Voya Financial(VOYA) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Voya Financial's unaudited condensed consolidated financial statements for Q2 and YTD 2024, covering balance sheets, operations, comprehensive income, equity, and cash flows Condensed Consolidated Balance Sheets As of June 30, 2024, Voya Financial's total assets increased to $161.3 billion from $157.1 billion at year-end 2023, primarily driven by an increase in assets held in separate accounts Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $161,280 | $157,085 | | Total investments | $35,235 | $36,600 | | Assets held in separate accounts | $99,147 | $93,133 | | Total Liabilities | $155,411 | $151,032 | | Contract owner account balances | $37,876 | $39,174 | | Liabilities related to separate accounts | $99,147 | $93,133 | | Total Shareholders' Equity | $5,686 | $5,878 | Condensed Consolidated Statements of Operations For Q2 2024, Voya reported net income available to common shareholders of $201 million, or $1.96 per diluted share, driven by higher total revenues of $2.03 billion Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,033 | $1,871 | $4,084 | $3,706 | | Net Income (Loss) | $235 | $235 | $523 | $364 | | Net Income (Loss) available to common shareholders | $201 | $154 | $435 | $223 | | Diluted EPS | $1.96 | $1.41 | $4.20 | $2.03 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income attributable to Voya Financial was $91 million for Q2 2024, a significant improvement from a comprehensive loss of $88 million in Q2 2023 Comprehensive Income Summary (in millions) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $235 | $235 | $523 | $364 | | Other Comprehensive Income (Loss), after tax | $(114) | $(246) | $(183) | $264 | | Comprehensive Income (Loss) attributable to Voya | $91 | $(88) | $273 | $505 | Condensed Consolidated Statements of Changes in Shareholders' Equity Total Voya Financial shareholders' equity decreased to $4.04 billion as of June 30, 2024, primarily due to share repurchases and common stock dividends - For the six months ended June 30, 2024, the company repurchased $348 million of common stock[23] - Dividends on common stock totaled $81 million for the first six months of 2024, while preferred stock dividends were $21 million[23] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $547 million for YTD 2024, with a net increase in cash and cash equivalents of $62 million Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $547 | $871 | | Net cash provided by (used in) investing activities | $990 | $1,269 | | Net cash provided by (used in) financing activities | $(1,475) | $(1,798) | | Net increase (decrease) in cash | $62 | $342 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of accounting policies and financial data, covering business overview, investments, derivatives, fair value, and segment reporting - On January 24, 2023, the Company acquired Benefitfocus, Inc. for a total purchase consideration of $595 million, resulting in $319 million of goodwill and $275 million of intangible assets[34] - On August 1, 2023, the Company acquired the remaining equity interest in its Indian joint venture, Voya Global Services Private Limited (Voya India), for approximately $53 million, resulting in goodwill of $102 million[35] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Voya's financial performance for Q2 and YTD 2024, covering consolidated results, segment performance, liquidity, and capital resources, highlighting revenue growth and capital management Results of Operations - Company Condensed Consolidated For Q2 2024, total revenues increased by $162 million to $2.03 billion, driven by higher premiums and fee income, leading to increased net income available to common shareholders Consolidated Results of Operations (in millions) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,033 | $1,871 | $4,084 | $3,706 | | Income (loss) before income taxes | $276 | $263 | $563 | $404 | | Net income (loss) available to common shareholders | $201 | $154 | $435 | $223 | - The $113 million increase in Q2 2024 premiums was primarily driven by growth across all blocks of business in the Health Solutions segment[285] - The $43 million increase in Q2 2024 fee income was mainly due to higher average equity markets benefiting the Wealth Solutions and Investment Management segments[283] Results of Operations - Segment by Segment Q2 2024 saw Wealth Solutions' adjusted operating earnings increase due to higher fees, while Health Solutions' earnings decreased due to a higher loss ratio, and Investment Management remained stable Adjusted Operating Earnings Before Income Taxes by Segment (in millions) | Segment | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Wealth Solutions | $214 | $174 | $400 | $306 | | Health Solutions | $60 | $124 | $119 | $218 | | Investment Management | $64 | $63 | $117 | $105 | | Corporate | $(54) | $(54) | $(118) | $(123) | - Wealth Solutions' Q2 2024 adjusted operating earnings increased by $40 million YoY, primarily due to higher fee income from favorable equity markets and lower expenses[309] - Health Solutions' Q2 2024 adjusted operating earnings decreased by $64 million YoY, mainly due to a higher total aggregate loss ratio (72.9% vs 61.3%) and business growth[318][319] Liquidity and Capital Resources Voya maintained a strong capital position with approximately $0.4 billion in excess capital and a 407% RBC ratio, returning significant capital to shareholders through repurchases - The company estimates excess capital was approximately $0.4 billion as of June 30, 2024, with an estimated combined RBC ratio of 407%[336] Capital Returned to Shareholders (YTD 2024 vs YTD 2023, in millions) | Action | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Dividends paid on common shares | $81 | $41 | | Repurchases of common shares | $346 | $162 | | Total | $427 | $203 | - The Financial Leverage Ratio, excluding AOCI, increased slightly to 28.0% at June 30, 2024, from 27.8% at December 31, 2023[358] Investments (excluding Consolidated Investment Entities) Voya's fixed maturity portfolio remains high quality with 95.8% investment grade, while the mortgage loan portfolio shows strong credit metrics, and European exposure is actively monitored - As of June 30, 2024, 95.8% of the fixed maturities portfolio was rated investment grade (NAIC 1: 53.2%, NAIC 2: 42.6%)[365] - The commercial mortgage loan portfolio had a weighted average loan-to-value (LTV) ratio of 43.8% and a debt service coverage (DSC) ratio of 1.98x as of June 30, 2024[386] - Total European exposure had a fair value of $2.35 billion as of June 30, 2024, with major exposures in the United Kingdom ($951 million), The Netherlands ($262 million), and France ($247 million)[392] Item 3. Quantitative and Qualitative Disclosures About Market Risk Voya is exposed to interest rate, equity market, and credit risks, with hypothetical scenarios showing a 100 bps upward shift in interest rates decreasing fair value by $1.65 billion Interest Rate Risk Sensitivity (in millions) | Scenario | Net Estimated Change in Fair Value | | :--- | :--- | | +100 bps Yield Curve Shift | $(1,650) on Fixed Maturities | | -100 bps Yield Curve Shift | $1,860 on Fixed Maturities | Equity Market Risk Sensitivity (in millions) | Scenario | Net Estimated Change in Fair Value | | :--- | :--- | | +10% Equity Shock | $24 on Equity Securities | | -10% Equity Shock | $(24) on Equity Securities | Item 4. Controls and Procedures Management concluded that Voya's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by the report[407] - No changes occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[408] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to the detailed discussion of legal proceedings and contingencies provided in Note 17 of the Condensed Consolidated Financial Statements - For information on legal proceedings, refer to the Commitments and Contingencies Note (Note 17) in the financial statements[413] Item 1A. Risk Factors This section refers to the risk factors discussion in the company's Annual Report on Form 10-K, indicating no material changes from previously disclosed risks - There are no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K[413] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2024, Voya repurchased approximately 2.4 million shares of common stock for an average price of $72.32 per share, with $551 million remaining under authorization Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining (millions) | | :--- | :--- | :--- | :--- | | April 2024 | 774,285 | $69.87 | $671 | | May 2024 | 829,451 | $73.78 | $610 | | June 2024 | 805,422 | $73.12 | $551 | | Total | 2,409,158 | $72.32 | $551 | Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include the Voya Financial, Inc. 2024 Omnibus Incentive Plan, CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[414]