Earnings Call Transcript
Voya Financial, Inc. (VOYA)
Earnings Call Transcript - VOYA Q4 2025
Operator, Operator
Good morning. Welcome to Voya Financial's Fourth Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the call over to Mei Ni Chu, Head of Investor Relations. Please go ahead.
Mei Ni Chu, Head of Investor Relations
Good morning, and thank you for joining us this morning for Voya Financial's Fourth Quarter 2025 Earnings Conference Call. As a reminder, materials for today's call are available on our website at investors.voya.com. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Mike Katz, our Chief Financial Officer. Following their remarks, we will take your questions. I'm also joined on this call by the heads of our businesses, specifically Jay Kaduson, CEO of Workplace Solutions; and Matt Toms, CEO of Investment Management. Turning to our earnings presentation materials that are available on our website. On Slide 2, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our Investor Relations website. And now I will turn the call over to Heather.
Heather Lavallee, CEO
Thank you, Mei Ni. Good morning, and thank you for joining us today. Let's turn to Slide 4. In 2025, Voya delivered strong financial and commercial results that exceeded our targets and accelerated our growth strategy. We delivered over $1 billion of pretax adjusted operating earnings for the full year and significantly grew earnings across all segments. We generated $775 million of excess cash, well above our target. And in 2025, combined Retirement and Investment Management assets surpassed $1 trillion. This achievement illustrates our scale and reinforces the value of our integrated business model. These financial results reflect our outperformance against the priorities we set at the start of the year, accelerating commercial momentum in Retirement and Investment Management, successfully integrating OneAmerica and improving margins in Employee Benefits. Voya's financial performance and strategic progress show the strength of our franchise and our team's consistent focus on execution. Before Mike walks through the quarterly and full year numbers, I'd like to touch on a few key highlights from 2025. In Retirement, we delivered exceptional results across our business. Defined contribution net flows surpassed $28 billion, the highest in Voya's history, and our participant base is fast approaching 10 million accounts, demonstrating our expanding reach. The OneAmerica integration significantly exceeded our financial targets while expanding the capabilities we offer clients and broadening our reach with advisers. We also continued to expand wealth management as a high-margin growth engine. The business generated over $200 million in net revenues in 2025, contributing to our exceptional financial results in Retirement and helping us serve our customers to and through retirement. Across Retirement, our strong margins reflect our scale, our focus on driving profitable growth and our disciplined expense management as we invest in key growth initiatives. In Investment Management, we delivered strong results, reflecting the scale and breadth of our platform and the momentum we're seeing across the business. We delivered a record $1 billion in annual net revenue and 4.8% organic growth, well above our long-term target. Our platform is well positioned in the areas where the industry is growing, including private assets, insurance asset management and the continued expansion of our intermediary platform with actively managed ETFs. We're an established leader in the third-party insurance channel built on our expertise in managing Voya's general account. This channel continues to build momentum heading into 2026 and is a clear competitive advantage. Our record net flows in 2025 drove AUM to $360 billion, highlighting both the competitiveness of our offering and the trust our clients place in our investment capabilities. In Employee Benefits, we made meaningful progress in improving margins and expect further improvement this year. In Stop Loss, we have increased our rates, enhanced risk selection and been disciplined with reserving. Our actions position us well for 2026. Across the enterprise, our results this year reflect the competitive strength of our franchise and the progress we're making against our strategic priorities. Our strong performance drove significant cash generation and positions us well to further increase excess capital in 2026. Together, our growth in excess capital and strong balance sheet gives us flexibility to deploy capital to the most value-accretive opportunities. With that, I'll turn it over to Mike to walk through the financials in more detail.
Michael Katz, CFO
Thank you, Heather. 2025 marked a strong year of execution. We generated over $1 billion of pretax adjusted operating earnings, $168 million higher than a year ago. And we increased earnings per share 22% to $8.85. This included EPS of $1.94 in the quarter, which was up 39% from last year. These results were driven by management action throughout the year as we delivered above-plan financial results across all our strategic priorities. We continued our commercial momentum in both Retirement and Investment Management. We significantly exceeded our financial targets integrating OneAmerica, and we achieved substantial margin increases in Employee Benefits. This led to approximately $775 million of excess capital generation in 2025, including approximately $175 million in the fourth quarter. And looking forward, we expect further excess capital improvement in 2026. Turning to Retirement. 2025 was an exceptional year, marked by record commercial results, robust earnings growth and higher value accretion from OneAmerica. We generated nearly $1 billion of adjusted operating earnings in Retirement stand-alone, 17% higher than 2024. This included $255 million of earnings in the fourth quarter. Earnings growth was primarily driven by higher fee-based revenues, which now exceed $1.4 billion. Commercial momentum and our integration of OneAmerica are driving a 21% increase in fee-based revenues year-over-year. Importantly, we finished the year with an adjusted operating margin of 40% as we both drove efficiency across the business while investing in key priorities that accelerate our strategy. We generated a record $28 billion of organic defined contribution net inflows in 2025, and we added $60 billion of assets from OneAmerica. Together, this supported a 30% increase in total defined contribution assets to approximately $730 billion at year-end. We now have a base of approximately 10 million participant accounts for us to serve both to and through retirement. Looking ahead to '26, we anticipate meaningful defined contribution net inflows underpinned by plans expected to fund in the back half of the year. And our scale and leadership position in Retirement provide a strong foundation for durable fee-based revenue growth, increasing cash generation over the long term. Turning to Investment Management. 2025 was a year of record commercial results and revenue. Net revenues exceeded $1 billion in 2025. Both institutional and retail revenues grew year-over-year, contributing to overall adjusted operating earnings of $226 million. This included another year of exceptional investment results as we realized $35 million of performance fees in the fourth quarter. We generated flows of approximately $15 billion, well exceeding our long-term organic growth target of 2%, further scaling our franchise. Flows for the year were broad-based across channels and strategies. In institutional, insurance channel demand for investment-grade credit, commercial mortgage and private credit strategies remain strong. And in retail, international demand for income and growth remained robust, while fixed income and specialty equity strategies drove positive flows in the U.S. intermediary channel. We enter 2026 with significant momentum and are on track to deliver another year of organic growth. Turning to Employee Benefits. Adjusted operating earnings were $152 million in the full year, significantly improved from $40 million in the prior year. A key driver of this improvement included Stop Loss, which I will discuss in a moment. In Group Life, full year loss ratios were at the low end of our target range of 77% to 80%. This included favorable loss ratios in the fourth quarter, driven by better-than-expected frequency and severity of claims. In Voluntary, our full year loss ratios were approximately 50%, consistent with our plan to drive enhanced value for our customers. Turning to Stop Loss. In 2025, we delivered meaningful improvement supported by higher rates, tighter risk selection and disciplined reserving. Full year reported loss ratios improved by 10 percentage points from 94% to 84%. This reflects in part a reserve increase of $37 million in the fourth quarter. Claims experience on the '25 book is developing modestly better than the prior year. However, ensuring we have a well-supported reserve level heading into first quarter is essential. And as a reminder, claims experience for January cohorts will move from approximately 65% to 90% credible on a paid basis through the first quarter. Looking forward, we continue to embed recent experience into our pricing and risk selection. For the January 2026 business, we achieved an average net effective rate increase of 24%, above the 21% increase secured last year. Different than a year ago, we were able to maintain in-force premiums. And we have more opportunities to select our risks with RFP volumes rising, driven by employers seeking greater certainty in their medical spend. Collectively, these actions, reserving, pricing and risk selection have materially strengthened our positioning and support further margin expansion in 2026. Turning to Slide 11. We generated approximately $775 million of excess capital in the full year, including approximately $175 million in the fourth quarter. This meaningfully exceeded our $700 million target in 2025. Exceptional earnings drove a more than 200 basis point expansion in our adjusted return on equity, which now stands at 18.6%. We have been disciplined with our capital in 2025, including our acquisition of OneAmerica, which is generating earnings and returns well above our original targets. More broadly, our strong balance sheet, healthy excess capital and highly cash-generative businesses provide us significant flexibility to deploy capital in the most value-accretive way. In the near term, the best use of that capital is for share repurchases. We will repurchase $150 million of shares in the first quarter and expect to do the same in the second quarter, subject to macro conditions. Longer term, we will continue to be strategic, opportunistic and disciplined with our deployment of capital as we accelerate our strategy. We head into 2026 with clarity on our priorities and great momentum. We exceeded our financial targets in 2025 and expect to do the same in 2026. I'll now turn it back to Heather to share those priorities.
Heather Lavallee, CEO
Thanks, Mike. Turning to Slide 12. I want to thank the entire team here at Voya. Collectively, we delivered for our customers and positioned Voya for another strong year in 2026. Our priorities for 2026 are clear and compelling: growing excess cash generation, maintaining balance sheet strength and capital flexibility, driving continued commercial momentum in Retirement and Investment Management, and further improving margins in Employee Benefits. These priorities and our continued focus on execution, accelerate our growth strategy and create meaningful value for our customers and shareholders. We are helping our customers build financial confidence and clearing a path for better outcomes today and in the years ahead. With that, I'll turn it over to the operator so we can take your questions.
Operator, Operator
Our first question is from Bob Huang with Morgan Stanley.
Jian Huang, Analyst
My first question is about Stop Loss, particularly in relation to the reserve that you've added. Could you provide more details about the reserve actions? Is the reserve primarily intended to be conservative, or are you actually observing some losses that prompted these actions?
Michael Katz, CFO
Bob, yes, first, just let me start by saying and reiterating what I shared in the prepared remarks. When we talk about the January '25 business relative to the January '24 business, it's running modestly better than where we were at this point last year. That includes when we set the reserves coming out of December and frankly, where we stand right now. And then to your question, second, we did increase reserves in the quarter. The importance of the claims experience in the first quarter can't be understated. As I mentioned, we moved from two-thirds complete to 90% complete in the first quarter. And the range of outcomes today is different than what I would say historically for Stop Loss. You hear us talk about 77% to 80%, a 3-point range. But with this healthcare backdrop, that range is wider, probably double the normal range. And so when we look at the reserving, we think about being on the higher end of that best estimate range. Now when we look forward and we think about the margin expansion that we expect in 2026, we certainly see that coming from not only the perspective of where we price the Jan '26 business, 24% increase we got on that business. And frankly, from a risk selection perspective, we've gotten more opportunities. RFPs are up. And as I just mentioned, we are seeing employers look for this type of coverage as they're really trying to get certainty with their medical spend. I think the big step back here right now is that when we look at Stop Loss, it did not take us off course for an incredible year in 2025. And the actions we've taken across pricing, risk selection and how we reserve for this heading into 2026 positions us to say the same.
Jian Huang, Analyst
Got it. Really appreciate that. So it sounds like your path hasn't changed. So maybe a follow-up on that specifically is the 24% rate increase for the January 2026 cohort. As we go forward, obviously, that's a big rate increase. Do you feel that rate increase is enough or sufficient going forward as we think about just the broader Stop Loss environment where you feel like maybe going into the next few years, there should be more pricing. Just curious, any comments or dynamics on pricing.
Michael Katz, CFO
Yes, we do. We do, Bob. When we think about where trend is, we talked a lot about the fact that we expected higher trend in '25 and '26, and so we went out to get that rate. Certainly, it was easier for Jan '26 than it was for Jan '25 as we were ahead of many in going after that rate. But when we look at this relative to that kind of high single-digit, maybe 10% first dollar trend, you lever that up around, we think, in that 20% range. And so the other piece I'd mention, too, is that demand we're seeing from employers that are looking for certainty of spend. We feel like as we move forward on the progress of margin improvement at the cohort level that we're going to have even more opportunity in 2026, because when you look at the demand, it's up, supply is at best, limited to down.
Heather Lavallee, CEO
Yes. And Bob, it's Heather. Maybe one thing I would add, just to kind of do the broader step back on stop losses. We've always talked about this being a 2-year journey. And as Mike talked about, the $100 million improvement in earnings in '25 is a significant step in the right direction. We aren't declaring victory. As Mike talked about, we're reserving for a wide range of outcomes, but we believe we only have upside from here, which is why we have reiterated our capital deployment plans for the first half of '26.
Thomas Gallagher, Analyst
A couple of Stop Loss follow-ups. Mike, when you mentioned that your actions support further margin expansion in '26, is your baseline the 84% that you achieved for the full year? Or is it the 91% accident year loss ratio for the January '25 cohort? Which number are you referring to when you say improvement, the 84% or the 91%?
Michael Katz, CFO
I believe it's a combination of both. When you consider the 84%, that's the reported loss ratios for the entire year. As Heather mentioned, we've grown the EB business from $40 million to $152 million. This includes progress with Stop Loss, as well as the perspective of the 91%. Bob touched on this earlier when discussing reserve levels. The fourth quarter is crucial for our assessment of potential outcomes. It's not just a slight widening of the range; we believe it's closer to double that. We aim to position ourselves at the higher end of the best estimate range. We need to monitor developments in the first quarter and part of the second quarter before determining where this will ultimately settle. I would encourage everyone to remember not to confuse our reserve levels with the eventual outcomes.
Heather Lavallee, CEO
And Tom, I would just add that if you compare our reserve levels from a year ago, around this time last year we were close to 95%. While we aren’t completely finished with the '25 book of business, it appears to be coming in closer to the 90% to 91% range, which is a significant improvement. Given the current situation, we believe it’s wise to make the reserve adjustments that Mike mentioned. However, as we noted last year, everything was moving in a positive direction. We appreciate the progress we've made and see potential for further improvement based on what we've delivered.
Michael Ward, Analyst
I was curious about maybe just utilizing the Stop Loss experience. And in terms of leverage in order to sort of cross-sell other products with specific employers, you know what I mean? Like how is that going? Is that becoming material? Is that contributing to your confidence in '26 for the Retirement side?
Heather Lavallee, CEO
Yes. Mike, it's Heather. I'll let Jay add. But I think what's important to think about is that we're often selling Employee Benefit products to the same brokers and consultants, both the Stop Loss and the Voluntary. And it goes to the point of we see high demand for the products that we're offering. But maybe the last bit I mentioned before I toss it over to Jay is our teams have continued to be highly disciplined on margin over growth. So we're not leading into anything to drive unnecessary growth just given the backdrop. But Jay?
Jay Kaduson, CEO of Workplace Solutions
Yes. As we think through this heading into '26, as Mike referenced, the supply at best level, we think is actually down, but the demand is significantly up, and we're hearing that from our brokers and intermediaries. And so what it does is it does cause this kind of capacity conversation of there is only so much capacity in the marketplace for coverage. And getting a more fulsome book as we think through the areas of Employee Benefits and where we have and are in similar segments in Retirement, we definitely are changing that conversation. It's happening in front of us. We're engaged in those conversations now. We expect those conversations to continue. We are also seeing more and more from a bundling perspective. So as we get into different questions on different parts of the book, we're seeing a greater opportunity to bundle given what we've done in some of the product lines. And so I think we'll come back to you as this conversation progresses, but it's definitely a leverage point and a conversation point we're having actively with our partners.
Michael Ward, Analyst
And then just for Heather and Mike, you both sounded confident on the idea of expanding your excess cash flow generation in '26. Wondering if you could unpack that a little bit more.
Michael Katz, CFO
Yes. Look, it really boils down to what we've been talking about in 2025 and what we're signaling around 2026 from a priority perspective, Heather finished with this, really, there's really three elements. I think the first element is the commercial momentum that we've had in both Retirement and Investment Management, record years. Earnings have been fantastic. And then what we just talked about from an Employee Benefit perspective, we made good progress in 2025, but we're not satisfied, and we see even more margin expansion in 2026. That's going to be a contributor as well. And then if you're looking at it from a per share perspective to Heather's point, just a moment ago, we see share repurchases as a key element of the value proposition. And frankly, when you look at our return on equity at close to 19%, we're more than happy to buy shares at these valuations.
Heather Lavallee, CEO
Yes. And Mike, maybe to build and certainly makes sense while there's a lot of questions on Stop Loss. But if you think about the broader and, frankly, larger portion of our business, we've had an absolutely amazing year in '25. If I think about record revenue and Investment Management, record flows driven by a diversified breadth of solutions with strong investment performance. We've talked about and you heard Mike mention on the call, an absolute record year in Retirement that is setting us up well for continued growth at margins that frankly have been above our long-term target. We're making progress on the build-out of wealth management, which further diversifies that business. And then the OneAmerica, where we've added additional capabilities for our clients. We brought in additional distribution partners but we've also demonstrated really good deployment of capital into an acquisition that generated over 30% unlevered return. So to your question, Mike, yes, we feel confident in our ability to continue to grow cash generation in '26 and are committed to returning that back to shareholders.
Suneet Kamath, Analyst
I wanted to go back to Stop Loss. Mike, as you were talking about the '25 block, I think you said it was modestly better than '24. And I had sort of expected it to be significantly better just given the pricing actions that you took. So I guess the question is, is this 2-step process that you talked about sort of extending to maybe it's going to take you another year to kind of get there in terms of the loss ratio?
Michael Katz, CFO
Yes. Look, I think it's a stay tuned, Suneet. We're pricing this business, and we did it in the fall. We'll do it in 2026 to get our target margins. And as we've been talking about, we made a lot of progress in 2025. We're not all the way there. Our expectation is to continue to make progress in 2026, the exact amount of that, I think we'll have a better sense as we get to more in the middle, late part of 2026. But we'll update you along the way. Like Tom was asking earlier, do we have our arms around this, we do, and we're taking action across the three dimensions. And those three dimensions are the pricing, the risk selection and the reserving. And so we think we've taken the appropriate steps in the fourth quarter to make sure that we're in a good position in 2026 to continue that excess capital generation growth that Heather just talked about a moment ago.
John Barnidge, Analyst
My first question is on Stop Loss. And Mike, you had some comments about range of outcomes is different today than historically and a lot wider. Is it one of these things with the Stop Loss business with the fourth quarter there just probably is going to be more seasonality going forward in this business, in this backdrop, setting aside the rate need?
Michael Katz, CFO
When we consider 2024 and 2025, we are facing a unique situation regarding the healthcare environment. We will need to see where this leads us as we progress into 2026. I don't want to suggest that this will necessarily be a recurring theme each fourth quarter. What I do want to emphasize is that we will continue our assessment and analysis of the appropriate reserves based on the work we have done. Ideally, we would not like the range of outcomes in December 2026 to mirror that of December 2025. However, if it does, we will adapt our evaluation accordingly. The steps we have taken as we entered this year reinforce our confidence in our ability to further increase margins in EB, and this is not solely related to Stop Loss; it applies across that entire business segment.
Heather Lavallee, CEO
Yes, John, it's Heather. Happy to do that. And I think if you look broadly at Employee Benefits and Stop Loss, this isn't a very important product in our overall portfolio. If you think about within the workplace business, stop losses in incredibly high demand for employer clients to help them control really more volatile medical expenses when they choose to self-insure. As you heard Jay mention, there is much greater demand and lower supply. And so we think we're in well positioned, specifically demonstrated by the 24% rate increase we achieved on the book, while maintaining the block size. But it also goes broadly. You think about the supplemental benefits we have is those are really critical for families and employees to cover out-of-pocket expenses when they're in a high deductible plan. It goes to the capabilities Jay talked about in terms of the lead management build-out is that our workplace benefits are designed to help people protect against unforeseen events. And then you think about the complementary nature across Retirement, wealth management and asset management, those are all really around accumulation returns and planning. And so I see them as the opposite side of the same coin is that we've got the right capabilities to serve clients at the workplace. We've got the right capabilities to bring to institutional clients. And it goes back to our vision really helping clients to achieve and secure financial future. So it really is a great strategic asset for us.
Jamminder Bhullar, Analyst
I would like to ask about the Stop Loss as well. It's evident that results have improved in the past year with the implementation of price increases. However, it's difficult to believe that you haven't seen any developments that would justify a quicker increase in reserve building compared to 3 to 6 months ago. It seems unlikely that you would simply raise reserves for the sake of being conservative. Additionally, you haven't addressed the questions about what changes you've observed now compared to 3 or 6 months ago that have led to the significant increase in reserves. I do recognize that you will eventually resolve this issue, but you haven't clarified what has occurred in the business over the last few months.
Michael Katz, CFO
Yes, Jimmy, I’d like to provide some insight into the trends we are observing. We're seeing consistent patterns related to increased frequency of cancer, particularly among younger populations, and higher severity associated with cell and gene therapies. It’s important to note where we currently stand in our development process. We transitioned from having minimal development until the third quarter, where we were about one-third developed. By the fourth quarter, we reached two-thirds development, which is when we can more accurately evaluate the range of outcomes. In the first quarter, we’ll begin to determine where things will ultimately settle. As I noted earlier, it’s crucial not to confuse our current projections with our reserving practices. The range of potential outcomes is broader, so it’s wise to maintain reserves at the higher end of our best estimate. Improvements will continue to materialize throughout 2026, and we are optimistic about our current position and the progress we are making.
Heather Lavallee, CEO
Jimmy, I want to add to that. Mike has clearly explained our actions. If you take a broader look at the U.S. healthcare market, we're noticing an increase in cancer claims and rising pharmaceutical costs. This creates a wider range of potential outcomes. Historically, we've targeted a loss ratio of 77% to 80%, which is quite narrow. Consider a hurricane's projected path; several days ahead, the forecast is broader, but it becomes more certain as the event approaches. This analogy applies to how Stop Loss develops. We're one-third of the way through the first nine months of the year, and completion will accelerate in the next quarter. Given the claims we anticipate, Mike pointed out that we expect 2025 to perform better than the 2024 book. However, due to the uncertainty in the overall healthcare environment, we believe it is wise to increase our reserves, and we see a greater likelihood of positive surprises compared to negative ones.
Wesley Carmichael, Analyst
Maybe first question off a Stop Loss. But in the Retirement business, could you maybe talk about the outlook for full service in 2026 in terms of organic growth? And also, are there any shock lapses that you expect to still come from OneAmerica? Or are we largely through that?
Jay Kaduson, CEO of Workplace Solutions
Sure. If you think a little bit about where we are heading into '26, we are building off of '25 strong organic DC net flows. If you think about the $28 billion we generated. We also had $60 billion in assets from OneAmerica. Our growing participant base is approximately $10 million, and we've done that in high 90s retention rates. So we do expect that the flows in to continue to be strong. And much of this, we expect to be back half weighted. We do have visibility into some of the plans that are funding in '26. An important data point that we use is around planned RFP activity. And we saw that activity continuing to grow at a healthy and consistent pace heading into '26. We're really pleased with the strong commercial momentum in Retirement, and we'll continue to come back. Again, that's on the heels, if you think about where we finished in '25, Heather referenced this, earnings growth of 17% and above target margins of approximately 40%. So really heading into the year with a lot of strength.
Wesley Carmichael, Analyst
Got it. That's helpful. And maybe just a follow-up on capital deployment. Mike, I hear you loud and clear on buybacks being a near-term use of capital. But could you maybe talk about a little bit further out? Are there more potential roll-up opportunities in the Retirement space? And maybe how many opportunities are out there that are similar to OneAmerica that you might be thinking of?
Heather Lavallee, CEO
Yes, Wes, it's Heather. I'll address your question. The retirement industry continues to experience secular consolidation, and we are seen as a natural buyer. We've demonstrated this effectively with OneAmerica, successfully delivering for our clients. We are actively exploring opportunities and believe there are several we can pursue. However, we maintain a high standard for mergers and acquisitions right now, especially since, as Mike mentioned, we see the greatest value in deploying excess capital into share buybacks. Additionally, I want to emphasize, referring back to what Mike said on the third-quarter call, if we were to pursue a retirement roll-up, it would not hinder our ability to return capital to shareholders. We recognize that consistently delivering and returning capital is crucial for our shareholders. Considering the cash payment for OneAmerica, it's not a significant amount, so we believe we can effectively manage both initiatives.
Taylor Scott, Analyst
I have a question about Stop Loss, and I promise to ask something different afterward. When I consider the 91% policy year and the 24%, along with the 21% you took and the fact it did not improve last year, it seems difficult to believe that you can improve from the 84% calendar year. I need to trust that your comments regarding conservatism and reserves are genuine. This is a tough belief to have given the overall negative momentum we've seen, even though you experienced favorable development last year. I would appreciate it if you could provide some metrics to help us assess this. Typically, in property and casualty, we look at something like paid-out ultimate. Could you tell us how much in actual cash claims you've paid out so far this year for the '25 policy year compared to last year or perhaps the historical average or IBNR as a percentage of reserves? Some quantitative evidence would help us gauge the validity of your statements regarding conservatism.
Michael Katz, CFO
Yes, Alex, that's something we can consider for future calls. The first quarter should provide clearer insights since people will likely compare paid claims information to 2024, which can be challenging. It's a smaller block, we've improved our loss ratio experience, and we're settling claims faster than we did last year, which can make it difficult to draw comparisons. We want to avoid any confusion on that front. As we've mentioned, there was significant uncertainty surrounding claims in the fourth quarter and that uncertainty continues into 2025 and 2026. We're pleased with the way the 2024 block is progressing; it's performed favorably compared to our reserves as we approached 2025. However, we can't assure that the same will occur in 2026, but that's how we are positioning ourselves.
Heather Lavallee, CEO
Thanks, Alex, for the question. It's Heather. I'll start, and then I'll ask Matt to share some insights on how we view the broader investment landscape. As you consider AI, there are many opportunities, and we are fully committed to exploring them. Our aim is to leverage AI to enhance client experience, drive efficiencies, and support our growth. We are currently implementing AI in various parts of our claims organization, contact center, and technology to accelerate our software development. This isn't a new initiative for us; we have been utilizing AI in some capacity for several years. We are also mindful of the potential risks it poses. However, given our industry, where people need insurance and retirement planning, we believe the risks of disintermediation are relatively low, though we are vigilant about possible disruptions. At present, we see significantly more opportunities with AI than challenges. One of the crucial benefits aligns with our long-standing focus on expense efficiency, which helps us maintain and grow our margins, and we consider AI to be an essential tool in this effort. But now, over to Matt.
Matthew Toms, CEO of Investment Management
Yes, Alex, an important question for the broader investor universe here. You're 100% right. I think it's important to think about where there's risk and where there's volatility. And I'll start with an insurance sense about our general account and how we view this really not an issue within the core GA bond portfolio. A broad technology makes up for us a little over 1%. I think you'll see some stats a bit higher across our peers. But again, I think you're going to be generally in the single digits there. We're a little over 1%. And software is about 0.5% if you look at that directly. And in the investment-grade space, you're going to run in names like Alphabet, Microsoft, Salesforce and beyond. So you've got diversified business models that can actually do quite well with AI, if done correctly. So within a core GA sense, I don't view it as an issue within the private portfolio, less than 1% of our portfolio is in tech. And in high yield, we're not really exposed to below investment grade in a meaningful way as a balance sheet, and that's where you see more industry risk. We don't have anything notable there, nearly 0 in high-yield tech. Over time, we view technology to be a much better investment from an equity standpoint than a debt standpoint. You can have very disparate outcomes. That plays itself better in an equity sense. Across the equity portfolio, you really have to get into our alternative portfolio for Voya. That's about 3% of our balance sheet within PE, you'll tend to see 25%-ish, 20%, 25%, we're lower than the 25% number in software related. So it's still meaningful. But you get, again, down to a number that's less than 1% of the GA. And I think that's where you have both upside and downside. But in the debt markets, we prefer to lean away from tech and feel very well supported. But if you're going to look for volatility, look for those more the venture more the recent vintage PE, we don't feel meaningfully exposed there as far as even that alternative portion of our portfolio.
Joel Hurwitz, Analyst
So just one on Stop Loss, Mike. I guess I'm just still trying to understand why you can't provide us with the paid claims experience, right? That's something that you guys provided as last year in the fourth quarter in your slide deck. And at the end of the day, I think we're all just trying to understand what does it actually mean that the book is performing modestly better year-over-year.
Michael Katz, CFO
Yes, I believe that's something we can consider moving forward, Joel. As I mentioned earlier regarding our reserving situation, we need to be cautious. This year's reserves are significantly lower compared to last year's, partly due to a smaller block and also because of the timing of reserve releases versus incurred from the '24 to '25 block, as well as the settlement aspect of paid claims. When we assess the appropriate reserve level, we do consider paid claims and reported claims, but there are various factors involved beyond just how paid claims are evolving. We can certainly offer more insights as we progress, especially in the first quarter, which would be a suitable time to do so since it will provide a good year-over-year comparison. However, we would be reiterating the same messages we've previously communicated about our approach to reserve levels.
Heather Lavallee, CEO
Sure, Jay will start and Mike can address the revenue question.
Jay Kaduson, CEO of Workplace Solutions
Great. If you think about the leave investment, we did successfully launch the integrated leave and disability claims solution in January. We do expect that the offering is going to continue to contribute revenue throughout '26. While it's early, we are encouraged by the initial feedback from our clients and our intermediaries, and they are providing that feedback real time. The market demand for this is really strong. We did see that over 50% of the Group Life, disability and sub health RFPs for 1/1/26 were bundled with leave. It's a really positive sign given the in-source and the commitment we've made to the space. But we are consistently hearing right now from our clients and brokers that leave administration is the most important capability they're looking for from carriers today. So specifically, they focus on the claims experience for their employees. We'll report back progress throughout the year, but we're really happy with the 1/1 launch.
Michael Katz, CFO
Yes. I want to come back to Joel's question for a moment. When examining in-force premium growth, I encourage you to consider the growth from 2023 to 2024 and then to 2025. Year-over-year growth has been more modest, but if you look at two-year growth across Voluntary and Group Life, it's very strong. We had a fantastic year in 2024. Regarding paid claims, while we aren't sharing a specific number, I can say it is modestly better compared to January 2024 or 2025, so you should think of it as low single digits improvement from a year ago to now. We still need to see how things unfold for the rest of the year, so we don't want you to rely heavily on that number just yet. That gives you a sense of what to keep in mind.
Ken Lee, Analyst
One on Investment Management. You saw nearly 5% organic growth in 2025. What were your expectations are for organic growth this year? And in particular, any specific products or offerings you see as driving most of that growth?
Matthew Toms, CEO of Investment Management
Ken, yes. So as you referenced, very pleased with the overall momentum in 2025, the $14.6 billion net growth, really best in a market that still has headwinds. So very happy with that. The theme going into 2026 is, say, twofold. A, longer term, we continue to think about that 2-plus percent organic growth rate assumption. We entered '26 with momentum that has allowed us to grow above that. And we do expect the first quarter to be positive with good breadth across the domestic market. So that's good as we really come into the year on our front foot. That's driven by strong investment outcomes. If you think about the 1, 3, 5, 7, 10 years, we deliver for our clients, and we get rewarded by our clients with net cash flows. And that's still the basis. And I think the performance fees at the end of the year were a testament to that as well. As far as where we're seeing products and channels, not a big change, insurance with fixed income, public and private still a stall work for us, very strong competitive position. We think more broadly in the U.S. institutional space. In DC, our target date offerings and partnership and coordination with our Retirement business is a good forward look, new products coming there. and fixed income continues to resonate there. And then internationally, income and growth in thematic equities, again, driving that. So really, it's a continuation of a story of breadth while we're looking to continue to grow upon our strength. So we enter first quarter feeling quite good.
Ken Lee, Analyst
Great. Very helpful there. And just one quick follow-up, if I may. Just on the Voluntary benefits side, what's the outlook here for this year? Is still around 50% benefit ratios there?
Michael Katz, CFO
Yes. Maybe I'll hit it from a loss ratio perspective margin. And then maybe, Jay, if you want to hit it from just a premium perspective. So we've talked about 50% throughout the course of 2025. We have been building up reserves to get in front of the fourth quarter when we see a lot of seasonality for that product line that worked exactly according to plan. So we saw the 50% come through. The outlook, we say modest increase with respect to loss ratios. That's totally part of the plan of us providing more customer value with these products. These are important complements to high deductible health care plans. But from a net margin perspective and Heather was alluding to this before, I think it's true not just within EB, but across the board. I mean we are constantly finding areas where we're looking for efficiencies to offset either investments for growth or protect margins where we want to deliver more customer value. And so I think when you look at the Voluntary line, I would think of slightly higher loss ratios, but net margins intact.
Jay Kaduson, CEO of Workplace Solutions
Ken, I'll address a little bit how we see the voluntary market heading into '26 and maybe a quick step back on EB. We do expect growth in '26. 1/1/26 sales showed that commercial momentum. Just as a reminder, we are a top 3 provider of Voluntary. We've got about 10% market share. I did reference the newly in-sourced integrated leave and disability claims solution that is going to be kind of contributing to some of the growth and retention of our Voluntary products. That did show itself in 1/1/26, as I referenced, that 50% RFP with bundle. With that said, our top priorities right now across all of EB really does remain focused on this margin expansion. We're doing it through pricing execution where it is driving stronger persistency in our customer base. That's important. And as Mike referenced, we're creating more efficiencies in the business through investments in claims automation and AI, which is starting to show itself into the efficiency line. And so really happy with where we are in the EB business. As it relates to Voluntary, 1/1/26 was a positive step.
Operator, Operator
Thank you. We have reached the end of our question-and-answer session. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.