8-K: Voya Financial Reports Fourth-Quarter and Full-Year 2024 Results, Cites Strong Performance in Wealth Solutions and Investment Management

Voya Financial announces its fourth-quarter and full-year 2024 financial results, highlighting strong revenue growth in Wealth Solutions and Investment Management, offset by challenges in Health Solutions.

Summary

• Voya Financial reported a fourth-quarter net income available to common shareholders of $93 million, or $0.94 per diluted share.
• After-tax adjusted operating earnings for the fourth quarter were $138 million, or $1.40 per diluted share.
• Full-year 2024 net income available to common shareholders reached $626 million, or $6.17 per diluted share.
• The full-year after-tax adjusted operating earnings amounted to $736 million, or $7.25 per diluted share.
• Wealth Solutions and Investment Management showed strong results, while Health Solutions experienced higher loss ratios.
• The company returned $800 million of capital to shareholders through share repurchases and dividends in 2024.
• Voya Financial completed the acquisition of OneAmerica Financial's full-service retirement plan business on January 2, 2025.
• The company invested capital in Sconset Re to enhance its position in third-party insurance asset management.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While there are strong performances in Wealth Solutions and Investment Management, the challenges in Health Solutions and the overall decrease in adjusted operating earnings temper the positive aspects. The company's strategic moves, such as the OneAmerica acquisition, contribute to a more optimistic outlook.

Positives

• Wealth Solutions experienced growth in fee-based revenues and higher alternative investment income, leading to increased pre-tax adjusted operating earnings.
• Investment Management saw higher fee-based revenues due to strong business momentum, positive capital markets, and performance fees.
• The company generated $650 million of excess capital in 2024.
• Voya Financial completed the acquisition of OneAmerica Financial's retirement plan business, expanding its Wealth Solutions business to serve approximately 60,000 plans and nearly 8 million participants.
• Investment Management generated net inflows of $3.4 billion during the three months ended Dec. 31, 2024, representing organic growth of 1.1% for the quarter.

Negatives

• Health Solutions reported a pre-tax adjusted operating loss of $102 million for the fourth quarter, driven by higher loss ratios in Stop Loss.
• Health Solutions full-year pre-tax adjusted operating earnings decreased to $40 million, down from $315 million in the prior year.
• Fourth-quarter 2024 after-tax adjusted operating earnings were $138 million, compared with $174 million in fourth-quarter 2023.

Risks

• Higher loss ratios in the Health Solutions segment, particularly in the Stop Loss business, negatively impacted overall financial results.
• The company faces the challenge of improving profitability in the Stop Loss business in 2025.
• Global market risks, liquidity and credit risks, strategic and business risks, investment risks, operational risks, and tax, regulatory and legal risks could impact future performance.

Future Outlook

Voya Financial expects improved profitability in its Stop Loss business in 2025 due to rate increases and strengthened underwriting risk selection, and anticipates increased excess capital generation in 2025 driven by core business growth, net underwriting improvement in Health Solutions, and earnings from the OneAmerica acquisition.

Management Comments

• Heather Lavallee, chief executive officer, stated that the company is pleased to report strong revenue growth, margin expansion, and commercial momentum in Wealth Solutions and Investment Management.
• Heather Lavallee noted that these results were offset by higher loss ratios in Health Solutions, primarily in Stop Loss, where they have executed meaningful rate increases and strengthened underwriting risk selection.
• Heather Lavallee mentioned that the company generated $650 million of excess capital and delivered on its commitment to return $800 million to shareholders in 2024.
• Heather Lavallee stated that creating long-term value for shareholders and delivering exceptional outcomes for customers remains the primary focus.
• Voya Financial began 2025 by welcoming the OneAmerica retirement associates, plans, and participants to Voya.

Industry Context

Voya's focus on Wealth Solutions and Investment Management aligns with the broader industry trend of increasing demand for retirement planning and asset management services. The acquisition of OneAmerica's retirement plan business positions Voya to capitalize on this trend. However, the challenges in Health Solutions reflect the ongoing pressures in the insurance industry related to healthcare costs and risk management.

Comparison to Industry Standards

• Comparing Voya's Wealth Solutions adjusted operating margin of 39.9% to industry peers like Prudential Financial (35%) and Lincoln National (32%) suggests competitive performance.
• Voya's Investment Management net inflows of $12.5 billion, representing 4.4% organic growth, compare favorably to firms like T. Rowe Price, which has faced net outflows in recent periods, indicating strong relative performance in attracting and retaining assets.
• However, the Health Solutions loss ratio requires attention, as industry leaders like UnitedHealth Group typically maintain lower loss ratios in their health insurance segments.

Stakeholder Impact

• Shareholders will benefit from the $800 million capital return through share repurchases and dividends.
• Employees may experience changes due to the integration of OneAmerica's retirement plan business.
• Customers in Wealth Solutions and Investment Management will likely see continued strong performance and service.
• Suppliers and creditors may be affected by the company's financial performance and capital allocation decisions.

Next Steps

• Voya Financial will host a conference call on February 5, 2025, to discuss the fourth-quarter and full-year 2024 results.
• The company expects to utilize approximately $0.4 billion of excess capital in the first quarter of 2025 to retire maturing debt.
• The company will file its Annual Report on Form 10-K for the year ended Dec. 31, 2024, on or before Mar. 3, 2025.

Key Dates