Voya Financial(VOYA) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION (UNAUDITED) Item 1. Financial Statements This section presents Voya Financial, Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q2 2023 and FY 2022 Condensed Consolidated Balance Sheets The balance sheets show Voya Financial, Inc.'s financial position, with increased assets, liabilities, and shareholders' equity | Metric | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------- | :--------------------------- | :---------------- | :------- | | Total Assets | $154,616 | $146,606 | $8,010 | 5.46% | | Total Liabilities | $149,088 | $141,609 | $7,479 | 5.28% | | Total Shareholders' Equity | $5,357 | $4,831 | $526 | 10.89% | - Assets held in separate accounts increased by $8,677 million (10.82%) from $80,174 million as of December 31, 2022, to $88,851 million as of June 30, 2023[15] - Goodwill increased significantly by $319 million (97.55%) from $327 million to $646 million, primarily due to business combinations[15] Condensed Consolidated Statements of Operations The statements of operations show significant net income improvement for Q2 2023, driven by higher revenues and gains | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Total Revenues | $1,871 | $1,524 | $347 | 22.77% | | Net Investment Income | $545 | $581 | $(36) | -6.20% | | Fee Income | $474 | $413 | $61 | 14.77% | | Premiums | $677 | $597 | $80 | 13.40% | | Net Gains (Losses) | $(56) | $(226) | $170 | 75.22% | | Total Benefits and Expenses | $1,608 | $1,372 | $236 | 17.20% | | Income (Loss) Before Income Taxes | $263 | $152 | $111 | 73.03% | | Net Income (Loss) Available to Common Shareholders | $154 | $64 | $90 | 140.63% | | Basic EPS | $1.50 | $0.62 | $0.88 | 141.94% | | Diluted EPS | $1.41 | $0.57 | $0.84 | 147.37% | | Metric | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Total Revenues | $3,706 | $3,030 | $676 | 22.31% | | Net Investment Income | $1,090 | $1,211 | $(121) | -9.99% | | Fee Income | $938 | $846 | $92 | 10.87% | | Premiums | $1,362 | $1,205 | $157 | 13.03% | | Net Gains (Losses) | $(72) | $(514) | $442 | 86.00% | | Total Benefits and Expenses | $3,302 | $2,756 | $546 | 19.81% | | Income (Loss) Before Income Taxes | $404 | $274 | $130 | 47.45% | | Net Income (Loss) Available to Common Shareholders | $223 | $118 | $105 | 88.98% | | Basic EPS | $2.22 | $1.13 | $1.09 | 96.46% | | Diluted EPS | $2.03 | $1.03 | $1.00 | 97.09% | Condensed Consolidated Statements of Comprehensive Income Comprehensive income shifted from a loss to income for H1 2023, primarily due to improved unrealized gains on securities | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Net Income (Loss) | $235 | $143 | $92 | 64.34% | | Other Comprehensive Income (Loss), After Tax | $(246) | $(1,885) | $1,639 | 86.95% | | Comprehensive Income (Loss) Attributable to Voya Financial, Inc. | $(88) | $(1,817) | $1,729 | 95.16% | | Metric | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Net Income (Loss) | $364 | $254 | $110 | 43.31% | | Other Comprehensive Income (Loss), After Tax | $264 | $(3,852) | $4,116 | 106.85% | | Comprehensive Income (Loss) Attributable to Voya Financial, Inc. | $505 | $(3,716) | $4,221 | 113.59% | Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased from $4,831 million to $5,357 million, driven by comprehensive income and noncontrolling interest | Metric | June 30, 2023 (Millions) | January 1, 2023 (Millions) | Change (Millions) | % Change | | :----------------------------------- | :----------------------- | :------------------------- | :---------------- | :------- | | Total Shareholders' Equity | $5,357 | $4,831 | $526 | 10.89% | | Net Income (Loss) | $241 | N/A | N/A | N/A | | Other Comprehensive Income (Loss) | $264 | N/A | N/A | N/A | | Common Stock Acquired - Share Repurchase | $(162) | N/A | N/A | N/A | | Dividends on Preferred Stock | $(18) | N/A | N/A | N/A | | Dividends on Common Stock | $(41) | N/A | N/A | N/A | - Voya Financial, Inc. shareholders' equity increased from $3,349 million to $3,697 million for the six months ended June 30, 2023, primarily due to net income and other comprehensive income[30] Condensed Consolidated Statements of Cash Flows Cash flows show a net increase in cash for H1 2023, reversing a prior year decrease, driven by operating and investing activities | Metric | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Net Cash Provided by Operating Activities | $871 | $715 | $156 | 21.82% | | Net Cash Provided by (Used in) Investing Activities | $1,269 | $(1,574) | $2,843 | 180.62% | | Net Cash Provided by (Used in) Financing Activities | $(1,798) | $325 | $(2,123) | -653.23% | | Net Increase (Decrease) in Cash and Cash Equivalents | $342 | $(534) | $876 | 164.04% | | Cash and Cash Equivalents, End of Period | $1,349 | $1,039 | $310 | 29.84% | - Payments for business acquisitions, net of cash acquired, amounted to $534 million for the six months ended June 30, 2023, compared to $2 million in the prior year, reflecting significant acquisition activity[39] Notes to Condensed Consolidated Financial Statements 1. Business, Basis of Presentation and Significant Accounting Policies This note outlines Voya Financial, Inc.'s business, strategic acquisitions, accounting policies, and new pronouncement adoption - Voya Financial, Inc. operates through three segments: Wealth Solutions, Health Solutions, and Investment Management, offering a broad range of financial services and products primarily in the United States[40] - The Company completed the acquisition of Benefitfocus, Inc. on January 24, 2023, for a total purchase consideration of $595 million ($583 million paid in cash), expanding its capacity for comprehensive benefits and savings solutions[45] - On August 1, 2023, the Company acquired the remaining equity interest in VFI SLK Global Services Private Limited (VFISLK) for approximately $50 million, making it a wholly-owned subsidiary to improve strategic and operational flexibility[46][47] - Effective January 1, 2023, the Company adopted ASU 2018-12, which changed the measurement and disclosures of insurance liabilities and DAC for long-duration contracts, resulting in a $158 million increase in Total Shareholders' Equity as of January 1, 2021[53][80][83] 2. Investments (excluding Consolidated Investment Entities) This note details Voya's investment portfolio, including fixed maturities, mortgage loans, credit losses, and net investment income | Investment Type | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :-------------------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Total Fixed Maturities (Amortized Cost) | $30,902 | $32,353 | $(1,451) | -4.48% | | Total Fixed Maturities (Fair Value) | $28,045 | $29,195 | $(1,150) | -3.94% | | Mortgage Loans on Real Estate (Net) | $5,339 | $5,427 | $(88) | -1.62% | | Allowance for Credit Losses (Fixed Maturities) | $16 | $12 | $4 | 33.33% | | Allowance for Credit Losses (Mortgage Loans) | $27 | $18 | $9 | 50.00% | - Gross unrealized capital losses on fixed maturities decreased by $278 million, from $3,481 million to $3,203 million, for the six months ended June 30, 2023, primarily due to tighter credit spreads[101] | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Net Investment Income | $545 | $581 | $(36) | -6.20% | | Net Gains (Losses) | $(56) | $(226) | $170 | 75.22% | | Proceeds on Sales (Fixed Maturities) | $2,331 | $971 | $1,360 | 140.06% | - Net gains (losses) improved by $170 million for the three months ended June 30, 2023, primarily due to favorable changes in derivative valuations and mark-to-market adjustments on FVO securities, partially offset by higher impairments and bond sale losses[118][119] 3. Derivative Financial Instruments This note details Voya's use of derivatives for hedging market risks and managing insurance liabilities, including fair values | Derivative Type (Non-Qualifying) | June 30, 2023 Notional (Millions) | June 30, 2023 Asset Fair Value (Millions) | June 30, 2023 Liability Fair Value (Millions) | Dec 31, 2022 Notional (Millions) | Dec 31, 2022 Asset Fair Value (Millions) | Dec 31, 2022 Liability Fair Value (Millions) | | :------------------------------- | :-------------------------------- | :---------------------------------------- | :------------------------------------------ | :------------------------------- | :---------------------------------------- | :------------------------------------------ | | Interest Rate Contracts | $27,506 | $374 | $390 | $18,304 | $341 | $376 | | Foreign Exchange Contracts | $249 | $4 | $1 | $160 | $9 | $2 | | Equity Contracts | $255 | $11 | $2 | $248 | $1 | $1 | | Credit Contracts | $177 | $0 | $4 | $174 | $0 | $2 | | Embedded Derivatives (Reinsurance) | N/A | $78 | $47 | N/A | $95 | $46 | - The majority of the Company's derivative positions were not designated or did not qualify for hedge accounting as of June 30, 2023, and December 31, 2022[126] | Impact on Statements of Operations (Non-Qualifying) | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | | :-------------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Interest Rate Contracts (Net Gains (Losses)) | $114 | $52 | $58 | $152 | | Equity Contracts (Net Gains (Losses)) | $5 | $(20) | $8 | $(28) | | Embedded Derivatives (Reinsurance) (Policyholder Benefits) | $8 | $84 | $(18) | $176 | 4. Fair Value Measurements (excluding Consolidated Investment Entities) This note details Voya's fair value measurements for assets and liabilities, categorized by input observability (Level 1, 2, 3) | Asset Category (June 30, 2023) | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | Total (Millions) | | :----------------------------- | :----------------- | :----------------- | :----------------- | :--------------- | | Fixed Maturities | $367 | $26,558 | $2,268 | $29,193 | | Equity Securities | $117 | $0 | $192 | $309 | | Derivatives | $0 | $444 | $0 | $444 | | Assets Held in Separate Accounts | $83,005 | $5,502 | $344 | $88,851 | | Total Assets | $85,786 | $32,618 | $2,804 | $121,208 | | Liability Category (June 30, 2023) | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | Total (Millions) | | :--------------------------------- | :----------------- | :----------------- | :----------------- | :--------------- | | Contingent Consideration | $0 | $0 | $112 | $112 | | Stabilizer and MCGs | $0 | $0 | $3 | $3 | | Derivatives | $4 | $385 | $58 | $447 | | Total Liabilities | $4 | $385 | $173 | $562 | - For the three and six months ended June 30, 2023, transfers in and out of Level 3 for fixed maturities were due to variations in valuation inputs[163] 5. Deferred Policy Acquisition Costs and Value of Business Acquired This note provides a rollforward of Deferred Policy Acquisition Costs (DAC) and Value of Business Acquired (VOBA) balances | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :---------------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | DAC: Wealth Solutions Deferred and Individual Annuities | $692 | $691 | $1 | 0.14% | | DAC: Businesses Exited | $990 | $1,043 | $(53) | -5.08% | | DAC: Other | $200 | $190 | $10 | 5.26% | | VOBA | $422 | $439 | $(17) | -3.87% | | Total DAC and VOBA | $2,304 | $2,363 | $(59) | -2.49% | - For the six months ended June 30, 2023, amortization expense for DAC and VOBA totaled $100 million ($28 million for Wealth Solutions, $53 million for Businesses Exited, and $19 million for VOBA)[168] - No loss recognition for VOBA occurred during 2023 and 2022[169] 6. Reserves for Future Policy Benefit and Contract Owner Account Balances This note details Voya's reserves for future policy benefits and contract owner account balances, including rollforwards | Category | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :---------------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Net Liability for Future Policy Benefits (after reinsurance) | $517 | $521 | $(4) | -0.77% | | Total Liability for Future Policy Benefits | $9,653 | $9,719 | $(66) | -0.68% | | Total Contract Owner Account Balances | $40,930 | $42,455 | $(1,525) | -3.59% | - The weighted average duration of the liability for future policy benefits for Health Solutions Group, Health Solutions Voluntary, and Businesses Exited remained stable at 7, 14, and 8 years, respectively, from December 31, 2022, to June 30, 2023[172] - The weighted-average crediting rate for Wealth Solutions Deferred Group and Individual Annuity was 2.7% as of June 30, 2023, up from 2.6% at December 31, 2022, while the net amount at risk decreased from $199 million to $135 million[173] 7. Reinsurance This note details Voya's reinsurance activities, including impact on financial statements and collateral management practices | Metric (Balance Sheet) | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :------------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Reinsurance Recoverable, Net | $12,169 | $12,455 | $(286) | -2.30% | | Future Policy Benefits & Contract Owner Account Balances (Total, Net of Reinsurance) | $50,583 | $52,174 | $(1,591) | -3.05% | | Metric (Statements of Operations) | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Net Premiums | $677 | $597 | $80 | 13.40% | | Net Fee Income | $474 | $413 | $61 | 14.77% | | Net Interest Credited & Other Benefits | $682 | $654 | $28 | 4.28% | - For the six months ended June 30, 2023, ceded premiums increased to $463 million from $433 million in the prior year, while ceded interest credited and other benefits decreased to $719 million from $804 million[177] 8. Separate Accounts This note provides a rollforward of Separate account liabilities and assets, detailing impact of investment performance and fees | Metric | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :-------------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Total Separate Account Liabilities | $88,851 | $80,174 | $8,677 | 10.82% | | Wealth Solutions Stabilizer Annuity | $7,211 | $7,196 | $15 | 0.21% | | Wealth Solutions Deferred Annuity | $77,582 | $69,152 | $8,430 | 12.19% | | Cash Surrender Value (Deferred Annuity) | $77,548 | $69,121 | $8,427 | 12.19% | - Investment performance contributed $8,465 million to the increase in separate account liabilities for the six months ended June 30, 2023, compared to a decrease of $16,838 million in the prior year[178] - Equity securities (including mutual funds) represent the largest component of assets supporting separate accounts, increasing from $72,309 million to $81,063 million[179] 9. Segments This note details Voya's operating segments, adjusted earnings, revenues, and total assets, with reconciliation to GAAP figures - Effective Q1 2023, the Company excludes amortization of acquisition-related intangible assets and the expected return on plan assets net of interest costs from Adjusted operating earnings before income taxes to better reflect core operating performance[184] | Segment (Adjusted Operating Earnings Before Income Taxes) | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :-------------------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Wealth Solutions | $174 | $197 | $(23) | -11.68% | | Health Solutions | $124 | $50 | $74 | 148.00% | | Investment Management (incl. Allianz noncontrolling interest) | $63 | $40 | $23 | 57.50% | | Corporate (incl. Allianz noncontrolling interest) | $(54) | $(60) | $6 | 10.00% | | Total (incl. Allianz noncontrolling interest) | $307 | $228 | $79 | 34.65% | | Segment (Adjusted Operating Revenues) | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Wealth Solutions | $705 | $709 | $(4) | -0.56% | | Health Solutions | $775 | $641 | $134 | 20.91% | | Investment Management | $226 | $171 | $55 | 32.16% | | Corporate | $15 | $17 | $(2) | -11.76% | | Total | $1,721 | $1,537 | $184 | 11.97% | | Segment (Total Assets) | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :--------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Wealth Solutions | $118,943 | $111,701 | $7,242 | 6.48% | | Health Solutions | $3,378 | $2,668 | $710 | 26.61% | | Investment Management | $1,648 | $1,611 | $37 | 2.30% | | Corporate | $26,241 | $26,712 | $(471) | -1.76% | | Total Assets | $154,616 | $146,606 | $8,010 | 5.46% | 10. Share-based Incentive Compensation Plans This note details Voya's equity-based compensation awards, expense, and activity for RSUs, PSUs, and stock options | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Total Share-based Compensation Expense | $26 | $15 | $11 | 73.33% | | After-tax Share-based Compensation Expense | $19 | $12 | $7 | 58.33% | | Award Type (June 30, 2023) | Number of Awards (Millions) | Weighted Average Grant Date Fair Value | | :------------------------- | :-------------------------- | :------------------------------------- | | RSU Awards Outstanding | 2.2 | $67.06 | | PSU Awards Outstanding | 2.3 | $61.27 | | Stock Options Outstanding | 1.2 | $44.55 | - As of June 30, 2023, 8,881,340 shares of common stock were reserved and available for issuance under the Omnibus Plans[194] 11. Shareholders' Equity This note provides an overview of Voya's shareholders' equity, including common shares, preferred stock, and share repurchases | Metric (Common Shares) | June 30, 2023 (Millions) | December 31, 2022 (Millions) | Change (Millions) | % Change | | :--------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Issued | 109.3 | 97.8 | 11.5 | 11.76% | | Held in Treasury | 3.6 | 0.6 | 3.0 | 500.00% | | Outstanding | 105.7 | 97.2 | 8.5 | 8.74% | - On May 10, 2023, warrants to purchase 26,050,846 shares were net share settled, resulting in the issuance of 9.6 million common shares[203] - On July 27, 2023, the Board of Directors authorized an additional $500 million for share repurchases, increasing the total authorized amount to $609 million, expiring on September 30, 2024[200] | Metric (Dividends) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Common Stock | $0.200 per share | $0.200 per share | $0.400 per share | $0.400 per share | | Preferred Stock | $4 million aggregate | $4 million aggregate | $18 million aggregate | $18 million aggregate | 12. Earnings per Common Share This note reconciles net income and shares for basic and diluted EPS, showing significant increases for Q2 and H1 2023 | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change | YoY % Change | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Net Income (Loss) Available to Common Shareholders | $154 million | $64 million | $90 million | 140.63% | | Basic EPS | $1.50 | $0.62 | $0.88 | 141.94% | | Diluted EPS | $1.41 | $0.57 | $0.84 | 147.37% | | Weighted Average Common Shares Outstanding (Basic) | 103.0 million | 101.7 million | 1.3 million | 1.28% | | Weighted Average Common Shares Outstanding (Diluted) | 109.8 million | 110.8 million | -1.0 million | -0.90% | | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | YoY % Change | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :----------- | | Net Income (Loss) Available to Common Shareholders | $223 million | $118 million | $105 million | 88.98% | | Basic EPS | $2.22 | $1.13 | $1.09 | 96.46% | | Diluted EPS | $2.03 | $1.03 | $1.00 | 97.09% | | Weighted Average Common Shares Outstanding (Basic) | 100.4 million | 103.9 million | -3.5 million | -3.37% | | Weighted Average Common Shares Outstanding (Diluted) | 109.7 million | 113.9 million | -4.2 million | -3.69% | 13. Accumulated Other Comprehensive Income (Loss) This note details Accumulated Other Comprehensive Income (AOCI) components and changes, driven by unrealized gains/losses | Component (Millions) | June 30, 2023 | December 31, 2022 | Change (Millions) | % Change | | :------------------- | :------------ | :---------------- | :---------------- | :------- | | Fixed Maturities | $(2,963) | $(1,926) | $(1,037) | -53.84% | | Derivatives | $98 | $129 | $(31) | -24.03% | | Change in Current Discount Rate | $(827) | $(951) | $124 | 13.04% | | Deferred Income Tax Asset (Liability) | $898 | $700 | $198 | 28.29% | | Total AOCI | $(2,791) | $(2,045) | $(746) | -36.48% | - For the six months ended June 30, 2023, the change in AOCI was a positive $264 million (after-tax), a significant improvement compared to a loss of $3,852 million in the prior year[209][210] - Approximately $17 million of AOCI from hedge transactions is expected to be reclassified into earnings within the next 12 months as of June 30, 2023[208] 14. Revenue from Contracts with Customers This note disaggregates revenue from financial services and software subscriptions by type and segment, highlighting growth | Revenue Type (Millions) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change (Millions) | YoY % Change | | :---------------------- | :--------------------------- | :--------------------------- | :-------------------- | :----------- | | Wealth Solutions | $154 | $158 | $(4) | -2.53% | | Investment Management | $264 | $197 | $67 | 34.01% | | Health Solutions | $58 | $5 | $53 | 1060.00% | | Corporate | $5 | $17 | $(12) | -70.59% | | Total Financial Services & Software Subscriptions & Services Revenue | $481 | $377 | $104 | 27.59% | | Total Fee Income & Other Revenue | $560 | $457 | $103 | 22.54% | - Software subscriptions and services revenue in Health Solutions increased significantly from $0 to $54 million for the three months ended June 30, 2023, primarily driven by the Benefitfocus acquisition[214] - Net receivables of $357 million (June 30, 2023) and $299 million (December 31, 2022) related to performance obligations satisfied in previous periods are included in Other assets[214] 15. Income Taxes This note discusses Voya's income tax provisions, effective tax rates, and the impact of the Inflation Reduction Act of 2022 | Metric (Effective Tax Rate) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective Tax Rate | 10.6% | 5.9% | 9.9% | 7.3% | - The effective tax rate differed from the statutory rate of 21% primarily due to noncontrolling interest, the effect of the dividends received deduction, and tax credits[216] - The Inflation Reduction Act of 2022 (IRA of 2022) imposes a 15% corporate alternative minimum tax (CAMT) and a 1% excise tax on stock repurchases, effective for taxable years beginning after December 31, 2022[217] 16. Financing Agreements This note summarizes Voya's financing agreements, including debt, credit facilities, and a significant senior notes issuance | Debt Type (Millions) | June 30, 2023 | December 31, 2022 | Change (Millions) | % Change | | :------------------- | :------------ | :---------------- | :---------------- | :------- | | Short-term Debt | $143 | $141 | $2 | 1.42% | | Long-term Debt | $2,095 | $2,094 | $1 | 0.05% | | Total Debt | $2,238 | $2,235 | $3 | 0.13% | - As of June 30, 2023, the Company was in compliance with its debt covenants[222] | Credit Facility (Millions) | Expiration | Committed Capacity | Utilization | Unused Commitment | | :------------------------- | :----------- | :----------------- | :---------- | :---------------- | | Voya Financial, Inc. (Other) | 05/01/2028 | $500 | $0 | $500 | | Voya Financial, Inc. (Other) | 04/07/2025 | $200 | $163 | $37 | | Total | | $700 | $163 | $537 | - On May 1, 2023, the Company exercised a put option to issue $400 million of 3.976% Senior Notes due 2025, using the proceeds to redeem the $393 million 5.650% Fixed-to-Floating Rate Junior Subordinated Notes due 2053, resulting in a $5 million loss on debt extinguishment[228][229] 17. Commitments and Contingencies This note details Voya's commitments and contingencies, including lease impairments, restricted assets, and litigation matters - During the three and six months ended June 30, 2023, the Company recorded impairment charges of $12 million and $14 million, respectively, on its right-of-use asset for leased office space[231] | Restricted Asset Type (Millions) | June 30, 2023 | December 31, 2022 | Change (Millions) | % Change | | :------------------------------- | :------------ | :---------------- | :---------------- | :------- | | Fixed Maturity Collateral Pledged to FHLB | $1,851 | $1,791 | $60 | 3.35% | | Securities Pledged | $1,148 | $1,162 | $(14) | -1.20% | | Total Restricted Assets | $3,139 | $3,085 | $54 | 1.75% | - As of June 30, 2023, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for litigation and regulatory matters, to be up to approximately $25 million[240] - The Company agreed to settle the Advance Trust & Life Escrow Services, LTA v. ReliaStar Life Insurance Company litigation for $39 million in cash consideration, which has been fully accrued as of June 30, 2023[246] 18. Consolidated and Nonconsolidated Investment Entities This note describes Voya's involvement with consolidated and nonconsolidated investment entities, including CLOs and LPs - The Company consolidates 7 CLOs and 10 LPs as of June 30, 2023, and December 31, 2022, where it is determined to be the primary beneficiary or has control through voting rights[252][254] - Noncontrolling interest related to partnerships increased from $1,482 million at December 31, 2022, to $1,660 million at June 30, 2023, driven by net contributions and favorable market appreciation[255] | Asset Category (Consolidated Investment Entities, June 30, 2023) | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | NAV (Millions) | Total (Millions) | | :--------------------------------------------------------------- | :----------------- | :----------------- | :----------------- | :------------- | :--------------- | | Cash and Cash Equivalents | $154 | $0 | $0 | $0 | $154 | | Corporate Loans | $0 | $1,432 | $0 | $0 | $1,432 | | Limited Partnerships/Corporations | $0 | $0 | $0 | $3,120 | $3,120 | | Total Assets | $154 | $1,432 | $0 | $3,120 | $4,706 | - As of June 30, 2023, the Company held $371 million in unconsolidated CLOs and $1,800 million in unconsolidated limited partnerships, representing its maximum exposure to loss in these entities[278][279] 19. Goodwill and Other Intangible Assets This note presents changes in goodwill and other intangible assets, primarily due to acquisitions in Health Solutions | Segment (Goodwill, Millions) | January 1, 2022 | December 31, 2022 | June 30, 2023 | Change (Dec 2022 to Jun 2023) | % Change | | :--------------------------- | :-------------- | :---------------- | :------------ | :---------------------------- | :------- | | Wealth Solutions | $17 | $17 | $17 | $0 | 0.00% | | Health Solutions | $24 | $24 | $343 | $319 | 1329.17% | | Investment Management | $31 | $286 | $286 | $0 | 0.00% | | Consolidated Total | $72 | $327 | $646 | $319 | 97.55% | | Intangible Asset Type (Net Carrying Amount, Millions) | June 30, 2023 | December 31, 2022 | Change (Millions) | % Change | | :---------------------------------------------------- | :------------ | :---------------- | :---------------- | :------- | | Total Indefinite-life Intangibles | $350 | $350 | $0 | 0.00% | | Total Finite-life Intangibles | $558 | $281 | $277 | 98.58% | | Total Other Intangible Assets | $908 | $631 | $277 | 43.90% | - Amortization expense related to intangible assets was $42 million for the six months ended June 30, 2023, compared to $22 million in the prior year[282] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews Voya Financial, Inc.'s consolidated results, financial condition, strategic acquisitions, and key trends Overview Voya Financial, Inc. provides workplace savings, benefits, and investment management services, aiming for client financial security - Wealth Solutions generates revenue primarily from asset and participant-based recordkeeping and advisory fees, as well as investment income on general account assets[288] - Health Solutions generates revenue from premiums, investment income, mortality and morbidity income, and policy charges, with growth opportunities in voluntary benefits and Health Account Solutions[290][291] - Investment Management generates revenue through management fees based on assets under management, with potential performance-based incentive fees and an enhanced international footprint[294][295] Business Update This section highlights Voya's recent strategic acquisitions, including VFISLK, Benefitfocus, and Czech Asset Management - On August 1, 2023, Voya acquired the remaining equity interest in VFI SLK Global Services Private Limited (VFISLK) for approximately $50 million, making it a wholly-owned subsidiary to improve strategic and operational flexibility[296][297] - On January 24, 2023, Voya completed the acquisition of Benefitfocus, Inc. for approximately $570 million (cash paid at closing), expanding its capacity for comprehensive benefits and savings solutions, incurring $27 million in integration expenses[298] - The combination of Voya IM with AllianzGI assets and teams, completed on July 25, 2022, increased Voya's international scale and diversified investment strategies, incurring $38 million in integration expenses[300][301] Trends and Uncertainties This section discusses key trends and uncertainties, including interest rate environment impacts and Voya's ESG commitment - The interest rate environment continues to influence Voya's business, with new investments expected to yield higher returns, positively impacting earnings if product crediting rates do not rise proportionally[305] - Rising interest rates may lead to lower prices for fixed income investments sold on the secondary market and potentially higher lapses for policies with existing guarantees[305][306] - Voya's ESG practices are integrated into its business and culture, focusing on long-term value creation for stakeholders and minimizing environmental impact[308][309] Operating Measures This section introduces Adjusted operating earnings and revenues as key non-GAAP measures for evaluating segment performance - Adjusted operating earnings before income taxes and Adjusted operating revenues are non-GAAP measures used by management to evaluate segment performance, focusing on core operating performance and trends by excluding highly variable items[311] AUM and AUA This section presents Voya's Assets Under Management (AUM) and Assets Under Administration (AUA) across its segments | Segment | June 30, 2023 (Millions) | June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------- | :----------------------- | :----------------------- | :-------------------- | :----------- | | Wealth Solutions | $518,941 | $469,019 | $49,922 | 10.64% | | Health Solutions | $1,886 | $1,996 | $(110) | -5.51% | | Investment Management | $381,306 | $289,710 | $91,596 | 31.62% | | Total AUM and AUA | $789,028 | $647,250 | $141,778 | 21.90% | | AUM | $457,615 | $350,242 | $107,373 | 30.66% | | AUA | $331,413 | $297,008 | $34,405 | 11.58% | - Effective Q1 2023, AUM and AUA now include asset balances associated with non-qualified retirement plans for clients using only non-qualified solutions, with historical periods recast for conformity[312] Results of Operations - Company Condensed Consolidated This section analyzes Voya's consolidated financial performance for Q2 2023, highlighting revenue growth and expense increases Consolidated - Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022 Voya Financial, Inc. reported increased net income for Q2 2023, driven by improved net gains, fee income, and premiums | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Total Revenues | $1,871 | $1,524 | $347 | 22.77% | | Net Investment Income | $545 | $581 | $(36) | -6.20% | | Fee Income | $474 | $413 | $61 | 14.77% | | Premiums | $677 | $597 | $80 | 13.40% | | Net Gains (Losses) | $(56) | $(226) | $170 | 75.22% | | Total Benefits and Expenses | $1,608 | $1,372 | $236 | 17.20% | | Income (Loss) Before Income Taxes | $263 | $152 | $111 | 73.03% | | Net Income (Loss) Available to Common Shareholders | $154 | $64 | $90 | 140.63% | - Operating expenses increased by $165 million to $770 million, driven by acquisitions (Benefitfocus, AllianzGI), business growth in Health Solutions and Wealth Solutions, and an increase in deferred compensation plan liability[321] - Net investment gains (losses) improved by $21 million to a loss of $38 million, primarily due to favorable mark-to-market adjustments on FVO securities and market risk benefits, partially offset by unfavorable derivative valuations and higher impairments[324][325] Consolidated - Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022 Voya Financial, Inc. reported increased net income for H1 2023, driven by improved net gains, fee income, and premiums | Metric | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Total Revenues | $3,706 | $3,030 | $676 | 22.31% | | Net Investment Income | $1,090 | $1,211 | $(121) | -9.99% | | Fee Income | $938 | $846 | $92 | 10.87% | | Premiums | $1,362 | $1,205 | $157 | 13.03% | | Net Gains (Losses) | $(72) | $(514) | $442 | 86.00% | | Total Benefits and Expenses | $3,302 | $2,756 | $546 | 19.81% | | Income (Loss) Before Income Taxes | $404 | $274 | $130 | 47.45% | | Net Income (Loss) Available to Common Shareholders | $223 | $118 | $105 | 88.98% | - Operating expenses increased by $369 million to $1,606 million, primarily due to acquisitions (Benefitfocus, AllianzGI), business growth in Health Solutions and Wealth Solutions, and increased deferred compensation plan liability[331] - Net investment gains (losses) improved by $124 million to a loss of $47 million, driven by favorable mark-to-market adjustments on FVO securities, lower impairments, and favorable market risk benefits, partially offset by unfavorable derivative valuations[336] Results of Operations - Segment by Segment This section analyzes the financial performance of Voya's core operating segments: Wealth Solutions, Health Solutions, and Investment Management Wealth Solutions Wealth Solutions saw decreased adjusted operating earnings for Q2 and H1 2023, due to higher expenses and lower alternative investment income | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Adjusted Operating Earnings Before Income Taxes | $174 | $197 | $(23) | -11.68% | | Total Adjusted Operating Revenues | $705 | $709 | $(4) | -0.56% | | Net Revenue | $481 | $486 | $(5) | -1.03% | | Adjusted Operating Margin | 36.1% | 40.6% | -4.5% | -11.08% | | Metric | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Adjusted Operating Earnings Before Income Taxes | $306 | $425 | $(119) | -28.00% | | Total Adjusted Operating Revenues | $1,389 | $1,465 | $(76) | -5.19% | | Net Revenue | $944 | $1,024 | $(80) | -7.81% | | Adjusted Operating Margin | 32.5% | 41.5% | -9.0% | -21.69% | | Client Asset Type (Millions) | June 30, 2023 | June 30, 2022 | YoY Change (Millions) | YoY % Change | | :--------------------------- | :------------ | :------------ | :-------------------- | :----------- | | Total Client Assets | $518,941 | $469,019 | $49,922 | 10.64% | | Fee-based | $429,958 | $377,667 | $52,291 | 13.84% | | Spread-based | $32,699 | $34,220 | $(1,521) | -4.44% | | Investment-only Stable Value | $37,354 | $39,622 | $(2,268) | -5.72% | | Retail Client Assets | $26,570 | $24,892 | $1,678 | 6.74% | Health Solutions Health Solutions demonstrated strong growth in adjusted operating earnings for Q2 and H1 2023, driven by higher premiums and acquisitions | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Adjusted Operating Earnings Before Income Taxes | $124 | $50 | $74 | 148.00% | | Total Adjusted Operating Revenues | $775 | $641 | $134 | 20.91% | | Net Revenue | $342 | $198 | $144 | 72.73% | | Adjusted Operating Margin | 36.2% | 25.5% | 10.7% | 41.96% | | Metric | 6 Months Ended June 30, 2023 (Millions) | 6 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Adjusted Operating Earnings Before Income Taxes | $218 | $72 | $146 | 202.78% | | Total Adjusted Operating Revenues | $1,549 | $1,288 | $261 | 20.26% | | Net Revenue | $649 | $367 | $282 | 76.84% | | Adjusted Operating Margin | 33.6% | 19.6% | 14.0% | 71.43% | | Sales & In-force (Millions) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Sales by Product Line | $82 | $58 | $620 | $571 | | Total Gross Premiums & Deposits | $765 | $671 | $1,526 | $1,331 | | Total Annualized In-force Premiums & Fees | $3,327 | $2,722 | $3,327 | $2,722 | | Total Loss Ratio (Trailing 12-month) | 63.9% | 73.1% | 63.9% | 73.1% | Investment Management Investment Management reported increased adjusted operating earnings for Q2 and H1 2023, driven by AllianzGI acquisition and market performance | Metric | 3 Months Ended June 30, 2023 (Millions) | 3 Months Ended June 30, 2022 (Millions) | YoY Change (Millions) | YoY % Change | | :---------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :----------- | | Adjusted Operating Earnings Before Income Tax