Voya Financial, Inc. — 2023 Form 10-K Summary
Business context and reporting period
Voya provides workplace retirement, employee benefits and benefits-administration services, and investment management. It reports Wealth Solutions, Health Solutions and Investment Management segments. This filing covers the fiscal year ended December 31, 2023, with comparisons to 2022. Voya reported approximately 15.2 million workplace customers and $813.5 billion of consolidated AUM and AUA at year-end.
Financial and operating metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $7.348 billion | $5.930 billion |
| Income from continuing operations before tax | $678 million | $428 million |
| Net income available to common shareholders | $589 million | $474 million |
| Diluted EPS | $5.42 | $4.30 |
| Adjusted operating earnings before tax (non-GAAP) | $916 million | $908 million |
| Operating cash flow | $1.638 billion | $1.352 billion |
- Revenue rose 24%, while GAAP pretax income increased $250 million. Common-shareholder net income rose $115 million. The effective tax benefit was $51 million, or a reported effective tax rate of negative 7.5%.
- Revenue growth reflected higher premiums and fees, Benefitfocus and AllianzGI contributions, and higher income from consolidated investment entities. Net investment income fell $122 million; reported net losses improved from $686 million to $72 million, partly due to market-related marks and a $45 million Voya India revaluation gain.
- Segment adjusted pretax earnings: Wealth Solutions $632 million (down from $697 million); Health Solutions $315 million (up from $304 million); Investment Management $177 million excluding Allianz’s noncontrolling interest (up from $158 million). Adjusted operating margins were 33.6%, 26.6% and 24.6%, respectively; Health’s margin declined from 33.7% and Investment Management’s was broadly flat.
- Wealth Solutions client assets increased to $544.3 billion from $477.4 billion. Investment Management AUM and AUA were $377.7 billion, nearly flat year over year; reported net flows were negative $16.1 billion, driven by $15.5 billion of institutional outflows.
- Cash flow from investing activities was positive $2.532 billion; financing activities used $4.059 billion. Cash and equivalents, including cash held by consolidated investment entities, ended at $1.118 billion, up from $1.007 billion.
- Long-term debt was $2.097 billion; total financial debt was $2.098 billion. Financial leverage excluding AOCI declined to 27.8% from 29.5%. Estimated excess capital was approximately $0.4 billion, using management’s stated RBC and holding-company liquidity targets. Combined principal-insurer RBC was 433%, versus 490% a year earlier.
- Total shareholders’ equity was $5.878 billion; AOCI remained negative at $2.400 billion, improving from negative $3.055 billion. Fixed maturities had $2.722 billion of gross unrealized losses at year-end, which the company attributed primarily to interest rates.
Material changes and unusual items
- Benefitfocus was acquired in January 2023 for stated consideration of $595 million. It added benefits-administration revenue and operating costs; Voya recorded $37 million of integration expenses and expected further integration costs.
- Voya acquired the remaining interest in Voya India in August 2023 and recorded a $45 million revaluation gain. It also issued $400 million of 3.976% senior notes and used proceeds from the Treasury securities received to redeem its 5.65% junior subordinated notes due 2053.
- Annual assumption updates were $67 million unfavorable overall in 2023, including an $8 million unfavorable effect on adjusted operating earnings, mainly in Health Solutions. The comparable 2022 update benefited adjusted earnings by about $66 million.
- Voya recorded a $33 million impairment of acquired Investment Management contract rights. It adopted the long-duration insurance accounting standard ASU 2018-12, with comparative periods presented under the new guidance.
- Common share repurchases totaled $374 million in 2023, versus $750 million in 2022; common dividends paid were $125 million, versus $80 million. The filing reports an additional $107 million of repurchases after year-end through the filing date.
Outlook, commentary and risks
Management describes a path to adjusted operating EPS growth through net revenue growth, margin expansion and disciplined capital management, but the filing provides no quantified earnings or revenue guidance. Management noted that higher rates may make reinvestments accretive to portfolio yields, while also raising fixed-income valuation, collateral and policyholder-outflow risks. Market volatility, slower growth, asset values and customer behavior may affect fees, sales, flows and insurance results.
- Key exposures include interest rates, credit spreads and defaults, investment valuation and liquidity, collateral calls, stable-value withdrawals, and dependence on insurance-subsidiary dividends. Insurance subsidiaries’ dividend capacity is regulated.
- Reinsurance remains a material counterparty risk: year-end reinsurance recoverables were approximately $12.0 billion, including $9.2 billion related to Security Life of Denver. Voya remains liable to policyholders if reinsurers fail to perform.
- The company disclosed a putative ERISA class action concerning administration of its 401(k) plan; most fiduciary-duty claims were dismissed, but certain claims remain. It estimated reasonably possible losses above accruals of up to approximately $25 million in aggregate for matters where a range could be estimated. It also cooperates with an industry-wide SEC recordkeeping investigation.
- Voya reported no known cybersecurity incidents that materially affected it in the prior three years. It identified cybersecurity, privacy, third-party service providers, acquisition integration, regulation and litigation as ongoing risks.
- The independent auditor gave an unqualified opinion on the financial statements and internal controls. Critical audit matters included investment fair-value estimates and recoverability of deferred tax assets.
Most important facts for investors to verify
- Reconcile the improvement in GAAP earnings with the much smaller increase in adjusted operating earnings, and assess the contribution of market marks, tax benefits and acquisition-related items.
- Track whether Benefitfocus integration costs, revenue growth and expected synergies support returns on the $595 million purchase consideration.
- Monitor Investment Management institutional outflows and whether they persist, alongside asset values and fee rates.
- Assess insurer RBC, dividend capacity and holding-company liquidity, particularly under adverse market or collateral scenarios.
- Review reinsurance recoverability and collateral support, especially the Security Life of Denver exposure, and developments in the 401(k) litigation and SEC inquiry.
- Check subsequent repurchases, dividends, debt maturities and actual performance against management’s stated growth priorities; the filing does not provide quantified forward guidance.