) from continuing operations before income taxes, refer to the "Reconciliations" section in this document.
Stranded Costs
As a result of the 2018 Transaction and the Individual Life Transaction, the historical revenues and certain expenses of the sold businesses have been classified as discontinued operations. Historical revenues and certain expenses of the businesses that will be divested via reinsurance at closing of the Individual Life Transaction (including an insignificant amount of Individual Life and closed block non retirement annuities that are not part of the transaction) are reported within continuing operations, but are excluded from adjusted operating earnings as businesses exited or to be exited through reinsurance or divestment. Expenses classified within discontinued operations and businesses exited or to be exited through reinsurance include only direct operating expenses incurred by these businesses and then only to the extent that the nature of such expenses was such that we would cease to incur such expenses upon the close of the 2018 Transaction and the Individual Life Transaction. Certain other direct costs of these businesses, including those which relate to activities for which we have or will provide transitional services and for which we have or will be reimbursed under transition services agreements (“TSAs”) are reported within continuing operations along with the associated revenues from the TSAs. Additionally, indirect costs, such as those related to corporate and shared service functions that were previously allocated to the businesses sold or divested via reinsurance, are reported within continuing operations. These costs ("Stranded Costs") and the associated revenues from the TSAs are reported within continuing operations in Corporate, since we do not believe they are representative of the future run-rate of revenues and expenses of our continuing operations. The Stranded Costs related to the 2018 Transaction were removed in the fourth quarter of 2019 and we plan to address the Stranded Costs related to the Individual Life Transaction through a cost reduction strategy.
Normalized Adjusted Operating Earnings
Normalized adjusted operating earnings excludes from Adjusted operating earnings before income taxes the following items:
•DAC/VOBA and other intangibles unlocking;
•The amount by which Investment income from prepayment fees and alternative investments exceeds or is less than our long-term expectations reported on a pre-DAC basis;
•For periods ended on or prior to June 30, 2018, Investment Management adjusted operating earnings related to our fixed and variable annuities businesses, which we sold in a transaction that closed on June 1, 2018; and
•For periods ended on or prior to the closing of the Individual Life Transaction, stranded costs associated with the Individual Life Transaction where the corresponding revenue is now reported in discontinued operations or in businesses exited or to be exited through reinsurance or divestment; for periods after the closing of the Individual Life Transaction any remaining stranded costs and the associated revenues from future TSAs will be reported in normalized adjusted operating earnings.
Because DAC/VOBA and other intangibles unlocking can be volatile, excluding the effect of this item can improve period to period comparability.
Adjusted Operating Earnings per Common Share (Diluted) and Normalized Adjusted Operating Earnings per Common Share (Diluted)
In addition to Net income (loss) per common share, we report Adjusted operating earnings per common share (diluted) and Normalized adjusted operating earnings per common share (diluted) because we believe that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performances and enhances the understanding of our financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions and/or other factors. For a reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures, refer to the "Reconciliation of Normalized Adjusted Operating Earning and Earnings Per Common Share" page of this document.
Shareholders' Equity/Book Value per Common Share, Excluding AOCI
In addition to book value per common share including Accumulated other comprehensive income (AOCI), we also report book value per common share excluding AOCI and shareholders' equity excluding AOCI and preferred stock. Included in AOCI are investment portfolio unrealized gains or losses. In the ordinary course of business we do not plan to sell most investments for the sole purpose of realizing gains or losses, and book value per common share excluding AOCI and common shareholders' equity excluding AOCI provide a measure consistent with that view. The Adjusted debt to capital ratio includes a 25% equity treatment afforded to subordinated debt, 100% equity treatment afforded to preferred stock and excludes AOCI. For a reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures, refer to the Reconciliation of Book Value Per Common Share, Excluding AOCI" page of this document.
Explanatory Note on Non-GAAP Financial Information
Adjusted Return on Capital
We report Adjusted return on capital ("ROC") because we believe this measure is a useful indicator of how effectively we use capital resources allocated to our segments apart from Corporate and closed block activities, which include our Retirement, Investment Management and Employee Benefits segments. Capital is allocated to each of our segments in proportion to each segment’s target statutory capital, plus an allocation of the differences between statutory capital and total Voya Financial, Inc. shareholders' equity on a GAAP basis (excluding AOCI), based on each segment’s portion of these differences. Statutory surplus in excess of target statutory capital and certain Corporate assets and liabilities, such as certain deferred tax assets and liabilities for unfunded pension plans, are allocated to Corporate.
Adjusted Operating Effective Tax Rate and Normalized Adjusted Operating Effective Tax Rate
Beginning in 2018, the normalized adjusted operating effective tax rate is based on the actual income tax expense for the current period related to Income (loss) from continuing operations, adjusted for estimated taxes on non-operating items and non-operating tax impacts, such as those related to restructuring, changes in a tax valuation allowance and changes to tax law. For non-operating items, we apply a 21% tax rate beginning in 2018.
Adjusted Operating Revenues
Adjusted operating revenues is a measure of our segment revenues and a non-GAAP financial measure. Each segment's Adjusted operating revenues are calculated by adjusting Total revenues for the following items:
•Net realized investment gains (losses) and related charges and adjustments, which are significantly influenced by economic and market conditions, including interest rates and credit spreads and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest. These are net of related amortization of unearned revenue;
•Gain (loss) on change in fair value of derivatives related to guaranteed benefits, which is significantly influenced by economic and market conditions and not indicative of normal operations, includes changes in the fair value of derivatives related to guaranteed benefits, less the estimated cost of these benefits. The estimated cost, which is reflected in operating results, reflects the expected cost of these benefits if markets perform in line with our long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from operating revenues, including the impacts related to changes in nonperformance spread;
•Revenues related to businesses exited or to be exited through reinsurance or divestment, which includes revenues associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions). Excluding this activity better reveals trends in our core business and more closely aligns Adjusted operating revenues with how we manage our segments;
•Revenues attributable to noncontrolling interest, which represents the interests of shareholders, other than those of Voya Financial, Inc., in consolidated entities. Revenues attributable to noncontrolling interest represents such shareholders' interests in the revenues of those entities, or the attribution of results from consolidated VIEs or VOEs to which we are not economically entitled; and
•Other adjustments to total revenues primarily reflect fee income earned by our broker-dealers for sales of non-proprietary products, which are reflected net of commission expense in our segments’ operating revenues, other items where the income is passed on to third parties and the elimination of intercompany investment expenses included in Adjusted operating revenues.
The most directly comparable U.S. GAAP measure to Adjusted operating revenues is Total revenues. For a reconciliation of Adjusted operating revenues to Total revenues, refer to the "Reconciliations" section in this document.
Sources of Earnings
We analyze our segment performance based on the sources of earnings. We believe this supplemental information is useful in order to gain a better understanding of our Adjusted operating earnings before income taxes for the following reasons: (1) we analyze our business using this information and (2) this presentation can be helpful for investors to understand the main drivers of Adjusted operating earnings (loss) before income taxes. The sources of earnings are defined as such:
•Investment spread and other investment income consists of net investment income and net realized investment gains (losses) associated with swap settlements and accrued interest, less interest credited to policyholder reserves.
•Fee based margin consists primarily of fees earned on assets under management ("AUM"), assets under administration and advisement ("AUA"), and transaction based recordkeeping fees.
•Net underwriting gain (loss) and other revenue contains the following: the difference between fees charged for insurance risks and incurred benefits, including mortality, morbidity, surrender results, and contractual charges for annuity contracts.
•Administrative expenses are general expenses, net of amounts capitalized as acquisition expenses and exclude commission expenses and fees on letters of credit.
•Net commissions are commissions paid that are not deferred and thus recorded directly to expense.
•For a detail explanation of DAC/VOBA and other intangibles amortization/unlocking see “Unlocking of DAC/VOBA and other Contract Owner/Policyholder Intangibles” in our SEC filings.
Other Information
Financial information, unless otherwise noted, is rounded to millions, therefore may not sum to its corresponding total.
Key Metrics
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| Three Months Ended or As of | | | | | | | | | | Year-to-Date or As of | | |
| (in millions USD, unless otherwise indicated) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Net income (loss) available to Voya Financial, Inc.'s common shareholders | (71) | | | (98) | | | (776) | | | 106 | | | 226 | | | (169) | | | 290 | |
| Per common share (basic) | (0.56) | | | (0.75) | | | (5.76) | | | 0.77 | | | 1.57 | | | (1.32) | | | 1.99 | |
| Per common share (diluted) | (0.55) | | | (0.71) | | | (5.45) | | | 0.74 | | | 1.51 | | | (1.27) | | | 1.93 | |
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Adjusted operating earnings: (1) | | | | | | | | | | | | | |
| Before income taxes | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
| After income taxes | 20 | | | 115 | | | 153 | | | 114 | | | 159 | | | 134 | | | 247 | |
| Effective tax rate | (17.6) | % | | 14.3 | % | | 14.2 | % | | 7.5 | % | | 16.2 | % | | 10.8 | % | | 14.7 | % |
| Per common share (diluted) | 0.15 | | | 0.83 | | | 1.07 | | | 0.79 | | | 1.06 | | | 1.01 | | | 1.64 | |
Normalized adjusted operating earnings: (1) | | | | | | | | | | | | | |
| Before income taxes | 169 | | | 180 | | | 199 | | | 179 | | | 190 | | | 349 | | | 346 | |
| After income taxes | 140 | | | 151 | | | 170 | | | 159 | | | 159 | | | 291 | | | 291 | |
| Effective tax rate | 17.2 | % | | 16.0 | % | | 14.9 | % | | 11.7 | % | | 16.2 | % | | 16.6 | % | | 15.8 | % |
| Per common share (diluted) | 1.09 | | | 1.10 | | | 1.19 | | | 1.10 | | | 1.06 | | | 2.19 | | | 1.93 | |
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| Shareholder's equity: | | | | | | | | | | | | | |
| Total Voya Financial, Inc. Common Shareholders' Equity | 8,936 | | | 6,815 | | | 8,796 | | | 9,939 | | | 9,452 | | | 8,936 | | | 9,452 | |
Total Voya Financial, Inc. Common Shareholders' Equity - Excluding AOCI (1) | 4,897 | | | 4,974 | | | 5,465 | | | 6,442 | | | 6,585 | | | 4,897 | | | 6,585 | |
Deferred Tax Asset ("DTA") (2) | 1,767 | | | 1,935 | | | 1,823 | | | 1,829 | | | 1,952 | | | 1,767 | | | 1,952 | |
Total Voya Financial, Inc. Common Shareholders' Equity - Excluding AOCI & DTA (2) | 3,130 | | | 3,039 | | | 3,642 | | | 4,613 | | | 4,633 | | | 3,130 | | | 4,633 | |
| Book value per common share (including AOCI) | 70.86 | | | 54.09 | | | 66.49 | | | 73.73 | | | 67.37 | | | 70.86 | | | 67.37 | |
Book value per common share (excluding AOCI) (1) | 38.83 | | | 39.48 | | | 41.31 | | | 47.79 | | | 46.94 | | | 38.83 | | | 46.94 | |
| Debt to Capital: | | | | | | | | | | | | | |
| Debt to Capital | 24.2 | % | | 29.1 | % | | 24.4 | % | | 22.4 | % | | 23.8 | % | | 24.2 | % | | 23.8 | % |
Adjusted Debt to Capital (1) | 32.4 | % | | 32.1 | % | | 30.4 | % | | 27.4 | % | | 27.7 | % | | 32.4 | % | | 27.7 | % |
| Shares: | | | | | | | | | | | | | |
| Weighted-average common shares outstanding | | | | | | | | | | | | | |
| Basic | 126 | | | 131 | | | 135 | | | 138 | | | 144 | | | 129 | | | 145 | |
| Dilutive effect of warrants | — | | | 3 | | | 4 | | | 2 | | | 2 | | | 2 | | | 1 | |
Other dilutive effects (3) | 2 | | | 4 | | | 4 | | | 4 | | | 4 | | | 3 | | | 4 | |
| Diluted | 128 | | | 137 | | | 142 | | | 144 | | | 150 | | | 133 | | | 151 | |
Adjusted Diluted (1) | 128 | | | 137 | | | 142 | | | 144 | | | 150 | | | 133 | | | 151 | |
| Ending shares outstanding | 126 | | | 126 | | | 132 | | | 135 | | | 140 | | | 126 | | | 140 | |
| Returned to Common Shareholders: | | | | | | | | | | | | | |
| Repurchase of common shares, excluding commissions | — | | | 406 | | | 160 | | | 290 | | | 446 | | | 406 | | | 646 | |
| Dividends to common shareholders | 19 | | | 20 | | | 21 | | | 20 | | | 2 | | | 39 | | | 3 | |
| Total cash returned to common shareholders | 19 | | | 426 | | | 181 | | | 310 | | | 448 | | | 445 | | | 649 | |
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(1) This measure is a Non-GAAP financial measure. For an explanation of our use of Non-GAAP financial measures, refer the “Explanatory Note on Non-GAAP Financial Information” beginning on page 3 of this document. For a reconciliation of this item to the most directly comparable GAAP measure, refer to the “Reconciliations” section beginning on page 35 of this document. | | | | | | | | | | | | | |
(2) DTA primarily related to Federal Net Operating Loss Carry Forwards (“Federal NOLs”), net of $194 million tax valuation allowance for the periods beginning with quarter ended December 31, 2019 and $445 million for the periods presented prior to the quarter ended December 31, 2019. Periods beginning with quarter ended December 31, 2019 have been adjusted for the expected utilization of Federal NOLs related to the Individual Life Transaction. | | | | | | | | | | | | | |
(3) Includes stock-based compensation awards such as restricted stock units (RSU), performance stock units (PSU), or stock options. | | | | | | | | | | | | | |
Normalized Adjusted Operating Earnings by Segment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD, unless otherwise indicated) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Normalized adjusted operating earnings | | | | | | | | | | | | | |
| Retirement | 120 | | | 133 | | | 151 | | | 141 | | | 153 | | | 253 | | | 294 | |
| Investment Management | 46 | | | 42 | | | 61 | | | 45 | | | 39 | | | 88 | | | 80 | |
| Employee Benefits | 46 | | | 60 | | | 53 | | | 56 | | | 47 | | | 106 | | | 87 | |
| Corporate | (43) | | | (55) | | | (65) | | | (64) | | | (49) | | | (98) | | | (115) | |
| Before income taxes | 169 | | | 180 | | | 199 | | | 179 | | | 190 | | | 349 | | | 346 | |
| After income taxes | 140 | | | 151 | | | 170 | | | 159 | | | 159 | | | 291 | | | 291 | |
| Effective tax rate | 17.2 | % | | 16.0 | % | | 14.9 | % | | 11.7 | % | | 16.2 | % | | 16.6 | % | | 15.8 | % |
| Per common share (diluted) | 1.09 | | | 1.10 | | | 1.19 | | | 1.10 | | | 1.06 | | | 2.19 | | | 1.93 | |
Prepayment fees and alternative investment income above (below) long-term expectations (1) | | | | | | | | | | | | | |
| Retirement | (92) | | | 7 | | | 21 | | | 5 | | | 22 | | | (85) | | | 6 | |
| Investment Management | (27) | | | (2) | | | (2) | | | — | | | 2 | | | (29) | | | (5) | |
| Employee Benefits | (10) | | | 1 | | | 2 | | | 1 | | | 2 | | | (9) | | | — | |
| | | | | | | | | | | | | |
| Before income taxes | (129) | | | 6 | | | 21 | | | 6 | | | 26 | | | (123) | | | 1 | |
| After income taxes | (102) | | | 5 | | | 17 | | | 5 | | | 21 | | | (97) | | | 1 | |
| Effective tax rate | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Per common share (diluted) | (0.79) | | | 0.04 | | | 0.12 | | | 0.03 | | | 0.14 | | | (0.73) | | | 0.01 | |
| DAC/VOBA and other intangibles unlocking | | | | | | | | | | | | | |
| Retirement | 9 | | | (16) | | | (10) | | | (29) | | | 5 | | | (8) | | | 9 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Before income taxes | 9 | | | (16) | | | (10) | | | (29) | | | 5 | | | (8) | | | 9 | |
| After income taxes | 7 | | | (13) | | | (8) | | | (23) | | | 4 | | | (6) | | | 7 | |
| Effective tax rate | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Per common share (diluted) | 0.05 | | | (0.09) | | | (0.06) | | | (0.16) | | | 0.02 | | | (0.04) | | | 0.04 | |
Individual Life transaction stranded costs(2) | | | | | | | | | | | | | |
| Before income taxes | (32) | | | (36) | | | (33) | | | (34) | | | (31) | | | (68) | | | (65) | |
| After income taxes | (25) | | | (28) | | | (26) | | | (27) | | | (25) | | | (54) | | | (52) | |
| Effective tax rate | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Per common share (diluted) | (0.20) | | | (0.21) | | | (0.18) | | | (0.18) | | | (0.16) | | | (0.40) | | | (0.34) | |
| Adjusted operating earnings | | | | | | | | | | | | | |
| Retirement | 37 | | | 124 | | | 162 | | | 117 | | | 180 | | | 160 | | | 309 | |
| Investment Management | 20 | | | 40 | | | 59 | | | 46 | | | 41 | | | 59 | | | 75 | |
| Employee Benefits | 36 | | | 61 | | | 55 | | | 57 | | | 49 | | | 98 | | | 87 | |
| Corporate | (75) | | | (91) | | | (98) | | | (98) | | | (80) | | | (166) | | | (180) | |
| Before income taxes | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
| After income taxes | 20 | | | 115 | | | 153 | | | 114 | | | 159 | | | 134 | | | 247 | |
| Effective tax rate | (17.6) | % | | 14.3 | % | | 14.2 | % | | 7.5 | % | | 16.2 | % | | 10.8 | % | | 14.7 | % |
| Per common share (diluted) | 0.15 | | | 0.83 | | | 1.07 | | | 0.79 | | | 1.06 | | | 1.01 | | | 1.64 | |
| | | | | | | | | | | | | |
(1) The amount by which Investment income from prepayment fees and alternative investments exceeds or is less than our long-term expectations reported on a pre-DAC basis. | | | | | | | | | | | | | |
(2) For periods ended on or prior to the closing of the Individual Life Transaction, Stranded Costs associated with the Individual Life Transaction where the corresponding revenue is now reported in discontinued operations or in businesses exited or to be exited through reinsurance or divestment; for periods after the closing of the Individual Life Transaction any remaining Stranded Costs and the associated revenues from future TSAs will be reported in normalized adjusted operating earnings. | | | | | | | | | | | | | |
Normalized Effective Tax Rate
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD, unless otherwise indicated) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Normalized adjusted operating earnings | | | | | | | | | | | | | |
| Before income taxes | 169 | | | 180 | | | 199 | | | 179 | | | 190 | | | 349 | | | 346 | |
| Income taxes | | | | | | | | | | | | | |
| Federal income taxes at 21% corporate rate | 35 | | | 38 | | | 42 | | | 38 | | | 40 | | | 73 | | | 73 | |
Tax adjustments (1) | (6) | | | (9) | | | (12) | | | (17) | | | (9) | | | (15) | | | (18) | |
| Total taxes | 29 | | | 29 | | | 30 | | | 21 | | | 31 | | | 58 | | | 54 | |
Effective tax rate (2) | 17.2 | % | | 16.0 | % | | 14.9 | % | | 11.7 | % | | 16.2 | % | | 16.6 | % | | 15.8 | % |
| | | | | | | | | | | | | |
Prepayment fees and alternative investment income above (below) long-term expectations (3) | | | | | | | | | | | | | |
| Before income taxes | (129) | | | 6 | | | 21 | | | 6 | | | 26 | | | (123) | | | 1 | |
| Income taxes | | | | | | | | | | | | | |
| Federal income taxes at 21% corporate rate | (27) | | | 1 | | | 4 | | | 1 | | | 5 | | | (26) | | | — | |
| | | | | | | | | | | | | |
| Total taxes | (27) | | | 1 | | | 4 | | | 1 | | | 5 | | | (26) | | | — | |
Effective tax rate (2) | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| | | | | | | | | | | | | |
| DAC/VOBA and other intangibles unlocking | | | | | | | | | | | | | |
| Before income taxes | 9 | | | (16) | | | (10) | | | (29) | | | 5 | | | (8) | | | 9 | |
| Income taxes | | | | | | | | | | | | | |
| Federal income taxes at 21% corporate rate | 2 | | | (3) | | | (2) | | | (6) | | | 1 | | | (2) | | | 2 | |
| | | | | | | | | | | | | |
| Total taxes | 2 | | | (3) | | | (2) | | | (6) | | | 1 | | | (2) | | | 2 | |
Effective tax rate (2) | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| | | | | | | | | | | | | |
Individual Life transaction stranded costs (4) | | | | | | | | | | | | | |
| Before income taxes | (32) | | | (36) | | | (33) | | | (34) | | | (31) | | | (68) | | | (65) | |
| Income taxes | | | | | | | | | | | | | |
| Federal income taxes at 21% corporate rate | (7) | | | (8) | | | (7) | | | (7) | | | (7) | | | (14) | | | (14) | |
| Total taxes | (7) | | | (8) | | | (7) | | | (7) | | | (7) | | | (14) | | | (14) | |
Effective tax rate (2) | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| | | | | | | | | | | | | |
| Adjusted operating earnings | | | | | | | | | | | | | |
| Before income taxes | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
| Income taxes | | | | | | | | | | | | | |
| Federal income taxes at 21% corporate rate | 4 | | | 28 | | | 37 | | | 26 | | | 40 | | | 32 | | | 61 | |
Tax adjustments (1) | (6) | | | (9) | | | (12) | | | (17) | | | (9) | | | (15) | | | (18) | |
| Total taxes | (3) | | | 19 | | | 25 | | | 9 | | | 31 | | | 16 | | | 43 | |
Effective tax rate (2) | (17.6) | % | | 14.3 | % | | 14.2 | % | | 7.5 | % | | 16.2 | % | | 10.8 | % | | 14.7 | % |
| | | | | | | | | | | | | |
(1) Includes tax adjustments for the dividends received deduction (DRD) related to certain qualified dividends that are not subject to federal income taxes and tax credits, less certain expense items that are not deductible for federal income taxes such as preferred stock dividends, certain compensation expenses, etc. | | | | | | | | | | | | | |
(2) Effective tax rate calculations are based on un-rounded numbers. | | | | | | | | | | | | | |
(3) The amount by which Investment income from prepayment fees and alternative investments exceeds or is less than our long-term expectations reported on a pre-DAC basis. | | | | | | | | | | | | | |
(4) For periods ended on or prior to the closing of the Individual Life Transaction, Stranded Costs associated with the Individual Life Transaction where the corresponding revenue is now reported in discontinued operations or in businesses exited or to be exited through reinsurance or divestment; for periods after the closing of the Individual Life Transaction any remaining Stranded Costs and the associated revenues from future TSAs will be reported in normalized adjusted operating earnings. | | | | | | | | | | | | | |
Consolidated Statements of Operations
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| | | | | | | | | | | | | | |
| Revenues | | | | | | | | | | | | | | |
| Net investment income | | 586 | | | 698 | | | 735 | | | 687 | | | 711 | | | 1,284 | | | 1,370 | |
| Fee income | | 458 | | | 505 | | | 510 | | | 494 | | | 483 | | | 963 | | | 965 | |
| Premiums | | 607 | | | 608 | | | 556 | | | 565 | | | 577 | | | 1,215 | | | 1,152 | |
| Net realized capital gains (losses) | | (1) | | | (233) | | | (159) | | | (20) | | | 25 | | | (234) | | | 13 | |
| Other revenues | | 81 | | | 92 | | | 140 | | | 106 | | | 106 | | | 173 | | | 219 | |
| Income (loss) related to consolidated investment entities | | (68) | | | 15 | | | 28 | | | 43 | | | 67 | | | (53) | | | 72 | |
| Total revenues | | 1,663 | | | 1,685 | | | 1,810 | | | 1,875 | | | 1,969 | | | 3,348 | | | 3,791 | |
| | | | | | | | | | | | | | |
| Benefits and expenses | | | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (997) | | | (882) | | | (862) | | | (1,003) | | | (951) | | | (1,879) | | | (1,885) | |
| Operating expenses | | (643) | | | (640) | | | (767) | | | (627) | | | (670) | | | (1,283) | | | (1,352) | |
| Net amortization of DAC/VOBA | | (19) | | | (76) | | | (63) | | | (36) | | | (43) | | | (95) | | | (100) | |
| Interest expense | | (40) | | | (40) | | | (41) | | | (51) | | | (42) | | | (80) | | | (84) | |
| Operating expenses related to consolidated investment entities | | (12) | | | (3) | | | (11) | | | (9) | | | (20) | | | (15) | | | (25) | |
| Total benefits and expenses | | (1,711) | | | (1,641) | | | (1,744) | | | (1,726) | | | (1,726) | | | (3,352) | | | (3,446) | |
| Income (loss) from continuing operations before income taxes | | (48) | | | 44 | | | 66 | | | 149 | | | 243 | | | (4) | | | 345 | |
| Less: | | | | | | | | | | | | | | |
| Net investment gains (losses) and related charges and adjustments | | 42 | | | (8) | | | (47) | | | 14 | | | 45 | | | 34 | | | 58 | |
| Net guaranteed benefit hedging gains (losses) and related charges and adjustments | | 38 | | | (89) | | | 8 | | | (12) | | | (6) | | | (52) | | | (10) | |
| Income (loss) related to businesses exited or to be exited through reinsurance or divestment | | (55) | | | 9 | | | 18 | | | 31 | | | 40 | | | (45) | | | 49 | |
| Income (loss) attributable to noncontrolling interests | | (79) | | | 6 | | | 6 | | | 19 | | | 26 | | | (73) | | | 25 | |
| Income (loss) on early extinguishment of debt | | — | | | — | | | — | | | (12) | | | — | | | — | | | — | |
| Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments | | — | | | — | | | (63) | | | — | | | — | | | — | | | 66 | |
| Dividend payments made to preferred shareholders | | 4 | | | 14 | | | 4 | | | 14 | | | — | | | 18 | | | 10 | |
| Other adjustments | | (15) | | | (22) | | | (38) | | | (27) | | | (52) | | | (37) | | | (144) | |
Adjusted operating earnings before income taxes (1) | | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
| | | | | | | | | | | | | | |
(1) This measure is a Non-GAAP financial measure. For an explanation of our use of Non-GAAP financial measures, refer the “Explanatory Note on Non-GAAP Financial Information” beginning on page 3 of this document. For a reconciliation of this item to the most directly comparable GAAP measure, refer to the “Reconciliations” section beginning on page 35 of this document. | | | | | | | | | | | | | | |
Consolidated Adjusted Operating Earnings Before Income Taxes
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Consolidated Adjusted Operating Earnings Before Income Taxes | | | | | | | | | | | | | | |
| Adjusted operating revenues | | | | | | | | | | | | | | |
| Net investment income and net realized gains (losses) | | 336 | | | 479 | | | 498 | | | 479 | | | 502 | | | 815 | | | 954 | |
| Fee income | | 361 | | | 388 | | | 396 | | | 392 | | | 379 | | | 749 | | | 739 | |
| Premiums | | 506 | | | 502 | | | 459 | | | 460 | | | 476 | | | 1,008 | | | 945 | |
| Other revenue | | 22 | | | 28 | | | 68 | | | 34 | | | 38 | | | 50 | | | 86 | |
Adjusted operating revenues (1) | | 1,225 | | | 1,397 | | | 1,421 | | | 1,365 | | | 1,395 | | | 2,622 | | | 2,724 | |
| | | | | | | | | | | | | | |
| Adjusted operating benefits and expenses | | | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (629) | | | (607) | | | (591) | | | (592) | | | (609) | | | (1,236) | | | (1,212) | |
| Operating expenses | | (515) | | | (558) | | | (564) | | | (535) | | | (525) | | | (1,073) | | | (1,071) | |
| Net amortization of DAC/VOBA | | (16) | | | (41) | | | (40) | | | (57) | | | (27) | | | (57) | | | (51) | |
Interest expense (2) | | (48) | | | (57) | | | (48) | | | (59) | | | (44) | | | (105) | | | (99) | |
| Adjusted operating benefits and expenses | | (1,208) | | | (1,263) | | | (1,243) | | | (1,243) | | | (1,205) | | | (2,471) | | | (2,433) | |
Adjusted operating earnings before income taxes (1) | | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Operating Revenues and Adjusted Operating Earnings by Segment | | | | | | | | | | | | | | |
| Adjusted operating revenues | | | | | | | | | | | | | | |
| Retirement | | 559 | | | 677 | | | 701 | | | 675 | | | 688 | | | 1,236 | | | 1,336 | |
| Investment Management | | 129 | | | 166 | | | 197 | | | 167 | | | 163 | | | 294 | | | 311 | |
| Employee Benefits | | 530 | | | 543 | | | 500 | | | 503 | | | 515 | | | 1,074 | | | 1,023 | |
| | | | | | | | | | | | | | |
| Corporate | | 7 | | | 11 | | | 23 | | | 20 | | | 29 | | | 18 | | | 54 | |
Adjusted operating revenues (1) | | 1,225 | | | 1,397 | | | 1,421 | | | 1,365 | | | 1,395 | | | 2,622 | | | 2,724 | |
| | | | | | | | | | | | | | |
| Adjusted operating earnings | | | | | | | | | | | | | | |
| Retirement | | 37 | | | 124 | | | 162 | | | 117 | | | 180 | | | 160 | | | 309 | |
| Investment Management | | 20 | | | 40 | | | 59 | | | 46 | | | 41 | | | 59 | | | 75 | |
| Employee Benefits | | 36 | | | 61 | | | 55 | | | 57 | | | 49 | | | 98 | | | 87 | |
| | | | | | | | | | | | | | |
| Corporate | | (75) | | | (91) | | | (98) | | | (98) | | | (80) | | | (166) | | | (180) | |
Adjusted operating earnings before income taxes (1) | | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
| | | | | | | | | | | | | | |
(1) This measure is a Non-GAAP financial measure. For an explanation of our use of Non-GAAP financial measures, refer the “Explanatory Note on Non-GAAP Financial Information” beginning on page 3 of this document. For a reconciliation of this item to the most directly comparable GAAP measure, refer to the “Reconciliations” section beginning on page 35 of this document. | | | | | | | | | | | | | | |
(2) Includes dividend payments made to preferred shareholders. | | | | | | | | | | | | | | |
Adjusted Operating Earnings by Segment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2020 | | | | | | | | | | |
| (in millions USD) | | Retirement | | Investment Management | | Employee Benefits | | | | Corporate | | Consolidated |
| | | | | | | | | | | | |
| Adjusted operating revenues | | | | | | | | | | | | |
| Net investment income and net realized gains (losses) | | 336 | | | (22) | | | 17 | | | | | 5 | | | 336 | |
| Fee income | | 197 | | | 148 | | | 16 | | | | | — | | | 361 | |
| Premiums | | 6 | | | — | | | 500 | | | | | — | | | 506 | |
| Other revenue | | 20 | | | 3 | | | (3) | | | | | 2 | | | 22 | |
Adjusted operating revenues (1) | | 559 | | | 129 | | | 530 | | | | | 7 | | | 1,225 | |
| | | | | | | | | | | | |
| Adjusted operating benefits and expenses | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (241) | | | — | | | (383) | | | | | (5) | | | (629) | |
| Operating expenses | | (269) | | | (109) | | | (107) | | | | | (29) | | | (515) | |
| Net amortization of DAC/VOBA | | (12) | | | — | | | (4) | | | | | — | | | (16) | |
Interest expense (2) | | — | | | — | | | — | | | | | (48) | | | (48) | |
| Adjusted operating benefits and expenses | | (522) | | | (109) | | | (494) | | | | | (82) | | | (1,208) | |
Adjusted operating earnings before income taxes (1) | | 37 | | | 20 | | | 36 | | | | | (75) | | | 17 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three Months Ended June 30, 2019 | | | | | | | | | | |
| | Retirement | | Investment Management | | Employee Benefits | | | | Corporate | | Consolidated |
| Adjusted operating revenues | | | | | | | | | | | | |
| Net investment income and net realized gains (losses) | | 449 | | | 7 | | | 29 | | | | | 17 | | | 502 | |
| Fee income | | 211 | | | 152 | | | 16 | | | | | — | | | 379 | |
| Premiums | | 4 | | | — | | | 472 | | | | | — | | | 476 | |
| Other revenue | | 24 | | | 4 | | | (2) | | | | | 13 | | | 38 | |
Adjusted operating revenues (1) | | 688 | | | 163 | | | 515 | | | | | 30 | | | 1,395 | |
| | | | | | | | | | | | |
| Adjusted operating benefits and expenses | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (238) | | | — | | | (361) | | | | | (10) | | | (609) | |
| Operating expenses | | (248) | | | (122) | | | (100) | | | | | (56) | | | (525) | |
| Net amortization of DAC/VOBA | | (22) | | | — | | | (5) | | | | | — | | | (27) | |
Interest expense (2) | | — | | | — | | | — | | | | | (44) | | | (44) | |
| Adjusted operating benefits and expenses | | (508) | | | (122) | | | (466) | | | | | (110) | | | (1,205) | |
Adjusted operating earnings before income taxes (1) | | 180 | | | 41 | | | 49 | | | | | (80) | | | 190 | |
| | | | | | | | | | | | |
(1) This measure is a Non-GAAP financial measure. For an explanation of our use of Non-GAAP financial measures, refer the “Explanatory Note on Non-GAAP Financial Information” beginning on page 3 of this document. For a reconciliation of this item to the most directly comparable GAAP measure, refer to the “Reconciliations” section beginning on page 35 of this document. | | | | | | | | | | | | |
(2) Includes dividend payments made to preferred shareholders. | | | | | | | | | | | | |
Adjusted Operating Earnings by Segment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2020 | | | | | | | | | | |
| (in millions USD) | | Retirement | | Investment Management | | Employee Benefits | | | | Corporate | | Consolidated |
| | | | | | | | | | | | |
| Adjusted operating revenues | | | | | | | | | | | | |
| Net investment income and net realized gains (losses) | | 773 | | | (19) | | | 47 | | | | | 15 | | | 815 | |
| Fee income | | 413 | | | 305 | | | 31 | | | | | — | | | 749 | |
| Premiums | | 8 | | | — | | | 1,000 | | | | | — | | | 1,008 | |
| Other revenue | | 42 | | | 8 | | | (4) | | | | | 3 | | | 50 | |
Adjusted operating revenues (1) | | 1,236 | | | 294 | | | 1,074 | | | | | 18 | | | 2,622 | |
| | | | | | | | | | | | |
| Adjusted operating benefits and expenses | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (476) | | | — | | | (747) | | | | | (13) | | | (1,236) | |
| Operating expenses | | (551) | | | (235) | | | (220) | | | | | (66) | | | (1,073) | |
| Net amortization of DAC/VOBA | | (48) | | | — | | | (9) | | | | | — | | | (57) | |
Interest expense (2) | | — | | | — | | | — | | | | | (105) | | | (105) | |
| Adjusted operating benefits and expenses | | (1,075) | | | (235) | | | (976) | | | | | (184) | | | (2,471) | |
Adjusted operating earnings before income taxes (1) | | 160 | | | 59 | | | 98 | | | | | (166) | | | 151 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Six Months Ended June 30, 2019 | | | | | | | | | | |
| | Retirement | | Investment Management | | Employee Benefits | | | | Corporate | | Consolidated |
| Adjusted operating revenues | | | | | | | | | | | | |
| Net investment income and net realized gains (losses) | | 864 | | | 5 | | | 55 | | | | | 30 | | | 954 | |
| Fee income | | 410 | | | 297 | | | 32 | | | | | — | | | 739 | |
| Premiums | | 5 | | | — | | | 939 | | | | | 1 | | | 945 | |
| Other revenue | | 57 | | | 9 | | | (3) | | | | | 23 | | | 86 | |
Adjusted operating revenues (1) | | 1,336 | | | 311 | | | 1,023 | | | | | 54 | | | 2,724 | |
| | | | | | | | | | | | |
| Adjusted operating benefits and expenses | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (469) | | | — | | | (725) | | | | | (18) | | | (1,212) | |
| Operating expenses | | (516) | | | (236) | | | (202) | | | | | (117) | | | (1,071) | |
| Net amortization of DAC/VOBA | | (42) | | | — | | | (9) | | | | | — | | | (51) | |
Interest expense (2) | | — | | | — | | | — | | | | | (99) | | | (99) | |
| Adjusted operating benefits and expenses | | (1,027) | | | (236) | | | (936) | | | | | (234) | | | (2,433) | |
Adjusted operating earnings before income taxes (1) | | 309 | | | 75 | | | 87 | | | | | (180) | | | 291 | |
| | | | | | | | | | | | |
(1) This measure is a Non-GAAP financial measure. For an explanation of our use of Non-GAAP financial measures, refer the “Explanatory Note on Non-GAAP Financial Information” beginning on page 3 of this document. For a reconciliation of this item to the most directly comparable GAAP measure, refer to the “Reconciliations” section beginning on page 35 of this document.
| | | | | | | | | | | | |
(2) Includes dividend payments made to preferred shareholders. | | | | | | | | | | | | |
Consolidated Balance Sheets
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balances as of | | | | | | | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 |
| Assets | | | | | | | | | | |
| Total investments | | 55,536 | | | 52,570 | | | 53,687 | | | 54,159 | | | 52,957 | |
| Cash and cash equivalents | | 1,110 | | | 1,033 | | | 1,181 | | | 1,155 | | | 1,178 | |
| Assets held in separate accounts | | 78,521 | | | 68,937 | | | 81,670 | | | 78,714 | | | 78,475 | |
| Premium receivable and reinsurance recoverable, net | | 3,767 | | | 3,722 | | | 3,732 | | | 3,871 | | | 3,745 | |
| Short term investments under securities loan agreement and accrued investment income | | 2,166 | | | 2,724 | | | 1,900 | | | 2,114 | | | 2,118 | |
| Deferred policy acquisition costs, Value of business acquired | | 1,967 | | | 2,603 | | | 2,226 | | | 2,198 | | | 2,418 | |
Current and deferred income taxes (1) | | 1,326 | | | 1,769 | | | 1,458 | | | 1,029 | | | 1,162 | |
Other assets (2) | | 836 | | | 1,086 | | | 902 | | | 1,120 | | | 1,132 | |
| Assets related to consolidated investment entities | | 1,782 | | | 2,155 | | | 2,226 | | | 2,189 | | | 2,011 | |
| Assets held for sale | | 19,923 | | | 19,133 | | | 20,069 | | | 21,076 | | | 20,728 | |
| Total Assets | | 166,934 | | | 155,732 | | | 169,051 | | | 167,625 | | | 165,924 | |
| Liabilities | | | | | | | | | | |
| Future policy benefits and contract owner account balances | | 51,658 | | | 51,621 | | | 50,868 | | | 51,131 | | | 50,537 | |
| Liabilities related to separate accounts | | 78,521 | | | 68,937 | | | 81,670 | | | 78,714 | | | 78,476 | |
| Payables under securities loan agreements, including collateral held | | 1,608 | | | 2,065 | | | 1,373 | | | 1,499 | | | 1,480 | |
| Short-term debt | | 1 | | | 1 | | | 1 | | | 1 | | | 97 | |
| Long-term debt | | 3,043 | | | 3,042 | | | 3,042 | | | 3,041 | | | 3,041 | |
Other liabilities (3) | | 2,906 | | | 2,789 | | | 2,243 | | | 2,360 | | | 2,278 | |
| Liabilities related to consolidated investment entities | | 874 | | | 1,040 | | | 1,126 | | | 1,212 | | | 994 | |
| Liabilities held for sale | | 18,034 | | | 17,972 | | | 18,498 | | | 18,401 | | | 18,222 | |
| Total Liabilities | | 156,645 | | | 147,467 | | | 158,821 | | | 156,359 | | | 155,125 | |
| Shareholders' Equity | | | | | | | | | | |
| Preferred stock | | — | | | — | | | — | | | — | | | — | |
| Common stock | | 2 | | | 2 | | | 2 | | | 3 | | | 3 | |
| Treasury stock | | (887) | | | (882) | | | (460) | | | (5,955) | | | (5,663) | |
| Additional paid-in capital | | 11,227 | | | 11,232 | | | 11,184 | | | 24,671 | | | 24,642 | |
| Retained earnings (deficit) | | (4,833) | | | (4,766) | | | (4,649) | | | (11,665) | | | (11,785) | |
| Total Voya Financial, Inc. Shareholders' Equity - Excluding AOCI | | 5,509 | | | 5,586 | | | 6,077 | | | 7,054 | | | 7,197 | |
| Accumulated other comprehensive income | | 4,039 | | | 1,841 | | | 3,331 | | | 3,497 | | | 2,867 | |
| Total Voya Financial, Inc. Shareholders' Equity | | 9,548 | | | 7,427 | | | 9,408 | | | 10,551 | | | 10,064 | |
| Noncontrolling interest | | 741 | | | 838 | | | 822 | | | 715 | | | 735 | |
| Total Shareholders' Equity | | 10,289 | | | 8,265 | | | 10,230 | | | 11,266 | | | 10,799 | |
| Total Liabilities and Shareholders' Equity | | 166,934 | | | 155,732 | | | 169,051 | | | 167,625 | | | 165,924 | |
| | | | | | | | | | |
(1) Current and deferred income taxes: | | | | | | | | | | |
| Deferred Tax Asset primarily related to Federal NOL's | | 1,961 | | | 2,129 | | | 2,017 | | | 2,274 | | | 2,397 | |
| Tax valuation allowance related to Federal NOL's | | (194) | | | (194) | | | (194) | | | (445) | | | (445) | |
| Deferred Tax Asset (Liability) related to Unrealized Capital Gains and Losses | | (978) | | | (394) | | | (789) | | | (833) | | | (666) | |
| Other Net Deferred Tax Asset (Liability) related to DAC, reserves, and other temporary differences | | 537 | | | 228 | | | 424 | | | 33 | | | (124) | |
| Total Current and deferred income taxes | | 1,326 | | | 1,769 | | | 1,458 | | | 1,029 | | | 1,162 | |
| Gross Unrealized Gains (losses) reflected in AOCI | | 4,657 | | | 1,875 | | | 3,759 | | | 3,968 | | | 3,170 | |
| 21% Tax Effect | | (978) | | | (394) | | | (789) | | | (833) | | | (666) | |
(2) Includes Other assets, Sales inducements to contract holders, Goodwill and other intangible assets. | | | | | | | | | | |
(3) Includes Other liabilities, Derivatives, Pension and other postretirement provisions, Funds held under reinsurance agreements, and Current income taxes. | | | | | | | | | | |
DAC/VOBA Segment Trends
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Retirement | | | | | | | | | | | | | | |
| Balance as of Beginning-of-Period | | 1,004 | | | 667 | | | 632 | | | 834 | | | 1,029 | | | 667 | | | 1,271 | |
| Deferrals of commissions and expenses | | 17 | | | 15 | | | 18 | | | 5 | | | 18 | | | 32 | | | 35 | |
| Amortization | | (29) | | | (23) | | | (22) | | | (41) | | | (26) | | | (52) | | | (59) | |
| Unlocking | | 38 | | | (22) | | | (13) | | | (4) | | | 18 | | | 16 | | | 43 | |
Change in unrealized capital gains/losses (1) | | (541) | | | 367 | | | 52 | | | (162) | | | (205) | | | (174) | | | (456) | |
| Balance as of End-of-Period | | 489 | | | 1,004 | | | 667 | | | 632 | | | 834 | | | 489 | | | 834 | |
Deferred Sales Inducements as of End-of-Period (2) | | 27 | | | 29 | | | 29 | | | 29 | | | 31 | | | 27 | | | 31 | |
Other (3) | | | | | | | | | | | | | | |
| Balance as of Beginning-of-Period | | 129 | | | 118 | | | 113 | | | 116 | | | 103 | | | 118 | | | 106 | |
| Deferrals of commissions and expenses | | 10 | | | 11 | | | 11 | | | 11 | | | 21 | | | 21 | | | 28 | |
| Amortization | | (6) | | | (6) | | | (3) | | | (4) | | | (5) | | | (12) | | | (9) | |
| Unlocking | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Change in unrealized capital gains/losses (1) | | (8) | | | 6 | | | (3) | | | (10) | | | (3) | | | (2) | | | (9) | |
| Balance as of End-of-Period | | 125 | | | 129 | | | 118 | | | 113 | | | 116 | | | 125 | | | 116 | |
| Total | | | | | | | | | | | | | | |
| Balance as of Beginning-of-Period | | 1,133 | | | 785 | | | 745 | | | 950 | | | 1,132 | | | 785 | | | 1,377 | |
| Deferrals of commissions and expenses | | 27 | | | 26 | | | 29 | | | 16 | | | 39 | | | 53 | | | 63 | |
| Amortization | | (35) | | | (29) | | | (25) | | | (45) | | | (31) | | | (64) | | | (68) | |
| Unlocking | | 38 | | | (22) | | | (13) | | | (4) | | | 18 | | | 16 | | | 43 | |
Change in unrealized capital gains/losses (1) | | (549) | | | 373 | | | 49 | | | (172) | | | (208) | | | (176) | | | (465) | |
| Balance as of End-of-Period, excluding businesses to be exited through reinsurance or divestment | | 614 | | | 1,133 | | | 785 | | | 745 | | | 950 | | | 614 | | | 950 | |
Balance as of End-of-Period, businesses to be exited through reinsurance or divestment (4) | | 1,353 | | | 1,470 | | | 1,441 | | | 1,453 | | | 1,468 | | | 1,353 | | | 1,468 | |
| Balance as of End-of-Period, including businesses to be exited through reinsurance or divestment | | 1,967 | | | 2,603 | | | 2,226 | | | 2,198 | | | 2,418 | | | 1,967 | | | 2,418 | |
| | | | | | | | | | | | | | |
(1) Includes insignificant amounts related to the adoption of a new accounting standard (CECL) in Q1 '20. | | | | | | | | | | | | | | |
(2) Deferred sales inducements in other segments are insignificant. | | | | | | | | | | | | | | |
(3) Includes Employee Benefits, Investment Management and Corporate. | | | | | | | | | | | | | | |
(4) Represents amounts related to the Individual Life transaction. | | | | | | | | | | | | | | |
Consolidated Capital Structure
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balances as of | | | | | | | | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | |
| | | | | | | | | | | |
| Financial Debt | | | | | | | | | | | |
| Senior bonds | | 1,943 | | | 1,941 | | | 1,941 | | | 1,941 | | | 2,037 | | |
| Subordinated bonds | | 1,097 | | | 1,098 | | | 1,098 | | | 1,097 | | | 1,097 | | |
| Other debt | | 4 | | | 4 | | | 4 | | | 4 | | | 4 | | |
| Total Debt | | 3,044 | | | 3,043 | | | 3,043 | | | 3,042 | | | 3,138 | | |
| | | | | | | | | | | |
| Equity | | | | | | | | | | | |
Preferred equity (Excluding AOCI) (1) | | 612 | | | 612 | | | 612 | | | 612 | | | 612 | | |
| Common equity (Excluding AOCI) | | 4,897 | | | 4,974 | | | 5,465 | | | 6,442 | | | 6,585 | | |
Total Equity (Excluding AOCI) (2) | | 5,509 | | | 5,586 | | | 6,077 | | | 7,054 | | | 7,197 | | |
| Accumulated other comprehensive income (AOCI) | | 4,039 | | | 1,841 | | | 3,331 | | | 3,497 | | | 2,867 | | |
| Total Voya Financial, Inc. Shareholders' Equity | | 9,548 | | | 7,427 | | | 9,408 | | | 10,551 | | | 10,064 | | |
| | | | | | | | | | | |
| Capital | | | | | | | | | | | |
| Total Capitalization | | 12,592 | | | 10,470 | | | 12,451 | | | 13,593 | | | 13,202 | | |
Total Capitalization (Excluding AOCI) (2) | | 8,553 | | | 8,629 | | | 9,120 | | | 10,096 | | | 10,335 | | |
| | | | | | | | | | | |
| Debt to Capital | | | | | | | | | | | |
| Debt to Capital | | 24.2 | % | | 29.1 | % | | 24.4 | % | | 22.4 | % | | 23.8 | % | |
Adjusted Debt to Capital (2) (3) | | 32.4 | % | | 32.1 | % | | 30.4 | % | | 27.4 | % | | 27.7 | % | |
| | | | | | | | | | | |
(1) Includes Preferred stock par value and additional paid-in-capital. | | | | | | | | | | | |
(2) This measure is a Non-GAAP financial measure. For an explanation of our use of Non-GAAP financial measures, refer the “Explanatory Note on Non-GAAP Financial Information” beginning on page 3 of this document. For a reconciliation of this item to the most directly comparable GAAP measure, refer to the “Reconciliations” section beginning on page 35 of this document. | | | | | | | | | | | |
(3) Includes 25% equity treatment afforded to subordinated debt, 100% equity treatment afforded to preferred stock and excludes AOCI. | | | | | | | | | | | |
Consolidated Assets Under Management, Assets Under Administration and Advisement
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2020 | | | | | | | | | | | | |
| (in millions USD) | | General Account | | Separate Account (3) | | Institutional/Mutual Funds | | Total AUM - Assets Under Management | | AUA - Assets Under Administration & Advisement (4) | | Total AUM + AUA |
| | | | | | | | | | | | |
Retirement (1) | | 33,616 | | | 74,298 | | | 55,882 | | | 163,796 | | | 273,494 | | | 437,290 | |
| Investment Management | | 56,997 | | | 27,607 | | | 145,325 | | | 229,929 | | | 51,971 | | | 281,900 | |
| Employee Benefits | | 1,856 | | | 14 | | | — | | | 1,870 | | | — | | | 1,870 | |
| | | | | | | | | | | | |
| Eliminations/Other | | (35,472) | | | (22,003) | | | (10,736) | | | (68,211) | | | (46,759) | | | (114,970) | |
Total AUM and AUA (2) | | 56,997 | | | 79,916 | | | 190,471 | | | 327,384 | | | 278,706 | | | 606,090 | |
| | | | | | | | | | | | |
(1) Includes wrapped funds as well as unwrapped Voya-managed funds. | | | | | | | | | | | | |
| | | | | | | | | | | | |
(2) Includes AUM balances related to Individual Life, Annuities and Variable Annuities businesses held for sale, for which a substantial portion of the assets will continue to be managed by the Investment Management segment. | | | | | | | | | | | | |
(3) Includes separate account balances related to Individual Life, Annuities and Variable Annuities businesses held for sale, which are reported as Assets held for sale on the balance sheet. | | | | | | | | | | | | |
(4) Starting Q1 2019, AUA includes Assets Under Advisement. Retirement Assets under Administration and Advisement includes Recordkeeping, Stable Value investment-only wrap, Brokerage and Investment Advisory assets. Investment Management Assets under Administration and Advisement includes Mutual Fund, General Account and Stable Value assets where only administrative or ancillary services are performed. | | | | | | | | | | | | |
Retirement
Retirement Sources of Normalized Adjusted Operating Earnings and Key Metrics
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended or As of | | | | | | | | | | Year-to-Date or As of | | |
| (in millions USD) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Sources of operating earnings before income taxes: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Gross investment income (normalized) | 398 | | | 391 | | | 391 | | | 396 | | | 393 | | | 789 | | | 791 | |
| Investment expenses | (19) | | | (19) | | | (20) | | | (19) | | | (18) | | | (38) | | | (37) | |
| Credited interest | (232) | | | (231) | | | (234) | | | (234) | | | (231) | | | (463) | | | (460) | |
| Net margin | 147 | | | 141 | | | 137 | | | 143 | | | 144 | | | 288 | | | 294 | |
Other investment income (normalized) (1) | 44 | | | 49 | | | 46 | | | 45 | | | 40 | | | 93 | | | 88 | |
| Investment spread and other investment income (normalized) | 191 | | | 190 | | | 183 | | | 188 | | 198 | | 184 | | | 381 | | | 382 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Full service fee based revenue | 122 | | | 133 | | | 140 | | | 137 | | | 133 | | | 255 | | | 257 | |
| Recordkeeping and Other fee based revenue | 99 | | | 113 | | | 119 | | | 111 | | | 111 | | | 212 | | | 219 | |
| Total fee based margin | 220 | | | 246 | | | 259 | | | 248 | | | 244 | | | 466 | | | 476 | |
| Net underwriting gain (loss) and other revenue | (2) | | | (3) | | | (2) | | | (3) | | | — | | | (5) | | | 3 | |
| Administrative expenses | (216) | | | (228) | | | (206) | | | (212) | | | (194) | | | (444) | | | (409) | |
| Net Commissions | (53) | | | (52) | | | (55) | | | (54) | | | (53) | | | (105) | | | (105) | |
DAC/VOBA and other intangibles amortization, excluding unlocking | (21) | | | (20) | | | (28) | | | (26) | | | (28) | | | (41) | | | (53) | |
| Normalized adjusted operating earnings before income taxes | 120 | | | 133 | | | 151 | | | 141 | | 141 | | 153 | | | 253 | | | 294 | |
| Prepayment fees and alternative investment income above (below) long-term expectations | (92) | | | 7 | | | 21 | | | 5 | | | 22 | | | (85) | | | 6 | |
| DAC/VOBA and other intangibles unlocking | 9 | | | (16) | | | (10) | | | (29) | | | 5 | | | (8) | | | 9 | |
| Adjusted operating earnings before income taxes | 37 | | | 124 | | | 162 | | | 117 | | | 180 | | | 160 | | | 309 | |
Adjusted Return on Capital (2) | 10.9 | % | | 13.6 | % | | 13.2 | % | | 13.2 | % | | 13.9 | % | | 10.9 | % | | 13.9 | % |
Full Service Revenue (3) | | | | | | | | | | | | | |
| Full Service Investment Spread and other investment income | 97 | | | 187 | | | 194 | | | 182 | | | 194 | | | 284 | | | 364 | |
| Full Service Fee Based Revenue | 122 | | | 133 | | | 140 | | | 137 | | | 133 | | | 255 | | | 257 | |
| Total Full Service Revenue | 219 | | | 320 | | | 334 | | | 319 | | | 327 | | | 539 | | | 621 | |
| | | | | | | | | | | | | |
| Client Assets | | | | | | | | | | | | | |
| Spread Based | 33,616 | | | 33,828 | | | 32,932 | | | 32,928 | | | 32,688 | | | 33,616 | | | 32,688 | |
| Fee Based | 305,107 | | | 259,664 | | | 307,630 | | | 278,318 | | | 273,301 | | | 305,107 | | | 273,301 | |
| Retail Client Assets | 57,783 | | | 52,579 | | | 63,108 | | | 60,221 | | | 60,089 | | | 57,783 | | | 60,089 | |
| Defined Contribution Investment-only Stable Value | 40,784 | | | 39,806 | | | 36,373 | | | 36,343 | | | 35,678 | | | 40,784 | | | 35,678 | |
| Total Client Assets | 437,290 | | | 385,877 | | | 440,043 | | | 407,810 | | | 401,756 | | | 437,290 | | | 401,756 | |
| | | | | | | | | | | | | |
(1) Includes investment income on assets backing surplus that has been allocated from Corporate and income from policy loans. | | | | | | | | | | | | | |
(2) Adjusted Return on Capital calculated using trailing twelve months. | | | | | | | | | | | | | |
(3) Excludes Net underwriting gain (loss) and other revenue. | | | | | | | | | | | | | |
Retirement Client Assets Rollforward by Product Group
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Full service - Corporate markets | | | | | | | | | | | | | |
| Client Assets, beginning of period | 62,562 | | | 73,497 | | | 68,892 | | | 67,748 | | | 65,366 | | | 73,497 | | | 58,705 | |
| Transfers / Single deposits | 821 | | | 1,179 | | | 1,310 | | | 1,338 | | | 828 | | | 2,000 | | | 2,180 | |
| Recurring deposits | 1,689 | | | 2,059 | | | 1,596 | | | 1,653 | | | 1,639 | | | 3,748 | | | 3,489 | |
| Total Deposits | 2,510 | | | 3,238 | | | 2,906 | | | 2,991 | | | 2,467 | | | 5,748 | | | 5,669 | |
| Surrenders, benefits, and product charges | (1,895) | | | (2,961) | | | (2,596) | | | (2,112) | | | (2,158) | | | (4,856) | | | (4,467) | |
| Net Flows | 616 | | | 277 | | | 310 | | | 879 | | | 309 | | | 893 | | | 1,202 | |
| Interest credited and investment performance | 9,481 | | | (11,212) | | | 4,295 | | | 265 | | | 2,073 | | | (1,731) | | | 7,841 | |
| Client Assets, end of period - Corporate markets | 72,658 | | | 62,562 | | | 73,497 | | | 68,892 | | | 67,748 | | | 72,658 | | | 67,748 | |
| | | | | | | | | | | | | |
| Full service - Tax-exempt markets | | | | | | | | | | | | | |
| Client Assets, beginning of period | 62,504 | | | 70,109 | | | 66,636 | | | 65,978 | | | 64,610 | | | 70,109 | | | 60,514 | |
| Transfers / Single deposits | 520 | | | 318 | | | 552 | | | 927 | | | 477 | | | 838 | | | 876 | |
| Recurring deposits | 962 | | | 1,039 | | | 892 | | | 882 | | | 879 | | | 2,001 | | | 1,832 | |
| Total Deposits | 1,482 | | | 1,357 | | | 1,444 | | | 1,809 | | | 1,356 | | | 2,839 | | | 2,708 | |
| Surrenders, benefits, and product charges | (2,025) | | | (1,305) | | | (1,488) | | | (1,416) | | | (1,684) | | | (3,330) | | | (3,344) | |
| Net Flows | (543) | | | 52 | | | (43) | | | 393 | | | (328) | | | (491) | | | (637) | |
| Interest credited and investment performance | 6,965 | | | (7,657) | | | 3,231 | | | 265 | | | 1,696 | | | (692) | | | 6,101 | |
Transfer between markets (5) | — | | | — | | | 285 | | | — | | | — | | | — | | | — | |
| Client Assets, end of period - Tax-exempt markets | 68,926 | | | 62,504 | | | 70,109 | | | 66,636 | | | 65,978 | | | 68,926 | | | 65,978 | |
| | | | | | | | | | | | | |
| Full Service - Total | | | | | | | | | | | | | |
| Client Assets, beginning of period | 125,066 | | | 143,606 | | | 135,528 | | | 133,726 | | | 129,976 | | | 143,606 | | | 119,219 | |
| Transfers / Single deposits | 1,341 | | | 1,497 | | | 1,862 | | | 2,265 | | | 1,305 | | | 2,838 | | | 3,056 | |
| Recurring deposits | 2,651 | | | 3,098 | | | 2,488 | | | 2,535 | | | 2,518 | | | 5,749 | | | 5,321 | |
| Total Deposits | 3,992 | | | 4,595 | | | 4,350 | | | 4,800 | | | 3,823 | | | 8,587 | | | 8,377 | |
| Surrenders, benefits, and product charges | (3,920) | | | (4,266) | | | (4,084) | | | (3,528) | | | (3,842) | | | (8,186) | | | (7,811) | |
| Net Flows | 73 | | | 329 | | | 267 | | | 1,272 | | | (19) | | | 402 | | | 565 | |
| Interest credited and investment performance | 16,446 | | | (18,869) | | | 7,526 | | | 530 | | | 3,769 | | | (2,423) | | | 13,942 | |
Transfer between markets (5) | — | | | — | | | 285 | | | — | | | — | | | — | | | — | |
| Client Assets, end of period - Full Service Total | 141,584 | | | 125,066 | | | 143,606 | | | 135,528 | | | 133,726 | | | 141,584 | | | 133,726 | |
| | | | | | | | | | | | | |
| Full Service - Client Assets | | | | | | | | | | | | | |
| Fee-based | 109,748 | | | 93,016 | | | 112,477 | | | 104,422 | | | 102,883 | | | 109,748 | | | 102,883 | |
| Spread-based | 31,836 | | | 32,050 | | | 31,129 | | | 31,106 | | | 30,842 | | | 31,836 | | | 30,842 | |
| Client Assets, end of period - Full Service Total | 141,584 | | | 125,066 | | | 143,606 | | | 135,528 | | | 133,726 | | | 141,584 | | | 133,726 | |
Retirement Client Assets Rollforward by Product Group
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | Year-to-Date | | | |
| (in millions USD) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 | |
| Recordkeeping | | | | | | | | | | | | | | |
| Client Assets, beginning of period | 166,649 | | | 195,154 | | | 173,896 | | | 170,417 | | | 166,778 | | | 195,154 | | | 152,837 | | |
| Transfers / Single deposits | 4,998 | | | 2,345 | | | 24,806 | | | 4,086 | | | 602 | | | 7,343 | | | 1,601 | | |
| Recurring deposits | 3,631 | | | 4,361 | | | 3,219 | | | 3,148 | | | 3,126 | | | 7,992 | | | 6,961 | | |
| Total Deposits | 8,629 | | | 6,706 | | | 28,025 | | | 7,234 | | | 3,728 | | | 15,335 | | | 8,562 | | |
| Surrenders, benefits, and product charges | (4,173) | | | (5,177) | | | (15,737) | | | (4,476) | | | (3,968) | | | (9,350) | | | (9,133) | | |
| Net Flows | 4,456 | | | 1,529 | | | 12,288 | | | 2,758 | | | (240) | | | 5,985 | | | (571) | | |
| Interest credited and investment performance | 24,256 | | | (30,034) | | | 9,255 | | | 721 | | | 3,879 | | | (5,778) | | | 18,151 | | |
Transfer between markets (5) | | | — | | | (285) | | | — | | | — | | | — | | | — | | |
| Client Assets, end of period - Recordkeeping | 195,361 | | | 166,649 | | | 195,154 | | | 173,896 | | | 170,417 | | | 195,361 | | | 170,417 | | |
| | | | | | | | | | | | | | |
Total Defined Contribution (1) | | | | | | | | | | | | | | |
| Client Assets, beginning of period | 291,713 | | | 338,758 | | | 309,424 | | | 304,143 | | | 296,754 | | | 338,758 | | | 272,056 | | |
| Transfers / Single deposits | 6,340 | | | 3,843 | | | 26,667 | | | 6,351 | | | 1,907 | | | 10,183 | | | 4,657 | | |
| Recurring deposits | 6,282 | | | 7,458 | | | 5,707 | | | 5,684 | | | 5,644 | | | 13,740 | | | 12,281 | | |
| Total Deposits | 12,622 | | | 11,301 | | | 32,374 | | | 12,035 | | | 7,551 | | | 23,923 | | | 16,938 | | |
| Surrenders, benefits, and product charges | (8,093) | | | (9,443) | | | (19,821) | | | (8,005) | | | (7,810) | | | (17,536) | | | (16,944) | | |
| Net Flows | 4,529 | | | 1,858 | | | 12,553 | | | 4,030 | | | (259) | | | 6,387 | | | (6) | | |
| Interest credited and investment performance | 40,701 | | | (48,903) | | | 16,781 | | | 1,251 | | | 7,648 | | | (8,202) | | | 32,093 | | |
| Client Assets, end of period - Total Defined Contribution | 336,943 | | | 291,713 | | | 338,758 | | | 309,424 | | | 304,143 | | | 336,943 | | | 304,143 | | |
| | | | | | | | | | | | | | |
Defined Contribution Investment-only Stable Value (SV) (2) | | | | | | | | | | | | | | |
| Assets, beginning of period | 39,807 | | | 36,374 | | | 36,343 | | | 35,679 | | | 34,967 | | | 36,374 | | | 34,078 | | |
| Transfers / Single deposits | 736 | | | 2,719 | | | 1,150 | | | 368 | | | 342 | | | 3,455 | | | 1,203 | | |
| Recurring deposits | 209 | | | 788 | | | 168 | | | 133 | | | 186 | | | 997 | | | 304 | | |
| Total Deposits | 945 | | | 3,507 | | | 1,318 | | | 501 | | | 528 | | | 4,452 | | | 1,507 | | |
| Surrenders, benefits, and product charges | (583) | | | (913) | | | (1,314) | | | (620) | | | (658) | | | (1,496) | | | (1,423) | | |
| Net Flows | 362 | | | 2,594 | | | 4 | | | (119) | | | (130) | | | 2,956 | | | 84 | | |
| Interest credited and investment performance | 615 | | | 839 | | | 27 | | | 783 | | | 842 | | | 1,454 | | | 1,517 | | |
| Assets, end of period - Defined Contribution Investment-only SV | 40,784 | | | 39,807 | | | 36,374 | | | 36,343 | | | 35,679 | | | 40,784 | | | 35,679 | | |
| | | | | | | | | | | | | | |
Retail Client Assets (3) | 57,789 | | | 52,585 | | | 63,108 | | | 60,221 | | | 60,089 | | | 57,789 | | | 60,089 | | |
| | | | | | | | | | | | | | |
Other Assets (4) | 1,774 | | | 1,771 | | | 1,802 | | | 1,822 | | | 1,846 | | | 1,774 | | | 1,846 | | |
| | | | | | | | | | | | | | |
| Total Client Assets | 437,290 | | | 385,877 | | | 440,043 | | | 407,810 | | | 401,756 | | | 437,290 | | | 401,756 | | |
| | | | | | | | | | | | | | |
(1) Total of Full Service and Recordkeeping | | | | | | | | | | | | | | |
(2) Includes Stable Value Investment-only Wrap and Stable Value Separate Accounts. | | | | | | | | | | | | | | |
(3) Includes assets of our Retail Wealth Management business, as well as assets in a proprietary IRA mutual fund product that is distributed by both VFA (affiliated) and non-affiliated advisors. | | | | | | | | | | | | | | |
(4) Includes other guaranteed payout products. | | | | | | | | | | | | | | |
(5) Transfer represents a plan moving from Recordkeeping to Full Service. | | | | | | | | | | | | | | |
Investment Management
Investment Management Sources of Normalized Adjusted Operating Earnings
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| | | | | | | | | | | | | | |
| Sources of operating earnings before income taxes: | | | | | | | | | | | | | | |
| Investment capital and other investment income (normalized) | | 6 | | | 6 | | | 6 | | | 5 | | | 5 | | | 12 | | | 10 | |
| Fee based margin (normalized) | | 150 | | | 162 | | | 193 | | | 162 | | | 156 | | | 312 | | | 306 | |
| Administrative expenses | | (109) | | | (126) | | | (138) | | | (121) | | | (122) | | | (235) | | | (236) | |
| Normalized adjusted operating earnings before income taxes | | 46 | | | 42 | | | 61 | | | 45 | | | 39 | | | 88 | | | 80 | |
| Prepayment fees and alternative investment income above (below) long-term expectations | | (27) | | | (2) | | | (2) | | | — | | | 2 | | | (29) | | | (5) | |
| Adjusted operating earnings before income taxes | | 20 | | | 40 | | | 59 | | | 46 | | | 41 | | | 59 | | | 75 | |
| | | | | | | | | | | | | | |
| Fee based margin | | | | | | | | | | | | | | |
| Investment advisory and administrative revenue | | 148 | | | 157 | | | 156 | | | 158 | | | 152 | | | 304 | | | 297 | |
| Other fee based margin | | 2 | | | 5 | | | 37 | | | 4 | | | 4 | | | 8 | | | 9 | |
| Fee based margin (normalized) | | 150 | | | 162 | | | 193 | | | 162 | | | 156 | | | 312 | | | 306 | |
Investment Management Analysis of AUM and AUA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Client Assets: | | | | | | | | | | | | | | |
| External Clients | | | | | | | | | | | | | | |
| Institutional | | 105,573 | | | 93,662 | | | 94,424 | | | 92,912 | | | 91,116 | | | 105,573 | | | 91,116 | |
| Retail | | 67,359 | | | 60,168 | | | 72,398 | | | 68,014 | | | 67,189 | | | 67,359 | | | 67,189 | |
| Subtotal External Clients | | 172,932 | | | 153,830 | | | 166,822 | | | 160,926 | | | 158,305 | | | 172,932 | | | 158,305 | |
| General Account | | 56,997 | | | 56,873 | | | 56,651 | | | 56,336 | | | 55,921 | | | 56,997 | | | 55,921 | |
| Total Client Assets (AUM) | | 229,929 | | | 210,703 | | | 223,473 | | | 217,262 | | | 214,226 | | | 229,929 | | | 214,226 | |
| Administration Only Assets (AUA) | | 51,971 | | | 46,969 | | | 49,257 | | | 50,031 | | | 50,098 | | | 51,971 | | | 50,098 | |
| Total AUM and AUA | | 281,900 | | | 257,672 | | | 272,730 | | | 267,293 | | | 264,324 | | | 281,900 | | | 264,324 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Investment Advisory and Administrative Revenues (1) | | | | | | | | | | | | | | |
| External Clients | | | | | | | | | | | | | | |
| Institutional | | 65 | | | 65 | | | 65 | | | 67 | | | 65 | | | 131 | | | 127 | |
| Retail | | 50 | | | 57 | | | 58 | | | 58 | | | 55 | | | 107 | | | 107 | |
| Subtotal External Clients | | 115 | | | 123 | | | 124 | | | 125 | | | 119 | | | 238 | | | 232 | |
| General Account | | 29 | | | 29 | | | 28 | | | 28 | | | 29 | | | 58 | | | 57 | |
| Total Investment Advisory and Administrative Revenues (AUM) | | 144 | | | 152 | | | 152 | | | 153 | | | 148 | | | 296 | | | 289 | |
| Administration Only Fees | | 4 | | | 5 | | | 4 | | | 5 | | | 4 | | | 9 | | | 8 | |
| Total Investment Advisory and Administrative Revenues | | 148 | | | 157 | | | 156 | | | 158 | | | 152 | | | 304 | | | 297 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Revenue Yield (bps) (1) | | | | | | | | | | | | | | |
| External Clients | | | | | | | | | | | | | | |
| Institutional | | 25.7 | | | 27.5 | | | 27.8 | | | 29.0 | | | 29.1 | | | 26.4 | | | 28.8 | |
| Retail | | 30.9 | | | 33.5 | | | 33.5 | | | 34.4 | | | 33.1 | | | 31.8 | | | 32.7 | |
| Revenue Yield on External Clients | | 27.7 | | | 30.0 | | | 30.3 | | | 31.3 | | | 30.8 | | | 28.6 | | | 30.5 | |
| General Account | | 20.4 | | | 20.2 | | | 20.2 | | | 20.3 | | | 20.3 | | | 20.3 | | | 20.1 | |
| Revenue Yield on Client Assets (AUM) | | 25.9 | | | 27.5 | | | 27.7 | | | 28.4 | | | 28.0 | | | 26.5 | | | 27.7 | |
| Revenue Yield on Administration Only Assets (AUA) | | 3.3 | | | 4.3 | | | 3.4 | | | 3.6 | | | 3.3 | | | 3.8 | | | 3.2 | |
| Total Revenue Yield on AUM and AUA (bps) | | 21.7 | | | 23.3 | | | 23.2 | | | 23.7 | | | 23.3 | | | 22.4 | | | 23.0 | |
| | | | | | | | | | | | | | |
| Revenue Yield on Client Assets (AUM) - trailing twelve months | | 27.3 | | | 27.9 | | | 27.9 | | | 28.1 | | | 28.2 | | | 27.3 | | | 28.2 | |
| | | | | | | | | | | | | | |
(1) Investment Advisory and Administrative Revenues and resulting Revenue Yields exclude any performance fees. | | | | | | | | | | | | | | |
Investment Management Account Rollforward by Source
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Institutional AUM: | | | | | | | | | | | | | | |
| Beginning of period AUM | | 93,662 | | | 94,424 | | | 92,912 | | | 91,116 | | | 88,147 | | | 94,424 | | | 85,918 | |
| Inflows | | 10,096 | | | 4,417 | | | 3,233 | | | 2,478 | | | 3,219 | | | 14,513 | | | 6,554 | |
| Outflows | | (3,045) | | | (2,313) | | | (2,860) | | | (2,105) | | | (2,230) | | | (5,358) | | | (4,097) | |
| Subtotal Investment Management Sourced Institutional Net Flows | | 7,051 | | | 2,104 | | | 373 | | | 373 | | | 989 | | | 9,155 | | | 2,457 | |
| Affiliate Sourced Institutional Inflows | | 694 | | | 1,674 | | | 610 | | | 426 | | | 545 | | | 2,368 | | | 1,814 | |
| Affiliate Sourced Institutional Outflows | | (631) | | | (695) | | | (463) | | | (467) | | | (762) | | | (1,326) | | | (2,394) | |
| Subtotal Affiliate Sourced Net Flows | | 63 | | | 979 | | | 147 | | | (41) | | | (217) | | | 1,042 | | | (580) | |
| Net flows- Institutional AUM | | 7,114 | | | 3,083 | | | 520 | | | 332 | | | 772 | | | 10,197 | | | 1,877 | |
| Net Money Market Flows | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Change in Market Value | | 4,797 | | | (3,845) | | | 1,028 | | | 1,196 | | | 2,201 | | | 952 | | | 3,325 | |
Other (Including Acquisitions / Divestitures) (1) | | — | | | — | | | (36) | | | 268 | | | (4) | | | — | | | (4) | |
| End of period AUM- Institutional | | 105,573 | | | 93,662 | | | 94,424 | | | 92,912 | | | 91,116 | | | 105,573 | | | 91,116 | |
| Organic Growth (Net Flows/Beginning of period AUM) | | 7.6 | % | | 3.3 | % | | 0.6 | % | | 0.4 | % | | 0.9 | % | | 10.8 | % | | 2.2 | % |
| Market Growth % | | 5.1 | % | | -4.1 | % | | 1.1 | % | | 1.3 | % | | 2.5 | % | | 1.0 | % | | 3.9 | % |
| Retail AUM: | | | | | | | | | | | | | | |
| Beginning of period AUM | | 60,168 | | | 72,398 | | | 68,014 | | | 67,189 | | | 65,512 | | | 72,398 | | | 61,257 | |
| Inflows | | 1,892 | | | 2,700 | | | 2,204 | | | 2,153 | | | 1,717 | | | 4,592 | | | 3,641 | |
| Outflows | | (1,923) | | | (2,996) | | | (1,665) | | | (1,189) | | | (1,874) | | | (4,919) | | | (3,878) | |
| Sub-advised Retail Net Flows | | (12) | | | (148) | | | (130) | | | (29) | | | (139) | | | (160) | | | (362) | |
Subtotal Investment Management Sourced Retail Net Flows (2) | | (43) | | | (444) | | | 409 | | | 935 | | | (296) | | | (487) | | | (599) | |
| Affiliate Sourced Retail Inflows | | 559 | | | 770 | | | 627 | | | 669 | | | 547 | | | 1,329 | | | 1,231 | |
| Affiliate Sourced Retail Outflows | | (804) | | | (1,235) | | | (882) | | | (813) | | | (831) | | | (2,039) | | | (1,706) | |
Subtotal Affiliate Sourced Retail Net Flows (2) | | (245) | | | (465) | | | (255) | | | (144) | | | (284) | | | (710) | | | (475) | |
| Variable Annuity Net Flows | | (520) | | | (702) | | | (839) | | | (621) | | | (616) | | | (1,222) | | | (1,166) | |
| Inflows from Sub-advisor Replacements | | — | | | — | | | 1,690 | | | 219 | | | 897 | | | — | | | 897 | |
| Net flows- Retail AUM | | (808) | | | (1,611) | | | 1,005 | | | 389 | | | (299) | | | (2,419) | | | (1,343) | |
| Net Money Market Flows | | 2 | | | 320 | | | — | | | 16 | | | (27) | | | 322 | | | (149) | |
| Change in Market Value | | 8,300 | | | (10,077) | | | 3,490 | | | 691 | | | 2,100 | | | (1,777) | | | 7,790 | |
Other (Including Acquisitions / Divestitures) (1) | | (303) | | | (862) | | | (111) | | | (271) | | | (97) | | | (1,165) | | | (366) | |
| End of period AUM- Retail | | 67,359 | | | 60,168 | | | 72,398 | | | 68,014 | | | 67,189 | | | 67,359 | | | 67,189 | |
Retail Organic Growth excluding Variable Annuity Net Flows and Sub-advisor
Replacements (Net Flows / Beginning of period AUM) | | -0.5 | % | | -1.3 | % | | 0.2 | % | | 1.2 | % | | -0.9 | % | | -1.7 | % | | -1.8 | % |
| Market Growth % | | 13.8 | % | | -13.9 | % | | 5.1 | % | | 1.0 | % | | 3.2 | % | | -2.5 | % | | 12.7 | % |
Total Investment Management Sourced Net Flows (2) | | 7,007 | | | 1,660 | | | 783 | | | 1,307 | | | 693 | | | 8,667 | | | 1,858 | |
Total Affiliate Sourced Net Flows (2) | | (182) | | | 515 | | | (109) | | | (184) | | | (501) | | | 333 | | | (1,055) | |
Total Variable Annuity Net Flows (1) | | (520) | | | (702) | | | (839) | | | (621) | | | (616) | | | (1,222) | | | (1,166) | |
Total Inflows from Sub-advisor Replacements (3) | | — | | | — | | | 1,690 | | | 219 | | | 897 | | | — | | | 897 | |
| Total Net Flows | | 6,306 | | | 1,473 | | | 1,525 | | | 721 | | | 473 | | | 7,778 | | | 534 | |
| Net Flows excluding Variable Annuity Net Flows and Sub-advisor Replacements | | 6,826 | | | 2,175 | | | 674 | | | 1,123 | | | 192 | | | 9,001 | | | 803 | |
Total External Clients Organic Growth (Net Flows (excludes VA and Sub-advisor Replacement) / Beginning of period AUM) (2) | | 4.4 | % | | 1.3 | % | | 0.4 | % | | 0.7 | % | | 0.1 | % | | 5.4 | % | | 0.6 | % |
| | | | | | | | | | | | | | |
(1) Includes Assets Under Management and Net Flows associated with the Variable Annuities business divested in June 2018. | | | | | | | | | | | | | | |
(2) Affiliate Sourced Net Flows include Retirement distribution of Voya Investment Management retail funds. | | | | | | | | | | | | | | |
(3) Reflects net flows mainly associated with outside managed funds. | | | | | | | | | | | | | | |
Investment Management Account Value by Asset Type
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balances as of | | | | | | | | |
| (in millions USD) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 |
| Institutional | | | | | | | | | |
| Equity | 20,415 | | | 19,158 | | | 21,993 | | | 22,561 | | | 23,041 | |
| Fixed Income | 85,158 | | | 74,504 | | | 72,431 | | | 70,351 | | | 68,075 | |
| Real Estate | — | | | — | | | — | | | — | | | — | |
| Money Market | — | | | — | | | — | | | — | | | — | |
| Total | 105,573 | | | 93,662 | | | 94,424 | | | 92,912 | | | 91,116 | |
| Retail | | | | | | | | | |
| Equity | 39,667 | | | 34,182 | | | 44,567 | | | 41,149 | | | 41,621 | |
| Fixed Income | 25,942 | | | 24,236 | | | 25,614 | | | 24,496 | | | 23,207 | |
| Real Estate | — | | | — | | | 791 | | | 947 | | | 962 | |
| Money Market | 1,750 | | | 1,750 | | | 1,426 | | | 1,422 | | | 1,399 | |
| Total | 67,359 | | | 60,168 | | | 72,398 | | | 68,014 | | | 67,189 | |
| General Account | | | | | | | | | |
| Equity | 314 | | | 307 | | | 298 | | | 311 | | | 309 | |
| Fixed Income | 55,505 | | | 55,544 | | | 55,126 | | | 54,962 | | | 54,417 | |
| Real Estate | — | | | — | | | — | | | — | | | — | |
| Money Market | 1,178 | | | 1,022 | | | 1,227 | | | 1,063 | | | 1,195 | |
| Total | 56,997 | | | 56,873 | | | 56,651 | | | 56,336 | | | 55,921 | |
| Combined Asset Type | | | | | | | | | |
| Equity | 60,396 | | | 53,647 | | | 66,858 | | | 64,020 | | | 64,971 | |
| Fixed Income | 166,605 | | | 154,284 | | | 153,171 | | | 149,810 | | | 145,699 | |
| Real Estate | — | | | — | | | 791 | | | 947 | | | 962 | |
| Money Market | 2,928 | | | 2,772 | | | 2,653 | | | 2,485 | | | 2,594 | |
| Total | 229,929 | | | 210,703 | | | 223,473 | | | 217,262 | | | 214,226 | |
| | | | | | | | | |
| Total Specialty Assets | 69,973 | | | 69,523 | | | 69,827 | | | 68,330 | | | 67,631 | |
| % of Specialty Assets / Total AUM | 30.4 | % | | 33.0 | % | | 31.2 | % | | 31.5 | % | | 31.6 | % |
| | | | | | | | | |
| Total Retirement and Wealth Management Assets | 101,306 | | | 95,781 | | | 103,535 | | | 100,840 | | | 99,754 | |
| % of Retirement and Wealth Management Assets / Total AUM | 44.1 | % | | 45.5 | % | | 46.3 | % | | 46.4 | % | | 46.6 | % |
Employee Benefits
Employee Benefits Sources of Normalized Adjusted Operating Earnings
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Sources of operating earnings before income taxes: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Gross investment income (normalized) | | 24 | | | 22 | | | 23 | | | 23 | | | 23 | | | 46 | | | 46 | |
| Investment expenses | | (1) | | | (1) | | | (1) | | | — | | | (1) | | | (2) | | | (2) | |
| Credited interest | | (14) | | | (14) | | | (14) | | | (14) | | | (14) | | | (28) | | | (28) | |
| | | | | | | | | | | | | | |
| Net margin | | 9 | | | 7 | | | 8 | | | 9 | | | 8 | | | 16 | | | 16 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Other investment income (normalized) | | 4 | | | 7 | | | 5 | | | 6 | | | 5 | | | 11 | | | 11 | |
| Investment spread and other investment income (normalized) | | 13 | | | 14 | | | 13 | | | 15 | | | 13 | | | 27 | | | 27 | |
| Net underwriting gain (loss) and other revenue | | 145 | | | 164 | | | 145 | | | 147 | | | 140 | | | 308 | | | 272 | |
| Administrative expenses | | (66) | | | (70) | | | (60) | | | (63) | | | (63) | | | (135) | | | (125) | |
| Net commissions | | (42) | | | (43) | | | (42) | | | (39) | | | (38) | | | (85) | | | (78) | |
| DAC/VOBA and other intangibles amortization, excluding unlocking | | (4) | | | (5) | | | (3) | | | (4) | | | (5) | | | (9) | | | (9) | |
| Normalized adjusted operating earnings before income taxes | | 46 | | | 60 | | | 53 | | | 56 | | | 47 | | | 106 | | | 87 | |
| Prepayment fees and alternative investment income above (below) long-term expectations | | (10) | | | 1 | | | 2 | | | 1 | | | 2 | | | (9) | | | — | |
| DAC/VOBA and other intangibles unlocking | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Adjusted operating earnings before income taxes | | 36 | | | 61 | | | 55 | | | 57 | | | 49 | | | 98 | | | 87 | |
Adjusted Return on Capital (1) | | 31.7 | % | | 34.1 | % | | 31.0 | % | | 29.8 | % | | 29.4 | % | | 31.7 | % | | 29.4 | % |
| | | | | | | | | | | | | | |
| Group life: | | | | | | | | | | | | | | |
| Premiums | | 133 | | | 130 | | | 132 | | | 133 | | | 131 | | | 263 | | | 261 | |
| Benefits | | (112) | | | (102) | | | (95) | | | (101) | | | (97) | | | (214) | | | (201) | |
Other (2) | | (2) | | | (1) | | | (4) | | | (2) | | | (2) | | | (3) | | | (4) | |
| Total Group life | | 19 | | | 27 | | | 33 | | | 30 | | | 32 | | | 46 | | | 56 | |
| Group Life Loss Ratio (Interest adjusted) | | 83.8 | % | | 78.1 | % | | 72.2 | % | | 76.3 | % | | 74.4 | % | | 81.0 | % | | 77.0 | % |
| Group stop loss: | | | | | | | | | | | | | | |
| Premiums | | 266 | | | 264 | | | 250 | | | 250 | | | 255 | | | 530 | | | 509 | |
| Benefits | | (208) | | | (193) | | | (193) | | | (196) | | | (205) | | | (401) | | | (401) | |
Other (2) | | (1) | | | (1) | | | (1) | | | (1) | | | (1) | | | (2) | | | (2) | |
| Total Group stop loss | | 57 | | | 70 | | | 56 | | | 53 | | | 49 | | | 127 | | | 106 | |
| Stop loss Loss Ratio | | 78.1 | % | | 73.2 | % | | 77.2 | % | | 78.6 | % | | 80.6 | % | | 75.7 | % | | 79.0 | % |
| Voluntary Benefits, Disability, and Other | | 66 | | | 67 | | | 56 | | | 65 | | | 59 | | | 133 | | | 110 | |
| | | | | | | | | | | | | | |
| Net underwriting gain (loss) and other revenue | | | | | | | | | | | | | | |
| Premiums | | 519 | | | 515 | | | 481 | | | 482 | | | 489 | | | 1,034 | | | 973 | |
| Benefits | | (374) | | | (349) | | | (331) | | | (331) | | | (346) | | | (723) | | | (695) | |
Other (2) | | (3) | | | (2) | | | (5) | | | (3) | | | (3) | | | (5) | | | (6) | |
| Total Net underwriting gain (loss) and other revenue | | 145 | | | 164 | | | 145 | | | 147 | | | 140 | | | 308 | | | 272 | |
Total Aggregate Loss Ratio (1) | | 69.3 | % | | 69.1 | % | | 70.2 | % | | 71.0 | % | | 71.6 | % | | 69.3 | % | | 71.6 | % |
| | | | | | | | | | | | | | |
(1) Adjusted Return on Capital and Total Aggregate Loss Ratio are calculated using Trailing twelve months. | | | | | | | | | | | | | | |
(2) Includes service fees, dividends, interest expenses, and other miscellaneous expenses. The Loss Ratio calculation does not include Other. | | | | | | | | | | | | | | |
Employee Benefits Key Metrics
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended or As of | | | | | | | | | | Year-to-Date or As of | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| | | | | | | | | | | | | | |
| Sales by Product Line: | | | | | | | | | | | | | | |
| Group life and Disability | | 21 | | | 81 | | | 9 | | | 7 | | | 13 | | | 102 | | | 117 | |
| Stop loss | | 17 | | | 241 | | | 12 | | | 25 | | | 9 | | | 258 | | | 245 | |
| Voluntary | | 41 | | | 80 | | | 8 | | | 6 | | | 31 | | | 121 | | | 100 | |
| | | | | | | | | | | | | | |
| Total sales by product line | | 79 | | | 402 | | | 29 | | | 38 | | | 53 | | | 481 | | | 462 | |
| | | | | | | | | | | | | | |
| Total gross premiums and deposits | | 563 | | | 560 | | | 511 | | | 515 | | | 532 | | | 1,123 | | | 1,053 | |
| | | | | | | | | | | | | | |
| Annualized In-force Premiums by Product Line: | | | | | | | | | | | | | | |
| Group life and Disability | | 716 | | | 704 | | | 710 | | | 715 | | | 715 | | | 716 | | | 715 | |
| Stop loss | | 1,075 | | | 1,084 | | | 1,038 | | | 1,037 | | | 1,045 | | | 1,075 | | | 1,045 | |
| Voluntary | | 477 | | | 483 | | | 390 | | | 392 | | | 392 | | | 477 | | | 392 | |
| | | | | | | | | | | | | | |
| Total annualized in-force premiums | | 2,268 | | | 2,271 | | | 2,138 | | | 2,144 | | | 2,152 | | | 2,268 | | | 2,152 | |
| | | | | | | | | | | | | | |
| Assets Under Management by Fund Group | | | | | | | | | | | | | | |
| General account | | 1,856 | | | 1,767 | | | 1,782 | | | 1,896 | | | 1,827 | | | 1,856 | | | 1,827 | |
| Separate account | | 14 | | | 13 | | | 15 | | | 15 | | | 15 | | | 14 | | | 15 | |
| Total AUM | | 1,870 | | | 1,780 | | | 1,797 | | | 1,911 | | | 1,842 | | | 1,870 | | | 1,842 | |
Corporate
Corporate Adjusted Operating Earnings
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| | | | | | | | | | | | | | |
Interest expense (excluding Preferred stock dividends) (1) | | (44) | | | (43) | | | (43) | | | (45) | | | (43) | | | (87) | | | (88) | |
| Preferred stock dividends | | (4) | | | (14) | | | (4) | | | (14) | | | — | | | (18) | | | (10) | |
| Amortization of intangibles | | (8) | | | (9) | | | (9) | | | (9) | | | (8) | | | (17) | | | (17) | |
| Other | | 13 | | | 11 | | | (9) | | | 4 | | | 2 | | | 24 | | | — | |
| Normalized adjusted operating earnings before income taxes | | (43) | | | (55) | | | (65) | | | (64) | | | (49) | | | (98) | | | (115) | |
Individual Life transaction stranded costs (2) | | (32) | | | (36) | | | (33) | | | (34) | | | (31) | | | (68) | | | (65) | |
| Adjusted operating earnings before income taxes | | (75) | | | (91) | | | (98) | | | (98) | | | (80) | | | (166) | | | (180) | |
| | | | | | | | | | | | | | |
(1) Includes interest expense related to intercompany loans and other operating expenses related to financing agreements. | | | | | | | | | | | | | | |
(2) For periods ended on or prior to the closing of the Individual Life Transaction, Stranded Costs associated with the Individual Life Transaction where the corresponding revenue is now reported in discontinued operations or in businesses exited or to be exited through reinsurance or divestment; for periods after the closing of the Individual Life Transaction any remaining Stranded Costs and the associated revenues from future TSAs will be reported in normalized adjusted operating earnings. | | | | | | | | | | | | | | |
Investment Information
Portfolio Composition
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balances as of | | | | | | | | | | | | | | |
| (in millions USD) | | 6/30/2020 | | | 3/31/2020 | | | 12/31/2019 | | | 9/30/2019 | | | | 6/30/2019 | |
| Composition of Investment Portfolio | | Amount | % of Total | | Amount | % of Total | | Amount | % of Total | | Amount | | % of Total | | Amount | % of Total |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Fixed maturities, available for sale, at fair value, after consolidation | | 40,938 | | 73.7 | % | | 37,584 | | 71.5 | % | | 39,663 | | 74.0 | % | | 39,718 | | | 73.4 | % | | 38,761 | | 73.2 | % |
| Fixed maturities, at fair value using the fair value option | | 3,098 | | 5.6 | % | | 2,855 | | 5.4 | % | | 2,707 | | 5.0 | % | | 2,676 | | | 4.9 | % | | 2,535 | | 4.8 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Equity securities, available for sale, at fair value | | 225 | | 0.4 | % | | 176 | | 0.3 | % | | 196 | | 0.4 | % | | 335 | | | 0.6 | % | | 331 | | 0.6 | % |
| Short-term investments | | 73 | | 0.1 | % | | 80 | | 0.2 | % | | 68 | | 0.1 | % | | 122 | | | 0.2 | % | | 147 | | 0.3 | % |
| Mortgage loans on real estate, net | | 6,830 | | 12.3 | % | | 6,947 | | 13.1 | % | | 6,878 | | 12.8 | % | | 6,927 | | | 12.8 | % | | 7,033 | | 13.3 | % |
| | | | | | | | | | | | | | | | |
| Policy loans | | 746 | | 1.3 | % | | 763 | | 1.5 | % | | 776 | | 1.4 | % | | 788 | | | 1.5 | % | | 794 | | 1.6 | % |
| Limited partnerships/corporations, before consolidation | | 1,540 | | N/M | | 1,619 | | N/M | | 1,625 | | N/M | | 1,554 | | | N/M | | 1,455 | | N/M |
CLO/VOEs Adjustments (1) | | (164) | | N/M | | (276) | | N/M | | (335) | | N/M | | (312) | | | N/M | | (340) | | N/M |
| Limited partnerships/corporations, after consolidation | | 1,376 | | 2.5 | % | | 1,343 | | 2.6 | % | | 1,290 | | 2.4 | % | | 1,242 | | | 2.3 | % | | 1,115 | | 2.1 | % |
| Derivatives | | 809 | | 1.5 | % | | 875 | | 1.7 | % | | 316 | | 0.6 | % | | 439 | | | 0.8 | % | | 307 | | 0.6 | % |
| Other investments | | 319 | | 0.6 | % | | 392 | | 0.7 | % | | 385 | | 0.7 | % | | 383 | | | 0.7 | % | | 384 | | 0.6 | % |
| Securities pledged to creditors | | 1,122 | | 2.0 | % | | 1,555 | | 3.0 | % | | 1,408 | | 2.6 | % | | 1,529 | | | 2.8 | % | | 1,550 | | 2.9 | % |
| Total investments, after consolidation | | 55,536 | | 100.0 | % | | 52,570 | | 100.0 | % | | 53,687 | | 100.0 | % | | 54,159 | | | 100.0 | % | | 52,957 | | 100.0 | % |
Fixed Maturity Securities - Security Sector (2) | | | | | | | | | | | | | | | | |
| U.S. Government agencies and authorities | | 1,647 | | 3.6 | % | | 1,695 | | 4.0 | % | | 1,477 | | 3.4 | % | | 1,538 | | | 3.5 | % | | 1,345 | | 3.2 | % |
| U.S. Corporate - Public | | 15,042 | | 33.3 | % | | 13,956 | | 33.2 | % | | 14,938 | | 34.0 | % | | 15,157 | | | 34.5 | % | | 14,952 | | 34.9 | % |
| U.S. Corporate - Private | | 6,219 | | 13.8 | % | | 5,643 | | 13.4 | % | | 6,035 | | 13.8 | % | | 6,000 | | | 13.6 | % | | 5,864 | | 13.7 | % |
| Foreign Government / Agency | | 689 | | 1.5 | % | | 693 | | 1.7 | % | | 693 | | 1.6 | % | | 699 | | | 1.6 | % | | 711 | | 1.7 | % |
| Foreign Corporate - Public | | 3,671 | | 8.2 | % | | 3,313 | | 7.9 | % | | 3,648 | | 8.4 | % | | 3,662 | | | 8.3 | % | | 3,677 | | 8.6 | % |
| Foreign Corporate - Private | | 4,653 | | 10.3 | % | | 4,416 | | 10.5 | % | | 4,831 | | 11.0 | % | | 4,768 | | | 10.9 | % | | 4,768 | | 11.1 | % |
| State, municipalities and political subdivisions | | 1,368 | | 3.0 | % | | 1,315 | | 3.1 | % | | 1,323 | | 3.0 | % | | 1,362 | | | 3.1 | % | | 1,318 | | 3.1 | % |
| CMO-B | | 3,887 | | 8.6 | % | | 3,700 | | 8.8 | % | | 3,433 | | 7.7 | % | | 3,496 | | | 8.0 | % | | 3,391 | | 7.9 | % |
| Agency | | 665 | | 1.5 | % | | 954 | | 2.3 | % | | 643 | | 1.5 | % | | 707 | | | 1.6 | % | | 703 | | 1.6 | % |
Non-Agency (3) | | 1,429 | | 3.2 | % | | 987 | | 2.4 | % | | 1,164 | | 2.7 | % | | 1,105 | | | 2.5 | % | | 962 | | 2.2 | % |
| Total Residential mortgage-backed securities | | 5,981 | | 13.3 | % | | 5,641 | | 13.5 | % | | 5,240 | | 11.9 | % | | 5,308 | | | 12.1 | % | | 5,056 | | 11.7 | % |
| Commercial mortgage-backed securities | | 3,847 | | 8.5 | % | | 3,484 | | 8.3 | % | | 3,574 | | 8.2 | % | | 3,379 | | | 7.7 | % | | 3,226 | | 7.5 | % |
Other asset-backed securities (3) | | 2,041 | | 4.5 | % | | 1,838 | | 4.4 | % | | 2,019 | | 4.7 | % | | 2,050 | | | 4.7 | % | | 1,929 | | 4.5 | % |
Total fixed maturities, including securities pledged (4) | | 45,158 | | 100.0 | % | | 41,994 | | 100.0 | % | | 43,778 | | 100.0 | % | | 43,923 | | | 100.0 | % | | 42,846 | | 100.0 | % |
| Fixed Maturity Securities - Contractual Maturity Dates, Due to mature: | | | | | | | | | | | | | | | | |
| Due in one year or less | | 1,281 | | 2.8 | % | | 1,227 | | 2.9 | % | | 1,120 | | 2.6 | % | | 945 | | | 2.2 | % | | 1,108 | | 2.6 | % |
| Due after one year through five years | | 5,259 | | 11.6 | % | | 5,019 | | 12.0 | % | | 5,638 | | 12.9 | % | | 5,975 | | | 13.6 | % | | 5,947 | | 13.9 | % |
| Due after five years through ten years | | 8,652 | | 19.2 | % | | 8,117 | | 19.3 | % | | 8,667 | | 19.8 | % | | 8,434 | | | 19.2 | % | | 8,842 | | 20.6 | % |
| Due after ten years | | 18,097 | | 40.1 | % | | 16,668 | | 39.7 | % | | 17,520 | | 40.0 | % | | 17,845 | | | 40.6 | % | | 18,352 | | 42.9 | % |
| CMO-B | | 3,887 | | 8.6 | % | | 3,700 | | 8.8 | % | | 3,433 | | 7.7 | % | | 3,495 | | | 8.0 | % | | 3,391 | | 7.9 | % |
| Mortgage-backed securities | | 5,941 | | 13.2 | % | | 5,425 | | 12.9 | % | | 5,381 | | 12.4 | % | | 5,191 | | | 11.8 | % | | 4,891 | | 11.4 | % |
Other asset-backed securities (3) | | 2,041 | | 4.5 | % | | 1,838 | | 4.4 | % | | 2,019 | | 4.6 | % | | 2,038 | | | 4.6 | % | | 315 | | 0.7 | % |
Total fixed maturities, including securities pledged (4) | | 45,158 | | 100.0 | % | | 41,994 | | 100.0 | % | | 43,778 | | 100.0 | % | | 43,923 | | | 100.0 | % | | 42,846 | | 100.0 | % |
| Fixed Maturity Securities - NAIC Quality Designation | | | | | | | | | | | | | | | | |
| 1 | | 24,379 | | 54.0 | % | | 23,284 | | 55.4 | % | | 23,779 | | 54.2 | % | | 24,267 | | | 55.2 | % | | 23,603 | | 55.1 | % |
| 2 | | 18,747 | | 41.5 | % | | 17,033 | | 40.5 | % | | 18,149 | | 41.5 | % | | 17,795 | | | 40.5 | % | | 17,402 | | 40.6 | % |
| 3 | | 1,460 | | 3.2 | % | | 1,249 | | 3.0 | % | | 1,324 | | 3.0 | % | | 1,373 | | | 3.1 | % | | 1,311 | | 3.1 | % |
| 4 | | 445 | | 1.0 | % | | 329 | | 0.8 | % | | 378 | | 0.9 | % | | 345 | | | 0.8 | % | | 350 | | 0.8 | % |
| 5 | | 76 | | 0.2 | % | | 75 | | 0.2 | % | | 121 | | 0.3 | % | | 113 | | | 0.3 | % | | 148 | | 0.3 | % |
| 6 | | 51 | | 0.1 | % | | 24 | | 0.1 | % | | 27 | | 0.1 | % | | 30 | | | 0.1 | % | | 32 | | 0.1 | % |
Total fixed maturities, including securities pledged (4) (5) | | 45,158 | | 100.0 | % | | 41,994 | | 100.0 | % | | 43,778 | | 100.0 | % | | 43,923 | | | 100.0 | % | | 42,846 | | 100.0 | % |
| Fixed Maturity Securities - ARO Quality Rating | | | | | | | | | | | | | | | | |
| AAA | | 8,202 | | 18.2 | % | | 8,022 | | 19.1 | % | | 7,425 | | 17.0 | % | | 7,681 | | | 17.5 | % | | 7,385 | | 17.2 | % |
| AA | | 3,384 | | 7.5 | % | | 3,143 | | 7.5 | % | | 3,199 | | 7.3 | % | | 3,131 | | | 7.1 | % | | 2,964 | | 7.0 | % |
| A | | 12,153 | | 26.9 | % | | 11,381 | | 27.1 | % | | 11,803 | | 27.0 | % | | 11,896 | | | 27.1 | % | | 11,754 | | 27.4 | % |
| BBB | | 18,799 | | 41.6 | % | | 17,154 | | 40.8 | % | | 18,763 | | 42.8 | % | | 18,672 | | | 42.5 | % | | 18,138 | | 42.3 | % |
| BB | | 1,745 | | 3.9 | % | | 1,492 | | 3.6 | % | | 1,780 | | 4.1 | % | | 1,684 | | | 3.8 | % | | 1,702 | | 4.0 | % |
| B and below | | 875 | | 1.9 | % | | 802 | | 1.9 | % | | 808 | | 1.8 | % | | 859 | | | 2.0 | % | | 903 | | 2.1 | % |
Total fixed maturities, including securities pledged (5) | | 45,158 | | 100.0 | % | | 41,994 | | 100.0 | % | | 43,778 | | 100.0 | % | | 43,923 | | | 100.0 | % | | 42,846 | | 100.0 | % |
(1) Adjustments include the elimination of intercompany transactions between the Company and its consolidated investment entities, primarily the elimination of the Company's equity at risk recorded as investments by the Company (before consolidation) against either equity (private equity and real estate partnership funds) or senior and subordinated debt (CLOs) of the funds. | | | | | | | | | | | | | | | | |
(2) Fixed Maturity Securities includes fixed maturities,available for sale , fixed maturities at fair value using the fair value option and securities pledged to creditors. | | | | | | | | | | | | | | | | |
(3) Subprime asset-backed securities are included as a component of Non-Agency RMBS under this presentation. | | | | | | | | | | | | | | | | |
(4) Includes fixed maturities securities related to businesses exited through reinsurance where assets are retained on the Company's balance sheet. | | | | | | | | | | | | | | | | |
(5) ARO ratings do not directly translate into NAIC ratings. | | | | | | | | | | | | | | | | |
Portfolio Results
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | | | | | | Year-to-Date | | | | |
| (in millions USD) | 6/30/2020 | | | 3/31/2020 | | | 12/31/2019 | | | 9/30/2019 | | | 6/30/2019 | | | 6/30/2020 | | | 6/30/2019 | |
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Operating investment income and annualized yield (1) | Net Investment Income | Annualized Yield | | Net Investment Income | Annualized Yield | | Net Investment Income | Annualized Yield | | Net Investment Income | Annualized Yield | | Net Investment Income | Annualized Yield | | Net Investment Income | Annualized Yield | | Net Investment Income | Annualized Yield |
Fixed maturity securities (2) | 446 | | 4.72 | % | | 451 | | 4.82 | % | | 463 | | 4.94 | % | | 466 | | 5.02 | % | | 473 | | 5.06 | % | | 897 | | 4.77 | % | | 946 | | 5.01 | % |
| Equity securities | 3 | | 5.39 | % | | 2 | | 4.87 | % | | 3 | | 7.15 | % | | 2 | | 5.58 | % | | 2 | | 5.64 | % | | 5 | | 5.19 | % | | 3 | | 4.21 | % |
| Mortgage loans | 71 | | 4.25 | % | | 72 | | 4.28 | % | | 72 | | 4.30 | % | | 73 | | 4.31 | % | | 74 | | 4.33 | % | | 143 | | 4.26 | % | | 149 | | 4.34 | % |
| Limited partnerships | (73) | | (17.32) | % | | 49 | | 13.01 | % | | 51 | | 13.58 | % | | 42 | | 11.67 | % | | 60 | | 18.38 | % | | (24) | | (3.03) | % | | 59 | | (0.21) | % |
| Policy loans | 12 | | 2.70 | % | | 10 | | 5.60 | % | | 9 | | 4.82 | % | | 7 | | 3.62 | % | | 10 | | 4.84 | % | | 22 | | 3.49 | % | | 21 | | 5.27 | % |
| Short-term investments | 2 | | 0.67 | % | | 3 | | 0.78 | % | | 3 | | 0.85 | % | | 5 | | 1.05 | % | | 4 | | 0.71 | % | | 5 | | 0.74 | % | | 8 | | 0.74 | % |
Derivatives (2) | (2) | | N/A | | 1 | | N/A | | 2 | | N/A | | 1 | | N/A | | (1) | | N/A | | — | | N/A | | 3 | | N/A |
| Prepayment fee income | 4 | | 0.03 | % | | 6 | | 0.05 | % | | 29 | | 0.24 | % | | 9 | | 0.07 | % | | 16 | | 0.13 | % | | 10 | | 0.04 | % | | 25 | | 0.07 | % |
| Other assets | (45) | | N/A | | 13 | | N/A | | 6 | | N/A | | 4 | | N/A | | 13 | | N/A | | (32) | | N/A | | 22 | | N/A |
| Gross investment income before expenses and fees | 418 | | 3.36 | % | | 607 | | 5.02 | % | | 638 | | 5.27 | % | | 609 | | 5.01 | % | | 651 | | 5.32 | % | | 1,025 | | 4.18 | % | | 1,236 | | 4.73 | % |
| Expenses and fees | (31) | | -0.25 | % | | (28) | | -0.24 | % | | (33) | | -0.28 | % | | (28) | | -0.23 | % | | (26) | | -0.22 | % | | (59) | | -0.25 | % | | (52) | | -0.22 | % |
| Total investment income and annualized yield | 387 | | 3.11 | % | | 579 | | 4.78 | % | | 605 | | 4.99 | % | | 581 | | 4.78 | % | | 625 | | 5.10 | % | | 966 | | 3.94 | % | | 1,184 | | 4.51 | % |
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Trading gains/losses (1) | | | | | | | | | | | | | | | | | | | | |
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| Fixed maturities | 39 | | | | (15) | | | | 2 | | | | 18 | | | | 12 | | | | 24 | | | | 16 | | |
| Equity securities | (2) | | | | 2 | | | | 1 | | | | (2) | | | | (2) | | | | — | | | | (4) | | |
| Mortgage loans | (50) | | | | (7) | | | | — | | | | — | | | | 1 | | | | (57) | | | | 1 | | |
| Other investments | (1) | | | | — | | | | 3 | | | | 1 | | | | — | | | | (1) | | | | 1 | | |
| Total trading gains/losses | (14) | | | | (20) | | | | 6 | | | | 17 | | | | 11 | | | | (34) | | | | 14 | | |
Impairments (1) | | | | | | | | | | | | | | | | | | | | |
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| Fixed maturities | (50) | | | | (20) | | | | (28) | | | | 1 | | | | (3) | | | | (70) | | | | (34) | | |
| Equity securities | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |
| Mortgage loans | — | | | | — | | | | (2) | | | | — | | | | — | | | | — | | | | (2) | | |
| Other investments | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |
| Total impairments | (50) | | | | (20) | | | | (30) | | | | 1 | | | | (3) | | | | (70) | | | | (36) | | |
Fair value adjustments (3) | 89 | | | | 155 | | | | (84) | | | | 53 | | | | 135 | | | | 244 | | | | 228 | | |
| Derivatives, including change in fair value of derivatives related to guaranteed benefits | 64 | | | | (217) | | | | 37 | | | | (51) | | | | (99) | | | | (153) | | | | (168) | | |
Net realized investment gains (losses) and Net guaranteed benefit hedging gains (losses) (1) | 88 | | | | (102) | | | | (71) | | | | 20 | | | | 44 | | | | (14) | | | | 38 | | |
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Businesses exited through reinsurance (4) | 79 | | | | (29) | | | | 9 | | | | 44 | | | | 50 | | | | 50 | | | | 105 | | |
Consolidation/eliminations (5) | 30 | | | | 17 | | | | 33 | | | | 22 | | | | 17 | | | | 47 | | | | 56 | | |
| Total investment income and realized capital gains (losses) | 585 | | | | 465 | | | | 576 | | | | 667 | | | | 736 | | | | 1,050 | | | | 1,383 | | |
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(1) Investment results related to businesses exited through reinsurance or divestment are excluded. Investment results related to businesses to be exited through reinsurance or divestment as part of the Life Transaction are included. | | | | | | | | | | | | | | | | | | | | |
(2) Operating income from CMO-B portfolio assets, including derivatives, is included in fixed maturity securities. | | | | | | | | | | | | | | | | | | | | |
(3) Fair value adjustments include adjustments related to CMO-B assets carried at fair value, among other income sources. | | | | | | | | | | | | | | | | | | | | |
(4) Income related to reinsurance transactions, in which investment results are passed directly to the reinsurers pursuant to contracted terms of the reinsurance agreement. | | | | | | | | | | | | | | | | | | | | |
(5) Includes i) the impact of consolidation of investment entities into the Consolidated Statements of Operations, net of the elimination of the Company's management fees expensed by the funds and recorded as operating revenues (before consolidation) by the Company, ii) the elimination of intersegment expenses, primarily consisting of asset-based management and administration fees charged by our Investment Management Segment, iii) and other intersegment eliminations. | | | | | | | | | | | | | | | | | | | | |
Alternative Investment Income
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| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
| Retirement | | | | | | | | | | | | | | |
| Average alternative investments | | 897 | | | 883 | | | 834 | | | 773 | | | 722 | | | 890 | | | 714 | |
| Alternative investment income | | (66) | | | 31 | | | 27 | | | 25 | | | 33 | | | (35) | | | 32 | |
| Investment Management | | | | | | | | | | | | | | |
| Average alternative investments | | 214 | | | 230 | | | 229 | | | 226 | | | 228 | | | 222 | | | 218 | |
| Alternative investment income | | (22) | | | 3 | | | 3 | | | 5 | | | 7 | | | (19) | | | 5 | |
| Employee Benefits | | | | | | | | | | | | | | |
| Average alternative investments | | 100 | | | 95 | | | 92 | | | 86 | | | 84 | | | 97 | | | 83 | |
| Alternative investment income | | (7) | | | 3 | | | 3 | | | 3 | | | 4 | | | (4) | | | 4 | |
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| The table above excludes alternative investments and income that are a component of Income (loss) from discontinued operations, net of tax and alternative investments and income in Corporate. | | | | | | | | | | | | | | |
Reconciliations
Reconciliation of Consolidated Statements of Operations
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| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
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| Revenues | | | | | | | | | | | | | | |
| Net investment income | | 586 | | | 698 | | | 735 | | | 687 | | | 711 | | | 1,284 | | | 1,370 | |
| Fee income | | 458 | | | 505 | | | 510 | | | 494 | | | 483 | | | 963 | | | 965 | |
| Premiums | | 607 | | | 608 | | | 556 | | | 565 | | | 577 | | | 1,215 | | | 1,152 | |
| Net realized capital gains (losses) | | (1) | | | (233) | | | (159) | | | (20) | | | 25 | | | (234) | | | 13 | |
| Other revenues | | 81 | | | 92 | | | 140 | | | 106 | | | 106 | | | 173 | | | 219 | |
| Income (loss) related to consolidated investment entities | | (68) | | | 15 | | | 28 | | | 43 | | | 67 | | | (53) | | | 72 | |
| Total revenues | | 1,663 | | | 1,685 | | | 1,810 | | | 1,875 | | | 1,969 | | | 3,348 | | | 3,791 | |
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| Benefits and expenses | | | | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | | (997) | | | (882) | | | (862) | | | (1,003) | | | (951) | | | (1,879) | | | (1,885) | |
| Operating expenses | | (643) | | | (640) | | | (767) | | | (627) | | | (670) | | | (1,283) | | | (1,352) | |
| Net amortization of DAC/VOBA | | (19) | | | (76) | | | (63) | | | (36) | | | (43) | | | (95) | | | (100) | |
| Interest expense | | (40) | | | (40) | | | (41) | | | (51) | | | (42) | | | (80) | | | (84) | |
| Operating expenses related to consolidated investment entities | | (12) | | | (3) | | | (11) | | | (9) | | | (20) | | | (15) | | | (25) | |
| Total benefits and expenses | | (1,711) | | | (1,641) | | | (1,744) | | | (1,726) | | | (1,726) | | | (3,352) | | | (3,446) | |
| Income (loss) from continuing operations before income taxes | | (48) | | | 44 | | | 66 | | | 149 | | | 243 | | | (4) | | | 345 | |
| Less: | | | | | | | | | | | | | | |
| Net investment gains (losses) and related charges and adjustments | | 42 | | | (8) | | | (47) | | | 14 | | | 45 | | | 34 | | | 58 | |
| Net guaranteed benefit hedging gains (losses) and related charges and adjustments | | 38 | | | (89) | | | 8 | | | (12) | | | (6) | | | (52) | | | (10) | |
| Income (loss) related to businesses exited or to be exited through reinsurance or divestment | | (55) | | | 9 | | | 18 | | | 31 | | | 40 | | | (45) | | | 49 | |
| Income (loss) attributable to noncontrolling interests | | (79) | | | 6 | | | 6 | | | 19 | | | 26 | | | (73) | | | 25 | |
| Income (loss) on early extinguishment of debt | | — | | | — | | | — | | | (12) | | | — | | | — | | | — | |
| Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments | | — | | | — | | | (63) | | | — | | | — | | | — | | | 66 | |
| Dividend payments made to preferred shareholders | | 4 | | | 14 | | | 4 | | | 14 | | | — | | | 18 | | | 10 | |
| Other adjustments | | (15) | | | (22) | | | (38) | | | (27) | | | (52) | | | (37) | | | (144) | |
| Adjusted operating earnings before income taxes | | 17 | | | 134 | | | 178 | | | 122 | | | 190 | | | 151 | | | 291 | |
Reconciliation of Adjusted Operating Revenues
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| | Three Months Ended | | | | | | | | | | Year-to-Date | | |
| (in millions USD) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
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| Total revenues | | 1,663 | | | 1,685 | | | 1,810 | | | 1,875 | | | 1,969 | | | 3,348 | | | 3,791 | |
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| Less Adjustments | | | | | | | | | | | | | | |
| Net realized investment gains (losses) and related charges and adjustments | | 41 | | | (8) | | | (53) | | | 16 | | | 42 | | | 33 | | | 55 | |
| Gain (loss) on change in fair value of derivatives related to guaranteed benefits | | 38 | | | (90) | | | 8 | | | (12) | | | (5) | | | (52) | | | (9) | |
| Revenues (losses) related to business exited or to be exited through reinsurance or divestment | | 332 | | | 344 | | | 315 | | | 401 | | | 417 | | | 676 | | | 815 | |
| Revenues (loss) attributable to noncontrolling interests | | (66) | | | 9 | | | 21 | | | 34 | | | 50 | | | (57) | | | 54 | |
| Other adjustments | | 93 | | | 33 | | | 98 | | | 71 | | | 70 | | | 125 | | | 152 | |
| Total adjusted operating revenues | | 1,225 | | | 1,397 | | | 1,421 | | | 1,365 | | | 1,395 | | | 2,622 | | | 2,724 | |
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| Adjusted operating revenues by segment | | | | | | | | | | | | | | |
| Retirement | | 559 | | | 677 | | | 701 | | | 675 | | | 688 | | | 1,236 | | | 1,336 | |
| Investment Management | | 129 | | | 166 | | | 197 | | | 167 | | | 163 | | | 294 | | | 311 | |
| Employee Benefits | | 530 | | | 543 | | | 500 | | | 503 | | | 515 | | | 1,074 | | | 1,023 | |
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| Corporate | | 7 | | | 11 | | | 23 | | | 20 | | | 29 | | | 18 | | | 54 | |
| Total adjusted operating revenues | | 1,225 | | | 1,397 | | | 1,421 | | | 1,365 | | | 1,395 | | | 2,622 | | | 2,724 | |
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Reconciliation of Adjusted Operating Earnings - excluding Unlocking; Adjusted Return on Capital (1)
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| | Twelve Months Ended (1) | | | | | | | | |
| (in millions USD, unless otherwise indicated) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 |
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| Retirement | | | | | | | | | | |
| Adjusted operating earnings before income taxes | | 440 | | | 583 | | | 588 | | | 596 | | | 732 | |
| Less: | | | | | | | | | | |
| DAC/VOBA and other intangibles unlocking | | (46) | | | (50) | | | (30) | | | (33) | | | 46 | |
| Adjusted Operating Earnings - excluding Unlocking before interest | | 486 | | | 633 | | | 618 | | | 629 | | | 686 | |
| Income tax expense | | 46 | | | 75 | | | 71 | | | 81 | | | 104 | |
| Adjusted Operating Earnings - excluding Unlocking before interest and after income taxes | | 440 | | | 558 | | | 547 | | | 549 | | | 582 | |
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Adjusted Operating effective tax rate, excluding Unlocking (2) | | (19.4) | % | | 13.0 | % | | 12.5 | % | | 7.8 | % | | 14.0 | % |
| Adjusted Operating effective tax rate, excluding Unlocking - Trailing Twelve Months | | 9.4 | % | | 11.9 | % | | 11.5 | % | | 12.8 | % | | 15.1 | % |
| Average Capital | | 4,054 | | | 4,094 | | | 4,130 | | | 4,170 | | | 4,186 | |
| Ending Capital | | 3,909 | | | 4,014 | | | 4,119 | | | 4,065 | | | 4,123 | |
| Adjusted Return on Capital | | 10.9 | % | | 13.6 | % | | 13.2 | % | | 13.2 | % | | 13.9 | % |
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| Investment Management | | | | | | | | | | |
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| Adjusted Operating Earnings - excluding Unlocking before interest | | 165 | | | 186 | | | 180 | | | 165 | | | 167 | |
| Income tax expense | | 35 | | | 39 | | | 38 | | | 35 | | | 35 | |
| Adjusted Operating Earnings - excluding Unlocking before interest and after income taxes | | 130 | | | 147 | | | 142 | | | 130 | | | 132 | |
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Adjusted Operating effective tax rate, excluding Unlocking (2) | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Adjusted Operating effective tax rate, excluding Unlocking - Trailing Twelve Months | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Average Capital | | 315 | | | 311 | | | 307 | | | 303 | | | 302 | |
| Ending Capital | | 323 | | | 321 | | | 316 | | | 310 | | | 306 | |
| Adjusted Return on Capital | | 41.0 | % | | 47.1 | % | | 46.2 | % | | 42.9 | % | | 43.9 | % |
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(1) Due to rounding, trailing twelve month totals may not equal the sum of the quarters. | | | | | | | | | | |
(2) Beginning in 2018, we assume a 21% tax rate on segment Adjusted operating earnings, excluding unlocking, less the estimated benefit of the dividends received deduction in our Retirement segment. | | | | | | | | | | |
Reconciliation of Adjusted Operating Earnings - excluding Unlocking; Adjusted Return on Capital (1)
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| | Twelve Months Ended (1) | | | | | | | | |
| (in millions USD, unless otherwise indicated) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 |
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| Employee Benefits | | | | | | | | | | |
| Adjusted operating earnings before income taxes | | 209 | | | 222 | | | 199 | | | 187 | | | 180 | |
| Less: | | | | | | | | | | |
| DAC/VOBA and other intangibles unlocking | | — | | | — | | | — | | | — | | | — | |
| Adjusted Operating Earnings - excluding Unlocking before interest | | 209 | | | 222 | | | 199 | | | 187 | | | 180 | |
| Income tax expense | | 44 | | | 47 | | | 42 | | | 39 | | | 38 | |
| Adjusted Operating Earnings - excluding Unlocking before interest and after income taxes | | 165 | | | 175 | | | 157 | | | 148 | | | 142 | |
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Adjusted Operating effective tax rate, excluding Unlocking (2) | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Adjusted Operating effective tax rate, excluding Unlocking - Trailing Twelve Months | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Average Capital | | 522 | | | 515 | | | 507 | | | 495 | | | 482 | |
| Ending Capital | | 549 | | | 523 | | | 519 | | | 517 | | | 509 | |
| Adjusted Return on Capital | | 31.7 | % | | 34.1 | % | | 31.0 | % | | 29.8 | % | | 29.4 | % |
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(1) Due to rounding, trailing twelve month totals may not equal the sum of the quarters. | | | | | | | | | | |
(2) Beginning in 2018, we assume a 21% tax rate on segment Adjusted operating earnings, excluding Unlocking, less the estimated benefit of the dividends received deduction in our Retirement segment. | | | | | | | | | | |
Prepayments and Alternative Income Above (Below) Long-Term Expectations (2)
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| Three Months Ended | | | | | | | | | | Twelve Months Ended | | |
| (in millions USD) | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
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Prepayments Above (Below) Long-term Expectations (1) | | | | | | | | | | | | | |
| Retirement | (7) | | | (4) | | | 12 | | | (1) | | | 6 | | | — | | | 12 | |
| Investment Management | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Employee Benefits | (1) | | | — | | | 1 | | | — | | | — | | | — | | | — | |
| Total | (8) | | | (4) | | | 13 | | | (1) | | | 6 | | | — | | | 12 | |
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Alternatives Above (Below) Long-term Expectations (1) | | | | | | | | | | | | | |
| Retirement | (85) | | | 11 | | | 9 | | | 6 | | | 16 | | | (59) | | | 32 | |
| Investment Management | (27) | | | (2) | | | (2) | | | — | | | 2 | | | (31) | | | (2) | |
| Employee Benefits | (9) | | | 1 | | | 1 | | | 1 | | | 2 | | | (6) | | | 3 | |
| Total | (121) | | | 10 | | | 8 | | | 7 | | | 20 | | | (96) | | | 33 | |
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Prepayments and Alternative Income Above (Below) Long-Term Expectations (1) | | | | | | | | | | | | | |
| Retirement | (92) | | | 7 | | | 21 | | | 5 | | | 22 | | | (59) | | | 44 | |
| Investment Management | (27) | | | (2) | | | (2) | | | — | | | 2 | | | (31) | | | (2) | |
| Employee Benefits | (10) | | | 1 | | | 2 | | | 1 | | | 2 | | | (6) | | | 3 | |
| Total | (129) | | | 6 | | | 21 | | | 6 | | | 26 | | | (96) | | | 45 | |
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(1) The amount by which Investment income from prepayment fees and alternative investments exceeds or is less than our long-term expectations reported on a pre-DAC basis, but excluding such amounts attributable to prepayment fees and alternative income in Corporate. | | | | | | | | | | | | | |
(2) Corporate impacts are immaterial. | | | | | | | | | | | | | |
Reconciliation of Normalized Adjusted Operating Earnings and Earnings Per Common Share (Diluted)
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| Three Months Ended | | | | | | | | | | | | | | | | | | |
| (in millions except per share in whole dollars) | 6/30/2020 | | | | 3/31/2020 | | | | 12/31/2019 | | | | 9/30/2019 | | | | 6/30/2019 | | |
| Pre-tax | After-tax | Per share (1) | | Pre-tax | After-tax | Per share (1) | | Pre-tax | After-tax | Per share (1) | | Pre-tax | After-tax | Per share (1) | | Pre-tax | After-tax | Per share (1) |
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| Income (loss) available to Voya Financial, Inc.'s common shareholders | | $ | (71) | | $ | (0.55) | | | | $ | (98) | | $ | (0.71) | | | | $ | (776) | | $ | (5.45) | | | | $ | 106 | | $ | 0.74 | | | | $ | 226 | | $ | 1.51 | |
Plus: Net income (loss) attributable to noncontrolling interest | | (79) | | (0.61) | | | | 6 | | 0.04 | | | | 6 | | 0.04 | | | | 19 | | 0.13 | | | | 26 | | 0.17 | |
Less: Preferred stock dividends | | (4) | | (0.03) | | | | (14) | | (0.10) | | | | (4) | | (0.03) | | | | (14) | | (0.10) | | | | — | | — | |
Less: Income (loss) from discontinued operations | | (93) | | (0.72) | | | | (128) | | (0.93) | | | | (1,084) | | (7.62) | | | | (4) | | (0.03) | | | | 42 | | 0.28 | |
| Income (loss) from continuing operations | (48) | | (53) | | (0.41) | | | 44 | | 50 | | 0.36 | | | 66 | | 318 | | 2.23 | | | 149 | | 144 | | 1.00 | | | 243 | | 210 | | 1.40 | |
Less: | | | | | | | | | | | | | | | | | | | |
| Net investment gains (losses) and related charges and adjustments | 42 | | 34 | | 0.26 | | | (8) | | (6) | | (0.05) | | | (47) | | (37) | | (0.26) | | | 14 | | 11 | | 0.08 | | | 45 | | 36 | | 0.24 | |
| Net guaranteed benefit hedging gains (losses) and related charges and adjustments | 38 | | 30 | | 0.23 | | | (89) | | (70) | | (0.51) | | | 8 | | 6 | | 0.05 | | | (12) | | (9) | | (0.06) | | | (6) | | (5) | | (0.03) | |
| Income (loss) related to businesses exited or to be exited through reinsurance or divestment | (55) | | (43) | | (0.34) | | | 9 | | 7 | | 0.05 | | | 18 | | 14 | | 0.10 | | | 31 | | 24 | | 0.17 | | | 40 | | 31 | | 0.21 | |
| Net income (loss) attributable to noncontrolling interest | (79) | | (79) | | (0.61) | | | 6 | | 6 | | 0.04 | | | 6 | | 6 | | 0.04 | | | 19 | | 19 | | 0.13 | | | 26 | | 26 | | 0.17 | |
| Income (loss) on early extinguishment of debt | — | | — | | — | | | — | | — | | — | | | — | | — | | — | | | (12) | | (9) | | (0.07) | | | — | | — | | — | |
| Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments | — | | — | | — | | | — | | — | | — | | | (63) | | (50) | | (0.35) | | | — | | — | | — | | | — | | — | | — | |
| Dividend payments made to preferred shareholders | 4 | | 4 | | 0.03 | | | 14 | | 14 | | 0.10 | | | 4 | | 4 | | 0.03 | | | 14 | | 14 | | 0.10 | | | — | | — | | — | |
| Other adjustments | (15) | | (18) | | (0.14) | | | (22) | | (16) | | (0.11) | | | (38) | | 222 | | 1.56 | | | (27) | | (19) | | (0.14) | | | (52) | | (38) | | (0.26) | |
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| Adjusted operating earnings | 17 | | 20 | | 0.15 | | | 134 | | 115 | | 0.83 | | | 178 | | 153 | | 1.07 | | | 122 | | 114 | | 0.79 | | | 190 | | 159 | | 1.06 | |
Less: | | | | | | | | | | | | | | | | | | | |
| DAC, VOBA and other intangibles unlocking | 9 | | 7 | | 0.05 | | | (16) | | (13) | | (0.09) | | | (10) | | (8) | | (0.06) | | | (29) | | (23) | | (0.16) | | | 5 | | 4 | | 0.02 | |
| Prepayment fees and alternative investment income above (below) long-term expectations | (129) | | (102) | | (0.79) | | | 6 | | 5 | | 0.04 | | | 21 | | 17 | | 0.12 | | | 6 | | 5 | | 0.03 | | | 26 | | 21 | | 0.14 | |
| Individual Life transaction stranded costs | (32) | | (25) | | (0.20) | | | (36) | | (28) | | (0.21) | | | (33) | | (26) | | (0.18) | | | (34) | | (27) | | (0.18) | | | (31) | | (25) | | (0.16) | |
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| Normalized adjusted operating earnings | 169 | | 140 | | 1.09 | | | 180 | | 151 | | 1.10 | | | 199 | | 170 | | 1.19 | | | 179 | | 159 | | 1.10 | | | 190 | | 159 | | 1.06 | |
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(1) Per share calculations are based on un-rounded numbers. | | | | | | | | | | | | | | | | | | | |
Reconciliation of Normalized Adjusted Operating Earnings and Earnings Per Common Share (Diluted)
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| | Six months ended | | | | | | |
| (in millions except per share in whole dollars) | | 6/30/2020 | | | | 6/30/2019 | | |
| | Pre-tax | After-tax | Per share (1) | | Pre-tax | After-tax | Per share (1) |
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| Income (loss) available to Voya Financial, Inc.'s common shareholders | | | $ | (169) | | $ | (1.27) | | | | $ | 290 | | $ | (2.58) | |
Plus: Net income (loss) attributable to noncontrolling interest | | | (73) | | (0.55) | | | | 25 | | 0.16 | |
Less: Preferred stock dividends | | | (18) | | (0.14) | | | | (10) | | (0.07) | |
Less: Income (loss) from discontinued operations | | | (221) | | (1.66) | | | | 22 | | 0.15 | |
| Income (loss) from continuing operations | | (4) | | (3) | | (0.03) | | | 345 | | 303 | | 2.01 | |
| Less: | | | | | | | | |
| Net investment gains (losses) and related charges and adjustments | | 34 | | 27 | | 0.20 | | | 58 | | 46 | | 0.31 | |
| Net guaranteed benefit hedging gains (losses) and related charges and adjustments | | (52) | | (41) | | (0.31) | | | (10) | | (8) | | (0.05) | |
| Income (loss) related to businesses exited or to be exited through reinsurance or divestment | | (45) | | (36) | | (0.27) | | | 49 | | 39 | | 0.26 | |
| Net income (loss) attributable to noncontrolling interest | | (73) | | (73) | | (0.55) | | | 25 | | 25 | | 0.16 | |
| Income (loss) on early extinguishment of debt | | — | | — | | — | | | — | | — | | — | |
| Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments | | — | | — | | — | | | 66 | | 52 | | 0.34 | |
| Dividend payments made to preferred shareholders | | 18 | | 18 | | 0.14 | | | 10 | | 10 | | 0.07 | |
| Other adjustments | | (37) | | (33) | | (0.25) | | | (144) | | (109) | | (0.72) | |
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| Adjusted operating earnings | | 151 | | 134 | | 1.01 | | | 291 | | 247 | | 1.64 | |
| Less: | | | | | | | | |
| DAC, VOBA and other intangibles unlocking | | (8) | | (6) | | (0.04) | | | 8 | | 7 | | 0.04 | |
| Prepayment fees and alternative investment income above (below) long-term expectations | | (123) | | (97) | | (0.73) | | | 1 | | 1 | | 0.01 | |
| Individual Life transaction stranded costs | | (68) | | (54) | | (0.40) | | | (65) | | (52) | | (0.34) | |
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| Normalized adjusted operating earnings | | 349 | | 291 | | 2.19 | | | 346 | | 291 | | 1.93 | |
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(1) Per share calculations are based on un-rounded numbers. | | | | | | | | |
Reconciliation of Book Value Per Common Share, Excluding AOCI
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| | Three Months Ended or As of | | | | | | | | | | Year-to-Date or As of | | |
| (in whole dollars) | | 6/30/2020 | | 3/31/2020 | | 12/31/2019 | | 9/30/2019 | | 6/30/2019 | | 6/30/2020 | | 6/30/2019 |
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| Book value per common share, including AOCI | | 70.86 | | | 54.09 | | | 66.49 | | | 73.73 | | | 67.37 | | | 70.86 | | | 67.37 | |
| Per share impact of AOCI | | (32.03) | | | (14.61) | | | (25.18) | | | (25.94) | | | (20.43) | | | (32.03) | | | (20.43) | |
| Book value per common share, excluding AOCI | | 38.83 | | | 39.48 | | | 41.31 | | | 47.79 | | | 46.94 | | | 38.83 | | | 46.94 | |
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| Debt to capital | | 24.2 | % | | 29.1 | % | | 24.4 | % | | 22.4 | % | | 23.8 | % | | 24.2 | % | | 23.8 | % |
| Capital impact of AOCI | | 11.4 | % | | 6.2 | % | | 9.0 | % | | 7.7 | % | | 6.6 | % | | 11.4 | % | | 6.6 | % |
| Impact of 25% equity treatment afforded to subordinate debt | | -3.2 | % | | -3.2 | % | | -3.0 | % | | -2.7 | % | | -2.7 | % | | -3.2 | % | | -2.7 | % |
| Adjusted Debt to capital | | 32.4 | % | | 32.1 | % | | 30.4 | % | | 27.4 | % | | 27.7 | % | | 32.4 | % | | 27.7 | % |
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| Reconciliation of shares used in Normalized adjusted operating earnings per common share (Diluted) | | | | | | | | | | | | | | |
| Weighted-average common shares outstanding - Basic | | 126.2 | | | 130.9 | | | 134.7 | | | 138.4 | | | 144.1 | | | 128.6 | | | 145.5 | |
| Dilutive effect of warrants | | — | | | 2.9 | | | 3.7 | | | 2.3 | | | 2.3 | | | 1.5 | | | 1.2 | |
Other dilutive effects (1) | | 2.1 | | | 3.6 | | | 4.0 | | | 3.6 | | | 3.5 | | | 2.8 | | | 3.9 | |
| Weighted-average common shares outstanding - Diluted | | 128.3 | | | 137.4 | | | 142.4 | | | 144.3 | | | 149.9 | | | 132.9 | | | 150.6 | |
Dilutive effect of the exercise or issuance of stock-based awards (2) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Weighted average common shares outstanding - Adjusted Diluted (2) | | 128.3 | | | 137.4 | | | 142.4 | | | 144.3 | | | 149.9 | | | 132.9 | | | 150.6 | |
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(1) Includes stock-based compensation awards such as restricted stock units (RSU), performance stock units (PSU), or stock options. | | | | | | | | | | | | | | |
(2) For periods in which there is Loss from continuing operations, Normalized adjusted operating earnings per common share calculation includes additional dilutive shares, as the inclusion of these shares for stock compensation plans would not be anti-dilutive to the Normalized adjusted operating earnings per common share calculation. | | | | | | | | | | | | | | |
Reconciliation of Investment Management Normalized Adjusted Operating Margin, Excluding Investment Capital
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| Three Months Ended | | | | | | Twelve Months Ended | | | | |
| (in millions USD, unless otherwise indicated) | 6/30/2020 | | 3/31/2020 | | 6/30/2019 | | 6/30/2020 | | 3/31/2020 | | 6/30/2019 |
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| Adjusted operating revenues | 129 | | | 166 | | | 163 | | | 659 | | | 693 | | | 638 | |
| Adjusted operating expenses | (109) | | | (126) | | | (122) | | | (494) | | | (507) | | | (471) | |
| Adjusted operating earnings before income taxes | 20 | | | 40 | | | 41 | | | 165 | | | 186 | | | 167 | |
| Adjusted operating margin | 15.2 | % | | 23.9 | % | | 25.3 | % | | 24.9 | % | | 26.8 | % | | 26.2 | % |
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| Adjusted operating revenues | 129 | | | 166 | | | 163 | | | 659 | | | 693 | | | 638 | |
| Less: | | | | | | | | | | | |
| Investment Capital Results | (22) | | | 3 | | | 7 | | | (11) | | | 18 | | | 18 | |
| Adjusted operating revenues excluding Investment Capital | 151 | | | 163 | | | 156 | | | 670 | | | 675 | | | 620 | |
| Adjusted operating expenses | (109) | | | (126) | | | (122) | | | (494) | | | (507) | | | (471) | |
| Adjusted operating earnings excluding Investment Capital | 42 | | | 37 | | | 34 | | | 176 | | | 168 | | | 149 | |
| Adjusted operating margin excluding Investment Capital | 27.4 | % | | 22.4 | % | | 21.9 | % | | 26.0 | % | | 24.8 | % | | 24.2 | % |
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| Adjusted operating revenues | 129 | | | 166 | | | 163 | | | 659 | | | 693 | | | 638 | |
| Less: | | | | | | | | | | | |
| Investment Capital Results above (below) long-term expectations | (27) | | | (2) | | | 2 | | | (31) | | | (2) | | | (2) | |
| Adjusted operating revenue related to annuities businesses sold on June 1, 2018 | — | | | — | | | — | | | — | | | — | | | — | |
| Normalized adjusted operating revenues | 156 | | | 168 | | | 161 | | | 690 | | | 695 | | | 640 | |
| Adjusted operating expenses | (109) | | | (126) | | | (122) | | | (494) | | | (507) | | | (471) | |
| Normalized adjusted operating earnings | 46 | | | 42 | | | 39 | | | 194 | | | 187 | | | 169 | |
| Normalized adjusted operating margin | 29.7 | % | | 24.8 | % | | 24.4 | % | | 28.2 | % | | 27.0 | % | | 26.5 | % |
