Business context and reporting period
Voya Financial, Inc. filed its Form 10-K for the fiscal year ended December 31, 2021. It provides retirement, investment management and employee-benefit products, primarily through Wealth Solutions, Investment Management and Health Solutions. The year included the January 4 sale of substantially all Individual Life and legacy non-retirement annuity operations to Resolution Life, and the June 9 sale of Voya Financial Advisors’ independent financial-planning channel to Cetera. Comparisons with 2020 are materially affected by these transactions and related reinsurance.
Financial and operating highlights
Unless otherwise noted, amounts are in U.S. dollars; financial figures are in millions.
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $4,230 | $7,649 |
| Income from continuing operations before tax | $2,777 | $352 |
| Income from continuing operations | $2,875 | $370 |
| Net income available to common shareholders | $2,090 | $(242) |
| Adjusted operating earnings before tax (non-GAAP) | $1,292 | $495 |
| Net cash provided by operating activities | $72 | $1,209 |
| Total assets | $171,262 | $180,518 |
| Total shareholders’ equity | $9,821 | $11,178 |
| Long-term debt | $2,595 | $3,044 |
Revenue fell $3.4 billion, chiefly because the life and annuity business was sold or reinsured. Reported premiums of $(3.354) billion and interest credited/other benefits of $(2.163) billion reflect large ceded amounts and offsets; they should not be read as ordinary revenue or expense trends. Consolidated results also include investment gains, consolidated investment entities and noncontrolling interests, so GAAP earnings and adjusted operating earnings are not directly interchangeable. The filing does not provide a clear, representative consolidated operating-margin measure.
- Segment adjusted operating earnings before tax: Wealth Solutions $1,110 (2020: $443); Investment Management $239 ($197); Health Solutions $204 ($204); Corporate loss $(261) ($(349)). Total was $1,292.
- Cash and capital: Consolidated cash and cash equivalents were $1.402 billion at year-end, while parent-company cash was $202 million. Management estimated excess capital of approximately $1.5 billion, defined using its 375% RBC and $200 million holding-company liquidity targets. The estimated combined RBC ratio was 550%.
- Debt and leverage: Total financial obligations were $2.896 billion and the financial leverage ratio was 27.6%, down from 28.2%. The company reported compliance with debt covenants.
- Assets and flows: Consolidated AUM and AUA were $739.0 billion, up from $700.2 billion. Wealth Solutions client assets were $536.2 billion; its recordkeeping net flows were negative $6.7 billion. Investment Management reported $4.8 billion in net flows, including positive institutional flows and negative retail flows.
- Health Solutions: Annualized in-force premiums were $2.510 billion, up from $2.282 billion. The group-life interest-adjusted loss ratio rose to 95.5% from 81.8%; the total trailing-12-month loss ratio rose to 72.5% from 70.4%.
- Shareholder returns: Voya repurchased $1.143 billion of common shares and paid $80 million in common dividends in 2021. It increased the common dividend twice during the year.
Material changes, outlook and risks
- Transaction effects and unusual items: The Individual Life transaction generated significant reinsurance and investment-accounting effects. The company reported a $1.423 billion net gain in 2021, including realized gains associated with asset transfers to a reinsurance trust, and a $521 million release of tax valuation allowances that benefited continuing-operations tax results. A $1.454 billion after-tax loss on the Individual Life sale was recorded through 2021; the 2021 discontinued-operations result included a $12 million favorable adjustment to that loss.
- Other restructuring: Voya incurred $91 million of restructuring expenses in 2021 and anticipated a further $25–$75 million beyond 2021 related to the dispositions and associated cost reduction efforts. Transition-services fees and cost savings helped improve Corporate results.
- Management outlook: Voya said low interest rates could continue to pressure spread-based earnings; its fourth-quarter 2021 general-account earned yield was approximately 4.5%, and new investments were expected to yield below the portfolio average. It expected COVID-related group-life mortality claims to remain elevated in 2022, estimating $2–$3 million of additional claims for every 10,000 incremental U.S. COVID-19 deaths. No formal company-wide earnings or revenue guidance is provided in the supplied filing text.
- Key risks: Market, interest-rate, credit, liquidity and policyholder-behavior changes may affect investment values, spreads, fees and capital. Other notable exposures include reinsurance collectability (including Resolution Life), stable-value guarantees, investment valuation judgments, cyber and operational disruption, and reliance on subsidiaries for holding-company cash. The filing identifies an aggregate reasonably possible litigation loss of up to approximately $25 million in excess of accrued amounts, while noting some matters cannot yet be estimated. It describes, among other cases, a stop-loss coverage dispute and a putative 401(k) fiduciary-duty class action; Voya disputes the allegations.
Most important facts for investors to verify
- Reconcile reported GAAP earnings and revenue to continuing-business performance, including the reinsurance-related presentation, transaction gains and $521 million tax valuation allowance release; review the company’s non-GAAP reconciliation.
- Assess the sustainability of Wealth Solutions’ 2021 earnings increase and the impact of negative recordkeeping flows, market levels and lower new-money yields.
- Review the Health Solutions claims trend, especially the 95.5% group-life loss ratio, COVID-related claims expectations and stop-loss experience.
- Examine operating cash flow of $72 million, parent cash of $202 million, subsidiary dividend capacity and planned capital returns alongside the reported excess-capital estimate and RBC ratio.
- Evaluate Resolution Life reinsurance recoverables, collateral and ongoing transition arrangements, plus litigation exposure and remaining restructuring costs.
The financial statements received an unqualified audit opinion, and the auditor also issued an unqualified opinion on internal control over financial reporting.