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Voya Financial, Inc. (VOYA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 adjusted operating EPS of $2.00 rose 13% YoY, and excluding notable items EPS was $2.15, a material beat versus S&P Global consensus of $1.51; GAAP diluted EPS was $1.42. Drivers were positive prior-year Stop Loss reserve development, OneAmerica retirement acquisition contribution, disciplined spend, and strong net inflows; partially offset by alternative income 15¢ below long-term expectations .
  • Revenues of $1.969B modestly beat consensus ($1.932B) as Wealth Solutions and Investment Management fee revenue offset Health margin pressure; IM net inflows were $7.7B and defined contribution net inflows were ~$30B with ~90% plan retention from OneAmerica .
  • Balance sheet catalysts: repaid $400M senior notes, excess capital generation ~90% of after-tax AOE; period-end excess capital ~$150M; RBC ~385% per call commentary .
  • Near-term watchpoints: management expects Q2 alternative returns below long-term; Health Solutions building back from 2024 challenges with a January 2025 Stop Loss cohort estimated loss ratio of 87% and strengthened Voluntary reserves given macro uncertainty .

What Went Well and What Went Wrong

  • What Went Well

    • “Adjusted operating EPS grew 13% compared with the prior-year period, driven primarily by the positive impact of the OneAmerica acquisition and our strong commercial momentum in Wealth Solutions and Investment Management.” — CEO Heather Lavallee .
    • Wealth Solutions pre-tax AOE rose to $207M (+11% YoY), TTM adjusted operating margin improved to 39.7% (41.2% ex-notables); defined contribution net inflows ~$30B and total client assets reached $694B .
    • Investment Management delivered $41M AOE with $7.7B net inflows (2.5% organic growth), broad-based across institutional/retail; TTM margins improved to 28.1% (28.6% ex-notables) .

  • What Went Wrong

    • Alternative income ran ~5% annualized versus 9% long-term, reducing EPS by $0.15; Q2 alternatives expected below long-term as well .
    • Health Solutions AOE was $46M (down from $59M YoY) with lower Group Life/Voluntary underwriting gains and ongoing strategic investments in Short-Term Disability/Leave Management; TTM adjusted operating margin declined to 2.7% (3.6% ex-notables) mainly from Stop Loss loss ratios .
    • Elevated Group Life claims in January (interest-adjusted loss ratio 90.3%) and reported Stop Loss loss ratio of 75% for Q1; management strengthened Voluntary reserves (IBNR) anticipating potential higher utilization if macro weakens .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
GAAP Total Revenues ($USD Billions)$2.051 $1.956 $2.010 $1.969
GAAP Diluted EPS ($)$2.24 $0.98 $0.94 $1.42
Adjusted Operating EPS ($)$1.77 $1.90 $1.40 $2.00
Adjusted Operating EPS ex-Notables ($)$1.88 $2.12 $1.50 $2.15
S&P EPS Consensus ($)1.61*0.75*0.75*1.51*
S&P Revenue Consensus ($USD Billions)1.798*—1.886*1.932*

Values with an asterisk were retrieved from S&P Global.

Segment AOE (Pre-tax, $USD Millions)Q1 2024Q4 2024Q1 2025
Wealth Solutions186 210 207
Health Solutions59 (102) 46
Investment Management42 66 41
Corporate(63) (27) (62)
Margin (Excluding Corporate, %)Q1 2024Q3 2024Q4 2024Q1 2025
Adjusted Operating Margin ex-Notables30.0% 31.9% 22.6% 29.1%
KPIsQ1 2024Q4 2024Q1 2025
Defined Contribution Net Inflows ($USD Billions)——~$30.0
Total Client Assets ($USD Billions)$573.9 $612.2 $694.2
Investment Management Net Inflows ($USD Billions)—3.4 7.7
RBC Ratio (%)——~385
Excess Capital at Period End ($USD Millions)—~600 ~150
Stop Loss Reported Loss Ratio (%)84.2% 115.4% 75.0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Alternative investment returnsQ2 2025Long-term 9% expectation baseline“Expect second quarter alternative returns to be below long-term expectations” Lowered near term
Stop Loss estimated loss ratio (Jan cohort)2025 policy year2024 cohort revised to 93% (from 95%) 87% estimated for Jan-2025 cohort; more credible by Q3/Q4 Introduced (‘improving’)
Wealth Solutions adjusted operating margin2025 run-rate35–39% framework referenced by analysts“Reasonable” run-rate; watch macro and expense seasonality Maintained
Leave management (in-sourcing) spendFY 2025~$50M plan disclosed prior~$50M; part in admin expense and part in premium tax/other in 2025 Maintained (timing detail refined)
Common dividendQ2 2025$0.45/share (raised in Q3’24) $0.45/share declared (payable Jun 26, 2025) Maintained
DebtQ1 2025Planned debt retirement in early 2025 Retired $400M 3.976% Senior Notes Executed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Stop LossQ3’24 reported LR 93.4%; Q4’24 Health AOE −$102M; mgmt expected improved profitability in 2025 Prior-year reserve development favorable; Jan-2025 cohort estimated LR 87%; 2024 cohort revised to 93% completion 90% by Mar 31 Improving with pricing/underwriting actions
OneAmerica integrationAcquisition closed Jan 2, 2025 ; retention target ~90%~90% plan retention; ~60B assets added; TSA reporting mix nuances; pipeline strong Integration on track; commercial momentum
IM net inflows/breadthQ3’24 net flows (ex divested) +$3.8B; Q4’24 +$3.4B +$7.7B net inflows; institutional +$5.2B; breadth across private assets, core fixed income, CLOs, international retail Strengthening; broad-based
Voluntary benefitsQ4’24 growth but Health margins pressured Claims in line; reserves strengthened (IBNR) given macro risk; loss ratio “high 40s” expectation discussed Prudent reserve stance; utilization could rise
Retail wealth buildoutStrategic capability build discussed prior; adviser footprint Modest investments; >420–450 advisers; tech support; holistic advice focus Incremental investment
Macro/alternativesQ4’24 had performance fees/seasonality; alternatives variable Alternatives ~5% annualized; Q2 expected below long-term Cautious near term

Management Commentary

  • “Our capital-light businesses generate diverse revenue streams and have allowed us to consistently generate free cash flow across all market cycles… Voya offers a resilient and relevant business model.” — CEO Heather Lavallee .
  • “We reported $2 of adjusted operating earnings per share… favorable performance in Health Solutions, earnings contributions from OneAmerica, and strong commercial momentum… Offsetting this, alternative income was $0.15 below long-term expectations.” — CFO Michael Katz .
  • “We ended the quarter with excess capital of approximately $150 million and a RBC ratio of 385%. As planned, we repaid approximately $400 million of debt in February.” — CFO Michael Katz .

Q&A Highlights

  • Wealth Solutions margins: CFO described Q1 margin in upper half of 35–39% framework with spread assets slightly higher; expects moderation and expense seasonality; OneAmerica and macro sensitivities will influence Q2 .
  • Voluntary benefits: CFO strengthened IBNR reserves due to potential utilization rising with economic uncertainty; reiterated “high 40s” loss ratio expectation as a starting point and smoothing through year .
  • Stop Loss: 2024 cohort reserve lowered to 93%; 2025 Jan cohort estimated LR 87% reflecting ~21% average net effective rate increases and improved underwriting for known claims; credibility improves by Q3/Q4 .
  • OneAmerica integration: ~90% plan retention; TSA-led reporting mix; yields elevated as assets moved at market value; $75M earnings outlook unchanged .
  • IM flows breadth: Private fixed income, private equity secondaries, core/core-plus, CLOs, and global income/growth strategies drove $7.7B net inflows, offsetting active equity headwinds .

Estimates Context

  • Q1 2025: Adjusted EPS ex-notables $2.15 vs S&P consensus $1.51 (beat); total revenues $1.969B vs S&P consensus $1.932B (beat). S&P Global consensus values used for comparison.*
  • Q4 2024: Adjusted EPS ex-notables $1.50 vs S&P consensus $0.75 (beat); total revenues $2.010B vs S&P consensus $1.886B (beat).*
  • Management noted Q2 alternatives below long-term expectations, which may temper EPS; Health expected to normalize in Group Life and Stop Loss base-case at 87% LR for Jan cohort .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Strong beat on adjusted EPS ex-notables and modest revenue beat powered by OneAmerica synergy and robust flows; watch the alternative income drag in Q2. Position sizing can lean into fee-driven segments while hedging alternatives sensitivity .
  • Health Solutions is in repair-and-reprice mode: improved 2024 cohort, 87% LR expectation for 2025 cohort, and prudent Voluntary reserves. Re-rating hinges on sustained LR improvement by Q3/Q4 .
  • Wealth Solutions pipeline in large/mega markets plus ~90% retention from OneAmerica supports asset/fee durability; margin framework maintained though expenses and AUM mix could moderate near term .
  • IM’s breadth of inflows across private/credit/CLOs and global strategies enhances earnings resilience; breadth offsets equities headwinds, improving margin trajectory .
  • Balance sheet de-risking and capital return continues: $400M debt retired, excess capital ~$150M, dividend maintained at $0.45; capital generation ~90% of AOE supports ongoing returns .
  • Near-term trading: potential consolidation if Q2 alternatives disappoint; medium-term thesis constructive on fee growth, integration benefits, and Health margin normalization.
  • Monitor catalysts: Q2 alt returns, Stop Loss LR progression, OneAmerica integration updates/retention, and DC recordkeeping wins pace .
Notes:
* S&P Global consensus and estimate values were used where indicated.