Voya Financial(VOYA) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION (UNAUDITED) This section presents Voya Financial, Inc.'s unaudited interim financial information Item 1. Financial Statements Voya Financial, Inc.'s unaudited condensed consolidated financial statements and notes for Q2 2021 and FY 2020 Condensed Consolidated Balance Sheets Snapshot of assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (June 30, 2021 vs. December 31, 2020) | Metric | June 30, 2021 (Millions) | December 31, 2020 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :------- | | Total Assets | $168,194 | $180,518 | $(12,324) | -6.83% | | Total Liabilities | $158,419 | $169,340 | $(10,921) | -6.45% | | Total Shareholders' Equity | $9,775 | $11,178 | $(1,403) | -12.55% | - Assets held for sale decreased from $20,703 million as of December 31, 2020, to $0 as of June 30, 2021, reflecting the completion of the Individual Life Transaction[15] - Liabilities held for sale decreased from $18,615 million as of December 31, 2020, to $0 as of June 30, 2021, also due to the Individual Life Transaction[17] Condensed Consolidated Statements of Operations Details revenues, benefits, expenses, and net income for the reported periods Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total Revenues | $2,503 | $1,669 | $834 | 49.97% | | Total Benefits and Expenses | $1,475 | $1,711 | $(236) | -13.79% | | Income (loss) from continuing operations before income taxes | $1,028 | $(42) | $1,070 | 2547.62% | | Net income (loss) available to Voya Financial, Inc.'s common shareholders | $459 | $(66) | $525 | 795.45% | | Basic EPS from continuing operations | $3.86 | $0.21 | $3.65 | 1738.10% | | Diluted EPS from continuing operations | $3.58 | $0.21 | $3.37 | 1604.76% | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total Revenues | $546 | $3,354 | $(2,808) | -83.72% | | Total Benefits and Expenses | $(1,520) | $3,352 | $(4,872) | -145.34% | | Income (loss) from continuing operations before income taxes | $2,066 | $2 | $2,064 | 103200.00% | | Net income (loss) available to Voya Financial, Inc.'s common shareholders | $1,545 | $(166) | $1,711 | 1030.72% | | Basic EPS from continuing operations | $12.64 | $0.44 | $12.20 | 2772.73% | | Diluted EPS from continuing operations | $11.78 | $0.43 | $11.35 | 2639.53% | Condensed Consolidated Statements of Comprehensive Income Presents net income and other comprehensive income components, reflecting equity changes Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Net income (loss) | $910 | $(141) | $1,051 | 745.39% | | Other comprehensive income (loss), after tax | $521 | $2,198 | $(1,677) | -76.30% | | Comprehensive income (loss) attributable to Voya Financial, Inc. | $984 | $2,136 | $(1,152) | -53.93% | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Net income (loss) | $2,010 | $(221) | $2,231 | 1009.49% | | Other comprehensive income (loss), after tax | $(2,467) | $708 | $(3,175) | -448.45% | | Comprehensive income (loss) attributable to Voya Financial, Inc. | $(904) | $560 | $(1,464) | -261.43% | Condensed Consolidated Statements of Changes in Shareholders' Equity Outlines changes in various components of shareholders' equity over reporting periods Changes in Voya Financial, Inc. Shareholders' Equity (Three Months Ended June 30, 2021) | Metric | April 1, 2021 (Millions) | June 30, 2021 (Millions) | Change (Millions) | | :-------------------------------- | :----------------------- | :----------------------- | :---------------- | | Total Voya Financial, Inc. Shareholders' Equity | $7,931 | $8,362 | $431 | | Noncontrolling Interest | $1,068 | $1,413 | $345 | | Total Shareholders' Equity | $8,999 | $9,775 | $776 | Changes in Voya Financial, Inc. Shareholders' Equity (Six Months Ended June 30, 2021) | Metric | January 1, 2021 (Millions) | June 30, 2021 (Millions) | Change (Millions) | | :-------------------------------- | :----------------------- | :----------------------- | :---------------- | | Total Voya Financial, Inc. Shareholders' Equity | $10,110 | $8,362 | $(1,748) | | Noncontrolling Interest | $1,068 | $1,413 | $345 | | Total Shareholders' Equity | $11,178 | $9,775 | $(1,403) | - For the six months ended June 30, 2021, total comprehensive income (loss) attributable to Voya Financial, Inc. was $(904) million, a significant decrease from $560 million in the prior year, primarily due to the reversal of Other Comprehensive Income (Loss) related to the Individual Life Transaction[29][34] Condensed Consolidated Statements of Cash Flows Reports cash generated and used by operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | | Net cash (used in) provided by operating activities | $(189) | $432 | $(621) | | Net cash provided by (used in) investing activities | $851 | $(950) | $1,801 | | Net cash (used in) provided by financing activities | $(601) | $569 | $(1,170) | | Net increase in cash and cash equivalents | $61 | $51 | $10 | | Cash and cash equivalents, end of period | $1,983 | $1,523 | $460 | - Net cash provided by investing activities significantly improved in 2021, primarily due to proceeds from the sale of business ($250 million) and increased proceeds from the sale/maturity of fixed maturities ($2,996 million)[37] - Net cash used in financing activities in 2021 was largely driven by maturities and withdrawals from investment contracts ($3,300 million) and common stock repurchases ($392 million)[37] Notes to Condensed Consolidated Financial Statements: Detailed explanations and additional information supporting the financial statements 1. Business, Basis of Presentation and Significant Accounting Policies Describes company operations, financial statement preparation, and key accounting principles - Voya Financial, Inc. is a U.S. financial services organization offering retirement services, investment management, mutual funds, group insurance, and supplemental health products[38] - On January 4, 2021, the Company completed the Individual Life Transaction, selling substantially all of its life insurance and legacy non-Wealth Solutions annuity businesses to Resolution Life US[39][40] - Effective March 15, 2021, the Retirement and Employee Benefits segments were renamed Wealth Solutions and Health Solutions, respectively, maintaining three principal segments: Wealth Solutions, Investment Management, and Health Solutions[41] - On June 9, 2021, the Company sold the independent financial planning channel of Voya Financial Advisors (VFA) to Cetera Financial Group, Inc., resulting in a pre-tax gain of $279 million recorded in Other revenue[42] 2. Discontinued Operations Details financial impact and specifics of business segments that have been disposed of - On January 4, 2021, the Company sold five legal subsidiaries (SLD, SLDI, RRII, MUL, VAE) and related Individual Life and fixed/variable annuities businesses to Resolution Life US[53] - The purchase price included cash, a $225 million interest in RLGH, and $123 million in surplus notes, with $100 million in cash proceeds deferred for up to 42 months[55] - The entities disposed of were classified as held for sale, and their results are presented as discontinued operations. An estimated loss on sale, net of tax, of $1,466 million was recorded as of December 31, 2020, with an $8 million reduction in the six months ended June 30, 2021[57][58] Income (loss) from discontinued operations, net of tax (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | | Total Revenues | $0 | $679 | $(679) | | Total Benefits and Expenses | $0 | $655 | $(655) | | Income (loss) from discontinued operations before income taxes | $0 | $24 | $(24) | | Adjustment to loss on sale, net of tax | $8 | $(242) | $250 | | Income (loss) from discontinued operations, net of tax | $8 | $(223) | $231 | - Concurrent with the sale, the Company's subsidiaries (RLI, RLNY, VRIAC) ceded $11.4 billion of policyholder liabilities under reinsurance agreements to SLD, transferring $10.8 billion in invested assets and $427 million in cash, recognizing $1.9 billion in pre-tax realized gains[64] 3. Investments (excluding Consolidated Investment Entities) Information on the company's investment portfolio, excluding consolidated investment entities Total Investments (June 30, 2021 vs. December 31, 2020) | Investment Type | June 30, 2021 (Millions) | December 31, 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------ | :----------------------- | :------------------------- | :---------------- | :------- | | Fixed maturities, available-for-sale | $33,983 | $43,569 | $(9,586) | -22.00% | | Mortgage loans on real estate, net | $5,579 | $6,741 | $(1,162) | -17.24% | | Total investments | $45,995 | $56,851 | $(10,856) | -19.09% | Net Investment Income (Three Months Ended June 30) | Source | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Fixed maturities | $497 | $596 | $(99) | -16.61% | | Mortgage loans on real estate | $64 | $73 | $(9) | -12.33% | | Net investment income | $656 | $586 | $70 | 11.95% | Net Investment Income (Six Months Ended June 30) | Source | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Fixed maturities | $1,012 | $1,167 | $(155) | -13.28% | | Mortgage loans on real estate | $125 | $147 | $(22) | -14.97% | | Net investment income | $1,370 | $1,284 | $86 | 6.70% | - Gross unrealized capital losses on fixed maturities decreased by $9 million to $130 million for the six months ended June 30, 2021, primarily due to non-credit related market factors[87] - The allowance for credit losses on available-for-sale fixed maturity securities decreased from $26 million at January 1, 2021, to $18 million at June 30, 2021[82] - The allowance for credit losses for commercial mortgage loans decreased from $89 million at December 31, 2020, to $33 million at June 30, 2021[102] 4. Derivative Financial Instruments Explains company's use of derivatives for risk management and their fair values - The Company uses interest rate swaps, foreign exchange swaps, total return swaps, futures, and embedded derivatives primarily to reduce market risks, alter interest rate exposure, and hedge against equity index decreases or increases[113][114][115][116][117] Notional Amounts and Fair Values of Derivatives (June 30, 2021 vs. December 31, 2020) | Derivative Type | June 30, 2021 Notional (Millions) | June 30, 2021 Asset Fair Value (Millions) | June 30, 2021 Liability Fair Value (Millions) | Dec 31, 2020 Notional (Millions) | Dec 31, 2020 Asset Fair Value (Millions) | Dec 31, 2020 Liability Fair Value (Millions) | | :------------------------------------ | :-------------------------------- | :------------------------------------ | :------------------------------------- | :-------------------------------- | :------------------------------------ | :------------------------------------- | | Interest rate contracts | $18,028 | $134 | $255 | $19,859 | $195 | $328 | | Foreign exchange contracts | $911 | $8 | $35 | $878 | $4 | $46 | | Equity contracts | $286 | $13 | $2 | $412 | $16 | $12 | | Embedded derivatives (within products) | N/A | $0 | $44 | N/A | $0 | $95 | | Total Derivatives (Asset) | | $171 | | | $235 | | | Total Derivatives (Liability) | | | $575 | | | $649 | - A substantial portion of the Company's derivative positions were not designated or did not qualify for hedge accounting but provide an economic hedge aligned with risk management objectives[118] - As of June 30, 2021, the Company held $15 million and pledged $132 million of net cash collateral related to OTC and cleared derivative contracts, respectively[122] 5. Fair Value Measurements (excluding Consolidated Investment Entities) Details methodologies and hierarchy for fair value measurements of financial instruments Fair Value Hierarchy of Assets (June 30, 2021) | Asset Type | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | Total (Millions) | | :------------------------------------ | :----------------- | :----------------- | :----------------- | :--------------- | | Fixed maturities, including securities pledged | $749 | $34,368 | $2,522 | $37,639 | | Equity securities | $105 | $0 | $249 | $354 | | Assets held in separate accounts | $91,269 | $5,536 | $293 | $97,098 | | Total assets | $94,952 | $40,219 | $3,109 | $138,280 | | Percentage of Level to total | 69% | 29% | 2% | 100% | Fair Value Hierarchy of Liabilities (June 30, 2021) | Liability Type | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | Total (Millions) | | :------------------------------------ | :----------------- | :----------------- | :----------------- | :--------------- | | Guaranteed benefit derivatives | $0 | $0 | $54 | $54 | | Other derivatives | $0 | $293 | $0 | $293 | | Embedded derivative on reinsurance | $0 | $152 | $85 | $237 | | Total liabilities | $0 | $445 | $139 | $584 | | Percentage of Level to total | 0% | 76% | 24% | 100% | - Fair values are determined using third-party commercial pricing services, brokers, and industry-standard software, incorporating market observable inputs for Level 2 assets and unobservable inputs for Level 3 assets/liabilities[129][130] - For the three and six months ended June 30, 2021 and 2020, transfers in and out of Level 3 for fixed maturities were due to variations in valuation inputs, with securities valued by independent broker quotes moving into Level 3 and those with more widely available information moving out[158] 6. Deferred Policy Acquisition Costs and Value of Business Acquired Explains accounting for deferred policy acquisition costs and value of acquired businesses Rollforward of DAC and VOBA (Six Months Ended June 30, 2021) | Metric | DAC (Millions) | VOBA (Millions) | Total (Millions) | | :------------------------------------------------ | :------------- | :-------------- | :--------------- | | Balance as of January 1, 2021 | $1,440 | $70 | $1,510 | | Deferrals of commissions and expenses | $50 | $3 | $53 | | Net amortization included in Condensed Consolidated Statements of Operations | $(432) | $(133) | $(565) | | Change due to unrealized capital gains/(losses) on available-for-sale securities | $181 | $267 | $448 | | Balance as of June 30, 2021 | $1,239 | $207 | $1,446 | - During 2021, the Company recognized loss recognition of $301 million for DAC and $1 million for VOBA[162] 7. Share-based Incentive Compensation Plans Describes company's share-based compensation programs and related expenses Share-based Compensation Expense (Six Months Ended June 30) | Award Type | 2021 (Millions) | 2020 (Millions) | Change (Millions) | | :-------------------------------- | :-------------- | :-------------- | :---------------- | | Restricted Stock Unit (RSU) awards | $26 | $27 | $(1) | | Performance Stock Unit (PSU) awards | $30 | $25 | $5 | | Total share-based compensation expense | $57 | $55 | $2 | | After-tax share-based compensation expense | $42 | $32 | $10 | - As of June 30, 2021, 1.2 million RSU awards and 2.1 million PSU awards were outstanding, with weighted average grant date fair values of $57.43 and $54.06, respectively[167] - As of June 30, 2021, 2.3 million stock options were outstanding with a weighted average exercise price of $42.67[167] 8. Shareholders' Equity Provides details on components of shareholders' equity, including common stock and repurchases Common Shares Outstanding (June 30, 2021 vs. December 31, 2020) | Metric | June 30, 2021 (Millions) | December 31, 2020 (Millions) | Change (Millions) | | :------------------------- | :----------------------- | :------------------------- | :---------------- | | Issued | 145.4 | 143.3 | 2.1 | | Held in Treasury | 32.0 | 19.1 | 12.9 | | Outstanding | 113.4 | 124.2 | (10.8) | - Dividends declared per share of Common Stock increased from $0.15 in Q2 2020 to $0.165 in Q2 2021, and from $0.30 in H1 2020 to $0.33 in H1 2021[169] - On January 28, 2021, the Board authorized an additional $1 billion for common stock repurchases, expiring March 31, 2022[171] - As of June 30, 2021, 625,000 shares of preferred stock (Series A and B) were issued and outstanding, with no dividends in arrears[174][175] 9. Earnings per Common Share Presents calculation of basic and diluted earnings per common share Earnings per Common Share (Three Months Ended June 30) | Metric | 2021 | 2020 | Change | | :------------------------------------------------------------------------------------------------ | :--- | :--- | :----- | | Basic EPS from continuing operations | $3.86 | $0.21 | $3.65 | | Basic EPS (total) | $3.81 | $(0.52) | $4.33 | | Diluted EPS from continuing operations | $3.58 | $0.21 | $3.37 | | Diluted EPS (total) | $3.53 | $(0.51) | $4.04 | Earnings per Common Share (Six Months Ended June 30) | Metric | 2021 | 2020 | Change | | :------------------------------------------------------------------------------------------------ | :--- | :--- | :----- | | Basic EPS from continuing operations | $12.64 | $0.44 | $12.20 | | Basic EPS (total) | $12.71 | $(1.29) | $14.00 | | Diluted EPS from continuing operations | $11.78 | $0.43 | $11.35 | | Diluted EPS (total) | $11.84 | $(1.25) | $13.09 | - Weighted average common shares outstanding (basic) decreased from 126.2 million in Q2 2020 to 120.6 million in Q2 2021, and from 128.6 million in H1 2020 to 121.6 million in H1 2021[177] 10. Accumulated Other Comprehensive Income (Loss) Details components and changes in accumulated other comprehensive income or loss Accumulated Other Comprehensive Income (AOCI) (June 30, 2021 vs. December 31, 2020) | Component | June 30, 2021 (Millions) | December 31, 2020 (Millions) | Change (Millions) | | :------------------------------------------------ | :----------------------- | :------------------------- | :---------------- | | Fixed maturities, net of impairment | $3,739 | $6,914 | $(3,175) | | Derivatives | $63 | $195 | $(132) | | DAC/VOBA adjustment on available-for-sale securities | $(877) | $(1,915) | $1,038 | | Net unrealized capital gains (losses) | $2,427 | $4,034 | $(1,607) | | AOCI | $2,431 | $4,039 | $(1,608) | - The change in AOCI for the six months ended June 30, 2021, was $(2,467) million after tax, primarily driven by a significant decrease in unrealized gains on available-for-sale securities[183] - The portion of AOCI expected to be reclassified into earnings within the next 12 months is $20 million as of June 30, 2021[178] 11. Income Taxes Explains company's income tax provisions, effective tax rates, and related adjustments - The effective tax rate for the three months ended June 30, 2021, was 10.9%, differing from the statutory rate of 21% primarily due to non-controlling interest and the dividends received deduction (DRD)[188] - For the six months ended June 30, 2021, the effective tax rate was 3.1%, primarily influenced by the release of a stranded tax benefit in Other Comprehensive Income due to the Individual Life Transaction, non-controlling interest, and DRD[188] - The Company participated in the IRS Compliance Assurance Process (CAP) for tax years 2019-2021, being in the Compliance Maintenance Bridge phase for 2019 and 2020[190] 12. Financing Agreements Describes company's debt instruments, credit facilities, and related covenants Carrying Value of Debt Securities (June 30, 2021 vs. December 31, 2020) | Debt Type | June 30, 2021 (Millions) | December 31, 2020 (Millions) | Change (Millions) | | :------------------------------------------------ | :----------------------- | :------------------------- | :---------------- | | 3.125% Senior Notes, due 2024 | $375 | $398 | $(23) | | 3.65% Senior Notes, due 2026 | $444 | $497 | $(53) | | Total long-term debt | $2,969 | $3,044 | $(75) | - During the six months ended June 30, 2021, the Company repurchased $23 million par value of its 3.125% Senior Notes and $53 million par value of its 3.65% Senior Notes, resulting in a $10 million loss on debt extinguishment[194] - As of June 30, 2021, the Company had a $500 million senior unsecured credit facility expiring November 1, 2024, with no outstanding borrowings and was in compliance with debt covenants[194] 13. Commitments and Contingencies Outlines company's contractual obligations, off-balance sheet commitments, and legal matters - The Company recorded a $13 million impairment on its right-of-use asset for leased office space during the three and six months ended June 30, 2021[195] - As of June 30, 2021, off-balance sheet commitments included $177 million to acquire mortgage loans and $1,040 million to purchase limited partnerships and private placement investments[197] Total Restricted Assets (June 30, 2021 vs. December 31, 2020) | Asset Type | June 30, 2021 (Millions) | December 31, 2020 (Millions) | Change (Millions) | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | | Fixed maturity collateral pledged to FHLB | $1,807 | $1,386 | $421 | | Securities pledged | $1,094 | $449 | $645 | | Total restricted assets | $3,035 | $1,951 | $1,084 | - The Company estimates the aggregate range of reasonably possible losses from litigation and regulatory matters, in excess of accrued amounts, to be up to approximately $25 million as of June 30, 2021[206] 14. Consolidated and Nonconsolidated Investment Entities Details company's involvement with and accounting for investment entities - The Company consolidates certain investment entities (CLOs and LPs) where it is the primary beneficiary or has controlling financial interest through voting rights[214][216][219] - As of June 30, 2021, the Company was the primary beneficiary of 6 CLOs (up from 3 in Dec 2020) and consolidated 13 limited partnerships (up from 12 in Dec 2020)[218][220] - Non-controlling interest related to consolidated partnerships increased from $1,068 million at December 31, 2020, to $1,413 million at June 30, 2021, driven by favorable market appreciation[221] Fair Value Hierarchy of Consolidated Investment Entities Assets (June 30, 2021) | Asset Type | Level 1 (Millions) | Level 2 (Millions) | Level 3 (Millions) | NAV (Millions) | Total (Millions) | | :------------------------------------ | :----------------- | :----------------- | :----------------- | :------------- | :--------------- | | Cash and cash equivalents | $85 | $0 | $0 | $0 | $85 | | Corporate loans, at fair value | $0 | $1,081 | $0 | $0 | $1,081 | | Limited partnerships/corporations | $0 | $0 | $0 | $2,248 | $2,248 | | Total assets, at fair value | $85 | $1,081 | $0 | $2,248 | $3,414 | - The Company holds $388 million in unconsolidated CLOs and $1,543 million in unconsolidated limited partnerships, representing its maximum exposure to loss in these entities[246][247] 15. Restructuring Describes company's restructuring initiatives and associated expenses - The Company is undertaking restructuring efforts to reduce stranded expenses from the Individual Life Transaction and the sale of VFA's independent financial planning channel[249] - Additional restructuring expenses of $60 million - $135 million are anticipated beyond Q2 2021, following $78 million in 2020 and $52 million for the six months ended June 30, 2021[249] Organizational Restructuring Expenses (Six Months Ended June 30) | Cost Type | 2021 (Millions) | 2020 (Millions) | Cumulative to Date (Millions) | | :-------------------------- | :-------------- | :-------------- | :---------------------------- | | Severance benefits | $13 | $(8) | $75 | | Organizational transition costs | $39 | $64 | $362 | | Total restructuring expenses | $52 | $56 | $437 | | Continuing operations | $52 | $36 | $372 | | Discontinued operations | $0 | $20 | $65 | 16. Segments Provides financial information by operating segments: Wealth, Investment Management, and Health Solutions - The Company operates through three segments: Wealth Solutions, Investment Management, and Health Solutions, with Corporate activities including non-segment related and run-off activities[254][265] Adjusted Operating Earnings Before Income Taxes by Segment (Three Months Ended June 30) | Segment | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :-------------------- | :-------------- | :-------------- | :---------------- | :------- | | Wealth Solutions | $295 | $37 | $258 | 697.30% | | Investment Management | $66 | $20 | $46 | 230.00% | | Health Solutions | $63 | $36 | $27 | 75.00% | | Corporate | $(71) | $(75) | $4 | -5.33% | | Total | $353 | $17 | $336 | 1976.47% | Adjusted Operating Earnings Before Income Taxes by Segment (Six Months Ended June 30) | Segment | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :-------------------- | :-------------- | :-------------- | :---------------- | :------- | | Wealth Solutions | $550 | $160 | $390 | 243.75% | | Investment Management | $118 | $59 | $59 | 100.00% | | Health Solutions | $100 | $98 | $2 | 2.04% | | Corporate | $(142) | $(166) | $24 | -14.46% | | Total | $626 | $151 | $475 | 314.57% | Total AUM and AUA by Segment (June 30, 2021 vs. June 30, 2020) | Segment | June 30, 2021 (Millions) | June 30, 2020 (Millions) | Change (Millions) | % Change | | :-------------------- | :----------------------- | :----------------------- | :---------------- | :------- | | Wealth Solutions | $527,835 | $437,290 | $90,545 | 20.71% | | Investment Management | $315,331 | $281,900 | $33,431 | 11.86% | | Health Solutions | $1,905 | $1,870 | $35 | 1.87% | | Total AUM and AUA | $721,165 | $606,090 | $115,075 | 18.99% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comprehensive review of Voya Financial, Inc.'s consolidated results, financial condition, and key trends - The Company completed the Individual Life Transaction on January 4, 2021, selling substantially all of its life insurance and legacy non-Wealth Solutions annuity businesses, with results presented as discontinued operations[267][269] - The sale of VFA's independent financial planning channel on June 9, 2021, resulted in a $279 million pre-tax gain, excluded from Adjusted operating earnings[266] - The estimated combined RBC ratio was 544% as of June 30, 2021, significantly above the 400% target, indicating strong capital levels[276] - The Company restarted its share repurchase program in Q4 2020, repurchasing approximately $873 million of common shares, and increased its common shareholder dividend by 10% in January 2021[277] - COVID-19 has primarily impacted fee-based income and underwriting income (due to increased mortality/morbidity), with lower interest rates contributing to reduced spread-based income in Wealth Solutions[278][279][282] - The Company anticipates incurring additional restructuring expenses of $60 million - $135 million beyond Q2 2021 to reduce stranded costs from recent dispositions[286] Consolidated Total Revenues (Three Months Ended June 30) | Revenue Type | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Net investment income | $656 | $586 | $70 | 11.95% | | Fee income | $436 | $464 | $(28) | -6.03% | | Premiums | $516 | $607 | $(91) | -14.99% | | Net realized capital gains (losses) | $(37) | $(1) | $(36) | 3600.00% | | Other revenue | $374 | $81 | $293 | 361.73% | | Income (loss) related to consolidated investment entities | $558 | $(68) | $626 | 920.59% | | Total revenues | $2,503 | $1,669 | $834 | 49.97% | Consolidated Total Revenues (Six Months Ended June 30) | Revenue Type | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Net investment income | $1,370 | $1,284 | $86 | 6.70% | | Fee income | $894 | $969 | $(75) | -7.74% | | Premiums | $(4,471) | $1,215 | $(5,686) | -467.98% | | Net realized capital gains (losses) | $1,705 | $(234) | $1,939 | -828.63% | | Other revenue | $484 | $173 | $311 | 179.77% | | Income (loss) related to consolidated investment entities | $564 | $(53) | $617 | 1164.15% | | Total revenues | $546 | $3,354 | $(2,808) | -83.72% | Consolidated Total Benefits and Expenses (Three Months Ended June 30) | Expense Type | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Interest credited and other benefits to contract owners/policyholders | $686 | $997 | $(311) | -31.19% | | Operating expenses | $706 | $643 | $63 | 9.80% | | Net amortization of DAC/VOBA | $26 | $19 | $7 | 36.84% | | Total benefits and expenses | $1,475 | $1,711 | $(236) | -13.79% | Consolidated Total Benefits and Expenses (Six Months Ended June 30) | Expense Type | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Interest credited and other benefits to contract owners/policyholders | $(3,504) | $1,879 | $(5,383) | -286.48% | | Operating expenses | $1,308 | $1,283 | $25 | 1.95% | | Net amortization of DAC/VOBA | $565 | $95 | $470 | 494.74% | | Total benefits and expenses | $(1,520) | $3,352 | $(4,872) | -145.34% | Wealth Solutions Adjusted Operating Earnings Before Income Taxes (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total adjusted operating revenues | $1,589 | $1,236 | $353 | 28.56% | | Total operating benefits and expenses | $1,040 | $1,075 | $(35) | -3.26% | | Adjusted operating earnings before income taxes | $550 | $160 | $390 | 243.75% | Investment Management Adjusted Operating Earnings Before Income Taxes (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total adjusted operating revenues | $382 | $294 | $88 | 29.93% | | Total operating benefits and expenses | $264 | $235 | $29 | 12.34% | | Adjusted operating earnings before income taxes | $118 | $59 | $59 | 100.00% | Health Solutions Adjusted Operating Earnings Before Income Taxes (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total adjusted operating revenues | $1,190 | $1,074 | $116 | 10.80% | | Total operating benefits and expenses | $1,090 | $976 | $114 | 11.68% | | Adjusted operating earnings before income taxes | $100 | $98 | $2 | 2.04% | Corporate Adjusted Operating Earnings Before Income Taxes (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | % Change | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | :------- | | Total adjusted operating revenues | $48 | $18 | $30 | 166.67% | | Total operating benefits and expenses | $190 | $184 | $6 | 3.26% | | Adjusted operating earnings before income taxes | $(142) | $(166) | $24 | -14.46% | Parent Company Cash and Cash Equivalents (Six Months Ended June 30) | Metric | 2021 (Millions) | 2020 (Millions) | Change (Millions) | | :------------------------------------------ | :-------------- | :-------------- | :---------------- | | Beginning cash and cash equivalents balance | $229 | $212 | $17 | | Total sources | $2,183 | $620 | $1,563 | | Total uses | $1,657 | $589 | $1,068 | | Net increase in cash and cash equivalents | $526 | $31 | $495 | | Ending cash and cash equivalents balance | $755 | $243 | $512 | - The average duration of the fixed maturities portfolio, including securities pledged, is between 7.0 and 7.5 years as of June 30, 2021[380] - As of June 30, 2021, 94.6% of the fixed maturities portfolio had NAIC quality designations of 1 or 2, indicating high credit quality[382] - The Company's total European exposure had an amortized cost of $3,367 million and fair value of $3,698 million as of June 30, 2021, with peripheral Europe exposure at $389 million[414] Item 3. Quantitative and Qualitative Disclosures About Market Risk Details company's exposure to market risks, including interest rate, equity price, and credit risk - The Company is exposed to interest rate risk, equity market price risk, and credit risk, with no material market risk exposure to 'trading' activities[424] Net Estimated Potential Change in Fair Value from Hypothetical 100 Basis Point Interest Rate Shifts (June 30, 2021) | Financial Instrument | +100 Basis Points Yield Curve Shift (Millions) | -100 Basis Points Yield Curve Shift (Millions) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Fixed maturity securities, including securities pledged | $(2,639) | $2,653 | | Commercial mortgage and other loans | $(273) | $255 | | Funding agreements without fixed maturities and deferred annuities | $(3,203) | $4,031 | | Interest rate contracts (Derivatives) | $113 | $(153) | | Long-term debt | $(214) | $246 | Net Estimated Potential Change in Fair Value from Hypothetical 10% Equity Market Shock (June 30, 2021) | Financial Instrument | +10% Equity Shock (Millions) | -10% Equity Shock (Millions) | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Equity securities, at fair value | $28 | $(28) | | Limited liability partnerships/corporations | $95 | $(95) | | Equity futures and total return swaps (Derivatives) | $14 | $(14) | | Guaranteed benefit derivatives | $0 | $1 | - The Company's largest reinsurer is SLD, with reinsurance obligations collateralized through assets held in trust. Any default by SLD or loss of credit for reinsurance could impact reserves or claims[431] Item 4. Controls and Procedures Confirms effectiveness of company's disclosure controls and internal control over financial reporting - The Company's disclosure controls and procedures were evaluated as effective as of June 30, 2021[433] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2021[434] PART II. OTHER INFORMATION Additional information not covered in financial statements, including legal, risk, and equity matters Item 1. Legal Proceedings Refers to Commitments and Contingencies Note for details on legal proceedings - Information on legal proceedings is cross-referenced to the Commitments and Contingencies Note in the financial statements[435] Item 1A. Risk Factors Directs readers to Annual Report on Form 10-K for risks and Item 2 for trends - Potential risks and uncertainties are discussed in the Annual Report on Form 10-K and in Item 2 of this Quarterly Report[436] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Summarizes common stock repurchases, average price, and remaining authorization Common Stock Repurchases (Three Months Ended June 30, 2021) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Dollar Value of Shares that May Yet Be Purchased (Millions) | | :-------------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------- | | April 1, 2021 - April 30, 2021 | 16,988 | $68.39 | $879 | | May 1, 2021 - May 31, 2021 | 1,029,941 | $65.26 | $834 | | June 1, 2021 - June 30, 2021 | 6,824,692 | $61.85 | $332 | | Total | 7,871,621 | $62.31 | N/A | - As of June 30, 2021, $332 million remained authorized for common stock repurchases under the plan expiring March 31, 2022[437] - On June 30, 2021, the Company entered into a share repurchase agreement for $400 million of common stock, with initial delivery of 5,203,252 shares[437] Item 6. Exhibits Refers to the Exhibit Index for a list of all exhibits filed with the Quarterly Report on Form 10-Q - The Exhibit Index provides a list of all exhibits filed with the report[438] Exhibit Index Lists exhibits accompanying Form 10-Q, including CEO/CFO certifications and XBRL documents - Includes Rule 13a-14(a)/15d-14(a) Certifications from the CEO and CFO (Exhibits 31.1 and 31.2)[441] - Includes Section 1350 Certifications from the CEO and CFO (Exhibits 32.1 and 32.2)[441] - XBRL Instance Document and Taxonomy Extension files (Schema, Calculation, Definition, Label, Presentation Linkbases) are included[441] Signature Contains signature of registrant by CFO, certifying report filing on August 6, 2021 - The report was signed by Michael S. Smith, Vice Chairman and Chief Financial Officer, on behalf of Voya Financial, Inc. on August 6, 2021[444]